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Inside Washington (06/19/2009)

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* WASHINGTON (6/22/09)--Credit Union National Association (CUNA) President/CEO Dan Mica presented Jean Chatzky, NBC “Today Show” financial editor, with the Consumer Federation of America’s (CFA) 2009 Betty Furness Consumer Media Services Award at CFA’s 39th annual awards dinner in Washington, D.C., Wednesday. Mica underscored Chatzky’s passion for financial education, her ability to explain complex topics and to reach tens of millions of consumer via “The Today Show” and through regular appearances on “The Oprah Winfrey Show,” “Larry King Live,” satellite radio, newspaper columns and magazine articles. From left are Chatzky, Mica, CFA Executive Director Stephen Brobeck and Federal Deposit Insurance Corp. Chairman Sheila Bair, who received CFA’s public service award. CUNA is a charter member of the CFA board. (Photo provided by CUNA) ... * WASHINGTON (6/22/09)--Federal Reserve Board advisory panel members disagreed at a meeting Thursday on how credit card companies should be allowed to create terms in light of new credit card legislation, the Credit CARD Bill of Rights Act, signed earlier this year by President Barack Obama. The legislation aims to crack down on abusive card practices. Given the new rules, credit card company representatives said if they can’t adjust rates on existing balances, they would have to set competitive rates based on an individual’s credit score to mitigate the revenues they receive from defaulting customers (American Banker June 19). They also said they could charge accountholders more fees. Consumer advocates said the companies should not be able to earn revenues through fees. Penalty fees are for guiding conduct and should not be used for companies to earn profit, said Thomas James, senior assistant attorney general for the Illinois Attorney General Office’s consumer fraud bureau. Senate Banking Committee Chairman Christopher Dodd (D-Conn.) warned banks earlier this month against gouging consumers with deceptive or excessive checking account fees (Reuters June 4 via News Now) ... * WASHINGTON (6/22/09)--Senators expressed skepticism at giving the Federal Reserve Board more power under President Barack Obama’s plan to overhaul the financial regulatory system (The New York Times June 19). Senate Banking Committee Chairman said in a hearing last week with Treasury Secretary Timothy Geithner that he was open to giving the Fed more power, but likened the situation to a parent giving a child a bigger car after crashing the family station wagon. Sen. Richard Shelby (R-Ala.) said he thought the Fed had enough responsibilities. Sen. Jim Bunning (R-Ky.) said the Obama plan puts “a lot of faith” in the Fed’s ability to prevent another financial crisis. However, if the Fed and other regulators had done their jobs and saw what banks and other firms did earlier in the decade, the mess could have been prevented, he said ... * WASHINGTON (6/22/09)--Even some who support giving the Federal Reserve Board more authority under the Obama administration’s regulatory revamp plan have noted concerns about what would happen if the Fed’s powers were to be widened (American Banker June 19). If the Fed was granted more power, it would be blamed for things that go wrong, according to Douglas Landy, former Federal Reserve Bank of New York lawyer. There have to be realistic expectations of what it means to be a systemic risk regulator, added Randall Kroszner, former Fed governor. Other observers expressed concern over the Fed losing its independence. Under Obama’s plan, the Fed would be responsible for the financial system, holding companies and all large financial companies. Increasing the Fed’s powers also may mean that the central bank will have to be more involved with Congress, noted Treasury Secretary Timothy Geithner at a hearing Tuesday. However, even if its powers were broadened, the Fed would still have to obtain written permission from the Treasury before it can use emergency lending powers ...

Bachus backs CUs as Congress reforms regs

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WASHINGTON (6/22/09)--The National Credit Union Administration (NCUA) and credit unions in general should expect support from both sides of the aisle as debate on financial regulatory restructuring moves forward this year, with ranking House Financial Services Committee member Rep. Spencer Bachus (R-Al.) lending his continued support to the mission of credit unions. In a recent letter to Credit Union National Association (CUNA) President / CEO Dan Mica, Bachus said that he and other House Republicans would seek CUNA’s input to ensure that the “shared goals of charter preservation and credit union independence are achieved” as they develop their alternative plan for regulatory reform. Though the exact details have not been released yet, the republican plan would look to limit future financial bailouts and reform the Federal Reserve, Fannie Mae, Freddie Mac, and credit rating agencies. Calling credit unions “an integral part of our financial system,” Bachus also reaffirmed CUNA’s belief that credit unions did little to contribute to the current economic crisis. The NCUA would maintain its safety and soundness authority over credit unions under the U.S. Treasury's blueprint for financial regulatory reform.

House resolution salutes 75 years of FCU Act

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WASHINGTON (6/22/09)--Praising credit unions for exemplifying the “American values of thrift, self help, and volunteerism,” a trio of house Democrats this week introduced a resolution celebrating the 75th anniversary of the enactment of the Federal Credit Union Act. The resolution, which was co-signed by Reps. John Larson (D-Ct.), Paul Kanjorski (D-Pa.) and Jim Himes (D-Ct.), cited the “instrumental role” that credit unions played in helping Americans recover following the great depression as well as the valuable service that credit unions continue to provide in the face of today’s economic challenges. The resolution, which is currently in the House Committee on Financial Services, also supported credit unions for their continued commitment to the core philosophy of “people helping people.” This Friday, June 26, will mark 75 years from the date that President Franklin Roosevelt signed the Federal Credit Union Act, which enabled credit unions nationwide to organize under a federal charter.

House hearings address aspects of reform

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WASHINGTON (6/22/09)—The House Financial Services Committee and its financial institutions subcommittee have announced hearings this week addressing aspects of the Obama administration’s new regulatory restructuring plan. On Wednesday, members of House Financial Services will explore “Regulatory Restructuring: Enhancing Consumer Financial Products Regulation.” On Thursday the subcommittee on financial institutions and consumer credit will take the focus to “Improving Consumer Financial Literacy under the New Regulatory System.” Also on Thursday, the full committee will take a look at legislative options that could help preserve federal- and state-assisted affordable housing. The panel intends to specifically zero in on preventing the displacement of low-income, elderly and disabled tenants. Witnesses will be announced this week.

Reg reform on August agendas

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WASHINGTON (6/22/09)—House Financial Services Chairman Barney Frank (D-Mass.) and Senate Banking Chairman Christopher Dodd (D-Conn.) both noted their projected timing last week to address the Obama administration plan for a financial regulatory revamp. (CongressDaily June 19) Frank said his goal is to wrap up the summer by having his panel vote on a still-to-be-drafted bill by the last week of July. That would, thereby, place House consideration of the measure after the August recess. Dodd said a companion bill in the Senate would have to wait until the fall as he fills in for Health, Education, Labor and Pensions Committee Chairman Edward Kennedy (D-Mass.) on health care negotiations. House Financial Services, however, announced hearings to take up certain aspects of the regulatory reform bill this week. (See related story: House hearings address aspects of reform.)