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Washington Archive

Washington

CUNA to participate in Treasury Hill interchange briefings

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WASHINGTON (7/13/09)--Though potential legislation aimed at addressing interchange fees was not added to a recent Senate appropriations bill, the Credit Union National Association continues to monitor the interchange issue and is scheduled to discuss interchange with U.S. Treasury officials this week. CUNA will join other members of the Electronic Payments Coalition in a meeting with Treasury Secretary for Financial Institutions Michael Barr. During the meeting, CUNA will advocate for the interests of credit unions regarding interchange. CUNA will hold additional interchange fee discussions with so-called “Blue Dog” conservative Democrats later this month. Both House and Senate members have looked to address interchange fees through legislation in recent months, but CUNA has recommended that legislators wait for the results of a Government Accountability Office review of interchange fees before they act.

Higher CLF CDFI and co-op development funding move ahead

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WASHINGTON (7/13/09)--A Senate committee last week approved a State-Foreign Appropriations Bill which includes a $10 million grant for the U.S. Agency for International Development's cooperative development programs sponsored by such organizations as the the World Council of Credit Unions (WOCCU). The WOCCU program helps credit unions in developing nations provide financial services to their members. The CDP also helps credit unions in these nations expand their technical and regulatory expertise. The Senate Appropriations subcommittee on financial services and general government also approved its appropriations bill last week. Under that bill, the National Credit Union Administration will be granted continued authority to allow the Central Liquidity Facility (CLF) to lend to its statutory cap of $41 billion. Low-income credit unions will also have access to $1 million in technical assistance funds under the Community Development Revolving Loan Fund, effective until September 30 of 2011. The Senate also approved $166.75 million in Community Development Financial Institution (CDFI) funds, which is short of the House's recommendation and the Obama administration's proposed budget of $234.6 million. The Senate bill will also make $236 million in funds available through the Small Business Administration's business loan account. A similar appropriations bill, which was approved by a House committee early last week, would allow the CLF to maintain its maximum amount through fiscal 2010 and would increase funding for CDFI fund and the SBA's business loan account.

Inside Washington (07/10/2009)

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* WASHINGTON (7/13/09)--Investors expect that the Federal Deposit Insurance Corp.’s (FDIC) plans to restrict private-equity bank owners will reduce the required capital amounts by half. The agency proposed July 2 a minimum Tier 1 leverage ratio of 15% for private-equity investors who purchase failed banks (American Banker July 10). Wilbur Ross, CEO of W.L. Ross & Co., and Patricia McCoy, a law professor at the University of Connecticut--who attended an FDIC roundtable July 6--expect the capital amounts will be dropped. After the proposed rule was released last week, FDIC Chairman Sheila Bair said the capital ratio may not be popular. The FDIC would consider external input on the matter, according to an agency spokesman ... * WASHINGTON (7/13/09)--Small businesses that would otherwise have difficulty securing private equity or venture capital may find funding easier to get as a result of changes to the U.S. Small Business Administration’s (SBA) Small Business Investment Company (SBIC) program. The changes are a part of the American Recovery and Reinvestment Act. The changes include: eligibility for greater SBA guaranteed funding; maximum SBA funding levels for SBICs that will increase up to three times the private capital raised by SBIC; and limits that are higher for SBICs licensed after Oct. 1 and that certify at least 50% of their investments will be made in small businesses in low-income areas--up to $175 million for single licenses and up to $250 million for joint licenses ...

NCUA to discuss share insurance premium Thursday

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ALEXANDRIA, Va. (7/13/09)--Discussion of proposed rules that address the National Credit Union Administration's (NCUA) National Credit Union Share Insurance Fund Premium and one percent deposit should headline the NCUA’s agenda for the upcoming July 16 board meeting. The NCUA is also scheduled to consider final rules on credit union reporting and Truth in Savings Act disclosures. The comment deadline for the NCUA’s proposals regarding Truth in Savings Act disclosures, which would require credit unions to disclose on the periodic statement the dollar amounts charged for overdraft fees and returned item fees, passed on May 26. Interest rate ceiling determinations under Section 107(5) of the Federal Credit Union Act are also expected to be discussed at the board meeting. The NCUA will also consider reprogramming its 2009 budget and discuss its monthly Insurance Fund Report at this week's meeting. As is routine, a closed session of the NCUA board will follow the early open session.

Dodd Frank want regulators to fix loan mod problem

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WASHINGTON (7/13/09)--Senate and House financial heavyweights Sen. Chris Dodd (D-Conn.) and Rep. Barney Frank (D-Mass.) have asked federal regulators to look into possibly inflated valuations of some second mortgages that are being held on banks balance sheets to aid government-sponsored assistance for distressed homeowners. According to a Friday letter sent to the leaders of the National Credit Union Administration, the Federal Reserve, the Federal Deposit Insurance Corporation, and other federal regulatory entities, carrying mortgage loans at “potentially inflated values” could prevent loan servicers from negotiating “the disposition of these liens” and “may stand in the way” of “increasing participation” in the Obama administration’s Hope for Homeowners (H4H) mortgage adjustment program. Another issue facing the H4H program is the “unwillingness of subordinate lien holders to extinguish their liens” in order to participate in the program. H4H allows eligible homeowners to refinance their subprime mortgage loans into fixed-rate, FHA-backed loans. The H4H program also allows the subordinated lien holders to share in any future appreciation of the property as a means to encourage them to participate in the program. In the letter, Dodd and Frank expressed concern that “significant volumes” of “closed-end second mortgages or home equity lines of credit” are being held on the balance sheets of large mortgage servicers, adding that the “loss allowances associated with these subordinated liens may be insufficient to realistically and accurately reflect their value… in light of the historically poor performance of first lien mortgages” and the “diminished values of the underlying collateral.” The legislators urged federal authorities to look into this issue “as expeditiously as possible.”

House committee to hear from consumer advocates on reg reform

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WASHINGTON (7/13/09)--Rep. Barney Frank (D-Mass.), chairman of the House Financial Services Committee, announced Friday his panel will conduct a hearing entitled “Community and Consumer Advocates’ Perspectives on the Obama Administration’s Financial Regulatory Reform Proposals” on Thursday, July 16. The hearing is one in a series the committee has scheduled to explore issues surrounding the government’s proposals to revamp the financial services regulatory structure. As background to the hearings, House Democrats are holding a round of briefings from representatives of groups affected by the proposed changes. CUNA will participate in such a briefing Tuesday. Scheduled for Thursday, the House Financial Services subcommittee on domestic monetary policy intends to hold a related hearing called “Regulatory Restructuring: Safeguarding Consumer Protection and the Role of the Federal Reserve.” And on Wednesday, the full committee has scheduled a look at the banking industry perspective on the administration’s proposal, witnesses to be announced.

Ellison introduces credit rating agency reforms

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WASHINGTON (7/13/09)--Congressman Keith Ellison this week introduced legislation that would seek to strengthen and reform the “wholly inadequate” regulation and oversight of credit rating agencies. According to a release, Ellison’s legislation, H.R. 3128, would amend the Federal Reserve Act to authorize Federal Reserve Banks to examine the methodologies of used by nationally recognized statistical rating organizations in analyzing and rating asset backed securities and structured finance products. This authority would extend beyond the Feds current administrative powers under the Term Asset-Backed Securities Loan Facility to cover all types of asset-backed securities. The Securities and Exchange Commission is currently tasked with performing some oversight of credit ratings agencies. Citing instances where credit ratings agencies “have given top ratings to products backed by dubious mortgages and other loans,” Ellison said that the approval that these agencies give to a given product may be conferring a “legitimacy” that does not exist. Further, current law gives no governmental organization the power to ensure that credit rating agencies are “making reasonable assumptions” or that they have “a basic understanding” of the risks that they are assessing, Ellison added. Subjecting credit rating agencies to “enhanced supervision” by a regulator with “relevant expertise” would provide a “sensible guard rail for our financial system,” Ellison said. Ellison's bill was awaiting action from the House Financial Services Committee at press time.