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SBA suggests 7a compliance changes

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WASHINGTON (5/27/11)--The U.S. Small Business Administration (SBA) has identified the adoption of a single electronic application for all SBA 7(a) guaranteed loans as one of several ways it could reduce compliance burdens. This 7(a) streamlining would, according to the SBA, “reduce the paperwork burden on lenders” and increase the participation of credit unions and other lenders in the 7(a) program. It would also improve the timeliness of loan approval deliveries, the SBA added. The SBA also discussed allowing credit unions and other SBA lending partners to use an automated credit decision model for 7(a) loans of less than $250,000. Doing so could reduce the cost of delivering loans to eligible borrowers, thus expanding lender interest in making low-dollar loans. This change could also encourage new credit unions and other lenders to become SBA partners, increasing the amount of lending options for small businesses, the SBA added. The SBA was one of 30 federal agencies that this week released a regulatory review following an early 2011 executive order calling on federal agencies to design cost-effective, evidence-based regulations that are compatible with economic growth, job creation, and competitiveness. The Obama administration also instructed regulators to reduce burdens on small businesses whenever possible, called for greater transparency and accountability in regulatory compliance, and requested that regulators identify areas where regulations could be effectively harmonized to reduce costs. The SBA said it would also explore whether adding greater flexibility to its lending criteria and increasing the participation of lenders and borrowers in underserved communities could “reduce federal barriers” for entrepreneurs working to start and grow their own businesses. The SBA added that it would soon report on the feasibility of these and other ideas. For the full SBA release, use the resource link.

NCUA may lift prepayment plan contribution cap

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ALEXANDRIA, Va. (5/27/11)--While the National Credit Union Administration (NCUA) has said that the maximum corporate stabilization assessment prepayment a credit union may make would be 36 basis points (bp), the agency on Thursday said that it would consider lifting that cap if enough credit unions request that it be raised. The NCUA covered its voluntary prepayment plan, which was proposed at last week’s May board meeting and is designed to help smooth out future corporate credit union stabilization assessment rates, during a Thursday webinar. NCUA Chairman Debbie Matz reiterated that the prepayment plan was in response to several requests by credit unions. Credit unions would need to advance the minimum amount of $10,000 to participate in the plan, and the NCUA said it would not move forward with the plan if credit unions do not commit a combined $300 million in funds to the proposal. The prepayment plan would generate $2.8 billion in funds if all eligible credit unions contributed the maximum amount. The Credit Union National Association (CUNA) has estimated that voluntary payments by all eligible credit unions at the maximum payment amount could reduce the amount of corporate stabilization-related assessments charged in 2011 from 25 bp to 11 bp. Corporate assessments charged in 2012 could fall to 10 bp from the currently planned 13 bp if maximum advance payments are made. The plan would affect the amount of each year's assessment through time, but not the total amount of assessments. CUNA estimates that the NCUA will need to collect a minimum of $1 billion in funds for credit unions to recognize any benefits. Credit unions that wish to take part in the prepayment program can pledge their desired amount to the NCUA, and the agency would then process a direct debit from those credit union accounts. The agency is accepting credit union comments on the potential effectiveness of its plan, the level of interest in the plan, and any account treatment considerations until June 20. The NCUA said it could implement the plan by mid-August. CUNA is urging all eligible credit unions to consider the benefits of the prepayment program and to suggest revisions as appropriate. CUNA has also compiled its own FAQ on the proposal, and has issued a corresponding comment call. Comments are due to CUNA by June 10. The National Credit Union Share Insurance Fund (NCUSIF) was also addressed during the webinar, with NCUA Director of Examination and Insurance Melinda Love reiterating that an NCUSIF premium for 2011 is not likely. However, such a premium might be necessary in 2012, she indicated. CUNA President/CEO Bill Cheney in last week's NCUA board meeting summary noted that a premium for this year is unlikely. For more on the prepayment plan, and to access CUNA’s FAQ, use the resource links.

Inside Washington (05/26/2011)

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* WASHINGTON (5/27/11)--During the next several weeks, the U.S. Treasury will sell its warrant positions in SunTrust Banks Inc. and Webster Financial Corp. The department acquired the warrants through investments made under the Troubled Asset Relief Program (American Banker May 26). Both companies repurchased the Treasury’s preferred stock investment. Treasury said it will conduct auctions to sell the warrant positions. The warrants will be sold through public offerings, using a system that establishes a market price by allowing investors to submit bids at specified increments above a minimum price for each auction. The Treasury holds 17.9 million warrants in Sun Trust and 3.28 million in Webster. The strike price on one set of 11.89 million Sun Trust warrants is $44.15, with an expiration date of Nov. 14, 2018. The strike price on the other set of 6.01 million Sun Trust warrants is $33.70, with an expiration date of Dec. 31, 2018. The strike price on the Webster warrants is $18.28, with an expiration date of Nov. 21, 2018 … * WASHINGTON (5/27/11)--The Office of the Comptroller of the Currency has published in the Federal Register a proposal to take over a number of responsibilities from the Office of Thrift Supervision. The changes are tied to the implementation of the Dodd-Frank Act and address organization and functions, the availability and release of information, post-employment restrictions for senior examiners, and fee assessments. The OCC is accepting comment on the changes until June 27… * WASHINGTON (5/27/11)--A proposal issued by the Office of the Comptroller of Currency (OCC) Wednesday would amend its federal pre-emption of national banks, but largely preserve the office’s authority. The new pre-emption plan, part of the Dodd-Frank Act, would require operating subsidiaries of national banks to follow state consumer protection laws and remove language from OCC regulations that state officials argued was too rigid (American Banker May 26). Language from the OCC’s 2004 pre-emption rule stating national banks can avoid state laws that “obstruct, impair or condition” the business of banking would be removed. Many states said the language could be used to avoid more than just banking laws. But while the proposal alters the preemption standard, the 1996 U.S. Supreme Court decision solidifying the OCC’s authority through the so-called Barnett standard still stands. “Because the Dodd-Frank Act preserves the Barnett conflict pre-emption standard, OCC’s rules and existing precedents (including judicial decisions and interpretations) consistent with that analysis are also preserved,” the proposal said. The proposal has a 30-day comment period …