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Go Direct reminds Direct deposit prevents theft

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WASHINGTON (8/10/11)--The U.S. Treasury’s Go Direct program this week reminded partners that reducing the risk of benefit check theft was one of the reasons behind the switch to all-electronic federal benefit payments, and encouraged benefit recipients to switch to electronic benefit payments well ahead of the March 1, 2013 deadline. The U.S. Treasury began its Go Direct program, which encourages Americans to switch to direct deposit, in 2004. The Go Direct campaign notes that direct deposit enhances safety and convenience. The Treasury officially ended the use of paper checks for the payment of newly filed Social Security and other federal benefit payments on May 1. All federal benefit payments will be made electronically beginning on March 1, 2013. “Criminals can steal checks out of mailboxes, leaving people who rely on that money for essentials--such as medicine, rent or groceries--in a difficult situation,” the Treasury said. Credit unions and other Go Direct partners can use provided news copy, fliers and posters to promote direct deposit. Go Direct suggested that these educational materials could be used during October’s Crime Prevention Month activities. Go Direct also reminded organizations with employees that are close to retirement that National Save for Retirement Week, which will take place from Oct. 16 until Oct. 22, is the perfect time to inform them of the coming changes in federal benefit payments distribution. Go Direct is providing newsletter copy, social media tips, and a direct deposit checklist to ease the federal benefits enrollment process. The Credit Union National Association is a Go Direct national partner and supports the check-safety and cost-savings goals for the program. For more information on Go Direct, use the resource link.

Downgrades will have little effect says NCUA

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WASHINGTON (8/10/11)--Standard & Poor's (S&P) downgrades of credit ratings of the U.S. government and a number of government programs this past week will have little effect on credit unions and the Corporate Stabilization program, said the National Credit Union Administration (NCUA) Tuesday. Buddy Gill, NCUA's senior strategic communications and external relations advisor, cited three reasons why: First, all federal banking agencies, including NCUA, affirm the current risk-weights for Treasury securities will not change. This includes other securities issued or guaranteed by the U.S. government, government agencies, and government-sponsored enterprises. "Credit unions do not have to worry about examiners treating NGNs (NCUA Guaranteed Notes) or Treasuries any differently for risk purposes," said Gill, who added NCUA will send a letter to credit unions to affirm "things don't change." Second, the NGNs retain their current AAA rating. Although they were placed on S&P's negative credit watch list Monday, their rating has not changed. "All the NGNs have been sold already and are collateralized so the negative watch status does not affect the costs to NCUA of these debt obligations," NCUA said. In other words, there is "no negative effect on NCUA's Corporate Stabilization Program costs." However, if a credit union or other entity bought NGNs and wants to sell them in the marketplace now rather than hold to maturity, the price or value may or may not be affected by S&P's action, said NCUA. Third, S&P did downgrade four NCUA unsecured debt guaranteed issues from two corporate credit unions the agency had guaranteed under the Temporary Corporate CU Liquidity Guarantee Program from AAA to AA+. However, the downgrade does not affect the costs to NCUA of these debt obligations. "This should be a "non-event" since these are not traded in the secondary market," Gill said. "Bottom line: the S&P downgrade has no negative impact on Corporate Stabilization costs," he said.

NCUA seeking nearly 2B in corporate CU damages

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ALEXANDRIA, Va. (8/10/11)--The National Credit Union Administration (NCUA) is seeking $491 million in damages from Goldman Sachs & Co., alleging that the firm violated federal and state securities laws when it sold securities to U.S. Central FCU and Western Corporate FCU. Added to other lawsuits, that brings the total damages the agency is seeking to nearly $2 billion. The agency has requested nearly $2 billion in combined damages from Goldman Sachs, RBS Securities and J.P. Morgan Securities, LLC. This is the fourth suit of its kind, and the agency said it expects to take an additional five to 10 actions. The NCUA's suit claims that Goldman Sachs sellers and underwriters made several material misrepresentations in the offering documents, leading the corporates to believe the risk of loss associated with their investments was minimal, when in fact the risk was substantial. “The mortgage-backed securities experienced dramatic, unprecedented declines in value,” effectively rendering the corporates insolvent, the agency added. The NCUA’s latest published estimates are that the total eventual losses on these investments will be around $15 billion. “While the credit union industry generally fared better than the rest of the financial world over the last few years, the corporate credit union collapse remains the largest crisis ever faced by credit unions,” NCUA Chairman Debbie Matz said. “Fortunately, given the liquidity in the system, the average consumer is insulated from these past losses. However, it remains our statutory duty to replenish the insurance fund that protects consumer deposits by seeking recoveries.” Any recoveries from these actions will reduce the total losses resulting from the failure of five corporate credit unions and would help to reduce the amount of future corporate credit union stabilization fund assessments on credit unions, the NCUA has said. The Credit Union National Association has encouraged the NCUA to take "all reasonable actions" available to pursue effective restitution from securities firms that "share the culpability for the events that led to the corporate failures." For the full NCUA release, use the resource link.

Hawaiian CU now CDFI approved

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WASHINGTON (8/10/11)--Honolulu, Hawaii’s The Queen’s FCU is one of three new financial institutions that were added to the U.S. Treasury’s list of approved Community Development Financial Institutions (CDFI) in July. The Treasury's CDFI Fund helps locally based financial institutions offer small business, consumer and home loans in communities and populations that lack access to affordable credit. Credit unions that are certified to take part in the CDFI program may apply for as much as $2 million in funding to help maintain their credit union's presence in the community. CDFI Fund distributions are merit-based. There are now 957 approved CDFIs, according to the Treasury. The credit union also was added to the list of institutions approved under the CDFI Fund’s Native American CDFI Assistance (NACA) Program, which addresses a lack of economic opportunity in Native communities by increasing access to capital and financial services. The credit union works with native Hawaiian healthcare workers and is a designated a low-income credit union. The CDFI Fund in a release noted that development services provided by the credit union include mortgage loan seminars, loan counseling, and overdraft and payday lender education. The CDFI Fund last month awarded $25.7 million in funds to 25 credit unions under the fiscal year 2011 round of the CDFI Fund's cornerstone program, the Community Development Financial Institutions Program. The awards will help the specialized, community-based financial institutions spur local economic growth and recovery, and expand access to affordable financial products and services. Credit union awards represented 18.06% of the number of CDFI Fund awards granted in this round. For the CDFI Fund’s release, use the resource link.

Inside Washington (08/09/2011)

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* WASHINGTON (8/10/11)--The IRS’s Volunteer Income Tax Assistance (VITA) Return Preparation Adjusted Gross Income (AGI) threshold will stand at $50,000 for the 2011 tax year. As reported in the Pennsylvania Credit Union League’s Life is a Highway (Aug. 9), this threshold is based on 2011 tax year EITC AGI limits. The IRS has determined that earned income and adjusted gross income (AGI) must each be less than:
*$43,998 ($49,078 married filing jointly) with three or more qualifying children; *$40,964 ($46,044 married filing jointly) with two qualifying children; *$36,052 ($41,132 married filing jointly) with one qualifying child; and *$13,660 ($18,740 married filing jointly) with no qualifying children.
The maximum EITC for 2011 will be $5,751 for households with three or more qualifying children, $5,112 for households with two qualifying children, $3,094 for households with one qualifying child, and $464 for households with no qualifying children. Investment income must be $3,150 or less for the year, the IRS said … * WASHINGTON (8/10/11)--About 31,600 homeowners received a permanent modification through the Treasury Department’s Home Affordable Modification Program (HAMP) in June, according to the monthly HAMP report. More than 760,000 homeowners nationwide have received a HAMP permanent modification to date, with a median payment reduction of 37%, according to the Treasury Department. About 115,500 borrowers are in payment trials, with 18,200 receiving a trial principal reduction. Roughly 7,000 homeowners have received a permanent principal reduction under HAMP. The median principal amount reduced is nearly $67,500, or 30% of the loan amount …