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Washington Archive

Washington

CU reg relief bill sails through full House

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WASHINGTON (6/25/08)--The full House of Representatives last night passed a comprehensive financial regulatory relief bill which eases field of membership and member business lending (MBL) restrictions in underserved areas for credit unions. The bill, known as the Credit Union, Bank and Thrift Regulatory Relief Act (CUBTRRA, H.R. 6312), passed by a voice vote after it was placed on the House Suspension Calendar. Such action is reserved only for non-controversial legislation. CUNA President/CEO Dan Mica thanked U.S. Reps. Paul Kanjorski (D-Pa.), Ed Royce (R-Calif.), Financial Services Committee Chairman Barney Frank (D-Mass.) and Ranking Member Spencer Bachus (R-Ala.) for “working with us to attain regulatory relief for the nation’s credit unions.” “This measure holds a number of substantive elements that will serve our members well,” said Mica this evening. “Now it is on to the Senate to ask for its consideration of the package.” As its name suggests, the bill contains measures that would benefit credit unions, as well as banks and thrifts. Among provisions for credit unions, the bill proposes to:
* Allow all federal credit unions to apply to serve underserved areas, reversing the effect of a banker lawsuit that has prevented community and single-sponsor credit unions from reaching out to underserved areas; * Provide increased MBL ability by exempting MBLs made in underserved areas from a statutory 12.25%-of-assets cap; CUNA estimates more than 40% of the nation's census tracts are located in underserved areas; * Grandfather previously approved underserved fields of membership for credit unions; * Allow short-term payday loan alternatives within a credit union's field of membership; * Raise the current investment limit in credit union service organizations (CUSOs) and to 3% of unimpaired capital and surplus, up from 1%; * Enhance the 2006 regulatory relief provisions that allowed the National Credit Union Administration (NCUA) to increase the 12-year maturity limit on non-real estate secured loans to 15 years, Section 104 would further permit the agency to issue regulations providing for loan terms exceeding 15 years for specific types of loans; * Give the NCUA greater flexibility to respond to market conditions; and * Clarify existing law that permits credit unions to participate in loan programs secured by the insurance, guarantees, or commitments of State or Federal governments, such as the Small Business Administration's 504 program.
H.R. 6312 was introduced just last week by Reps. Kanjorski, Royce, and Dennis Moore (D-Kan.) and was backed by Chairman Frank. Just as the credit union provision of the newly introduced legislation were based on the Credit Union Regulatory Relief Act (CURRA), the bank and thrift provisions also were based on a currently pending bill, the Bank and Thrift Regulatory Relief Act of 2008 (H.R. 5841), introduced in April. Bank and Thrift Provisions For commercial banks, the House bill proposes to allow the payment of interest on business checking accounts. For thrifts, CUBTRRA would remove the current caps on auto and business lending. Left behind from that bill, however, were sections that would have allowed banks and thrifts to reorganize more easily as LLC or Subchapter S entities. Some provisions benefit credit unions, as well as banks and thrifts. One example is the proposed change in Gramm-Leach-Bliley privacy notification requirements, according to CUNA Legislative Affairs Vice President Ryan Donovan. Under this bill, financial institutions would not be required to send annual privacy notifications under certain circumstances if it has not changed its policies and practices with respect to disclosing nonpublic personal information since its last disclosure. Next Steps The bill faces a tougher road in the Senate, according to Donovan. "The Senate just is not as far along in the process as was the House, but we will continue to make our case there," the CUNA lobbyist said. Both the House and Senate adjourn at the end of this week for a July 4 District Work Period and will return to session the week of July 7. Despite the positive development, Mica emphasized CUNA was not finished in seeking more flexibility for credit unions in serving their members. “We will continue to push for risk-based capital through reform of prompt corrective action (PCA) requirements,” he said. “And we strongly believe credit unions should have the power to offer more business loans to their members.” The CUNA leader said the association would pursue----both in this Congress and the next--provisions contained in the Credit Union Regulatory Improvements Act (CURIA, H.R. 1537), which propose a higher cap on member business lending, as well as prompt corrective action reform. NCUA Reaction After the vote, NCUA Chairman JoAnn Johnson encouraged the Senate to build upon the solid start made by the House and consider “reasonable and important enhancements such as reform of the system of Prompt Corrective Action coupled with the institution of a Risk-Based Capital regime.” She also urged the Senate to “increase consumer protections for credit union members during their consideration of a proposal to convert to another type of financial institution, and the modernization of credit union merger procedures covered by the Clayton Act.” Use the resource links below for the official text and bill summaries.

Inside Washington (06/24/2008)

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* WASHINGTON (6/25/08)--An application by Cerberus Capital Management LP to permanently retain an industrial loan company (ILC) may spark old tensions about ILC ownership (American Banker June 24). Two years ago, the Federal Deposit Insurance Corp. (FDIC) granted the company permission to acquire the ILC as an exception to a moratorium the agency placed on ILC applications. The FDIC’s approval of the application expires in November, and a vote that was expected to take place last week has been tabled. A spokesman for the agency said Cerberus’ application is being processed ... * WASHINGTON (6/25/08)--About $26.6 million has been distributed to 250 investors as part of a settlement with the Securities and Exchange Commission (SEC) and Bank of America Securities (American Banker June 24). The SEC alleged that Bank of America published false research from January 1999 to December 2001 on three companies. The research was available to traders before clients, according to the SEC’s claim. Bank of America neither denied nor admitted the SEC’s charge. The case was settled in March 2007 ...

CTR exemption proposal needs changes CUNA says

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WASHINGTON (6/25/08)—The Credit Union National Association (CUNA) supports much of a plan intended to simplify how credit unions and other depository institutions exempt eligible individuals from currency transaction reporting (CTR) requirements, but the group recommends a few adjustments. CTRs are mandated by the Bank Secrecy Act and implementing regulations and are required of credit unions, banks and thrifts each time more than $10,000 in cash comes into or moves out of the financial institution, but there are exceptions. In April, the Financial Crimes Enforcement Network (FinCEN) announced its plans to make changes to its current exceptions rules and asked for public comment. In its recent comment letter, CUNA said it supports:
* Eliminating the biennial filing of FinCEN’s Designation of Exempt Person Form 110 (Form110) for Phase II customers/members; and * Replacing the current twelve-month waiting period with a risk-based determination when designating an eligible non-listed or payroll (Phase II) customer/member for exemption.
However, the CUNA letter recommends the following changes to the proposal:
* FinCEN should review the threshold for filing a CTR and adjust it for inflation; and * FinCEN should allow financial institutions to make a good-faith, case-by-case determination of whether an otherwise eligible customer/member frequently engaged in currency transactions of more than $10,000 when designating a Phase II exemption.
Also, CUNA believes filing a notice of revocation of exempt status after filing a CTR is duplicative and should continue to be voluntary. Use the resource link below to read CUNA’s complete comment letter.

CUNA corrects press report on reg relief bill

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WASHINGTON (6/24/08)--The Credit Union National Association (CUNA) today corrected a number of misleading and inaccurate points made in a trade press web posting about the credit union-bank regulatory relief bill, to be considered today in the House of Representatives. Key among the corrections: If enacted, the bill would expand the definition of "underserved areas" for credit unions, and allow all business loans made in those areas to be exempted from the cap on such loans. “With all of the back and forth about regulatory relief legislation, and the changing acronyms, it might be easy to become confused,” said CUNA Vice President of Legislative Affairs Ryan Donovan. “But, the bottom line about this legislation is that it offers regulatory relief for credit unions in a substantive way.” Among the key points CUNA made in its corrections:
* The Credit Union, Bank, Thrift Regulatory Relief Act (CUBTRRA, HR 6213) changes the way underserved areas are determined by expanding the definition; * All of the provisions affecting banks and thrifts have been passed previously by the House; and * The provision exempting most business loans made in underserved areas from the statutory cap on member business loans is a major step forward in credit unions’ ultimate goal of giving credit unions more flexibility in making business loans to members.
In other developments, CUNA President/CEO Dan Mica late Monday urged all House members to support CUBTTRA. “H.R. 6312 represents a good first step toward providing credit unions the regulatory framework needed to serve their members in the 21st Century,” said Mica. Use the resource links for complete details and the bill's official Congressional text.