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Corporates biz plan for United Resources FCU approved

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BAKERSFIELD, Calif. (5/9/11)--The business plan for the United Resources FCU, a new corporate credit union that will survive the Western Bridge Corporate FCU, was approved by the National Credit Union Administration's (NCUA) Office of Corporate Credit Unions, the corporate announced Friday. Western Bridge Corporate submitted the business plan to NCUA on March 28. The notice received from the agency allows for the release of the plan, in final version, to members of Western Bridge and clears the way for distribution of the capital offering materials, expected shortly, said a press release from the corporate. The 80-page business plan projects the launch of a corporate credit union with total assets between $4 billion and $5 billion and a capital ratio goal of 5%. United Resources FCU will offer a complete portfolio of products comprised of payment services, liquidity products including term loans, and short-term investments in compliance with NCUA’s new corporate credit union regulations. “We are very pleased to have received confirmation from NCUA that the business plan is approved and we are clear to move forward with the chartering process,” said Matt Davidson, chairman of the Board, United Resources FCU. The next step in the charter process is to distribute the Private Placement Memorandum to current members of Western Bridge Corporate FCU. Credit unions will have until Aug. 31 to decide whether to invest in the new corporate credit union.

Inside Washington (05/06/2011)

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* WASHINGTON (5/9/11)--Midsize banks that barely meet the $50 billion threshold as systemically important, as defined in the Dodd-Frank Act, will be treated differently than the largest financial institutions, Federal Reserve Chairman Ben Bernanke said Thursday (American Banker May 6). The Fed will use a graduated approach in how it will require banks of all sizes to implement higher capital and liquidity requirements, Bernanke said, adding there will not be a discrete difference in how the Fed treats banks of similar asset sizes. Many in the banking industry have maintained that size alone should not dictate which institutions are considered systemically important. Bernanke's comments indicate that despite the $50 billion threshold, the largest banks will hold more capital and face tougher prudential regulation than those that just meet the standard … * WASHINGTON (5/9/11)--Although there is still doubt whether the Dodd-Frank Act ended “too big to fail” regulators must ensure that discipline is restored to the financial sector, Federal Deposit Insurance Corp. Chairman Sheila Bair said in a speech Thursday. “On one hand, there is concern that new regulations could impose onerous costs on banks and the economy, stifling financial innovation and economic growth,” Bair said. “On the other, there is alarm about the scale and seemingly indiscriminate nature of the government assistance provided to large financial companies during the crisis, and what effects these actions will have on the competitive landscape.” Bair said a major improvement with systemically important financial institutions (SIFI) is the resolution process. When a large, complex financial institution gets into trouble, time is the enemy, she said. A larger financial institution will take longer to assemble a resolution strategy. By requiring detailed resolution plans in advance, and authorizing an on-site FDIC team to conduct pre-resolution planning, the SIFI resolution framework regains the informational advantage that was lacking in the financial crisis, Bair said. “As far-reaching as these changes are, their ultimate effectiveness will still depend on the willingness of the FDIC and the Federal Reserve to actively use their authority to require organizational changes that promote the ability to resolve SIFIs,” she added … * WASHINGTON (5/9/11)--Federal Reserve Board Chairman Ben Bernanke said Thursday new regulatory reform rules resulting from the Dodd-Frank Act will make the financial system safer and less susceptible to risk (American Banker May 6). New risk retention requirements, tougher underwriting standards, and rules on off-balance sheet accounting have corrected many problems that led to the financial crisis, Bernanke said. Regulators must be aware of changes within the financial system and guard against new risks they present, he said, adding he was confident regulators now have mechanisms to adapt to any future shocks the financial system would experience …

NCUA issues prohibition order

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ALEXANDRIA, Va. (5/9/11)—The National Credit Union Administration (NCUA) last week prohibited Rhett Rowe, a former employee of Boulder, Colo.-based Premier Members FCU, from future work at any federally insured financial institution. Rowe agreed to the NCUA’s cease and desist order and will pay $9,306 in restitution to the credit union. Violation of a prohibition order is a felony offense punishable by imprisonment and a fine of up to $1 million. For the full release, use the resource link.

GAO CFPB regulators must add to mortgage oversight

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WASHINGTON (5/9/11)—Noting that federal oversight of servicers’ foreclosure activities “has been limited and fragmented,” the U.S. Government Accountability Office (GAO) last week called on the developing Consumer Financial Protection Bureau (CFPB) and fellow regulators to create plans for mortgage servicer oversight. Focus on foreclosure related activities has increased with the recent news of loan and foreclosure documentation issues in several mortgage servicers. As a result, the GAO was tasked with studying past servicer oversight, current and future oversight plans, and the potential impact of those oversight plans. The GAO found that while authorities had the right to examine foreclosure activities, those activities were not looked into, as regulators did not believe that foreclosure practices posed a risk to safety and soundness. The report suggested that the Comptroller of the Currency, the Federal Reserve, the Office of Thrift Supervision, the Federal Deposit Insurance Corporation, and the CFPB all “develop and coordinate plans to provide ongoing oversight and establish clear goals, roles, and timelines for overseeing mortgage servicers under their respective jurisdiction.” These regulators should also create national standards for mortgage servicing and foreclosure practices, the GAO said. That agency also called on regulators to “assess the risks of potential litigation or repurchases due to improper mortgage loan transfer documentation on institutions under their jurisdiction and require that the institutions take action to mitigate the risks, if warranted.” Although credit unions have seen some increases in foreclosure-related activity due to the overall decline in the economy, the majority of credit unions were much more careful in their lending activities, and did not originate toxic mortgages nor engage in the subprime mortgage market. For more on the GAO report, use the resource link.