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Credit card bill passes in House

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WASHINGTON (9/24/08)—The U.S. House of Representatives voted 312-112 to approve H.R. 5244, the Credit Card Holders Bill of Rights, intended to ban abusive and deceptive credit card practices. The vote came amid a hail storm of House votes on suspensions items—about 69 over a two-day period. H.R. 5244 was one of only a few bills outside the suspension calendar, which is reserved for bills considered noncontroversial, to make it onto the House floor for a vote. H.R. 5244 was introduced by Rep. Carolyn Maloney (D-N.Y.) and was approved by the House Financial Services Committee in July. In addition to the Maloney bill, in the Senate the chairman of the banking committee, Sen. Christopher Dodd (D-Conn), has introduced similar legislation (S. 3252). Also in the mix, the Federal Reserve Board, the Office of Thrift Supervision and the National Credit Union Administration (NCUA) issued a joint proposal that addresses several of the concerns raised in the legislation. It is expected that the agencies will finalize their plan by the end of the year. The Credit Union National Association has recommended to Maloney that "it may be more prudent to let the regulatory process run its course prior to legislating a remedy." And in fact, that may well be what Capitol Hill intends. Just prior to the committee vote on the Maloney bill, the July 30 issue of American Banker noted that lawmakers may be meaning the House vote to send regulators a prod to continue work on their proposed crackdown on abusive lending practices.

Inside Washington (09/23/2008)

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* WASHINGTON (9/24/08)--The Treasury Department and Democrats in Congress Tuesday were discussing legislation to purchase $700 billion of troubled bank assets--specifically, two provisions involving executive compensation and mortgages in the bankruptcy process (American Banker Sept. 23). As of Tuesday, the Treasury agreed to require mortgage servicers to rework loans purchased by the government, but the outcome of the other provisions was not clear. Sen. Richard Shelby (R-Ala.) said the Treasury proposal was not workable and too expensive. Sen. John McCain (R-Ariz.), presidential candidate, said he was not comfortable with the proposal but did not formally oppose it ... * WASHINGTON (9/24/08)--An order by the Securities and Exchange Commission (SEC) to short-sell 800 financial stocks did not mention Fifth Third Bancorp, M&T Bank Corp. and Capital One Financial Corp. The companies’ sales exceeded 10% of the shares for trading as of Aug. 31 (American Banker Sept. 23). An SEC spokesman, John Heine, said the agency may add other companies to the list ... * WASHINGTON (9/24/08)--Securities and Exchange Commission (SEC) Chairman Christopher Cox encouraged Congress to regulate corporate debt insurance, or credit default swaps because of their role in the financial market crisis. Regulation of the insurance should go along with a regulatory overhaul of the entire U.S. financial system, he said (Associated Press Sept. 23) ... * WASHINGTON (9/24/08)--National Credit Union Administration (NCUA) Chairman Michael E. Fryzel welcomed Stan Hollen, CEO of the CO-OP Network, and Carroll Beach, president of the Credit Union Services Corp., to the NCUA headquarters in Alexandria, Va., Tuesday. “I am committed to making certain that credit union relationships with third parties provide benefits to members in a safe and sound fashion, and will continue my outreach to all facets of the credit union system as part of a vigilant and active approach to regulation,” Fryzel said. From left are: Beach, Fryzel and Hollen. (Photo provided by the National Credit Union Administration) ...

CUNA eyes accounting standards in bailout debate

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WASHINGTON (9/24/08)--Now that credit unions appear assured equal access to the proposed Treasury Department economic rescue package if approved, the Credit Union National Association (CUNA) is closely monitoring associated accounting and bankruptcy issues. CUNA Deputy General Counsel Mary Dunn yesterday said the association was encouraging policymakers to investigate how the Financial Accounting Standards Board’s (FASB) fair value accounting rules have contributed to the current financial turmoil. Dunn echoed Sept. 23 Washington Post reports that banking and other financial lobbyists have been seeking temporary relief from the accounting measure, which they say establishes bargain-basement prices for assets that would be valued far higher during more normal trading conditions. In many cases, the price tags fell to artificially low levels, forcing some financial institutions to take large write-downs, even when they did not intend to sell the assets anytime soon. “Most often these assets are performing as expected,” said Dunn. Although there is not yet consensus in Washington about what the rescue should look like, credit unions are specifically included in the many draft plans currently circulating in Washington, D.C. Credit unions likely may need only limited use of an overall government support plan because few participated in the lending practices that are in part to blame for the devastating upheaval in the mortgage markets--and now the general economy. However, as Bill Hampel, CUNA chief economist, noted Tuesday, credit unions in some areas of the country are like “collateral damage” caught in the crossfire of their regions’ housing disasters. For instance, Hampel said, despite responsible lending practices, in states like California, Nevada, Arizona and Florida where housing prices have plummeted as much as 40%, credit unions could find it necessary to access a government rescue plan. “Such a plan could put the floor to their market higher than it otherwise would be,” Hampel said. Now that access appears assured, CUNA is taking on some related issues that will be critical to credit unions, as well as other financial institutions, that avail themselves of a government rescue. CUNA’s actions include:
* Advising both legislative and executive branch plan designers of the dangers of unwarranted cram-downs, a practice that could allow bankruptcy courts to reduce homeowners’ mortgage debt; * Working to ensure credit union interests are acknowledged in any proposal to limit executive compensation; * Working to ensure credit unions, as member-owned financial cooperatives, do not lose their standing to participate in a rescue package if the final plan requires stock warrants or excess stock run-offs to the Treasury.
Ryan Donovan, CUNA’s vice president of legislative affairs, advised credit unions to expect Congress to act on a rescue plan soon. “Something is going to happen,” he said on a CUNA press call, “But it is up in the air what it will look like. The Treasury is asking for considerable authority in an extraordinary timeframe.”

Go Direct Crime month good time to switch from paper

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WASHINGTON (9/24/08)--The U.S. Treasury Department’s “Go Direct” campaign is again highlighting October’s distinction as Crime Prevention Month as making it the perfect time to encourage the safety benefits of direct deposit for Social Security payments. Entering its fourth year, the Go Direct promotional campaign urges the recipients of government benefits checks to opt for electronic delivery as a means to eliminate the risk of stolen checks and forgeries, and to reduce exposure to identity theft. In addition to direct deposit, Go Direct is promoting its Direct Express Debit MasterCard card as another means to eliminate the risk of lost or stolen checks. Free materials are available to help promote the safer payment options, including newsletter copy, fliers and posters, talking points and PowerPoint slides, Web banners and flashing safety lights. The Credit Union National Association (CUNA)—a national partner of the Go Direct campaign--supports the program and backs its goals of providing a secure delivery method for those receiving benefits checks. In addition, direct deposit saves taxpayer dollars: It is estimated that if all recipients of federal benefit checks switched to direct deposit, millions of taxpayers' dollars would be saved annually. Use the resource links below for more Go Direct information.