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Housing small biz funding coming up in House

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WASHINGTON (6/8/10)—While credit unions will be focused on interchange activity this week, the Credit Union National Association will also be monitoring the House for action on the Federal Housing Agency and Small Business Lending. The House on Thursday is expected to consider H.R. 5702, the FHA Reform Act, which would allow the FHA to adjust its premium structure for new borrowers while still providing affordable mortgage insurance to the underserved individuals that the FHA is intended to serve. The legislation, as currently written, also enhances the FHA’s authority to terminate lenders' approval to originate or underwrite loans backed by FHA insurance in instances where the FHA has found evidence of fraud or noncompliance. The House may also bring up H.R. 5297, the Small Business Lending Fund Act, later this week. That legislation would create a $30 billion small business lending fund for community banks. CUNA’s own plan to strengthen funding for small businesses has also been a topic of conversation lately, with the U.S. Treasury and Rep. Barney Frank (D-Mass.) each publicly backing lifting the current 12.25% of assets cap on credit union member business lending. The Treasury’s MBL proposal, which would lift the cap to as high as 27.5%, provided the credit union in question attained certain funding and soundness thresholds, was recently sent to the Hill. Frank in recent weeks has promised that MBL legislation would come up for discussion in his Financial Services Committee soon. Sen. Mark Udall (D-Colo.) and Rep. Paul Kanjorski (D-Penn.) have each introduced their own member business lending proposals, and Kanjorski’s proposal currently has 122 House cosponsors. CUNA has publicly backed lifting the MBL cap, saying that doing so would inject over $10 billion in funds into the economy and create up to 100000 new jobs at no cost to taxpayers.

Hundreds of CU reps to mobilize on interchange in Hill visits

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WASHINGTON (6/8/10)--Starting today, nearly 800 credit union representatives from across the nation will again spread the credit union message and, more specifically, will engage their respective elected representatives to drum up opposition to portions of the Senates financial regulatory reform package that address interchange fees. The Credit Union National Association’s latest Hike the Hill, which will take place today and tomorrow, is expected to “reach every member of Congress,” CUNA’s Senior Vice President of Legislative Affairs John Magill said. However, a delegation from Louisiana has opted to focus on in-district work on interchange to allow their Washington-based legislators to continue to monitor the ongoing oil spill in the Gulf of Mexico. CUNA is also taking the interchange argument to the broadcast media this week by airing an advertisement in several key states. An amendment offered by Sen. Richard Durbin (D-Ill.) and included in the Senate regulatory reform bill would allow government intervention in setting interchange fees. However, the House version of financial regulatory reform legislation does not contain similar language. While retailers have argued that reducing interchange fee expenses would allow them to pass on savings to consumers, CUNA has countered by stating that these new rules could allow merchants to direct consumers to use preferred forms of payment. CUNA has also said that this rule change forces the Fed into the role of a price-fixing body, when interchange fees should be driven by market forces. The interchange legislation could potentially be addressed during the House/Senate conference committee, which could potentially begin this week. CUNA expects the conference committee to hold session on June 15-17 and June 22-24. The House is expected to name its conferees on Wednesday. The Senate recently named Chris Dodd (D-Conn.), Tim Johnson (D-S.D.), Jack Reed (D-R.I.), Chuck Schumer (D-N.Y.), Richard Shelby (R-Ala.), Bob Corker (R-Tenn.), Mike Crapo (R-Idaho), Judd Gregg (R-N.H.), Blanche Lincoln (D-Ark.), Patrick Leahy (D-Vt.), Tom Harkin (D-Iowa) and Saxby Chambliss (R-Ga.) to serve as its conferees.

Regulators offer guidance on NCUA- and FDIC-assisted acquisitions

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WASHINGTON (6/8/10)--In a joint statement released on Monday, federal financial regulators said that the approval of financial acquisitions should be “conditioned on the acquiring institution's commitment to maintain specified levels of capital to address the risk of significant retrospective adjustments to the bargain purchase gain or other risks.” The release, entitled “Interagency Supervisory Guidance on Bargain Purchases and [Federal Deposit Insurance Corporation (FDIC)]- and [National Credit Union Administration (NCUA)]-Assisted Acquisitions,” aims to “address supervisory considerations related to business combinations that result in bargain purchase gains and the impact such gains have on the acquisition approval process.” Specifically, the release recommends that so-called “acquiring institutions” should “apply the acquisition method of accounting to all business combinations, including bargain purchase transactions and assisted acquisitions.” “Any estimated bargain purchase gain will be affected by retrospective adjustments made during the accounting measurement period to the acquisition-date fair values of assets acquired and liabilities assumed in the combination,” the release adds. According to the release, federal regulatory agencies may “impose capital preservation and other conditions in their approvals of acquisitions of institutions” due to concerns regarding the “quality and composition of capital” when bargain purchase gains are “expected to result from a business combination” and any associated fair value estimates “have not yet been validated.” For the full release, use the resource link.

Inside Washington (06/07/2010)

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* The National Credit Union Administration (NCUA) on Monday reported that Millbury, Ohio-based Woodco FCU ”sustained major damage” due to a weekend tornado touch down. While the $8.9 million in assets, high-school-based credit union was damaged by the storm, the credit union was empty at the time. The NCUA’s Region III staff will assist the credit union, which will temporarily relocate within the week. The NCUA also encouraged the FCU to “make loans with special terms and reduced documentation to affected members,” to “reschedule routine examinations if necessary,” and to use the available NCUA resources to back lines of credit and loans… * The Canadian Government has awarded a bank charter to U.S.-based big box retailer Wal-Mart. The retailer in 2007 withdrew its application for an Industrial Loan Company (ILC) charter, which was filed with the U.S. Federal Deposit Insurance Corporation. The ILC charter, if granted, would have permitted Wal-Mart to open individual branches in its stores. However, Wal-Mart representatives at the time denied that they intended to start their own financial institution, saying that the ILC application was aimed at reducing their overall transaction costs. Wal-Mart currently operates over 8000 stores in 15 countries, and allows financial institutions to provide a number of services through in-store branches…

NCUA key topics webinar set for June 28

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ALEXANDRIA, Va. (6/8/10)--The National Credit Union Administration (NCUA) and Chairman Debbie Matz will discuss a number of credit union-specific issues during an upcoming June 28 web-based virtual town hall. The 90-minute town hall will begin at 3 PM E.T. and will allow participants to communicate directly with NCUA officials, including Matz. An NCUA representative told News Now that the meeting is part of Chairman Matz's "ongoing interest in providing the industry with periodic updates on a variety of topics, including corporate credit unions, examination issues and field of membership rulemaking." Matz has said that communication with credit unions would be an important part of her tenure as NCUA chair. Previous open meetings in both this year and 2009 focused on the aforementioned issues as well as alternative capital and the continuing economic challenges facing natural-person credit unions. To register for the NCUA event, use the resource link.

Def Jam exec advocate for unbanked opposes interchange language

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WASHINGTON (6/8/10)—Adding to the growing concert of opposition against government limits on interchange fees, Russell Simmons, co-founder of the hip-hop label Def Jam, voiced his concerns about the issue on behalf of 80 million “underbanked” Americans “who are left out of the banking system.” He cited the recent joint letter from Credit Union National Association (CUNA) and the Independent Community Bankers of American (ICBA) on the inadequacy of a carve out for smaller institutions as an influence on his decision to speak out. Simmons, based in New York, publicized, via The Huffington Post Monday, a letter he recently sent to Sen. Richard Durbin (D-Ill). Simmons’ letter said he is “gravely concerned about the potential unintended consequences” of an amendment, designed by Durbin, that would require the Federal Reserve Board to intervene in setting interchange fees. Describing himself as a long-time advocate for the poor and a business owner of a debit-card service for the under-banked, Simmons said his mission has been to provide needed access to debit cards with “transparent low pricing and services that help our users budget, build credit, buy affordable healthcare and participate in the U.S. economy,” something he said many can take for granted. The Def Jam founder said he has no stake or interest in the “politics of regulating large banks, or the various lobbying efforts on their behalf, or on behalf of large retailers who want to see interchange fees reduced.” But, he added, his is extremely concerned about the impact the interchange provision could have on credit unions, community banks, and “specialist providers to the under-banked,” and their ability to provide card services at affordable rates. “That in turn would hurt the poor and the underserved by either raising fees or limiting the availability of this vital service. This would have a grotesquely unfair impact on the most vulnerable and the most heavily hit consumers, including minorities,” Simmons said, and vowed, “I would be compelled to fight this publicly and actively.” Simmons noted the recent CUNA-ICBA letter and said he was alarmed by the groups’ arguments that a carve-out provision in the amendment for financial institutions with less than $10 billion in assets would not work for a number of reasons. One reason cited is that card issuers may not have the ability, or willingness, to make a distinction between institutions in processing payments and sharing interchange revenue. Simmons letter comes as the U.S. House and Senate prepare to negotiate a final financial regulatory reform bill, which many reports say could be ready for President Obama’s signature by July 4. The Senate bill contains language that would allow the government to limit interchange fees, while the House version is silent on the topic. The language was added as a late amendment and was never vetted through the congressional hearing process. CUNA has launched a massive grassroots campaign to try to convince lawmakers not to include the language in a final bill. More than 209,000 communications have been sent to federal lawmakers by credit union advocates, and hundreds of credit union representatives are expected to make personal visits to lawmakers on June 9-10.