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SBA reactivates recovery loan queue

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WASHINGTON (5/27/10)--Small Business Administrator Karen Mills on Wednesday announced that the Small Business Administration (SBA) has “reactivated” its recovery loan queue. In a press release, Mills said that a key piece of President Barack Obama’s “aggressive” small business agenda is “a longer-term extension of these increased guarantees and reduced fees.” Mills urged Congress to “move quickly to continue these critical programs.” Obama last month authorized $80 million "to continue enhancements" to the SBA's 7(a) and 504 loan programs. Specifically, the funds provide higher guarantees on some SBA-backed loans and relief from some small business fees. H.R. 4213, the American Jobs and Closing Tax Loopholes Act, would extend increased guarantees for SBA 7(a) and 504 loans that are scheduled to expire on May 31. That legislation is currently awaiting House action and, if approved, would move on to the Senate. The Credit Union National Association has offered its own solution to small business funding shortages, heavily publicizing the fact that lifting the current 12.25% cap on member business loans to 25% of a credit union’s total assets could create up to $10.8 billion in new funds. These funds, which could create as many as 100,000 new jobs, would come at no cost to taxpayers. For the SBA release, use the resource link.

FTC releases final rule on insurance disclosures

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WASHINGTON (5/27/10)—Credit unions and other financial institutions that are backed by private insurance will now be required to more fully disclose that fact after the Federal Trade Commission (FTC) on Wednesday released its final rule on depository institution disclosures. The new rule will require non-federally insured financial institutions to disclose their insurance status and state clearly that they are not federally insured and that share or deposit accounts they hold are not backed by federal government guarantee. The required disclosures must be made on account statements, in advertising and inside branches at the deposit window. While the new rule will require non-federally-insured financial institutions to disclose their insurance status, that disclosure is not required to appear “in a sign, document, or other item that has the institution’s name but no information about the institution’s products or services or information otherwise promoting the institution.” However, the institution must “conspicuously disclose” that it is not federally insured wherever deposits are received as well as on its web site. National Credit Union Administration (NCUA) Chairman Debbie Matz applauded the FTC decision, saying in a Wednesday release that “effective consumer protection starts with relevant, practical information, and the FTC has taken an important step to equip members of non-federally insured institutions with essential details about their accounts.” “In these uncertain and difficult economic times, consumers should know more about how their money is insured, and should know that the federal deposit insurance provided by the National Credit Union Share Insurance Fund is the best option for credit union members," she added. The FTC release noted that commenters were most concerned by disclosure requirements for institutions participating in shared branching networks and service centers and “the timing of signed acknowledgment requirements.” Commenters were also reportedly concerned that the new rules would require federally insured institutions in shared branching networks to post Federal Deposit Insurance Corporation Improvement Act (FDICIA) disclosures on behalf of each of the non-federally ensured entities in those networks. “Both federally and non-federally insured institutions argued that such a requirement would be unreasonable” and, potentially, confusing for customers, the release added. Many also suggested that the FTC could “rely on recent disclosure requirements issued by the NCUA for such networks in lieu of imposing a separate disclosure requirement.” Commenters argued that the NCUA disclosure provides a clear explanation to consumers and that any FTC disclosure could cause confusion. The final rule will become effective 30 days after it is published in the Federal Register.

iCNNMoney.comi CUs among winners in reg reform battle

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WASHINGTON (5/27/10)--Although the credit union world is closely focused on the next round of the interchange legislation fight, a story has listed credit unions as one of the winners of the recent regulatory reform battle based on how credit unions fare in other elements of the wide-ranging reform legislation. Among the victories cited by the CNN story was the continuation of the National Credit Union Administration (NCUA) as the enforcement authority for credit unions under $10 billion for rules promulgated by the new consumer finance protection body that would be established under the legislation. Both the House and Senate bills would allow the NCUA to retain this authority. CNN also noted portions of the House bill that allow credit unions and community banks to avoid paying into the $150 failed institution resolution fund. CNN counted big banks, MasterCard and Visa as the biggest losers of the regulatory reform fight, with the legislation potentially forcing the banks to “beef up capital cushions and cut down on leverage and risky moves.” Visa and MasterCard’s profits will also be adversely affected by a late amendment to the bill that would allow the Federal Reserve to determine the amount that card issuers may charge for a given purchase. The Credit Union National Association remains opposed to the interchange rules, and CUNA, credit union leagues, and individual credit unions are intently focused on efforts to remove the interchange language from the final version of the bill.

CUNA holds natl call-in on interchange today for CUs

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WASHINGTON (5/27/10)—As part of its all-out assault to block interchange language from being included in a final financial regulatory reform bill, the Credit Union National Association (CUNA) is sponsoring a national conference call today to outline issues and needed action for leagues and credit unions. CUNA has reserved 3,000 lines for participants of the 2 p.m. (ET), half-hour call-in, during which President/CEO Dan Mica will describe credit union concerns regarding an interchange amendment currently included in the Senate version of the regulatory reform package, S. 3217, the Restoring American Financial Stability Act (RAFSA). The Senate passed that bill earlier this month by a 59-39 vote. "Credit unions must engage at the grassroots level right away. Our call will outline the actions credit unions must take to reach our goal of removing the interchange amendment from the financial reform legislation before it is enacted into law," said CUNA’s Mica. "We know this is short notice, but I urge all credit unions to dial into today's call. Next week's Memorial Day recess gives us an immediate opportunity to deliver our message to members of Congress while they are back home." The House-approved version of a comprehensive financial reform bill, the Wall Street Reform and Consumer Protection Act (H.R. 4173), approved last December, has no interchange provision. However, as the Senate worked toward a vote on its bill, an amendment was added that would direct the Federal Reserve to issue regulations to govern interchange fees charged for debit card transactions. As the House and Senate move forward to design a single bill that both houses of Congress can ratify, CUNA will continue its push against the interchange language and urge federal lawmakers to drop any such provision out of a final bill. To that end, CUNA’s has launched a comprehensive offensive, which includes the national call-in, a call for grassroots action, and written material to support a grassroots effort. As the House and Senate name their conferees, CUNA will enlist the aid of credit unions to keep pressure on these and all federal lawmakers to surgically remove the interchange language. To learn more about this key issue, use the resource link below to register for the CUNA call-in. CUNA requests one line-use per credit union because of likely demand.

Inside Washington (05/26/2010)

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* WASHINGTON (5/27/10)--A permanent increase in the deposit insurance limit is likely on the backburner, said American Banker (May 26). Some lawmakers hoped to address the limit--temporarily at $250,000 per account until 2013--in the regulatory reform bill the Senate passed May 20. Some financial observers say the limit should be permanent because the previous $100,000 limit had not been changed in 30 years and returning to that level could trigger a liquidity shock. Sen. Ben Cardin (D-Md.) had introduced an amendment in the regulatory reform bill to make the increase permanent, but it failed. Some observers say the increase will be added by those working on the House and Senate reform bills. Financial institutions were granted the $250,000 limit under S. 896, "Helping Families Save Their Homes Act of 2009.” Credit unions also were granted coverage up to $250,000 per account, a move that the Credit Union National Association supported ... * WASHINGTON (5/27/10)--House Financial Services Committee Chairman Barney Frank (D-Mass.) said Tuesday that forcing banks to divest their swap desks “goes too far.” Frank supports stopping banks from engaging in risky trading practices but opposes the spinoff plan--which was championed by Senate Agriculture Committee Chairman Blanche Lincoln (R-Ark.) Frank supports the Volcker Rule--which aims to ban risky trading--and Frank’s support will increase its chances of being added to the final regulatory reform bill, which could be signed into law by July 4, said American Banker (May 26). Frank has said banks should be able to hedge their own risks ... * WASHINGTON (5/27/10)--The Obama administration Tuesday again pushed its proposal for a $30 billion fund to encourage small business lending (American Banker May 26). President Barack Obama, who proposed the fund, said in a speech earlier this week in the Rose Garden that the fund would target only small community and neighborhood banks and would help these institutions increase small business lending. The Credit Union National Association (CUNA) is also working to increase available credit to small businesses. CUNA supports legislation that would increase the cap on credit unions’ member business lending to 25% of assets from 12.25%. CUNA figures show the cap increase would bring $10 billion in new credit and create more than 100,000 new jobs ...