Archive Links

Consumer Archive
CU System Archive
Market Archive
Products Archive
Washington Archive
150x172_CUEffect.jpg
Contacts
LISA MCCUEVICE PRESIDENT OF COMMUNICATIONS
EDITOR-IN-CHIEF
MICHELLE WILLITSManaging Editor
RON JOOSSASSISTANT EDITOR
ALEX MCVEIGHSTAFF NEWSWRITER
TOM SAKASHSTAFF NEWSWRITER

Washington Archive

Washington

CDFI Fund adds three CUs to approved institutions list

 Permanent link
WASHINGTON (9/16/11)--A trio of credit unions are among the latest additions to the list of Community Development Financial Institutions (CDFI) after the U.S. Treasury's CDFI Fund approved them in August. The credit unions are:
*Jefferson Financial CU, Metairie, La.; * Carville PHS Employees FCU, Carville, La.; and *HawaiiUSA FCU, Honolulu, Hawaii.
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, and a total of $25.7 million in funds were awarded to 25 credit unions under the fiscal year 2011 round of the CDFI Fund Program. Jefferson Financial, which holds $247 million in assets and has about 29,000 members, offers one-on-one financial counseling and broader budgeting, debt management, home purchase, credit and loan counseling to low income residents of Jefferson Parish, La., according to the CDFI Fund. The fund added that Carville PHS Employees FCU, which has $5 million in assets and 680 members, aids its community, which encompasses the parishes of Iberville and Ascension, by providing individual financial counseling. HawaiiUSA FCU offers financial education seminars, counseling, and youth- and student-specific financial literacy programs, the CDFI Fund said. The credit union, which holds around $1.3 billion in assets, serves 132,000 members and was also named as a certified Native CDFI last month. The CDFI Fund’s Native American CDFI Assistance (NACA) Program is designed to encourage the creation and strengthening of certified CDFIs that primarily serve Native American, Alaskan Native and Native Hawaiian communities. NACA funds may be used to finance capital or may be provided to financial institutions in the form of technical assistance grants. For the CDFI Fund's release, use the resource link.

Net worth equity ratio discussion leads NCUA meeting

 Permanent link
ALEXANDRIA, Va. (9/16/11)—The final regulation revising Parts 700, 701, 702, and 741 of the National Credit Union Administration’s (NCUA) Rules and Regulations on Net Worth and Equity Ratio Definitions will lead the day’s discussion when the NCUA meets for its September open board meeting next Thursday at 10 a.m. ET in Alexandria, Va. The NCUA in March proposed amending the Federal Credit Union Act's definition of "net worth" for natural-person credit unions under NCUA's Prompt Corrective Action authorities to allow the NCUA's Section 208 Assistance made to troubled credit unions to qualify as regulatory net worth. The NCUA proposal also included a "technical correction" to its regulatory definition of "net worth." This technical correction would generally decrease the amount of a combined credit union's "net worth" in a credit union merger. The agency also proposed equity ratio changes that clarify that the National Credit Union Share Insurance Fund's (NCUSIF) equity ratio must be based solely on the financial statements of the NCUSIF alone, without consolidation with other statements such as those of conserved credit unions. These changes were scheduled to be discussed at the NCUA’s July open board meeting. However, the changes were removed from the agenda shortly before the meeting took place. Although the Credit Union National Association (CUNA) supported some of these changes, CUNA also strongly opposed a provision that would have added language to the definition of a credit union's net worth to require "bargain purchase gains" be deducted from a target credit union’s net worth when it is merged with another credit union. CUNA was concerned that the proposal would result in a decrease in the combined credit union's net worth. CUNA and its Accounting Subcommittee, which is chaired by Patelco CU CFO Scott Waite, have worked with credit union accountants on the bargain purchase gain issue. During the meeting, the NCUA will also discuss delegations of agency authority, and the customary monthly insurance fund report is scheduled to be presented. The closed portion of the NCUA’s meeting will feature a charter and merger request as well as an appeal under Section 701.4 and Part 747, Subpart J of the NCUA's regulations. Supervisory activities and personnel issues will also be covered during the closed meeting. For the full NCUA agenda, use the resource link.

CUNA addressing IRS CU exemption error

 Permanent link
WASHINGTON (9/16/11)—An assertion by the U.S. Internal Revenue Service (IRS) that some credit unions are no longer tax-exempt is “completely wrong” and something that the Credit Union National Association (CUNA) will work on tirelessly to set the record straight, inside and outside the credit union movement, CUNA President/CEO Bill Cheney said Thursday. Cheney was reacting to recent action by the tax agency in which it notified several state-chartered credit unions, and some federally chartered credit unions, that they would lose their tax-exempt status after their respective regulators failed to file Form 990 tax returns on their behalf. Various state credit union regulators at one time filed Form 990 tax returns for all state-chartered credit unions under their jurisdiction, but that practice was stopped years ago. CUNA in a letter to IRS Commissioner Douglas Shulman and Director of Exempt Organizations Lois Lerner reminded the IRS officials that state-chartered credit unions, which now file their own returns, have met their annual filing requirements and should remain exempt. CUNA in the letter also emphasized that organizations that are tax exempt under Section 501(c)(1) of the Internal Revenue Code, such as federal credit unions, do not have to file 990 forms or make those forms available for inspection. Cheney said CUNA hopes the IRS issue “is simply a paperwork error.” However, he added, “if it’s not a paperwork error – and we are looking into this – we will not rest until this effort is ceased, its origins exposed, and the tax agency understands thoroughly that the credit union tax exemption comes from Congress and the individual charters of credit unions, not from the IRS.” CUNA General Counsel Eric Richard added that CUNA’s Regulatory Affairs staff “is on top of this development and pushing the IRS to correct its error as soon as possible.”

Inside Washington (09/15/2011)

 Permanent link
* WASHINGTON (9/16/11)--An additional 61 community banks received a total of $608 million through the Small Business Lending Fund (SBLF), the Treasury Department announced Wednesday. The SBLF, which was established as part of the Small Business Jobs Act that President Barack Obama signed into law, encourages community banks to increase their lending to small businesses, helping those companies expand their operations and create new jobs. With the announcement, 191 community banks have now received more than $2.4 billion in SBLF funding. Additional SBLF funding announcements will be made in the weeks ahead, Treasury said. The Credit Union National Association (CUNA) and credit unions are pressing Congress to increase credit unions' member business lending (MBL) cap to 27.5% of assets from 12.25%. Doing so would open up more opportunity to offer MBLs, inject $13 billion in loans into the economy and create as many as 140,000 new jobs, with no cost to taxpayers, CUNA said. … * WASHINGTON (9/16/11)--The American Bankers Association (ABA) has asked the Treasury Department for further explanation about rejected bank applications for the Small Business Lending Fund (SBLF) (American Banker Sept. 15). About 60% of applicants were denied for SBLF funds, primarily because they failed to meet the program’s minimum statutory requirements, Treasury said in a white paper last week. The ABA asked for more details on those denials and how banks can address those issues, in a letter from ABA President Frank Keating to Jason Tepperman, the head of the SBLF program. Keating said he was concerned the SBLF was failing to reach its potential … * WASHINGTON (9/16/11)--A more simple banking and regulatory environment would be a safer, Tom Hoenig, president of the Federal Reserve Bank of Kansas City, said in an interview with American Banker (Sept. 15). Hoenig, who will retire Sept. 30, said the current system subsidizes the high-risk activities of larger institutions, which he called a misallocation of resources. He suggested separating the roles within commercial banks between payments and intermediation, and higher-risk areas, such as investment banking, trading and hedge funds. Higher risk activities should be funded by private capital, while payments and intermediation should remain subsidized by the regulatory system, he said. Despite enhanced supervision since the 2008 financial fallout, the banking system is no easier to understand or enforce, Hoenig argued …