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CUNA to FTC Dont impose loan-mod rules on state CUs

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WASHINGTON (7/17/09)--State-chartered credit unions subject to Federal Trade Commission (FTC) jurisdiction should not be required to follow new rules applicable to those who offer loan modifications and foreclosure rescue services, said the Credit Union National Association (CUNA) in a recent comment letter. CUNA wrote in response to an advanced notice of proposed rulemaking (ANPR) from the FTC that addresses the practices of those who offer loan modification and foreclosure rescue services to consumers. The ANPR requests general comments as to whether the FTC should develop rules to restrict or prohibit activities in these areas. CUNA argued that the rules should not apply to state-chartered credit unions because they have not been the source of problems involving modifications and foreclosure rescues, and because the rules are not applicable to federal credit unions. “No matter how laudable, CUNA would not support rules which would only apply to one segment of the credit union industry,” the letter said. If state-chartered credit unions are covered by the new rules, they also would be subjected to new regulatory burdens that will add to their compliance costs, CUNA said. However, CUNA agrees that the FTC should move forward in this process to determine if additional rules should be implemented to restrict or prohibit practices that take advantage of vulnerable homeowners who seek loan modification or foreclosure rescue services. Credit unions are working with those members who are having difficulty in meeting their mortgage obligations by providing loan modifications, including the refinance and loan modification options that are available under the Treasury Department’s Making Home Affordable Programs. Although credit unions are offering their members valuable assistance in this area, CUNA recognizes that there are unscrupulous firms and individuals who offer loan modification and foreclosure rescue services to consumers.

Inside Washington (07/16/2009)

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* WASHINGTON (7/17/09)--At today’s House Financial Services Committee hearing entitled “Industry Perspectives on the Obama Administration’s Financial Regulatory Reform Proposals,” the panel has scheduled the following witnesses: Former congressman Richard Banker, now president of the Managed Funds Association; Chairman/CEO William Brodsky of the Chicago Board Options Exchange; Executive Vice President Randy Snook of Securities Industry and Financial Markets Association; Paul Schott Stevens, president, Investment Company Institute; Douglas Lowenstein, president, Private Equity Council; Diahann Lassus, president, Lassus Wherley on behalf of the Financial Planning Coalition; and Rob Nichols, president/CEO of the Financial Services Forum… * WASHINGTON (7/17/09)--National Credit Union Administration Chairman Michael Fryzel emphasized the need for continued member commitment among credit unions while speaking to the Michigan Credit Union League at its Annual Convention and Exposition last week in Traverse City, Mich. Credit unions are stepping forward to fill the void in financial services during the economic distress, Fryzel said, citing credit union’s proactivity helping small business owners. “The need for continued member commitment could not be greater. As credit union members continue to face the strains associated with the difficult economy, credit unions must recognize the essential role that they can play. The challenges are great, but so are the opportunities to make a real difference in the financial lives of millions of members,” Fryzel said ... * WASHINGTON (7/17/09)--The Financial Crisis Inquiry Commission, which announced its team of commissioners Wednesday, will study fraud in the financial system to determine the cause of the financial crisis. The commission can conduct hearings to examine industry practices, and subpoena regulators and financial institutions for information. Phil Angelides, commissioner and former California state treasurer, has not specified which issues the commission will take up first. Brian Gardner, KBW Inc. analyst, said he expects the commission will be careful and use its power guardedly (American Banker July 16). Another observer, Karen Shaw Petrou, managing director of Federal Financial Analytics Inc., said the panel would be more concerned with blame than with policy, but that although the “blame game” would be unpleasant, it could be constructive. The committee’s budget has not yet been approved, though commissioners are paid $153,000 for each day that they work ... * WASHINGTON (7/17/09)--President Barack Obama’s proposal to create a Consumer Financial Protection Agency triggered criticism from several financial services trade groups during a House Financial Services Committee hearing Wednesday. The committee invited the representatives to provide feedback on the plan. Among the concerns were questions about reduced credit access, limited consumer choice and rushed reform. Rep. Maxine Waters (D-Calif.) was angry at the industry’s concerns about the agency and said the witnesses were in denial about the financial crisis. She said the groups talk about preemption knowing that they would work to prevent any strong legislation coming from Congress (American Banker July 16). The Credit Union National Association said in a letter Tuesday to House Financial Services Committee Chairman Barney Frank (D-Mass.) that while it supports the creation of the proposed CFPA, “examination, supervision and enforcement” of the consumer protection rules should be left “to each credit union's prudential regulator” ...

Insurance premiums v. deposit recapitalizations NCUA

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ALEXANDRIA, Va (7/17/09)—Interested parties have 30 days to comment on a National Credit Union Administration (NCUA) plan to clarify how insurance premiums and deposit recapitalizations are calculated for only a portion of a year when a credit union either enters or departs the National Credit Union Share Insurance Fund (NCUSIF) in a year with an assessment. NCUA board member Gigi Hyland said at the agency’s Thursday open board meeting that this new rule is necessary to clarify ambiguities in the current regulations that came to light because of the NCUSIF expenses related to the corporates. The rule could apply to such situations as conversions from NCUSIF to private insurance; conversions from private insurance to NCUSIF insurance; and conversions to a federal thrift where the conversion is from NCUSIF insurance to FDIC insurance. Those scenarios could also include mergers of one type of charter with another. The proposal includes specific calculations for these types of assessments and distributions. The proposal would amend the definition of insured shares to include shares that would have been insured by the NCUSIF if the institution had been federally insured on the date of measurement. In addition, the proposal would add a definition of premium/distribution ratio and modified premium/distribution ratio to reflect a fraction of a year that a credit union was insured if it enters or departs the NCUSIF. An additional clarifications to distinguish premium assessments and assessments to replenish the 1% deposit is also in the plan. In response to a question from the board, NCUA staff clarified that the new regulation as proposed would not apply to TCCUSF payments.

Online reporting to NCUA intended to cut redundancies

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ALEXANDRIA, Va. (7/17/09)—A new online call report system approved by the National Credit Union Administration (NCUA) is expected by agency staff to eliminate many of the redundancies that occur under the existing reporting regime. The NCUA adopted a final rule Thursday that will provide a secure, web-based system to allow federally insured credit unions to submit financial reports, reports of officials, and other information online. The new approach will replace the current 5300 call report system for natural-person credit unions in late 2009, then in 2010 it will supplant the 5310 call report for corporate credit unions. The NCUA hopes to send details of the new program in a Letter to Credit Unions in early September, and then make the system mandatory for credit unions with internet access by Oct. 1. The NCUA estimates that around 435 credit unions without internet access will submit paper call reports in lieu of the online system initially, and NCUA will enter that call report information into the online system for them. NCUA will hold several informational webinars on this new system. Because under the new system all data may be submitted from any computer with an internet connection, NCUA will no longer issue software to submit the reporting data. The new system will collect information which is not collected under the current system about all services provided to credit unions by CUSOs. The current system only collects information on the primary services performed.

Overdraft disclosure rule mostly mirrors Feds

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ALEXANDRIA, Va (7/17/09)—A final rule adopted by the National Credit Union Administration (NCUA) Thursday will require credit unions to disclose on periodic statement the dollar amounts charged for overdraft fees and returned item fees, both for the month and the year-to-date. The NCUA action more closely aligns the federal credit union regulator’s Truth in Savings Act rule and its official staff commentary with that of the Federal Reserve Board's Regulation DD. Until now, only credit unions that promote or advertise payment overdrafts services were required to provide these disclosures. The rule is effective as of Jan. 1, 2010. The final rule will also require credit unions to provide account balance information through an automated system that discloses only the amount of funds available for withdrawal, without including the additional funds that would be available under an overdraft program. The rule also removes current provisions regarding the electronic delivery of disclosures.

18 FCU rate gets 18-month extension

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ALEXANDRIA, Va. (7/17/09)--The National Credit Union Administration (NCUA) at its Thursday open meeting voted to continue the 18% interest rate ceiling for loans made by federal credit unions. The ceiling is set for an 18-month period from Sept 10 to March 10, 2011. The agency will soon issue a Letter to Federal Credit Unions soon to notify them of this decision. The current 18% ceiling was due to revert to 15% on Sept. 10 absent NCUA's action. As required by Congress, the NCUA will review this rule again in 18 months, by may do so sooner if economic conditions warrant. The board discussed the benefits of a higher interest rate ceiling, which enables federal credit unions to provide affordable capital through risk-based lending and allows consumers to avoid predatory lenders. Vice Chairman Rodney Hood noted that credit unions are in the best position to help consumers in this way.

NCUA to woo investors through corp CU program changes

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ALEXANDRIA, Va. (7/17/09)--The National Credit Union Administration’s (NCUA's) Temporary Corporate Credit Union Liquidity Guarantee Program (TCCULGP) agreement will now be more similar to portions of the Federal Deposit Insurance Corporation’s (FDIC) Debt Guarantee Master Agreement under a plan approved Thursday by the NCUA. The agency on July 16 unanimously supported a staff recommendation to “enhance corporate credit unions’ ability to maintain stable liquidity by enabling them to access funds through public offerings of senior unsecured debt obligations.” According to an NCUA board action memorandum, the board expects that these actions will “favorably impact the cost and marketability of corporate credit union debt offered in public markets” and increase the attractiveness of these assets for potential investors by eliminating some competitive disadvantages. The board also voted to implement its previous order which legally obligates the Temporary Corporate Credit Union Stabilization Fund (TCCUSF), rather than the National Credit Union Share Insurance Fund (NCUSIF), for liabilities incurred under the TCCULGP. The approved changes will be published in the Federal Register, and a sample TCCULGP agreement will soon be posted on the NCUA Web site. Also at the monthly open board meeting, NCUA CFO Mary Ann Woodson reported little change in the monthly report on the financial state of the NCUSIF and TCCUSF, Woodson did detail the effects that recent NCUA board actions, including the assignment of the $1 billion capital note to the TCCUSF, have had on the NCUSIF balance sheet. Woodson also noted that the nine recorded credit union failures have cost the NCUSIF a combined $53 million so far this year.