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CUNA covers interchange in first regulatory podcast

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WASHINGTON (7/18/11)--Credit Union National Association (CUNA) Deputy General Counsel Mary Dunn has covered the latest debit interchange developments, and background information on the Federal Reserve’s debit interchange fee cap, in a recently released CUNA podcast. The podcast is the first in a regular series. Future podcasts will focus on National Credit Union Administration, Federal Reserve, and Consumer Financial Protection Bureau rulemakings, as well as other related regulatory developments. The podcast covered key changes in the final Fed rule. The rule, which was released last month, would cap large issuer debit interchange fees at 21 cents, to cover network connectivity, hardware, software, and labor costs, as well as costs related to network processing and transaction monitoring. An additional five basis points per transaction may be charged to cover fraud losses. A separate interim final rule proposed would allow an additional penny to be charged if financial institutions are in compliance with Fed established fraud prevention standards. Debit card issuers with less than $10 billion in assets are exempt from the direct impact of the cap provisions. Prepaid cards and government-issued cards are also exempted. Dunn in the podcast thanked credit unions and leagues for their strong grassroots advocacy work, which ultimately changed the tenor of the Fed’s final rule. She also noted that CUNA is urging Visa and MasterCard to implement the required two-tiered system, and is working with them to ensure that they are committed to this system. CUNA will work to ensure that small issuers receive as much interchange income as possible, Dunn added. CUNA members may listen to the podcast via their Web browser or download the podcast for replay on their mobile device. The Fed is accepting public comment on the interim final rule through Sept. 30, and CUNA has released its own comment call on the rule. For the podcast, CUNA’s interchange final rule analysis, and more on interchange, use the resource links.

House Financial Services July schedule released

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WASHINGTON (7/18/11)--The House Financial Services Committee will again convene on Wednesday when it holds a markup session for pending legislation at 10 a.m. ET, committee Chairman Spencer Bachus (R-Ala.) said in a Friday release. The schedule for the remainder of July was also released on Friday. The highest profile hearing will take place at 10 a.m. ET on Thursday, July 28, when U.S. Treasury Secretary Timothy Geithner delivers the first yearly Financial Stability Oversight Council report and covers the status of the international financial system. That hearing will take place before the full House Financial Services Committee at 9:30 a.m. ET. The status of the Federal Insurance Office will be covered during an insurance, housing, and community opportunity subcommittee hearing later that day. The financial institutions and consumer credit subcommittee will discuss the rent-to-own industry at 10 a.m. ET on Tuesday, July 26, and the domestic and monetary policy subcommittee will follow with a 2 p.m. ET hearing monetary policy’s impact on the economy. The relationship between the health of the U.S. housing finance system and global financial stability will be examined during a Wednesday, July 27 morning hearing before the international and monetary policy subcommittee. The oversight and investigations subcommittee has set a hearing on credit rating agencies for later that day. Bachus said that the committee “will continue promoting policies that encourage growth, investment and new jobs,” and will continue to focus on financial services industry oversight. The committee in its release stressed that all scheduled hearings are subject to change. The House is set to begin its August recess on Aug. 8, and is not scheduled to return until Sept. 5.

CUNA calls for comments on IRS Form 990 changes

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WASHINGTON (7/18/11)--Should the Internal Revenue Service’s (IRS) employee compensation-reporting thresholds be changed? The Credit Union National Association (CUNA) is seeking credit union input for this and other questions related to the IRS’s recent changes to its Form 990. State-chartered credit unions are required to file Form 990 with the IRS annually, although a few states still permit group 990 filings. Federal credit unions are not required to file, since they are not subject to unrelated business income taxes. The IRS made widespread changes to its Form 990 in 2008, and continues to gradually revise portions of the form. The IRS requires Form 990 filers to disclose the names and compensation of certain key employees, their highest compensated employees, any independent contractors that work for the firm, and former high ranking or key employees. However, the reporting thresholds for these positions differ somewhat from position to position. Some have criticized these reporting requirements, claiming that they decrease transparency. Others believe a single, uniform reporting threshold should be adopted. The IRS and CUNA are also seeking input for portions of Form 990 that relate to net asset reconciliation, audited financial statement reporting and related organization reporting. The IRS will accept public comments until Aug. 1. Comments should be sent to CUNA by July 25. For the full comment call, use the resource link.

NCUA considering TDR proposal

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ALEXANDRIA, Va. (7/18/11)--National Credit Union Administration (NCUA) Board Member Gigi Hyland has hinted that the agency could soon release an Interpretive Ruling and Policy Statement (IRPS) addressing Troubled Debt Restructurings (TDR). Hyland in July’s edition of The NCUA Report said that the proposal would recommend that credit unions adopt charge-off, loan grading and modification frequency standards that are similar to those currently used by banks. TDR loans, which have very specific accounting and reporting requirements, sometimes occur as a result of loan modifications. The financial statement notes and call report data associated with TDRs are also unique. Credit unions would be advised to create and implement their own limits on the number and frequency of loan extensions, loan deferrals, loan renewals and loan rewrites, according to Hyland. She added that the potential guidance “would emphasize the need for comprehensive and effective risk management, reporting and internal controls related to these types of loans.” The IRPS would also encourage credit unions to “adopt standards prohibiting additional advances that finance the unpaid interest and fees on these loans,” she said. A similar approach could also be applied to closed-end and open-end loans that are secured by one- to four-family residential dwellings, she added. The agency addressed TDR-related issues in a webinar earlier this year. For July’s NCUA report, use the resource link.

Inside Washington (07/15/2011)

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* WASHINGTON (7/18/11)-- Agility Recovery Solutions and the U.S. Small Business Administration will host a free webinar Tuesday at 2 p.m. (CT) about what business owners learned after nearly losing their companies to small scale disasters like a sprinkler system malfunction or catastrophic events. Agility Recovery CEO Bob Boyd will share real stories of entrepreneurs whose business continuity strategies emerged while recovering from major disasters. He’ll also outline some practical applications of disaster preparedness tips, focusing on the concept of not only putting a plan together, but testing it periodically. Attendees can register online. Agility Recovery is a CUNA Strategic Services provider … * WASHINGTON (7/18/11)--The new Office of Financial Research (OFR) has made significant progress, despite not having a permanent director, Richard Berner, a counselor to Treasury Secretary Timothy Geithner, said Thursday. Berner told members of a House Financial Services subcommittee that the OFR, created by the Dodd-Frank Act, is “working diligently to satisfy its statutory mandates and mission.” Among the OFR’s responsibilities: collect data on behalf of the Financial Stability Oversight Council; standardize collected data; perform research; and develop risk management and monitoring tools. The search for an OFR Director is ongoing, Berner said. In the meantime, Treasury Secretary Timothy Geithner has authority to direct the planning and implementation of the OFR … * WASHINGTON (7/18/11)--Federal regulators may reconsider a proposal to limit Wall Street control of the derivatives market. Last fall, the Commodity Futures Trading Commission proposed rules that would prohibit firms from controlling more than 20% of a derivatives exchange or trading facility. Regulators are now considering lowering the cap (The New York Times July 15). The purpose of the rule was to eliminate the monopolies that played a critical role in the financial crisis. However, Wall Street has lobbied against many of the regulatory changes passed by Congress following the crisis. Regulators recently agreed to delay the derivatives rules for up to six months. As Wall Street regulators soften their proposals, federal prosecutors say the proposals may not be strong enough. The Justice Department has been investigating possible anticompetitive practices in the derivatives industry, the Times reported late last year …