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Inside Washington (08/18/2009)

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* WASHINGTON (8/19/09)--In a letter dated Aug. 7, Treasury Secretary Timothy Geithner defended the way he criticized bank regulators during a July 30 meeting. He wrote the letter to Republicans on the House Financial Services Committee (American Banker Aug. 18). Republican lawmakers have said Geithner tried to bully independent agencies, but Geithner said he wanted to express to regulators that they should not let agencies’ efforts to defend their turf impede reform. Regulators are independent and have a right to express their views, but regulators and the administration have shared goals and common ground, Geithner said ...

CUNA urges leniency on CARD Act exam issues

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WASHINGTON (8/19/09)—National Credit Union Administration (NCUA) Chairman Michael Fryzel should instruct agency examination staff to be flexible as credit unions struggle to comply with aspects of the new Credit Accountability Responsibility and Disclosure (CARD) Act, urged the Credit Union National Association (CUNA) Tuesday. In a letter to the NCUA chairman, CUNA President/CEO Dan Mica reiterated that a number of credit unions have found the 21-day rule, as it applies to open-end lending programs other than credit cards, presents “extremely challenging compliance concerns, particularly in light of the effective date later this week.” That rule prohibits creditors from claiming a payment as late unless that creditor adopts reasonable procedures to ensure that periodic statements are delivered to consumers no later than 21 days before the payment due date. The provision goes into effect Thursday for all open end lending programs. Mica urged the NCUA that if a credit union is making good faith efforts to comply, the credit union should not be subject to any enforcement sanctions regarding a 21-day rule for open-end plans. The CUNA leader noted that CUNA has been aggressively seeking relief for credit unions at the Federal Reserve Board and in Congress. (See related story: Fed to CUNA: CUs have some leeway on 21-day rule.) “While it does not appear that the Fed will grant a more definitive extension of time for credit unions to comply, other than the ‘short period’ alternative it has already provided, that agency....(has) acknowledged the extreme compliance difficulties credit unions are experiencing,” Mica wrote. He added, “There is no question that the CARD Act is inflicting a significant toll on the credit union system. In recognition of this and the range of other issues credit unions are facing, including the sagging economy and funding for NCUA's corporate stabilization program, we urge you to direct NCUA examiners to work with credit unions as they reasonably determine what is their best approach for compliance.” Use the resource links below to access CUNA’s CARD Act FAQs resource as well as the complete Mica letter.

Fed to CUNA CUs have some leeway on 21-day rule

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WASHINGTON (8/19/09)--The Federal Reserve Board on Tuesday reiterated that credit unions will be allowed to be technically "inconsistent" with the 21-day requirement under the new Credit Accountability, Responsibility and Disclosure (CARD) Act for a "short period of time." In a Tuesday letter to Credit Union National Association (CUNA) President/CEO Dan Mica, the Fed said that during the undefined “short period of time,” credit unions may prominently disclose on or with their statements that the consumer's payment will not be treated as late if it is received within 21 days after the statement was provided. This approach allows credit unions flexibility in meeting their compliance responsibilities regarding the 21-day rule for open end plans other than credit cards for a reasonable period of time after August 20. It also allows them to treat a payment as late if the disclosure was provided but the payment was not received within the 21-day period. Section 106 of the CARD Act, as written, specifically prohibits creditors from claiming a payment is late unless the creditor adopts reasonable procedures to ensure that periodic statements are delivered to consumers no later than 21 days before the payment due date. The Fed said that while it understands the difficulties that the 21-day requirement creates for credit unions, “it would not be appropriate for the Board to deviate from the clear and unambiguous statutory requirements.” The Fed's letter indicates the agency feels it has no leeway to provide further relief for credit unions. Responding to the letter, Mica said that while the approach detailed by the Fed “provides more time for CUs to comply” and grants CUNA and associated credit union leagues more time to “work on achieving a legislative solution,” CUNA recognizes that “more permanent relief is needed” and is seeking such relief through ongoing discussions with legislators and the National Credit Union Administration. CUNA has been aggressively seeking relief for credit unions and discussing their compliance concerns with the requirement with both the Federal Reserve Board and Congress. In addition to pursuing legislation to limit the scope of the 21-day rule to credit cards -- which will be difficult to achieve and cannot be attained at least until after Congress returns in September -- CUNA has also written to NCUA board Chairman Fryzel to urge enforcement flexibility. (See related story: CUNA urges leniency on CARD Act exam issues)

Aug. 24 to be Matz swearing-in day

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ALEXANDRIA, Va. (8/19/09)--Deborah Matz will soon become the eighth chairman of the National Credit Union Administration (NCUA), after she is sworn in on August 24, the NCUA announced Tuesday. The swearing in ceremony will be completed by NCUA General Counsel Robert Fenner and will take place at 2 p.m. at the agency’s headquarters in Alexandria, Va.
If all goes according to plan, as of 2 p.m. (ET) next Monday, Deborah Matz will be sworn in as a member of the NCUA board, and is expected to be designated chairman shortly thereafter by President Obama. Matz is shown here taking an oath prior to her confirmation hearing. (CUNA Photo)
Once confirmed, Matz will serve a six-year term on the NCUA Board, ending in April of 2015. Matz, who will join the NCUA board for the second time, was unanimously confirmed by both the Senate Banking Committee and the full Senate following her nomination by President Barack Obama. Matz’s previous term on the board lasted from 2002 until 2005. Matz has given a taste of how she would govern during the recent confirmation hearings, indicating that she would look to revamp some aspects of the NCUA's rules governing corporate credit unions while also working to stabilize the corporate credit union system. Matz also pledged to work with credit union organizations, volunteers, and staff to ensure that the "vital" role that credit unions play in American life is "not only preserved, but enhanced" going forward.