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Inside Washington (08/07/2009)

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* WASHINGTON (8/10/09)--Rep. Carolyn Maloney (D-N.Y.) announced that she will not enter a primary race against Sen. Kirsten E. Gillibrand (D-N.Y.). Maloney is chairman of the Joint Economic Committee, a member of the House Financial Services Committee and chair of its subcommittee on financial institutions, and an author of credit card reforms. Gillibrand was picked by New York Gov. David Paterson to fill Secretary of State Hillary Clinton’s vacant Senate seat in January. Maloney said she decided not to run because she wants to address challenges involving health care reform, the economy and clean energy issues (Associated Press Aug. 7) ... * WASHINGTON (8/10/09)--Federal Housing Finance Agency (FHFA) Director James Lockhart is advocating for separating Fannie Mae and Freddie Mac into good banks and bad banks--a plan that many industry representatives doubt would have much political support. Lockhart, who confirmed Thursday that he would resign this month, said the solution could help Fannie and Freddie get rid of their most troubled holdings and return to the market. The government would continue to keep the troubled holdings and provide support for debt and mortgage-backed securities (American Banker Aug. 7). Lawrence White, economics professor at New York University, said Mellon Bank 20 years ago separated good banks from bad banks by isolating bad assets and assigning managers to work out their problems. However, observers say Fannie and Freddie’s situation is different because, unlike Mellon, they don’t have enough capital to finance a bad bank ...

Am. Banker Interchange fees are simply business for some retailers

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WASHINGTON (8/10/09)--Breaking the line that has been drawn by many retail industry representatives in Washington, a group of retailers have elected to eschew cash transactions by moving to accept only credit and debit cards for purchases. As reported in American Banker, some retailers, including restaurants and, in some cases, airliners, have elected to accept interchange fees as a cost of doing business. One New York-based restaurateur cited the security of cashless transactions as a reason for the switch to plastic purchases. The ease of using only one system for all purchases is another reason for the switch, he said. Retail representatives, as well as nationwide corner store chain 7-11, have spoken out against interchange fees, with 7-11 mounting a petition campaign that is seeking to net one million customer signatures. Merchants have claimed that the “hidden” interchange fee system deprives customers of potential savings, and they are pressing for greater transparency regarding interchange fees. Legislative actions aimed at addressing the interchange issue, H.R. 2695, the "Credit Card Fair Fee Act of 2009," and S. 1212, the “Credit Card Fair Fee Act,” have been introduced recently but have not been discussed by the full House of Senate. H.R. 2695, as introduced by Reps. John Conyers Jr. (D-Mich.) and Bill Shuster (R-Pa.), would allow merchants to negotiate fees with financial institutions via an antitrust exemption. Sen. Richard Durbin’s (D-Ill.) S. 1212 would establish a three-judge panel to mediate fee disputes between financial service providers and retailers. The Credit Union National Association (CUNA) opposes these pieces of legislation, and has asked Congress to, at a minimum, wait for the results of a Government Accountability Office review of interchange fees before taking any action on interchange fees. CUNA and other members of the Electronic Payment Coalition have spoken in favor of the current interchange fee structure, saying that regulating interchange fees would adversely affect consumers, competition, and technological innovation. CUNA has also highlighted the positive aspects of interchange fees, saying that the fees help credit unions cover their expenses and losses while offering merchants a guaranteed source of payment at the time that the transaction is completed.

Confirmed Matz promises focused positive agenda

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WASHINGTON (8/10/09)—In her first comments since she was confirmed to return to the National Credit Union Administration board, incoming NCUA Chairman Deborah Matz promised a “focused and positive agenda” that will be “characterized by an ongoing priority on reform and revitalization.”
Click to view larger imageDeborah Matz, who was unanimously confirmed to join the NCUA on Friday, has promised "reform" and "revitalization" during her tenure as NCUA Chairman. She is shown here at her nomination hearing. (CUNA Photo)
Matz was unanimously confirmed by the full Senate on Friday, and will soon join the NCUA board for the second time. Matz's nomination was scheduled for Senate approval several times in recent days, but a busy Senate calendar, dominated by such things as okaying $2 billion to extend the "cash for clunkers" program, and approving Sonia Sotomayor as a Supreme Court Justice, pushed back the Matz vote. Matz last served on the board between 2002 and 2005, and most recently held the position of executive vice president and chief operating officer of Maryland-based, $800 million-in-assets Andrews FCU, an experience which Matz said "sensitized" her "to the need for effective, rather than excessive, regulation." Current NCUA Chairman Michael E. Fryzel congratulated Matz on her confirmation, adding that he is certain that Matz will meet the “current economic turmoil and challenges,” challenges that require “strong, practical, progressive leadership,” with confidence. Credit Union National Association (CUNA) President/CEO Dan Mica joined Fryzel in congratulating Matz on her confirmation, saying that CUNA looks forward to working with Matz to ensure the "continued safety and soundness of credit unions" and to foster "a regulatory environment in which credit unions may continue to grow, prosper and effectively serve their members." Matz has taken on so-called “progressive” stances in the past, as she in 2002 provided the lone vote against what she has called "overly broad and permissive" NCUA corporate credit union regulations. Matz during recent Senate committee testimony also promised to revamp some aspects of the NCUA's rules governing corporate credit unions, and, more generally, stated that further work is needed to stabilize the corporate credit union system. Matz in her statement also pledged to work with the NCUA, credit union volunteers, and credit union staff to ensure that the “vital” role that credit unions play in American life is “not only preserved, but enhanced” going forward.