Archive Links

Consumer Archive
CU System Archive
Market Archive
Products Archive
Washington Archive
150x172_CUEffect.jpg
Contacts
LISA MCCUEVICE PRESIDENT OF COMMUNICATIONS
EDITOR-IN-CHIEF
MICHELLE WILLITSManaging Editor
RON JOOSSASSISTANT EDITOR
ALEX MCVEIGHSTAFF NEWSWRITER
TOM SAKASHSTAFF NEWSWRITER

Washington Archive

Washington

Bushs signature lifts CLF lending cap

 Permanent link
WASHINGTON (10/1/08)--President George W. Bush last night signed into law a government funding resolution that also contains a borrowing cap increase for the National Credit Union Administration's (NCUA's) Central Liquidity Facility (CLF) for Fiscal Year 2009. The increased borrowing ceiling was included in a continuing resolution (CR) to keep the government funded into 2009. The legislation was approved 78-12 by the Senate on Saturday and was passed 370-58 by the House on Wednesday. The CLF provision temporarily lifts an arbitrary $1.5 billion lending cap placed on the NCUA's liquidity facility. The increased cap would allow the CLF to lend up to approximately $41 billion to the Credit Union System. Credit Union National Association (CUNA) Vice President of Legislative Affairs Ryan Donovan said the higher lending cap has been sought by the NCUA in order to have an additional regulatory tool at their disposal, if needed, and CUNA has been “working very hard over the past week to make this happen."

FASB SEC underscore fair market accounting flexibility

 Permanent link
WASHINGTON (10/1/08)—The Federal Accounting Standards Board (FASB) and Securities and Exchange Commission (SEC) yesterday provided clarity for U.S. entities--including credit unions--forced to record lower fair market values for some assets on their balance sheets. According to Scott Waite, chair of the Credit Union National Association’s (CUNA) Accounting Task Force, the current Fair Value Measurement (FAS 157) already provides for a hierarchy to determine a financial instrument’s price, but Tuesday’s FASB and SEC statement provides accounting guidance urged by many in the financial services industry, including CUNA. The highest, or first, level in assigning a value to an asset is the “observable market price in an orderly transaction between willing market participants,” said Waite, who also is senior vice president and chief financial officer at Patelco CU in San Francisco. Absent this condition, the next two levels can be used to determine the fair value price--one of those is cash flows. “If a price for a security is depressed because of a lack of interested buyers, but is still performing and paying interest, its cash flows generated can be used to adjust the price upward for accounting purposes,” he explained. Waite explained these aspects of applying fair value are contained in the standard issued last year, but today’s clarification by the SEC and FASB reinforces their existence and acceptable use. “In Tuesday’s inactive or illiquid markets, it’s difficult to rely on the first level of fair value measurement,” he said. For credit unions, this means some relief for many who hold mortgage-backed securities, which in today’s market have depressed prices, according to Waite. Assuming a drop in price has occurred, the difference an entity pays for a security and today’s market value is classified as an “unrealized investment loss”. The resulting financial transaction decreases equity on the balance sheets. “This not only seems alarming to some, but gives the false appearance that real investment losses might have to be ultimately realized through earnings,” said Waite. “The affect of this guidance will allow credit unions to revisit the fair value and potentially improve or increase their equity by reversing some of this negative effect,” said Waite. "However, if a credit union has already been using the illiquid or inactive market defense with their accountants, then some may see little change." "But for those who might just now be thinking of that strategy, I think they may just find some relief and an opportunity for some improvement," he added. Waite pointed out that to the degree that equity positions improve for financial institutions, they may gain more latitude--from regulators and rating agencies--and confidence in supplying more credit to borrowers. "That's where I see some potential for increase liquidity," he said.

Inside Washington (09/30/2008)

 Permanent link
* WASHINGTON (10/1/08)--For the first time in history, the Federal Deposit Insurance Corp. (FDIC) used the systemic risk exception to sell Wachovia’s assets to Citigroup (American Banker Sept. 30). The exception allowed the agency to protect all of Wachovia’s depositors while covering Citi’s cost if Wachovia’s losses on assets were more than $42 billion. The transaction is not expected to cost the FDIC anything--and the agency will receive $12 billion in preferred Citi stock. Citi will absorb $42 billion in losses from Wachovia ... * WASHINGTON (10/1/08)--Three firms--Citigroup Inc., JPMorgan Chase and Co., and Bank of America--are completing deals with three other banking operations in an effort to save them from failure. The firms will become larger after the deals are finished, which sparks concern among some observers. Wachovia’s sale to Citigroup would give Citigroup $2.9 trillion in assets; Washington Mutual’s sale to JPMorgan would give it $2.1 trillion in assets, and BofA’s acquisition of Merrill Lynch would give it $1.9 trillion in assets. The purchases are concentrating the banking system in the hands of fewer people, which creates risk, said Bill Longbrake, former Washington Mutual vice chairman and director at First Financial Northwest (American Banker Sept. 30). Risks could be avoided if the companies are diversified, said Robert Clarke, senior partner at Bracewell and Giuliani. The interest in the companies is also more vested because the government will be less likely to let them fail, added Douglas Lindy, a banking partner in regulatory practice at Allen and Overy ... * WASHINGTON (10/1/08)--A delegation of 18 individuals representing 13 Illinois credit unions spent two days in Washington, D.C., last week hiking Capitol Hill, according to the Illinois Credit Union League. The group’s legislative priorities included support for regulatory relief legislation, opposition to interchange fees and support for retention of credit unions’ tax exempt status. Rep. Jesse Jackson (D-Ill.), center, spoke to and met the group at Credit
Click to view larger image Click for larger view
Union House. The group presented him with a plaque for sponsoring regulatory relief legislation. “This bill allows credit unions to better service members from all walks of life with modern, low-cost financial services and also promotes the economic growth and well-being of our communities,” Jackson said. “As financial cooperatives, the mission of credit unions is to serve their members, not to prey on people who are struggling in the current economic environment. [The legislation] keeps the self-help cooperative spirit of credit unions alive in my district and throughout the nation.” Hike the Hill participants also met with Brad McConnell, legislative assistant for financial services in Sen. Dick Durbin’s (D-Ill.) office. McConnell said Durbin was in favor of a provision raising the Central Liquidity Facility’s borrowing cap, which was recently approved in both the House and the Senate. The provision is part of a government funding resolution that awaits the president’s signature. The group also met with National Credit Union Administration (NCUA) Chairman Michael E. Fryzel; his new chief of staff, Sarah Vega; and NCUA board member Gigi Hyland. (Photo provided by the Illinois Credit Union League) ...

NCUA ad campaign focuses on share insurance

 Permanent link
ALEXANDRIA, Va. (10/1/08)--The National Credit Union Administration (NCUA) said yesterday it will embark on a national advertising campaign to ensure members know their money at federally-insured credit unions is backed by the full faith and credit of the U.S. Government. A media campaign featuring “Uncle Sam” will kick-off Thursday with advertisements in the USA Today and other major U.S. newspapers. The campaign’s message is “to assure credit union members and the general public that most credit union member accounts are federally insured,” said the agency.
Click either image to download a high-resolution pdf document


In addition, NCUA said it begins distributing this week to each federally-insured credit union three large lobby posters that feature “Uncle Sam” and accompanying text, “This Credit Union Is Federally Insured.” NCUA also said Chairman Michael Fryzel plans to assure credit union CEOs via video that federal insurance remains safe and secure. He will highlight the NCUA’s electronic Insurance Tool Kit, which is designed to help members understand their federal insurance protection. “Understandably, consumer confidence in our financial structures has been shaken by recent turmoil in the markets,” said Fryzel. “Federally insured credit unions remain a safe and sound alternative, and I will do everything in my power as chairman of the National Credit Union Administration to make certain that accurate and useful information about the National Credit Union Share Insurance Fund is available.” Fryzel called upon credit union volunteers and professionals to “do their part to help members understand how their credit union funds are federally insured.”

Post-merger net worth plan good with changes says CUNA

 Permanent link
WASHINGTON (10/1/08)—The Credit Union National Association (CUNA) supports a federal regulatory proposal to implement statutory authority to allow the net worth ratio of an acquiring credit union, following a merger, to reflect the acquired retained earnings of the merging credit unions. The National Credit Union Administration (NCUA) rule would put into action a provision of the 2006 Financial Services Regulatory Relief Act that gives credit unions more flexibility in complying with a 2001 accounting rule on mergers. If approved, the NCUA rule would apply to both natural person and corporate credit unions. Prior to the 2001 Financial Accounting Standards Board (FASB) rule, credit unions and others could use the “the pooling method” of accounting to report net worth in a merger situation. This method allowed merging credit unions to combine net worths—which are retained earnings. The method facilitated mergers because it permitted the full amount of retained earnings of both institutions to be included in the net worth of the acquiring credit union. Under the acquisition method, as now required by FASB, the value of assets acquired in a merger must be reflected as an addition to equity, not as an addition to retained earnings, as they are under the pooling method. This method can drive down the net worth ratio of an acquiring credit union unnecessarily. To address this, in 2006 Congress voted to allow credit unions to follow the FASB acquisition method but nonetheless include the net worth of the merging credit union in the net worth of the acquiring credit union for purposes of net worth ratio calculations. In a comment letter supporting the NCUA’s implementation plan, CUNA also suggested three modifications to the current proposals before final adoption. They are:
* Changes are needed in the definition of net worth to make it clearer that the entirety of the merging credit union’s retained earnings may be included in the net worth of the continuing credit union; * Changes are needed in the chart provided to illustrates how the proposed rule would be implemented taking Generally Accepted Accounting Principals (GAAP) into consideration compared to the application of GAAP without the proposal; and * Guidance is needed regarding how the NCUA anticipates a merging credit union’s retained earnings will be reported for accounting purposes as part of the net worth of the acquiring credit union.
The CUNA letter was developed under the auspices of its Accounting Task Force, chaired by Scott Waite, SVP-CFO of Patelco CU, San Francisco and an advisor to FASB. To read CUNA’s complete comment, use the resource link below.

CUNA urges continued insurance parity and more

 Permanent link
WASHINGTON (10/1/08)—As members of the U.S. Congress and the Bush administration continue to work to craft an economic rescue plan palatable enough to be passed by the House and Senate, the White House is considering the possibility of adding a temporary increase in deposit insurance, possibly up to $250,000 or $300,000, into the emergency legislation. Meanwhile, Credit Union National Association (CUNA) lobbyists learned late Tuesday that the Senate is expected to possibly vote today on a version of the financial rescue package with provisions to increase deposit insurance coverage for banks and credit unions. The apparent developments came shortly after CUNA urged President George W. Bush and U.S. Treasury Secretary Henry Paulson to make sure to include credit unions in any plans for increased deposit insurance coverage. Additionally, CUNA asked the White House to consider complimenting the parity in savings insurance for credit unions with a risk-based capital system that will provide credit unions with the flexibility they need to handle the unexpected increasing level of savings flowing into credit unions. In the letters, CUNA President/CEO Dan Mica pointed out that savings have been flowing into credit unions in the wake of recent closings and sales of financial institutions. To help credit unions continue to help consumers and absorb the savings inflow, Mica asked the president to consider complimenting the deposit insurance coverage “with a risk-based capital system (which) will provide credit unions and our regulator with additional tools to continue to serve their members safely and soundly.” Mica reminded in the letter that CUNA has been working for the last six years on behalf the Credit Union Regulatory Improvements Act (CURIA, H.R. 1537), Title I of which would define a risk-based capital system for credit unions. “We believe this legislation is more important now than ever, in light of the fact that credit markets are frozen, and consumers and small businesses are reporting great difficulties getting loans,” Mica wrote, and added that banks already operate under a similar risk-based capital system.

On video Hood on CUs in turbulent times

 Permanent link
On video: NCUA’s Hood on CUs in turbulent times WASHINGTON (10/1/08)—Appearing in a polished although impromptu video, National Credit Union Administration (CUNA) Vice Chairman Rodney Hood appeared on camera recently to discuss credit union strength amidst turbulent times. Hood addressed about 75 credit union representatives affiliated with

. the NW Chapter of Credit Unions of the North Carolina CU League and recognized credit unions for their smart lending decisions in the past, and encouraged them to ”keep doing great things” for their member-owners as the economy is threatened by a financial crisis. After his speech, Hood participated in a league video in which he encouraged credit unions to “really differentiate themselves” from other financial services providers in the midst of the market turbulence. “To the degree your balance sheets and your risk tolerance levels allow, let’s continue to to make capital available and affordable to those individuals who are hard-working men and women who want their financial institutions to be there for them,” Hood said. The NCUA vice chairman also noted the strength of his agency’s National Credit Union Share Insurance Fund, which backs credit union members’ deposits by the full faith and credit of the U.S> government. Hood also touted credit unions’ strong, 11.04% net worth position.

CEOs urge discussion about single CU association

 Permanent link
WASHINGTON (9/30/08)--The slow legislative progress of a risk-based capital system for credit unions was the final impetus for one group of CEOs to urge dialogue about creating a single national credit union trade association. Kirk Kordeleski, president/CEO of the $3 billion-asset Bethpage FCU in Bethpage, N.Y., and five other CEOs feel so strongly about the issue that they have unveiled a new white paper called, “A Stronger and More Effective Single Trade Association for Credit Unions: The Time is NOW.” “This effort was borne of a small group of credit union folks, frustrated over the lack of movement of the Credit Union Regulatory Improvements Act (CURIA), business services and capital reform,” said Kordeleski in an interview yesterday. Kordeleski said the group believes credit unions would benefit by bringing the National Association of Federal Credit Unions (NAFCU) and the Credit Union National Association (CUNA) together. “Our intent is to encourage meaningful and productive dialogue” toward that goal, he said. In addition to Kordeleski, the other five collaborating credit union CEOs include:
* Nader Moghaddam, Financial Partners CU, Downey, Calif.; $741 million in assets; * Teresa Freeborn, Xceed Financial CU, El Segundo, Calif.; $799 million in assets; * Gordon Dames, Mountain America FCU, West Jordan, Utah; $2.7 billion in assets; * Mary Cunningham, USA FCU, San Diego, Calif.; $692 million in assets; and * John Bommarito, Western FCU, Hawthorne, Calif.; $1.4 billion in assets.
“Ultimately, there were deeply held concerns that the infighting between CUNA and NAFCU didn’t allow for a strong stance on risk-based capital, among other issues,” said Kordeleski. Coordination between CUNA and NAFCU just hasn’t work, he explained. “Even during H.R. 1151, both trades wanted to go their separate ways until we forced them to work together,” said Kordeleski. “That effort was eventually very successful because both trades understood that no amount of petty bickering would be tolerated and there were credit unions reviewing each of the steps taken.” In that case, “one trade association would have been as effective as two,” he said. “And when they don’t work together, particularly on major bills or regulations, we all lose.” Kordeleski explained the quickening pace of credit union consolidation and increased expense of supporting separate trade associations support the concept of one entity. Other credit unions recently have joined Kordeleski’s effort, including 30 aerospace industry credit unions and large credit unions in California and Nevada. “So far, 90 of the largest 300 U.S. credit unions support the white paper in principle,” he said. According to Kordeleski, the biggest challenge so far has been simply getting both groups to the table. He said CUNA, via Board Chairman Tom Dorety, was open to discussions. NAFCU is disinterested, said Kordeleski. In a statement, CUNA’s Dorety said CUNA endorsed the concept of the group and expressed CUNA’s willingness to talk. He added that CUNA believes continuing a “coordinating council” between the two trade groups is insufficient and will not address the valid issues raised by these credit unions. Further, Dorety said in the statement, the initiative by the CEOs is entirely theirs--CUNA has had no hand in the effort. Kordeleski said his group of CEOs is asking right now for the boards of both trade associations to simply sit down and talk about solutions. “We want them to take into serious consideration the white paper’s six core principles and to act in good faith on them,” he said. Kordeleski underscored that his effort was not about CUNA or NAFCU winning or losing, because “each association has many leverage points.” “This is about speaking consistently and capably for credit unions,” he pointed out. Moving forward, Kordeleski said his group of six will meet next week to draft a communication about the white paper to large U.S. credit unions. The CUNA and NAFCU boards also will receive another letter urging a dialogue about the paper’s principles. The white paper will be posted next week on a neutral website. In the meantime, credit unions also can obtain the white paper by emailing Kordeleski at kkordeleski@bethpagefcu.com.

P-and-A arranged for Kaiperm FCU

 Permanent link
ALEXANDRIA, Va. (9/30/08)—The National Credit Union Administration (NCUA) negotiated a deal for Alliant CU of Chicago to purchase the assets and assume the members of Kaiperm FCU of Oakland, Calif. as the least costly way to address Kaiperm’s flagging position. In June, Kaiperm announced it was working to negotiate a merger with $5.7 billion-asset Alliant. Kaiperm decided to pursue the merger after its research concluded a merger was the best way to improve and enhance financial services for its members. It was reported that during the first three months of this year, the credit union posted losses of $2.2 million. The NCUA Monday announced its decision to liquidate Kaiperm and discontinue its independent operation after determining the credit union was insolvent and has no prospects for restoring viable operations. At the time of liquidation, Kaiperm FCU had approximately $91 million in assets and served 18,000 members. An NCUA release noted that the new Alliant CU members will continue to receive convenient, uninterrupted service. It reminded that credit member accounts in Alliant are insured up to at least $100,000 by the National Credit Union Share Insurance Fund (NCUSIF), an entity of the federal government operated by NCUA. Certain retirement accounts, such as IRA and KEOGH accounts, are insured up to $250,000. Alliant is a state-chartered, federally insured chartered in 1935 to serve employees of United Airlines. It is a full-service credit union with more than 216,000 members located throughout the United States. Alliant CU has 10 service centers nationwide and no-fee ATM service at over 75,000 locations. The NCUA chartered Kaiperm in 1957 to serve employees of Kaiser Foundation medical facilities in the East Bay area of Northern California and over time the field of membership expanded to include numerous select employee groups. The NCUA has emergency supervisory field of membership authority for credit unions in danger of closing. The agency can use the authority both in mergers and purchase and assumption arrangements.

CUNA Whatever passes must include CUs

 Permanent link
WASHINGTON (9/30/08)—As the House failed to approve a $700 billion rescue of the financial industry Monday, the Credit Union National Association (CUNA) continued to encourage credit unions to assure their members that their deposits are safe and insured. News that the House rejected 228-205 the rescue package—legislation that had appeared poised to be approved by both the House and Senate Monday—sent the stock markets plunging from already depressed levels. “Credit unions have widely differing views about this legislation,” said CUNA President/CEO Dan Mica after the vote. He added, “Our major concern is that, whatever package ultimately comes forward, it should not in any way disadvantage credit unions. Further, while we are working to ensure that credit unions are eligible for what the package offers, we are also working just as hard to ensure credit unions never have to use the provisions of this legislation.” Ryan Donovan, CUNA vice president of legislative affairs, acknowledged that the situation is turbulent. “Congress is facing the toughest of decisions. And while the administration and our federal lawmakers grapple with the issues, credit unions can fill an important role reminding members that the credit union system is safe and sound,” said Ryan Donovan, CUNA vice president of legislative affairs. Reiterating comments made by CUNA in a letter to lawmakers Friday, Donovan said of the rescue package, “Inaction at this critical time is unacceptable. The consequences of inaction may have devastating effects on the financial system and American consumers." The proposed legislation would establish a program within the Department of Treasury to acquire troubled assets from financial institutions and the resell them at a later date, presumably at a higher value. Credit unions are included in the definition of financial institutions eligible to participate in the program. The bill also favorably deals with two issues that CUNA raised in letters to Congress last week. The Emergency Economic Stabilization Act of 2008 (EESA) does not include any mortgage bankruptcy cram down language. Also, the bill restates the authority of the Securities and Exchange Commission to suspend FASB's mark-to-market accounting standard if it determines that it is in the public interest and protects investors. "In this case, we were able to ensure credit unions would be eligible to participate and we successfully kept the mortgage bankruptcy cram down provisions out of the bill, not to mention that the final version bill included the mark-to-market language which we found favorable. "We believe that the House may try to take this or similar legislation up again later this week. We are hopeful that nothing relevant to credit unions will change," Donovan said.

Inside Washington (09/29/2008)

 Permanent link
* WASHINGTON (9/30/08)--Last week’s failure of Washington Mutual (WaMu) could eventually close the Office of Thrift Supervision (OTS), according to observers (American Banker Sept. 29). WaMu made up about 20% of the OTS’ budget. The agency says that it has a contingency plan to ensure funding through next year and that it would take legislation to eliminate OTS. The Treasury Department has recommended that OTS merge with the Office of the Comptroller of the Currency. However, OTS Director John Reich said last week that multiple federal banking regulators is necessary and said the agency doesn’t want WaMu to be purchased. WaMu was placed on a problem bank list the week before it failed ... * WASHINGTON (9/30/08)--The Treasury Department adopted a report with more than 30 recommendations to improve audits of public companies. Recommendations focused on three specific areas: improving accounting education and strengthening human capital; enhancing auditing firm governance, transparency, responsibility, communications, and audit quality; and increasing audit market competition and auditor choice ... * WASHINGTON (9/30/08)--The Treasury Department Monday opened its temporary guarantee program for money market funds. The Treasury will guarantee the share price of any publicly offered eligible money market fund that applies for and a pays a fee to participate in the program. The money market mutual funds are regulated under the Rule 2a-7 of the Investment Company Act of 1940. They maintain a stable share price of $1 and are publicly offered. Those registered with the Securities and Exchange Commission will be eligible to participate ...

Strong CUNA insurance message noted in Hill paper

 Permanent link
WASHINGTON (9/30/08)—In a publication that reaches a Congressional and Administration audience, the intensity of the Credit Union National Association’s (CUNA’s) ongoing push to assure credit union members that their share deposits are safe and federally insured was called “the lobbying equivalent of a rampage.” “Remember that speech President Bush gave to the nation last week to press for passage of his bailout plan and to reassure the country that the money in federally insured banks is absolutely safe? “Dan Mica sure does,” opened the Sept. 29 article in Roll Call, talking about CUNA’s president and CEO. The article recounts just some of CUNA’s effort to get the word out that credit unions, through the National Credit Union Administration, have parallel and equal federal deposit insurance to Federal Deposit Insurance Corp/-insured institutions. Noted was CUNA’s letter to President George W. Bush prior to his national address last week urging him to clarify that the nation’s credit unions are also backed by the full faith and credit of the U.S. government. Mica was quoted that CUNA had “an indication at the staff level” that the message would be included in the President’s address and when it wasn’t CUNA received feedback saying it was an oversight. “Mica’s not backing down. He said he has penned a letter to Bush and is reaching out to administration officials tasked with the bailout. He is also beating down the doors of Members of Congress,” Roll Call said. The complete article is available through the resource link below (For Roll Call subscribers only.

Fryzel NCUA vigilant on CU health

 Permanent link
ALEXANDRIA, Va. (9/30/08)—National Credit Union Administration (NCUA) Chairman Michael Fryzel said he was “extremely pleased” by recent congressional action to increase the agency’s Central Liquidity Facility’s lending limit. Fryzel said the NCUA’s pursuit of authority to lend to the CLF’s full statutory level—currently at around $41 billion—gives the agency another tool that could assist credit unions withstand the market turbulence gripping the country. "Overall, the actions of Congress this week will play a major role in determining the health of the financial institutions for decades to come," Fryzel said, referring to effortst to approve the Emergency Economic Stabilization Act. "The magnitude of the asset repurchasing legislation being considered, regardless of the final product, will impact all financial institutions, including credit unions," the chairman noted, He added: “Credit unions comprise a significant component of the financial system. My goal is to make certain that they remain safe, sound and well-positioned to deal with the uncertainties presented by problems in the broader markets. “Credit union members rightfully depend on NCUA's strong and vigilant oversight, and I am confident that, working closely with Congress, we will find solutions to put in place the kinds of safeguards that achieve that goal."

Data retrieval fee increase a good move CUNA

 Permanent link
WASHINGTON (9/30/08)—The Credit Union National Association (CUNA) believes the Federal Reserve Board should move ahead with its updates that would increase fees that may be charged by a financial institution for costs incurred in producing consumer financial records in response to government requests. The Fed’s proposal would amend its Regulation S, which implements Right to Privacy Act provisions. The changes are intended to modernize the fee structure by reflecting increased cost in producing records, as well as changes in the technology used. The changes include a new “per electronic production” charge of $5, instead of the previous “per diskette” charge, that will cover the cost of all electronic media or email transmissions. In its comment letter to the Fed, CUNA said that the Fed proposal meets its goals. CUNA advised, however, that the Fed not pursue its idea to eliminate current fees for microfiche duplications. These fees should not be eliminated at this time as we believe there are credit unions that still retrieve and produce records in this manner. We anticipate that this method of producing records will eventually end for all financial institutions over time, but we do not believe this will occur in the near future. The Fed proposal also would implement a mechanism to update all the reimbursement rates periodically, based on changes in the Bureau of Labor and Statistics (BLS) survey data. CUNA supports the periodic updates, but recommends that each position description in the proposal add the term “or equivalent” as this should eliminate the requirement to amend these rules if the BLS changes these position names and descriptions in the future. To view CUNA complete comments, use the resource link below.

Higher CLF cap moves forward

 Permanent link
WASHINGTON (9/29/08)—As of Saturday afternoon, both houses of Congress have passed a government funding resolution that also contains a borrowing cap increase for the National Credit Union Administration's (NCUA's) Central Liquidity Facility (CLF) for Fiscal Year 2009. The increased borrowing ceiling was included in a continuing resolution (CR) to keep the government funded into 2009. The legislation was approved 78-12 by the Senate on Saturday and was passed 370-58 by the House on Wednesday. The CLF provision temporarily lifts an arbitrary $1.5 billion lending cap placed on the NCUA’s liquidity facility. The increased cap would allow the CLF to lend up to approximately $41 billion to the Credit Union System. Credit Union National Association (CUNA) Vice President of Legislative Affairs Ryan Donovan noted Saturday, “The higher lending cap has been sought by the NCUA in order to have an additional regulatory tool at their disposal, if needed, and CUNA has been working very hard over the past week to make this happen.” Donovan said that it is expected that the President will sign the continuing resolution, but, he warned, “Nothing is ever final in these closing days of Congress until it is official. “This CR is the vehicle that will keep the federal government programs operating after October 1 until March of 2009. So, the CLF language is clearly part of a very important development.”

Inside Washington (09/26/2008)

 Permanent link
* WASHINGTON (9/29/08)--On Thursday, Congressional leaders said they had reached a deal on the Treasury’s $700 billion proposal to bail out banks, but details of the plan were not announced and Republicans had not yet indicated if they would sign on (American Banker Sept. 25). Rep. Spencer Bachus (R-Ala.) said there was no agreement on the plan except to continue discussions. Sen. Richard Shelby (R-Ala.) agreed, saying there were a lot of differing opinions. Congress is not prepared to give $700 billion, but would give $250 billion with another $100 billion down the road, Sen. Charles Schumer (D-N.Y.) said, speaking on behalf of lawmakers who noted they had reached an agreement. The plan is good enough to stabilize the markets, and Republicans can support it, according to Sen. Robert Bennett (R-Utah) ... * WASHINGTON (9/29/08)--Federal regulators have proposed requiring institutions to submit more data on residential construction loans and structured investment products in call reports (American Banker Sept. 26). The proposed changes were published Tuesday in the Federal Register. Comments will be taken until Nov. 24. More changes could be down the road when the Treasury’s $700 billion proposal to bail out banks goes into effect, said a Federal Deposit Insurance Corp. (FDIC) official ...


* WASHINGTON (9/29/08)--National Credit Union Administration Chairman Michael Fryzel (center) met with delegations from the Wisconsin, Georgia, Ohio and Oregon credit union leagues. He encouraged credit union professionals and volunteers to get involved in the governmental affairs process. “It is crucial that lawmakers know the credit union story and by coming to Washington and conveying what your credit union does for its members,” he said. “I commend you on this outreach." (Photo provided by the National Credit Union Administration) ...

Two nominated by CUNA to Feds TIAC

 Permanent link
WASHINGTON (9/29/08)—The Credit Union National Association (CUNA) has nominated two credit union representatives for membership on the Federal Reserve's Thrift Institutions Advisory Council (TIAC), and described both as individuals who would bring significant expertise to the cork of the Fed council. In a nominating letter to Fed Governor Randall S. Kroszner, CUNA Chairman Tom Doherty put forward the names of Patsy Van Ouwerkerk, president/CEO of Travis CU, Vacaville, Calif., and Rod Staatz, president/CEO of State Employees CU of Maryland (SECU CU), in Linthicum. Doherty noted that Van Ouwerkerk has been involved in the credit union system for more than 18 years. In addition to her current position at the $1.6 billion-asset Travis CU, which has 155,000 members, she also has served as president/CEO of Alliance CU in San Jose and at Columbia Community CU, Vancouver Wash. Van Ouwerkerk also has served in a leadership capacity on many boards and committees, including those under CUNA and the California CU League, the letter noted, and added that the nominee currently is chair of the Filene Research Council, a member of the Solano Economic Development Committee’s board of directors, and is chair of the Travis Regional Armed Forces Committee, which is a community and business partnership with Travis Air Force Base. On behalf of the Staatz nomination, Doherty noted Staatz has been at the head of $1.8 billion SECU, which has 252.411 members, for five years and throughout a distinguished career has held many executive and senior role in several financial institutions. Staatz also currently chairs the Credit Union Auto Lending Network, Credit Union Business Capital and is treasurer of Card Services for Credit Unions. He also is on the boards of Open Technology Solutions and the Maryland-D.C. CU Association. He is chairman of the Large CU Roundtable as well. TIAC is an advisory group established by the Fed in 1980, which meets three times a year with the Board of Governors to discuss developments relating to thrift institutions, mortgage finance, and certain regulatory issues. The Fed is expected to announce its selection of new TIAC members later this Fall.

NCUA to consider revocable trust coverage

 Permanent link
WASHINGTON (9/29/08)—The National Credit Union Administration (NCUA) is looking into simplifying its rules used to determine insurance coverage for revocable trust accounts. Specifically, the agency may be investigating the definition of “qualifying beneficiary” used for these accounts, known commonly as payable-on-death accounts. Just last week, the Federal Deposit Insurance Corp. (FDIC) announced changes to its coverage rules for the revocable trusts. The agency announced an interim rule, effective immediately, that eliminated the concept of qualifying beneficiaries, so that coverage is based on the naming of virtually any beneficiary. Under the revised FDIC rules, coverage for the vast majority of account owners at FDIC-insured banks is now based on the number of beneficiaries named in a depositor's revocable trust account or accounts. In as release, the FDIC noted that the insurance limit will still be based on $100,000 per named beneficiary. And for revocable trust account owners with more than $500,000 in such accounts naming more than five beneficiaries, the coverage is the greater of either $500,000 or the sum of all the named beneficiaries' proportional interest in the trusts, limited to $100,000 per different beneficiary. "We believe the interim rule will not only result in faster deposit insurance determinations after bank closings, but will help improve public confidence in the banking system," said FDIC Chairman Sheila Bair.

CUNA urges Congress to act on economic rescue

 Permanent link
WASHINGTON (9/29/08)—The Credit Union National Association (CUNA) urged every U.S. Senator and every member of the U.S. House to take “appropriate action” to restore the strength of the nation’s economy. “Inaction at this critical time is unacceptable given that the consequences of inaction may have devastating effects on the financial system and American consumers,” wrote CUNA President/CEO Dan Mica Friday. The CUNA letter reminded lawmakers that, despite current economic conditions, credit unions remain strong. The safety and soundness of the credit union movement can largely be attributed to the cooperative structure that “does little to encourage excessive risk taking,” the CUNA letter noted. However, the letter also reminded the federal lawmakers that credit unions are a sector of a much larger financial system which, by all accounts, is very ill. “Credit unions did not cause the subprime lending crisis because they generally avoided the weak underwriting practices which contributed to the crisis. Still, despite the movement’s good practices and overall health, credit unions are not immune to the effects of this economic crisis,” the letter said. CUNA urged that as Congress acts to restore the economy, the body must assure that credit unions have access to any programs created. The letter said CUNA appreciates that early drafts of the Troubled Asset Relief Act (TARA) give credit unions access to relief, if necessary. “We hope that, as Congress coalesces around a remedy, credit unions will continue to be included.” Lawmakers were reminded that in the aftermath of the Great Depression, American consumers turned to credit unions to help meet their financial services needs. CUNA assured that as the economy recovers from this crisis, credit unions will continue to be there for their members on Main Street. “We know credit unions cannot be the entire solution to the problems our economy faces, but we remain an important resource to the 90 million credit union members in the United States,” the letter said.

Inside Washington (09/25/2008)

 Permanent link
* WASHINGTON (9/26/08)--As of Thursday, details of the Treasury’s proposal to buy illiquid assets from banks were unclear. The proposal did not yet specify how the assets would be priced, managed, identified or resold (American Banker Sept. 25). Details regarding executive compensation and use of facility would likely be determined later by the Treasury. The proposal draft includes foreclosure prevention efforts, but it was not yet known if the Bush administration would agree to those provisions. Democrats also indicated they wanted to add a measure allowing judges in the bankruptcy process to rework mortgages. Sen. John McCain (R-Ariz.) said he would suspend his presidential campaign to work on the crisis and said he didn’t think the proposal would pass as it was. Sen. Barack Obama (D-Ill.) noted presidential politics could delay the proposal’s passing ... * WASHINGTON (9/26/08)--House Financial Services Committee Chairman Barney Frank (D-Mass.) said he would like to change the Treasury’s proposal to bail out banks by adding tax breaks for institutions affected by losses in Fannie Mae and Freddie Mae preferred stock (American Banker Sept. 25). Frank said small banks seemed concerned that they were being left out from the plan. Fannie Mae and Freddie Mac were placed into conservatorship several weeks ago. Treasury Secretary Henry Paulson and Federal Reserve Board Chairman Ben Bernanke have not yet commented on whether the tax-break provision should be added to the bill. The Treasury’s plan as of Thursday would bail out banks through a $700 billion package. Frank also said he may introduce a bill next year that would increase the deposit insurance limit to more than $100,000 per account ...

CLF borrowing cap could be raised

 Permanent link
WASHINGTON (9/26/08)—As part of a continuing resolution to keep the government funded into 2009, the U.S. House of Representatives has approved a cap increase for the borrowing authority of the National Credit Union Administration’s (NCUA’s) Central Liquidity Facility (CLF) for Fiscal Year 2009. Currently the CLF is authorized by the Federal Credit Union Act to lend up to 12 times its paid-in capital—an amount that translates today to about $41 billion. However, Congress annually caps the CLF lending authority at $1.5 billion through the appropriations process. The House voted yesterday to temporary remove the arbitrary $1.5 billion cap and permit the CLF to lend up to its full statutory authority of $41 billion. The Credit Union National Association (CUNA) worked closely with NCUA and key House members and their staff to secure the higher CLF ceiling. “Eliminating the cap would be preventative and timely,” said Ryan Donovan, CUNA vice president of legislative affairs, Thursday. “We all are aware of the concerns regarding access to liquidity throughout financial markets. Because the elimination of the cap requires an act of Congress, we need this action now before Congress adjourns for the year,” he said. The CLF cap elimination passed the House 370-58 Wednesday as part of the Continuing Resolution and will now be considered in the Senate, where an economic stimulus package, and possibly the Troubled Asset Recover Program, might be added. If approved, then the entire package would have to be considered by the House again for concurrence. “It’s got a long way to go, but the legislation is moving in the right direction,” CUNA’s Donovan said.

NCUA takes three actions geared toward flexibility

 Permanent link
ALEXANDRIA, Va. (9/26/08)—The National Credit Union Administration (NCUA) Thursday approved a final rule giving federal credit unions more latitude in how they use the official share insurance sign in advertising and voted to put out for comment a plan that would give Reg Flex credit unions more flexibility in developing unimproved properties.
Click for slide show CUNA President/CEO Dan Mica (left) with NCUA Chairman Michael Fryzel before the start of Fryzel’s first monthly board meeting. CLICK TO VIEW SLIDESHOW (Photo provided by CUNA)
The board also approved a final regulation intended to streamline the agency's system for complying with freedom of information and privacy laws. It was the first open board meeting conducted by Chairman Michael Fryzel. Setting the tone and pace for the meeting in general, Fryzel made a concise opening statement. He said he was honored to sit as NCUA chairman and pledged that he and his “esteemed colleagues” on the three-member board will do “the best job we can.” Fryzel joins Vice Chairman Rodney Hood, whose term expires April 10, and board member Gigi Hyland, whose term extends to Aug. 2, 2011 on the board. Fryzel described the three items on the agenda Thursday as “noncontroversial” and there was a unanimous affirmative vote on each of the three actions. The revision to the agency’s rule governing the requirements for use of the official insurance sign and official advertising statement now gives credit unions the flexibility to use the basic form of the official statement, a shortened form, or just the official sign. The new rule also clarifies that the font of the text in the official sign may be modified to ensure it is legible when used in an ad. The change moves the NCUA’s rule into conformity with those of the Federal Deposit Insurance Corp. for banks. The final rule on Freedom of Information Act (FOIA) requests and privacy laws combined both housekeeping and substantive changes. The new rule incorporates recent amendments to the Freedom of Information Act, adds definitions, and revises and clarifies provisions implementing the Privacy Act. And in another action, the NCUA board agreed to seek comment for 60 days on a plan to allow credit unions eligible under the Regulatory Flexibility Program (Reg Flex) additional time to occupy properties bought in an unimproved state. Currently, when a federal credit union acquires unimproved land for future expansion and does not fully occupy the completed premises within one year, it must partially occupy the property within three years or obtain a waiver. The proposal would extend that three year period to six years. The 60-day comment period will commence once the NCUA plan is published in the Federal Register.

Mica on FOX TV CU members funds are safe insured

 Permanent link
WASHINGTON (9/26/08)—Credit Union National Association (CUNA) President/CEO Dan Mica Thursday again assured a national television audience that federally insured deposits in the nation’s credit union system are safe and have the full backing of the U.S. government. Live on Fox Business News, Mica was queried
Click to play
about the financial rescue plan wending its way through the Congress. The CUNA leader was introduced as “somebody who actually has been on Capitol Hill all week long speaking with congressional leaders behind the scenes.” Mica was asked whether credit unions are getting “frantic calls” from people worried about the safety of their deposits. The CUNA leader reiterated assurances he has made repeatedly in national news media in recent weeks: He emphasized that credit unions are federally insured through the National Credit Union Administration (NCUA) just like banks are insured through the Federal Deposit Insurance Corp. “A lot of people don’t know that,” Mica warned, and went on to detail how federal credit union insurance coverage matches that offered by the FDIC. Use the resource link below to hear the entire interview.

FDIC spokesperson issues special note to CU members

 Permanent link
WASHINGTON (9/26/08)--A television personality who is spokesperson for the Federal Deposit Insurance Corp. (FDIC) has written a special note on her website for credit union members, reassuring them that their deposits are backed by the U.S. government. Suze Orman had made public appearances, including an appearance on "The Oprah Winfrey Show" Wednesday, on behalf of FDIC and indicated that consumers whose deposits aren't insured by FDIC should withdraw their funds. She did not mention that the National Credit Union Administration also offers comparable insurance for credit unions through the National Credit Union Share Insurance Fund (NCUSIF). On her website, www.suzeorman, Orman addresses federal insurance for credit unions. "If your savings is at a credit union I want you to listen up right now. Most credit unions are just as safe as an FDIC-insured bank account, but as I explained in an earlier Suze Scoop, the wise move to make in these scary times is to double check that you are absolutely 100% protected." Her entire message can be viewed at the resource link. Thursday the Credit Union National Association (CUNA) issued a nationwide press release to help credit unions reassure their millions of members that savings in credit unions are federally insured, just like deposits in banks are insured by FDIC (News Now Sept. 25). “We felt we had to take this action in order to respond to a number of challenges to the fact that credit unions are federally insured, just like the banks,” said Pat Keefe, CUNA vice president of communications. “With FDIC spokesperson and TV personality Suze Orman extolling bank insurance coverage, President Bush’s omission of credit union insurance, and sagging confidence in the financial system overall, it was clear we had to take action for our members, and consumers,” Keefe said. CUNA has posted a video on both its website and the “America’s Credit Unions” website (at www.creditunion.coop) of CUNA President/CEO Dan Mica explaining federal savings insurance at credit unions. The press release points out that the money of virtually all credit union members is protected by federal insurance similar to that provided to banks by FDIC. It directs consumers to two websites for more information:
* For more about federal savings insurance at credit unions, they can go to the “America’s Credit Unions” website at www.creditunion.coop. * To determine how much of their savings at your credit union is covered by federal insurance, they can visit the NCUA insurance calculator at http://webapps.ncua.gov/ins/

CUs have federal savings insurance CUNA reminds

 Permanent link
WASHINGTON (9/26/08)--Following President George W. Bush’s Wednesday night speech on an economic rescue plan, the Credit Union National Association (CUNA) in a national press statement reminded consumers the money of virtually all credit union members is protected by federal insurance at their credit unions--insurance coverage that is similar to that provided to banks by the Federal Deposit Insurance Corp. (FDIC). “Regrettably, President Bush did not mention this important aspect of the federal safety net in his comments to the nation,” said CUNA President/CEO Dan Mica. “But, it’s important for the millions of credit union members across the nation--with billions of dollars saved in their credit unions--to know their money is as safe and sound as any deposits in federally insured banks,” he said. Virtually every credit union across the nation has federal deposit insurance. Just like FDIC insurance at banks, savings are insured to at least $100,000. The federal insurance safety net at credit unions is provided by the National Credit Union Administration (NCUA), a U.S. Government Agency. Additionally, the credit union insurance--just like the FDIC--is backed by the full faith and credit of the United States. “In fact, no one with their savings at a federally insured credit union has ever lost a dime of their savings,” Mica added. CUNA on Thursday issued a nationwide press release to help credit unions reassure their millions of members that savings in credit unions are federally insured, just like savings in banks are insured by the FDIC. Meanwhile, CUNA on Wednesday posted a video on both its website and the “America’s Credit Unions” website of CUNA’s Mica explaining federal savings insurance at credit unions. Access it at www.creditunion.coop. Consumers can determine how much of their savings at your credit union is covered by federal insurance, visit the NCUA insurance calculator at http://webapps.ncua.gov/ins.

Paulson says CUs included in federal rescue proposal

 Permanent link
WASHINGTON (9/25/08)--U.S. Treasury Secretary Henry Paulson, Jr. in testimony before the House Financial Services Committee yesterday said credit unions would be included in any federal plan to rescue the financial services sector. Paulson appeared in the hearing entitled, “Turmoil in U.S. Credit Markets: Recent Actions regarding Government Sponsored Entities, Investment Banks and other Financial Institutions.” He outlined the urgency of Treasury's plan to issue up to $700 billion of Treasury securities to buy troubled mortgage assets from U.S. financial firms. “Under our proposal, we would use market mechanisms available to small banks, credit unions, and thrifts, across the country--not just big banks,” said Paulson. “These mechanisms will help set values of complex, illiquid mortgage and mortgage-related securities to unclog our credit and capital markets, and make it easier for private investors to purchase these securities and for financial institutions to raise more capital.” Paulson said the Treasury for months internally analyzed the proposed program--which he said the administration had hoped would never be necessary. The secretary urged lawmakers to quickly adopt the plan, and provided a peek at his follow-up agenda to reform the U.S. financial regulatory structure. “When we get through this difficult period, which we will, our next task must be to address the problems in our financial system through a reform program that fixes our outdated financial regulatory structure, and provides strong measures to address other flaws and excesses,” said Paulson. “I have already put forward my recommendations on this subject. Many of you also have strong views, and we must have that critical debate, but we must get through this period first.” Use the resource link below to access the complete text of Paulson’s testimony.

Inside Washington (09/24/2008)

 Permanent link
* WASHINGTON (9/25/08)--Senators expressed their concern over the Treasury Department’s proposed plan to buy back illiquid assets from banks (American Banker). Sen. Richard Shelby (R-Ala.) said that the plan is expensive and there is no guarantee that it would work. Michael S. Barr, professor at the University of Michigan and former special assistant to Treasury Secretary Robert Rubin, said the plan is shifting troubled assets from institutions to taxpayers. According to Treasury Secretary Henry Paulson, not passing a bill would harm the credit markets. Jobs would be lost and homes would be foreclosed on, he said. Sen. Jack Reed (D-R.I.) noted the government should show the public that the proposal is not a “one-way salvation” that costs taxpayers. He referred to American International Group’s loan from the Federal Reserve, which has a 79.9% stake in the insurer ... * WASHINGTON (9/25/08)--Securities and Exchange Commission (SEC) Chairman Christopher Cox said he would like to see certain credit derivative products regulated to improve disclosure and prevent fraud--which contributed to the housing crisis (American Banker Sept. 24). Cox asked Treasury Secretary Henry Paulson if the SEC should be granted authority to regulate the products as part of the Treasury’s bailout plan, but Paulson said the issue can’t be dealt with at this time. The credit default market is too large to interrupt with a regulation, he said ... * WASHINGTON (9/25/08)--The Federal Bureau of Investigation (FBI) has opened up preliminary investigations of possible fraud involving Fannie Mae, Freddie Mac, Lehman Brothers and American International Group (The New York Times Sept. 24). The four companies would logically come under investigation because of their recent collapses, said a government official. On Tuesday, FBI officials said the agency is investigating a total of 26 corporate fraud cases, compared with 24 a week ago ... * WASHINGTON (9/25/08)--The U.S. Small Business Administration (SBA) has named Peter Schalestock as the agency’s general counsel. He now serves as chief legal adviser to SBA Acting Administrator Sandy Baruah and the agency’s senior staff on the development and implementation of SBA policies and programs. Schalestock joined SBA as deputy general counsel in March and has been acting general counsel for the last three months ...

IPoliticoi CUs look good in midst of mortgage mess

 Permanent link
WASHINGTON (9/25/08)—As the dust settles from the current economic maelstrom and mortgage meltdown, credit unions may find they have successfully distinguished themselves on Capitol Hill as the strong and secure financial institutions that did not engage in the bad lending practices that are at the heart of the nation’s financial crisis, according to Politico (Sept. 24). And that distinction, the article surmised, could give a boost to some credit union priorities in the long run. Once the bailout is passed, the economy will remain weak, Credit Union National Association (CUNA) Vice President of Legislative Affairs Ryan Donovan pointed out in the column. “Congress is going to need to look for ways to help Main Street recover,” Donovan said, and noted that allowing credit unions to lend to small businesses — when other institutions are cutting back — would be one good option. Increased member business lending and several other proposed credit union regulatory reforms have been fiercely fought for years by the banking industry. But, Donovan noted, “Credit unions were created in the aftermath of the Depression to help the economy recover, so it makes perfect sense that, coming out of this situation, Congress and American consumers should look to credit unions to help them.” Wall Street Politico is a weekly column looking at issues that drive business. To read the complete column, which also focuses on hedge funds and investment banks, use the resource link below.

President Bush asked to note NCUSIF

 Permanent link
WASHINGTON (9/25/08)—President George W. Bush was asked by the Credit Union National Association (CUNA) Wednesday to instruct those within his administration to included federal credit union share insurance in messages meant to reassure Americans about the safety of their federally insured deposits. “In recent days through a variety of the media, Secretary of the Treasury (Henry) Paulson, Federal Reserve Board Chairman (Ben) Bernanke and you have been quoted as saying that consumers should consider their deposits safe in Federal Deposit Insurance Corporation, FDIC, insured accounts,” CUNA President/CEO Dan Mica wrote in his Sept. 24 letter. “I would respectfully draw your attention to the fact that credit union members’ funds in federally insured credit unions are just as safe as those that are insured by the FDIC,” Mica wrote. Credit union members’ funds at the nation’s 7,972 federally insured credit unions are guaranteed under the National Credit Union Share Insurance Fund (NCUSIF) to the same levels and safety as the FDIC insured accounts. NCUSIF, like the FDIC, is backed by the full faith and credit of the United States. The CUNA missive also highlighted that credit unions are gaining increasing recognition for the fact that they have not contributed to this crisis, having remained faithful to sound loan underwriting and avoiding subprime lending.

NCUSIF signage FOIA requests on todays NCUA agenda

 Permanent link
WASHINGTON (9/25/08)—The National Credit Union Administration (NCUA) is scheduled to consider at its open board meeting today one final rule addressing requirements for use of the official insurance sign in advertising and another other intended to streamline the agency's system for complying with freedom of information and privacy laws. It will be the first open session since Michael Fryzel became chairman of the agency in late July. Historically, the NCUA suspends open board meetings for the month of August. The Freedom of Information Act and Privacy Act proposal slated for final consideration combines both housekeeping and substantive changes. It incorporates recent amendments to the Freedom of Information Act, adds definitions, and revises and clarifies provisions implementing the Privacy Act. The other item up for a vote--the NCUA proposed revisions to requirements for use of the official insurance sign and official advertising statement--would permit insured credit unions to use the basic form of the official advertising statement, a shortened form, or the official sign in advertisements. The rule, if adopted, is expected to give credit unions added flexibility in advertisements. The final item on the agenda is a proposal to address Part 742 of NCUA's Rules and Regulations, involving its Regulatory Flexibility Program. Use the resource link below to access the NCUA website.

Mica promotes CU soundness message

 Permanent link
WASHINGTON (9/24/08)—Credit Union National Association (CUNA) President/CEO Dan Mica Wednesday posted a video reminder that not only are consumers’ federally insured share deposits in credit unions safe, credit unions are “probably the safest depository institutions in the country right now.” The Mica video contested misinformation being circulated in the news media about deposit safety and dispelled any notion that credit unions are second to any other depository institution as a safe haven for consumers’ insured funds. The message is featured on the homepage of the CUNA website, as well as the consumer website, creditunion.coop. “Credit unions, virtually all credit unions, are insured by the National Credit Union Administration, a federal agency with similar insurance to all the banks all over the country,” Mica assured listeners. Moreover, Mica noted, “Credit unions have history of not having the kind of problems banks and other institutions have. “During the Depression, we didn’t need a bailout. The last 100 years, we didn’t need a bailout. Our capital is strong. Our credit unions are strong. And they are insured.” The American credit union movement celebrates its 75th anniversary this year. Mica concluded the video clip: “Take a look at a credit union. I think they are probably the safest depository institution to put your money in.” (See related story: NCUA call center launched for insurance queries) In related events, CUNA has been working amid fast-breaking developments to assure credit unions are assured equal access to a proposed Treasury Department economic rescue package, if approved. Now that equality appears assured, CUNA is closely monitoring associated accounting and bankruptcy issues that could develop under the rescue plan.

NCUA call center launched for insurance queries

 Permanent link
ALEXANDRIA, Va. (9/25/08)--The National Credit Union Administration (NCUA) has opened a call center staffed by insurance experts available to answer questions about share insurance coverage provided by agency’s National Credit Union Share Insurance Fund, backed by the full faith and credit of the U.S. government. “With the well-publicized turmoil in the financial markets, consumers need assurance that the federally insured funds in their credit unions are safe up to the insured limits,” said NCUA Chairman Michael Fryzel in an announcement of the hotline. The agency concurrently posted an electronic tool kit, which is designed to enhance overall consumer understanding of how credit union deposits are insured. Fryzel urged credit union volunteers and professionals to make sure they are well-versed in the details of the protections offered to credit unions members through the NCUSIF. He encouraged those i8ndividuals to use the resources the NCUA is providing through the call center and toolkit. As of Sept. 23, the NCUA Insurance Call Center began operating from 8 a.m. to 6:30 p.m. (EDT) Monday through Friday. The toll-free number is 1-800-755-1030, extension 1. The NCUA electronic tool kit is available online through the NCUA website and provides information on share insurance coverage, including:
* An ‘insurance estimator,’ which facilitate the calculation of an estimate of share insurance coverage; * Your Insured Funds, a brochure that details insurance coverage and illustrates sample cases; * How Your Accounts Are Federally Insured, a brochure that provides basic insurance information; * “Special Bulletin,” which explains increased retirement account coverage in addition to basic insurance protection; and * Letter to Credit Union 08-CU-18, Educating Members on Share Insurance Coverage.
Also, the NCUA is offering a free Webinar on Oct. 7 from 1-2:30 p.m. (ET) to review federal share insurance regulations. Registration opened Sept. 19 for the event. The Credit Union National Association (CUNA) and the leagues also are working on behalf of credit unions to reassure their members about the safety of their deposits in the credit unions system and about the soundness of that system despite today's upheavals. CUNA President/CEO Dan Mica Wednesday posted a video on the CUNA website that dispels misinformation that is circulating that federally insured banks are the only safe places for consumer funds right now. He says that statement tells only part of the story and emphasizes that almost all credit unions are also federally insured and probably “the safest depository institutions in the country right now.” (See related story, Mica promotes CU soundness) Other CUNA efforts include a recent issue of Credit Union NewsWatch, in which CUNA encapsulated many of its newly designed resources to help credit unions and their staffs address the public's questions and concerns about the safety of their money in trying economic times. The issue featured a two-page "Primer on Share Insurance Coverage for Individual Credit Union Members," as well as a two-page spread on operational questions affecting share insurance coverage, geared toward credit union compliance staff. Also included in the special edition:
* CUNA, Leagues Help CUs Spread Good News of Safety, Soundness; * NCUSIF Strong at Mid-Year, Says NCUA; and * CUNA, Leagues Get Word Out About CU Soundness.

Credit card bill passes in House

 Permanent link
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)

 Permanent link
* 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

 Permanent link
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

 Permanent link
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.

CU interests asserted in wrangling over financial bill

 Permanent link
WASHINGTON (9/23/08)—-“Fluid” was likely the best way to describe developments on Capitol Hill Monday as lawmakers and the Bush Administration--with help from the Credit Union National Association (CUNA)--hammered out details of the plan to save the floundering financial system. CUNA was working with both the legislative and executive branches to ensure that credit union interests were taken into account throughout the legislative drafting process, according to CUNA Legislative Affairs Vice President Ryan Donovan. As the day progressed, new versions of the legislation emerged, reflecting interests of both sides of the aisle in Congress, as well as the positions of the Treasury Department. Through it all, CUNA was working as a conduit for the credit union movement, to explain the impact on credit unions of the effort to authorize the Treasury to absorb up to $700 billion of sour mortgages and mortgage securities. “Each version includes credit unions and their interests implicitly or explicitly,” said Donovan. “We continue our conversations with authors of the legislation, as well as the National Credit Union Administration, to ensure credit unions are included.” CUNA’s first goal is to ensure credit unions are included in any legislation, said Donovan. Secondly, CUNA is working to “make sure such legislation is consistent with credit unions’ cooperative structure.” “The legislative language tends to presume all financial institutions operate the same,” he said. “We’re ensuring the details account for the credit union difference.” Donovan said developments are moving quickly in Washington and he praised lawmakers for addressing the issues in a mostly non-partisan manner.

Inside Washington (09/22/2008)

 Permanent link
* WASHINGTON (9/23/08)--The House Financial Services Committee has set a Sept. 24 hearing to bring U.S. Treasury Secretary Henry Paulson, Jr. and Federal Reserve Board Chairman Ben Bernanke before the panel to discuss the Bush administration’s capital markets intervention proposal. The hearing is entitled “The Future of Financial Services: Exploring Solutions for the Market Crisis.” The following day, the committee has scheduled an oversight hearing to examine earlier action by the Treasury to place the housing government-sponsored enterprises into conservatorship. On Friday, the House Judiciary subcommittee on commercial and administrative law will hold a hearing on whether Chapter 11 of the Bankruptcy Code and the 2005 amendments to the Code respond to the financial distress that today's businesses face. And of interest on the Senate side, the Senate Banking Committee is scheduled today to look at "Turmoil in U.S. Credit Markets: Recent Actions Regarding Investment Banks and Other Financial Institutions." Paulson, Bernanke, SEC Chairman Christopher Cox, and Federal Housing Financial Agency Director James Lockhart are expected to testify… * WASHINGTON (9/23/08)--Ameribank Inc. was closed Friday by the Office of Thrift Supervision. The Federal Deposit Insurance Corp. (FDIC) was named receiver. Ameribank has five branches in West Virginia and three branches in Ohio. Pioneer Community Bank, Iaeger, W. Va., will assume deposits for the five branches in West Virginia. The Citizens Savings Bank, Martins Ferry, Ohio, will assume all deposits for the three branches in Ohio. West Virginia branches re-opened Monday; Ohio branches re-opened Saturday. As of June 30, Ameribank had $114 million in assets and $102 million in deposits ... * WASHINGTON (9/23/08)--Democratic lawmakers are seeking to add provisions to the Treasury Department’s proposal to create a government entity that would purchase banks’ illiquid assets. Senate Banking Committee Chairman Christopher Dodd (D-Conn.) warned against adding too much to the proposal, stating that it would “not be a Christmas tree.” Changes relating to the entity’s operation likely will be added to the proposal, observers said (American Banker Sept. 22). Treasury Secretary Henry Paulson announced the plan Friday, saying that it would cost taxpayers hundreds of billions or dollars. The plan is needed to stabilize the deteriorating housing market, he said ... * WASHINGTON (9/23/08)--The presidential candidates responded differently to news of the Treasury Department’s proposal to solve the mortgage market crisis by creating a new entity to purchase illiquid bank assets. Sen. John McCain (R-Ariz.) said that he would create an entity to seek out troubled companies in the financial sector and help them become healthy, but he did not provide specifics (American Banker Sept. 22). Sen. Barack Obama (D-Ill.) chose to delay releasing his own financial plan, saying that he needed to study the administration’s plan first and that a solution could not be proposed in one day. The Treasury’s proposal will be significant for both McCain and Obama, because one will have to deal with the plan, said Larry Sabato, director of the University of Virginia Center for Politics ...

New CDFI guidance for certification requests

 Permanent link
WASHINGTON (9/23/08)—For credit unions and other financial institutions considering certification under the U.S. Treasury Department’s Community Development Financial Institution (CDFI) program, there is new guidance on how to apply, and also how to amend, certification. The CDFI Fund was created in 1994 to make capital grants, equity investment, and awards for technical assistance to CDFIs. One of the new guidance documents is designed in a frequently asked-questions (FAQ) format. It offers 18 questions and answers in six categories ranging from “general” to “recertification” to “contacting CDFI” program staff. The second document, on "Designating a Target Market In my CDFI Fund," provides guidance on defining an institution’s “target market” in the CDFI application and can also be useful for a CDFI needing to its target market. A CDFI release said this revised guide provides “clearer instructions on the step-by-step guidance for designating and submitting the Target Market Maps that are a part of a new CDFI Certification Application or a request from a certified CDFI to modify its certified Target Market.” Use the resource links below for more CDFI information.

Treasury plan likely to include CUs in financial boost

 Permanent link
WASHINGTON (9/22/08)—The Credit Union National Association’s (CUNA) preliminary review of draft legislation unveiled during the weekend finds credit unions appear to be included in the Treasury’s plan to buy troubled mortgage assets from U.S. financial firms. The Treasury Department on Saturday submitted legislation to Congress requesting authority to issue up to $700 billion of Treasury securities to finance the purchase of troubled assets. "Based on our initial review of the draft legislation, it appears credit unions are included in the Treasury plan to protect the financial system, as we have been working to ensure over the last two days,” said CUNA President/CEO Dan Mica. Mica reiterated that details remain to be clarified, “however, at this stage, we are encouraged by what we have seen," he said. Congress is expected to debate the legislation this week, according to Mica. Meanwhile, the Treasury on Sunday released details about its temporary guaranty program for money market mutual funds that was announced on Friday. Use the resource link for the complete text of the draft legislation and for more information on the Treasury plan.

Inside Washington (09/19/2008)

 Permanent link
* WASHINGTON (9/22/08)--The Treasury Department announced a temporary guaranty program for U.S. money market mutual funds. The Treasury will insure the holdings of any publicly offered eligible money market mutual fund that pays a fee to participate in the program. The program “should enhance market confidence and alleviate investors’ concerns about the ability for money market mutual funds to absorb a loss. Concerns about the net asset value of money market funds falling below $1 have exacerbated global financial market turmoil and cause severe liquidity strains in world markets,” the Treasury said in a statement ... * WASHINGTON (9/22/08)--The Federal Deposit Insurance Corp. (FDIC) said it is committed to taking a “flexible supervisory approach” for institutions affected by the conservatorship of Fannie Mae and Freddie Mac. The agency said it will work with institutions that are required to develop a Capital Restoration Plan under the Prompt Corrective Action guidelines. The FDIC also will be flexible in considering requests for waivers from brokered deposit restrictions for institutions that have become adequately capitalized, the agency said in a financial institution letter ... * WASHINGTON (9/22/08)--Sen. Jack Reed (D-R.I.) said during a Thursday hearing that he wants regulators to tighten controls on off-balance sheet assets. More transparency is needed, he said (American Banker Sept. 19). Reed also supports the Financial Accounting Standards Board proposal to change the way banks count certain off-balance sheet assets--which would prevent special-purpose entities from being counted as assets. Reed noted that if firms keep off-balance sheet assets, they need to let investors know. Companies with more accurate accounting fare better in today’s marketplace than those who are slow to realize losses, he added ...

Compliance What to know about mortgage registry

 Permanent link
WASHINGTON (9/22/08)—Credit unions may be wondering how a new law imposing licensing and registration requirements for mortgage originators affects them, and when they might need to start participating in the registry, and the compliance experts at the Credit Union National Association (CUNA) are busy getting the word out. In the September Compliance Challenge, CUNA reminds credit unions that the Housing and Economic Recovery Act, signed into law in July, will require employees of state and federally chartered credit unions who originate mortgage loans (such as loan officers) to annually register with the National Mortgage Licensing System and Registry as a "registered loan originator." However, credit union employees do not have to do anything to comply just yet. The law requires the National Credit Union Administration and the federal banking agencies via the Federal Financial Institutions Examination Council (FFIEC) to develop and maintain the registry system in conjunction with the Conference of State Bank Supervisors (CSBS) and the American Association of Residential Mortgage Regulators (AARMR). The CSBS launched a nationwide database for mortgage professionals on January 2, 2008, and the project gets a gigantic boost from the new housing law. The FFIEC agencies have one year to put this program into place. The law was enacted on July 30, 2008, so agencies have until late July/early August 2009 to get the registry up and running. Stay tuned, says the Challenge for agency announcements in the next several months.

CUNA Possible lame duck session for 110th Congress

 Permanent link
WASHINGTON (9/22/08)—Both houses of Congress are scheduled to adjourn for the year at the end of this week. However, there are pending matters which, if not resolved, may all but demand that federal lawmakers to stay beyond the target adjournment date, or return to Washington in October or November to work them out. On Thursday, Treasury Secretary Henry Paulson and Federal Reserve Chairman Benjamin Bernake met with lawmakers to propose the creation of an entity similar to Resolution Trust Corporation (RTC) as an effort to stabilize the capital markets. An energy bill, defense authorization bill and a continuing resolution to fund the government are also pending before Congress. While sentiment as recently as last week appeared to be solidly against a lame duck session, leaders in both the House and Senate have acknowledged it as a probability. Credit Union National Association Vice President of Legislation Ryan Donovan noted Friday that credit unions could benefit from legislative days being added to the calendar. “A lame duck session gives us more time to keep pushing for action on key credit union issues,” Donovan said. “The CUNA legislative team is in high gear following the legislative proposals to deal with the economic crisis and also trying to push CUBTRRA through the Senate.” The House passed the Credit Union, Bank and Thrift Regulatory Relief Act(CUBTRRA, H.R. 6312) on June 19 by voice vote. CUNA continues to urge the Senate to act on this bill before the end of the 110th Congress. CUBTTRA combined most of the Credit Union Regulatory Relief Act (CURRA) with the Bank and Thrift Regulatory Relief Act

Inside Washington (09/18/2008)

 Permanent link
* ALEXANDRIA, Va. (9/19/08)—After two years of operating under the conditions of a National Credit Union Administration (NCUA) Letter of Understanding (LUA), Toledo Metro FCU has resolved the issues of concern to the agency and the LUA has been terminated. The NCUA announced Thursday that the Toledo, Ohio, credit union has improved its underwriting and compliance with NCUA rules and regulations. Toledo Metro is “open, operating and serving its members,” the agency said in a release. The credit union board members signed the LUA in February and March of 2006 and its details were made public in September of that year. By signing the NCUA document, the credit union officials recognized the credit union's condition and committed to make a "sustained, conscientious effort to correct noted adverse conditions." According to the NCUA, those conditions included: poor loan quality; field of membership violations; delinquency issues; and weak management … * WASHINGTON (9/19/08)--House Financial Services Committee Chairman Barney Frank (D-Mass.) said he wants to quicken the loan modification process and will consider changing the mortgage servicing system to give servicers more authority. Frank commended Federal Deposit Insurance Corp. (FDIC) Chairman Sheila Bair for systemic loan modifications after IndyMac bank failed, and urged servicers to do the same. FDIC took on 742,000 mortgages after the bank failure, and iy has sent out 7,400 modification proposals. Borrowers with modifications are saving $430 a month, Bair said (American Banker Sept. 18). Modifying loans that servers do not own is a challenge, acknowledged Wells Fargo, Citigroup and Bank of America Corp. Michael Gross, Bank of America managing director for loss mitigation, said lawmakers’ expectations for Hope for Homeowners, a modification program scheduled to start Oct. 1, may be too high. Lenders may want to use traditional loan modification methods rather than taking a “haircut” to participate in the Hope program ... * WASHINGTON (9/19/08)--To bolster financial markets, regulators have proposed a number of rule changes. The Securities and Exchange Commission (SEC) has placed new limits on short-selling to help financial institutions build up money market accounts (The New York Times Sept. 18). SEC Chairman Christopher Cox also proposed a rule that would require investors and hedge funds to disclose short positions. The Federal Reserve announced Sunday that it had eased rules that would prevent companies from transferring funds to less regulated affiliates. The Office of the Comptroller of the Currency, Office of Thrift Supervision and Federal Deposit Insurance Corp., have proposed changes to accounting rules that would allow goodwill to be counted as capital. The agencies’ changes are subject to a 30-day comment period ...

Frank wants short-term Flood Insurance extender

 Permanent link
WASHINGTON (9/19/08)--House Financial Services Committee Chairman Barney Frank (D-Mass.) introduced legislation Thursday for a seven-month extension of the National Flood Insurance Program (NFIP). The NFIP is set to expire on Sept. 30 and the proposed extension would give House and Senate negotiators time to complete work on a permanent extension and to assess the implications of the 2008 hurricane season, Frank said in an announcement. “I am disappointed that a permanent solution is not before us, but we can and should extend the program while we work on that final bill,” Frank said. The House passed a bill in 2007, the Flood Insurance Reform and Modernization Act, which would reauthorize the NFIP, which was established after Hurrican Katrina, for five years.

Two finals one proposal at Fryzels first meeting

 Permanent link
Click to view larger image NCUA Board nominee Michael Fryzel before his June 3 Senate Banking Committee hearing on Capitol Hill. (Photo provided by CUNA)
WASHINGTON (9/19/08)—The National Credit Union Administration (NCUA) is scheduled to take up two final rules at its open board meeting next Thursday, one addressing requirements for use of the official insurance sign in advertising and the other intended to streamline the agency’s system for complying with freedom of information and privacy laws. The meeting will be the first of its kind since Michael Fryzel became chairman of the agency. He was sworn in on July 30 and historically the NCUA suspends open board meetings for the month of August. The Freedom of Information Act and Privacy Act proposal slated for final consideration combines both housekeeping and substantive changes. It incorporates recent amendments to the Freedom of Information Act, adds definitions, and revises and clarifies provisions implementing the Privacy Act. The other item up for a vote--the NCUA proposed revisions to requirements for use of the official insurance sign and official advertising statement--would permit insured credit unions to use the basic form of the official advertising statement, a shortened form, or the official sign in advertisements. The rule, if adopted, is expected to give credit unions added flexibility in advertisements. A third and final item on the Sept 25 agenda is a proposal to address Part 742 of NCUA’s Rules and Regulations, involving its Regulatory Flexibility Program. Use the resource link below to access the agenda.

Eight receive NCUA prohibition orders

 Permanent link
ALEXANDRIA, Va. (9/19/08)—Eight individuals have been the subject of recent prohibition orders issued by the National Credit Union Administration (NCUA) and are thereby prohibited from participating in the affairs of any federally insured financial institution. The NCUA posted the following announcements its website:
* Aaron Bell, a former board member of Burlington Northern Santa Fe Railroad CU, Cicero, Ill., was convicted of laundering criminal property, by committing dishonest acts against the credit union, and sentenced to two years of supervised release; * Patricia H. Sherman, former teller of Obelisk FCU, New Albany, Ind. was convicted of embezzlement and sentenced to 97 months imprisonment, five years of supervised release, and ordered to pay $7,012,900 in restitution; * Pranee Kolesar, former employee of Boeing Helicopters FCU, Ridley Park, Penn., pled guilty to misapplication of credit unions funds and bank fraud. She was sentence to one day in prison, five years of supervised release, and ordered to pay $14,500 in restitution; * Elizabeth Montedoro, former teller of Patriot FCU, Chambersburg, Penn. pled guilty to one count of bank fraud and was sentenced to 21 months in prison followed by four years of supervised release, and was ordered to pay $182,777 in restitution; and * Josette L. Williamson, was convicted of petty larceny in connection with the failure of WIT FCU, Rochester, N.Y. and sentenced to 120 hours of community service.
The following individuals consented to a prohibition order, without admitting or denying fault, to avoid the time and cost of litigation, according to the NCUA:
* Ann M. Bryson, former employee of Good Samaritan Employees FCU, Cincinnati, Ohio; * Betty J. Hargrave, former manager of Kellogg Memphis Employees FCU, Syracuse, N.Y.; and * Linda Mattina, former employee of Long Island State Employees FCU, Hauppauge, N.Y.
Violation of a prohibition order is a felony offense punishable by imprisonment and a fine of up to $1 million. Use the resource link below to find NCUA prohibition orders online.

NCUA offers Share Insurance 101

 Permanent link
ALEXANDRIA, Va, (9/19/08)—Registration is open now for the National Credit Union Administration’s (NCUA’s) free webinar to review federal share insurance regulations. The Oct. 7 information session also will provide a discussion of available resources regarding share insurance issues, as well as address operational considerations. NCUA board member Gigi Hyland will host the event scheduled from 1-2:30 p.m. (ET). The webinar is designed to be interactive and participants’ questions and paired with agency responses will be an integral part of the presentation. To register fir the NCUA’s “Share Insurance 101” Webinar, use the resource link below. Alexandria, Va., September 18, 2008 – Registration for the Tuesday, October 7, 2008, webinar “Share Insurance 101” is now open.

2009 NCUA meeting schedule made public

 Permanent link
ALEXANDRIA, Va. (9/19/08)—The National Credit Union Administration (NCUA) Thursday its 2009 board meeting schedule and posted it to its websitre. The NCUA board is scheduled to convene each month on a Thursday at 10 a.m. on the following dates:
* January 15 * February 19 * March 19 * April 16 * May 21 * June 18 * July 16 * September 2 * October 15 * November 19 * December 17
The meeting schedule may be subject to change. The NCUA board historically does not meet in open session in August.

Inside Washington (09/17/2008)

 Permanent link
* WASHINGTON (9/18/08)—Senate Banking Committee Chairman Christopher Dodd (D-Conn.) has asked Senate Majority Leader Harry Reid (D-Nev.) to keep the Senate in “pro forma” session for the rest of the year so that body can respond if market conditions demand it (American Banker Sept. 17). Dodd said at a press conference that he wants the ability to reconvene his committee as events unfold. He also wants to be able to call before his committee members of the administration and “others” to examine what options should be pursued as market conditions develop. Dodd’s request was reported in an article that questioned whether the rapidly evolving financial crisis may result in structural solutions rather than just crisis management by the Bush administration…. * WASHINGTON (9/18/08)--The Treasury Department is launching a multi-media campaign to teach 18-24 year-olds already in debt or about to get into unmanageable debt about their spending habits. The campaign will feature public service announcements with the tagline, “Don’t let your credit put you in a bad place.” Television spots, radio spots, web banners and a new website will also be used. Some radio spots and a version of the website will be in Spanish ... * WASHINGTON (9/18/08)--To revive a slow mergers and acquisitions market, regulators are proposing to allow acquirers to count goodwill toward Tier 1 capital requirements (American Banker Sept. 17). The Federal Deposit Insurance Corp., Office of Thrift Supervision, Office of the Comptroller of the Currency and the Federal Reserve Board have sent out a proposal on the change with a 30-day comment period. If the change is approved, it could trigger dealmakers and help acquirers by “lowering the barrier,” according to Carol Larson, senior client partner at Deloitte and Touche. Under current Financial Accounting Standards Board rules, acquirers have to accept writedowns if a seller’s assets are less than the purchase price. In 2001, the banking industry expressed its concerns that goodwill in Tier 1 capital is not included. It has continually pushed for a change ... * WASHINGTON (9/18/08)--The Treasury Department announced Wednesday a temporary Supplementary Financial Program at the Federal Reserve’s request. The program will consist of Treasury bills, separate from the current borrowing program, and will provide cash for Federal Reserve initiatives. It will be governed by existing Treasury auction rules ... * WASHINGTON (9/18/08)--Congress is looking into creating an agency that would buy bad debt from troubled companies (The New York Times Sept. 17). On Tuesday, House Financial Services Committee Chairman Barney Frank (D-Mass.) said it would make more sense for a new agency, rather than the central bank, to tackle the debt. Senate Majority Leader Harry Reid (D-Nev.) and House speaker Nancy Pelosi (D-Calif.) supported the idea. Steny Hoyer (D-Md.), House majority leader, said there isn’t enough time for Congress to consider new proposals in two weeks. Senate Banking Committee Chairman Christopher Dodd (D-Conn.) said he wondered if the Fed and Treasury were already functioning to handle the bad debt and whether a new agency was needed. However, Dodd noted that he wasn’t opposed to the idea ...

Inflation-adjusted available funds bill passed

 Permanent link
WASHINGTON (9/18/08)—A bill to increase the dollar amount of funds subject to next-day availability passed the House Financial Services Committee Tuesday by voice vote. The bill would allow accountholders next-day access to the first $175 deposited by check on any single business day, up from the current $100 cap. It also proposes to raise to $700—up from $400—the amount of cash from a deposit that may be withdrawn by 5 p.m. on the day it is available. The bill is formally known as The Expedited Funds Availability Dollar Limits Adjustment Act of 2008 (H.R. 6871). It was introduced by Rep. Carolyn Maloney (D-N.Y.), chairman of the House Financial Services subcommittee on financial institutions, and was co-sponsored by Rep. Barney Frank (D-Mass.), who heads the parent financial services panel. The bill is intended to account for inflation over the 21 years since the enactment of the original law. It also contains a provision to provide for future adjustments on a regular basis—at least every five years. The Credit Union National Association (CUNA) worked closely with the bill's designers, Ryan Donovan, CUNA vice president of legislative affairs, noted. He cautioned, however, that the legislation is unlikely to see additional action this session of Congress, since the House and Senate are expected to adjourn Sept. 26 for the year, with a possible lame duck session in November or December.

Fryzel vows decisive regulation

 Permanent link
ALEXANDRIA, Va. (9/18/08)—In what the National Credit Union Administration (NCUA) labeled a “major address” by its chairman, Michael Fryzel vowed a decisive, assertive regulatory approach to preserve confidence in the credit union system. “Where I see a balance sheet problem, I will move decisively to resolve it. Where I see adverse trends, I will take steps to correct them. And where activities carry unacceptably high levels of risk and expose consumers to potential loss, I will intervene decisively,” Fryzel said. He announced a comprehensive stress test of the National Credit Union Share Insurance Fund, aimed at determining the Fund’s strength to withstand stresses that could develop as a result of credit and mortgage dislocations. Fryzel said his experience as a former state regulator of credit unions has formed his philosophy that regulations should create a climate for credit unions "to function as strong, dynamic, consumer-oriented financial service providers." He stated that "like every other financial institution in these turbulent times, corporate [credit unions] have faltered" and ”must regroup and regenerate themselves to withstand the balance of this economic downturn." The chairman added that the NCUA is committed to maintaining the integrity of the corporate network and is actively monitoring the corporates. It will take ”all necessary measures" to "restructure, reenergize and maintain the corporate system as a viable entity,” he said. "I expect every [credit union] trade organization, every credit union volunteer and professional to render their full support to our efforts to keep the corporate system vibrant and member driven. As a result of the volatility in the markets, I have been required to take aggressive measures that will institute an ounce of prevention as we move through the remainder of the year," Fryzel said. He noted Congress’ interest in credit unions now and said that he is keeping lawmakers well informed about the corporates. Fryzel also said his agency is currently expanding Vice Chairman Rodney Hood's risk mitigation efforts, and is organizing a high level industry summit with the trade associations on the ramifications of "continued volatility in the credit and mortgage markets and to identify measures to mitigate the impact." He made his remarks at the National Association of Federal Credit Unions Congressional Caucus in Washington, D.C. Credit Union National Association (CUNA) Deputy General Counsel Mary Dunn said Wednesday that CUNA will be working closely with the agency to help address these issues.

Tiny Interfaith FCU closed

 Permanent link
ALEXANDRIA, Va. (9/18/08)—Interfaith FCU of East Orange, N.J., had approximately $388,000 in assets and 370 when it was closed by the National Credit Union Administration (NCUA) recently. It is the tenth federal credit union to be closed by the agency this year. Announcing the liquidation Wednesday, the NCUA said its Asset Management and Assistance Center will issue checks within a week to individuals holding verified share accounts. The agency reiterated that the members’ deposits are insured to at least $100,000 on regular accounts and $250,000 on certain retirement accounts through the NCUA National Credit Union Share Insurance Fund. The federal regulator liquidated Interfaith FCU and discontinued its operations after determining the credit union is insolvent and has no prospects of restoring viable operations. The credit union was chartered in 1982 to serve New Hope Baptist Church.

All but two Ike-struck CUS contacted reports NCUA

 Permanent link
ALEXANDRIA, Va. (9/18/08)—As of close of business Tuesday night, the National Credit Union Administration (NCUA) reports that there are only two credit unions—both federally insured and state-chartered—that state and federal credit union authorities have not made contact with yet. Additionally, the NCUA reports there are an additional 32 federally insured credit unions that are not operational at this time. The agency says that its calculations based on member numbers shows that 89% of affected members have access to at least some credit unions services. “This is a major accomplishment given that Texas media is reporting that over 2.1 million residential customers are still without power,” noted John McKechnie III, NCUA director of public and congressional affairs. He added that many credit unions are operating from alternate work sites, shared branch centers, or on generators. In an announcement issued yesterday, McKechnie said the NCUA noted "a very high level of disaster preparedness among credit unions in the Texas and Louisiana coastal areas, with good implementation of contingent record-keeping and off-site operational ability plans." Hurricane Ike struck the Texas and southwestern Louisiana coastline on Saturday.

Inside Washington (09/16/2008)

 Permanent link
* WASHINGTON (9/17/08)--The Merrill Lynch-Bank of America deal may have increased risks faced by the Federal Deposit Insurance Corp. (FDIC), according to industry observers. Over the weekend, the Federal Reserve Board waived long-standing limits, which are aimed to prevent commercial banks from bailing out their affiliates (American Banker Sept. 16). Observers say the waiver may have paved the way for Merrill Lynch to agree to sell itself to Bank of America. Lawmakers worry the FDIC will run out of funds to pay for bank failures because barriers designed to prevent commercial banks from bailing out their affiliates are being relaxed. FDIC Chairman Sheila Bair said the agency is monitoring risks posed by the investment bank sector; and has taken steps to mitigate impact from the Lehman Brothers bankruptcy filing. On Thursday, regulators will testify before the Senate Banking Committee on the IndyMac Bank failure ... * WASHINGTON (9/17/08)--The Federal Reserve Banks Monday announced “significant progress” converting customers to the FedLine Direct access solution ahead of sunset date Dec. 31 for legacy computer-interface technology. The conversion does not involve changes to message or file formats. The solution leverages a financial institution’s investment in Internet protocol-based technology. “As with all Federal Reserve access solutions, security and reliability are top priorities,” said Tony Fressola, assistant vice president of the Fed’s wholesale product office ... * WASHINGTON (9/17/08)--John A. Koskinen and Philip A. Laskawy will serve as the non-executive chairmen of Fannie Mae and Freddie Mac, respectively, the Federal Housing Finance Agency announced Tuesday. Koskinen worked at Palmieri Co., serving as president/CEO from 1979 to 1993. He also has served in several senior positions with the federal government, including deputy director for management in the Office of Management and Budget. Laskawy served as chairman/CEO of Ernst and Young from 1994 to September 2001. In 2006-2007, he served as chairman of the International Accounting Standards Committee Foundation ...

Pennsylvania FOM case closed

 Permanent link
WASHINGTON (9/17/08)—U.S. District Court Judge Yvette Kane has entered the remedy to the Pennsylvania field of membership case submitted by the National Credit Union Administration (NCUA) and the bankers and has ordered the clerk to close the case. Under the remedy, effective immediately, the community charters granted by the NCUA to Members 1st FCU in 2003, New Cumberland FCU in 2004, and AmeriChoice FCU in 2005 are vacated. Each credit union is prohibited from accepting any new members pursuant to their former community charters unless those members are eligible under the restored charters. However, current members who would not be eligible for membership under the restored charter may remain as members as “grandfathered members.” John McKechnie III, NCUA director of public and congressional affairs, said Tuesday that the court orders' provision allowing the credit unions to continue to serve all members of record is "a particularly positrive apect." The judge’s order also states that the affected credit union “may add as a member any person or persons within the immediate family or household of a Grandfathered Member is the Grandfathered Member was eligible for membership under the terms of the restored charter on or after April 23, 2003.”

FASB plan covers some CU loan participations

 Permanent link
WASHINGTON (9/17/08)—Credit unions that sell a participating interest in loans could feel a direct impact of a new plan by the Financial Accounting Standards Board (FASB), but those on the purchase side will see little change, said the head of the Credit Union National Association’s (CUNA’s) Accounting Task Force Tuesday. Task force chairman Scott Waite was addressing FASB’s recently proposed amendments that would remove the concept of a qualifying special purpose entity (QSPE) from FAS 140, Accounting for Transfers and Service of Financial Assets and Extinguishments of Liabilities. The accounting body’s intent, in part, is to address concerns about isolating the loan participations and other financial assets from the reach of the originating institutions and its creditors in liquidation. "This provides more clarity as to the accounting treatment required when ‘control’ is maintained over the assets," Waite said. CUNA and its accounting group are reviewing the proposed FASB statements and will file comments with FASB. However, Waite’s group’s early review suggested that sellers of participation must be sure to structure a transaction so that it qualifies as a true “sale” of the assets before removing it from their financial statements. “The Accounting Task Force will be sure to review the exposure draft, provide comments back to the FASB Board, and keep the credit union industry informed,” Waite said Tuesday. He is SVP-CFO of Patelco CU, San Francisco and an advisor to FASB. FASB has been developing its proposal since 2000 and CUNA has argued that there are already sufficient safeguards in place to address the accounting group's concerns about isolating the loan participation asset from the reach of the originating credit union and its creditors in liquidation. Therefore, CUNA has maintained, there is no need for the proposed changes to FAS 140. Use the resource link below to read CUNA comments in its 2004 letter to FASB.

CUNA urges blocked list in UIGEA rules

 Permanent link
WASHINGTON (9/17/08)—The House Financial Services Committee late Tuesday passed an amended version of the Payment System Protection Act (H.R. 6870), a bill that would place a moratorium on the implementation of the Unlawful Internet Gambling Enforcement Act (UIGEA) as currently proposed by the Department of Treasury and the Federal Reserve Board. The approved bill includes an important mandate that the Department of Treasury compile and maintain a list of unlawful internet gambling sites, similar to the Office of Foreign Assets Control (OFAC) list. Prior to the committee’s consideration of the bill, the Credit Union National Association (CUNA) wrote to its chairman, Rep. Barney Frank (D-Mass.) voicing strong support H.R. 6870. CUNA President/CEO Dan Mica wrote that without intervention by Congress in the implementation of the UGEIA, credit unions and other financial institutions would be forced to comply with a regulation that does not even define the type of transactions that would be required to be blocked. An earlier version of Frank’s bill was defeated this summer by a tie vote. When the new bill was introduced, it was stripped its provision ordering the Treasury to maintain the list of unlawful gambling sites. CUNA urged that provision be adopted. “We feel very strongly that such a list is absolutely essential for credit unions and other financial institution to be able to comply with the extraordinary burdens of UIGEA.” Mica told Frank in the CUNA letter. He added, “Without such a list, there is no way for financial institutions to know which entities are unlawful Internet gambling providers.” CUNA Vice President of Legislative Affairs Ryan Donovan said that while CUNA is “delighted with the positive outcome of the House committee vote,” final votes in the House and Senate are unlikely this year due to the dwindling congressional calendar.

Ike cancels Hoods Texas town hall speech

 Permanent link
WASHINGTON (9/17/08)—The Texas Credit Union League (TCUL) said Tuesday that it has been forced by Hurricane Ike to cancel its Sept. 18 town hall-style meeting, which was to feature a presentation by National Credit Union Administration Vice Chairman Rodney Hood. “Given that a large number of registrants from the area affected by Hurricane Ike are understandably unable to attend the one-day program, and with much efforts being placed on disaster recovery, TCUL and other involved parties felt it most appropriate to cancel the meeting,” the league announcement said. The conference had been scheduled fo the Doubletree Hotel in Dallas.

103 CUs in Ike territory are operational--NCUA

 Permanent link
WASHINGTON (9/17/08)--Of the 179 credit unions affected by Hurricane Ike in Texas and Louisiana, 103 are operational, according to the National Credit Union Administration (NCUA). NCUA, jointly with the Louisiana and Texas state regulators, contacted 158 of the 179 affected credit unions as of the close of business Monday. "We anticipate several more will either open today or Wednesday, as power is restored to the Houston metro area," said John McKechnie III, NCUA director of public and congressional affairs. "Galveston-area credit unions continue to evidence the most damage and difficulty in restoring operations," he said. He added NCUA notes "a very high level of disaster preparedness among credit unions in the Texas and Louisiana coastal areas, with good implementation of contingent record-keeping and off-site operational ability plans." Hurricane Ike struck the Texas and southwestern Louisiana coastline on Saturday.

Inside Washington (09/15/2008)

 Permanent link
* WASHINGTON (9/16/08)—Consumer advocacy group Consumers Union (CU) filed a petition last week seeking Federal Trade Commission (FTC) action to protect consumers from losing money on gift cards when a retailer files for bankruptcy. In a letter to the agency, CU urged the FTC to require retailers to segregate funds generated from gift card sales in a trust account and to honor a consumer’s gift card as long as the doors remain open unless a bankruptcy court orders otherwise. The CU letter called on the FTC to declare the sale of gift cards without segregating funds and holding the funds in trust to be an unfair and deceptive practice. Consumers Union was joined by the Consumers Federation of America, National Consumer Law Center, and U.S. PIRG in filing the petition. CU is the nonprofit publisher of Consumer Reports… * WASHINGTON (9/16/08)--Fannie Mae and Freddie Mac’s multi-family and single-family housing contracts will not be affected by the two government-sponsored enterprises’ conservatorships, the Federal Housing Finance Agency said last week (American Banker Sept. 15). The agency will only intervene if the contracts raise safety and soundness questions about Fannie and Freddie. The enterprises were placed into conservatorship by the federal government Sept. 7 ... * WASHINGTON (9/16/08)--Actions by national banks and thrifts to prevent home mortgage foreclosures increased faster than their new foreclosures during the second quarter of 2008, according to a joint report issued Friday by the Office of the Comptroller of the Currency and the Office of Thrift Supervision. From January to June, new loan modifications increased by more than 80%. New payment plans grew by 8% and two types of loss mitigation actions reached more than 90,000 in June alone. The report is the first issued by the two agencies to combine the mortgage data of national banks and federal thrifts ... * WASHINGTON (9/16/08)--The Office of Thrift Supervision (OTS) will be questioned during a Thursday hearing by the Senate Banking Committee on the IndyMac Bank takeover. The OTS’ largest institution, Washington Mutual, also could be acquired soon (American Banker Sept. 15). Washington Mutual has 20% of its assets under the OTS and if the bank is acquired the OTS could be forced to restructure. At the hearing will be: OTS Director John Reich, Federal Deposit Insurance Corp. Chairman Sheila Bair, and Comptroller of the Currency John Dugan ... * WASHINGTON (9/16/08)--House Financial Services Committee Chairman Barney Frank (D-Mass.) was named as the funniest and brainiest member of the House by Washingtonian Magazine. Frank also was second in the eloquence category and third in the workhouse category (Washingtonian Magazine Aug. 25). Sens. Barack Obama (D-Ill.) and Joe Biden (D-Del.), the Democratic presidential and vice-presidential candidates, came in second and third in the show horse category. Republican presidential candidate Sen. John McCain (R-Ariz.) was second on the best friend to lobbyists category, while placing third in the enemy to lobbyists category ... * WASHINGTON (9/16/08)--The Small Business Administration’s (SBA) small/rural lender advantage program has received a “soft response,” according to Charlie Thomas, SBA director of program development (American Banker Sept. 15). SBA officials said the soft response could be due to the fact that the program has been marketed primarily in rural areas. Eligible borrowers are in more developed markets, they said. Officials also cited a slow economy. The program aims to help lenders with fewer than 20 SBA loans from the last three years. Lenders can receive loans of $350,000 or less. Decisions on the applications are made within three to five business days ... * WASHINGTON (9/16/08)--U.S. Treasury Secretary Henry Paulson is scheduled to deliver remarks today on issues involving the economy and the housing market. He will make his remarks at The Brookings Institution’s conference on The Future of Consumer Payments being held here in Washington…

PSECU can move to jury trial

 Permanent link
WASHINGTON (9/16//08)—A court has denied the request of Fifth Third Bank of Cincinnati, which was seeking a rehearing of a July court decision regarding the quest of Pennsylvania State Employees CU (PSECU) and Sovereign Bank to sue over losses sustained in a data breach. The July court decision granted PSECU and Sovereign Bank standing to sue BJ's Wholesale Club for the cost of replacing member credit cards after customer data was stolen from the retailer. That U.S. court of appeals ruling reversed a district court ' s decision denying the parties standing in the case, and thereby cleared the way for the credit union’s plan to return to the District Court for a jury trial--which PSECU originally had requested. After the breach was discovered, the $3.13 billion Harrisburg, Penn.-based credit union had tried to recover $98,000 from both the retailer and its merchant bank, which is Fifth Third Bank, through negotiations. More than 235,000 credit and debit cards total were reissued, and nearly 1,000 accounts were affected by illegal purchases made by thieves.

House committee vote today on funds access

 Permanent link
WASHINGTON (9/16/08)—A bill scheduled for a House Financial Services Committee vote today would increase the dollar amount of funds subject to next day availability. The bill, developed by Rep. Carolyn Maloney (D-N.Y.), would allow accountholders next-day access to the first $175 deposited by check on any single business day, up from the current $100 cap. Maloney also proposes to raise to $700—up from $400—the amount of cash from a deposit that may be withdrawn by 5 p.m. on the day it is available. The New York congresswoman has said her bill, The Expedited Funds Availability Dollar Limits Adjustment Act of 2008 (H.R. 6871), is intended to account for inflation over the 21 years since the enactment of the original law. It also contains a provision to provide for future adjustments on a regular basis—at least every five years. Maloney is chairman of the House Financial Services subcommittee on financial institutions. H.R. 6871 is co-sponsored by Rep. Barney Frank (D-Mass.), who heads the parent financial services panel. The Credit Union National Association (CUNA) has worked closely with the bill’s designers, noted Ryan Donovan Monday. Donovan is CUNA vice president of legislative affairs. The funds availability legislation is among five bills scheduled for a vote today. The others on the calendar are:
* A new version of the Payment Systems Protection Act introduced Sept. 11 by Frank, which is intended to respond to concerns of the Credit Union National Association (CUNA) and many others in the financial services industry about aspects of a current plan to implement the 2006 Unlawful Internet Gambling Enforcement Act (see News Now; Sept. 15, “New Internet gambling definition bill up for vote.”); * H.R. 6694, FHA Seller-Financed Downpayment Reform and Risk-Based Pricing Authorization Act; * H.R. 3019, Expand and Preserve Home Ownership through Counseling Act; and * H.R. 6642, National Consumer Cooperative Bank Act Amendments.

New Reg Z trigger CUNA analysis

 Permanent link
WASHINGTON (9/16/08)—Starting Jan. 1, the dollar amount that triggers additional disclosures and prohibitions under the Truth in Lending Act (TILA) for certain mortgage loans will increase, reminds the Credit Union National Association (CUNA) in a final rule analysis. TILA requires creditors to disclose credit terms and the cost of consumer credit as an annual percentage rate. The act, implemented by the Fed’s Regulation Z, requires additional disclosures for loans secured by a consumer’s home, and permits consumers to cancel certain transactions that involve their principal dwelling. The recent adjustment to the trigger, which is tied to the Consumer Price Index, is required under the Home Ownership and Equity Protection Act of 1994. Under the Fed’s new trigger, the disclosures and prohibitions will now apply when total points and fees on a loan exceed $583 or 8% of the loan an amount, whichever is greater. The trigger for 2008 was $561. The adjustment does not affect the new mortgage lending rules adopted by the Fed in July 2008 for "higher-priced mortgage loans," the CUNA analysis notes. Coverage of mortgage loans under those rules is determined using a different rate-based threshold. Use the resource link below to read the Fed’s Regulation Z rule.

Treasury-SBA website helps with HSA info

 Permanent link
WASHINGTON (9/16/08)—A new government website has been established to provide information on health savings accounts (HSAs), the tax-advantaged accounts created in 2003 that individuals may use to pay for medical expenses that are not reimbursed. The U.S. Treasury Dept. and the U.S. Small Business Administration (SBA), announcing their website partnership last week, said that many employees who work for small businesses find their companies are unable to sponsor health insurance plans. “Many of these employees can benefit from the affordability and flexibility of HSAs and HSA-eligible health plans,” noted the agencies’ release. For instance, such expenses as co-pays, deductibles, and other products and services not covered by one’s insurance plan could be deducted from pre-tax income. The new website is designed to present the advantages of HSAs and to provide comparisons to other health coverage options. It offers other materials to help employers and individuals determine whether and how to enroll in HSA-eligible coverage and how to save for health care costs through an HAS. The Credit Union National Association (CUNA) supported creation of these accounts in the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, to give individuals more flexibility and control over the payment of their health care costs. CUNA has noted that credit union members benefit from these accounts and often urge their credit unions to offer them if they don’t already do so. Credit unions, in turn, benefit from offering HSAs because of the additional deposits that follow as a result. There are nearly seven million Americans currently covered by HSAs and CUNA supports the expansion of HSAs as a way of providing credit union members with a way to build wealth while also better managing personal medical costs. CUNA also supports an aggressive effort to encourage credit unions to offer HSAs, as only 600 credit unions currently offer these accounts. Use the resource links below to access more HSA information and to visit the Treasury-SBA website.

NCUA responds to Ike disaster

 Permanent link
ALEXANDRIA, Va. (9/16/08)--The National Credit Union Administration (NCUA) announced Monday it has activated its disaster relief policy to assist credit unions and their members affected by Hurricane Ike in Texas and Louisiana. Under its disaster assistance policy, NCUA will, where necessary:
* Encourage credit unions to make loans with special terms and reduced documentation to affected members; * Reschedule routine examinations of affected credit unions if necessary; * Guarantee lines of credit for credit unions through the National Credit Union Share Insurance Fund; and * Make loans to meet the liquidity needs of member credit unions through the Central Liquidity Facility.
In its announcement, the NCUA noted that it works with individual state league organizations and state regulators to ensure all federally insured credit unions are aware of NCUA’s available assistance. Region IV examiners are closely monitoring the situation and will provide assistance as requested or needed. The NCUA reiterated its three operating priorities during disaster conditions. NCUA personnel:
* Determine the safety of credit union staff and operational condition of credit unions; * Provide needed material and technical assistance to affected credit unions; and * Return credit unions to normal operations as quickly as possible.

Financial Services seeks interchange jurisdiction

 Permanent link
WASHINGTON (9/15/08)--U.S. Rep. Barney Frank has asked House leadership to ensure that the financial services panel, which he chairs, has a role in deciding credit and debit card interchange fee issues that were voted this summer by the House Judiciary Committee. In a Sept. 12 letter to House Speaker Nancy Pelosi (D-Calif.), Frank stated his case that Judiciary should not claim exclusive jurisdiction over a bill that makes decisions regarding the regulation of financial institutions, which fall under his committee’s purview. Specifically the Massachusetts Democrat addressed H.R. 5546, the Credit Card Fair Fee Act, which was approved by a narrow margin in July by Judiciary. In his letter, Frank said wrote, “As this bill addresses a number of complex issues regarding banks, banking, extension of credit, operation of credit networks and the pricing of credit, the committee with subject matter expertise over these issues should have the opportunity to consider the bill, at least on a sequential basis.” “This request is great news for credit unions,” said Michele Johnson, director of legislative affairs for the Credit Union National Association (CUNA), Friday. CUNA has strenuously worked against H.R. 5546, which would permit government intervention in setting the fees charged merchants each time a consumer uses the card for a purchase. “We believe that interchange at its core is a financial services issue. Until now, merchants have had success positioning this as a commerce issue. Now, if Chairman Frank’s request is honored as it should be, this issue can move before the panel that has the deep understanding of what this bill would mean to credit unions and banks,” Johnson said. Johnson also predicted that Frank’s request will preclude any further consideration of H.R. 5546 this session of Congress. “Into 2009, it is an indication that the Committee on Financial Services will be fully engaged in the issue,” she said.

CUNA offers Form 990 webinar analysis

 Permanent link
WASHINGTON (9/15/08)—The Credit Union National Association (CUNA) is offering a Nov. 11 webinar to explain the revised Internal Revenue Service (IRS) Form 990 and has posted a final rule analysis of agency’s instructions to the new form. The webinar will also include an update on what is happening regarding Unrelated Business Income Tax (UBIT) issues for credit unions. State-chartered credit unions are required to file Form 990-- Return of Organization Exempt from Income Tax--with the IRS annually, although a few states still file a group 990. Organizations must report compensation of executives including officers, directors and "key employees." The new form will be used for the 2008 tax year, by mid-May 2009. The accompanying instructions include changes in content and format and provide additional examples to explain the instructions. In its analysis, CUNA noted:
* The instructions provide definitions and examples of the two types of compensation required to be reported, “reportable compensation” and “other compensation.” * The new instructions define “key employee” for purposes of reporting executive compensation as an employee, officer, director and trustee, who had reportable compensation exceeding $150,000, had organization-wide responsibility over at least 10 percent of the organization’s activities, and was one of the organization’s top-20 highest paid employees. * The term “officer,” for purposes of reporting executive compensation, is clarified to include both the top financial official as well as the top management official. * If an organization’s board delegated broad authority to act on its behalf to an executive committee, the instructions state that the organization should describe the composition of the committee, whether any of the committee’s members are not on the board and the scope of the committee’s authority. * Smaller organizations will have a three year period to transition to the new form. * There were no material changes to the instructions for filing group returns and the IRS indicated for at least the 2008 tax year (for returns filed in 2009), it will continue to allow group filings.
Use the resource links below to register for the CUNA webinar and to read the full analysis.

House Senate panels look at GSE takeovers

 Permanent link
WASHINGTON (9/15/08)—On the to-do lists in the next few weeks of both U.S. Treasury Secretary Henry Paulson and the director of the new Federal Housing Finance Agency (FHFA), James Lockhart; testify before both the Senate Banking Committee and the House Financial Services Committee. The Senate panel has set a hearing entitled “Recent Regulatory Actions Regarding Fannie Mae and Freddie Mac” for tomorrow, Sept. 16. Paulson and Lockhart are the only witnesses listed. House Financial Services has slated a Sept. 25 oversight hearing, also to examine last week’s action by the Treasury Department to place the housing government-sponsored enterprises into conservatorship. During that session, Paulson and Lockhart are scheduled to be joined at the witness table by Ben Bernanke, chairman of the Federal Reserve Board, and Federal Housing Authority Commissioner Brian Montgomery. After the hearing, the committee is scheduled to vote on five bills. (See related story: New Internet gambling definition bill up for vote.) Also of note, Senate Banking announced Friday that it would conduct a hearing on recent bank failures and the federal banking regulators’ responses to them. Scheduled to testify are Chairman Sheila Bair of the Federal Deposit Insurance Corp., Comptroller of the Currency John Dugan, and Director John Reich of the Office of Thrift Supervision.

New Internet gambling definition bill up for vote

 Permanent link
WASHINGTON (9/15/08)--Among five bills scheduled for a vote tomorrow by the House Financial Services Committee is a new version of the Payment Systems Protection Act introduced Sept. 11 by Rep. Barney Frank (D-Mass.). As was its predecessor, that bill is intended to respond to the concerns of the Credit Union National Association (CUNA) and many others in the financial services industry that the aspects of a current plan to implement the 2006 Unlawful Internet Gambling Enforcement Act (UIGEA) would be difficult, if not impossible, to implement. Under the Internet gambling law, financial institutions must establish and implement policies and procedures to identify and block restricted Internet gambling transactions, or rely on those established by the payments system. Frank’s bill would direct the U.S. Treasury Department and the Federal Reserve System, in consultation with the U.S. Attorney General, to give format guidance on defining what online gambling transactions. The earlier version of Frank’s bill failed in committee by a tie vote this summer. CUNA continues to support the Frank bill and will send a letter expressing that support. CUNA also reiterates its fundamental concern that UIGEA adds to credit unions’ already extraordinary burden with heavy policing responsibilities under the Bank Secrecy Act and Office of Foreign Assets Control (OFAC) rules. CUNA warned an increased policing role could interfere with financial institutions' fundamental business to provide financial services to their communities. The remaining bills scheduled for a committee vote Tuesday are:
* A recently introduced H.R. 6871, Expedited Funds Availability Dollar Limits Adjustment Act; * H.R. 6694, FHA Seller-Financed Downpayment Reform and Risk-Based Pricing Authorization Act; * H.R. 3019, Expand and Preserve Home Ownership Through Counseling Act; and * H.R. 6642, National Consumer Cooperative Bank Act Amendments.

Inside Washington (09/12/2008)

 Permanent link
* WASHINGTON (9/15/08)--Credit union representatives from St. Louis Community CU; Vantage CU, Bridgeton; and United CU, Mexico, Mo., met with Missouri’s entire congressional delegation Sept. 10 in Washington, D.C., as a part of the Missouri Credit Union Association’s (MCUA) annual “Hike the Hill.” They discussed the Credit Union Regulatory Improvements Act (CURIA) and how it would help credit unions respond to members’ needs in the current economy, and a recent MCUA study on the mortgage crisis in Missouri (The Missouri Difference Sept. 12). “I think that we laid some good groundwork for any future attempts at a regulatory relief reform bill,” said Betty Clark, United CU president/CEO. From left are: Dan Boyle, Vantage CU; Mike O’Brien, St. Louis Community CU; U.S. Rep. Russ Carnahan (D-District 3), Hubert Hoosman, Vantage, and Amy McLard, MCUA vice president of legislative and public affairs. (Photo provided by the Missouri Credit Union Association) ... * WASHINGTON (9/15/08)--During an Aug. 26 meeting between National Federation of Community Development Credit Unions President/CEO Cliff Rosenthal and National Credit Union Administration Chairman Michael Fryzel, the federation listed its priorities. Among them: chartering and start-up of new credit unions, credit union partnerships and examiner supervision of low-income credit unions. On Thursday, Fryzel also met with Ben Rogers, the Filene Research Institute’s CU Tomorrow project leader and director of the Institute’s 30 Under 30 group. “Strategic planning, succession planning and member growth are all intertwined, and the Filene Institute is taking an impressive leadership role in fostering new thinking on these subjects. Attracting the next generation to membership and employment must be a mandatory exercise for today’s credit union leaders,” Fryzel said ... * WASHINGTON (9/15/08)--Financial services industry representatives are trying to pull back on an agreement that would create new appraisal standards for Fannie Mae and Freddie Mac. The agreement, which the enterprises made with New York Attorney General Andrew Cuomo to crack down on the appraisal process, isn’t effective until Jan. 1. If Fannie and Freddie break their agreement with Cuomo, he could theoretically sue them (American Banker Sept. 12). But the Office of the Comptroller of the Currency said in May that the agreement itself may be illegal because it was made without comment from outsiders. The agreement could be too burdensome to implement, said Gil Schwartz, a former Federal Reserve Board lawyer. If the agreement remains, Fannie and Freddie must create an independent valuation protection institute to monitor and implement new appraisal standards ... * WASHINGTON (9/15/08)--Sens. Charles Schumer (D-N.Y.), Bob Casey, (D-Pa.), Sherrod Brown (D-Ohio) and Robert Menendez (D-N.J.) are urging the Bush administration to stop Fannie Mae and Freddie Mac from foreclosing on homes for at least three months. The senators want to see the mortgage giants help borrowers refinance into more affordable mortgages (The New York Times Sept. 12). One criticism of that plan is that taxpayers may have to eventually cover the cost of the modified mortgages. Fannie and Freddie have guaranteed or purchased $5.3 trillion in mortgages and securities. On Sept. 7, Fannie and Freddie were placed into conservatorship by the federal government ... * WASHINGTON (9/15/08)--The Treasury Department will announce the depository institutions selected to receive $20.1 million in awards today in Chicago under the 2008 round of the Bank Enterprise Award program. Recipients were chosen after an application review by the Community Development Financial Institutions fund ...

In Hill Micas tips on becoming a former

 Permanent link
WASHINGTON (9/12/08)—Changing one’s status from a Capitol Hill player to a “former” Hill hot shot may hold some surprises for the thousand or so who will face that transition—voluntarily or otherwise—after the November elections, wrote Dan Mica, president/CEO of the Credit Union National Association (CUNA), this week in The Hill. In his most recent monthly K Street Insider column, Mica wrote that “current wisdom” indicates that approximately 40-45 congressmen and six to nine senators will be leaving Congress after the elections. That, he added, translates to more than 1,000 staffers also. Sharing his perspective as one who has made the transition, Mica said the change can be an eye-opener for some. “When you’re in, you’re in; When you’re out, you’re out,” he warned. And a change to a professional life of Washington K-Street style lobbying occasionally can be a particularly rude awakening. Mica served in the U.S. Congress from 1979 to 1989 as a representative from Florida. “To be clear, a life outside Congress and on K Street can be rewarding and fulfilling, and it has been so for me. But there are adjustments, and one needs to be prepared for the certain change,” Mica wrote. “I learned quickly the phone system works quite differently from downtown to Capitol Hill, rather than vice versa,” Mica mused, “You will find that it takes longer to have calls returned, if they are returned at all.” Be prepared for rejection, to resign your position as center of attention, even to pay for past misdeeds if you were abusive on the way up, Mica advised his Capitol Hill readers. He joked, “Even your golf game is likely to change. The ‘gimmes’ on the golf course go away. You may find yourself asking: ‘Hey, what happened to my game?’” For more Mica pearls, use the resource link below to read the complete column.

2007 mortgage trend info available

 Permanent link
WASHINGTON (9/12/08)—Data on mortgage lending transactions by credit unions, banks and thrifts throughout the United States in 2007 is now available through the Federal Financial Institutions Examination Council (FFIEC). The report covers the mortgage activity of 8,610 financial institutions covered by the Home Mortgage Disclosure Act (HMDA). Those covered institutions include, but are not limited to credit unions, banks, savings associations, and independent mortgage companies. The Credit Union National Association (CUNA) is currently analyzing the just-released mortgage lending data, particularly credit union information, and will report any significant trends. Mike Schenk, CUNA vice president of economics and statistics, noted it will take time to cull the enormous HMDA database. However, he said CUNA expects the numbers to show that credit unions, compared to other lenders, continue to be more likely to approve mortgage loan applications, and that their relatively high approval rates will continue to stand out across the income spectrum and in all key ethnic groupings. Schenk said the FFEIC numbers also historically have shown credit unions to be much less likely to saddle consumers with high-cost loans and that credit unions remain true to their mission: compared to other lenders, credit unions reported a larger share of the total mortgage lending to low/moderate income consumers. “My expectation is that, at a minimum, the new numbers will show a continuation of these impressive credit union results. I won't be surprised if, compared to other lenders, credit unions look even better than they have in the past,” Schenk said Thursday. He anticipated the FFEIC data will reflect that credit unions have remained active, responsible lenders during the ongoing housing downturn, which has caused many other lenders to significantly tighten underwriting standards and substantially curtail or completely abandon the mortgage market. “Credit unions were not contributors to the subprime mess, and have remained active, responsible lenders - the FFIEC data should reflect this fact,” the CUNA economist said. In more general terms, an FFIEC release noted that the 2007 HMDA data shows reductions in activity both in the overall mortgage market and in higher-priced lending. Factors contributing to the slowing were identified as slower or declining house price appreciation and tighter underwriting standards. In addition, part of the reduction in lending activity appears to be due to the nonreporting of loans by institutions that reported data for 2006 but discontinued operations during 2007. HMDA was enacted by Congress in 1975 and is intended, in part, to determine whether mortgage lenders are meeting the needs of their communities and to identify possible discriminatory lending patterns. The HMDA data show disposition of loan applications and include information on loan type, purpose, and amount; property type (1- to 4-family, multifamily, or manufactured housing); property location (MSA, state, county, and census tract); applicant characteristics (race, ethnicity, sex, and income); and census tract characteristics (minority composition and income). The FFIEC release said differences in the incidence of higher-priced lending between racial and ethnic groups continued in 2007, as did differences in denial rates on loan applications. “These differences continue to raise concerns about the terms, cost and availability of credit to minority applicants and borrowers, and lending practices in minority neighborhoods,” the FFIEC noted. The FFIEC is comprised of the National Credit Union Administration, Federal Reserve Board, Federal Deposit Insurance Corp., Office of the Comptroller of the Currency and Office of Thrift Supervision. Use the resource links below to read more from the FFIEC or to order the HMDA report.

Hearing slated for homeowners help program

 Permanent link
WASHINGTON (9/12/08)--House Committee on Financial Services Thursday announced a Sept. 17 hearing to check in on the implementation progress of the newly established Hope for Homeowners program, intended to many thousands avoid mortgage foreclosures. In July, the U.S, Congress passed and President George W. Bush signed legislation designed to help at least 400,000 borrowers who are lagging in their payments because of a combination of unaffordable mortgages and falling home prices. The law sets an Oct. 1 effective date for the rescue provisions, which would let the FHA insure foundering mortgage loan for qualified individuals. Just before the bill was signed into law, a spokesperson for the Department of Housing and Urban Development (HUD) indicated he believed there was little chance that implementing regulations for the program would be ready by October. However, by the time Bush penned his name to the legislation HUD Secretary Steven Preston expressed confidence that the rules would be ready on time. The committee also intends to review foreclosure mitigation efforts by loan servicers at next Wednesday’s hearing. A witness list has not been released.

GSE deals political impact Donovan in iPoliticoi

 Permanent link
WASHINGTON (9/12/08)--Ryan Donovan, a chief lobbyist at the Credit Union National Association (CUNA), said that one affect on credit unions of the government’s move to seize control of Fannie Mae and Freddie Mac may in the loss of a sometimes political ally. He added that the situation has distracted lawmakers from the House-passed regulatory relief bill CUNA is working to push through the Senate before Congress adjourns this month; the Credit Union, Bank and Thrift Regulatory Relief Act (CUBTTRA). In an article in Politico entitled, “Picking up the Fannie-Freddie pieces, Donovan said he believed the loss of Fannie and Freddie’s firepower probably won’t hurt credit unions in the short term, but there are ramifications. “They may be out of the advocacy game, but Fannie and Freddie are still sucking a lot of the oxygen out of the room,” he said. In assessing what the article referred to as the “gaping hole left by the sudden departure of Fannie Mae and Freddie Mac from the lobbying game,” Donovan made the following observations: “Whenever you have an ally that ceases to exist so abruptly, there’s something missing. There’s a vacuum.” However, he added, while CUNA has worked alongside Fannie and Freddie on issues that address big banks, the two government-sponsored enterprises were not the kind of allies with whom credit union strategized. To read the entire article, use the resource link below.

NCUA encourages CU readiness for Ike

 Permanent link
ALEXANDRIA, Va. (9/12/08)—Credit unions and credit union members in the potential path of Hurricane Ike should prepare for all contingencies, including the possible interruption of some credit union operations, the National Credit Union Administration (NCUA) advised Thursday. The advisory, released as Ike was strengthening and moving toward the Gulf Coast states, noted that the NCUA will activate, as needed, a toll-free hotline for credit union members seeking information on such things as the operating status of their credit unions. That information will also be available on the NCUA website. The agency said it will also distribute a public service announcement to news outlets in potentially affected states in an effort to provide essential information to consumers about federal deposit insurance coverage for credit unions and how to access their credit union funds. Credit unions in Texas and Louisiana that could be affected by Ike are advised to review their contingency of operations plans and business continuity procedures, ensuring their ability to provide financial services to their members. NCUA encourages credit unions to ensure that in the event of an evacuation, they have taken the following important actions:
* Alternate sites are identified and prepared for potential activation; * Systems are backed up and the backup data is stored in a secure location that will be accessible (i.e., outside the impact area); * The NCUA regional office is notified with the location(s) of the alternate site(s), telephone numbers, and management emergency contact telephone numbers; * Any deploying employees should be identified and prepared to take necessary data and/or equipment to the alternate site location; and *Credit unions should test their backup systems to ensure proper operation.
In addition, the NCUA advised credit union staff and members may wish to document important personal family and financial information. It noted that the U.S. Department of Homeland Security’s “Ready Campaign” (www.ready.gov, or 1-800-BE-READY) provides information about disaster preparedness, including a link to the Emergency Financial First Aid Kit, a checklist of documents and steps consumers can take to maximize their preparedness. (See related story: Texas CUs, league brace for Hurricane Ike)

Inside Washington (09/11/2008)

 Permanent link
* WASHINGTON (9/12/08)--House Financial Services Chairman Barney Frank (D-Mass.) is looking to bring back two programs--one that would allow sellers to help borrowers in the Federal Housing Administration’s (FHA) mortgage insurance program with downpayment assistance, and another to allow FHA premiums to be priced based on borrowers’ risk (CongressDailyPM Sept. 10). The programs were killed earlier during housing bill talks. Rep. Al Green (D-Texas) has sponsored a bill to allow the FHA program to apply to those with credit scores of 680 or higher. Those with scores of 620 would pay a premium to participate. Green said the bill is needed to help with the housing crisis. Reps. Christopher Shays (R-Conn.) and Gary Miller (R-Calif.) have co-sponsored Green’s bill ... * WASHINGTON (9/12/08)--Sen. John Cornyn (R-Texas) has called for an investigation of mortgage giants Fannie Mae and Freddie Mac, citing a 2006 report indicating that Fannie had overstated earnings. He sent a letter to the Justice Department asking it to determine if any illegal activities have taken place. Fannie and Freddie were placed into conservatorship Sept. 7 (CongressDailyPM Sept. 10) ... * WASHINGTON (9/12/08)--Senate Finance Committee Chairman Max Baucus (D-Mont.) and Ranking Member Charles Grassley (R-Iowa), House Ways and Means Chairman Charles Rangel (D-N.Y.), and House Financial Services Committee Members Paul Kanjorski (D-Pa.) and Mike Capuano (D-Mass.) have called for oversight of pension investments in hedge funds and private equity. The legislators supported the recommendations of a recent Government Accountability Office report, which suggests that the secretary of labor should provide more guidance for investments in hedge and equity funds by pension plans. “This new investment strategy has not been tested in an unstable market,” Baucus said. “If the pension investments sour, the retirement savings of millions of Americans could suffer” ... * WASHINGTON (9/12/08)--A Senate subcommittee report released Wednesday indicates that several Wall Street investment banks are using marketing schemes such as “dividend uplift” or “dividend enhancement” that help foreign investors avoid dividend taxes. The report, by the Senate Permanent Subcommittee on Investigations, cites Morgan Stanley, Lehman Brothers, Merrill Lynch, Deutsche Bank, Citigroup and UBS (The New York Times Sept. 11). Hedge funds, such as Maverick Capital, Moore Capital and Highbridge also were noted as using the dividend avoidance products. The schemes have been used for at least the last 10 years, according to the report. Foreign investors generally owe 30% tax on dividends ...

Inside Washington (09/10/2008)

 Permanent link
* WASHINGTON (9/11/08)--Sens. Charles Schumer (D-N.Y.) and Jack Reed (D-R.I.) are criticizing the severance packages that Fannie Mae’s and Freddie Mac’s ousted heads will receive considering the government placed the two mortgage giants into conservatorship (American Banker Sept. 10). Schumer and Reed wrote a letter Tuesday to James Lockhart, Federal Housing Finance Agency director, encouraging him to reduce or eliminate the packages ... * WASHINGTON (9/11/08)--The Federal Housing Finance Agency (FHFA) said Tuesday that Fannie Mae and Freddie Mac will have to improve loan modification efforts. FHFA Director James Lockhart said he is looking into modification programs for the two enterprises and will discuss them with Fannie and Freddie officials. The FHFA and Treasury have both been urged to help the enterprises speed up the modification process (American Banker Sept. 10). The enterprises would be the investors, so there would be no fear of investor backlash from servicers, according to Fannie-Freddie workout supporters. The enterprises’ top executives were removed Sunday. Modifying loans would be costly and could shrink the credit pool, said Daniel Mudd, Fannie’s former chief executive. Both Fannie and Freddie’s top executives were averse to speeding up the modification process ...

FinCEN gives guidance on money services definition

 Permanent link
WASHINGTON (9/11/08)—Credit unions and other financial institutions with Bank Secrecy Act (BSA) compliance obligations received a little further guidance Wednesday on whom the Financial Crimes Enforcement Network (FinCEN) considers a money services business. The FinCEN interpretative guidance specifically addressed whether a broker or dealer in currency or other commodities is a money transmitter when, in the ordinary course of business, the broker or dealer accepts and transmits funds in order to effect transactions in currency or other commodities for or with a customer. “When a broker or dealer in currency or other commodities accepts and transmits funds solely for the purpose of effecting a bona fide purchase or sale of currency or other commodities for or with a customer, such person is not engaged as a business in the transfer of funds, and is not acting as a money transmitter as that term is defined in our regulations,” FinCEN noted in a release. “In such circumstances, the transmission of funds is a fundamental element of the actual transaction necessary to execute the contract for the purchase or sale of the currency or the other commodity. The transmission of funds is not a separate and discrete service provided in addition to the underlying transaction. It is a necessary and integral part of the transaction,” it added. However, the agency warned that the conclusions reached in its guidance are limited to circumstances in which a broker or dealer in currency or other commodities accepts and transmits funds as an integral part of the execution and settlement of a transaction other than the funds transmission itself. In 2006, FinCEN began seeking public comment regarding the impact of BSA regulations on the ability of MSBs to open and maintain accounts and obtain other banking services at depository institutions. Also, the U.S. Congress has been considering legislation to encourage credit unions and banks to serve MSBs by clarifying that they would not be responsible for whether the MSB is complying with anti-money laundering laws and any other applicable Bank Secrecy Act (BSA) requirements. A bill passed the House on July 22.

Red-flag exam guidance expected soon

 Permanent link
WASHINGTON (9/11/08)—Federal financial regulators, including the National Credit Union Administration (NCUA), are soon expected to issue guidelines for examiners charged with reviewing financial institution compliance with an identity theft “red flags” rule. The red-flags rule, as required under the Fair and Accurate Credit Transaction (FACT) Act, was issued jointly last November by the federal credit union, bank and thrift regulators and the Federal Trade Commission. The rules require financial institutions and other creditors to develop and implement a written program that is designed to detect, prevent, and mitigate identity theft. There is a Nov. 1 compliance deadline. Credit Union National Association (CUNA) Senior Assistant General Counsel Jeff Bloch said it is CUNA's understanding that the exam guidance is in the final stages of preparation and will be issued shortly. Bloch said, based on information unveiled Aug. 11 by the Office of Thrift Supervision, CUNA expects the NCUA instruction to examiners to include that:
* A credit union’s red flags program can build on existing foundations for information security, such as Customer Identification Programs, and does not have to start from scratch; * A credit union should use existing tools as much as is possible; * The program should be a collaborative effort among all departments; and * Each program should reflect a credit union’s unique circumstances.
A study released Wednesday by TowerGroup, a research firm that focuses on financial services issues, predicted that less than one-third of the country’s financial institutions may be ready for the Nov. 1 compliance date. “Regulators are expected to be reasonable with institutions that have made a good-faith effort to comply,” according to TowerGroup. But the firm advised financial institutions to “step up their efforts to develop and deploy programs to prevent identity theft, or they face the inevitable consequences of noncompliance.” CUNA continues to provide resources to help credit unions with compliance. CUNA, with CUNA Mutual Group, offers an archived Webinar targeted to credit union staff responsible for compliance, information security, and fraud prevention. CUNA is also offering a Sept. 29 audio conference with advice from industry experts. As an additional resource, CUNA’s director of compliance information, Valerie Moss, posed the seven red-flags questions credit unions should be asking during the few months left before the mandatory compliance date in an August Credit Union Magazine article. To access these resources, use the resource links below.

RESPA changes focus of a Sept. hearing

 Permanent link
WASHINGTON (9/11/08)—Proposed changes to the Real Estate Settlement Practices Act, known as RESPA, will come under the scrutiny during a House Financial Services subcommittee hearing Sept. 16. Rep. Melvin Watt (D-N.C.), chairman of the subcommittee on oversight and investigations, announced Wednesday that he intends to gather testimony from representatives of the U.S. Department of Housing and Urban Development (HUD), which has developed the proposed changes, consumer advocates and industry representatives. In March, HUD unveiled long-awaited proposed revisions to RESPA and sought comment. HUD has been working since the late 1990's on revising its rules implementing the 1974 RESPA law with a view to improving the mortgage process and to lower settlement costs for borrowers. The current proposal supplants one issued in 2002, scrapped by HUD after the Credit Union National Association (CUNA) and others noted that some of the proposed changes could be confusing to consumers and could have the opposite effect of the intended simplification In part, the current proposal would:
* Make significant changes to the Good Faith Estimate (GFE) form, resulting in a new format for the GFE. That change is intended to ensure that the estimates are more accurate and to facilitate consumer comparisons between lenders. These changes will also facilitate comparisons between the GFE and the HUD-1 or HUD-1A settlement statement; * Ensure that borrowers are aware of the final loan terms and costs at settlement by requiring lenders read to each borrower a copy of a "closing script" containing the information; and * Clarify when it is appropriate to provide borrowers with discounts and average price costing of settlement services.
Watt said his subcommittee will be investigating the costs, regulatory burdens and other impacts of the proposed RESPA rule. The HUD RESPA plan has many critics. In fact, this summer 240 members of the U.S. House of Representatives signed a letter to HUD Secretary Steven Preston urging him to withdraw his agency’s RESPA plan. The lawmakers petitioned Preston to “immediately commence” joint rulemaking with the Federal Reserve Board to produce “more simplified” mortgage and real estate settlement cost disclosure forms. “To expedite this process, we also ask you to discard the hundreds of pages of HUD’s current proposed RESPA rule that have not previously been the subject of public comment and cover a number of subjects beyond disclosures,” the letter requested. The lawmakers said they are “profoundly concerned” that HUD plan will “hinder rather than help the recovery of the housing market.” The Credit Union National Association (CUNA) strongly supports the concept of amending the RESPA rules in order to simplify and streamline the home purchase and settlement process. CUNA believes that such changes would reduce out-of-pocket costs to consumers and increase quality of services. However, CUNA also has a significant number of concerns with the HUD proposal and has questioned whether the HUD plan makes the disclosure process more confusing for consumers, rather then less so.

Inside Washington (09/09/2008)

 Permanent link
* WASHINGTON (9/10/08)--Congress and policymakers are working to decide the futures of Fannie Mae and Freddie Mac after the government placed the two housing giants into conservatorship over the weekend (The New York Times Sept. 9). It could be at least a year before Congress and the new president decide on a new role for Fannie and Freddie. Some Treasury Department officials said they would like to use the two as public utilities, regulating their profits and activities and reducing their investment portfolios. Democratic lawmakers would like to see Fannie and Freddie help provide more affordable housing. Free-market theorists would like to break up the two companies or liquidate them after the housing crisis has ended. The issue will not be worked out until the new president is elected and the Senate meets on the institutions’ rescue ... * WASHINGTON (9/10/08)--The Treasury Department will launch its multimedia campaign on consumer credit Sept. 16. The department will debut TV spots, radio spots and a new website, www.controlyourcredit.gov, targeted at young adults ...

Mica assesses GSE deal impact on credit unions

 Permanent link
WASHINGTON (9/10/08)—Credit Union National Association (CUNA) President/CEO Dan Mica said Monday credit unions are already seeing conforming mortgage rates falling due to the government’s seizure of control of over housing giants Fannie Mae and Freddie Mac. “We don’t yet expect any relaxation of credit standards or fees from the (government-sponsored enterprises), but because of lower rates, conforming mortgages will be more attractive to credit union members than they have recently become,” Mica noted, putting recent events into perspective for credit unions. Another short-term effect of restored confidence in the debt obligation of Fannie and Freddie—brought by the change of control—is that other mortgage lenders may become more competitive with confidence restored to the agency mortgage-backed securities market. “More broadly, restoring this important source of mortgage credit will remove one--but certainly not all--of the negative forces in the housing market,” Mica said. However, Mica warned, the long-term ramifications of the government’s action on the mortgage finance market -- and credit unions -- are unclear for now. “All we can say at this point is that things will never return to the state they had evolved by the beginning of this decade, but all the final changes are at his point speculation. However, we can say that the greater the eventual cost to the Treasury of resolving the mess, the greater will be the changes to the future structure of these government-sponsored enterprises or their successor organizations,” Mica added. As reported by Treasury, Fannie Mae and Freddie Mac have outstanding debt and mortgage-backed securities that total about $5 trillion. Due to concerns that the GSEs may not have sufficient capital to cover potential losses in the loans they hold or guarantee, and the devastating effect the failure of the GSEs would have on mortgage finance and an already reeling residential real estate market, the new Federal Housing Finance Agency was been appointed as conservator of the two GSEs. The Treasury Department has provided a number of concise fact sheets describing the conservatorship program. Use the resource link below to access that information.

Inside Washington (09/08/2008)

 Permanent link
* WASHINGTON (9/9/08)--Downey Financial Corp., a $13 billion asset Newport Beach, Calif.-based thrift, was issued a cease-and-desist order last week by the Office of Thrift Supervision (OTS). OTS ordered the thrift to meet a minimum Tier 1 capital ratio of 7% and a minimum total risk-based capital ratio of 14% (American Banker Sept. 8). Downey sent out a press release Friday that did not mention the cease-and-desist order specifically, but said that the company would sell certain non-core real estate assets to a third party for $110 million. Downey also is working on a capital plan and has enhanced the bank’s regulatory capital by $176 million through the third-party real estate sale and previously disclosed contributions of capital from its parent company. In 45 days, the bank plans to submit to the OTS an asset-reduction plan, long-term business plan, real estate-owned disposition plan, and a plan to strengthen executive management ... * WASHINGTON (9/9/08)—The House Small Business Committee has scheduled a 10 a.m. hearing for Thursday on “Examining Expiring Tax Incentives and the Needs of Small Businesses.” The focus of the hearing is expected to be on tax extenders that expired in 2007 and are set to expire in 2008 and that affect and benefit small businesses, and which many small businesses use as incentives to grow and expand their businesses. A witness list was not yet available…

Inequitable terms ruling may impede foreclosures CUNA

 Permanent link
WASHINGTON (9/8/08)—A Massachusetts trial court ruling this year highlights the fact that unfair mortgage terms and origination practices can jeopardize a lender’s ability to foreclose on a property whose owner is in default. Chris Johnson, vice president of State Governmental Affairs for the Credit Union National Association (CUNA), has advised credit unions that in the case Commonwealth of Massachusetts v. Fremont Investment & Loan, the court limited a lender's exercise of all of its specific rights under its mortgage agreements with its borrowers. The Massachusetts attorney general obtained a preliminary injunction against Fremont, a subprime lender that originated thousands of mortgages in Massachusetts and whose lending practices were considered by the attorney general to have contributed significantly to the foreclosure crisis in that state. Johnson notes the court's order prohibits Fremont from initiating or advancing foreclosures on loans that are "presumptively unfair." Under the terms of the injunction, Fremont must provide the attorney general's office with at least a 30-day notice of all foreclosures it intends to initiate for the loans that Fremont owns and services. In turn, the AG has an opportunity to object to the foreclosure going forward. If Fremont has issued a loan that is considered "presumptively unfair," and the borrower occupies the property as his or her principal dwelling, the attorney general has 45 days to object to the foreclosure. Under the terms of the injunction, a loan is "presumptively unfair" if it has all of the following characteristics:
* The loan is an adjustable-rate mortgage with an introductory period of three years or less; * The loan has an introductory or "teaser" interest rate that is at least three percent lower than the fully-indexed rate (the relevant index at the time of origination plus the interest margin specified in the mortgage note); * The borrower has a debt-to-income ratio (the ratio between the borrower's monthly debt payments, including the monthly mortgage payment, and the borrower's monthly income) that would have exceeded 50% if Fremont had measured the debt by the debt due under the fully-indexed rate, not by the debt due under the teaser rate; and * Fremont extended 100% financing, or the loan has a substantial prepayment penalty.
The lesson of the Fremont case, according to Johnson, "is that the lender's inequitable origination practices have now hamstrung its ability to foreclose on properties that secure mortgages that it owns." Johnson further noted that although Fremont ultimately is likely to be able to exercise its foreclosure rights, "it will generally not be able to do so until after it has incurred significant expenses, and lost considerable time, in complying with the terms of the injunction." Johnson believes that credit unions are highly unlikely to find themselves subject to legal actions and outcomes similar to those in the Fremont case. "Credit unions' prudent underwriting practices and equitable loan terms constitute a bulwark of protection when unfortunate events result in mortgage delinquencies and foreclosures," he said, but noted the case "demonstrates the need for continued vigilance in maintaining fair and reasonable lending terms and practices." For more analysis of the case, use the resource link below.

CU parties statement on relief in FOM case

 Permanent link
WASHINGTON (9/9/08)—A coalition of interested credit union parties filed a statement with a U.S. district court regarding an appropriate relief plan in a case that challenged a National Credit Union Administration’s (NCUA) decision to grant a six-county area community credit union expansion in Pennsylvania. In July, the U.S. District Court for the Middle District of Pennsylvania ruled that the NCUA’s record was not sufficient to sustain its decision and ordered the plaintiff American Bankers Association and defendant NCUA to suggest a remedy to the court. In its lawsuit against the federal regulator, the bankers argued that the NCUA acted in an arbitrary and capricious way in 2003 when it approved Harrisburg, Pa.-based Members 1st FCU's charter request. The agency decision was later used as basis to authorize two other charter requests, one from New Cumberland FCU and the other from AmeriChoice FCU. In a statement on appropriate resolution to the case, the Credit Union National Association (CUNA), Pennsylvania Credit Union League and other credit union parties made points for the record regarding the remedy negotiated by the NCUA and ABA. As part of the agreed upon order, the affected credit unions will revert to the select employee group and associational charters that they held prior to the community charter expansions. Also as part of the agreement, all members who joined the credit unions under the community charters may remain as members. Although the ABA, in its brief, did not ask that the credit unions involved divest the members who were added under the NCUA decision, the credit union parties noted that the case should not serve as a precedent that the consent of the bankers “or similar plantiffs” is required for that outcome. Also, the credit union parties said that although the court’s final order is silent on the issue, the entire matter should be remanded to the NCUA to take further actions as may be appropriate. The credit unions named in the lawsuit and the National Association of Federal Credit Unions were also parties to the credit union statement on appropriate relief. Since most issues have been agreed upon, the judge likely will decide whether to accept the proposed order in a relatively short time—possibly within several weeks.

NCUAs Kutchey named OEI deputy director

 Permanent link
ALEXANDRIA, Va. (9/9/08)—John Kutchey has been named deputy director of the National Credit Union Administration’s (NCUA’s) Office of Examination and Insurance (OEI), where he will assist in overseeing the agency’s supervision and examination program, risk management and data collection programs. Kutchey takes his new post after having served most recently as OEI’s director of risk management. “John Kutchey has long been an asset to NCUA’s executive management team,” said
John Kutchey is shown here at a 2007 open board meeting as NCUA Deputy Director of the Office of Examination and Insurance Larry Fazio discusses the agency’s proposal on capital standards for credit unions. (Photo provided by CUNA)
NCUA Director Leonard Skiles. “In filling this important leadership position, John will bring valuable field management expertise that will serve to further strengthen the agency’s supervision and examination program.” Kutchey started his career with the NCUA 18 years ago as an examiner in Baltimore, Md. He also has served as a problem case officer, supervisory examiner, and director of supervision in Region II. While with NCUA, Kutchey has also completed several details, most notably as the associate regional director - operations in Regional V and as the director of insurance in Region II. The NCUA noted that Kutchey has received numerous awards highlighting his accomplishments and contributions to the agency.

CUNA Fed takeover of GSE will reassure consumers

 Permanent link
WASHINGTON (9/8/08)—The Credit Union National Association (CUNA) said yesterday the U.S. Government takeover of Fannie Mae and Freddie Mac would help strengthen the U.S. housing market and promote stability in the financial markets--thus reassuring consumers. "We have strongly held that any disruption in the secondary mortgage market would have a significant and lasting negative effect on the housing market, with an especially strong impact on persons of modest means--whom credit unions serve as part of their mission,” said CUNA President/CEO Dan Mica, who noted the association continued to review details of the plan, made public Sunday. Yesterday, the Federal Housing Finance Agency (FHFA) said it seized the government-sponsored enterprises (GSEs) after federal officials determined that Fannie and Freddie did not have sufficient capital to survive the losses they are expected to post in the quarters ahead. Since the beginning of 2007, both companies have lost a combined $10.6 billion. The Boards of both companies consented yesterday to the conservatorship. “Although we continue to review the details of the plan, CUNA agrees with Fed Chairman Ben Bernanke that the necessary steps taken by the Federal Housing Finance Administration, and the Treasury, help to strengthen the U.S. housing market and promote stability in our financial markets--thus reassuring consumers,” said Mica. “Further, from what we have seen, it appears this plan will lower mortgage rates from what they otherwise would have been, and will lessen the impact of the credit crunch on the housing market. How much, remains to be seen," he added. In a statement released yesterday, FHFA Director James B. Lockhart provided these provisions of the conservatorship:
* Monday morning the businesses will open as normal, only with stronger backing for the holders of mortgage-backed securities (MBS), senior debt and subordinated debt: * The Enterprises will be allowed to grow their guarantee MBS books without limits and continue to purchase replacement securities for their portfolios, about $20 billion per month without capital constraints; * As the conservator, FHFA will assume the power of the Board and management; * The present CEOs will be leaving, but the FHFA asked them to stay on to help with the transition; * Herb Allison will be the new CEO of Fannie Mae and David Moffett the CEO of Freddie Mac. Allison was vice chairman of Merrill Lynch and for the last eight years chairman of TIAA-CREF. Moffett was the vice chairman and CFO of US Bancorp. “Their compensation will be significantly lower than the outgoing CEOs,” said Lockhart: * At this time any other management action will be very limited; * In order to conserve over $2 billion in capital every year, the common stock and preferred stock dividends will be eliminated, but the common and all preferred stocks will continue to remain outstanding. Subordinated debt interest and principal payments will continue to be made; * All political activities--including all lobbying--will be halted immediately. Charitable activities are being reviewed; and * There will be the financing and investing relationship with the U.S. Treasury, which Secretary Paulson will be discussing.

Inside Washington (09/05/2008)

 Permanent link
* WASHINGTON (9/8/08)--Freedom CU Supervisory Committee Chairman Crystal Barnett was chosen as a delegate to represent Delaware at the Democratic National Convention in Denver Aug. 25-28. Barnett (far right) represents the Philadelphia Federation of Teachers Local #3, which is a part of the American Federation of Teachers. “I was humbled by the experience,” she said. “The final night, when [Barack] Obama spoke, between the quantity of people there and the look of hope on people’s faces--it was amazing.” Freedom CU, Warminster, Pa., has $35 million in assets. (Photo provided by Freedom CU) ... * WASHINGTON (9/8/08)--The Federal Deposit Insurance Corp. (FDIC) can handle bank failures without needing other government sources of liquidity, FDIC Chairman Sheila Bair said Thursday (American Banker Sept. 5). Recent failures such as IndyMac Bank drained the fund’s reserves by 14% last quarter, which means the industry will have higher premiums next year. The agency can use a $30 billion line of credit from the Treasury, but Bair said the higher premiums would be enough to restore reserves. However, the Treasury guarantee helps maintain depositor confidence, she said ... * WASHINGTON (9/8/08)--The Federal Deposit Insurance Corp. (FDIC) released guidance Thursday on best practices from the agency’s forum on mortgage lending for low- and moderate-income households. The forum explored a framework for low-to-moderate income mortgage lending in the future regarding current problems in the mortgage market. It also examined ways to encourage responsible mortgage lending to lower-income households to rejuvenate the secondary market for mortgage loans, the agency said ... * WASHINGTON (9/8/08)--The Federal Housing Finance Agency (FHFA) is looking at a plan that would require the 12 Federal Home Loan Banks to raise capital by keeping more of their earnings (American Banker Sept. 5). Some banks may be forced to keep three times the amount of earnings they do now. However, a proposal on the plan has not been sent to James Lockhart, FHFA’s new director, according to an agency spokesman. In March 2006, the Federal Housing Finance Board, which regulated the Home Loan banks before the FHFA, tried to pass a rule that would have forced the banks to cut their dividends in half. The proposal received criticism from the industry and community banks ...

Bankruptcy law violates lawyers free speech says court

 Permanent link
WASHINGTON (9/8/08)—A provision in the 2005 Bankruptcy Abuse Prevention and Consumer Protection Act that prohibits lawyers from advising clients to take on more debt prior to filing for bankruptcy protection has been struck down by a federal appeals court in St. Louis, Mo. The 8th U.S. Circuit Court of Appeals, ruling 2-1, concluded that attorneys who provide bankruptcy assistance to debtors are debt-relief agencies as defined under the Bankruptcy Code. In addition, the court also concluded that the particular section of the Code that restricts debt-relief agencies from advising potential debtors about incurring additional debt prior to filing bankruptcy is unconstitutional as to attorneys. Calling credit unions’ attention to last week’s ruling, Mike McLain, Credit Union National Association (CUNA) assistant general counsel and senior compliance counsel, said the ruling underscores the need for credit unions to continue working with their members who may be facing financial hardships by continuing to offer debt consolidation loans and working with members to lower payments and interest rates on existing loans rather than file bankruptcy. “There are times when it will be in a member’s interest, for example, when he or she is facing the threat of bankruptcy, to consolidate debt at a lower interest rate and with lower payments, and credit unions can help with that,” McLain said. He said the court ruling will make it likely that more consumers get similar advice from their attorneys. However, in some instances debtor's attorneys may advise their clients to skip certain loan payments or to restructure their debts in a manner that may be harmful to credit unions. To protect themselves, McLain said, credit unions must be aware of the laws and actions they can pursue before a member files bankruptcy as well as their rights and the actions they can pursue under bankruptcy law after a member files bankruptcy. The court ruling applies to the following states: North Dakota, South Dakota, Nebraska, Minnesota, Iowa, Missouri, and Arkansas.

FCUs may offer locked box accounting says NCUA

 Permanent link
ALEXANDRIA, Va.(9/8/08)—A federal credit union may provide “locked box” accounting to services to its members under the National Credit Union Administration’s incidental powers rules, according to a recent legal opinion from the agency. The agency was responding to an inquiry from Bethex FCU. The Bronx, N.Y. –credit union said it was planning to collect monthly rental payments on behalf of a housing cooperative and apply those payments to the cooperative’s accounts. Also under the Bethex proposal, the credit union would pay, from the cooperative’s accounts, certain monthly bills and reconcile the account ledger to the monthly statements. “NCUA defines operational programs as programs that an FCU establishes to deliver products and services to members that enhance member service and promote safe and sound operation. 12 C.F.R. §721.3(j),” wrote NCUA Associate General Counsel Sheila Albin in an Aug. 11 letter recently posted to the agency’s website. “These programs include pre-authorized member transactions and loan collection services…Accordingly, the services you have in mind on behalf of your member are permissible,” the letter concluded.

Congress back CUNA heat on CUBTRRA interchange

 Permanent link
WASHINGTON (9/8/08)—Congress returns to session this week after a month-long recess that spanned the Democratic National Convention (DNC) and the Republican National Convention (RNC), and both houses of Congress have set Sept. 26 as their targeted adjournment date for the year. “The rest of the House and Senate calendar year is short, but promises to be intense,” assessed John Magill, senior vice president of legislative affairs for the Credit Union National Association (CUNA). Magill said CUNA will keep the heat on its two year-end priority issues: passage of the Credit Union Bank and Thrift Regulatory Relief Act CUBTRRA); and dissuading lawmakers from allowing government interference in interchange fees. Both issues were key topics for credit unions at the DNC in Denver, Colo. and RNC in St. Paul, Minn. In discussions with lawmakers at the convention, CUNA continued to promote opposition to a bill that would give merchants an antitrust exemption to negotiate interchange fees. CUNA also encouraged support for credit union regulatory relief at every opportunity. CUNA will continue those efforts as lawmakers return to Washington and will also work during the final few weeks left in the legislative session to push for passage of CUBTRRA. “We haven’t given up hope for final passage this year,” says CUNA Vice President of Legislative Affairs Ryan Donovan, who put the chances for passage in 2008 at about thirty percent.

Cost of political absence too high says CEO

 Permanent link
ST. PAUL, Minn. (9/5/08)--The cost is too high for credit unions not to be involved in the local, state and national political scenes, according to credit union CEOs who attended the Republican National Convention in the Twin Cities this week. “We’ve seen all too clearly 10 years ago how being not involved can costs credit unions dearly,” said Harry Carter, president/CEO of Topline FCU in Maple Grove, Minn., in referring to the landmark legislative effort to pass H.R. 1151, the Credit Union Membership Access Act. Carter, who also is board chairman of the Minnesota Credit Union Network, urged credit unions to never let history repeat itself. “Ten years ago, we got caught flat-footed, but we’ve learned,” he said, pointing out that credit unions have strengthened both CUNA and their league’s political muscle. “If you’re going to master the strength of your industry, you must always be heard by those who make the laws.” Jeff Schwalen, president/CEO of Hiway FCU in St. Paul agreed with Carter. “You must be involved in the process or accept what people put on you,” said Schwalen, who chairs the Minnesota Credit Union Network’s Political Involvement Committee. While delegates to each party convention are bombarded with messages, the two CEOs said credit unions’ non-partisan nature is an advantage. They said the Homes for Our Troops project at both conventions was a perfect way to send a message. “The project was a way to demonstrate how credit unions give back to their communities and leave lasting commitments,” said Schwalen. Wounded Iraqi war veteran Sgt. Marcus Kuboy, who received the Minnesota Homes for Our Troops house, joined Hiway FCU after embarking on the project with credit unions. Both CEOs say they enjoy representing credit unions in the political process. “I think it’s valuable, fun and rewarding,” said Carter. “I’ve met so many interesting people.”

As conventions conclude CUs keep momentum

 Permanent link
ST. PAUL, Minn. (9/5/08)--Representatives from the Credit Union National Association (CUNA), the state leagues and credit unions yesterday polished off their final day of advancing the credit union movement during the back-to-back Democratic and Republican National Conventions.
Click for slide show As the confetti and balloons fall, the camera zooms in on Sen. John McCain and Gov. Sarah Palin, the GOP ticket for the president and vice president of the United States. (Photo provided by CUNA) (Photo provided by CUNA)
During the conventions, the three-tiered system reinforced credit unions’ non-partisan, consumer-oriented position in American politics. That effort was illustrated by CUNA and the leagues’ signature project at both party events: Building a home for a wounded veteran with Homes for Our Troops. Beyond the flurry of meetings, receptions and other events during both party conventions, CUNA teamed up with the National Journal to produce a series of Daily Briefings with national pundits and politicos. The two organizations also hosted nightly VIP viewing receptions, where those not attending the convention facilities could mix and mingle while watching speeches via television. CUNA and credit unions have been involved in these national events since 1988, according to CUNA Senior Vice President of Political Affairs Richard Gose. "Being a part of the party conventions demonstrates CUNA's resolve to put itself in front of the key people who will be making policy affecting credit unions in the coming year," said Gose. "It's just as important to be part of the campaigns as it is to be lobbying in Washington."

Inside Washington (09/04/2008)

 Permanent link
* WASHINGTON (9/5/08)--New Small Business Administration (SBA) disaster loan rules will not be effective until 2009. However, Steven G. Smith, head of the SBA office of disaster strategic planning, said the SBA can handle up to 15 times its normal loan volume even though the Midwest has been flooded and the Gulf Coast is recovering from hurricanes Gustav and Fay (American Banker Sept. 4). The SBA bill was enacted in May, allowing the agency to create rules governing how banks can make the loans. If more storms hit the country, the SBA might be pressured to implement the program sooner, said Jaret Seiberg, Stanford Group Co. policy analyst ... * WASHINGTON (9/5/08)--The Department of Housing and Urban Development (HUD) has implemented a final rule on home equity conversion mortgages (HECM). The rule adopts an interim rule making two technical changes to HUD's HECM program, according to the Federal Register (Sept. 4) The interim rule extended the date for calculating the maximum claim amount in the HECM program from the date of the underwriter's receipt of the appraisal report to the date of closing ...

New housing agency announces its arrival

 Permanent link
WASHINGTON (9/5/08)--The Federal Housing Finance Agency (FHFA), created under the Housing and Economic Recovery Act signed into law July 30, published a notice of “Establishment of a New Independent Agency” in the Federal Register. The document, signed Aug. 30 by FHFA Director James Lockhart, serves to provide formal notice to the public of the existence of the agency, as well as to set out its purpose and identify the chapter of the Code of Federal Regulations that it will employ for public dissemination of regulations, guidance and other publications. “FHFA was established to ensure that Fannie Mae, Freddie Mac and the Federal Home Loan Banks operate in a safe and sound manner,” Lockhart said in a release. “We are working quickly to set up the regulatory framework needed to make certain that their operations and activities foster liquid, efficient, competitive, and resilient national housing finance markets.” The release said the new entity is “making good progress” in integrating the Office of Federal Housing Enterprise Oversight (OFHEO), the Federal Housing Finance Board and HUD mission and affordable housing programs. Lockhart was formerly the director of OFHEO. Use the resource link below to access the complete Federal Register document.

Fair lending Compliance is in the details

 Permanent link
WASHINGTON (9/5/08)—Overt discrimination in lending practices rarely occurs any more, but lenders need to be aware that some subtle procedures could add up to unintentional unfair practices, writes Valerie Moss in the September issue of The Credit Union National Association’s (CUNA’s) Credit Union Magazine. Moss, CUNA’s director of compliance information, suggests credit unions consider these examples:
* A program that’s designed to serve all members but unintentionally discriminates against the elderly. This program would violate fair lending unless the credit union could show a business need for the policy or practice; * A rogue employee who ignores the credit union’s fair lending policies and procedures. The credit union would be held liable for the unchecked discriminatory behavior of one of its employees; or * A marketing campaign that targets only consumers in affluent suburbs, while ignoring predominantly minority neighborhoods in the inner city. Fair lending laws cover every aspect of the lending process, including the credit union’s advertising campaigns.
The article, “Fair Lending Lifeline,” advises credit unions that examiners expect credit unions to have solid policies in place to serve their entire memberships equitably. The National Credit Union Administration’s (NCUA) will continue its ongoing focus on fair lending issues next year. To read fair-lending examination pointers and credit union fair-lending insights, use the resource link below to access the magazine article.

CU convention efforts recognized on C-SPAN

 Permanent link
MINNEAPOLIS (9/4/08)--Credit unions’ Homes for Our Troops project was praised on live television yesterday during yesterday’s National Journal Daily Briefing broadcast live on C-SPAN from the Republican National Convention in Minneapolis.
Click for slide show Sgt. Marcus Kuboy (right) acknowledges applause during yesterday’s National Journal Daily Briefing, broadcast live on C-SPAN from the Republican National Convention in Minneapolis. CLICK FOR MORE SCENES FROM THE REPUBLICAN NATIONAL CONVENTION (Photo provided by CUNA)
Yesterday’s briefing featuring U.S. Sen. Lamar Alexander (R-Tenn.), U.S. Rep. Tom Cole (R-Okla.), MSNBC’s Chris Matthews and CNN’s Charlie Cook. Iraq war veteran Sgt. Marcus Kuboy--the recipient of the custom home built by credit unions--and CUNA’s Political Affairs Senior Vice President Richard Gose also were singled out for recognition by Charlie Cook. CUNA, the Minnesota Credit Union Network, the Credit Union Association of Colorado, Co-op Financial Services and the Corporate Network also were noted.

CU political junkie reports live from the RNC

 Permanent link
MINNEAPOLIS (9/4/08)--As Credit Union National Association (CUNA), league and credit union representatives cement relationships with lawmakers and politicos during this week’s Republican National Convention (RNC) in the Twin Cities, one Wisconsin credit union staffer is providing his hometown with an up-close view of the event.
Click for slide show Heartland CU Marketing and Business Development Vice President Robin Marohn yesterday in St. Paul, Minn. Heartland CU is located in Madison, Wis. CLICK FOR MORE SCENES FROM THE REPUBLICAN NATIONAL CONVENTION (Photo provided by CUNA)
Robin Marohn is vice president of marketing and business development for Heartland CU in Madison, Wis. The self described political junkie provides daily phone interviews with Madison radio stations WTDY-AM and WMMM-FM, posts frequent blog updates and uses Twitter. “I’ve never been to a national party convention, so I am burning a few vacation days and bunking in Minneapolis with an old college roommate,” said Marohn. Marohn, however, is more than a political junkie. He was chairman of the Wisconsin Credit Union League Government Affairs Committee (GAC) from 2005-2007 and served on the league’s board of directors for nine years. “The Wisconsin league and CUNA really deserve kudos for strengthening Wisconsin credit unions’ political action effort,” he said. “During my four years as GAC chairman, we grew the program from a handful of political activists to more than 400.” Before driving to the Twin Cities on Monday, Marohn said he cleared his freelance RNC reporting duties with his employer and the league. The daily radio interviews--conducted via cell phone--were a result of contacts he made during a previous career as a deejay. Marohn was once known on the Madison airwaves as “Robin Bannks.” “That’s ‘Bannks’ with two Ns,” he says. “Who would’ve thought with an air name like that I’d eventually work for credit unions.” At the RNC this week, Marohn has followed closely the Wisconsin Republican delegation during meetings with U.S. Rep. Paul Ryan (R-Wis.), former Bush advisor Karl Rove, and former Wisconsin Gov. Tommy Thompson (R). “Credit unions worked very closely with Gov. Thompson--he actually recognized me during the meeting yesterday,” said Marohn. “This is the best three-day vacation I’ve had in years,” he said. “There’s no better place to be if you’re a political junkie--I just wish I would have gone to Denver for the Democratic convention.”

Inside Washington (09/03/2008)

 Permanent link
* WASHINGTON (9/4/08)--The Federal Housing Authority has published notice in the Federal Register that it will impose a one-year moratorium as of Oct. 1 on risk-based premium pricing structure it was poised to set for most Title II single-family mortgage loans. The implementation delay is because of a provision in the Housing and Economic Recovery Act of 2008, signed into law on July 30, which the FHA said places the one-year moratorium on FHA's implementation and carrying out of its risk-based premium structure ... * WASHINGTON (9/4/08)--The Department of Housing and Urban Development (HUD) announced a 90-day foreclosure moratorium in 34 parishes throughout Southern and Central Louisiana to help homeowners and other low-income renters affected by Hurricane Gustav. HUD recommends that loan servicers take action such as special forbearance, loan modification, refinancing and a late charges waiver. HUD also is offering its National Housing Locator System, which combines vacant sales and rental housing data from federal housing resources and three commercial apartment locations ... * WASHINGTON (9/4/08)--The Federal Deposit Insurance Corp. (FDIC) also announced guidance to help financial institutions and to facilitate recovery in Alabama, Mississippi, Louisiana and Texas after Hurricane Gustav .... * WASHINGTON (9/4/08)--The Internal Revenue Service is providing tax relief to victims of Hurricane Gustav in affected areas of Louisiana by postponing deadlines for taxpayers until Jan. 5, 2009. The postponement applies to return filing, tax payment and other time-sensitive acts due between Sept. 1 and Jan. 5, 2009. This includes individual estimated tax payments due Sept. 15, corporate extended 1120 tax returns due Sept. 15 and individual extended 1040 tax returns due Oct. 15 ...

Minn. Colo.Wyo leagues host event to thank RNC delegates

 Permanent link
ST. PAUL, Minn. (9/4/08)—To recognize and thank Republican National Convention
Minnesota Senate Minority Leader David Senjem (R-Rochester) speaks with Minnesota Credit Union Network Board Chair Harry Carter (right) of TopLine FCU at the Summer Soiree in St. Paul Tuesday (Photo provided by Minnesota Credit Union Network)
delegates, the Minnesota Credit Union Network (MnCUN) and Credit Union Association of Colorado & Wyoming co-hosted a Summer Soiree in St. Paul on Sept. 2, along with the Credit Union National Association and other credit union sponsors. More than 200 delegates from Minnesota, Colorado, and Wyoming attended the gathering. CUNA Mutual Group and the Corporate Credit Union Network were also sponsors of the event. Also in attendance at the reception were Minnesota State Senate Minority Leader Dave Senjem (R-Rochester), a long-time supporter of credit unions, and the chairman of the Republican Party of Minnesota, Ron Carey. “The Minnesota Credit Union Network was honored to thank the convention delegates in this small way. We are grateful for the time they donate to the political process as they represent and speak on behalf of their communities,” said President/CEO, Mark Cummins of the MnCUN.

NCUA opinion on suspension of services

 Permanent link
WASHINGTON (9/4/08)—The National Credit Union Administration (NCUA) has no prohibition against a federal credit union applying the same “suspension of services” policy to a member who presents a risk of potential loss to the credit union as it does to an abusive member. However, the agency warns that the Equal Credit Opportunity Act (ECOA) may have an impact on a proposed policy. In its legal opinion letter 08-0431, the agency noted that, generally, a federal credit union may suspend services to a member if it complies with the Federal Credit Union Act (FCU Act). The act grants all members two basic rights: the right to maintain a share account and the right to vote at annual meetings. “However, nothing in the FCU Act or (NCUA) rules and regulations precludes an FCU from restricting the availability of certain services, provided there is a rational basis. A rational basis exists when there is a relationship between the risk to a credit union and the restriction of services,” wrote Associate General Counsel Sheila Albin in the letter. She added, “We caution, however, that any suspension of services policy should be in writing and an FCU should make its membership aware of the policy before it is enforced against any individual.” The NCUA letter also pointed out that contract provisions and federal and state laws may limit a federal credit union’s ability to deny certain services to members; specifically that ECOA may have an impact on a proposed policy. That law is intended to promote the availability of credit to all creditworthy applicants, regardless of race, color, religion, national origin, sex, marital status or age. “(P)olicies that are facially neutral may be prohibited under the ‘effects test.’ Under the ‘effects test,’ a policy is discriminatory if it has a negative impact on a protected class of persons, even if there is no intent to discriminate,” the NCUA letter said, and suggested a credit union consult counsel to determine the applicability of ECOA and whether a policy would have a discriminatory effect if implemented.

Large California CU placed in conservatorship

 Permanent link
ALEXANDRIA, Va. (9/4/08)—The National Credit Union Administration (NCUA) has been named conservator of state-chartered Valley CU, San Jose, Calif., to ensure safe and sound credit union operations and continuing service to members. The California Division of Financial Institutions appointed NCUA as conservator because of the declining financial condition of the $257 million-asset credit union, according to an NCUA release. The credit union has almost 27,000 members, three branch offices, and was originally chartered in 1953 to serve telephone company employees. In announcing it accepted the role of conservator, the NCUA noted that member accounts are insured to at least $100,000 while IRA and KEOGH retirement accounts are insured up to $250,000 under coverage provided by the National Credit Union Share Insurance Fund (NCUSIF). The NCUSIF, the agency reminded, is backed by the full faith and credit of the Unite States government. The NCUA added that excess insurance protection is currently provided by private insurer American Share Insurance of Dublin, Ohio. Members with questions about their insurance coverage can contact NCUA’s Region V Division of Insurance at 602-302-6000 Monday through Friday during business hours. Use the resource link below to access the NCUA website.

Fryzel picks his chief of staff

 Permanent link
ALEXANDRIA, Va. (9/4/08)—Sarah Vega, a former director of the Illinois Department of Financial Institutions, has been named as chief of staff and senior policy advisor by National Credit Union Administration (NCUA) Chairman Michael Fryzel. The appointment is effective Sept. 10. Vega will advise the new NCUA chairman on the full range of issues before the NCUA and oversee the day-to-day management of his office. “Sarah Vega will bring a wealth of knowledge and experience to this role. I am very pleased that she has chosen to continue her public service in this capacity, and I am confident that she will be a tremendous asset to me and my efforts as NCUA Chairman,” noted Fryzel in his announcement. Vega served four years as director of her state’s Department of Financial Institutions, the regulatory agency responsible for licensing and examination of all state-chartered credit unions, currency exchanges, consumer-installment lenders, sales finance companies, title insurance companies, money transmitters, foreign exchange offices, and debt management firms in Illinois. The new NCUA chief of staff also was administrator of the department’s Credit Union Division for 10 years. The division regulates Illinois state-chartered credit unions. Additionally, Vega served as chairman of the National Association of State Credit Union Supervisors, is a former member of the board of directors of the Federal Home Loan Bank of Chicago, and is a member of the Illinois Bar. Credit Union National Association (CUNA) Deputy General Counsel Mary Dunn welcomed the announcement saying CUNA has enjoyed working with Vega as an Illinois regulator and looks forward to working with her at the NCUA. "There are many issues that are pending at NCUA and Sarah's background and experience will be very useful for the agency," Dunn added. Vega fills the position vacated recently by Peter Barrett, who was former Chairman JoAnn Johnson’s senior policy advisor.

CUNA microblogging on RNC events

 Permanent link
WASHINGTON (9/4/08)—Credit Union National Association (CUNA) Editorial Communication Vice President David Klavitter posts comments and observations almost minute by minute at the Republican National Convention (RNC), which started Monday, ends Thursday, in Minneapolis-St. Paul, Minn. Credit unions are encouraged to check in on Twitter, a microblogging service, to get the latest credit union take on happenings at the RNC this week, as they did last week at the Democratic National Convention in Denver. Twitter allows instant, extremely short online postings--limited to no more than 140 characters each. CUNA staff and volunteers, state leagues and corporates, attending both national conventions, aim to raise the profile of credit unions during the high-profile political events. Use the resource link below to stay up-to-date.

GOP reps tour low-income CU facility during RNC

 Permanent link
ST. PAUL, Minn. (9/3/08)--Two members of Congress took time out of their busy schedules Tuesday during the Republican National Convention to visit a credit union branch located in a low-income area of St. Paul, Minn.
Click for slide showUS Federal CU President/CEO Bill Raker (from left), U.S. Rep. Jim Ramstad (R-Minn.) and Minnesota Credit Union Network President/CEO Mark Cummins discuss Eastside Financial Center services yesterday during a ceremony at the facility. “We need more of these in other neighborhoods,” said Ramstad. CLICK TO VIEW MORE SCENES FROM CUs AT YESTERDAY’S RNC (Photo provided by CUNA)
U.S. Reps. Jim Ramstad (R-Minn.) and Michelle Bachmann (R-Minn.) toured and heard stories from those whose lives were improved by the Eastside Financial Center--an alliance between U.S. Federal CU of Burnsville, Minn., Thrivent Financial, and Lutheran Social Services of Minnesota. The center opened in January and is a not-for-profit alternative to check cashers and payday lenders who frequently charge predatory rates and do little to promote savings, money management and financial independence. According to U.S. Federal CU President/CEO Bill Raker, the credit union operates a branch within the center, offering a “full menu of products complemented by specific services designed to meet the needs of the local neighborhood.” Those services include check cashing, bill payment, remittance services, and access to affordable, short-term emergency loans. During the center’s first six months of operation:
* 282 new members have joined U.S. Federal CU and opened savings accounts at the Eastside Financial Center branch; * 57 people have received bundled services in financial counseling, employment coaching and public benefits access and are working toward financial stability; * 32 families have opened individual development accounts, which offers a three to one matched savings account for the purchase of a first-time home, starting a small business or higher education; and * 222 people have received financial counseling related to budgeting, credit and debt management.
In his remarks, Ramstad praised the facility’s work calling it “important.” “We should replicate this in other neighborhoods,” Ramstad told Raker and Minnesota Credit Union Network President/CEO Mark Cummins. He said this work is not a “hand out, but rather a hand up.” Rep. Bachmann said the center’s mission is the focus of her interests in Congress--a reason she fought to earn a slot on the House Financial Services Committee. Attendees of yesterday’s ceremony also heard testimonials from two individuals whose financial lives were improved through participation in the Eastside Financial Center’s products, services and training.

Inside Washington (09/02/2008)

 Permanent link
* WASHINGTON (9/3/08)--For a market economy to work best, individual institutions must be allowed to fail, Thomas M. Hoenig, president of the Federal Reserve Bank of Kansas City, said Monday in a speech in Buenos Aires. Economies also must find a balance between financial stability and a stable price environment and in doing so must let institutions fail, he said. “The ‘too big to fail’ issue will only grow in importance as the consolidation of the financial industry grows both in size and scope in future decades,” he concluded ... * WASHINGTON (9/3/08)--The Federal Deposit Insurance Corp. (FDIC) announced that its general counsel, Sara Kelsey, will retire on Oct. 31. She has served as general counsel the past two years. Before joining the FDIC, Kelsey served as deputy superintendent and general counsel of the New York State Banking Department; counsel at Skadden, Arps, Slate, Meagher and Flom; and as senior vice president and associate general counsel at Chase Manhattan Bank. She began her career with the Board of Governors of the Federal Reserve System in Washington, D.C., in 1976 ...

NCUA posts Hurricane Gustav information

 Permanent link
ALEXANDRIA, Va. (9/3/08)—On its website, the National Credit Union Administration (NCUA) has posted Hurricane Gustav recovery information for credit unions and their members, information that is modeled on resources disseminated after Hurricanes Katrina and Rita three years ago. The information includes, in English and Spanish, presidentially declared disaster areas and U.S Postal service links, among other information. Use the resource link below to access the NCUA posting.

Dates set for 75th FCUA anniversary event

 Permanent link
WASHINGTON (9/3/08)—National Credit Union Administration (NCUA) board member Gigi Hyland announced the date of her free, two-day symposium recognizing the 75th anniversary of the signing of the Federal Credit Union Act (FCUA). It will be held here on Capitol Hill June 9-10. The event, celebrating 75 years of federal credit union history while providing a forum to discuss the future of federal credit unions in the 21st century, will be held at the Hyatt Regency Washington. The program agenda will focus on the current financial marketplace, the importance of federal deposit insurance, opportunities for credit unions to serve all segments of their field of membership and opportunities for modernization of the FCUA, according to an NCUA announcement. The FCUA was signed into law by President Franklin D. Roosevelt on June 26, 1934. The symposium will be one in a series of commemorative efforts the NCUA plans to undertake to highlight the landmark anniversary. Celebration of the 100th anniversary of America's credit unions, the 75th anniversary of the FCUA, and the 75th anniversary of Credit Union National Association (CUNA) will all be a major focus of CUNA's 2009 America's Credit Union Conference & Expo June 21-24 in Boston, Mass., next year. "We will be pulling out all the stops to make next year's America's Credit Union Conference an historic event in one of the nation's most historic cities," commented CUNA President/CEO Dan Mica.

Fin Lit Honor Roll comments sought

 Permanent link
WASHINGTON (9/3/08)—Credit unions are being asked what they think about a U.S. Treasury Dept. plan to initiate the Workplace Financial Education Honor Roll Program, which would recognize employers who establish and maintain successful educational programs. The program is meant to encourage financial literacy in the workplace by highlighting successful initiatives that show the benefits of financial education through both private sector and public sector efforts. It will be administered by the Treausury’s President's Advisory Council on Financial Literacy. Information regarding those involved in the Honor Roll Program will be collected through an application form. The submitted information will be used to evaluate and assess the effectiveness of employer financial education programs and determine which employers will make the Honor Roll. The collection process will:
* Be conducted on a annual voluntary basis; and * Include brief narrative descriptions on the types of financial education programs being offered to employees.
CUNA is asking credit unions to comment on elements of the Honor Roll program by Oct. 15. CUNA seeks specific comment on the following areas:
*Is the proposed method of gathering information the most efficient? Are there other, similar methods of collection that may prove more effective? * Any suggestions to better structure and implement the Honor Roll Program? * Does the initial burden estimate of six hours sound accurate? * Aside from the collection process, are there any general concerns regarding the Honor Roll Program itself? * Other comments or concerns regarding the Honor Roll Program and its method of collecting data for participants.
Comments in response to Treasury’s proposed Honor Roll Program are due by October 27. Use the resource link below to access CUNA’s Comment Call.

CUNA Twitters to keep readers current on RNC

 Permanent link
WASHINGTON (9/3/08)--Credit Union National Association (CUNA) Editorial Communication Vice President David Klavitter posts comments and observations almost minute by minute at the Republican National Convention (RNC), which started Monday in Minneapolis-St. Paul. Credit unions are encouraged to check in on Twitter, a microblogging service, to get the latest credit union take on happenings at the RNC this week, as they did last week at the Democratic National Convention in Denver. Twitter allows instant, extremely short online postings--limited to no more than 140 characters each. CUNA staff and volunteers, state leagues and corporates. attending both national conventions, aim to raise the profile of credit unions during the high-profile political events. Use the resource link below to stay up-to-date: Follow Klavitter on Twitter.

Convention delegate a lawmaker long-time CU member

 Permanent link
ST. PAUL, Minn. (9/3/08)--You could say politics is in the blood of Republican National Convention delegate Dave Senjem, a long-time credit union member and former board member in Minnesota. His dad was a mayor and his great-grandfather was a legislator. Senjem started in politics in 1992 by serving on the Rochester, Minn., city council for 11 years. Senjem (R-29) was elected--after a seat became available--to the Minnesota Senate in 2002 by winning a three-person race. He has been the Senate minority leader since 2006. “You become involved in politics because of a deeply ingrained feeling of community service, of giving back, and making the earth a better place,” Senjem told News Now last week in advance of the convention.
Click for slide showMinnesota State Senate Minority Leader Dave Senjem (R-Rochester) during yesterday’s Summer Soiree hosted by the Minnesota Credit Union Network and the Credit Union Association of Colorado. A delegate to the Republican National Convention, Senjem served as a credit union board member for 23 years. The Tuesday event provided credit unions an opportunity to meet the GOP delegates. CLICK TO VIEW MORE SCENES FROM CUs AT YESTERDAY’S RNC (Photo provided by CUNA)
As a political leader, Senjem declared for John McCain months ago and “that has not changed,” Senjem said. He’s looking forward to seeing and hearing McCain at the convention. “I think the highlight of the convention will be a strong coming together of the Republican party around John McCain,” Senjem said. “There’s a sense of excitement that this nation will follow a man of deep commitment and experience. I’m excited because this is my first convention, and John McCain has been a good friend of Minnesota.” On a lighter note, Senjem said he has been invited to more parties at the convention than he can possibly attend. “Receptions are being put together by the NFL and major corporations and the list goes on, including a reception by the credit union movement on Wednesday that I plan on attending,” he said. Senjem, who became an employee of the Mayo Clinic in Rochester, Minn., in 1964, joined the Mayo Clinic Employees CU in the mid 1970s when he sought a car loan. Senjem subsequently served 23 years on the credit union board of directors--until 2002. The credit union subsequently went to a federal charter and became Mayo Employees FCU. He has worked for the Mayo Clinic for 44 years and will retire next year. Senjem now serves as the environmental affairs officer at the Mayo Clinic. In his time with the credit union, Senjem has seen it grow from $5 million in assets to more than $200 million. Today it has $310 million in assets. “It’s a fabulous organization that does so much for so many in terms of financial security-- in a homespun and wonderful way,” Senjem said. “I think credit unions are the greatest organization on earth in terms of what they do and how they do it every day,” he concluded. “Being a part of a credit union has been a marvelous opportunity for me.”

Second wounded veteran receives new home from CUs

 Permanent link
WOODBURY, Minn. (9/2/08)--In the culmination of a project that kicked off in Minnesota nine months ago, Minnesota Gov. Tim Pawlenty (R), the Credit Union National Association and state credit union leagues yesterday gave Sgt. Marcus Kuboy the keys to his new house in Woodbury, Minn.
Click for slide showSgt. Marcus Kuboy, who was injured by an improvised explosive device while serving in Iraq, thanks credit unions for their efforts in the Homes for Our Troops project. (Photo provided by Tom Cherrey)
This home is specially-adapted to meet the unique needs of Sgt. Kuboy, who was injured while serving in Iraq. Homes for Our Troops, the Minnesota Credit Union Network, the Republican National Convention staff and National Journal constructed the house for Sgt. Kuboy since the groundbreaking in April. A nationwide fundraising effort among state credit union leagues, individual credit unions and credit union system partners including Co-Op Financial Services and the Corporate Credit Union Network raised over $350,000 for the Sgt. Travis Strong and Kuboy homes. CUNA and National Journal also worked with Homes for Our Troops and the Democratic National Convention Committee on a companion project for a veteran’s home in conjunction with the Democratic National Convention. The keys for the Denver home were presented on Aug. 28 during the Democratic National Convention.

CUNA supports new Reg C threshold

 Permanent link
WASHINGTON (9/2/08)—The Credit Union National Association (CUNA) supports a Federal Reserve Board proposed rule to amend Regulation C, the Home Mortgage Disclosure Act (HMDA), by revising the threshold for reporting price information on higher-priced loans. In a comment letter, CUNA said noted that the Fed’s proposed change would bring the regulation in line with recent Regulation Z mortgage lending final rules. Regulation C currently requires lenders to report to regulators annually the spread between the annual percentage rate (APR) on a loan and the yield on comparable Treasury securities if the spread is at least three percentage points for first-lien loans or five percentage points for subordinate-lien loans. Under this proposal, a lender would report the spread if the loan APR exceeds an average of comparable prime mortgage rates by at least 1.5 percentage points for first-lien loans or 3.5 percentage points for subordinate lien loans. By making the threshold identical in both regulations, it will help ease the compliance burden of credit unions and other lenders that must follow the regulations, according to CUNA. However, CUNA also noted its concern that the proposed Jan. 1, 2009 implementation date will not provide sufficient time for lenders to make necessary programming changes. CUNA said the short timeframe “will be even more of a challenge in the current regulatory climate in which the Board and other federal financial institution regulators have issued a significant number of new, complex consumer protection rules over the past several years and will issue several more in the near future.” Use the resource link below to read the CUNA’s entire comment.

CUNA mini blog keeps readers current on RNC

 Permanent link
WASHINGTON (9/2/08)--Credit Union National Association (CUNA) Editorial Communication Vice President David Klavitter posts comments and observations almost minute by minute at the Republican National Convention (RNC). which started Monday in Minneapolis-St. Paul. Credit unions are encouraged to check in on Twitter, a microblogging service, to get the latest credit union take on happenings at the RNC this week, as they did last week at the Democratic National Convention in Denver. Twitter allows instant, extremely short online postings--limited to no more than 140 characters each. CUNA Staff and volunteers, state leagues and corporates. attending both national conventions, aim to raise the profile of credit unions during the high-profile political events. Use the resource link below to stay up-to-date: Follow Klavitter on Twitter.

UBIT issues Quarterly filing court date

 Permanent link
WASHINGTON (9/2/08)—State-chartered credit unions filing Internal Revenue Service (IRS) Form 990-Ts, the "Exempt Organization Business Income Tax Return," and paying unrelated business income taxes (UBIT), will want to consult their accountants or tax advisors to discuss the need to file quarterly estimated tax returns on UBIT income, advises the Credit Union National Association (CUNA). That consultation should be pursued, CUNA says, whether the credit union has filed a 990-T or plans to do so for 2008. CUNA has learned that a handful of credit unions have been told by the IRS that they may be subject to interest or penalties if they fail to submit quarterly estimated tax reporting in years when they file, or expect to file, a 990-T form. At least one credit union received a notice after it filed a 990-T form for the first time in May 2008, for the 2007 tax year, stating that it not only had failed to include the UBIT tax payment due but also that it was being penalized for having not begun quarterly estimated tax reporting by April 15, 2007. The April date would have been 13 months before the credit union filed its first 990-T form and only a few weeks after the IRS issued its first technical advice memoranda (TAMs) taking the position that UBIT is due on the income from certain credit union products and services. CUNA says fair or not, the law is applied strictly and there is no "reasonable cause" excuse for failure to pay estimated taxes. “Unfortunately, the tax law and the 990-T instructions state that ‘generally, an organization filing Form 990-T must make installment payments of estimated tax if its estimated tax is expected to be $500 or more," says Eric Richard, CUNA general counsel. Estimated tax is tax minus allowable credits, and the applicable section of the tax code is 26 USC Section 6655(g)(3). CUNA advises that IRS Form 990-W can be used to help figure estimated UBIT liability. The estimated tax is due April 15, June 15, September 15, and December 15 for the tax year. “Whether there will be any broad effort by the IRS to enforce quarterly UBIT reporting is unknown, which is why it is important for state-chartered credit unions filing 990-T forms to discuss this issue with their accountants,” said Richard. On a related topic, a trial date of Aug. 31, 2009, has been set for Bellco CU vs. the Internal Revenue Service, a case filed earlier this year to challenge the government’s policies on UBIT issues. Bellco, of Greenwood Village, Colo., is seeking a refund of $199,000, based on UBIT taxes paid for 2000, 2001 and 2003. The Colorado credit union refund claim is based on income generated primarily through sales of credit life and credit disability insurance over those three tax years. Revenue generated from sales of accidental death and disability insurance, and the credit union's involvement with CFS Member Financial Services, a credit union service organization, were included under the 2003 refund claim. The Bellco lawsuit was the second filed by a credit union on UBIT issues this year. In January, Community First CU, Appleton, Wis., filed a complaint in federal court challenging the IRS on its determinations that certain insurance products offered to members fall outside the credit union's main mission and are subject to UBIT. The UBIT Steering Committee, comprised of CUNA, CUNA Mutual Group, the American Association of Credit Union Leagues, and the National Association of State Credit Union Supervisors, strongly supports the credit unions’ efforts.

Final DNC speaker lineup featured heavy CU hitters

 Permanent link
DENVER (9/2/08)—Those keeping score of Thursday’s Democratic National Convention speaker lineup would have noticed each House member had a common credit union streak: With the exception of House Speaker Nancy Pelosi (D-Calif.), each was a cosponsor of the Credit Union Regulatory Improvements Act (CURIA, H.R. 1537). While the Speaker of the House generally does not co-sponsor legislation, these seven CURIA co-sponsors spoke in advance of Democratic presidential candidate Barack Obama’s acceptance speech Thursday at Invesco Field in Denver:
* Mark Udall (D-Colo.); * John Lewis (D-Ga.); * Diana DeGette (D- Colo.); * John Salazar (D-Colo.); * Ed Perlmutter (D-Colo.); * Jan Schakowski (D-Ill.); and * Louis Gutierrez (D-Ill.).
According to Credit Union National Association Legislative Affairs Vice President Ryan Donovan, the convention’s final night is generally reserved for the party's most well respected and influential members. “Credit unions should be very proud of that,” said Donovan. “It is a terrific illustration of the influence credit unions have developed with leaders in the House of Representatives as well as the success of our grassroots advocacy programs."

Inside Washington (09/01/2008)

 Permanent link
* WASHINGTON (9/2/08)—Along with the eight credit unions who received a total of $4.2 million in assistance from the U.S. Department of the Treasury's Community Development Financial Institutions (CDFI) Fund (News Now Aug. 29), an additional five credit unions were awarded technical assistance grants bringing the credit union totals to 13 credit unions and $4.4 million in funds. Also, when including the Financial Assistance award to the National Federal of Community Development Credit Unions, the totals are 14 credit union organizations and $5.4 million in CDFI assistance. CDFI Director Donna Gambrell last week announced more than $54 million in awards for 89 organizations serving economically distressed communities across the nation … * WASHINGTON (9/2/08)—The Federal Deposit Insurance Corp. (FDIC) Friday announced it had become receiver of $1.1 billion-asset Integrity Bank, Alpharetta, Ga., after that institution was closed by the Georgia Department of Banking and Finance. The FDIC approved the assumption of Integrity’s $974.0 million in total deposits by Regions Bank, Birmingham, Ala. All depositors of Integrity Bank, including those with deposits in excess of the FDIC's insurance limits, will automatically become depositors of Regions Bank for the full amount of their deposits, and they will continue to have uninterrupted access to their deposits, the FDIC said in its announcement. Depositors will continue to be insured with Regions Bank so there is no need for customers to change their banking relationship to retain their deposit insurance, the agency reminded. The failed bank's five offices will reopen today as branches of Regions Bank, but temporarily customers of both banks are advised to use their existing branches until Regions Bank can fully integrate the deposit records of Integrity Bank. Regions Bank agreed to pay a total premium of 1.012%t for the failed bank's deposits. In addition, Regions Bank will purchase approximately $34.4 million of Integrity Bank's assets, consisting of cash and cash equivalents. The FDIC will retain the remaining assets for later disposition… * WASHINGTON (9/2/08)--Federal Insurance Deposit Corp. Chairman Sheila Bair was named the U.S.’s most powerful woman by Forbes (Aug. 29). Bair was No. 2 on the list of the world’s 100 most powerful women, second to Germany’s Chancellor Angela Merkel ... * WASHINGTON (9/2/08)--The Federal Reserve Board and Security Pacific Bancorp of Los Angeles signed an agreement to maintain financial soundness of Security Pacific. Under terms of the agreement, Security Pacific cannot: take dividends or any other form of payment representing a reduction in capital from the bank without approval from the Fed; declare or pay dividends unless the declaration or payment is consistent with the Fed’s policy statement on cash dividends; and make any distributions of interest, principal or other sums on subordinated debentures without approval of the Fed ... * WASHINGTON (9/2/08)--The Treasury Department has distributed 2.404 million stimulus payments, totaling $1.5 billion, since mass disbursement of the payments ended July 11. As of the end of August, 114.809 million payments have been distributed, totaling $93.389 billion ...