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Washington Archive

Washington

Inside Washington (09/26/2012)

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  • WASHINGTON (9/27/12)--The Federal Deposit Insurance Corp. (FDIC) Wednesday announced the appointment of John Vogel as regional director in New York. Vogel had been serving there as deputy regional director for risk management. In his new position, he directs the supervision of about 890 FDIC-insured depository institutions with combined assets of more than $1.5 trillion. The New York Region covers Maine, New Hampshire, Vermont, Massachusetts, Rhode Island, Connecticut, New York, Pennsylvania, New Jersey, Delaware, Maryland, Washington, D.C., Puerto Rico and the U.S. Virgin Islands. Vogel began his FDIC career in 1990 working at the Concord, N.H., field office. Since then he has served as a bank examiner and supervisory examiner in offices throughout New England. From 2004 through 2006, he was the special assistant to FDIC board member Thomas J. Curry in Washington, D.C., and then returned to New England as the field supervisor for the Southern New England Field territory. In August 2009, Vogel became an assistant regional director in New York, and then served as deputy regional director for risk management …
  • WASHINGTON (9/27/12)--The overall positive return on Troubled Asset Relief Program (TARP) bank programs now totals more than $21 billion after Zions Bancorporation, Salt Lake City, repurchased its remaining $700 million in outstanding TARP Capital Purchase Program (CPP) preferred stock, the Treasury Department said Wednesday. Treasury invested $245 billion through TARP's bank programs and has now recovered more than $266 billion through repayments, dividends, interest and other income. Treasury originally invested $1.4 billion in Zions through the CPP. Prior to the $700 million repurchase, Zions had repurchased an additional $700 million in CPP preferred stock in March. In addition to the $1.4 billion in repayments, Zions Bancorporation also paid taxpayers $253 million in dividends over the life of its TARP investment, Treasury said …

Free training for CDFIs that support mid-size biz

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WASHINGTON (9/27/12)--Community Development Financial Institutions (CDFIs) that lend to small- and medium-sized-businesses can receive free training through an upcoming CDFI Fund Capacity Building Initiative training series, entitled Innovations in Small Business Lending.

The training events, which will be provided by Deloitte Financial Advisory Services LLP, will help CDFIs grow their business lending capabilities. The first training event has been scheduled for Nov. 13 and 14, at the Minneapolis Federal Reserve in Minneapolis, Minn. Additional training events are scheduled to be held between November 2012 and May 2013, and those events will be announced as they are finalized.

The free training events will help CDFIs better tailor their lending practices and analyze multiple national and local lending trends, the CDFI Fund release said. Deloitte trainers will also help CDFIs evaluate the potential economic and social impact of their business lending, and perform preliminary financial calculations, the release added.

CDFI Fund Director Donna Gambrell said the training events will expand the Capacity Building Initiative's efforts to provide cutting edge training, technical assistance, and impact analysis to CDFIs that work to support small and medium enterprises in underserved communities throughout the United States, and will "help CDFIs enhance and expand business lending, ultimately putting more Americans back to work."

The Credit Union National Association (CUNA) continues to fight to increase the member business lending cap for credit unions by supporting two bills that would increase the cap from 12.25% of assets to 27.5% of assets. CUNA expects the Senate version of MBL legislation, S. 2231, the Small Business Lending Enhancement Act, to receive a vote once the U.S. Congress returns to Washington in November.

CUNA has estimated that an MBL cap increase would create 140,000 jobs and inject $13 billion in new funds into the economy during the first year after enactment. Both benefits would come at no cost to taxpayers.

For more on the CDFI Fund training, use the resource link.

Five-year plan unveiled by CFPB

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WASHINGTON (9/27/12)--The Consumer Financial Protection Bureau (CFPB) on Wednesday released its draft strategic plan for 2013 through 2018, and credit unions and other interested parties can suggest improvements to the plan and comment on how that plan could impact the consumer finance market until Oct. 25.

In the proposed plan, the CFPB noted its stated goals of promoting a marketplace where:

  • Customers can see prices and risks up front and easily make product comparisons; and
  • No one can build a business model around unfair, deceptive, or abusive practices.


To reach these goals, the CFPB proposal sets out 11 desired outcomes, 25 strategies that will help the CFPB achieve these outcomes, and 27 performance measures that the agency will use to track its progress.

Helping consumers more fully understand the risks associated with some financial products and improving financial literacy are also key goals going forward, the CFPB added.

The agency said it will, in part, determine its success by keeping track of the percentage of scheduled regulatory projects it completes, the percentage of five-year regulation reviews that are completed on schedule, and the percentage of rulemakings that are informed by public outreach processes, such as Small Business Regulatory Enforcement Fairness Act (SBREFA) panels and/or e-rulemaking.

Credit Union National Association (CUNA) Deputy General Counsel Mary Dunn said CUNA is reviewing the plan and will certainly be commenting. "We want the CFPB to include efforts to protect credit unions from needless regulatory burdens in its strategic plan," she said.

For the full CFPB release, use the resource link.

FASB must exclude CUs from risk reporting changes CUNA

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WASHINGTON (9/27/12)--Noting that credit unions are not publicly traded companies, and should not be treated as such, the Credit Union National Association (CUNA) has urged the Financial Accounting Standards Board (FASB) to exclude credit unions from the scope of upcoming accounting standards changes.

FASB's proposed requirements would unduly burden credit unions, while at the same time not resulting in superior information to a credit union's members, creditors, auditors, or regulators, CUNA said in a comment letter.

FASB this summer released a draft proposal that would amend its financial instruments regulations by requiring credit unions and other financial institutions to provide certain disclosures about liquidity risk and interest rate risk (IRR). The proposal is intended to provide users of financial statements with more decision-useful information about entity-level exposures to liquidity risk and IRR.

Specifically, credit unions and other institutions would be required to disclose liquidity risk information that includes:
  • The carrying amounts of classes of financial assets and liabilities in a table, segregated by expected maturities, including off-balance sheet financial commitments and obligations;
  • Information about time deposit liability, including the cost of funding in a table or list during the previous four fiscal quarters; and
  • Details on available liquid funds, such as unencumbered cash, high-quality liquid assets and borrowing availability, in a tabular format.
Financial institutions would also be required to provide IRR disclosures that include:

  • The carrying amounts of classes of financial assets and liabilities according to time intervals based on the contractual repricing of the instrument;
  • An interest rate sensitive table that presents the effects on net income and shareholders' equity of hypothetical instantaneous shifts of interest rate curves; and
  • Information on the organization's overall IRR exposure.
CUNA Deputy General Counsel Mary Dunn in a comment letter to FASB said while CUNA supports appropriate transparency on the part of credit unions to their members, regulators, and Congress, the National Credit Union Administration (NCUA) has regulated IRR for federally insured credit unions. The new disclosure requirements imposed by FASB could undermine compliance with those NCUA requirements, particularly if members are confused about the information provided to them under the FASB proposal, Dunn said.

Dunn in the letter also noted the differences between credit unions, which are beholden to their members, not shareholders who have purchased publicly traded stock. "As such, these disclosures are not appropriate for credit unions," she said.

Credit unions would have to undertake significant compliance costs to provide these FASB disclosures, and the costs of compliance would likely far outweigh any benefits from this proposal, the CUNA letter added. The letter noted that FASB's proposal also comes at a time when credit unions are facing an avalanche of new requirements as a result of the Dodd-Frank Wall Street Reform and Consumer Protection Act and other requirements.

Further, liquidity risk and IRR risk information is not frequently demanded by credit union members, CUNA noted. A CUNA CFO council survey found that credit union members, in general do not request financial statements, IRR details or liquidity risk details from their credit unions. Sixty-seven percent of the 127 credit unions surveyed said none of their members had asked for financial statements within the past year. The 31% of credit unions that had received financial information requests only received those requests from between one and five of their members, and a scant few of those credit unions were asked for detailed IRR or liquidity risk information.

If FASB does not agree to remove credit unions from the scope of the proposal, FASB should allow adequate time for all reporting entities to make the necessary changes to their systems and retrain staff. CUNA suggested FASB set an effective date at least one year beyond the issuance of the final rule, and grant credit unions and other nonpublic entities an extra six months to comply.

For the full CUNA comment letter, use the resource link.