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Dodd may introduce overdraft fee bill this week

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WASHINGTON (9/21/09)--Senate Banking Committee Chairman Chris Dodd as early as this week could introduce a bill that would require financial institutions to seek permission before they can enroll their accountholders in an overdraft protection program. Sen. Charles Schumer (D-N.Y.) himself recently came out in favor of increased consumer protections related to overdraft protection plans, saying that he would support legislation that targets abusive overdraft practices. Schumer is expected to co-sponsor Dodd’s legislation once it is introduced. Speaking at Albany, New York’s College of Saint Rose earlier this month, Schumer said that any pending overdraft legislation should require consumers to be given a chance to opt in or out of overdraft protection programs and increase the disclosure of fees and APR charges on overdraft loans. New York Democratic Rep. Carolyn Maloney has introduced House legislation, H.R. 1456, the Consumer Overdraft Protection Fair Practices Act, that would treat many of the same issues listed by Schumer. CUNA representatives have spoken with Senate Banking Committee members and staffers in an effort to “educate them about how and why credit unions offer this service to their members, the features of the various programs and our concerns regarding the legislation that has been introduced in the House,” CUNA Vice President of Legislative Affairs Ryan Donovan said.

NCUA to tackle premiums stabilization CLF policies

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ALEXANDRIA, Va. (9/21/09)—The National Credit Union Administration (NCUA) will begin its first board meeting with new Chairman Deborah Matz by discussing the National Credit Union Share Insurance Fund Premium (NCUSIF) and Stabilization Fund Assessment, which the NCUA has indicated would be in the range of .15 per cent of insured shares. The meeting, which will take place at 10 a.m. on September 24, will also feature board discussion on the NCUA’s Central Liquidity Fund (CLF)policies. The NCUA earlier this year transferred $1.8 billion in CLF funds that were held by U.S. Central FCU to the U.S. Treasury. Credit Union National Association Senior Vice President and Deputy General Counsel Mary Dunn said that the transfer “is not based on any issues with U.S. Central but is being taken in response to a concern raised by the U.S. Treasury that the deposits would be more appropriately held by Treasury.” According to Dunn, the NCUA should likely review longer term issues regarding CLF funding in the coming months. The board will also be updated on the performance of the insurance fund and on the number of credit unions that are currently financially distressed.

House committee announces additional reg reform hearings

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WASHINGTON (9/21/09)--The House Financial Services Committee last week announced a series of hearings on regulatory reform, with the first of many hearings being held on the morning of Wednesday, September 23. The first hearing, during which the full Committee will address the Obama Administration’s proposals for financial regulatory reform, will take place in the Rayburn House Office Building. The Committee will also discuss financial regulator’s perspectives on regulatory reform early that afternoon. The Committee also announced a hearing to address oversight and audit issues at the Federal Reserve, scheduled for this Friday morning. The Committee will again discuss the Consumer Financial Protection Agency on Wednesday, September 30, with the Capital Markets Subcommittee holding a hearing on credit ratings agencies later in the day. Witness lists and prepared statements were not available at press time.

Inside Washington (09/18/2009)

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* WASHINGTON (9/21/09)--Democratic members of the House Agriculture Committee Thursday rejected claims that derivative trades on clearing platforms or exchanges could be costly for counterparties (American Banker Sept. 18). Committee Chairman Collin Peterson (D-Minn.) said many large derivative traders and dealers would urge the committee to loosen proposed regulations to regulate derivatives so they would not lose profits. Under the bill, a central clearing party would set margin requirements. While there is a cost to central clearing, there also is a benefit, said Garry O’Connor, chief product officer for the International Derivatives Clearing Group. Companies that engage in derivatives trading could find a way to centrally clear their trades, even if they don’t have the cash for a clearing platform’s margin requirements, he said. The committee is scheduled to hold a second meeting Tuesday ... * WASHINGTON (9/21/09)--Treasury Secretary Timothy Geithner conducted a meeting Thursday regarding government actions against mortgage fraud (American Banker Sept. 18). At the meeting were Eric Holder, attorney general; Shaun Donovan, Housing and Urban Development secretary; Jon Leibowitz, Federal Trade Commission chairman; and Jim Freis, Financial Crimes Enforcement Network director. The meeting followed an April announcement about a multi-agency effort to stop fraud. The Obama administration is acting preemptively to stop fraud, Geithner said. Efforts include alerting financial institutions, education about fraud and increasing enforcement ... * WASHINGTON (9/21/09)--Panel members of the Financial Crisis Inquiry Commission discussed whether Congress should wait for the panel’s December 2010 report before overhauling the financial regulatory system (American Banker Sept. 18). Brooksley Born, former chairman of the Commodity Futures Trading Commission, and Bob Graham, former senator from Florida, said Congress should not wait. The commission should not contribute to procrastination, Graham said. Peter Wallison, fellow at the American Enterprise Institute, said Americans and Congress need to know the extent of the financial crisis before action is taken ... * WASHINGTON (9/21/09)--The Federal Reserve is working on a set of rules that would be one of the most sweeping to regulate pay at the nation’s banks. The rules would affect top executives, loan officers, traders and other staff. The Fed plans to analyze the compensation in terms of structure, bonuses and excessive risk-taking. Executive pay has been viewed by some financial experts as a contributor to the financial crisis. The rules won’t be ready for several weeks, but they are scheduled to be discussed at the Group of 20 meeting in Pittsburgh this week. The G-20 was created in 1999 to bring together systemically important developing and industrialized economies to discuss global economic issues ...

NCUA follow-up says substantial corporate impairment likely

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ALEXANDRIA, Va. (9/21/09)—In a follow-up letter to the release of U.S. Central’s 2008 audited financial statements, the National Credit Union Administration (NCUA) said it is likely all invested corporates will record substantial impairments in their reports due at the end of November. The letter from the NCUA’s Office of Corporate said each U.S. Central member corporate is expected to review the audited financial statement to determine if its U.S. Central capital assets have experienced other-than-temporary impairments that would require recognition and measurement on their financial statement. To facilitate that process, the OCCU set forth these expectations for the corporate members:
* Consult with their licensed independent accountants regarding the recognition of any impairment from U.S. Central capital accounts, and regarding the need to restate any earlier financial reports; * If losses associated with the depletion at U.S. Central create a retained earnings deficit at any quarterly or annual reporting period, deplete contributed capital as needed to replenish retained earnings to zero (in accordance with Part 704.2 of the NCUA Rules and Regulations); and, * If needed, submit revised 5310 Call Reports.
The letter noted that the above actions are to be accomplished with the issuance of a corporate credit union’s Oct. 31 regulatory reports and submitted no later than Nov. 30, and that the OCCU will monitor corporates’ efforts to comply.