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Interchange remittance discussions could come next week

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WASHINGTON (6/15/10)--Although discussions of the to-be-resolved financial regulatory reform package will continue this week, big ticket items for credit unions, including interchange provisions, are not likely to be discussed until next week. An official schedule has not been released, but it is expected that investor protections, executive compensation, corporate governance, systemic risk regulation, resolution authority, and payments/clearing and settlement issues will be discussed by the conference committee this week. Discussion of the proposed Consumer Financial Protection Bureau, as well as remittances—two issues of interest to many credit unions--has been pushed back until next week. While that fact makes this a relatively quiet week in Congress on the financial services front, there will still be some action in the Senate, with discussion on a tax extenders bill that would fund the National Flood Insurance Plan (NFIP) and the Stimulus Act’s small business provisions set to take place. That legislation, if passed by the Senate this week, would still need House action to move forward. The NFIP and the aforementioned small business provisions are currently lapsed. The House will also reportedly consider H.R. 5297, the Small Business Lending Fund Act, on Wednesday. That legislation, which was passed out of committee last month, would create a $30 billion small business lending fund for community banks. The Credit Union National Association, and, lately, governmental bodies such as the U.S. Treasury and legislators such as Rep. Barney Frank (D-Mass.), have all back increasing lending to small businesses by lifting the current 12.25% of assets cap on credit union member business lending (MBL). The Treasury has itself proposed lifting the cap to as high as 27.5%, and MBL legislation introduced by Rep. Paul Kanjorski (D-Penn.) currently has 122 House cosponsors and will likely come up for discussion in House committees soon.

Mica Interchange plan is pro-merchant anti-consumer

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WASHINGTON (6/15/10)--Credit Union National Association (CUNA) President/CEO Dan Mica said Monday that CUNA and credit unions just do not agree with a key senator's view that interchange legislation will be "good for consumers." Mica was commenting on a letter he received Friday from Sen. Richard Durbin (D-Ill.), in which Durbin stated that the changes that his legislation would bring to the interchange fee system would benefit consumers. Durbin also addressed his letter to Camden Fine, President/CEO of the International Community Bankers Association. "We appreciate Sen. Durbin's comments," Mica said in a statement. "However, we just cannot agree with his view that the change is good for consumers." Mica noted that someone has to pay to provide this service, which clearly benefits the merchants, and credit unions cannot absorb the costs under the strictures of this proposed law. "Those costs will be borne by consumers – members of credit unions. That is not a good outcome for them or for credit unions,” Mica added. Durbin’s legislation, which was added to the Senate version of regulatory reform just prior to passage, would ask the government to control interchange fees. While Durbin has touted a carve out that would exempt financial institutions with under $10 billion in assets from the terms of the interchange legislation, CUNA and others have said that that carve out would not be meaningful because there is no requirement for the payment card networks to operate a higher rate system for small issuers. The House version contains no interchange language, and over 100 House members from both major political parties last week urged their congressional colleagues not to include language on interchange fees in the final bicameral legislative package. That “dear colleague” letter, which was offered up by Reps. Debbie Wasserman Schultz (D-Fla.) and Kenny Marchant (R-Texas), followed several days of direct credit union advocacy in the form of a national fly-in. Over 1,000 credit union activists met directly with their legislators, and a further 500,000 credit union backers have contacted their legislators to urge them to oppose the interchange provisions. Members of the media have also challenged assertions that the interchange alteration would be good for consumers, with an Investor’s Business Daily editorial stating that large retailers, including Walgreen’s, would win out over small businesses and consumers. Those retailers would simply “shift their costs of processing credit and debit cards to consumers,” the editorial added. (For the full story, use the resource link.) Mica said that CUNA and other credit union representatives will continue to press their concerns on Congress about the interchange language. Interchange fee legislation should be taken up by the conference committee early next week.

Inside Washington (06/14/2010)

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* WASHINGTON (6/15/10)--Debate is ensuing regarding which agency would replace the Office of Thrift Supervision (OTS) on the board of the Federal Deposit Insurance Corp. (FDIC). OTS will soon be eliminated. The decision will be made by conferees of the two regulatory reform bills. Conferees could address the issue as early as today. There are essentially three options, according to American Banker: give the seat to the Federal Reserve Board, give the seat to the proposed consumer protection bureau, or return the FDIC to a three-member board from a five-member board. The House version advocates giving the Federal Reserve Board the seat, while the Senate favors the seat going to the proposed consumer protection bureau (June 14). The FDIC’s board was widened to five members under a 1989 law that addressed reform during the savings and loan crisis. Prior to that law, three agencies--the FDIC chairman, an independent director and the comptroller of the currency--oversaw the operations ...

NCUSIF other NCUA funds are auditor approved

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ALEXANDRIA, Va. (6/15/10)--The National Credit Union Share Insurance Fund (NCUSIF) has officially received “clean” audit opinions for 2008 and 2009, with auditors also certifying the “financial accuracy” of the National Credit Union Administration’s (NCUA) operating fund, its community development revolving loan fund, and its central liquidity facility. In a Monday release, NCUA Chairman Debbie Matz said that she was pleased by the results of the audits, which were posted immediately after they were completed, adding that transparency would “continue to be a hallmark of NCUA’s operations.” Deloitte & Touche LLP completed the NCUA’s 2008 audits, and KPMG LLP, which completed the 2009 audits, will also release its audit of the NCUA’s Temporary Corporate Credit Union Stabilization Fund (TCCUSF) soon. "Credit unions and the more than 90 million consumers who have federally insured accounts should know the National Credit Union Share Insurance Fund that protects their deposits up to $250,000 has also now received two unqualified opinions of its financial condition," Matz said, She added that the NCUA would be “more vigilant than ever” in it’s efforts to “keep the credit union system strong” and “reduce risk, strengthen capital, and enhance the overall supervision of the credit union industry.” Credit Union National Association Deputy General Counsel May Dunn noted, ""We recognize the financial statements identify some problem areas for NCUA to address and the process for completing these statements was uncommonly long, raising a number of questions within the credit union system for the delay. "On the timing score, however, we agree with the NCUA's objective to provide a more accurate reflection of the financial condition of the NCUSIF and the agency's operations." The NCUA will take up the NCUSIF and the TCCUSF this week, and board member Michael Fryzel on Monday reiterated the agency’s stance that separating the corporate stabilization fund and share insurance fund assessments would improve the transparency of the assessment process and improve the accuracy of credit union budget estimates. “Separation would not increase the total amount of assessments but it would clarify exactly what each assessment is for: The Share Insurance Fund assessment for losses at natural person credit unions, and the Corporate Stabilization Fund assessment for losses at corporate credit unions,” Fryzel added. The NCUA’s recently proposed changes to its field of membership rules, some of which the Credit Union National Association has criticized as overly restrictive, will also be discussed at the board meeting, which will take place on Thursday. For the NCUA's audit release, use the resource link.