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CUNA Drop indemnification golden parachute proposals

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WASHINGTON (9/9/10)--The Credit Union National Association (CUNA) has urged the National Credit Union Administration (NCUA) not to proceed with proposed changes that would limit or generally prohibit golden parachute and indemnification payments to officials of federally insured credit unions, including natural person and corporate credit unions. CUNA's comments were developed with CUNA's Federal Credit Union Subcommittee, which is chaired by Truliant FCU President/CEO Marc Schaefer. CUNA’s comments are in response to a recent NCUA proposal that would generally not allow federally insured credit unions, regardless of their financial condition, to make payments to an institution-affiliated party (IAP) to compensate them for any legal costs they have incurred in connection with administrative or legal proceedings by NCUA or a state regulator if the IAP was assessed a money penalty, removed from office, or the subject of a cease and desist order. The prohibition would not apply to qualified pension plans, "bona fide" deferred compensation, and some other types of employee benefits and severance agreements, and would not apply to current employment contracts, only to those that are agreed to or renewed after the rules take effect. While CUNA supported efforts to contain costs to the National Credit Union Share Insurance Fund, the agency's rationale for issuing the proposal, CUNA's Deputy General Counsel Mary Dunn said CUNA is “generally concerned that the scope of the proposal is too far-reaching and will have a chilling affect on the ability of credit unions to attract management personnel and board members.” The NCUA’s proposals also give the NCUA a “greater role for the agency in the regulation of corporate governance issues than it currently assumes.” Dunn raised concerns that the supplementary information accompanying the proposal provides little justification for it and reiterated general credit union concerns that the NCUA has “crafted a proposal for all federally insured credit unions that is based on its concerns regarding problems experienced by a limited number of corporate credit unions.” She also questioned the need for the short, thirty day comment period for the proposal. CUNA also raised concerns about NCUA’s proposed prohibition of so-called "golden parachute" compensation packages to the departing executives of troubled federally insured credit unions. The so-called “golden parachute” payments addressed by the proposal should also “be permissible to former officials of credit unions in conservatorship, CAMEL 4 or 5 credit unions or those in troubled condition situations in which the official receiving the payment was not involved in causing the loss,” CUNA added. "CUNA cannot support proposals that do not provide proper safeguards for credit union officials who strive to fulfill their duties and serve their credit unions well," Dunn stated. The letter urges NCUA, if it believes the rule is in the best interest of credit unions, to make important changes and allow credit unions to comment again before the rule is adopted. For the full comment letter, use the resource link.

MBL fight goes interactive

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WASHINGTON (9/9/10)--With grassroots member business lending activism in full swing ahead of the U.S. Congress’s pending return to Washington, the Credit Union National Association (CUNA) has again taken the fight for increased MBL cap to the internet.
CUNA will use the geographically-targeted, web-based ads to drive traffic to its own MBL direct advocacy page. That page will put readers in touch with the resources needed to directly express their support for MBL legislation to their legislators. One of the many sites that the ads will appear on is the political news site, which also published a pro-MBL editorial by CUNA President/CEO Bill Cheney earlier this week. CUNA has also actively promoted lifting the MBL cap through facebook and other online media sources. Legislation that would lift the MBL cap from the current 12.25% of assets threshold to 27.5% of a credit union’s total assets has been proposed by Sen. Mark Udall (D-Colo.). CUNA has estimated that lifting the MBL cap to 27.5% of total assets could provide up to $10 billion in new funding to small businesses and create over 100,000 new jobs in the first year following enactment. Cheney has targeted this week as a pivotal opportunity to increase Senate support before the U.S. Congress returns on Sept. 14, and credit union supporters and state leagues have written letters to editors, submitted their own editorials to local press, and directly contacted their legislators through in-district town hall meetings. CUNA this week will also meet directly with President Obama's economic advisors to seek their support for lifting the MBL cap. A small business jobs package, which could still include the MBL legislation, is expected to be voted on by the Senate next week.

Freddie Mac provides enviro loan guidance

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WASHINGTON (9/9/10)--Freddie Mac recently released guidance on the purchase restrictions placed on mortgages secured by properties that are subject to Property Assessed Clean Energy (PACE) obligations. In general, Freddie Mac has said that it would not “purchase mortgages secured by properties subject to PACE obligations with first lien priority.” Freddie Mac in a release noted that this restriction has been waived for all mortgages that it settled before July 6 and “that were secured by properties subject to PACE obligations with first lien priority” originated before that date. “Nevertheless, if a borrower who has received a waiver wishes to refinance his or her mortgage with Freddie Mac, that borrower must payoff the existing PACE obligation as a condition to obtaining a new mortgage, unless the refinancing is conducted under Freddie Mac's Relief Refinance Mortgages offering,” Freddie Mac added. Freddie Mac also recently reported that both 30- and 15-year mortgage rates remained at record lows during the week ended Sept. 2. The weekly mortgage survey recorded average rates of 4.32% and 3.83%, respectively. The 5-year Treasury-indexed hybrid adjustable-rate mortgage also fell to record levels during that week, with a recorded average rate of 3.54%. For the Fannie Mae PACE announcement and the mortgage survey, use the resource links.

NACHA to address rule problem points

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WASHINGTON (9/9/10)--The Electronic Payments Association (NACHA) has proposed several changes to its operating rules that would eliminate some so-called “pain points,” areas of misunderstanding, and other problems that it identified during a rules simplification initiative that it completed earlier this year. NACHA in April reorganized its rules around the rights and responsibilities of participants in the electronic payment network, making the rules “more navigable by participants.” NACHA President/CEO Janet Estep at that time said that NACHA’s goal was “to make the rules more easily understood and the corresponding information easier to find." According to NACHA, the proposed rule changes will impact some third-party senders and originators. Specifically, NACHA has proposed requiring third-party senders to conduct yearly compliance audits and requiring Originating Depository Financial Institutions (ODFIs) to provide information on their return entries to loan originators. NACHA has also sought to clarify rules that require a receiving depository financial institution (RDFI) to return a credit entry returned to the RDFI by its consumer customer, as well as requirements regarding revocation of authorization for single-entry transactions. NACHA has also proposed altering its rules addressing the warranties and liabilities of associations, and has asked financial institutions for information on authorization requirements for corporate entries, notifications of change for single-entries, and stop payment return reason codes. Comments may be sent to NACHA until Sept. 30, and the Credit Union National Association will also accept comments until Sept. 24. For more on the NACHA proposals and CUNA’s comment call, use the resource link.

NCUA to CUNA Expect merger registry in Oct.

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WASHINGTON (9/9/10)—The National Credit Union Administration (NCUA) said credit unions can expect a national merger registry “to be live by October.” The registry, an idea initally recommended by the Credit Union National Association. would provide the names of potential credit union merger partners. The registry is just one innovation sought by the Credit Union National Association (CUNA) regarding the regulators’ approach to voluntary mergers. The trade group has also urged the agency to address due diligence and loss-sharing incentives as it further refines its approach to the merger process. CUNA, in an August letter to all three NCUA board members, said that the agency also should provide credit unions with greater information on how it works with assorted state regulators in the event that a dual-chartered credit union is involved in a merger. CUNA also recommended that NCUA provide greater detail on its criteria for selecting which credit unions on the merger partner registry should serve as acquirers. Responding to the CUNA letter, NCUA Chairman Debbie Matz wrote that the NCUA will continue to evaluate the merger process and consider improvements. “I do not anticipate a change in the required due diligence a continuing credit union must exercise to ensure the acquired credit union is appropriate for their operation,” the head of the agency wrote. She also noted that the NCUA continues to work closely with state supervisory authorities to obtain names of potential merger candidates when an assisted merger resolution is being sought. The late-summer CUNA letter also broached to the agency many credit unions’ concern that the NCUA is increasingly using documents of resolution, letters of understanding and agreement, and cease and desist orders in its supervisory activities. CUNA asked the NCUA to further examine some of its own supervisory practices. Matz said that NCUA administrative actions are intended to minimize credit union losses. “And if credit union losses are lower,” she added in her response, “credit union assessments will be lower.” Matz also thanked CUNA for its comments on the issues and asked to be kept apprised of CUNA’s thoughts “on these and other issues of mutual interest.”

Inside Washington (09/08/2010)

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* ALEXANDRIA, Va. (9/9/10)--Debbie Matz, National Credit Union Administration chairman, who will be leading a town hall meting in Portland, Ore. (News Now Aug. 19) on Oct. 5, will also address the annual meeting of the Credit Union Association of Oregon on Oct. 6. “The Portland Town Hall will be an ideal opportunity for credit union leaders in Oregon, and across the Northwest, to have a dialogue with NCUA leadership on the major issues of the day,” Matz has said. Oregon credit union leaders are likely to discuss with Matz the health of the share insurance fund, regulatory and examination burdens, and comment on recently passed federal regulations. Credit union leaders also will express their support for increased an increased cap on member business lending, said the Credit Union Association of Oregon (Oregon Outlook September 2010) ... * WASHINGTON (9/9/10)--The Internal Revenue Service has issued guidance regarding changes to the use of certain tax-favored arrangements, such as flexible spending arrangements to pay for over-the-counter medicines and drugs. Under the Affordable Care Act, enacted in March, the cost of over-the-counter medicine or drugs cannot be reimbursed from the account unless a prescription is obtained. The change does not affect insulin, eye glasses, contact lenses, co-pays and deductibles. The standard applies to purchases made on or after Jan. 1 … * WASHINGTON (9/9/10)--The Federal Deposit Insurance Corporation (FDIC) has received numerous reports of suspicious telephone calls where the caller claims to represent the FDIC and is calling regarding the collection of an outstanding debt. Callers have alleged that the recipient is delinquent on a loan payment that was applied for over the Internet or through a payday lender. The loan may or may not exist. The caller attempts to authenticate the claim by providing sensitive personal information, such as name, Social Security number, and date of birth, supposedly taken from the loan application. The recipient is then strongly urged to make a payment over the phone to “avoid a lawsuit and possible arrest.” If a caller demonstrates that he or she has the recipient's sensitive personal information, such as Social Security number, date of birth, and bank account numbers, the recipient may be the victim of identity theft and should review his or her credit reports for signs of possible fraud. The individual should also consider placing a “fraud alert” on his or her credit reports, the FDIC said. The agency generally does not initiate unsolicited telephone calls to consumers and is not involved with the collection of debts on behalf of operating lenders and financial institutions ...