Archive Links

Consumer Archive
CU System Archive
Market Archive
Products Archive
Washington Archive

Washington Archive

Washington

Inside Washington (06/30/2008)

 Permanent link
* WASHINGTON (7/1/08)--Elizabeth A. Duke, a Virginia banker and former American Bankers Association chairman, has been confirmed as the next Federal Reserve Board Governor (American Banker June 30). She will serve a term through 2012. Larry Klane, an executive at Capital One Financial Corp., and Gov. Randall Kroszner also were nominated, but the status of their nominations is unclear. Kroszner’s term expired in January. Gov. Frederic Mishkin will leave the board in August ... * WASHINGTON (7/1/08)--The Federal Reserve Board and the Securities and Exchange Commission (SEC) are being encouraged to wait for Congress’ input on investment bank oversight. Senate Banking Committee Chairman Christopher Dodd (D-Conn.) and Sen. Richard Shelby (R-Ala.) sent a letter to the agencies and the Treasury Department Friday, saying that Congress should determine changes to the financial regulatory system ...

CUNA thanks lawmakers for pro-CU comments

 Permanent link
WASHINGTON (7/1/08)—The Credit Union National Association (CUNA) sent letters to two lawmakers this week thanking them for voicing their support of credit unions in recent statements made on the House floor. In one letter, CUNA President/CEO Dan Mica thanked Rep. Maxine Waters (D-Calif.) for publicly noting the role of credit unions in helping those victimized by the subprime housing crisis. “Your sentiments, echoed by (House Financial Services Committee) Chairman (Barney) Frank (D-Mass.), further support the fact that regulated financial institutions like credit unions did not cause the current crisis in the nation’s housing sector,” Mica wrote. He also thanked Waters, who is a member of the House financial services panel, for her support for H.R. 6312, the Credit Union, Bank, and Thrift Regulatory Relief Act of 2008. “The credit union movement was very pleased with the affirmative outcome of the vote and the positive impact this legislation will have on credit unions across the country,” Mica wrote. In a second letter, CUNA commended Rep. Jerry Lewis (R-Calif.) for acknowledging the public service of Maurice Calderon, senior vice president for governmental affairs and community development with Arrowhead CU, San Bernardino, Calif. “Mr. Calderon is truly an example of public service and dedication to those in need,” Mica wrote and noted, “In this position, he put into practice the ideals of the credit union movement.” For instance, the CUNA letter pointed out, Calderon extended Arrowhead’s presence and outreach into “unbanked” areas of southern California, bringing affordable and convenient financial services to many people outside out the financial services mainstream. Use the resource link below for more information on H.R. 6312.

Congress Few days to clear top issues

 Permanent link
WASHINGTON (7/1/08)—The U.S. Congress is in recess this week for a fourth of July District Work Session, and when lawmakers come back to Capitol Hill there will be fewer than 30 working days left for the year. What that means for financial services issues, says Ryan Donovan, is a tight schedule for getting things done, such things as a Senate vote on the Credit Union, Bank and Thrift Regulatory Relief Act (CUBTRRA), which was passed by the House as H.R. 6312 on June 24. Donovan, who is vice president of legislative affairs for the Credit Union National Association (CUNA), said the bill has been sent to the Senate for consideration and has been referred to the Senate Banking Committee. CUNA has already made initial contacts with the Senate Banking Committee staff and certain members of the committee. Those contacts follow several meetings with staff and senators over the last six months in anticipation of House passage of a regulatory relief measure. “However,” Donovan notes, “it is obvious the legislative calendar is not our friend. But we will be working very hard to get this bill through the Senate and to the President before Congress leaves for the year.” On other topics of key interest to credit unions, Donovan notes:
* While the House and Senate didn’t meet their goal of delivering a housing relief bill to the President’s desk by July 4, there is still hope that a bill could be enacted by August; * A bill introduced by House Financial Services Committee Chairman Barney Frank (D-Mass.), which would have effectively caused a moratorium on implementation of the Unlawful Internet Gambling Enforcement Act, failed to clear that committee with a 32-32 vote. Several members of the committee were unable to be present for the vote and it is possible that the bill will be reconsidered in the future; * A bill to regulate interchange fees, strongly opposed by CUNA and the Electronic Payments Coalition, may again be taken up in July—most likely by the House Judiciary Committee whose chairman is primary sponsor of one of two pending interchange bills in the House; and * On credit card reform and overdraft protection plans; both issues remain on the agenda of the House Financial Services Committee, but have been knocked to the back burner by various bills to address the mortgage crisis. However, it is possible the committee could take up both credit cards and overdraft protection plans this summer as either additional hearings or a vote.
For more information on legislative issues, use the resource link below.

Changes to low-income definition urged by CUNA

 Permanent link
WASHINGTON (7/1/08)—Changes to a National Credit Union Administration (NCUA) proposal to broaden its low-income designation are needed to better reach those members who benefit most from access to financial services from through low-income designated credit unions, according to the Credit Union National Association (CUNA). In a recent comment letter, CUNA Deputy General Counsel Mary Dunn rtote that CUNA “does not generally object to the change in the definition from one that is based on ‘median household income’ to one that is based on ’median family income,’ as proposed by the agency in April. The NCUA, at the time, pointed out that presently agency regulations describe a low-income family as members whose annual household income falls at or below 80% of the national Median Family Income. That rule does not provide a differential for certain geographic areas with higher costs of living. The proposed change is intended to acknowledge geographical differences. However, CUNA urges the agency to consider some important modifications before adopting a final rule. They include:
* ‘Grandfather’ for existing low-income credit unions should be permanent, not just for five years as in the proposal. NCUA should also include a waiver process that would allow other credit unions on an individual basis to qualify for or retain low-income status to serve areas or individuals who might not technically meet the definition of low-income; * A final rule should be clarified to include state-chartered federally insured credit unions; * The definition should include those whose incomes are at or below 80% of the area or nation’s income standards, even if they do not live in a low-income area; and * NCUA should facilitate the ability of credit unions to determine low-income areas by making appropriate resources available for them on its website.
The low-income designation is considered especially important to credit unions because it determines whether they qualify for subsidies from the Community Development Revolving Loan Fund. For more on the NCUA proposal and to read CUNA’s complete comment letter, use the resource links below.

Inside Washington (06/27/2008)

 Permanent link
* WASHINGTON (6/30/08)--Regulators unveiled a standardized version of Basel II for financial institutions that would implement certain approaches for calculating risk-based capital requirements. The framework addresses expanding the number of risk-weight categories to which credit exposures may be assigned; using loan-to-value ratios to risk weight most residential mortgages to enhance the risk sensitivity of the capital requirement; providing a capital charge for operational risk using the Basic Indicator Approach under the international Basel II capital accord; emphasizing the importance of a bank’s assessment of its overall risk profile and capital adequacy; and providing for comprehensive disclosure requirements to complement the minimum capital requirements and supervisory process through market discipline. The rule also would expand risk categories for most financial institutions to 16 from five. Community bankers argue the rule would give larger bankers a competitive advantage over smaller ones because operational risk would be tied to capital levels (American Banker June 27). The Federal Reserve Board is seeking public comment on the rule for 90 days. The National Credit Union Administration has based its credit union prompt corrective action reform proposal on aspects of Basel reform ... * WASHINGTON (6/30/08)--Sen. Charles Schumer (D-N.Y.) is requesting information on IndyMac Bancorp from the Federal Home Loan Bank of San Francisco, the Office of Thrift Supervision and the Federal Housing Finance Board. Schumer is concerned about the company’s loan holdings (American Banker June 27). The senator wants to know if the Federal Deposit Insurance Corp. has verified that the company’s loans meet regulatory guidelines, and whether the FDIC has asked IndyMac to scale down its reliance on brokered deposits. Regulators also may not be ready to prevent a potential IndyMac collapse, he said. Indymac was downgraded by Moody’s Investors Service Tuesday ... * WASHINGTON (6/30/08)--Though she wants a provision for higher conforming loan limits for Fannie Mae and Freddie Mac included in a housing bill, Speaker of the House Nancy Pelosi (D-Calif.) said she will support the measure if House Financial Services Committee Chairman Barney Frank (D-Mass.) gives his approval. The Senate is not expected to accept the higher loan limits in the housing package, though Frank said the higher limits could help the economy. The legislation can and must be approved before the August recess, Frank said. Originally, the bill was expected to pass before July 4. Frank and Senate Banking Committee Chairman Christopher Dodd (D-Conn.) are expected to discuss the bill next week ... * WASHINGTON (6/30/08)--The Community Development Financial Institutions (CDFI) Fund is extending deadlines for the Notice of Award for the 2008 Native American CDFI Assistance program to July 7, and the Community Investment Impact System reporting deadline for the period ending Dec. 31, 2007, to July 11. The CDFI’s public website experienced technical difficulties June 20 and was taken down. It has been restored ...

Compliance Is the ubiquitous rate board required

 Permanent link
WASHINGTON (6/27/08)—Many credit unions—and financial institutions in general—feature lobby display boards for selected loan or account rates. But is there a rule that requires that kind of public display? The Credit Union National Association’s June Compliance Challenge asks readers to consider: Is the rate board required by either Regulation Z or Truth in Savings? The answer is no. Neither Regulation Z nor Truth in Savings requires a federal credit union to maintain a lobby rate board and post loan and share account rates. In fact, neither regulation requires any specific form of advertisement nor do they require a credit union to advertise at all, CUNA’s compliance experts note. According to the Challenge, once a credit union decides to advertise its products, it must comply with the requirements of Regulation Z if it is advertising a loan product or Truth in Savings if it is advertising a share account product. Credit unions should be aware that both Regulation Z and Truth in Savings define advertisements very broadly. Examples include:
* Messages in a newspaper, magazine, leaflet, promotional flyer, or catalog. Announcements on radio, television, or public address system; * On-line messages, such as on the Internet; * Direct mail literature or other printed material on any exterior or interior sign; * Point-of-sale displays; * Telephone solicitations; * Price tags that contain credit information; * Letters sent to customers as part of an organized solicitation of business; * Messages on checking account statements offering auto loans at a stated annual percentage rate; * Communications promoting a new open-end plan or closed-end transaction.
Use the resource link below to read more on this and other compliance guidance.

CDRLF CDFI funding approved by committee

 Permanent link
WASHINGTON (6/30/08)—The House Appropriations Committee approved a slight boost last week for a program that provides money for low-income credit unions and another that provides grants, loans and technical assistance to community development credit unions, banks, and other local financial entities committed to helping disadvantaged communities. By approving a FY2009 funding bill, the committee gave the nod to a small increase for the U.S. Treasury Department's Community Development Financial Institutions (CDFI) Fund for FY2009. The committee voted in favor of a $10 million increase to $104 million for FY 2009. The CDFI Fund provides grants, loans and technical assistance to community development credit unions, banks, housing investment funds and other local financial entities committed to helping disadvantaged communities. It is also expected that the committee backed $1 million to fund the National Credit Union Administration's Community Development Revolving Loan Fund (CDRLF), as approved earlier this month by its subcommittee, but that detail has not been released. That would be a slight increase, up from $975,000 this year. The CDRLF provides grants and loans to low-income credit unions to help underserved communities. It also gave the nod to a small increase for the U.S. Treasury Department's Community Development Financial Institutions (CDFI) Fund for FY2009. The committee voted in favor of a $10 million increase to $104 million for FY 2009. The CDFI Fund provides grants, loans and technical assistance to community development credit unions, banks, housing investment funds and other local financial entities committed to helping disadvantaged communities. Also falling under the committee’s comprehensive Treasury Department funding measure was $880 million approved for the Small Business Administration, including $100 million for regional development centers, $100 million for loan guarantees, and $22.5 million for direct loans and technical assistance. The $880 million is $311 million above the 2008 level and $222 million above the President’s request. The funding measure still must be approved by the full House and Senate. Both houses of Congress adjourned last week for a July 4 District Work Session. Congress is scheduled to resume session the week of July 7.

Fryzel notes priorities for NCUA board

 Permanent link
Click to view larger image NCUA Board nominee Michael Fryzel before his June 3 Senate Banking Committee hearing on Capitol Hill. (Photo provided by CUNA)
WASHINGTON (6/30/08)--The U.S. Senate confirmed Michael Fryzel Friday to replace JoAnn Johnson on the National Credit Union Administration (NCUA) board. President George W. Bush said he would name Fryzel chairman of the three-seat board. In a statement released by the NCUA shortly after the Senate’s action, Fryzel said, “As with the President’s decision to nominate me to the board of the National Credit Union Administration and confer the high honor of Chairman, I am deeply honored by my U.S. Senate’s confirmation. “In preparing to assume office, I want to reiterate the priorities stated during my recent Senate Banking hearing: vigilant and thorough supervision, emphasis on safety and soundness, and dedication to protecting the consumer. The credit union industry, now entering its second century, has proven itself valuable to America’s consumers and as such has a right to expect fair, consistent, common-sense regulation. It is my commitment to conduct my chairmanship in that manner.” Credit Union National Association (CUNA) President/CEO Dan Mica congratulated Fryzel after the Senate vote. "With his background in credit union law and regulation, he has a number of tools to draw upon during his tenure with the agency," said Mica. "We look forward to working with him to keep credit unions safe, strong and essential to their members." Fryzel was with the Illinois Department of Financial Institutions from 1977 to 1989 and headed the agency from 1982 to 1989. Upon leaving that position, Fryzel founded his private law practice, the Law Offices of Michael Fryzel, which specializes in financial regulatory and real estate law. At his nomination hearing before the committee early this month, Fryzel noted consumers not only place their money in credit unions, they also place their trust. Exiting chairman Johnson, who agreed to stay in the head position after her term ended last August, congratulated Fryzel on his confirmation. She said she ready stands to assist the new board member during his transition and eagerly anticipates her return to “my family, and my roots, in Iowa.”

NEW Senate confirms Fryzel for NCUA board

 Permanent link
Click to view larger image NCUA Board nominee Michael Fryzel before his June 3 Senate Banking Committee hearing on Capitol Hill. (Photo provided by CUNA)
WASHINGTON (6/27/08, UPDATED 1:45 p.m. ET)--The U.S. Senate today confirmed Michael Fryzel to replace JoAnn Johnson on the NCUA board. President George W. Bush said he would name Fryzel chairman of the three-seat board. CUNA President/CEO Dan Mica congratulated Fryzel after the Senate vote. “With his background in credit union law and regulation, he has a number of tools to draw upon during his tenure with the agency,” said Mica. “We look forward to working with him to keep credit unions safe, strong and essential to their members.” Fryzel was with the Illinois Department of Financial Institutions from 1977 to 1989 and headed the agency from 1982 to 1989. Upon leaving that position, Fryzel founded his private law practice, the Law Offices of Michael Fryzel, which specializes in financial regulatory and real estate law. At his nomination hearing before the committee early this month, Fryzel said his priority as a federal regulator would be oversight of the safety and soundness of credit unions. He said consumers not only place their money in credit unions, they also place their trust.

Inside Washington (06/26/2008)

 Permanent link
* WASHINGTON (6/27/08)--Time is running short as Senate Banking Committee Chairman Christopher Dodd (D-Conn.) and House Financial Services Committee Chairman Barney Frank (D-Mass.) struggle to pass housing legislation (American Banker June 26). Dodd said he has compromised with Senate Republicans as much as he can and met with Frank Tuesday to earn his support on the bill. Last week, Frank said he could not support the Senate package because measures to reform regulation of Fannie Mae and Freddie Mac don’t provide enough time to implement a new supervisor. Dodd also is being pressured by a deal he made with Sen. Richard Shelby (R-Ala.). Shelby agreed to raise the enterprises’ conforming loan limits. The senators originally hoped to pass the legislation by July 4 ... * WASHINGTON (6/27/08)--Federal Deposit Insurance Corp. (FDIC) Chairman Sheila Bair and Sir Callum McCarthy, chairman of the United Kingdom Financial Services Authority (FSA), yesterday signed a memorandum of understanding (MOU) that will provide formal information-sharing and contingency planning arrangements in connection with cross-border banking activities in the U.S. and the United Kingdom. The MOU is designed to enhance the ongoing working relationship between the two authorities, the FDIC said in a release. “The MOU will provide tremendous assistance to both countries in promoting opportunities to learn from each other's experience and expertise--and could serve as a template for future agreements with other countries,” Bair said ...

August deadline for MBL comments

 Permanent link
WASHINGTON (6/27/08)—Credit unions have until August 25 to respond to a recent National Credit Union Administration (NCUA) request for comments on proposed changes to Part 723 of its member business lending (MBL) rule. At its June 19 meeting, the NCUA acknowledged it has received a number of communications voicing concerns about the current rule. The Credit Union National Association (CUNA), for instance, has repeatedly sought revisions in areas that are not dictated by statutory requirements, such as loan-to-value ratios and waiver provisions. The NCUA is seeking comment on whether the following sections of its rule should be revised and clarified:
* Loan-to-value ratio requirements; * Collateral and security requirements; * Credit union service organization involvement in the MBL process; * MBL loan participation; and * Waivers.
The NCUA is also seeking comments on any other aspect of the rule. "While we are reviewing the proposal, the NCUA’s action 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 about the agency’s advanced notice of proposed rulemaking. CUNA is developing a comment letter with the CUNA Federal Credit Union Subcommittee and CUNA Lending Council. A CUNA Comment Call on the notice will be available shortly on CUNA's Regulatory Advocacy website. Use the resource link below for more information the NCUA request for comment.

NCUA to mark FCU Acts 75th year

 Permanent link
ALEXANDRIA, Va. (6/27/08)—The 75th anniversary of when President Franklin D. Roosevelt took pen in hand and signed the Federal Credit Union Act will be marked by a two-day symposium next year, the National Credit Union Administration (NCUA) announced Thursday. NCUA board member Gigi Hyland said the symposium will be one in a series of commemorative efforts the agency will undertake to highlight the landmark anniversary. Roosevelt signed the FCU Act into law on June 26, 1934. The two-day symposium will be held in Washington, D.C., in early June 2009 and will focus on:
* The current financial marketplace; * The importance of federal deposit insurance; * Opportunities for credit unions to serve all segments of their field of membership; and * Opportunities for modernization of the Federal Credit Union Act.
“The purpose of this effort is to bring together a wide variety of representatives from all sectors of the credit union industry, as well as other interested parties, to hold a wide-ranging and frank discussion to determine whether there is a consensus on the vision for credit unions for the next several decades and beyond,” Hyland said in a release. She added that the symposium will be one in a series of commemorative efforts the agency will undertake.

Fryzel nomination moves forward

 Permanent link
Click to view larger image NCUA Board nominee Michael Fryzel before his June 3 Senate Banking Committee hearing on Capitol Hill. (Photo provided by CUNA)
WASHINGTON (6/26/08)--The Senate Banking Committee Wednesday approved the nomination of Michael Fryzel for a position on the National Credit Union Administration (NCUA) board. Fryzel was with the Illinois Department of Financial Institutions from 1977 to 1989 and headed the agency from 1982 to 1989. Integral to that job, according to his resume, was the licensing and regulation of more than 700 state-chartered credit unions with assets exceeding $4.3 billion. Upon leaving that position, Fryzel founded his private law practice, the Law Offices of Michael Fryzel, which specializes in financial regulatory and real estate law. At his nomination hearing before the committee early this month, Fryzel said his priority as a federal regulator would be oversight of the safety and soundness of credit unions. He said consumers not only place their money in credit unions, they also place their trust. Fryzel also said he would work to protect the rights of consumers through such things as plain language disclosures, but underscored that credit unions "naturally gravitate toward giving consumers a fair deal." He said as NCUA chairman he would maintain a "healthy and dynamic, arms-length" relationship with the industry. There are, however, two remaining steps before Fryzel can replace JoAnn Johnson as head of the NCUA. His nomination to the NCUA board must be confirmed by the full Senate, and then President George W. Bush must designate him as chairman. Johnson’s term ended last August. Both actions may be accomplished before the end of the week.

Bush to nominate new SBA head

 Permanent link
WASHINGTON (6/26/08)--President George W. Bush Wednesday announced his intention to nominate a new administrator for the Small Business Administration (SBA). The President said he will nominate Santanu “Sandy” K. Baruah, who is currently assistant secretary for economic development at the U.S. Department of Commerce, for the top SBA spot. According to a White House press release, Baruah has held several positions at the Commerce Department. Prior to his current position, he served as chief of staff of the economic development administration at Commerce. Earlier he served as deputy assistant secretary for economic development there. The SBA vacancy was created when Steven Preston was tapped to become the new leader at the U.S. Department of Housing and Urban Development. Prior to being sworn in at HUD, Preston spent two years at the helm of the SBA.

Lobbying Strike while the summer is hot says Mica

 Permanent link
WASHINGTON (6/26/08)—Even Washington lobbyists might feel that warm-weather tug to slow down and kick back, but summer may be the best time to ramp up efforts to get one’s message across to federal lawmakers, according to Dan Mica, president/CEO of the Credit Union National Association (CUNA). In his most recent monthly K Street Insider column, Mica wrote of lobbyists, “While many of us would like to sit back and enjoy the summer (congressional) recess, the fact is we need to be mobilizing our local lobbying forces.” The CUNA leader, a former congressman, said that it is particularly true for groups with a strong grassroots constituency that they should try to get members out to every local political and public event. “As a former (House) member, I can tell you personally that representatives, senators and their staffs take special note of organizations that make constant appearances at local district events,” wrote Mica. That will be particularly true the summer of this current election year, he added, at time when federal lawmakers “They know more than ever that they want your vote.” Mica said every organization needs to have a “T-shirt message,” one that can be “passed on at every town hall meeting, barbecue or ribbon-cutting.” “ A simple ‘support our credit unions’ or ‘take care of our firefighters’ is enough to make an impact, Mica suggested, adding, “ If a lobbying group stations its members at every event during a public campaigning day, the group will get noticed.” Mica appears regularly in the Capitol Hill publication The Hill as a monthly guest columnist for its “K Street Insiders” column.

Changes to UIGEA voted down in committee

 Permanent link
WASHINGTON (6/26/08)—The House Financial Services Committee Wednesday rejected a bill that would have significantly revised the implementation of the controversial Unlawful Internet Gambling Enforcement Act (UIGEA). The committee voted down the Payment System Protection Act (H.R. 5767), which would have forced the U.S. Treasury Department and the Federal Reserve Board to set aside their current proposal to implement the law on Internet gambling prohibitions. The bill was introduced by Rep. Barney Frank (D-Mass.), who is chairman of the financial services panel. H.R. 5767 would have required the implementing agencies to hammer out a definition of what constitutes unlawful Internet gambling and report it to Congress. Then, if Congress had no objections to the definition, the Treasury and Fed would go ahead and draw up the implementing rules for UIGEA. A proposed amendment, which was defeated on a 32-32 vote, would have required the Treasury Department to compile and maintain a list of unlawful Internet gambling businesses, so that credit unions and other financial institutions would actually know whose transactions should be blocked. Under the Internet gambling law, financial institutions must establish and implement policies and procedures to identify and block restricted transactions, or rely on those established by the payments system. The Credit Union National Association (CUNA) has voiced concerns that the provisions of the law could swamp credit unions and other financial institutions with compliance burdens. CUNA also opposes the agencies' draft implementation of the law, saying it lacks clarity and sufficient definition of terms. "We are obviously very disappointed that the committee was unable to report this important legislation to the full House for its consideration,” said Ryan Donovan after the Wednesday voice vote. Donovan is CUNA vice president of legislative affairs. “The proposed regulations represent an impossible compliance burden for credit unions and we will continue to work with Chairman and others on the Committee to resolve this issue.”

Inside Washington (06/25/2008)

 Permanent link
* WASHINGTON (6/26/08)--Two bills that the Senate and House are expected to pass this week would require financial institutions to fork over hundreds of millions of dollars to help the Internal Revenue Service (IRS) collect business income tax (American Banker June 25). Financial institutions also would need to report their business customers’ credit card income--which would help the government collect $9.8 billion of revenue over 10 years. The Senate bill was expected to be approved Tuesday evening. Sen. Mike Crapo (R-Idaho) said the legislation would require credit card system upgrades and could harm small businesses ... * WASHINGTON (6/26/08)--Legislation to help banks and credit unions keep relationships with money-services businesses (MSBs), and exonerate financial institutions holding these accounts from liability, passed through the House Financial Services Committee Tuesday (American Banker June 25). The measure would allow MSBs to certify themselves as having anti-money laundering controls, based on regulations developed by the Treasury Department. Starting several years ago, financial institutions dropped many account relationships with money-services businesses because of the oversight burden imposed by Bank Secrecy Act rules. Each state except Montana requires MSBs to register, but states’ varied requirements hinder consistency in reporting information ... * WASHINGTON (6/26/08)--The Securities and Exchange Commission (SEC) will encourage investment funds to use criteria to such as risk and liquidity, instead of credit rankings, to prevent losses in securities. The agency will propose that references to credit ratings be changed to “liquidity, volatility or probability of loss” (American Banker June 25). Eliminating the credit references would require companies to undergo more due diligence to determine if assets are investment grade, said Erik Sirri, head of the SEC division of trading and markets. Sirri recently spoke at an American Enterprise Institute conference in Washington ...

CU reg relief bill sails through full House

 Permanent link
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)

 Permanent link
* 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

 Permanent link
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

 Permanent link
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.

Committee to vote on Fryzel Wednesday

 Permanent link
WASHINGTON (6/23/08, UPDATED 10:30 a.m. ET)—The Senate Banking Committee is scheduled to vote Wednesday on the nomination of Michael Fryzel for a position on the National Credit Union Administration (NCUA) board. If approved by the committee—and approval is expected—Fryzel would then have to be confirmed by the full Senate. That action is less sure because of an apparent standoff between the Senate and the White House on the confirmation process as a whole. With time running out for his administration, President George W. Bush has been pushing the Senate since the beginning of the year to confirm close to 200 judicial and agency nominees, action that has in some cases been pending for many months. Withholding votes this year would allow the winner of the 2008 presidential election in November to choose new candidates. However, Senate Democrats have blamed Bush for the confirmation delay, charging that the President has refused to compromise on choices they consider extreme. However, the committee vote puts Fryzel one step closer to the NCUA board. And since his nomination is not considered controversial, it could push through the logjam of disputed names and be approved soon. If approved by the Senate, the President would then appoint Fryzel as chairman of the NCUA to replace JoAnn Johnson, whose term ended last August.

House vote expected today on reg relief measure

 Permanent link
WASHINGTON (6/24/08)—Credit Union National Association (CUNA) Vice President of Legislative Affairs Ryan Donovan said he expects today’s House vote on an important credit union regulatory relief bill to proceed without a hitch. Donovan noted Monday that the bill, known as the Credit Union, Bank and Thrift Regulatory Relief Act (CUBTRRA, H.R. 6312), was placed on the House Suspension Calendar for a vote, an action reserved only for noncontroversial legislation. As its name suggestions, the bill contains measures that would benefit credit unions unions, as well as banks and thrifts. CUNA noted the bill offers significant relief for credit unions. 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 CUs from reaching out to underserved areas; * Provide increased member business lending (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; * 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. The section provides that the loan maturities, terms, and conditions on these loans may be specified in applicable regulations; and * Encourage small business development in underserved urban and rural communities by excluding from the statutory cap any member business loans made to members in underserved communities. The bill's language clarifies that business loans made to businesses operating on a nationwide basis would not be exempt from the cap, but business loans made to locally owned franchises of businesses operating on a nationwide bases would be exempt if in an underserved area.
H.R. 6312 was introduced just last week by Reps. Paul Kanjorski (D-Penn.), Ed Royce (R-Calif.), and Dennis Moore (D-Kan.) and was backed by Rep. Barney Frank (D-Mass.), who is chairman of the House Financial Service Committee. 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. 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. Left behind from that bill, however, were sections that would have allowed banks and thrifts to reorganize more easily as LLC or Subchapter S organizations (Section 101, 102 and 206 of H.R. 5841). “But for credit unions, I think the important part of the bill is not what the banks got or didn't get, the important thing is to look at the relief that the bill provides credit unions,” Donovan advised. “This is a good bill that includes the underserved areas FOM provision and member business lending relief." He also noted that some provisions benefit credit unions, as well as banks and thrifts. One example is the proposed change in Gramm-Leach-Bliley privacy notification requirements. 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. If approved by the House, as expected, 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 vp 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. Donovan said CUNA will work to garner support in the Senate, and also will continue to work with House lawmakers on additional relief measures. CUNA continues to pursue 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.

Senate committee to decide Fryzel nomination

 Permanent link
WASHINGTON (6/24/08)--The Senate Banking Committee is scheduled to vote Wednesday on the nomination of Michael Fryzel for a position on the National Credit Union Administration (NCUA) board. If approved by the committee—and approval is expected—Fryzel would then have to be confirmed by the full Senate. That action is less sure because of an apparent standoff between the Senate and the White House on the confirmation process as a whole. With time running out for his administration, President George W. Bush has been pushing the Senate since the beginning of the year to confirm close to 200 judicial and agency nominees, action that has in some cases been pending for many months. Withholding votes this year would allow the winner of the 2008 presidential election in November to choose new candidates. However, Senate Democrats have blamed Bush for the confirmation delay, charging that the President has refused to compromise on choices they consider extreme. However, the committee vote puts Fryzel one step closer to the NCUA board. And since his nomination is not considered controversial, it could push through the logjam of disputed names and be approved soon. If okayed by the Senate, the President would then appoint Fryzel as chairman of the NCUA to replace JoAnn Johnson, whose term ended last August.

House committee considers UIGEA tweaks

 Permanent link
WASHINGTON (6/24/08)—The House Financial Services Committee is scheduled to mark up several bills Wednesday, including one that addresses problems with the implementation of the Unlawful Internet Gambling Enforcement Act (UIGEA). That bill, the Payment System Protection Act (H.R. 5767), would block the U.S. Treasury Department and the Federal Reserve Board from adopting their current plans to implement UIGEA. The Credit Union National Association (CUNA) opposes the agencies’ draft implementation proposal. Under the Internet gambling law, financial institutions must establish and implement policies and procedures to identify and block restricted transactions, or rely on those established by the payments system. CUNA testified against the plan at a House Financial Services Committee hearing in April. CUNA witness Harriet May, president/CEO of GECU, El Paso, Texas, reiterated CUNA’s concerns that aspects of the proposal would be difficult, if not impossible, to implement. May also said financial institutions could be swamped by the compliance burdens associated with UIGEA. The current plan to implement the complicated law, she said, lacks clarity and sufficient definition of terms. CUNA also testified that credit unions' have a fundamental concern that they already have an “extraordinary" burden with "heavy policing responsibilities" under the Bank Secrecy Act and Office of Foreign Assets Control (OFAC) rules. CUNA warned an increased policing role could interfere with financial institutions' fundamental business to provide financial services to their communities. It is expected that the committee’s version of H.R. 5767 will impose a two-step rulemaking process: First, the implementing agencies would hammer out a definition of what constitutes unlawful Internet gambling and report it to Congress. Then, if Congress had no objections to the definition, the Treasury and Fed would go ahead and draw up implementing rules for UIGEA. There is a possibility that an amendment will be added to H.R. 5767 at the time of the vote, one which would require that Treasury maintain a list of unlawful Internet gambling providers.

Fed seeks to add vocal reps on CAC

 Permanent link
WASHINGTON (6/24/08)--The Federal Reserve Board is seeking nominations to fill 10 upcoming vacancies on it Consumer Advisory Council (CAC), a panel that advises the Fed Board on the exercise of its responsibilities under various consumer financial services laws. The CAC is a 30-member council with a rotating membership. Each year, ten terms expire at yearend, and terms are for three years. Alan Cameron, president/CEO of the Idaho CU League, is currently the only CAC member from a credit union organization. Cameron’s term extends to 2010. In a Federal Register document soliciting nominations, the Fed said it wants nominations for candidates familiar with consumer financial services, community reinvestment, and consumer protection regulations, and nominees must be willing to “express their views.” Nominations must be submitted by Aug. 29. To read the Fed request for nominations, use the resource link below

Inside Washington (06/23/2008)

 Permanent link
* WASHINGTON (6/24/08)--Thirty Michigan credit union leaders visited with federal legislators and staff members June 11-12 for a “Hike the Hill” trip in Washington, D.C. Two messages dominated the meetings--the need for comprehensive credit union regulatory reform and opposition to proposed legislation regarding interchange fees (Michigan Monitor June 23). Credit union representatives met with all 17 members of Michigan’s congressional delegation. They also thanked Michigan’s 11 co-sponsors of the Credit Union Regulatory Improvements Act (CURIA)--including U.S. Reps. Dave Camp (R-St. Joseph), John Conyers (D-Detroit), Pete Hoekstra (R-Holland), Dale Kildee (D-Flint), Carolyn Cheeks Kilpatrick (D-Detroit), Joe Knollenberg (R-Bloomfield Hills), Sander Levin (D-Royal Oak), Thaddeus McCotter (R-Livonia), Bart Stupak (D-Menominee), Tim Wahlberg (R-Tipton) and Fred Upton (R-St. Joseph). From left: Daniel Schneider, USA CU, and U.S. Sen. Carl Levin (D-Mich.) listen to Lon Bone of T&C FCU during a visit to the senator's Capitol Hill office on June 12. (Photo provided by CUNA) ... * WASHINGTON (6/24/08)--Legislators are cracking down on mortgage lenders and brokers through a bill intended to ensure lenders only write mortgagees that borrowers can afford. Lenders also would have to send borrowers a notice three months before a foreclosure could occur (American Banker June 23). The Senate was scheduled to vote on the measure yesterday. The bill is a result of a compromise between New York Gov. David Paterson and legislators, and would make the state one of the first to reform lending standards in light of the housing crisis. Lawmakers in Minnesota recently attempted to pass a measure addressing foreclosures, but it was vetoed by Gov. Tim Pawlenty ... * WASHINGTON (6/24/08)--Rep. Dennis Kucinich (D-Ohio) is asking for records from more than 24 mortgage servicers to see how defaults and delinquencies were handled. The deadline is Thursday (American Banker June 23). Wells Fargo, JP Morgan Chase, Washington Mutual and Countrywide Financial are among those asked to provide the data. Kucinich requested that companies break the data down by refinancings, short sales, forbearance, rate freezing, repayment plans and principal reductions ...

Vote on Tuesday for CU bank thrift relief

 Permanent link
WASHINGTON (6/23/08)—The U.S. House of Representatives has scheduled a Tuesday vote on important legislation for credit unions—the Credit Union, Bank and Thrift Regulatory Relief Act (CUBTRRA)—introduced late last week. The bill (H.R. 6312) would allow all federal credit unions to apply to serve underserved areas and would exempt member business loans made in underserved areas from a statutory 12.25%-of-assets cap. It also would grandfather previously approved underserved fields of membership for credit unions. H.R. 6312 proposes to allow short-term payday loan alternatives within a credit union's field of membership. And it addresses the current investment limit in credit union service organizations (CUSOs) and proposes to raise it to 3% of unimpaired capital and surplus, up from 1%. The Credit Union National Association (CUNA) supports the bill and has commended its authors for “their solid steps toward regulatory relief for credit unions, bank and thrifts.” The legislation was introduced late Thursday by Reps. Paul Kanjorski (D-Penn.), Ed Royce (R-Calif.), and Dennis Moore (D-Kan.). When the bill was unveiled, CUNA Senior Vice President of Legislative Affairs John Magill said, “These members of the House Financial Services Committee have shown with the introduction of this measure their commitment to credit unions to obtain regulatory relief– particularly in the midst of a tough presidential election year. “ “Along with Chairman Barney Frank (D-Mass.), these three deserve the thanks and appreciation of credit unions for taking action to give us more flexibility to serve our members," Magill said. CUBTRRA, as its full name indicates, also has relief provisions for banks and thrifts. For instance, it proposes to remove the current thrift caps on auto and business lending. For commercial banks it would, most notably, authorize the payment of interest on reserves by a federal reserve bank at least quarterly on balances maintained there on behalf of a depository institution. It proposes to allow banks to pay interest on business checking accounts. Other provisions for credit unions include ones that would:
* 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 with greater flexibility to respond to market conditions; *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. The section provides that the loan maturities, terms, and conditions on these loans may be specified in applicable regulations; and *Encourage small business development in underserved urban and rural communities by excluding from the statutory cap any member business loans made to members in underserved communities. The bill's language clarifies that business loans made to businesses operating on a nationwide basis would not be exempt from the cap, but business loans made to locally owned franchises of businesses operating on a nationwide bases would be exempt if in an underserved area.
Use the resource link below for more CUNA information on the bill. Also, see related stories in this edition of News Now.

Inside Washington (06/20/2008)

 Permanent link
* WASHINGTON (6/23/08)--Treasury Secretary Henry Paulson signaled support Thursday for a receivership plan aimed at investment banks in the event of a failure. Federal Deposit Insurance Corp. (FDIC) Chairman Sheila Bair had suggested the plan a day before, stating that the FDIC would be equipped to handle such a program. Paulson gave his support after a speech before the Women in Housing in Finance (American Banker June 20). During his speech, Paulson noted the Fed would need appropriate authority to respond to and address risks in the market. “Defining the scope of the Fed’s new authorities and responsibilities is not a simple task, and the definition must balance two very important priorities--providing additional stability to the financial system on the one hand, while limiting moral hazard on the other,” he said ... * WASHINGTON (6/23/08)--Regulators disagree on the necessity of new laws to increase oversight of investment banks. On Thursday, the Securities and Exchange Commission (SEC) said a legislative fix is needed. The SEC is partnering with the Federal Reserve Board to create guidelines so the two can share information. But Scott Polakoff, senior deputy director and chief operation officer from the Office of Thrift Supervision (OTS), said legislation is not necessary and noted that the OTS is the regulator under the Gramm-Leach-Bliley Act of 1999. Treasury Secretary Henry Paulson said he agreed with the SEC, and questioned the long-term ramifications of its relationship with the Fed. “A more difficult issue is how this newly formalized relationship evolves when these temporary facilities eventually close and how the memorandum of understanding [between the SEC and the Fed] will be perceived by the marketplace,” he said in a speech before Women and Housing in Finance ...

CUNA details new bill bank thrift provisions

 Permanent link
WASHINGTON (6/23/08)—A new House bill that, in part, addresses aspects of member business lending (MBL) and field of membership issues for credit unions also contains relief provisions for banks and thrifts. For instance, H.R. 6312, the Credit Union, Bank and Thrift Regulatory Relief Act of 2008, would remove the current thrift caps on auto and business lending. For commercial banks it would, most notably, authorize the payment of interest on reserves by a federal reserve bank at least quarterly on balances maintained there on behalf of a depository institution. It proposes to allow banks to pay interest on business checking accounts. 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. Left behind from that bill, however, were sections that would have allowed banks and thrifts to reorganize more easily as LLC or Subchapter S organizations (Section 101, 102 and 206 of H.R. 5841). CUNA Vice President of Legislative Affairs Ryan Donovan Friday noted many may recall when CUNA opposed removing the business lending cap for thrifts during House-Senate negotiation of the Financial Services Regulatory Relief Act of 2006. However, he said, the situation in 2008 is different. "That time, the package of provisions was incredibly unbalanced. This time, to achieve a balanced bill, the banks lost LLC and Subchapter S flexibility, which in the long run is probably more important to them. "But for credit unions, I think the important part of the bill is not what the banks got or didn't get, the important thing is to look at the relief that the bill provides credit unions. This is a good bill that includes the underserved areas FOM provision and member business lending relief." Some provisions of the new regulatory relief measure, introduced late Thursday by Reps. Paul Kanjorski (D-Penn.), Ed Royce (R-Calif.) and Dennis Moore (D-Kan.), benefit credit unions, as well as banks and thrifts. One example is the proposed change in Gramm-Leach-Bliley privacy notification requirements. 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. For more details of the bill, use the resource link below.

New relief bill important for CUs says CUNA

 Permanent link
WASHINGTON (6/23/08—The Credit Union National Association (CUNA) Friday underscored the importance to credit unions of new financial services regulatory relief legislation and vowed to continue its push to get the bill to the President’s desk for a bill signing. CUNA Senior Vice President of Legislative Affairs John Magill commended the bill’s authors for their solid steps toward regulatory relief for credit unions, bank and thrifts. The Credit Union, Bank and Thrift Regulatory Relief Act of 2008 (H.R. 6312) was introduced late Thursday by Reps. Paul Kanjorski (D-Penn.), ed Royce (R-Calif.), and Dennis Moore (D-Kan.). “These members of the House Financial Services Committee have shown with the introduction of this measure their commitment to credit unions to obtain regulatory relief– particularly in the midst of a tough presidential election year. Along with Chairman Barney Frank, these three deserve the thanks and appreciation of credit unions for taking action to give us more flexibility to serve our members,” Magill said. “This is an important step in ultimately getting all of what we need – including the MBL (member business lending) and PCA (prompt corrective action) reform,” Magill said referring to priorities contained in the Credit Union Regulatory Improvements Act (CURIA, H.R. 1537), but not in the new legislation. “Our view is that victories beget victories. We fully intend to stay on the congressional radar screen. In addition to seeking Senate action in this measure, our next step will be to push for a PCA reform hearing in the House. We are on the right track, but let’s be clear: It’s a track that takes time and patience,” Magill said, adding: “Chairman Frank has made it abundantly clear that he feels this approach, at this time, has the best chance of giving credit unions regulatory relief in this legislative environment.” CUNA expects H.R. 6312 to pass the House under suspension of the rules as early as Monday, but sees a tougher road in the Senate. “The Senate just is not as far along in the process as was the House, but we will make our case there,” CUNA Vice President Ryan Donovan, said Friday. He acknowledged the process is further complicated by the tight legislative calendar in both the House and Senate, where barely more than 30 scheduled working days remain for the year. Among the major credit union provisions, the new bill would allow all federal credit unions to apply to serve underserved areas and exempt member business loans made in underserved areas from a statutory 12.25%-of-assets cap, It would also grandfather previously approved underserved fields of membership for credit unions. H.R. 6312 also would permit short-term payday loan alternatives within a credit union’s field of membership. It bill addresses the current investment limit in credit union service organizations (CUSOs) and proposes to raise it to 3% of unimpaired capital and surplus, up from 1%. The bill also would:
* 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 with greater flexibility to respond to market conditions; * 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. The section provides that the loan maturities, terms, and conditions on these loans may be specified in applicable regulations; and * Encourage small business development in underserved urban and rural communities by excluding from the statutory cap any member business loans made to members in underserved communities. The bill’s language clarifies that business loans made to businesses operating on a nationwide basis would not be exempt from the cap, but business loans made to locally owned franchises of businesses operating on a nationwide bases would be exempt if in an underserved area.
Use the resource link below to access a CUNA summary of the bill. Also, watch News Now for CUNA’s live posting of analysis of bank and thrift provisions of the legislative package.

Start now for new ACH rule compliance--CUNA

 Permanent link
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.

Interchange bill markup postponed until July

 Permanent link
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

 Permanent link
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%.

NCUA seeks comments on ways to improve MBL reg

 Permanent link
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.

New relief bill based on CURRA introduced in House

 Permanent link
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.
Click to watch Click to watch
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)

 Permanent link
* 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 ...

Inside Washington (06/18/2008)

 Permanent link
* WASHINGTON (6/19/08)--The Federal Deposit Insurance Corp. (FDIC) Tuesday approved a rule that would prepare large banks to handle a failure and also cost them $2 million to $10 million in upgrades (American Banker June 18). Under the rule, about 159 financial institutions would be required to bring customer data systems in line with the FDIC’s systems. They also would be required to hold a small portion of deposits to prevent depositors from withdrawing funds because it’s determined whether they’re insured in the event of a failure. The rule applies to institutions with $2 billion in domestic deposits and assets of $20 billion. The rule’s approval comes after three years of three different proposals and opposition from the banking industry ... * WASHINGTON (6/19/08)--Legislation to steady the housing market may not pass by Independence Day as originally anticipated by the financial services industry. On Tuesday, House Financial Services Committee Chairman Barney Frank (D-Mass.) rejected the Senate’s version of the bill (American Banker June 18). Senate Banking Committee leaders had changed the original bill to align with the House measure, but did not go far enough, Frank said. Sen. Christopher Dodd (D-Conn.) and Sen. Richard Shelby (R-Ala.) amended the bill to include a cap increase to $625,000 on the amount of mortgages Fannie Mae and Freddie Mac can purchase. Dodd said he would have written the legislation differently if he didn’t have to earn the approval of the House. Though some had expected the bill to pass through Congress sooner, the delay is acceptable, Frank said ... * WASHINGTON (6/19/08)--Higher capital requirements could be required for national banks if changes to guidance proposed by regulators Tuesday is approved. “The principles are based on the fundamental premise that a bank’s liquidity risk framework should ensure it maintains sufficient liquidity to withstand a range of stress events, including those that affect secured and unsecured funding,” said Nigel Jenkinson, co-chairman of the Basel Committee’s Working Group on Liquidity and executive director of the Bank of England, in a statement. The principles underscore the importance of liquidity risk management framework that is well integrated into the bank-wide risk management process. The principles also strengthen expectations about the role of supervisors, including the need to intervene quickly to address deficiencies and the importance of communication with other supervisors and public authorities, both within and across national borders ...

Slight boost in CDRLF CDFI gets early approval

 Permanent link
WASHINGTON (6/19/08)—The Community Development Revolving Loan Fund (CDRLF) would get a slight boost in FY 2009 under an appropriations bill approved late Tuesday by a House subcommittee. The House Appropriations subcommittee on financial services and general government approved $1 million to fund the National Credit Union Administration’s CDRLF, up from $975,000. The Fund provides grants and loans to low-income credit unions to help underserved communities. The subcommittee also approved a small increase for the U.S. Treasury Department’s Community Development Financial Institutions (CDFI) Fund for FY2009. It voted in favor of a $10 million increase to $104 million for FY 2009. The CDFI Fund provides grants, loans and technical assistance to community development credit unions, banks, housing investment funds and other local financial entities committed to helping disadvantaged communities. Earlier this week, CDFI Fund Director Donna Gambrell noted credit unions’ CDFI participation, saying it was second only to that of loan funds. Also falling under the subcommittee’s comprehensive Treasury Department funding measure was $880 million approved for the Small Business Administration, including $100 million for regional development centers, $100 million for loan guarantees, and $22.5 million for direct loans and technical assistance. The subcommittee approval was just the first necessary vote for the appropriations bill. The House Appropriations Committee is scheduled to consider the package on June 24. If approved, it still must be voted on the by the House and Senate.

Comment sought on permissible powers plan

 Permanent link
WASHINGTON (6/19/08)—The Credit Union National Association (CUNA) is asking credit unions to comment on a plan to update federal rules addressing permissible incidental powers. In May, the National Credit Union Administration (NCUA) proposed amendments to its incidental powers regulation (Section 721) to clarify and update definitions of permissible activities in correspondent and operational programs, and finder activities. The proposal would add examples of activities that have been recognized as permissible since Part 721 was last amended in 2001. Also, the proposed rule would recognize that federal credit unions (FCUs) may provide correspondent services to foreign as well as federal or state-charted credit unions. The following are among the questions that CUNA would like credit unions to address:
* What issues may arise from the provision of the proposal to include foreign credit unions under the correspondent services category? *Are there any unforeseen problems that may arise in including payroll services within the operational programs category? * Are there any specific concerns with the provision of the proposal to clarify that finder activities include an FCU’s negotiation of group discounts? * Are there any specific concerns with the provisional to clarify that finder activities include the performance of administrative functions for outside vendors?
Comments are due to CUNA by July 15 and to the NCUA by July 28. For more on CUNA’s comment call and more information of the NCUA proposal, use the resource link below.

CU reps bankers unite against interchange bill

 Permanent link
WASHINGTON (6/19/08)—Credit union officials and bankers will join forces today to plead their case on Capitol Hill against government interference in interchange fees. The Credit Union National Association (CUNA) and banking organizations, who comprise the Financial Services Roundtable, will participate in more than 30 meetings with federal legislators and their staff. CUNA, along with banks and thrifts, strongly oppose proposed legislation that would, in part, set up a government tribunal as mediator in disputes that could occur relating to the interchange fees charged based on consumer use of credit and debit cards. Scheduled to represent credit unions at the “fly-in” meetings are:
* Mike Ligon, CFO, Belvoir FCU, Woodbridge, Va.; * John Harwell, Apple FCU, Fairfax, Va.; * James H. Norris III, CEO, AFL-CIO Employees FCU, Washington, D.C.; and * Susan Enis, CEO, U.S. Senate FCU, Washington, D.C.
CUNA strongly opposes any statutory and rulemaking changes, including those in the Credit Card Fair Fee Act introduced in both U.S. House (H.R. 5546) and Senate (S. 3086), that would regulate interchange fees. CUNA believes such action would adversely affect consumer options, competition and technological innovation. Interchange revenue enables a credit union to offer credit cards or debit cards by covering the costs and risks the credit union incurs in the card system, including the risks of consumer nonpayment and fraud. Credit unions believe the interchange rates represent a balance of factors for both sides: the merchants and the consumers’ card-issuing institutions and that the balance of interchange brings stability and is best determined by the marketplace.

NCUA to seek comment on MBL changes

 Permanent link
ALEXANDRIA, Va. (6/19/08)—The National Credit Union Administration (NCUA) has one item on its agenda for today’s open board meeting and that an Advanced Notice of Proposed Rulemaking regarding member business loans, Part 723 of the federal regulator's rules and regulations. The agency is expected to ask for comment on whether the NCUA should make changes to its rules that govern loan-to-value (LTV) and waiver requirements. In 2007 comment letter to the NCUA regarding the reduction of regulatory burdens on credit unions, the Credit Union National Association urged the agency to change the MBL rule to allow items such as LTV requirements to be set by credit unions rather than in the regulation. After today, the NCUA’s meeting schedule takes on its summer routine. The agency’s next open session is planned for July 24. There is no meeting scheduled for August and then the regular monthly schedule resumes on Sept. 25.

HOPE NOW tries to speed help to homeowners

 Permanent link
WASHINGTON (6/18/08)—The HOPE NOW mortgage industry coalition, formed late last year to boost efforts to help struggling homeowners keep their homes, announced new guidelines Tuesday that the alliance hopes will speed up help to troubled mortgage borrowers. HOPE NOW unveiled standardized guidelines for workout categories in an attempt to make mortgage servicers’ efforts to help homeowners become more uniform. The guidelines are intended to bolster HOPE NOW’s efforts to increase workouts by eliminating confusion caused by institutions’ varying definitions of such things as loan modification, forbearance, and repayment plan. "The HOPE NOW procedures announced today will allow even more homeowners to get help faster. We are pleased to see the alliance members continually making improvements and expect them to maintain their efforts,” said Treasury Under Secretary for Domestic Finance Robert K. Steel, in a release. “As we have said, there is no one silver bullet to address every housing challenge, but if we continue pursuing a series of measures and initiatives, we can have a maximum impact," he added. It was the U.S. Treasury Department, along with the Department of Housing and Urban Development, that announced the creation of HOPE NOW last October. According to HOPE NOW, its new guidelines will accomplish four goals. They are:
* Expedite—by establishing a uniform, streamlined timetable for action by each mortgage servicer when dealing with a homeowner. This will provide every homeowner who contacts their servicer with deadlines by which action is likely to be taken and a better understanding about their particular situation; * Inform—by including extensive procedures by which mortgage servicers will keep homeowners informed about the status of their request for assistance. It also includes access to free, independent counseling for homeowners who want information about their options. It also sets detailed procedures that servicers will use to reach out to homeowners who may be in danger of losing their home; * Protect—by setting extensive options that mortgage servicers agree to use to help homeowners avoid foreclosure, including loan modifications, repayment plans, partial claims, and temporarily suspending the need to make monthly payments. The agreement also calls on mortgage servicers to delay pending foreclosure proceedings when there is a possibility that other options will allow homeowner to stay in their home; and * Remedy—by including guidelines for dealing with two difficult foreclosure-related issues -- second mortgages and short sales. Because of the guidelines established in this agreement, neither of these should be as difficult for homeowners as they have been in the past.
Use the resource link below for more HOPE NOW information.

CDFI director touts CU involvement

 Permanent link
WASHINGTON (6/18/08)—The director of the U.S. Treasury Department's Community Development Financial Institutions (CDFI) Fund recently noted in a speech that credit unions are one of the largest industry component for CDFI participation, second only to loan funds. Donna Gambrell, addressing the National Federation of Community Development Credit Unions’ 34th Annual Conference for Serving the Underserved, called credit unions “an important part of the CDFI community.” She noted they make up approximately 18% of the more than 800 certified CDFIs. Gambrell reported that in 2007 her organization certified 16 credit unions as new CDFIs, more than double the number certified in 2006. Those 16 represented 38% of all CDFI certifications that year, second only to loan funds at 47%, she said. Three additional credit unions were certified during the first quarter of this year. The CDFI director reminded credit unions that organizations working toward CDFI certification are permitted to apply for technical assistance grants from the CDFI Fund that can help an organization on its path to certification. She said, “To those of you who are not certified CDFIs, we would like you to have the capacity to do more of what you do, and I encourage you to examine if CDFI certification and our funding programs could be beneficial to you.” Gambrell went on to note that credit unions “have been at the forefront of providing many innovative financial products and are proven, low-cost alternatives to payday and predatory lenders.” “Innovative products offered by credit unions include such things as credit building loans, small loans with an automatic savings feature, and first chance accounts, in addition to many others,” she noted, adding, “Many CDCUs developed best practices and I want to encourage all of you to please share these among each other and with the CDFI Fund.”

NCUA declares disaster policies for Wisconsin

 Permanent link
ALEXANDRIA, Va. (6/18/08)—Responding to an unusual rash of violent weather, the National Credit Union Administration (NCUA)--for the second time in a week—has activated its disaster relief policy to assist credit unions and their members affected by storms, flooding, and tornadoes. In an announcement Tuesday, the NCUA noted that President George W. Bush has declared an emergency exists in the Wisconsin counties of Columbia, Crawford, Milwaukee, Sauk, and Vernon. The NCUA said its disaster policies now apply to those areas. Late last week, the agency invoked its disaster relief rules for Indiana and Iowa, two states also struggling to recover from weather-related disasters. Under its disaster assistance policy, NCUA announced it will, where necessary:
* Encourage credit unions to make loans with special terms and reduced documentation to affected members; * Reschedule routine examinations of affected credit unions if necessary; * Guarantee lines of credit for credit unions through the National Credit Union Share Insurance Fund; and * Make loans to meet the liquidity needs of member credit unions through the Central Liquidity Facility.
The NCUA announcement noted that the agency is working with the Wisconsin state credit union regulator to make certain that all state-chartered, federally insured credit unions in the affected areas are aware of NCUA’s available assistance. Also, NCUA regional examiners are closely monitoring the situation in concert with Wisconsin officials and will provide assistance as requested or needed. During disaster conditions, NCUA personnel operate under three priorities:
* Determine the safety of credit union staff and operational condition of credit unions; * Provide needed material and technical assistance to affected credit unions; and. * Return credit unions to normal operations as quickly as possible.

Hill staff briefed on interchange issues by CU CEO

 Permanent link
WASHINGTON (6/18/08)—The CEO of a small Maryland credit union briefed a large group of Capitol Hill staffers Tuesday on just what the current system of interchange fees means to her cooperative and the negative impact government interference could have on her credit union and consumers. Cindy Prestandrea of Prince George’s Community FCU in Upper Marlboro told legislative staffers that interchange rates today are established “with a delicate balance in mind.” “Too low, and issuing institutions like my credit union cannot make ends meet. Too high, and merchants will refuse to accept the card,” Prestandrea said. The briefing was held amid anticipation that the House Judiciary Committee may vote next week on a bill that would enable the government to intervene in what is now a free-market process—setting the rate that a merchant’s bank pays a customer’s bank when debit or credit cards are used for purchases. A companion bill has been introduced in the Senate. All congressional staff were invited to attend the briefing, and the U.S. House and Senate Judiciary and Banking committees were heavily represented among the approximately 75 attendees. Prestandrea explained to the group that the balance to which she referred brings stability to the marketplace. “Merchants will argue about being able to ‘negotiate’ interchange,” she said, but she then asked the Hill staffers to picture her small credit union opposing some retail giant in an interchange “negotiating” session. “Being able to ‘negotiate’ assumes equal negotiating power or stature,” she said. She added tjat the same imbalance would exist between a large retailer and a three-person government tribunal, as envisioned in House and Senate legislation. Proponents such legislation sometimes claim the card fees are excessive. Detailing her own experience, Prestandrea said her Maryland credit union currently offers debit cards to members, but not credit cards because the administrative support for those is too high. “Credit card interchange couldn’t make it work for us given our size and resources,” she said, However, she added that her credit union would be harmed if it lost the fees associated with member debit card use, which represents 16% of monthly income. More generally, she said, interchange accomplishes three things for credit unions:
* It allows credit unions to compete with largest financial institutions; * It gives credit unions the ability to offer credit and debit products in relationships with members; and * Interchange revenue covers costs of system (fraud, overhead, etc.) for the credit union.
Also represented at the briefing were Visa, MasterCard and the Independent Community Bankers Association.

Inside Washington (06/17/2008)

 Permanent link
* WASHINGTON (6/18/08)--A hearing focusing on how payday lending can harm Social Security recipients is scheduled for June 24. The Subcommittee on Social Security of the House Committee on Ways and Means announced the event yesterday. A Credit Union National Association (CUNA) witness, Darwin Brokke, CEO of Citizens Community CU, Devils Lake, N.D., recently testified at a hearing focusing on how payday lending affects Native American communities ... * WASHINGTON (6/18/08)--The Senate yesterday was scheduled to discuss legislation to help the foreclosure crisis and reform regulation of Fannie Mae and Freddie Mac (American Banker June 17). The bill, which is being pushed by Senate Banking Committee Chairman Christopher Dodd (D-Conn.) was approved last month and is being modified to align with the House version. The measure has not yet been scheduled for a Senate vote, said a spokesman for Senate Majority Leader Harry Reid (D-Nev.) ... * WASHINGTON (6/18/08)--The Internal Revenue Service (IRS) is extending tax payment deadlines for those affected by severe storms and flooding in 10 states, the agency announced Monday. The deadline for the payments was Monday. “At a time like this, taxes should be the last thing on the minds of these unfortunate victims,” said IRS Commissioner Doug Shulman. The IRS has provided tax relief to counties in Iowa, Indiana and Wisconsin. Earlier this spring, the agency provided similar relief to Arkansas, Colorado, Georgia, Maine, Mississippi, Missouri and Oklahoma. Due dates of new deadlines vary, depending upon location ... * WASHINGTON (6/18/08)--The Federal Deposit Insurance Corp. (FDIC) has announced steps to provide regulatory relief to financial institutions and to facilitate recovery in areas of Indiana affected by severe storms and flooding in a financial institution letter published yesterday ...

CU issues in Congress this week

 Permanent link
WASHINGTON (6/17/08)—With just two weeks before its Independence Day District Work Period and a mere 35 scheduled legislative days remaining this year, the U.S. Senate reconvened Monday to consider energy issues and the U.S. House convenes today to consider several measures. The Credit Union National Association (CUNA) had been hopeful that the Credit Union Regulatory Relief Act (CURRA, H.R. 5519) would be on the House suspension calendar for a vote this week. However, it is not currently on the list of bills to be considered. CURRA is the regulatory relief bill clarifying federal credit unions' ability to add underserved areas to their fields of membership and exempting member business loans (MBLs) made in underserved areas from the 12.25% MBL cap . It is expected that the House will this week vote on bills addressing parental leave, child abuse and, possibly Iraq/Afghanistan supplemental appropriations. On the Senate side, lawmakers first considered the Renewable Energy and Job Creation Act and were expected to move then to housing legislation that would allow the Federal Housing Administration to insure refinanced mortgages that have been significantly written down by mortgage holders and lenders. Proponents of that bill were hopeful that that the housing bill would reach the President's desk by Independence Day. However, the prospects of that happening now appear to be slim. CUNA will be monitoring several hearings of interest to credit unions:
* On Monday, the House Financial Services subcommittee on housing and community opportunity conducted a field hearing in Ohio on foreclosures in that state; * On Tuesday, the House Appropriations subcommittee on financial services and government operations is scheduled to vote on its FY 2009 appropriations bill. The bill would affect a few National Credit Union Administration programs, such as Community Development Revolving Loan Fund; * On Wednesday, the Senate Homeland Security and Governmental Affairs Committee will investigate data protection issues in a hearing entitled “Protecting Personal Information: Is the Federal Government Doing Enough?"; and * On Thursday, the House Financial Services Committee has scheduled a hearing on affordable housing preservation and protection of tenants. Also on Thursday, the Senate Banking subcommittee on securities, insurance and investment has scheduled a look into "Risk Management and its Implications for Systemic Risk."

Free space branch names subjects of NCUA opinions

 Permanent link
ALEXANDRIA, Va. (6/17/08)—The National Credit Union Administration (NCUA) has addressed the issues of credit union space in federal buildings and branch names in separate legal opinion letters released this month. In response to a query by NLRB FCU, Washington, D.C., the NCUA clarified a rule that allows federal agencies to grant free space for credit union use. A federal agency may allot building space to a credit union at no charge for rent or services if at least 95% of the membership of the credit union to be served by the allotment of space are, or were at the time of admission to membership, federal employees or their family members, according to the Federal Credit Union Act. NLRB asked if the 95% condition is properly applied to the credit union’s total membership or only the number of members who actually use the allotted space. The NCUA answered that the 95% is applied to the number of members who actually use the allotted space. In a second letter, this one directed to Mattel FCU, El Segundo, Calif., the NCUA said it is acceptable for a federal credit union to use the names of its sponsor's subsidiaries to name its branch offices. However, the NCUA noted, there are a few conditions that must be met. The credit union must take “reasonable steps to ensure members are fully apprised of the use of different names.” The agency referred to its Letter No. 99-CU-17 and noted a list of several steps a federal credit union must take to ensure its advertising in such cases is not inaccurate or deceptive, as prohibited by NCUA regulations. In particular, the NCUA said, credit unions should ensure signage used at a branch office under a different name clearly reflects the branch office is a division or branch of the same insured credit union. Also, the credit union should obtain written permission from its sponsor before using the names or trademarks of the sponsor's subsidiaries.

House committee may vote on interchange fees next week

 Permanent link
WASHINGTON (6/17/08)—The House Judiciary Committee may vote as early as next week on a bill that would allow government intervention in setting interchange rates and fees, legislation that is strongly opposed by the Credit Union National Association (CUNA). The legislation, 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.) last week introduced a bill to require credit card companies to disclose their interchange rates, terms, and conditions to consumers and businesses. CUNA will continue to work closely with all members of the Electronic Payments Coalition to oppose legislation that would regulate interchange fees, CUNA vice president of legislative affairs, Ryan Donovan, said Monday. The Credit Card Fair Fee legislation would set up a three-member panel of lawyers appointed by the U.S. Department of Justice and the Federal Trade Commission (FTC) to settle fee disputes between merchants and card providers. Welch’s bill stops short of that requirement, but would empower the FTC to review interchange rates and rules and prohibit practices it determines violate consumer protection of anti-competition laws.

Inside Washington (06/16/2008)

 Permanent link
* WASHINGTON (6/17/08)--The Federal Reserve Board has amended contact information for the agency that handles complaints about creditors denying loans or issuing other adverse actions. The updated information was published in the Federal Register on Friday. The Fed also created a help center for consumers. The updated information doesn’t directly affect credit unions, because they issue complaints to the National Credit Union Administration or the Federal Trade Commission, said Jeff Bloch, senior assistant general counsel at the Credit Union National Association ... * WASHINGTON (6/17/08)--The Federal Deposit Insurance Corp. (FDIC) is celebrating its 75th anniversary and announced an education campaign to raise awareness about deposit insurance limits. The campaign includes national advertising, multi-city outreach, and an awards program for outstanding work for financial education. Advertising will appear in major daily newspapers, news magazines and lifestyle publications. FDIC Chairman Sheila Bair also will go on a road tour, stopping in four FDIC regional office cities in July and September to educate guests about deposit insurance. Bair will announce a new award to highlight innovation in financial education and present awards to six people or organizations for their efforts ...

Inside Washington (06/13/2008)

 Permanent link
* WASHINGTON (6/16/08)--More than half of national banks tightened commercial and retail lending standards for 2008, according to survey results released by the Office of the Comptroller of the Currency Thursday. About 52% of banks tightened their commercial underwriting standards and 68% tightened their retail standards. Reasons cited for tightening standards include: the overall economic outlook, the downturn in residential real estate, a changing risk appetite and a decrease in market liquidity. Examiners reported that risk in both commercial and retail portfolios has increased over the past year and they expect portfolio risk to continue increasing over the coming year. Factors that contributed to the higher risk include a weakening economy, rising energy costs, turbulence in the secondary credit markets, the downturn in the housing market and anticipation of relaxed underwriting standards over the past few years ...

NCUA declares disaster assistance for Indiana Iowa

 Permanent link
ALEXANDRIA, Va. (6/16/08)--The National Credit Union Administration (NCUA) has activated its disaster relief policy to assist credit unions and their members affected by the storms, flooding, and tornadoes in Indiana and Iowa. As of Friday in Iowa alone, an estimated 20 to 30 credit unions had been affected by numerous Midwest storms and subsequent flooding, according to the Iowa Credit Union League. President George W. Bush has declared an emergency exists in Indiana and Iowa and has ordered federal aid to supplement state and local response efforts. Under its disaster assistance policy, NCUA announced it will, where necessary:
* Encourage credit unions to make loans with special terms and reduced documentation to affected members; * Reschedule routine examinations of affected credit unions if necessary; *Guarantee lines of credit for credit unions through the National Credit Union Share Insurance Fund; and *Make loans to meet the liquidity needs of member credit unions through the Central Liquidity Facility.
The NCUA announcement noted that the agency works with individual state league organizations and state regulators to ensure all federally insured credit unions are aware of NCUA’s available assistance. Region III and Region IV examiners are closely monitoring the situation and will provide assistance as needed. When operating under disaster conditions, the NCUA instructs its personnel to operate maintaining three priorities. First is to determine the safety of credit union staff and operational condition of credit unions. Second is to provide needed material and technical assistance to affected credit unions. The final priority is to return credit unions to normal operations as quickly as possible. The NCUA reiterated that member accounts in all federally insured credit unions, including those affected by the storms, are insured by the National Credit Union Share Insurance Fund, a federal fund backed by the full faith and credit of the U.S. government.

Comment sought on NCUA underserved plan

 Permanent link
WASHINGTON (6/16/08)—Credit unions are asked to comment on proposed changes to the current federal regulatory process for approving multiple group credit unions' applications to serve underserved areas. In a comment call to credit unions, the Credit Union National Association (CUNA) noted that since the adoption of the Credit Union Membership Access Act in 1998, NCUA has revised the FOM provisions on underserved areas three times. In 1999 the NCUA made changes to implement the Credit Union Membership Access Act (CUMAA); in 2002 there were changes to include underserved area criteria from the Community Development Financial Institutions (CDFI) Fund; and in 2006 NCUA acted to prohibit community and single group credit unions from adding new underserved areas, as a result of a legal challenge launched by banking groups. At its May open board meeting, the agency again proposed changes to its “Chartering and Field of Membership Manual for Federal Credit Unions. This proposal:
* Requests comments on whether a supporting letter should be necessary when a multiple group credit union seeks to add an underserved area; * Would change the criteria for "economic distress" for determining if the community is an investment area so that it would be more compatible with the criteria used by the Community Development Financial Institutions Fund; * Would also require a one-page narrative statement that describes significant unmet needs for loans or other financial services in the proposed area; and * Would not apply to applications that already have been approved.
CUNA's Federal Credit Union Subcommittee is be reviewing the proposal and developing CUNA's comments. The proposal has not yet been published in the Federal Register, which is a necessary step for a federal agency seeking public comment. Once it appears in that publication, interested parties will have 60 days to comment. Use the resource link below for more details on the NCUA’s complex proposal and to read CUNA’s complete comment call.

House panel to look at financial market reg restructuring

 Permanent link
WASHINGTON (6/13/08)--House Financial Services Committee Chairman Barney Frank (D-Mass.) announced Thursday that the committee will conduct a series of hearings to study policy implications of financial market regulatory restructuring. Starting in July, the committee intends to examine the regulatory implications of the rescue of Bear Stearns through the intervention by the Federal Reserve. Throughout the fall, subsequent hearings are being planned to examine, in light of the collapse of Bear Stearns, the ability of the regulatory structure to assess and mitigate systemic risk in order to avoid a similar or more serious crisis in the future, according to a committee release. “As the extraordinary measures utilized to respond to the Bear Sterns crisis demonstrated, we have failed to develop a regulatory system with the reach and capacity to protect the system against the large risks embedded in our increasingly interconnected markets. These hearings are designed to focus on identifying how much reach and what new capacities are needed to avoid – or respond to – the next crisis,” said Frank. Ryan Donovan, vice president of legislative affairs for the Credit Union National Association, said Thursday, "We don't expect any legislative action on this issue in the near term, but will be following all of these hearings closely.” He added, “I think that part of the reason Chairman Frank is going hold these hearings this summer is precisely because there is not enough time to do anything as significant as regulatory restructuring before the end of the year. There is a lot of time for these issues to be studied." The House panel intends to invite the following witnesses: U.S. Treasury Department Secretary Henry Paulson, Federal Reserve Chairman Ben S. Bernanke, New York Federal Reserve President Timothy Geithner, Securities and Exchange Commission Chairman Christopher Cox, other federal regulators, academics, economists. Frank said his committee will also invite witnesses who are “market participants who can address the current state of America’s and other jurisdictions financial regulatory system and can testify on how best to measure and limit risk without stifling innovations and improve market liquidity and breadth.”

State regulators oppose blueprints exec order

 Permanent link
WASHINGTON (6/13/08)—State financial regulators told President George W. Bush this week that an Executive Order proposed in the U.S. Treasury’s Blueprint for a Modernized Financial Regulatory Structure would diminish the interagency regulatory cooperation provided through the Federal Financial Institutions Examination Council (FFIEC). The result of the Executive Order, which would expand the scope and authority of the President’s Group on Financial Markets, would be to circumvent congressional intent that established FFIEC as the primary forum for interagency coordination, the regulators said in a joint letter to the President. The letter was signed by the he National Association of State Credit Union Supervisors, the American Council of State Savings Supervisors, and the Conference of State Bank Supervisors. The three organizations have representatives on FFIEC’s State Liaison Committee. “The Congress has organized the FFIEC as the proper mechanism for financial policy coordination and interagency regulatory cooperation. The FFIEC is best positioned to draw upon federal and state expertise to enhance financial market integrity as it pertains to depository institutions,” NASCUS Chairman George Reynolds and his bank and thrift counterparts wrote. The letter added, “An expanded and broader role for the President’s Working Group will make the FFIEC irrelevant, as policy development shifts to the purview of the Treasury Department. While greater coordination is needed to enhance market stability, we believe the solution lies in enhancing the strengths of our existing model of federalism, as created by the Constitution of the United States, and preserved by Congress in the centuries that have followed.” The Credit Union National Association (CUNA) has lobbied against the Treasury blueprint since it was released March 31. CUNA charges that the Treasury plan would essentially eliminate credit unions if its long-term recommendations were put into place and is completely counter to the Bush administration’s long-standing support of the credit union movement. In April, the chairman of the House Financial Services Committee and a high-ranking Republican member of that panel each sent credit unions their assurances that the U.S. Congress values the unique role of financial services cooperatives. Chairman Barney Frank (D-Mass.), in a letter to CUNA, wrote that the Congress appreciates the role credit unions play in the country's financial services system. Frank acknowledged CUNA's concerns regarding the devastating affect the Treasury proposal could have on credit unions and said that any proposal to do away with credit unions is a proposal that will go nowhere. Rep. Ron Paul of Texas, who is the ranking member on the House Financial Services subcommittee on domestic and international monetary policy, trade, and technology, wrote similar assurances to the Texas CU League.

MBLs focus of NCUA board meeting

 Permanent link
ALEXANDRIA, Va. (6/13/08)—The National Credit Union Administration (NCUA) announced its board meeting agenda for Thursday, June 19, and its one item is an Advanced Notice of Proposed Rulemaking regarding member business loans, Part 723 of the federal regulator’s rules and regulations. The agency is expected to ask for comment on whether the NCUA should revise such things as loan-to-value rules and waiver requirements. As usual, the meeting will be held at the agency headquarters here at 10 a.m. A closed board meeting will follow.

Inside Washington (06/12/2008)

 Permanent link
* WASHINGTON (6/13/08)--Loan modifications have been overstated, said Comptroller of the Currency John Dugan in a speech in New York this week. The loan modification data hasn’t undergone consistency and completeness checks, which raises questions about the data’s precision, he said (American Banker June 12). Dugan is the first regulator to question the loan reporting efforts, which are managed by the Hope Now alliance. The group said more than one million borrowers’ loans were modified between October 2007 and March 2008. The Office of the Comptroller of the Currency (OCC) said Wednesday only 167,000 had been helped during the same time period. The OCC’s data come from reports conducted by nine banks, which hold 25% of outstanding subprime mortgages and 40% of outstanding mortgages. Hope Now represents 90% of the subprime industry. Hope Now’s executive director, Faith Schwartz, has defended her organization’s data ... * WASHINGTON (6/13/08)--Rep. Patrick McHenry (R-N.C.) has introduced the Credit Rating Agency Transparency and Disclosure Act. “The housing market exposed dangerous weaknesses in the credit rating industry, demonstrating a clear need for reform,” he said in a statement. Specifically, the bill would: ensure that issuers and originators are providing credit rating agencies with adequate information on the assets underlying a structured security; require credit rating agencies to institute procedures for gathering data from issuers and originators concerning the procedures employed to attest to the data’s veracity and the fraud detection capabilities surrounding the process; and require credit rating agencies to disclose in a central database the historical default rates of all classes of financial products they have rated ... * WASHINGTON (6/13/08)--Sen. Joseph Lieberman (I-Conn.) is looking to propose legislation to ban institutional investors from commodity markets (The New York Times June 12). The senator is on the Senate Homeland Security and Governmental Affairs Committee, which is planning a hearing June 24 to discuss whether the price of fuel and crops is being affected by financial speculation. Sen. Jack Reed (D-R.I.) and Carl Levin (D-Mich.) also have requested a task force to see if deceptive practices are fueling energy prices--a request that was approved by the Bush administration ...

Treasury introduces prepaid federal benefits card

 Permanent link
WASHINGTON (6/12/08)—Some recipients of federal benefits now have a choice between receiving a standard paper check or a new prepaid debit card, an innovation that might prove particularly valuable to those with no banking relationship. The U.S. Treasury Department announced this week it is introducing the prepaid card option in 10 states now and that the option will become available nationally this summer through Treasury’s Financial Management Service (FMS). The “Direct Express” card is intended to provide unbanked federal beneficiaries a no-cost or low-cost alternative to using check cashing facilities and carrying large amounts of cash. Unlike other prepaid debit cards, the Direct Express card offers cardholders free access to their money. There is no sign-up fee, and no bank account or credit check is required to enroll, according to Treasury. Cardholders can make purchases, pay bills and get cash at thousands of ATMs and retail locations. In a “frequently asked question” section of the Direct Express website, Treasury notes that, with the card, a recipient’s money is federally insured up to the maximum legal limit. It adds that consumer protections of Regulatoion E (12 CFR 205) and MasterCard Zero Liability—with some exceptions—apply to unauthorized use of the card. Lost or stolen cards will be replaced.

House banking panel gets three new members

 Permanent link
WASHINGTON (6/12/08)—House Democrats voted to approve three recently elected representatives for seats on the House Financial Services Committee. The committee appointments included a Louisianan, Rep. Don Cazayoux, who was backed during his special election by the Credit Union National Association (CUNA) and the Louisiana CU League. CULAC, CUNA's political action committee , contributed $5,000 to Cazayoux's campaign. Cazayoux's narrow victory, winning 49% - 46% over Republican Woody Jenkins, was the subject of broad national attention. The victory placed into the hands of Democrats a Louisiana seat that long had been held by the GOP. Cazayoux now fills the seat left vacant by the resignation of Richard Baker in February. Also elected to the financial services panel by the House Democratic Caucus Tuesday were:
* Rep. Jackie Speier (D-Calif.) who won the seat formerly held by Tom Lantos (D-Calif.), who died of cancer on Feb. 11; and * Rep. Travis W. Childers (D-Miss.), who won the seat formerly held by Republican Roger Wicker, who was appointed his governor to fill a vacated Senate seat in December.
Earlier this year, U.S. Reps. Bill Foster (D-Ill.) and André Carson (D-Ind.) were appointed to the House Financial Services Committee.

Inside Washington (06/11/2008)

 Permanent link
* WASHINGTON (6/12/08)--Citing schedule conflicts, the Senate Banking Committee has delayed a hearing that was to focus on underwriting practices at investment banks (American Banker June 11). Lehman Brothers Holdings, Goldman Sachs Group, UBS AG, Citigroup and Merrill Lynch and Co. were expected to have witnesses at the meeting. The hearing comes after New York Federal Reserve Bank President Timothy Geithner said investment banks should be able to access the Federal Reserve’s discount reserves but only if they were supervised by the central bank ... * WASHINGTON (6/12/08)--Rep. Barney Frank (D-Mass.) is being urged by 35 congressional members in a letter to keep tough conforming limits for Fannie Mae and Freddie Mac (American Banker June 11). Frank is the chair of the House Financial Services Committee. A house bill would let the two buy $729,500 in mortgages. The Senate Banking Committee’s bill would cap the loans at $550,000 ... * WASHINGTON (6/12/08)--The Office of Federal Housing Enterprise Oversight (OFHEO) has issued a final rule for loss severity calculations under OFHEO’s Risk-Based Capital Regulation. The rule corrects deficiencies in the formula used to calculate risk-based capital. The action results in two changes. The first stems from certain loss severity equations that cause Fannie Mae and Freddie Mac to record profits instead of losses on foreclosed mortgages during the calculation of the risk-based capital requirement. The second addresses prior treatment of Federal Housing Administration insurance associated with single-family mortgages with a loan-to-value below 78%, which is inconsistent with current law ...

New data breach bill hits House and Senate

 Permanent link
WASHINGTON (6/11/08)— U.S. Senators John Kerry (D-Mass.) and Olympia Snowe (R-Maine) and U.S. Reps. Michael Michaud (D-Maine) and Donald Manzullo (R-Ill.) introduced a data security bill this week aimed at protecting small businesses. In 2006 and 2007, staunching the hemorrhage of data breach incidents and creating tools to deal with their aftermath was a stated priority issue among committees in the U.S. Congress that have jurisdiction over such issues. In fact, during those years there was a bottleneck in the legislative process caused by a plethora of bills with different legislative approaches vying for attention in at least six different committees. However, in recent months the issue had been all but supplanted by such things as the country’s focus on the housing crisis, the ensuing credit crunch, and economic downturn The new data security bill, called the Small Business Information Security Act of 2008 (S. 3102 and H.R. 6206), would establish a Small Business Information Security Task Force within the Small Business Administration (SBA) to help small firms understand and effectively respond to the information security challenges they face. The task force would:
* Identify information security concerns and the services that address those concerns; * Make recommendations to the SBA regarding how it can better assist small businesses to both understand cyber-security issues and identify resources to help meet those complex challenges; and * Promote current programs and services that will help small businesses protect their customers' valuable information.
In a release, bill-sponsor Snowe noted a 2005 Small Business Technology Institute survey, which reported that more than half of all small businesses in the United States experienced a security breach in the previous year. Snowe, who is ranking member of the Senate Committee on Small Business and Entrepreneurship, said, "Given that the study concludes that nearly one-fifth of small businesses do not use virus-scanning for e-mail, over 60% do not protect their wireless networks with encryption, and two-thirds do not have an information security plan, it is clear that we must get serious about helping firms to protect themselves from cyber predators.” On the House side, Manzullo said, “"America's 27 million small businesses are the job creators of our economy and we must do everything we can to help protect them from computer hackers and data thieves. This legislation will help them identify potential information security breaches and protect them and their customers from these cyber criminals.” The bill’s authors, in announcing their initiative, noted the recent breach at the supermarket chain, Hannaford Bros., which exposed 4.2 million credit and debit card numbers to fraudulent use (see related News Now story: “Hannaford breach lawsuits consolidated under one judge). The lawmakers said that breach indicates "the ease with which sensitive information can be obtained, regardless of the level of protection that might be in place.” Moreover, they added, as more small businesses seek to compete internationally, they must be provided with the tools to protect their information systems from countries with less stringent security laws. Ryan Donovan, vice president of legislative affairs for the Credit Union National Association (CUNA) said, "This bill would be a step in the right direction, and we applaud the sponsors for recognizing that data security is a problem. But, we continue to urge Congress to look at the issue of data security in a comprehensive manner that recognizes that credit unions and their members are often not notified of data breaches until well after they have occurred, and are not reimbursed for the cost of the breaches." On the issue of data security on a broader level, the CUNA supports legislation prohibiting the retention of sensitive, identifying information by merchants and certain non-financial companies from plastic card magnetic strips that could be obtained in connection with financial transactions. CUNA would like to see initiatives pursued that would require the major credit card companies to notify financial institutions when a breach has occurred, and for financial institutions to be able to disclose the source of the breach to the consumer. CUNA also supports a requirement that the breaching party, such as a merchant, reimburse the consumer or financial institution for any losses incurred and believes a uniform standard should be set.

Inside Washington (06/10/2008)

 Permanent link
* WASHINGTON (6/11/08)--A provision in the federal farm bill would allow lenders to make loans to businesses and individuals through the Small Business Administration’s (SBA) disaster program (American Banker June 10). The maximum loan limit is $2 million, and the SBA would guarantee 85%. The SBA previously had allowed only itself to make disaster loans, and had hired temporary employees to process the loans. After Hurricane Katrina in 2005, the SBA was able to process only a few thousand of the 200,000 applications it received ... * WASHINGTON (6/11/08)--The Federal Housing Administration (FHA) is solvent but cannot continue to suffer losses, said Brian Montgomery, FHA commissioner, in a speech Monday at the National Press Club. The FHA has a reserve of $21 billion, but it had to book an additional reserve of $4.6 billion after unanticipated long-term losses increased in certain types of seller-funded loans in the FHA portfolio, he said. “No insurance company can sustain that amount of additional costs year after year and still survive,” Montgomery said. “Unless we take action to mitigate these losses, FHA will soon either have to shut down or rely on appropriations to operate.” He noted that some proposed congressional actions could weaken the FHA by making it less stable. The FHA is pushing new regulations to reform the Real Estate Settlement Procedures Act (RESPA) to require mortgage lenders and brokers to display an estimate of settlement services, fees and charges ... * WASHINGTON (6/11/08)--Rep. Carolyn Maloney (D-N.Y.) is seeking support from congressional colleagues for her proposed legislation to crack down on credit card practices (American Banker June 10). She is the lead sponsor of card legislation before the House Financial Services committee. In a draft letter, she said she plans to address universal default, double-cycle billing and other issues in her legislation ... * WASHINGTON (6/11/08)--The Federal Deposit Insurance Corp. (FDIC) will launch a national advertising campaign to broaden public awareness of deposit insurance and the FDIC’s mission, Chairman Sheila Bair said in a speech Monday in Chicago. The campaign is a part of the agency’s 75th anniversary activities. It will address the increased public interest in deposit insurance issues. Four events in four cities across the country to share ideas about financial education and leadership also are planned ... * WASHINGTON (6/11/08)--On Monday, the Federal Reserve Board decided to scrutinize derivatives trading, which would prevent the failure of a major bank from creating a systemic threat as the collapse of Bear Stearns did (The Wall Street Journal June 10). Timothy Geithner, president of the Federal Reserve Bank of New York, met with 17 major financial institutions to create a system to oversee settlement and trading of credit derivatives. Meeting attendees also agreed to use a computerized system to register their trades for instant recording. Geithner has said that regulatory policy should go beyond supervision of firms and oversight should be extended beyond banks (The Wall Street Journal June 9) ...

CUNA commends effort to honor Americas CUs

 Permanent link
WASHINGTON (6/11/08)—Dan Mica, president/CEO of the Credit Union National Association (CUNA), commended Reps. Carol Shea-Porter and Paul Hodes on their successful efforts to mark the 100-year anniversary of credit unions in America with a House resolution. The two New Hampshire Democrats witnessed their resolution, H.RES.1145, pass the House Tuesday by voice vote. The action honors the 100th anniversary of the founding of the first state-chartered credit union, St. Mary's Cooperative Credit Association of Manchester, N.H., and calls that event "the birth of the American credit union." Thanking Shea-Porter and Hodes for their effort on behalf of the country’s credit unions, CUNA’s Mica said, “The credit union movement is proud of its history and will continue to provide low-cost, convenient service to its member-owners.” The establishment of St. Mary’s Cooperative, Mica added, is “a very significant event in the history of credit unions and our nation’s financial system.” He noted the credit union difference: that as cooperative financial institutions, credit unions are owned and controlled by the people who use its services.

Cost outlook for Senate housing legislation

 Permanent link
WASHINGTON (6/11/08)—A Senate housing bill to allow the Federal Housing Administration (FHA) to insure up to $300 billion in subprime mortgages would benefit about 400,000 of the country’s 2.2 million borrowers expected to face the threat of foreclosure on their homes over the next few years. That estimate was unveiled Tuesday by the Congressional Budget Office (CBO) as part of a cost estimate of the legislation, an evaluation ordered reported by the Senate Banking Committee on May 20. According to an article in CongressDaily PM (June 10), the CBO also said the measure, introduced by Senate Banking Chairman Christopher Dodd (D-Conn.) and ranking member Richard Shelby (R-Al.), ultimately would cost FHA $729 million over a 10-year period to help guarantee new mortgages for those troubled loans at risk of default. The CBO estimated that beyond the bill's ceiling of $300 billion in new guarantees, the FHA would also provide $68 billion in new loan commitments. The article pointed out that the Senate bill varies from a companion bill in the House in a few ways, including the fact that it has a narrower eligibility than the House version. That bill, sponsored by Rep. Barney Frank (D-Mass.), head of the financial services panel, is expected to cost $1.7 billion and help an estimated 500,000 borrowers. The FHA refinancing program is part of a broader housing package that both the House and Senate are working to reach agreement on before July.

FDIC seeks 200 million in cardholder restitution

 Permanent link
WASHINGTON (6/11/08)—The Federal Deposit Insurance Corp. (FDIC) Tuesday announced it is seeking more than $200 million in restitution from a credit card company and two FDIC-supervised banks to repay card holders for deceptive marketing practices. The FDIC said is has issued enforcement actions against CompuCredit Corporation, Atlanta, Ga. and two banks for allegedly marketing subprime credit cards in violation of the Federal Trade Commission Act (FTC Act) The FDIC said it settled with a third bank, Columbus Bank and Trust, Columbus, Ga., also involved with CompuCredit. The restitution is being sought against CompuCredit, First Bank of Delaware, Wilmington, Del., and First Bank & Trust, Brookings, S.D. The FDIC is also seeking civil money penalties (CMPs) of $6.2 million against CompuCredit, and a total of $431,000 against the two banks. The enforcements are in connection with CompuCredit's credit card solicitations for three general categories of Visa and MasterCard branded credit card products:
* A fee-based credit card that was marketed to consumers with low credit scores. The FDIC alleges that the solicitations failed to adequately disclose significant upfront fees and misrepresented the consumer's initial available credit. The solicitations appeared to offer credit cards with a $300 credit limit; however, consumers were immediately charged as much as $185 in inadequately disclosed fees, leaving them with as little as $115 in available credit, according to the bank regulator; * A card that offered "up to $3,250" in available credit to consumers with slightly higher credit scores. The FDIC alleges that CompuCredit failed to adequately disclose that only half of the consumer's credit limit would be available for the first 90 days. Additionally, the agency claims, CompuCredit failed to disclose that it would monitor consumers' purchases, and potentially reduce their credit limits based on undisclosed "behavioral" scoring models; and * A debt transfer Visa credit card marketed to consumers with charged-off debt. The FDIC alleges that the solicitations represented that the consumer's prior charged-off debt would be immediately transferred to the card and reported to consumer reporting agencies as paid in full. However, the FDIC charges, consumers who accepted the offer were actually enrolled in a debt repayment plan and did not receive a Visa card unless they paid 25% to 50% of their charged off debt over a 12-month period and for the few consumers who did so, the credit card they received had nominal available credit.
Separately, the FTC filed a parallel federal court action against CompuCredit. That lawsuit also names Jefferson Capital Systems, a subsidiary of CompuCredit, as a defendant for violations of the FTC Act and the Fair Debt Collection Practices Act (FDCPA), according to the FDIC announcement. Use the resouerce link below for more details.

NCUA details data collection plans for CUNA

 Permanent link
WASHINGTON (6/10/08)—The Credit Union National Association (CUNA) and its relevant committees engaged in an information session with the National Credit Union Administration (NCUA) on the data collection initiative the agency adopted at its last open board meeting. For more than an hour, NCUA Executive Director Len Skiles and NCUA Senior Attorney Tonya Green discussed the details behind the creation of the plan, as well as how the information will and will not be used. Skiles indicated that the NCUA has been involved with the underlying issue of how it can adequately and authoritatively respond to requests for information from Congress and the Government Accountability Office as far back as 1991. He noted that when the agency only produced anecdotal examples of requested information and provided limited membership increases in underserved areas, some members of Congress, their staff, and the GAO were critical of NCUA’s failure to provide statistically valid information on who credit unions serve. Arguably, Skiles indicated, NCUA, as the regulator of federal credit unions, from a regulatory standpoint should provide the information if considered important and helpful to Congress, the NCUA and federal credit unions and if the collection of the information is feasible. The NCUA officials reiterated that the agency will only publish aggregated data, data will be collected only from federal credit unions, and that the information will have no role in credit union examinations. The data collection will not begin until January 2009 and not be completed for 24 months. NCUA’s Skiles and Green also addressed concerns regarding the regulatory burden of the information gathering process for credit unions. The audio conference was hosted by CUNA’s Federal Credit Union Subcommittee and its Chairman, Marc Schaefer. Joining the call were members of the CUNA Governmental Affairs Committee, Small Credit Union Committee, Community Credit Union Committee, and the Examination and Supervision Subcommittee. Contact CUNA Deputy General Counsel Mary Dunn at MDunn@cuna.coop with questions regarding the NCUA data collection plan. For more on all aspects of the agency’s plan, use the resource link below to read a complete summary of the audio conference.

Green incentives for lenders hearing this week

 Permanent link
WASHINGTON (6/10/08)—There is a hearing scheduled this week on a bill that would provide incentives to lenders and financial institutions to provide lower interest loans and other benefits to consumers who build, buy, or remodel their homes and businesses to improve their energy efficiency. The House Financial Services Committee hearing is Wednesday and a witness list will be available later this week. Its focus is H.R. 6078, the Green Resources for Energy Efficient Neighborhoods Act of 2008. That bill was introduced May 15 by Rep. Ed Perlmutter (D-Co.) and sports 22 co-sponsors, including Rep. Barney Frank (D-Mass.), the chairman of the committee. Perlmutter, in a release, has said of his bill, “This legislation proves that it is easy to be green. This bill helps revitalize our economy by making energy efficiency practices more affordable, accessible and achievable by consumers, businesses and government entities.” The only other hearing of particular note to credit unions scheduled in the House this week is on H.R. 5840, the Insurance Information Act of 2008. That bill would create a federal Office of Insurance Information within the Department of the Treasury to provide advice and expertise on insurance policy to the Administration and to Congress. The hearing will be conducted by the House Financial Services subcommittee on capital markets, insurance, and government-sponsored enterprises. It was introduced in April by the subcommittee chairman, Rep. Paul Kanjorski (D-Pa.) and has four co-sponsors. A witness list had not been released as of Monday. Kanjorski, along with Rep. Ed Royce (R-Calif.), is also author of the Credit Union Regulatory Improvements Act (CURIA, H.R. 1537), intended to modernize the regulatory structure of credit unions.

Preston sworn in as HUD chief

 Permanent link
WASHINGTON (6/10/08)—Steven C. Preston was sworn in Monday as secretary of the U.S. Department of Housing and Urban Development (HUD). At the ceremony, President George W. Bush praised Preston’s understanding of financial markets and management skills, and White House Chief of Staff Josh Bolten administered the oath of office. The Credit Union National Association (CUNA) has called Preston, who headed the U.S. Small Business Administration for two years prior to the HUD assignment, an "effective and fair administrator" and welcomed news of his confirmation as HUD leader last week. Attending the ceremony on behalf of the National Credit Union Administration (NCUA), Vice Chairman Hood congratulated Preston on his appointment and noted the important role HUD plays in the credit union community. According to an agency release, Hood further recognized Preston’s focus on initiatives aimed at meeting the affordable housing needs of underserved urban and rural markets – the cornerstone of the credit union community.

Inside Washington (06/09/2008)

 Permanent link
* WASHINGTON (6/10/08)--The Office of Federal Housing Enterprise Housing Oversight (OFHEO) announced the first quarter minimum and risk-based capital classification for Fannie Mae and Freddie Mac yesterday. Fannie’s core capital of $42.7 billion exceeded the OFHEO’s capital requirement by $5.1 billion. Freddie Mac’s core capital of $38.3 billion exceeded OFHEO’s capital requirement by $6 billion. Fannie Mae’s risk-based capital of $47.7 billion exceeded the requirement by $24.6 billion. Freddie Mac’s risk-based capital of $42.2 exceeded the requirement by $16.1 billion. All figures were as of March 31. The OFHEO-directed capital requirement is the amount of capital the enterprise is required to maintain to compensate for increased operational risks ... * WASHINGTON (6/10/08)--Federal bank and thrift regulatory agencies announced the agenda and keynote speaker for the 2008 Interagency Minority Depository Institutions (MDI) National Conference July 16-18 in Chicago. The theme for this year will be “Know Your Business, Grow Your Business.” The speaker will be Robert L. Johnson, founder and chairman of the RLJ Companies. During the conference, representatives from the Federal Deposit Insurance Corp., the Federal Reserve Board, the Office of the Comptroller of the Currency and the Office of Thrift Supervision will address issues MDIs face ... * WASHINGTON (6/10/08)--Eleven credit union professionals and volunteers from Minnesota traveled to Washington, D.C., June 3-5 to meet with their federal representatives to discuss credit union issues and concerns. During a hill briefing at the Credit Union National Association (CUNA), Dan Mica, CUNA president/CEO, thanked attendees for making the trip and emphasized the importance of constituent contact with elected officials. The hill visits included meetings with Minnesota Rep. John Kline, Sen. Amy Klobuchar, Rep. Betty McCollum, Rep. Jim Oberstar, Rep. Collin Peterson, and Rep. Tim Walz. From left are: Kline; a member of Kline’s staff; Jeff Schwalen, president, Hiway FCU, St. Paul; and Harry Wobschall, board chairman, First Alliance CU, Rochester. (Photo provided by the Minnesota Credit Union Network). Georgia and Michigan leagues will hike Capitol Hill this week also, focusing on the Credit Union Regulatory Improvement Act (CURIA) and an interchange bill ... * WASHINGTON (6/10/08)--Federal Reserve Bank of New York President Timothy Geithner Monday called for more central bank authority over financial institutions in markets (The Wall Street Journal June 9). Today’s risk-management framework focuses too much on an individual firm’s mistakes, instead of mistakes correlated from a group of firms, he said. The current regulatory structure leaves opportunities for arbitrage and evasion, and creates risk of gaps in authority and knowledge, he added. Regulatory policy should be broadened beyond supervision of firms and oversight should be extended beyond banks, Geithner said ...

House to vote on CUNA-backed CU resolution today

 Permanent link
WASHINGTON (6/10/08)—The Credit Union National Association (CUNA) strongly endorses a House resolution honoring the 100th anniversary of the founding of the first state-chartered credit union, St. Mary's Cooperative Credit Association of Manchester, N.H. Calling the establishment of St. Mary’s “the birth of the American credit union,” the House resolution notes the following among the contributions of the credit union system:
* “Whereas St. Mary's Cooperative Credit Association and other credit unions created as a result of the passage of the Federal Credit Union Act played an instrumental role in helping hard-working Americans recover after the Great Depression; * "Whereas credit unions have consistently carried on the traditions set by St. Mary's and exemplified the American values of thrift, self-help, and volunteers, carving out a special place for themselves among the Nation's financial institutions; * "Whereas America's Credit Union Museum, located on the site of America's first credit union, maintains a mission of `educating present and future generations on the benefits of cooperative self-help efforts to promote thrift and sensible use of credit' and preserves the history and tradition of America's credit unions; * "Whereas credit unions operate with the credo, `Not for profit, not for charity-but for service' and have consistently reflected this philosophical tradition and the cooperative spirit of `people helping people' that gave birth to the Federal Credit Union Act…”
The House commendation (H.RES.1145) goes on to say the House resolves that it recognizes the 100th anniversary of the founding of St. Mary's Cooperative Credit Association, the `Bank of the People', and the birth of the American credit union.

NEW CUNA opposes Senate interchange bill

 Permanent link
WASHINGTON (UPDATED 6/9/08 11:30 a.m. ET)—The Credit Union National Association (CUNA) opposes a recently introduced Senate bill to regulate credit card interchange fees and believes the free market, not the government, should set the user fees. Sen. Richard Durbin (D-Ill.), who is majority whip, introduced a bill last week that would force payment system providers and merchants to either agree on interchange fees or argue their case before a newly created tribunal which would have the authority to set the rate. His bill, a companion to similar House legislation, would set up a three-member panel of lawyers appointed by the U.S. Department of Justice and the Federal Trade Commission. Under Durbin’s Credit Card Fair Fee Act of 2008, retailers would be able to engage in collective negotiations with the providers of any electronic payment system with significant market power, defined as 20% or more of the credit and debit card market, over the fees and terms for access to that system. If the retailers and providers do not reach a voluntary agreement on fees and terms, the matter would be brought before the three-judge board. The House bill (H.R. 5546), introduced by Rep. John Conyers (D-Mich.) who is chairman of the powerful Judiciary Committee, was drafted after Conyers conducted a series of House task force meetings focused on whether credit card companies, as well as financial institutions, engage in anti-competitive practices when setting the fees they charge retailers. CUNA Vice President of Legislative Affairs Ryan Donovan Friday said CUNA strongly opposes government intervention in what should be a free-market process and has been working closely with the Electronic Payments Coalition to oppose legislative efforts in the House and Senate. Donovan said the current system of setting interchange fees is beneficial to consumers because interchange fees assist the growth of universal acceptance of cards and the innovation of super-fast authorization technology and enhanced security measures.

IRS adds functions to online payment application

 Permanent link
WASHINGTON (6/9/08)—The Internal Revenue Service (IRS) Friday introduced several new features to its interactive Online Payment Agreement application intended to make it easier for taxpayers, or their authorized representatives, to make changes to existing installment agreements. According to an IRS release, the system will now permit individuals to revise:
* Their payment due dates and/or amounts on existing agreements; *E xisting extensions to regular installment agreements and direct debit installment agreements; and * Existing regular installment agreements to a payroll deduction installment agreement or a direct debit installment agreement.
Also, the system now permits practitioners with valid authorizations to use the signature date found on their approved Form 2848, Power of Attorney and Declaration of Representative, or the caller ID as an alternate way to authenticate when requesting agreements for clients. According to the IRS, more than 75% of those eligible for an installment agreement can establish one using the online application, Since its launch in October 2006, more than 30,000 taxpayers have successfully used it to set up a payment agreement. Those eligible include taxpayers who owe $25,000 or less in combined tax, penalties and interest. They may self-qualify, apply and receive immediate notification of approval for installment agreements – including pre-assessed agreements on tax year 2007 Form 1040 liabilities and paperless direct debit agreements, the IRS release said.

Government shouldnt interfere in interchange fees says CUNA

 Permanent link
WASHINGTON (6/9/08)—The Credit Union National Association (CUNA) opposes a recently introduced Senate bill to regulate credit card interchange fees and believes the free market, not the government, should set the user fees. Sen. Richard Durbin (D-Ill.), who is majority whip, introduced a bill last week that would force payment system providers and merchants to either agree on interchange fees or argue their case before a newly created tribunal which would have the authority to set the rate. His bill, a companion to similar House legislation, would set up a three-member panel of lawyers appointed by the U.S. Department of Justice and the Federal Trade Commission. Under Durbin's Credit Card Fair Fee Act of 2008, retailers would be able to engage in collective negotiations with the providers of any electronic payment system with significant market power, defined as 20% or more of the credit and debit card market, over the fees and terms for access to that system. If the retailers and providers do not reach a voluntary agreement on fees and terms, the matter would be brought before the three-judge board. The House bill (H.R. 5546), introduced by Rep. John Conyers (D-Mich.) who is chairman of the powerful Judiciary Committee, was drafted after Conyers conducted a series of House task force meetings focused on whether credit card companies, as well as financial institutions, engage in anti-competitive practices when setting the fees they charge retailers. CUNA Vice President of Legislative Affairs Ryan Donovan Friday said CUNA strongly opposes government intervention in what should be a free-market process and has been working closely with the Electronic Payments Coalition to oppose legislative efforts in the House and Senate. Donovan said the current system of setting interchange fees is beneficial to consumers because interchange fees assist the growth of universal acceptance of cards and the innovation of super-fast authorization technology and enhanced security measures.

Inside Washington (06/06/2008)

 Permanent link
* WASHINGTON (6/9/08)--A law enacted in Tennessee cracks down on credit card solicitations on college campuses, and may set a precedent for more tightly regulating the credit card push on campus. Tennessee’s law gives public university students the ability to opt out of the collection of personal information for solicitation purposes. Other states, such as California, Texas and Oklahoma have passed similar legislation. Texas has limited where companies can market cards on campuses, and Oklahoma made it illegal for colleges to sell students’ personal information to companies (American Banker June 6). Last month, Senate Banking Committee Chairman Christopher Dodd (D-Conn.) proposed credit card reform that would ban universal default, double-cycle billing and interest charged on fees. The bill also would limit prescreened offers of credit to consumers under 21. Issuers would also have to collect the signature of a parent or guardian before an individual under 21 is given a card (News Now May 1). Dodd’s bill aims to address complaints about young adults receiving credit card solicitations in the mail just after they turn 18. Some claim that the marketing practice could lead young consumers into high levels of debt ...

CUNA advises on CAN-SPAM rule

 Permanent link
WASHINGTON (6/9/08)—As of July 7, credit unions must remember to comply with CAN-SPAM Act rules that set certain requirements for email messages that primarily have a commercial purpose, the Credit Union National Association (CUNA) reminds. CAN-SPAM stands for Controlling the Assault of Non-Solicited Pornography and Marketing. The Federal Trade Commission (FTC), responsible for the law’s enforcement, has issued a final rule interpreting a number of provisions in the CAN-SPAM Act, a number of which may have an impact on credit unions. The law requires commercial-purpose emails to:
* Clearly and conspicuously indicate that the message is an advertisement or solicitation. Provide recipients with an opportunity to “opt-out” from receiving additional commercial e-mail messages from the same entity; and * Provide a physical postal address of the sender.
In a final rule analysis, CUNA advises that “transactional or relationship” e-mails, which may include most, if not all e-mails sent by a credit union, are not considered commercial e-mail messages and, therefore, are not subject to the same requirements. Use the resource link below for more CUNA analysis of the final FTC rule.

Mica urges Senate opposition to interchange bill

 Permanent link
WASHINGTON (6/9/08)—Each member of the U.S. Senate was urged by the Credit Union National Association (CUNA) Friday to oppose legislation that would insert government interference into a free-market system that works well—the setting of credit card interchange fees. In a June 6 letter, President/CEO Dan Mica noted CUNA’s disagreement with S. 3086, the Credit Card Fair Fee Act, introduced last week by Sen. Richard Durbin (D-Ill.). (See related story.) Mica noted that the bill would establish “a costly governmental tribunal that would be authorized to impose its decisions on a system that is more appropriately governed by the market.” CUNA has voiced opposition to a similar bill introduced in the House by Rep. John Conyers (D-Mich.). “While proponents of S. 3086 argue that interchange fees are becoming an increasing burden on their ability to do business, we believe that the current payment processing system directly contributes to the success of the retailer in guaranteed payment, increased sales, and the ability to competitively contract for payment processing services,” the CUNA letter argued. Mica pointed out that under the current fee system, 1.4 million merchants change acquiring relationships each year, in large part because of price shopping. “The number of options available to merchants and the fact that they actively change processors to get the best price available provides clear evidence that the payment processing system is competitive and the market is working,” Mica wrote. The CUNA leader also refuted the argument that legislating interchange fees would benefit consumers. “Government-imposed price controls on interchange fees are more likely to increase credit and debit card costs that consumers bear, and make convenient credit less available. “The uncertainty surrounding this legislation makes it unlikely that consumers will see any benefit. We urge you to oppose the legislation, Mica concluded.

Witness CUs are ally in Native American communities

 Permanent link
WASHINGTON (6/6/08)--Credit unions are a natural ally in the effort to reduce predatory lending because their purpose is to promote the economic well being of all people, and that role is particularly important among Native American communities, a Credit Union National Association (CUNA) witness told federal lawmakers Thursday. Darwin Brokke, president/ CEO of Citizens Community CU in Devils
Click for slide show Darwin Brokke, president/CEO of Citizens Community CU in Devils Lake, N.D., testified on behalf of CUNA. CLICK TO VIEW SLIDESHOW
Lake, N. D., testified before the Senate Committee on Indian Affairs during its hearing on “Predatory Lending in Indian Country.” Brokke said that lack of access to financial institutions plays a key role in poverty in any community, but there are additional challenges associated with serving Native American communities that make it even more the case in those areas. “Those without access to financial institutions do not have the opportunity to build assets and accumulate wealth. And, in many cases, they are forced to use informal lending structures, including borrowing from family or friends, or turning to payday lenders,” Brokke noted. Home Mortgage Disclosure Act (HMDA) data from 2006, Brokke said in his written statement , makes it clear that credit unions are more likely than other lenders to grant loans to Native Americans. He added that the HMDA data also shows that credit unions generally lend to Native Americans on more favorable terms. “That's not surprising - as member-owned, not-for-profit financial cooperatives, credit unions care deeply about their member-borrowers, “ he noted in his testimony. Specifically, the most recent HMDA data shows that credit unions approved 66% of the applications they received from Native Americans. In comparison, other lenders approved just 52% of applications they received from this group. In addition, credit union pricing is more consumer-friendly to Native Americans, Brokke said. Just five percent of single family mortgage loans originated by credit unions were high-rate loans while 28% of such loans originated by other lenders were high-rate loans. High-rate loans are defined as those with interest rates 3 percentage points or more above the rate on comparable-maturity U.S. Treasury Department securities. Regarding specific credit union initiatives created to support Indian communities, Brokke noted Credit unions’ commitment to financial education for all members. But, he added, even the best education efforts are not enough to reach all members. Other credit union efforts include:
* The National Credit Union Foundation’s (NCUF’s)establishment in 2006 of the Native American Credit Union Initiative, an effort to study credit union service to Native American communities; and * Programs such as Citizens Community’s own Open-End Lending Program and Reward Line of Credit Program.
Credit unions participating in the NCUF initiative identified several opportunities for credit unions to serve Native American communities, including: membership expansion; financial education; increased lending opportunities; accounts for tribal governments; and minimal competition from other financial institutions.

Johnson testifies to CU strength

 Permanent link
WASHINGTON (6/6/08)—At a state of banking hearing Thursday at which the Federal Deposit Insurance Corp. noted preparations for expected bank failures while the federal credit union regulator depicted credit unions as systemically robust, the contrast between banks’ and thrifts’ current experience and that of credit unions was apparent. At a Senate Banking Committee hearing, the second this year on the state of the industry, National Credit Union Administration (NCUA) Chairman JoAnn Johnson said her agency, its National Credit Union Share Insurance Fund (NCUSIF), and the credit union movement have an overall strength, with a few, isolated problems. Johnson testified that as of the first quarter of the year, aggregate assets of federally insured credit unions increased $39 billion, or an annualized 20.57%, reaching a new high of $792.16 billion. She noted that loans comprised 67% of assets, down slightly since December 2007 due to asset growth strongly outpacing loan growth. However, also down—slightly—is the loan delinquency rate which Johnson reported at 2.4%, or down 0.2%, although delinquent real estate loans increased 0.3% from January through March of this year. Johnson attributed the general strength of credit unions, in part, to their having “effectively implemented” guidance by the NCUA related to real estate lending positioning them to withstand the current economic downturn. Also testifying before the panel were FDIC Chairman Sheila Bair, Comptroller of the Currency John Dugan, Director John Reich of the Office of Thrift Supervision, Vice Chairman Donald Kohn of the Federal Reserve Board, and Timothy Karsky, Commissioner/Chairman, North Dakota Department of Financial Institutions/ Conference of State Bank Supervisors. As part of her formal testimony and during questioning, FDIC’s Bair noted her agency’s careful preparations for any bank failures that may result in the coming year and beyond. Bair said she anticipated that there would be such failures and that they would not be confined to only the smallest institutions. However, she also said she would be greatly surprised by the failure of any large institution. Bair took and opportunity to state her support of the U.S. Treasury Department’s blueprint for financial regulatory reform, which she said would consolidate all the financial regulators. NCUA’s Johnson later returned to that point and told the panel of lawmakers that separate regulation for credit unions as distinct institutions is necessary and justified, as the current health of the credit union system demonstrates, despite problems elsewhere in the financial sector. The Credit Union National Association strongly opposes any Treasury plan that would consolidate financial institution regulation and oversight.

CUNA calls Preston effective fair

 Permanent link
WASHINGTON (6/6/08)—Credit Union National Association (CUNA) President/CEO Dan Mica Thursday called Steven Preston an “effective and fair administrator” and welcomed news of his confirmation as head of the U.S. Department of Housing and Urban Development (HUD). Preston was confirmed late Wednesday by the Senate to serve as HUD secretary. He has served for two years at the head of the U.S. Small Business Administration (SBA). “Administrator Preston listened carefully to credit unions about their hopes for better serving their members while he was at the Small Business Administration,” said Mica. “Having proven himself as an effective and fair administrator in that role, we look forward to working with him in his new position of secretary of the Department of Housing and Urban Development,” the CUNA leader added. President George W. Bush said in a statement, “Steve is a strong leader whose understanding of our financial markets and strong management skills make him highly qualified to serve in this important position. “He will aggressively work to ensure that the department remains focused on its mission of making housing more affordable and helping Americans keep their homes. “Steve is also a consensus builder who will build on our efforts to work with Congress on responsible legislation addressing our Nation’s housing policies.” Former HUD chief Alphonso Jackson', who resigned earlier this year, is under criminal investigation because of allegations that he favored friends with contracts at public housing authorities controlled by HUD.

Bankruptcy filings rose in March

 Permanent link
WASHINGTON (6/6/08)--Bankruptcy filings in the federal courts for the 12-month period ending March 31 exceeded 900,000, according to statistics released Monday by the Administrative Office of the U.S. Courts. The 901,927 bankruptcy cases filed represent a 30% increase over the 695,575 cases filed in the 12-month period ending March 31, 2007. The majority of filings involve non-business debts. Non-business filings, also called personal or consumer filings, for the 12-month period ending March 31 totaled 871,186, up 29% compared with the same time period the year before. Filings involving predominantly business debts also rose. They totaled 30,741, up 40% compared with the same time period the year before. For the 12-month period ending March 31, filings rose for all bankruptcy chapters, except for Chapter 12:
* Chapter 7 (liquidations) filings rose 36% to 560,015, compared to the 413,294 Chapter 7 filings in the 12-month period ending March 31, 2007; * Chapter 13 (reorganization for individuals with regular income) filings rose 21% to 334,551, from the 276,649 bankruptcies filed in the 12-month period ending March 31, 2007; * Chapter 11 (business reorganizations) filings rose 34%, to 6,971 compared to the 5,199 Chapter 11 filings in the same time period in 2007; and * Chapter 12 (farmers) filings fell 8% to 343, from the 372 filings for the 12-month period ending March 2007.

Inside Washington (06/05/2008)

 Permanent link
*WASHINGTON (6/6/08)--The Federal Reserve Board on Thursday announced its approval of the notice of Bank of America Corporation, Charlotte, N.C., to acquire Countrywide Financial Corporation ("Countrywide"), Calabasas, Calif., and thereby indirectly acquire Countrywide Bank, FSB, Alexandria, Va., and certain other nonbanking subsidiaries of Countrywide… * WASHINGTON (6/6/08)--Presidential candidate John McCain (R-Ariz). is in favor of waiting until the market improves before using government resources to correct it, said Douglas Holtz-Eakin, chief economic adviser to the senator(American Banker June 5). McCain prefers to monitor the situation before taking action, he said. Compared with Sen. Barack Obama (D-Ill.), McCain’s likely competition in the presidential race, McCain’s financial plans for the nation are much less detailed. However, he has said he would be interested in creating a Justice Department task force to look at potential mortgage abuses, and increasing the government’s ability to back student loans ... * WASHINGTON (6/6/08)--A popular Small Business Administration (SBA) pilot program, Community Express, which encourages lending to minorities, veterans and women, is being scaled back. Since Oct. 1, the number of Community Express loans increased 55% from two years ago and was 12% of all 7(a) loans created (American Banker June 5). Community Express is supposed to cap loans at 10% of the 7(a) total. Some of the program’s lenders, like U.S. Bancorp, are cutting back because of the heavy use of the program. Erik Daniels, U.S. Bancorp’s SBA division national sales manager, suggested Community Express increase its caps. Eric Zarnikow, Capital Access associate administrator, said Capital Express is not planning to increase its limits ...

NEW Senators add support for CURIA

 Permanent link
WASHINGTON (6/4/08, UPDATED 12:00 p.m. ET)-—Sens. Susan Collins and Olympia Snowe, both Maine Republicans, have signed on in support of the Senate bill (S. 2957) intended to modernize the regulatory structure for credit unions and provide more choices in services for their member-owners.
That bill, the Credit Union Regulatory Improvements Act (CURIA), was introduced in April by Sen. Joseph Lieberman (ID-Conn.). A House version of the regulatory improvements package (H.R. 1537) carries the names of 149 official backers. Collins and Snowe join Rep. Bernard Sanders (I-Vt.) as co-sponsors of the bill. Sanders penned his name to the bill on May 14. Collins called the legislation “an opportunity for credit unions to better serve the thousands of small business owners in Maine and the millions across the country, as well as provide affordable financial services to more low-income consumers.” “I understand the economic benefit that credit unions provide to communities and consumers, and, during these difficult economic times, the ability of credit unions to offer additional services and operate more efficiently is more important than ever,” Collins said in a statement noting her support. Maine’s Snowe said, “Maine credit unions play an essential role in our state’s economy. Increasing credit unions’ ability to make member business loans will increase small firms’ access to capital and help to stimulate local economies throughout Maine and the country. “As the ranking member of the Senate Committee on Small Business and Entrepreneurship, I know first-hand that Maine’s credit unions are ideally positioned to help expand Maine’s economy, drive economic development, and create jobs.” Credit Union National Association (CUNA) President/CEO Dan Mica today said, "On behalf of credit unions across the nation, our thanks to Sens. Snowe and Collins for their support of credit unions in co-sponsoring CURIA.” He added, “And kudos to the Maine League and Maine credit unions for working so effectively with their senators. It is appropriate for credit unions across the country to now express their thanks, in e-mails and letters, to the two Maine senators for their solid support for our legislation – and our future." In early May, CUNA contacted each member of 110th U.S. Senate to urge support of S. 2957. CUNA’s Mica wrote that by co-sponsoring CURIA, lawmakers are "helping credit unions continue their mission of serving working families, making needed services available to lower-income or underserved consumers, and helping promote economic growth and well being in our nation's communities." Beyond that, Mica noted, CURIA will also improve the quality of services to credit union members by updating or removing other burdensome regulations. The letter included an attachment with specific information about important reforms within CURIA. In part, CURIA proposes to:
* Modernize credit union capital standards to permit more efficient capital management while allowing more earnings to be returned to members in lower costs and expanded services; * Expand the ability of credit unions to make loans to finance their members' local small businesses; and * Permit more credit unions to offer needed services in lower income communities that are not adequately served by other depository institutions.
In addition to the Small Business Administration Committee, Snowe’s committee assignments include Finance, which addresses issues relating to taxes, health care, trade and Social Security. Collins is ranking member and former chairman of the Homeland Security and Governmental Affairs Committee, which has jurisdiction over the Department of Homeland Security and is the Senate’s chief oversight committee. Maine CU League President John Murphy thanked the senators for their leadership roles in becoming early co-sponsors of CURIA. “Sens. Collins and Snowe have a long history of supporting credit unions and consumers, and this legislation is about helping credit unions help consumers. Both senators are well-respected by their colleagues regardless of party affiliation and having them as early co-sponsors provides this legislation with a solid foundation to move forward and gain additional co-sponsors.

CU-backed candidates advance

 Permanent link
WASHINGTON (6/5/08)—Credit union-backed candidates in New Jersey and New Mexico won primaries this week for seats in the U.S. Senate, as did one candidate for a U.S. House seat in California. And two candidates with credit union support, vying for U.S. House slots in Alabama, have successfully advanced to run-off races in their state on July 15. The Credit Union National Association and state leagues supported the following candidates: In New Mexico, U.S. House member Steve Pearce won the Republican primary in the race to replace retiring Sen. Pete Domenici, also a Republican. Pearce currently is a member of the House Financial Services Committee and a co-sponsor of H.R. 1537, the Credit Union Regulatory Improvements Act (CURIA). He will face Rep. Tom Udall (D-N.M.) in the general election. Incumbent Sen. Frank Lautenberg (D-N.J.) defeated Rep. Rob Andrews (D-N.J.) in their state’s Democratic primary. Lautenberg will oppose former Republican Rep. Dick Zimmer in the general election. On the other side of the country, Californian Duncan D. Hunter, son of CURIA cosponsor and former presidential hopeful Rep. Duncan Hunter (R-Calif.), easily won his four-way primary with 73% of the vote. Also advancing in their races:
* State Rep. Jay Love (R) of Alabama moved ahead in his race for a U.S. House seat vacated by retiring Rep. Terry Everett (R-Ala.). On July 15, Love will be in a run-off election against community banker and state senator, Harri Anne Smith; and * Also in Alabama, credit union-backed candidate and casualty insurance executive Wayne Parker will be in a GOP runoff against Huntsville-based attorney Cheryl Guthrie. Parker and Guthrie are seeking the Republican nomination to replace retiring incumbent Rep. Bud Cramer (D-Ala.)
Each successful candidate received $5,000 from CUNA’s Credit Union Legislative Action Council (CULAC). Of the Alabama race, Alabama CU League President Gary Wolter said Wednesday, “We were very pleased by the results of Tuesday’s primary, Both Wayne and Jay have shown themselves to be leaders that understand credit unions, and our issues, and how important credit unions are for so many people. We look forward to continuing to work with them during the next phase of the campaign.”

CUNA comment on NCUA honesty standard

 Permanent link
WASHINGTON (6/5/08)—Providing credit unions with guidance to interpret a statutory honesty standard for employees is a good idea, but the National Credit Unions Administration’s (NCUA’s) current plan needs a few changes to be most useful, according to the Credit Union National Association (CUNA. In a comment letter to the agency, CUNA said that the NCUA’s move to establish an interpretative ruling addressing provisions in the Federal Credit Union Act that prohibit persons convicted of criminal offenses relating to dishonesty, breach of trust and certain other offenses from participating in the affairs of a federally insured credit union may be helpful both to credit unions as well as to their examiners. Furthermore, the effort parallels guidance from the Federal Deposit Insurance Corp. and the Office of Thrift Supervisions for their regulated institutions. However, CUNA wrote, the NCUA should discontinue its informal process now used to review credit unions’ applications for prior approval and establish a more formal process. Among its other points, CUNA said:
* While the FDIC has similar guidance, it has also incorporated procedural provisions into its regulation to facilitate compliance for federally insured banks on these issues. CUNA supports this approach to the extent it will make it easier for credit unions to meet their responsibilities; * The FDIC has developed guidance for federally insured banks on pre-employment background screening that also addresses how the prohibition on persons convicted of certain crimes should be dealt with. NCUA should review this guidance and consider adopting it for credit unions, as appropriately modified; * NCUA should establish specific timeframes for when it will respond to consent requests and appeals, and address these issues in its regulations; and * NCUA should provide practical examples to illustrate the phrase, “participate, directly, or indirectly, in the conduct of the affairs of any insured credit union.”
Use the resource link to read more of CUNA’s comment on the NCUA proposal.

Senators add support for CURIA

 Permanent link
WASHINGTON (6/5/08)-- Sens. Susan Collins and Olympia Snowe, both Maine Republicans, have signed on in support of the Senate bill (S. 2957) intended to modernize the regulatory structure for credit
U.S. Sen. Susan Collins (R-Maine), right, chats with Maine CU League President John Murphy prior to addressing a delegation of Maine credit union representatives in Washington, D.C. (Photo provided by the Maine CU League)
unions and provide more choices in services for their member-owners. That bill, the Credit Union Regulatory Improvements Act (CURIA), was introduced May 1 by Sen. Joseph Lieberman (ID-Conn.). A House version of the regulatory improvements package (H.R. 1537) carries the names of 149 official backers. Collins and Snowe Wednesday join Sen. Bernard Sanders (I-Vt.) as co-sponsors of the bill. Sanders penned his name to the bill on May 14. Collins called the legislation “an opportunity for credit unions to better serve the thousands of small business owners in Maine and the millions across the country, as well as provide affordable financial services to more low-income consumers.” “I understand the economic benefit that credit unions provide to communities and consumers, and, during these difficult economic times, the ability of credit unions to offer additional services and operate more efficiently is more important than ever,” Collins said in a statement noting her support.
U.S. Sen. Olympia Snowe (R-Maine), right, and Maine CU League President John Murphy at a special breakfast of Maine credit union representatives attending CUNA’s GAC in Washington, D.C. in March.
Maine’s Snowe said, “Maine credit unions play an essential role in our state’s economy. Increasing credit unions’ ability to make member business loans will increase small firms’ access to capital and help to stimulate local economies throughout Maine and the country. “As the ranking member of the Senate Committee on Small Business and Entrepreneurship, I know first-hand that Maine’s credit unions are ideally positioned to help expand Maine’s economy, drive economic development, and create jobs.” Credit Union National Association (CUNA) President/CEO Dan Mica Wednesday said, "On behalf of credit unions across the nation, our thanks to Sens. Snowe and Collins for their support of credit unions in co-sponsoring CURIA.” He added,“And kudos to the Maine League and Maine credit unions for working so effectively with their senators. It is appropriate for credit unions across the country to now express their thanks, in e-mails and letters, to the two Maine senators for their solid support for our legislation--and our future." In early May, CUNA contacted each member of 110th U.S. Senate to urge support of S. 2957. CUNA’s Mica wrote that by co-sponsoring CURIA, lawmakers are "helping credit unions continue their mission of serving working families, making needed services available to lower-income or underserved consumers, and helping promote economic growth and well being in our nation's communities." Beyond that, Mica noted, CURIA will also improve the quality of services to credit union members by updating or removing other burdensome regulations. The letter included an attachment with specific information about important reforms within CURIA. In part, CURIA proposes to:
* Modernize credit union capital standards to permit more efficient capital management while allowing more earnings to be returned to members in lower costs and expanded services; * Expand the ability of credit unions to make loans to finance their members' local small businesses; and * Permit more credit unions to offer needed services in lower income communities that are not adequately served by other depository institutions.
Collins is ranking member and former chairman of the Homeland Security and Governmental Affairs Committee, which has jurisdiction over the Department of Homeland Security and is the Senate’s chief oversight committee. In addition to the Small Business Administration Committee, Snowe’s committee assignments include Finance, which addresses issues relating to taxes, health care, trade and Social Security.
Audio file CUNA Legislative Affairs Senior Vice President explains the importance of growing Senate support for the Credit Union Regulatory Improvements Act. Click to watch.
Maine CU League President John Murphy thanked the senators for their leadership roles in becoming early co-sponsors of CURIA. “Sens. Collins and Snowe have a long history of supporting credit unions and consumers, and this legislation is about helping credit unions help consumers. Both senators are well-respected by their colleagues regardless of party affiliation and having them as early co-sponsors provides this legislation with a solid foundation to move forward and gain additional co-sponsors.

Inside Washington (06/04/2008)

 Permanent link
* WASHINGTON (6/5/08)--Several regulatory changes to the financial system to reduce its vulnerability are on the way, Federal Reserve Board Chairman Ben Bernanke said in a speech before attendees of the International Monetary Conference in Barcelona, Spain, Tuesday. “Among the changes we expect to see are strengthening of capital and liquidity rules, greater disclosure requirements, an increased emphasis on the measurement and management of firmwide risks, and further steps to increase the transparency and resilience of the financial infrastructure,” he said. The Fed hopes to achieve a “more effective balance” between market discipline and regulation, he added. He also noted that the Fed and the Treasury continue to monitor developments in foreign exchange markets, and reiterated the Fed’s measures to ensure that financial institutions have adequate access to central bank liquidity ... * WASHINGTON (6/5/08)--The Financial Accounting Standards Board plans to scrap qualified special-purpose entities (QSPEs) in FAS 140 (American Banker June 4). If approved, the revision would be effective June 2009. Deliberation on the new standard is expected this month, and a public comment period will be set in July. A roundtable, where critics will be invited to meet with the board, is slated after the comment period. Banks and other financial institutions had improperly used QSPEs to securitize prepackaged loans. Under the new standard, companies will have to decide whether to put the entities on the balance sheet(CFO.com June 2) ... * WASHINGTON (6/5/08)--The Federal Deposit Insurance Corp. (FDIC) will sponsor a forum on mortgage lending for low- and moderate-income (LMI) households July 8. The purpose of the forum is to explore a framework for mortgage lending in the future, including identifying market and regulatory incentives for encouraging responsible lending. Speakers include: Henry Paulson, Treasury Secretary; Ben Bernanke, Federal Reserve Board chairman; and James Dimon, CEO and board chairman of JP Morgan Chase and Co. Topics include: Back to Basics, Reintroducing Standard Underwriting Criteria and Pricing to the LMI Mortgage Market; Reasonable, Profitable and Innovative Approaches to LMI Mortgage Lending; and Building Relationships, Building Communities: Partnerships that Foster Home Ownership ... * WASHINGTON (6/5/08)--If he is elected president, Sen. Barack Obama (D-Ill.) says he would offer several programs to protect consumers. He would encourage credit unions to provide short-term loans to the underserved and would try to cap interest rates on payday loans at 36% (American Banker June 4). He would create a $10 billion foreclosure prevention fund paid for by penalties given to lenders who engage in fraud, Obama said. The senator also proposed extending the Federal Reserve Board’s supervisory authority over institutions who borrow from the Fed, which contrasts with the Treasury’s blueprint to keep the Fed as a market stability monitor. Referencing a March 27 speech made by Obama in New York, Daniel Tarullo, an economic adviser to the senator, said the candidate’s focus on regulatory reform is not normally seen in presidential candidates. Sen. John McCain (R-Ariz.) said in March that he didn’t support a government-backed bailout for mortgage lenders. Several weeks later, the senator supported a Federal Housing Administration plan by House Financial Services Committee Chairman Barney Frank (D-Mass.) and Senate Banking Committee Chairman Christopher Dodd (D-Conn). ...

CUs a solution for consumers Mica tells FOX TV

 Permanent link
WASHINGTON (6/5/08)--Especially in today's tough economy, consumers will do well to turn to credit unions for a good deal on financial services, Credit Union National Association (CUNA) President/CEO Dan Mica told viewers of Fox Business Channel in a live television interview yesterday.
CUNA President/CEO Dan Mica prepares to discuss credit unions advantages for consumers during a live FOX Business Channel broadcast yesterday. (Photo provided by CUNA)
"Credit unions are one of the best places people can go in difficult times," Mica said, explaining credit unions typically offer better rates and lower fees because they are not-for-profit cooperatives. "They are not driven by that bottom line and shareholder needs," he said. "In fact every single member of a credit union is an owner of that credit union." Mica also explained why credit unions were not caught up in the subprime debacle, pointing out credit unions as not-for-profit co-ops operate more conservatively and are more apt to hold loans in portfolio. Mortgage delinquency and charge off ratios are both less than 1%, well below bank averages, he added. "Credit unions didn't make these no document loans, these liar loans, exotic loans. They're part of the solution, not the problem, and people who got those kinds of loans are now turning to credit unions for help." The CUNA leader also told Fox Business that most consumers can likely find a credit union they are eligible to join. He offered CUNA's creditunion.coop consumer web site, which includes a credit union locator tool, as a resource.

Fryzel makes case before Senate committee

 Permanent link
Click to view larger image NCUA Board nominee Michael Fryzel before yesterday's Senate Banking Committee hearing on Capitol Hill. (Photo provided by CUNA)
WASHINGTON (6/4/08)—National Credit Union Administration (NCUA) nominee Michael Fryzel appeared before the Senate Banking Committee Tuesday to present his case for why he is a good choice for federal credit union regulator. Fryzel’s nomination hearing unfolded in a fairly routine manner, except for the number of other nominees--for other federal positions--that joined him on the panel of prospective government representatives. There were 10 individuals whose nominations were being considered by the banking panel simultaneously. However, the outcome of the nomination hearings may not prove to be routine. With time running out for his administration, President George W. Bush has been pushing the Senate since the beginning of the year to confirm close to 200 judicial and agency nominees, action that has in some cases been pending for many months. Withholding votes this year would allow the winner of the 2008 presidential election in November to choose new candidates. However, as noted by washingtonpost.com on Feb. 8, Senate Democrats blame Bush for the confirmation delay, charging that the President has refused to compromise on choices they consider extreme. It was unclear by press time whether the bottleneck had been sufficiently addressed to clear the way for the nominees’ endorsement by the Senate Banking Committee. In addition to Fryzel, those who have existed in a nomination limbo include three candidates for Federal Reserve Board governor and would-be director of the U.S. Department of Housing and Urban Development Steven Preston. Also, and likely the White House priority, are 28 designated judges who would have lifetime positions if confirmed. During his nomination hearing, Fryzel said his priority as a federal regulator would be oversight of the safety and soundness of credit unions. He said consumers not only place their money in credit unions, they also place their trust. Fryzel said he will work to protect the rights of consumers through such things as plain language disclosures, but underscored that credit unions “naturally gravitate toward giving consumers a fair deal." He said as NCUA chairman he would maintain a “healthy and dynamic, arms-length” relationship with the industry. If Fryzel’s nomination is approved, his name will then be sent to the full Senate for confirmation. Fryzel was recommended for the NCUA position last December by President Bush. If confirmed, he will replace JoAnn Johnson as chairman of the agency. Johnson's term expired in August 2007. She has been on the NCUA board since 2002 and has served as chairman since 2004. At the time of her successor’s nomination, Johnson made it clear that she would remain at the helm until a candidate made it successfully through the confirmation process. Fryzel is an Illinois real estate lawyer and was with the state's Department of Financial Institution from 1977 to 1989, heading the agency from 1982 to 1989. Upon leaving that position, Fryzel founded his private law practice, the Law Offices of Michael Fryzel, which specializes in financial regulatory and real estate law.

Final rule analysis Disclosures for subprime loans

 Permanent link
WASHINGTON (6/4/08)—Federal financial regulators, including the National Credit Union Administration (NCUA), have issued disclosures that financial institutions may provide borrowers who are onsidering subprime loans. These disclosures, or “illustrations,” are intended to assist credit unions and other financial institutions in implementing the consumer protection provisions of the Statement on Subprime Mortgage Lending, issued recently by the regulators, according to a final rule analysis from the Credit Union National Association. The Statement addresses risks and other issues relating to subprime mortgage lending practices, specifically for adjustable-rate mortgage (ARMs) loans. Although the Statement outlines the type of information that should be provided to consumers, the use of these specific disclosures will not be required. They are intended only to serve as illustrations of the information described in the Statement. These disclosures are effective as of May 29. Use the resource link below for more information.

Inside Washington (06/03/2008)

 Permanent link
*
Click to view larger image Click for larger view
WASHINGTON (6/4/08)--Virginia Gov. Mark Warner won the endorsement of the state’s 202 credit unions in his bid for the U.S. Senate seat of retiring Sen. John Warner. The endorsement was announced at Credit Union House May 22 in Washington, D.C. Pictured with the “Little Guy” (from left) are: Stan Leicester, Virginia Credit Union League chairman; Warner; Larry Kelly, CEO, Apple FCU, Fairfax, Va.; and Rick Pillow, league president. The "Little Guy" is an iconic figure that represents those served by America's credit unions.(Photo provided by the Virginia Credit Union League) ... * WASHINGTON (6/4/08)--Oversight of over-the-counter credit derivatives needs to be strengthened, said Sen. Charles Schumer (D-N.Y.) He wrote a letter to the Federal Reserve Board and the Commodities Future Trading Commission, noting that the recent collapse of Bear Stearns Co. shows derivatives trading can create risk (American Banker June 3) ... * WASHINGTON (6/4/08)--Minnesota Gov. Tim Pawlenty vetoed a measure that would place a one-year moratorium on foreclosures(American Banker June 3). The governor wrote in a letter to state Senate President James Metzen that he vetoed the measure because he feared it would increase interest rates. The bill would have also let homeowners pay the minimum monthly payment at the time of origination or 65% of the mortgage payment upon default, whichever is lower ... * WASHINGTON (6/4/08)--The Federal Reserve Board held a meeting last week to discuss investment banks. The Fed did not release details of the meeting (American Banker June 3). Questions about how to regulate investment banks have been circulating for several months, and in March, 20 dealers were given access to the Fed’s discount window. The Fed has sent examiners to the banks that received loans ...

NCUA among regulators for Senate state of banking hearing

 Permanent link
WASHINGTON (6/3/08)--National Credit Union Administration (NCUA) Chairman JoAnn Johnson and the other federal financial institution regulators will appear Thursday before the Senate Banking Committee to discuss the state of the financial services industry. The hearing, entitled, "The State of the Banking Industry: Part II," is a follow-up to one held in March, according to American Banker (June 2). In addition to Johnson, also scheduled to testify:
* Federal Reserve Board Vice Chairman Donald L. Kohn; * Federal Deposit Insurance Corp. Chairman Sheila Bair; * Office of Thrift Supervision Director John Reich; and * Comptroller of the Currency John Dugan.

Senate hears NCUA Board nominee today

 Permanent link
WASHINGTON (6/3/08)--The Senate Banking Committee today plans a hearing on the nomination of Michael E. Fryzel, an Illinois real estate lawyer and former director of the state's Department of Financial Institutions, to become a member of the National Credit Union Administration (NCUA) board of directors, and ultimately to be its chairman. Fryzel is among nine nominees participating Tuesday’s event. If confirmed, Fryzel will replace JoAnn Johnson as chairman. Johnson's term expired in August of 2007. She has been on the NCUA board since 2002 and has served as chairman since 2004. Johnson has indicated she will likely remain as chairman until her successor makes it through the nominating process. Fryzel was with the Illinois Department of Financial Institutions from 1977 to 1989 and headed the agency from 1982 to 1989. Integral to that job, according to his resume, was the licensing and regulation of more than 700 state-chartered credit unions with assets exceeding $4.3 billion. Upon leaving that position, Fryzel founded his private law practice, the Law Offices of Michael Fryzel, which specializes in financial regulatory and real estate law. Listed among his professional affiliation, Fryzel said he is a member of the Governor's Board of CU Advisors and has been since 1992. He received his bachelor's degree from Valparaiso University, his MBA from the University of Chicago, and his JD from Loyola University of Chicago School of Law.

Native American predatory lending examined by Senate

 Permanent link
WASHINGTON (6/3/08)--The Credit Union National Association (CUNA) will participate Thursday in a U.S. Senate Committee on Indian Affairs oversight hearing entitled “Predatory Lending in Indian Country.” CUNA witness Darwin Brokke, president/CEO of Citizens Community CU of Devils Lake, N.D., will explain credit union alternatives to predatory lending in Native American communities. The hearing starts at 9:30 a.m. ET and can be viewed via the Internet. Use the resource link below for more information.

Inside Washington (06/02/2008)

 Permanent link
* WASHINGTON (6/3/08)--The mortgage industry needs consistent regulation, said Office of Thrift Supervision (OTS) Director John Reich at a convention last week. Mortgage brokers and mortgage bankers are regulated unevenly by individual states, while federally supervised banks and thrifts must abide by nationwide standards. Reich said a “level playing field” must be created. “Establishing a partnership between the states and a federal regulator to set and enforce minimum mortgage funding standards would ensure accountability, consistency and transparency throughout the mortgage lending process,” he said, adding that the OTS is qualified to fill that role ...