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NCUA closes Comunidades FCU accounts assumed

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ALEXANDRIA, Va. (9/23/09)— Water and Power Community CU Union of Los Angeles assumed the majority of the accounts of Comunidades FCU, also of Los Angeles, which was closed Tuesday by federal regulators. The Water and Power Community Credit Union share assumption, approved by the National Credit Union Administration (NCUA), assures that a majority of Comunidades members continue with uninterrupted credit union service. The NCUA said it closed Comunidades, a low-income commcredit union, because of a declining financial condition. It had $658,122 in assets and served 1,141 members. It is the sixth federally insured credit union liquidation in 2009. Water and Power Community CU, a full service institution, has $482.9 million in assets and serves approximately 52,340 members in and around the state of California, according to the NCUA. Its headquarters is located at 1053 W. Sunset Blvd., Los Angeles, California, and it has 6 branch locations and offers online transaction service as well.

CUNA to Congress Ease crunch through increased MBLs

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WASHINGTON (9/23/09)—As Congress addresses financial regulatory restructuring, it embraces the perfect opportunity to help America’s small businesses increase access to needed capital by allowing credit unions to make more small business loans to their members, Credit Union National Association (CUNA) Chief Economist Bill Hampel will tell a House committee today. Testifying before the House Small Business Committee at its hearing entitled “The Impact of Financial Regulatory Restructuring on Small Businesses and Community Lenders,” Hampel will urge enactment of legislation that will "restore credit unions’ ability to serve the lending needs of their business-owning members." Watch News Now Thursday for hearing coverage. Hampel is among 10 witnesses scheduled over two panels:
* Panel 1: Robert R. Harris, vice chair of the American Institute of Certified Public Accountants; Trevor Loy on behalf of the National Venture Capital Association; David T. Hirschmann for the U.S. Chamber of Commerce; Mike Anderson on behalf of the National Association of Mortgage Brokers; and J. Douglas Robinson on behalf of Property Casualty Insurers Association of America. * Panel 2: CUNA’s Hampel; Austin Roberts on behalf of the American Bankers Association; James D. MacPhee on behalf of Independent Community Bankers of America; Dawn Donovan on behalf of the National Association of Federal Credit Unions; and John Moloney on behalf of Securities Industry and Financial Markets Association.

Flood insurance Qs-and-As okay with tweaks says CUNA

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WASHINGTON (9/23/09)--In a comment letter responding to recent changes to federal regulators’ questions and answers regarding flood insurance policies, the Credit Union National Association (CUNA) said that some proposed changes to loan participations may “represent an inappropriate shifting of risk” from the original lender to entities that have assumed some control of a property. CUNA said that it has “no objections” to Q&As addressing replacement cost valuations “for property that will not be restored to its original purpose.” CUNA also found no issues with Q&As addressing force-placed insurance. However, Q&As addressing loan participation set unreasonable standards by forcing lenders that buy a participation interest in a loan on flood zone-based property to be responsible for ensuring that flood insurance requirements are met. CUNA also opposed shifting risk and responsibility surrounding the validity of flood insurance from loan originators to those who purchase participations in exiting loans. Use the resource link below to read CUNA's complete remarks.

Matz interview Mid-Nov. is target for new corp CU proposal

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WASHINGTON (9/23/09)--The National Credit Union Administration (NCUA) continues to develop new rules for corporate credit unions, and the board is looking to release a proposed version of these new rules by its mid-November board meeting, new NCUA Chairman Deborah Matz told News Now.
Deborah Matz
The corporate credit union situation is one of the dominant issues currently facing credit unions, and in an interview with News Now , Matz said that the NCUA also has its eye on the impact that the overall worldwide financial crisis is having on credit unions. While some past NCUA chairs have thought that the “best way to regulate was to end regulation or to modify them to provide extraordinary amounts of flexibility” to regulated credit unions, Matz believes that regulations serve a purpose, adding that she would look to propose new regulations and amend existing regulations to best ensure the safety and soundness of credit unions. However, regulations should not be excessive, according to Matz, who said that her “intent is not to over-regulate, but to have focused regulation” that protects credit union members. Communication, which Matz says can always be improved, is also a high priority for Matz, who plans to continue to hold town hall meetings with credit union officials on a yearly basis to gather input “directly from credit union staff and officers.” Regarding member business lending, Matz said that while she is an advocate of credit unions lending to member businesses, such practices can be risky and should be “done properly.” Matz opposes a statutory limit on MBL, saying that any such limit that could be imposed on credit unions is a regulatory issue and should be determined by the NCUA, “not Congress.” However, whether or not credit unions should be permitted to raise alternative sources of capital should be determined by Congress, and a resource group led by board member Hyland is developing an alternative capital proposal to submit to Congress. Matz also advised credit unions to be mindful of the concentrations of mortgages or indirect loans that they keep on their books. Matz also hopes to propose a division of consumer protection within the NCUA in 2010, whether or not the Consumer Financial Protection Agency is established in the near future. “I want NCUA to be recognized as the best regulator for consumers and that goes hand in hand with credit unions being recognized as the best financial institution for consumers,” Matz said. The change in board composition resulting from the addition of Matz, who is a Democrat, will not impact the way that the NCUA governs the credit union system, Matz added. A significant item that has been added to the regulatory agenda is the Credit Card Accountability, Responsibility and Disclosure (CARD) Act, and Matz said that while she has instructed NCUA examiners to provide some leeway to credit unions as they adapt to the new rules presented by the CARD Act, Credit unions will still have to comply “unless the law is changed.” The NCUA does not expect all credit unions to comply instantly with the new rules, but “they will have to have a business plan, they will have to allocate resources, and they will have to take steps to comply, and we’ll be examining for that,” Matz said. The NCUA examiners are meant to be an ally of credit unions, and are tasked with helping credit unions avoid “serious problems” in the future.

Fryzel says in-house consumer protection moves forward

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ALEXANDRIA, Va. (9/23/09)--Former National Credit Union Administration (NCUA) Chairman and current Board Member Michael Fryzel on Tuesday said that plans to create a division of consumer protection are moving forward within the agency. Fryzel earlier this year proposed the creation of the consumer protection office, which would consolidate existing consumer protection functions within the NCUA and create a liaison relationship with external groups, including the Obama Administration’s proposed Consumer Financial Protection Agency. In his speech before the National Association of Federal Credit Unions Congressional Caucus, held in Washington, D.C., Fryzel promised “improved regulatory control” from the Board and hinted that discussions of alternative capital for credit unions are ongoing. Fryzel also encouraged credit unions to work together as the financial crisis eases, saying that all members of the credit union system must “find new ways” of strengthening natural person credit unions, “bolstering” the share insurance fund, and rededicate themselves to “selflessly improving the financial lives” of credit union members. “While we cannot rest from working on a new corporate structure or maintaining adequate liquidity in our system, I believe we must position ourselves for growth and ensure that this growth is going to best help our members,” Fryzel added.

Inside Washington (09/22/2009)

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* WASHINGTON (9/23/09)--The hangover from the Troubled Asset Relief Program (TARP) will be felt for a long time, even after the TARP money is repaid, according to a former Federal Reserve Board lawyer. Cornelius Hurley said TARP was a “massive injection of taxpayer dollars.” It will be hard to recover from that, he added. William Isaac, former Federal Deposit Insurance Corp. chair, said TARP turned the banking system into a “public utility,” which will be hard to turn around. Financial observers have criticized TARP, saying that it was a mistake (American Banker Sept. 22). TARP ruined the working relationship between banks and the Treasury, said Robert Clarke, a former comptroller of the currency. The program could have been offered on an optional basis, he added. Alan Blinder, former Fed vice chair, agreed. The program should have been more voluntary, he said. About 37 institutions have repaid more than $70 billion in TARP funds. Of the first nine banks that received money, all but Wells Fargo, Citigroup and Bank of America have repaid their funds. The Treasury expects to receive $50 billion in repayments in the next year ... * WASHINGTON (9/23/09)--The push continues for legislation that would create a consumer protection agency. Many financial industry lobbyists have argued that the agency would limit access to credit, but the Obama administration is moving forward. House Financial Services Committee Chairman Barney Frank (D-Mass.) is working on the Treasury’s draft of the bill to lift concerns about the measure. Rep. Ed Perlmutter (D-Colo.) is concerned about the agency’s enforcement powers, while Rep. Melissa Bean (D-Ill.) is arguing for greater federal pre-emption (CongressDailyAM Sept. 22). Frank is expected to clarify in the draft who is included under the bill’s scope. He has said he would push for more disclosures on products offered in the marketplace. Frank’s goal is to get a pro-consumer bill out of the House so it has room for negotiations with Senate Banking Committee Chair Christopher Dodd (D-Conn.). Dodd has to get Richard Shelby (R-Ala.) to agree on the bill for the Senate to pass it ...

NCUA adds corporate CU liquidity item to agenda

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ALEXANDRIA, Va. (9/23/09)--The National Credit Union Administration (NCUA) on Tuesday added discussion of its Temporary Corporate Credit Union Liquidity Guarantee Program to the agenda for the open portion of its next board meeting, which is scheduled for 10 a.m. on Thursday in Alexandria. Among the items up for consideration during the open portion of the meeting, which will be the first under new NCUA Chairman Deborah Matz, are the National Credit Union Share Insurance Fund premium and stabilization fund assessment. The NCUA has said that the premium charged to credit unions should only be around .15 percent. The NCUA’s Central Liquidity Fund policies will also be discussed during the meeting, which will be the first under new NCUA Chairman Deborah Matz. A report on the status of the NCUA’s insurance fund is also on the agenda. Supervisory activities and personnel matters will be discussed during the closed portion of the meeting.