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Final reg reform vote could come this week

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WASHINGTON (6/29/10)--With the Monday morning passing of long-serving West Virginia Senator Robert Byrd (D), the exact schedule of events on Capitol Hill remains fluid. However, with Congress’s Independence Day district work period looming at the end of the week, there is a significant amount of work to be done, including a potential vote on the financial regulatory reform package. A report on that package, which was compiled by members of a House and Senate conference committee, was released over the weekend, and is being reviewed by Credit Union National Association (CUNA) staff this week. CUNA and affiliated credit unions have maintained that they will opposed the legislative package as long as the interchange language is included, and have urged legislators to vote no on the reform package. The House may debate the full, final version of the reform bill today or tomorrow, with the Senate also potentially holding its own debate on the agreed-to language this week. The Senate may also discuss H.R. 5297, the Small Business Lending Fund Act, if a cloture vote related to that bill successfully passes later today, and could hold a separate vote on legislation that would temporarily extend the National Flood Insurance Program (NFIP) this week. CUNA and other similar groups from throughout Washington wrote Senators last week to urge them to pass the NFIP plan. The National Credit Union Administration has recommended that credit unions with loans that would be subject to the NFIP, which has been suspended since June 1, continue making those loans while the program is lapsed.

Fed to alter payment system risk policy for all in 2011

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WASHINGTON (6/29/10)—The Federal Reserve on Monday announced that it will revise its Payment System Risk (PSR) policy for all depository institutions in 2011. The PSR policy revisions, which were adopted by the Fed in 2008, will “encourage financial institutions “to pledge collateral to cover daylight overdrafts by providing collateralized daylight overdrafts at a zero fee and by raising the fee for uncollateralized daylight overdrafts to 50 basis points (bp),” according to a Fed release. A daylight overdraft is a negative balance in an institution’s Federal Reserve account at any time during the Fedwire operating day. The PSR was revised to improve intraday liquidity, operational, and credit risks in the wholesale payment system. According to the Fed, financial institutions that may incur daylight overdraft fees will be required to adopt net debit caps, which are daily ceilings on their total daylight overdraft positions. Under the Fed’s changes, biweekly daylight overdraft fee waivers will also increase from $25 to $150, and the penalty fee for institutions without regular access to the discount window will increase from 136 bp to 150 bp. The exact implementation date for these policy changes will be announced 90 days in advance, the Fed added. For the Fed release, use the resource link.

Matz Merger advice final corp. rule NCUSIF assessmentall coming

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ALEXANDRIA, Va. (6/29/10)--National Credit Union Administration (NCUA) Chairman Debbie Matz on Monday previewed the agency’s upcoming regulatory actions, saying that plans to address corporate credit unions and a determination of the National Credit Union Share Insurance Fund (NCUSIF) assessment are all on the near-term agenda. Speaking during a Monday town hall webinar, Matz said that the NCUA’s final rules for corporate credit unions, which were originally scheduled to be released this month, will likely be addressed by September, Matz said. While she did not go into specifics on what those new rules would cover, she did say that the final rule would incorporate a number of suggested improvements. The corporate rules will not be released for a comment period, NCUA staff added. In the event that natural person credit unions do not elect to maintain the current corporate credit unions system, the NCUA said that it does have contingency plans that could be put in place. The past, present and future of the corporate credit union crisis will also be covered by a series of NCUA-created DVDs which will address the many questions and concerns of credit unions regarding the crisis, its resolution, and the future treatment of legacy assets held by those corporate credit unions. The second in that series of three DVDs was published online by the NCUA on Monday, and these guides will be sent in DVD form once all are completed. The NCUA would also likely release its plan for addressing legacy assets held by those corporate credit unions around late summer, not in June as the agency previously hoped. NCUA Deputy Executive Director Larry Fazio said that the legacy assets held by credit unions would be “isolated and funded” to ensure that they are not interfering with the business practices of corporate credit unions as they move forward. While the NCUA earlier this month indicated that the NCUSIF assessment for credit unions would be determined later this year, no concrete statements on the exact number of basis points that that assessment would be were discussed. However, during the call, Matz and NCUA staff said that the assessed amount would fall within prior projections of 15-40 basis points. The NCUA earlier this month assessed a 13 basis point levy on the assets of natural person credit unions. The NCUA will also release guidance for credit unions that are seeking voluntary mergers later this week, Matz added.

Inside Washington (06/28/2010)

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* WASHINGTON (6/29/10)--Credit unions lost “a true friend” when Sen. Robert Byrd (D-W.Va.) died Monday morning at the
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age of 92, West Virginia Credit Union League (WVCUL) Senior Vice President Rich Schaffer told News Now Monday. “We have lost an ally and statesman,” Schaffer said. As late as last Friday, Byrd’s staff was in contact with the state league regarding the financial reform package the senator was closely monitoring. Byrd was a record nine-term senator who assumed that office in 1959, following three terms in the House of Representatives. In this 2005 photograph, Byrd (left) is shown with WVCUL President Kenneth Watts at Credit Union House on Capitol Hill. Byrd was third in line of succession from the president, following Vice President Joe Biden and House Speaker Nancy Pelosi… * WASHINGTON (6/29/10)--The Treasury Department's inspector general (IG), who oversees such things as operations at the Office of Thrift Supervision (OTS), reported recently that the OTS ineffectively regulated regulating BankUnited before the Coral Gables, Fla. The report said the regulator failed to make the bank change its aggressive, high-risk lending strategy that largely caused the thrift’s 2009 failure. OTS also allowed BankUnited to backdate a capital infusion from its holding company, the report said. (American Banker June 25) The back-dating strategy at the agency, involving other thrifts, had earlier led to the dismissal of two senior OTS officials. public Thursday. The IG report was required because the BankUnited failure caused a "material loss" to the Deposit Insurance Fund… * WASHINGTON (6/29/10)--The Federal Deposit Insurance Corp. (FDIC), in its just-released summer 2010 issue of “Supervisory Insights,” takes a look at the agency’s increased use of “loss-sharing agreements” to deal with bank failures, and also examines how the financial crisis has highlighted the need for greater transparency and strengthened consumer protections in the financial system. There is also a feature explains how provisions of the Credit Card Accountability Responsibility and Disclosure Act and amendments to Regulation Z will affect bank product offerings and operations. The publication also provides guidance for examiners in assessing banks’ CARD Act compliance…