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Democratic convention delegate is CU volunteer

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DENVER (8/27/08)--Credit union volunteer Pamelya Herndon first became involved in politics after attending the 1993 Presidential Inauguration. The U.S. New Mexico FCU Board vice chair and delegate to the Democratic National Convention has been hooked ever since. “I began working on local and national campaigns as a volunteer and have continued to do so since then,” the first-time national party convention attendee told News Now. U.S. New Mexico FCU has $532 million in assets and is located in Albuquerque. Herndon became a delegate to the Democratic National Convention after being elected at her Congressional District Convention. The process was very much like running for a political office, she said. “I had to find people who would support me and then I had to get them to attend the Congressional District Convention to cast their votes for me,” said Herndon. “Ultimately, I was elected as a pledged delegate for Sen. Barack Obama.” Herndon decided to become a delegate because she was “truly excited and fired up about the 2008 Presidential election and about Obama becoming our next president.” “As a delegate, I could cast a vote that would help Senator Obama become the presidential nominee for the Democratic Party,” she said. During the convention this week in Denver, Herndon said she most looks forward to “casting her vote for the first African American Presidential nominee of a major political party, and then being present to watch him accept the nomination of the Democratic Party.” “I look forward to meeting many of the thousands of other delegates to the convention and participating in the various caucus meetings,” she explained. “I look forward to voting on the Party Platform and being a delegate at the convention that is destined to be remembered as the greatest political convention of all times.” She said she continues to support candidates who support the ideals and principles of credit unions. Herndon initially became involved with her credit union as a volunteer member of the Volunteer Development Committee, which developed educational training programs and strategies to recruit more volunteers. After the Volunteer Development Committee, she became a member of the supervisory committee. Two years later, a vacancy resulted in her seat on the credit union’s board of directors. Through its website and direct mail, U.S. New Mexico FCU keeps its membership informed about political matters that affect credit unions--a process that has not changed over the years, she said. She offered advice to her credit union peers. “I strongly encourage credit union volunteers and professionals to learn about the issues that affect credit unions and support candidates who believe in the principles, ideals and philosophy of credit unions,” said Herndon.

Inside Washington (08/26/2008)

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* WASHINGTON (8/27/08)--Banking industry observers say that regulators are taking action on bank failures too late after Columbian Bank and Trust Co. of Kansas failed on Friday (American Banker Aug. 26). The Federal Reserve Bank of Kansas City and Columbia Financial Corp., Overland Park, Kan., signed an agreement to restrict transactions and raise capital two weeks before the failure. The agreement gave the bank 60 days to raise capital, but the bank was closed by regulators just two weeks later. Enforcement orders should be issued right after an exam, said Nicholas Ketcha, former director at the Federal Deposit Insurance Corp. (FDIC). Ann Graham, Texas Tech University Law School professor, said some banks may not be able to raise enough capital. The FDIC has issued 31 cease-and-desist orders in the first half of this year, compared with a total of 48 for the total year in 2007 ... * WASHINGTON (8/27/08)--Brokered deposits have been linked to Columbian Bank and Trust Co.’s failure. Brokered deposits made up 43% of the bank’s $622 million deposit base (American Banker Aug. 26). Ralph F. McDonald III, a partner at Jones Day, said regulators should have restricted the brokered deposits. The bank also had troubled real estate loans. About $52 million of construction loans were in nonaccrual status, according to a call report. Data from the Federal Deposit Insurance Corp. showed that $7.5 million of Columbian’s portfolio had been in nonaccrual stats in 2007.... * WASHINGTON (8/27/08)--The number of struggling banks on probation has risen (The Wall Street Journal Aug. 26). The Federal Reserve and the Office of the Comptroller of the Currency issued more memorandums of understanding for the banks to fix their problems so far this year than they did for all of 2007. The Federal Deposit Insurance Corp. had 90 banks on its “problem list” since March 31. Five banks have failed since July 11 ... * ALEXANDRIA, Va. (8/27/08)--National Credit Union Administration (NCUA) Chairman Michael E. Fryzel (left) met with National Federation of Community Development President/CEO Clifford Rosenthal Tuesday at NCUA’s office in Alexandria, Va. “The National Federation of Community Development Credit Unions has a longstanding tradition of promoting and enhancing credit union outreach to low and moderate-income communities,” Fryzel said. “I am pleased to begin a dialogue with Mr. Rosenthal as both NCUA and the credit union industry continue to explore ways to assist credit unions on this essential effort, and look forward to ongoing discussions with a broad cross-section of the credit union industry.” (Photo provided by the National Credit Union Administration) ...

FASB business combo information released

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WASHINGTON (8/27/08)—The Financial Accounting Standards Board (FASB) has announced the completion of an important step in its ambitious project to codify the thousands of U.S. GAAP pronouncements into roughly 90 accounting topics. Earlier this month FASB released the Business Combinations Topic to the FASB Accounting Standards Codification (Codification). FASB constituents are encouraged to use the online Codification Research System during its verification period free of charge to research accounting issues. They are asked to provide comment on whether the codification content accurately reflects existing U.S. GAAP for nongovernmental entities. Scott Waite, chairman of the Credit Union National Association’s Accounting Task Force and an advisor to FASB, said of the recent announcement, "This is a great addition to the Codification Project which is close to completion. Credit unions will be using the new standard in 2009 for business combinations. I'm sure that they'll find the new tool very beneficial and less complex to use as an important source for GAAP related matters." Waite, who is also SVP-CFO of Patelco CU, San Francisco , added, "Today, the proper application of GAAP can require the reference to many different standards and pronouncements located throughout GAAP's many thousands of pages of literature. The Codification tool will provide a location for all related guidance which will be sorted by topic. "I highly encourage them to access and review the on-line tool which is free of charge to use. We are also seeking comments on its usefulness before it goes live." The Codification's one-year verification phase ends Jan. 15, 2009. Users are advised that the Codification content is not yet approved as authoritative and, therefore, they must verify research results using their existing resources for the currently effective literature. FASB intends the new structure and new system to have benefits for users, such as:
* Reduce the amount of time and effort required to solve an accounting research issue; * Improve usability of the literature thereby mitigating the risk of noncompliance with standards; * Provide real-time updates as new standards are released; and * Assist FASB with the research and convergence efforts required during the standard-setting process.
Use the resource link below to become a registered user to access and review the FASB Codification.

FDIC considers bolstering fund bank earnings drop

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WASHINGTON (8/27/08)—Insured bank and thrift earning fell to $5 billion in the second quarter of the year as the Federal Deposit Insurance Corp. (FDIC) considers a restoration plan to bolster the Deposit Insurance Fund. The second quarter earnings figure represented an 86.5%, or $31.8 billion, decline from the $36.8 billion that the industry earned in the same time period last year, according to an FDIC release announcing the figures. With the exception of the fourth quarter of last year, the latest earnings were the lowest for the industry since the fourth quarter of 1991. The FDIC also revealed that its "problem list" grew to 117 institutions from 90 at the end of the first quarter. Total assets of problem institutions increased from $26 billion to $78 billion, with $32 billion coming from IndyMac Bank, F.S.B., Pasadena, CA, which failed in July. FDIC Chairman Sheila Bair said more banks will come on the list as credit problems worsen and assets of problem institutions also will continue to rise. In releasing the latest results, the FDIC cited higher provisions for loan losses as the primary reason for the drop in industry profits. The agency said the size of the earnings decline was mainly attributable to a few large institutions, but more than half of all insured institutions, 56.4%, reported lower net income in the second quarter. Bair announced that in early October the FDIC will consider a plan to replenish the agency's Deposit Insurance Fund (DIF), which experienced a large drop due to added loss reserves for IndyMac and other bank failures. The DIF restoration plan "likely will include an increase in the premium rates that banks pay into the fund," she said. "And we'll be proposing changes to the current assessment system that will shift a greater share of any assessment increase onto institutions that engage in high-risk behavior to encourage and reward safer behavior." Use the resource link below for more on the FDIC earning figures.

CUNA asks newly sworn Fed gov to talk

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WASHINGTON (8/27/08)—After the Tuesday swearing-in ceremony of Elizabeth Duke, the Federal Reserve Board’s newest governor responded favorably to the Credit Union National Association (CUNA). CUNA Senior Vice President and Deputy General Counsel Mary Dunn, attending the ceremony on CUNA’s behalf, congratulated Duke on her appointment to the Fed board and expressed CUNA’s interest in meeting with her. “Ms. Duke seemed to be open to talking with us,” Dunn said. Duke is a former chairman of the American Bankers Association who began her banking career as a teller. Duke’s undergraduate degree was in theater, but, according to a Federal Reserve Board press release, she later received an MBA from Old Dominion University in Virginia, her native state. Prior to her appointment to the Fed board, Duke was senior executive vice president and chief operating officer of TowneBank, a Virginia-based community bank. Before that she was an executive vice president at Wachovia Bank, and an executive vice president at SouthTrust Bank. She also has been a director of the Federal Reserve Bank of Richmond.

Prohibited persons rule effective Sept. 18

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WASHINGTON (8/27/08)—September 18 is the effective date of new National Credit Union Administration (NCUA) guidance regarding provisions in the Federal Credit Union Act (Act) that prohibit persons convicted of certain criminal offenses from participating in the affairs of the credit union. Absent prior written consent from the NCUA Board, the Act prohibits persons convicted of a criminal offense involving dishonesty or breach of trust, or who have entered into a pretrial diversion or similar program, from participating in the affairs of the credit union. The agency’s new Interpretive Ruling and Policy Statement (IRPS) excludes certain minor offenses, juvenile offenses, and expunged convictions, while also prohibiting NCUA from providing consent to those individuals who have engaged in certain other criminal offenses. The IRPS establishes the procedures that credit unions must follow if they are seeking the required NCUA consent. Under these procedures, a credit union must explain circumstances surrounding a conviction or pretrial diversion program and demonstrate that the individual is fit to participate in the affairs of the credit union without posing a safety and soundness risk or impairing the public confidence in the credit union. The guidance also places the burden on the credit union to prove that the NCUA Board should grant the requested consent. It sets forth the factors that the NCUA Board will consider when reviewing these requests, which include the nature of the offense, evidence of rehabilitation, the position that the individual held at the credit union and the nature of those responsibilities, the ability of the credit union to supervise the individual, the credit union's fidelity bond coverage, the position of the state regulator if the credit union is state-chartered, and any other factors that may be relevant. For more details, use the resource link below to access the Federal Register document on the IRPS.

Immediate online convention coverage from CUNA

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WASHINGTON (8/27/08)--Credit unions are encouraged to check in on Twitter, a microblogging service, to get the latest credit union take on happenings at the Democratic National Convention this week in Denver and at the Republican National Convention next week in Minneapolis and St. Paul, Minn. Staff and volunteers from the Credit Union National Association (CUNA), state leagues and corporates are at the conventions and aim to raise the profile of credit unions during the national conventions. CUNA Editorial Communication Vice President David Klavitter will provide frequent convention updates using Twitter. The service allows instant, extremely short online postings--limited to no more than 140 characters each. Use the resource link below to stay up-to-date: Follow Klavitter on Twitter.