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CFPB tax hearings on tap as Congress returns

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WASHINGTON (5/3/11)--As Congress restarts after its two-week district work period, credit unions will want to watch a Wednesday House Financial Services subcommittee on financial institutions and consumer credit hearing for clues on potential changes to the structure of the Consumer Financial Protection Bureau (CFPB). The subcommittee will mark up H.R. 1121, the Responsible Consumer Financial Protection Act; H.R. 1315, the Consumer Financial Protection Safety and Soundness Improvement Act; and other legislation related to the date for transfer of functions to the CFPB if the bureau does not have a director in place. The CFPB is scheduled to take over a host of financial regulatory activities on July 21. H.R. 1121 would replace the proposed single CFPB director position with a five-person panel. H.R. 1315 would replace the proposed two-thirds voting approval threshold with a simple majority threshold. Doing so would strengthen the Financial Stability Oversight Council’s (FSOC) review authority over regulations that are issued by the CFPB. The Credit Union National Association (CUNA) has said that credit unions should be adequately represented if the single director position is expanded to a five-person panel. CUNA also suggested that the FSOC could set aside CFPB rules if it determines that a new rule would be unreasonably burdensome for financial institutions and the burden to financial institutions outweighs the benefit to consumers. CUNA Vice President of Legislative Affairs Ryan Donovan said that while the CFPB-related bills will likely pass out of the subcommittee, and could be marked up in full committee, their final fate is not certain. “We have seen very little appetite in the Senate to consider these types of changes to Dodd-Frank Act,” he added. A Senate Finance Committee hearing, entitled “Is the Distribution of Tax Burdens and Tax Benefit Equitable?,” is scheduled for 10 a.m. ET, and the Senate Banking Committee will hold confirmation hearings for several Treasury department nominees at that same time. The House Financial Services subcommittee on capital markets and government sponsored enterprises will also mark up legislation related to capital formation, data collection, covered bonds, access to capital, and market stabilization, among other topics, at 10 a.m. ET.

Fed can delay some interchange provisions CUNA

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WASHINGTON (5/3/11)--Credit Union National Association (CUNA) President/CEO Bill Cheney Monday said the Federal Reserve Board has the authority to delay portions of pending statutory changes to debit card interchange rules, and he urged the Fed to use that authority. Cheney contacted Fed Chairman Ben Bernanke by letter. The letter was also sent to all other Fed board members and the agency's general counsel. Cheney called on the Fed to enact a delay of as long as 24 months on portions of the its interchange proposal that would address exclusivity arrangements and routing restrictions. Under requirements of the Dodd-Frank Wall Street Reform Act, the Fed has proposed a debit card interchange limit that would top such fees at 12 cents. The law intends to exempt credit unions and other small institutions with assets of $10 billion or less from fee cap. However, the effectiveness of the proposed exemption has been hotly debated, and many analysts agree that the statutory exemption will not work as intended. While rules that would set an artificial cap on the amount that large issuers may receive for each individual debit card transaction are required by law to take effect on July 21, Congress said the Fed had to write rules on the exclusivity and routing provisions by July 21. It did not provide a specific effective date for the routing and exclusivity provisions. “Delaying the effective date of these provisions would not undermine merchants’ ability to pay lower fees to large issuers. Such a delay would, however, allow time for the exemption to work for small issuers, as Congress intended, without any group of issuers or the federal government being harmed as a result of compliance with the routing and exclusivity provisions,” the letter adds. Cheney noted that “there is little clarity” on the impact that portions of the interchange proposal that address routing and exclusivity will have on the financial marketplace. The letter added that “there is a significant likelihood” that these provisions will undermine the exemption for small issuers. “There are also concerns about the effects of these provisions on government debit card programs,” Cheney added. Separate House and Senate bills would delay implementation of the new interchange rules and would order a study of the impact a debit card interchange fee cap would have on consumers, financial institutions, and merchants. In the House, Rep. Shelley Moore Capito's (R-W.Va.) H.R. 1081 has 84 co-sponsors. The Senate version of interchange delay legislation (S. 575), introduced by Sen. Jon Tester (D-Mont.) and Bob Corker (R-Tenn.), has 16 co-sponsors. CUNA continues to back both of these pieces of legislation, and credit unions and leagues nationwide have called on legislators to support an interchange delay in recent in-district meetings. Credit union members and other supporters have also directly contacted their respective members of Congress via e-mail, with over 200,000 of them reaching their legislators through CUNA’s CapWiz program.

Inside Washington (05/02/2011)

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* ALEXANDRIA, Va. (5/3/11)--The National Credit Union Administration (NCUA) Board Chairman Debbie Matz activated the agency’s disaster relief policy to assist credit unions and their members in rebuilding and recovering areas in Tennessee and additional counties in Mississippi severely damaged by last week’s tornadoes. Yesterday’s announcement builds on Saturday’s decision by NCUA to provide disaster assistance in Alabama, Georgia and Mississippi. President Barack H. Obama has now declared that a major disaster exists in Tennessee and ordered federal aid to supplement state and local recovery efforts. The president’s actions make federal funding available for these affected Tennessee counties: Cheatham, Davidson, Hickman and Williamson. Four additional counties in Mississippi were added to the list of those announced Saturday. Mississippi’s Chickasaw, Choctaw, Neshoba and Webster counties also can access federal emergency assistance programs. Under the agency’s disaster assistance policy, NCUA will, where necessary encourage credit unions to make loans with special terms and reduced documentation to affected members; reschedule routine examinations of affected credit unions if necessary; guarantee lines of credit for credit unions through the National Credit Union Share Insurance Fund; and make loans to meet the liquidity needs of member credit unions through the central liquidity facility … * WASHINGTON (5/3/11)--John Munn, director of the Nebraska Department of Banking and Finance since 2005, will again chair the Federal Financial Institutions Examination Council's (FFIEC) State Liaison Committee (SLC), the FFIEC announced Monday. Munn’s most recent term as chairman is set to continue until April 30, 2012. He has served as chairman since he was elected to a partial term in 2008. The FFIEC also announced that Charles Vice, commissioner of the Kentucky Department of Financial Institutions, will continue to serve on the SLC through April 30, 2013. Vice’s previous two-year term was set to expire this year. The SLC is a five-member panel of state financial regulatory agencies that works to encourage "the application of uniform examination principles and standards by state and federal agencies" and allows state regulators to "participate in the development of those principles and standards." Texas Credit Union Commissioner Harold Feeney was one of three SLC members to be re-appointed last month. Doug Foster, commissioner of the Texas Department of Savings and Mortgage Lending, and Massachusetts Division of Banks Commissioner David Cotney also serve on the SLC. SLC members serve two-year terms. National Credit Union Administration (NCUA) Chairman Debbie Matz last month agreed to assume leadership of the FFIEC for a two-year term. Matz is the first NCUA leader to take charge of the FFIEC in more than 20 years. Matz has said she will work to restore "the responsibility and accountability in our financial system" during her term as FFIEC leader ... * WASHINGTON (5/3/11)--An insurance firm has launched a new product providing additional coverage to executives and directors at financial companies whose personal assets are now at greater risk as a result of expanded Federal Deposit Insurance Corporation (FDIC) authority as provided under the Dodd-Frank Act. The firm, Marsh USA Inc., has created a new form of insurance protection designed to cover the costs associated with an FDIC receivership action. Under Dodd-Frank, the FDIC was given authority to become the receiver of a wider range of struggling financial companies. Under this authority, the FDIC can conduct investigations, recoup executive compensation, repudiate personal services contract and sue directors and officers of financial companies in receivership. The FDIC has the authority to repudiate contracts that it determines to be “burdensome,” including compensation agreements. The regulator can also recoup compensation received during the previous two years by any current or former senior executive or director that it deems “substantially responsible for the failed condition” of the company …

CUNAs Ryan Donovan named a top lobbyist

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WASHINGTON (5/3/11)-- CEO Update newsletter has named Credit Union National Association Vice President of Legislative Affairs Ryan Donovan one of 2011’s top lobbyists. CEO Update is a widely read, twice-monthly print publication for executives in the association and nonprofit fields. The CEO Update special edition “highlights those who deftly employed the tradecraft of association lobbying--whether identifying issues of concern before their impact is widely known, energizing members for visits to the Hill, winning the information war, forming coalitions, marshaling experts, wearing out shoe leather or simply being a good judge of people.” Donovan was extensively quoted in a story on the ongoing fight over interchange fee cap legislation, in which he notes that credit unions and banking interests have worked together to build momentum for an amendment that would delay the implementation of proposed interchange fee cap rules for up to two years. While the need to focus only on one aspect of the overall Dodd-Frank Act gave retailers a “terrific advantage,” during consideration of the Dodd-Frank Act, Donovan said that his ability to explain complicated financial issues in ways that “members of Congress and their staffs can understand” has helped credit unions refocus the debate on the unintended consequences of the debit interchange regulations. The CEO Update item notes that staying aware of the issues, framing policy debates, and building coalitions are all central to lobbying success.

Matz Regulation leadership outreach key to CUs

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ALEXANDRIA, Va. (5/3/11)--“Effective regulation, effective volunteer leadership, and effective outreach” are core elements of a strong credit union system, National Credit Union Administration (NCUA) Chairman Debbie Matz said in a Monday address before the Credit Union National Association’s Volunteer Institute in St. Thomas, Virgin Islands. Effective regulation, according to Matz, allows the NCUA to protect member investments in the National Credit Union Share Insurance Fund. “Whenever a credit union is taking chances that threaten to cause serious losses, we are doing everything in our power to prevent those losses before they impact all federally insured credit unions,” Matz said, adding that “responsiveness to regulation is not enough to keep credit unions strong.” Effective volunteer leadership helps credit unions be responsive ”to credit union members and communities at large.” The agency through its recently released rules addressing credit union board members’ fiduciary duties is “clarifying and codifying the skills volunteer leaders need.” The agency is providing 34 free workshops and creating online course materials to educate volunteers. These materials will be made available before July 27, the date by which credit unions will be expected to institute financial education programs. These programs will need to sufficiently educate board members on how to understand balance sheets and income statements, and can cover other finance-related skills. “The most successful credit unions in the days ahead will not only be those with effective leadership, but also those that conduct effective outreach,” Matz added. To continue to be viable, credit unions must attract members that are younger than the current peak borrowers' age of 44. Credit unions must adapt to current and emerging technologies and enhance mobile access if they want to attract these younger consumers, Matz said. “If you can take your traditional member service and marry it with today’s cutting-edge technology, then you’ll have unlimited potential for a more prosperous tomorrow,” she said. For the full NCUA release, use the resource link.