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Financial Services seeks interchange jurisdiction

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WASHINGTON (9/15/08)--U.S. Rep. Barney Frank has asked House leadership to ensure that the financial services panel, which he chairs, has a role in deciding credit and debit card interchange fee issues that were voted this summer by the House Judiciary Committee. In a Sept. 12 letter to House Speaker Nancy Pelosi (D-Calif.), Frank stated his case that Judiciary should not claim exclusive jurisdiction over a bill that makes decisions regarding the regulation of financial institutions, which fall under his committee’s purview. Specifically the Massachusetts Democrat addressed H.R. 5546, the Credit Card Fair Fee Act, which was approved by a narrow margin in July by Judiciary. In his letter, Frank said wrote, “As this bill addresses a number of complex issues regarding banks, banking, extension of credit, operation of credit networks and the pricing of credit, the committee with subject matter expertise over these issues should have the opportunity to consider the bill, at least on a sequential basis.” “This request is great news for credit unions,” said Michele Johnson, director of legislative affairs for the Credit Union National Association (CUNA), Friday. CUNA has strenuously worked against H.R. 5546, which would permit government intervention in setting the fees charged merchants each time a consumer uses the card for a purchase. “We believe that interchange at its core is a financial services issue. Until now, merchants have had success positioning this as a commerce issue. Now, if Chairman Frank’s request is honored as it should be, this issue can move before the panel that has the deep understanding of what this bill would mean to credit unions and banks,” Johnson said. Johnson also predicted that Frank’s request will preclude any further consideration of H.R. 5546 this session of Congress. “Into 2009, it is an indication that the Committee on Financial Services will be fully engaged in the issue,” she said.

CUNA offers Form 990 webinar analysis

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WASHINGTON (9/15/08)—The Credit Union National Association (CUNA) is offering a Nov. 11 webinar to explain the revised Internal Revenue Service (IRS) Form 990 and has posted a final rule analysis of agency’s instructions to the new form. The webinar will also include an update on what is happening regarding Unrelated Business Income Tax (UBIT) issues for credit unions. State-chartered credit unions are required to file Form 990-- Return of Organization Exempt from Income Tax--with the IRS annually, although a few states still file a group 990. Organizations must report compensation of executives including officers, directors and "key employees." The new form will be used for the 2008 tax year, by mid-May 2009. The accompanying instructions include changes in content and format and provide additional examples to explain the instructions. In its analysis, CUNA noted:
* The instructions provide definitions and examples of the two types of compensation required to be reported, “reportable compensation” and “other compensation.” * The new instructions define “key employee” for purposes of reporting executive compensation as an employee, officer, director and trustee, who had reportable compensation exceeding $150,000, had organization-wide responsibility over at least 10 percent of the organization’s activities, and was one of the organization’s top-20 highest paid employees. * The term “officer,” for purposes of reporting executive compensation, is clarified to include both the top financial official as well as the top management official. * If an organization’s board delegated broad authority to act on its behalf to an executive committee, the instructions state that the organization should describe the composition of the committee, whether any of the committee’s members are not on the board and the scope of the committee’s authority. * Smaller organizations will have a three year period to transition to the new form. * There were no material changes to the instructions for filing group returns and the IRS indicated for at least the 2008 tax year (for returns filed in 2009), it will continue to allow group filings.
Use the resource links below to register for the CUNA webinar and to read the full analysis.

House Senate panels look at GSE takeovers

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WASHINGTON (9/15/08)—On the to-do lists in the next few weeks of both U.S. Treasury Secretary Henry Paulson and the director of the new Federal Housing Finance Agency (FHFA), James Lockhart; testify before both the Senate Banking Committee and the House Financial Services Committee. The Senate panel has set a hearing entitled “Recent Regulatory Actions Regarding Fannie Mae and Freddie Mac” for tomorrow, Sept. 16. Paulson and Lockhart are the only witnesses listed. House Financial Services has slated a Sept. 25 oversight hearing, also to examine last week’s action by the Treasury Department to place the housing government-sponsored enterprises into conservatorship. During that session, Paulson and Lockhart are scheduled to be joined at the witness table by Ben Bernanke, chairman of the Federal Reserve Board, and Federal Housing Authority Commissioner Brian Montgomery. After the hearing, the committee is scheduled to vote on five bills. (See related story: New Internet gambling definition bill up for vote.) Also of note, Senate Banking announced Friday that it would conduct a hearing on recent bank failures and the federal banking regulators’ responses to them. Scheduled to testify are Chairman Sheila Bair of the Federal Deposit Insurance Corp., Comptroller of the Currency John Dugan, and Director John Reich of the Office of Thrift Supervision.

New Internet gambling definition bill up for vote

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WASHINGTON (9/15/08)--Among five bills scheduled for a vote tomorrow by the House Financial Services Committee is a new version of the Payment Systems Protection Act introduced Sept. 11 by Rep. Barney Frank (D-Mass.). As was its predecessor, that bill is intended to respond to the concerns of the Credit Union National Association (CUNA) and many others in the financial services industry that the aspects of a current plan to implement the 2006 Unlawful Internet Gambling Enforcement Act (UIGEA) would be difficult, if not impossible, to implement. Under the Internet gambling law, financial institutions must establish and implement policies and procedures to identify and block restricted Internet gambling transactions, or rely on those established by the payments system. Frank’s bill would direct the U.S. Treasury Department and the Federal Reserve System, in consultation with the U.S. Attorney General, to give format guidance on defining what online gambling transactions. The earlier version of Frank’s bill failed in committee by a tie vote this summer. CUNA continues to support the Frank bill and will send a letter expressing that support. CUNA also reiterates its fundamental concern that UIGEA adds to credit unions’ already extraordinary burden with heavy policing responsibilities under the Bank Secrecy Act and Office of Foreign Assets Control (OFAC) rules. CUNA warned an increased policing role could interfere with financial institutions' fundamental business to provide financial services to their communities. The remaining bills scheduled for a committee vote Tuesday are:
* A recently introduced H.R. 6871, Expedited Funds Availability Dollar Limits Adjustment Act; * H.R. 6694, FHA Seller-Financed Downpayment Reform and Risk-Based Pricing Authorization Act; * H.R. 3019, Expand and Preserve Home Ownership Through Counseling Act; and * H.R. 6642, National Consumer Cooperative Bank Act Amendments.

Inside Washington (09/12/2008)

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* WASHINGTON (9/15/08)--Credit union representatives from St. Louis Community CU; Vantage CU, Bridgeton; and United CU, Mexico, Mo., met with Missouri’s entire congressional delegation Sept. 10 in Washington, D.C., as a part of the Missouri Credit Union Association’s (MCUA) annual “Hike the Hill.” They discussed the Credit Union Regulatory Improvements Act (CURIA) and how it would help credit unions respond to members’ needs in the current economy, and a recent MCUA study on the mortgage crisis in Missouri (The Missouri Difference Sept. 12). “I think that we laid some good groundwork for any future attempts at a regulatory relief reform bill,” said Betty Clark, United CU president/CEO. From left are: Dan Boyle, Vantage CU; Mike O’Brien, St. Louis Community CU; U.S. Rep. Russ Carnahan (D-District 3), Hubert Hoosman, Vantage, and Amy McLard, MCUA vice president of legislative and public affairs. (Photo provided by the Missouri Credit Union Association) ... * WASHINGTON (9/15/08)--During an Aug. 26 meeting between National Federation of Community Development Credit Unions President/CEO Cliff Rosenthal and National Credit Union Administration Chairman Michael Fryzel, the federation listed its priorities. Among them: chartering and start-up of new credit unions, credit union partnerships and examiner supervision of low-income credit unions. On Thursday, Fryzel also met with Ben Rogers, the Filene Research Institute’s CU Tomorrow project leader and director of the Institute’s 30 Under 30 group. “Strategic planning, succession planning and member growth are all intertwined, and the Filene Institute is taking an impressive leadership role in fostering new thinking on these subjects. Attracting the next generation to membership and employment must be a mandatory exercise for today’s credit union leaders,” Fryzel said ... * WASHINGTON (9/15/08)--Financial services industry representatives are trying to pull back on an agreement that would create new appraisal standards for Fannie Mae and Freddie Mac. The agreement, which the enterprises made with New York Attorney General Andrew Cuomo to crack down on the appraisal process, isn’t effective until Jan. 1. If Fannie and Freddie break their agreement with Cuomo, he could theoretically sue them (American Banker Sept. 12). But the Office of the Comptroller of the Currency said in May that the agreement itself may be illegal because it was made without comment from outsiders. The agreement could be too burdensome to implement, said Gil Schwartz, a former Federal Reserve Board lawyer. If the agreement remains, Fannie and Freddie must create an independent valuation protection institute to monitor and implement new appraisal standards ... * WASHINGTON (9/15/08)--Sens. Charles Schumer (D-N.Y.), Bob Casey, (D-Pa.), Sherrod Brown (D-Ohio) and Robert Menendez (D-N.J.) are urging the Bush administration to stop Fannie Mae and Freddie Mac from foreclosing on homes for at least three months. The senators want to see the mortgage giants help borrowers refinance into more affordable mortgages (The New York Times Sept. 12). One criticism of that plan is that taxpayers may have to eventually cover the cost of the modified mortgages. Fannie and Freddie have guaranteed or purchased $5.3 trillion in mortgages and securities. On Sept. 7, Fannie and Freddie were placed into conservatorship by the federal government ... * WASHINGTON (9/15/08)--The Treasury Department will announce the depository institutions selected to receive $20.1 million in awards today in Chicago under the 2008 round of the Bank Enterprise Award program. Recipients were chosen after an application review by the Community Development Financial Institutions fund ...