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Inside Washington (07/07/2008)

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* WASHINGTON (7/8/08)--A rule by the Federal Deposit Insurance Corp. could help students learn financial skills and give financial institutions a way to serve the underserved by allowing banks to operate inside schools (American Banker July 7). The rule allows banks to hire students as tellers to learn financial skills, but some see it as an opportunity to grow business. James Maloney, chairman and CEO of Mitchell Bank in Milwaukee, said deposits from a branch at South Division High School totaled $870,000 at one point. The branch also made $300,000 in loans to staff and parents, he said. Park Federal Savings Bank, Chicago, said the purpose of its in-school branch is community service, and that the branch is an “expense item” ... * WASHINGTON (7/8/08)--The Federal Reserve Board and the Securities and Exchange Commission (SEC) Monday announced they had reached a memorandum of understanding (MOU) to share information on clearing and settling banks’ and investment firms’ transactions, bank brokerage activities and anti-money laundering measures (The Wall Street Journal July 7). “The MOU finalized between the SEC and the Federal Reserve is consistent with the long-term vision of the Treasury’s Blueprint for a Modernized Regulatory Structure and should help inform future decisions as our Congress considers how to modernize and improve our regulatory structure,” said Treasury Secretary Henry Paulson Jr. The Bush administration has proposed changes to the U.S. financial system. Credit Union National Association President/CEO Dan Mica has spoken out against the Treasury blueprint, saying it would eliminate credit unions as they function today ... * WASHINGTON (7/8/08)--The Treasury Department has released Notice 2008-59 regarding health savings accounts (HSAs). Since HSAs were created as part of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, the Treasury and the Internal Revenue Service have issued a large number of formal guidance items containing questions and answers on HSAs. The notice contains more than 40 new frequently asked questions and answers that cover topics including: who is eligible; issues related to high deductible health plans; contributions to HSAs; distributions from HSAs; and establishing an HSA ...

House vote expected soon on MSB bill

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WASHINGTON (7/8/08)—The U.S. House of Representatives returns to session today and is scheduled to take up a list of bills, including one of particular interest to credit unions—the Money Services Business Act (H.R. 4049). That bill is intended to encourage credit unions and banks to serve money services businesses (MSBs) by clarifying that they would not be responsible for whether the MSB is complying with anti-money laundering laws and any other applicable Bank Secrecy Act (BSA) requirements. The bill was introduced in 2007 by Rep. Carolyn Maloney, chairman of the House Financial Services subcommittee on financial institutions. Other members of the House Financial Services Committee to back the bill include its chairman, Rep. Barney Frank (D-Mass.), and ranking member Spencer Bachus of Alabama. In 2006, the Financial Crimes Enforcement Network (FinCEN) began seeking public comment regarding the impact of BSA regulations on the ability of money services businesses (MSBs) to open and maintain accounts and obtain other banking services at depository institutions. The request for comment, printed in the Federal Register, noted, "(FinCEN is) seeking input to assist in our efforts to ensure that money services businesses that comply with the law have reasonable access to banking services and, specifically, to avoid any unintended misinterpretation of Bank Secrecy Act requirements that could adversely affect the issue of the establishment and maintenance of account relationships and other banking services for money services businesses by banking institutions." MSBs are nonbank financial institutions that provide one or more of such services as money orders, traveler’s checks, money transmissions, check cashing, currency exchange, currency dealing, or issuing, selling or redeeming stored-value cards. As of May 15, a FinCEN list maintained information on 35,245 registered MSBs.

Subcommittee to review housing grant issues

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WASHINGTON (7/8/08)—A House subcommittee this week will examine funding for federal housing and community development programs and, more specifically, how such things as cancellation of unspent funds can affect the functioning of such programs. The House Financial Services subcommittee on housing and community development, lead by Rep. Maxine Waters (D-Calif.), will scrutinize current federal spending requirements for such programs as: HOPE VI, Section 202 Housing for the Elderly, Brownfields, and Homeless Assistance Grants. The hearing will also look into efforts by the Department of Housing and Urban Development (HUD) to work with grantees to spend funds efficiently, with a particular focus on HUD’s efforts to work with FY 2002 HOPE VI grantees facing cancellation of their grants on September 30th of this year. Legislation introduced by Reps. Corrine Brown (D-Fla.) and John Mica (R-Fla.), directly addressing the issue (H.R. 6347), will also be discussed. A witness list had not yet been made public Monday.

Time tight hope alive for reg relief

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WASHINGTON (7/8/08)—Ryan Donovan, vice president of legislative affairs for the Credit Union National Association (CUNA), said Monday there is reason to be hopeful that regulatory relief legislation for credit unions will make it through the Senate this session, but warned that it is far from a sure thing. “I’ve said it before—the congressional calendar is not our friend this year,” Donovan said. However, he added that through CUNA’s work on behalf of regulatory relief legislation in the Senate, he believes such a bill could move in the Senate this year despite time constraints. The logical vehicle, he noted, is the House-passed Credit Union, Bank and Thrift Regulatory Relief Act (CUBTRRA, H.R. 6312). That bill passed the House by voice vote and was referred to the Senate on June 25. Donovan noted that CUBTRRA holds a number of substantive elements that will serve credit union members well, especially provisions that ease field of membership and member business lending (MBL) restrictions in underserved areas. “We expect both the Senate and the House to be in session this week and the next three weeks before recessing from Aug. 1 to Sept. 8,” Donovan said. “When the Congress returns in September, they are scheduled to be in session until September 26th.” “As always, these dates are subject to change and often do,” Donovan said, and added, “ “The point is: time is short for legislative action.” He encouraged credit unions to continue to contact federal lawmakers to encourage passage of credit union regulatory relief. Use the resource link below for more CUBTRRA information.

Fryzel says will be ready by Julys end

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ALEXANDRIA, Va. (7/8/08)—Michael Fryzel issued a statement through the National Credit Union Administration (NCUA) Monday stating he will be ready to take the oath of office and assume the duties as chairman at the end of July. “As required by law, I will be dissolving my law practice in Illinois during this interim period. I eagerly anticipate the commencement of my service as chairman,” Fryzel said. Fryzel was confirmed by the Senate to succeed JoAnn Johnson at the agency and is expected to be designated chairman by the president once he takes his oath of office. Johnson had said recently that she was prepared to stay at the helm of the agency until Aug. 1 to give Fryzel a chance to wrap up pending matters prior to joining the NCUA. 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 specialized in financial regulatory and real estate law.