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Start now for new ACH rule compliance--CUNA

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WASHINGTON (6/20/08)—Credit unions that originate or receive automated clearinghouse (ACH) transactions should start now to prepare for compliance with new rules that go into effect March 20 of next year, according to the Credit Union National Association (CUNA). CUNA Director of Compliance Information Valerie Moss, in the June issue of CUNA’s Credit Union Magazine, notes that NACHA—the electronic payments association in Herndon, Va.—recently amended its operating rules to facilitate compliance with the Office of Foreign Assets Control (OFAC) regulations. OFAC requires credit unions and others to block property and reject transactions involving any country, entity, or individual on OFAC’s Specially Designated Nationals and Blocked Persons list. The new rule affects international automated clearinghouse transactions (IAT), but not domestic OFAC compliance obligations. Moss said the changes are designed to improve institutions’ ability to identify all international payments flowing through the ACH network and all parties involved. In her article entitled, “NACHA Aligns Rules with OFAC Obligations,” Moss informs credit unions that NACHA recommends the following steps for credit unions preparing for the 2009 rules:
* Become familiar with new ACH rules related to IAT; * Revise ACH OFAC compliance policy for both originating and receiving IAT transactions; * Review existing agreements with corporate originators and vendors to ensure IAT compliance; * Review all originators for possible IAT scenarios, and determine if any of them make the credit union a gateway operator; * Educate appropriate staff (such as operations, compliance, audit, and member service) on IAT requirements; * Review additional processing costs for IAT transactions; * Review the credit union’s account analysis statement to ensure it can include new services; * Review downstream applications (such as reporting systems, statements, and online banking platforms) for the ability to accept new format and processing requirements; * Check vendor readiness; * Update and provide training on all applicable procedures; and * Test with vendors, operators, correspondent banks, and so forth.
CUNA members can use the link below to read more on this compliance topic.

NCUA seeks comments on ways to improve MBL reg

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ALEXANDRIA, Va. (6/20/08)--The National Credit Union Administration (NCUA) Board Thursday voted to seek comment on an advance notice of proposed rulemaking on Part 723, Member Business Loans (MBLs). As discussed at the meeting, the agency has received a number of concerns about the rule and suggestions for improving it. The Credit Union National Association (CUNA) has repeatedly sought revisions in the rule in areas that are not dictated by statutory requirements, such as the loan-to-value ratios and the waiver provisions. The issues the board is requiring comments on are whether the MBL rule should be clarified and revised in the following areas:
* Loan-to-value ratio requirements; * Collateral and security requirements; * Credit union service organization involvement in the MBL process; * MBL loan participation; and * Waivers.
NCUA is also seeking comments on any other aspect of the rule. "While we will be reviewing the proposal, the advance notice represents the kind of regulatory approach that is positive and much needed in the current climate of overregulation," said CUNA's Deputy General Counsel Mary Dunn. CUNA's comment letter will be developed with the CUNA Federal Credit Union Subcommittee and CUNA Lending Council. The comment period is 60 days. A CUNA Comment Call on the notice will be available shortly on CUNA's Regulatory Advocacy website.

Interchange bill markup postponed until July

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WASHINGTON (6/20/08)--The House Judiciary Committee confirmed to the Credit Union National Association (CUNA) yesterday that it does not intend to mark up an interchange fee bill next week as originally expected. The bill, known as the Credit Card Fair Fee Act (H.R. 5546), has a companion bill (S. 3086) of the same name pending action in the Senate. Additionally, Rep. Peter Welch (D-Vt.) has introduced a bill to require credit card companies to disclose their interchange rates, terms, and conditions to consumers and businesses. CUNA was told that no mark up would be scheduled until July at the earliest, said Ryan Donovan, CUNA vice president of legislative affairs. The interchange fee bill would set up a government tribunal as mediator in disputes that could occur relating to interchange fees based on consumer use of credit and debit cards. CUNA opposes legislation that would regulate interchange because it believes that such action would adversely affect consumer options, competition and technology innovation. Credit unions use interchange fee revenue to offer credit and debit cards to their members. The revenue covers the costs and risks the credit union incurs in the card system, including consumer nonpayment and fraud. For more information, use the link.

Green 150th co-sponsor to sign on to CURIA

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WASHINGTON (6/20/08)--Rep. Gene Green (D-Texas) has signed on as a Credit Union Regulatory Improvements Act (CURIA) co-sponsor, bringing the number of supporters in the House to 150. Green’s co-sponsorship comes on the heels of a recent Hike the Hill event by the Texas Credit Union League, said Ryan Donovan, Credit Union National Association (CUNA) vice president of legislative affairs. "We are delighted that Green has read the bill and seen fit to co-sponsor it," said Dick Ensweiler, president/CEO of the Texas league. "It's a culmination of hard work by credit unions and his constituency in ensuring that our congressman understood the bill and what it will do for credit unions." CURIA was introduced in the Senate May 1 by Sen. Joe Lieberman (I-Conn.) Reps. Paul Kanjorski (D-Pa.) and Ed Royce (R-Calif.) introduced the measure in the House. Among other changes, CURIA would allow all credit unions, regardless of charter type, to serve those in underserved areas. It also would increase the current cap on member business loans to 20% from 12.25%.

New relief bill based on CURRA introduced in House

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WASHINGTON (6/20/08)--A bill that would allow all federal credit unions to apply to serve underserved areas and exempt member business loans (MBLs) made in underserved areas from a statutory cap moved to the legislative fast track Thursday night. The new bill, H.R., 6312, the Credit Union, Bank and Thrift Regulatory Relief Act of 2008, would also grandfather previously approved underserved fields of membership for credit unions.
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The measure is based on provisions of the Credit Union Regulatory Relief Act (CURRA, H.R. 5519)combined with some provisions of a banking relief bill. The new legislation--introduced by Reps. Paul E. Kanjorski (D-Pa.), Dennis Moore (D-Kan.), and Edward Royce (R-Calif.)--is expected to be placed on the House Suspension Calendar for a vote, perhaps as early as next week. The measure then could be considered by the Senate. “We have worked hard throughout the 110th Congress to identify how credit unions and financial institutions of all types can better serve their members and customers, and this bill represents a real consensus on these matters,” said Rep. Kanjorski. “This legislation, among other things, will allow credit unions of all types to expand into underserved areas and support community development. It also will allow interest to be paid on business checking accounts, a change for which I have long advocated,” Kanjorski said. “During this time of economic uncertainty, we need to take action in Washington not only to help those individuals who live and work in underserved areas, but also the businesses that create jobs. Both of these provisions will help to achieve that goal. I look forward to moving this legislation quickly on the House floor,” Kanjorski added. The bill received the support of key Financial Services Committee Ranking Member Spencer Bachus (R-Ala.) and Chairman Barney Frank (D-Mass.). Frank said, “I appreciate the hard work and bipartisan cooperation of Reps. Kanjorski, Moore and Royce on this important legislation, as well as the constructive engagement of both the banking and credit union industries. This bill will advance financial institutions’ ability to serve their consumers, and I look forward passage by the House very soon.” Bachus said the legislation “is an example of a bipartisan effort to remove unnecessary regulatory burdens on our financial institutions. Increasing our regulatory efficiencies will allow banks and credit unions to devote additional resources to better serve their customers.” Moore noted that “reducing regulatory burdens on businesses and consumers is simply the right thing to do. I’m pleased that this bipartisan package, which will do much to keep our financial services and business communities competitive in the global market, includes provisions that I have long advocated to reduce the burden on our small banks and thrifts. And, the bipartisan support for this bill shows just how important it is that Congress pass meaningful regulatory relief legislation soon.” Royce said the bill’s introduction “is a major step toward achieving our ultimate objective: providing significant regulatory relief for our financial institutions. This bill gives both credit unions and banks greater flexibility in their day to day operations, thereby allowing them to better serve their customers.” To see a video of Ryan Donovan, the Credit Union National Association's vice president of legislative affairs, comment on the bill, use the link.

Inside Washington (06/19/2008)

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* WASHINGTON (6/20/08)--A special receivership process for investment banks outside of the bankruptcy process is needed, Federal Deposit Insurance Corp. (FDIC) Chairman Sheila Bair said in a speech Wednesday. The receivership process should minimize public loss--imposing losses first on shareholders and general creditors--and must allow continuation of any systemically significant operations, she added. Bair noted that the FDIC is equipped to handle a receivership, since the agency has “run a bridge bank” on several occasions. “Housing all receivership and resolution responsibility in a single federal agency may make sense,” she said ... * WASHINGTON (6/20/08)--The Federal Reserve System yesterday announced the nationwide launch of Partnership for Progress, an outreach and technical assistance program for minority-owned institutions. The program includes guidance, workshops, and an online information center. Partnership for Progress provides insight on issues in three stages of a bank’s life cycle: Start a Bank, Manage Transition, and Grow Shareholder Value. Topics covered include credit and interest rate risk, capital and liquidity, and banking regulations. To develop the program, Fed officials met with minority-owned banks across the country to understand the challenges they face ... * WASHINGTON (6/20/08)--National Association of State Credit Union Supervisors (NASCUS) President/CEO Mary Martha Fortney was elected president of the Women in Housing and Finance (WHF) board of directors. She was sworn in for the two-year term yesterday. Fortney has been involved with WHF for more than eight years, serving on the board for three years. She most recently served as president-elect and vice president, and was treasurer for the WHF Foundation board. WHF is an association of women and men who promote women in the fields of financial services and housing through professional enrichment and leadership enhancement ...