NCUA GOES TO WORK ON IMPLEMENTING BANK REFORM

ALEXANDRIA, Va.-NCUA has already begun analyzing the more than 2,300 pages of the bank reform bill in preparation for the numerous provisions that will have to be adopted for credit unions, like those covering the permanent increase in deposit insurance coverage; executive compensation; remittance transfers and appeals of conflicting supervisory determinations on consumer protection.

The bill, which will create a new oversight scheme for too-big-to-fail financial institutions, regulate financial derivatives and Wall Street rating agencies and develop a consumer financial protection bureau, was signed into law by President Obama last week.

While credit unions have focused on the interchange amendment that will regulate fees on debit card transactions, NCUA must write its own rules for credit unions on a variety of provisions. "NCUA has reviewed the new law and will begin drafting implementing rules on the timetable specified by its provisions," said John McKechnie, spokesman for the agency.

Among the provisions requiring NCUA adaptations are:

Title III: makes $250,000 deposit insurance permanent standard. NCUA will need to amend its regulations accordingly. Also, the bill authorizes NCUA to fully insure the net amount maintained in noninterest-bearing transaction accounts in addition to other share insurance coverage. NCUA must change its rule there too.

Title IX: requires NCUA, the Federal Reserve, OCC, FDIC and other federal regulators, to jointly set regulations requiring regulated entities with assets of $1 billion or more to disclose the structures of all incentive-based compensation arrangements if those arrangements provide excessive compensation or could lead to material financial loss.

Title X: is the consumer protection portion of the bill and includes a section called Appeals of Conflicting Supervisory Determinations that provides for NCUA to have a representative on the panel to hear appeals by credit unions on certain unresolved disputes between the Bureau of Consumer Financial Protection and the prudential regulator (Fed, FDIC, OCC, or NCUA, as the case may be) over supervisory actions resulting from examinations of banks, savings associations, and credit unions with assets over $10 billion. Section 1073 on remittance transfers requires NCUA (and the federal banking agencies) to provide guidelines (not regulations) to financial institutions under their jurisdiction regarding the offering of low-cost remittance transfers.

 

SOME-TIME CU FOE COULD HEAD CONSUMER PROTECTION AGENCY

WASHINGTON-Harvard law professor Elizabeth Warren, a long-time consumer advocate and some-time critic of credit unions and banks, is widely seen as the frontrunner to be the first director of the Consumer Financial Protection Bureau the new bank reform bill will create inside the Federal Reserve.

Warren, one of the originators of the idea for the consumer protection agency, has often fought credit unions and banks on consumer issues, particularly the long battle over bankruptcy reform, which she opposed. Warren, 61, is also the current chair of the panel overseeing the Troubled Asset Relief Program, or TARP.

The credit union lobby originally opposed the creation of the consumer agency but softened its opposition after Congress agreed to exempt all institutions under $10 billion (all but three credit unions) from being examined by the agency. Those credit unions under $10 billion instead will continue to be examined for compliance with consumer regulations by their current regulator, either NCUA or state credit union supervisors. But all credit unions will have to comply with any new regulations to be written by the new agency, which will also have ultimate supervisory authority if the current credit union regulator fails to act to enforce a violation.

NAFCU President Fred Becker, who opposed credit unions being brought under the new consumer agency, said he has met Warren and talked to her on several occasions. "She is one of an apparent short list of candidates and I am confident she will get careful consideration," said Becker.

Among the other candidates to head the new consumer agency are Michael Barr, the well-known assistant Treasury Secretary who helped guide the bank bill through Congress and is considered a friend of credit unions, and Eugene Kimmelman, a former consumer advocate and currently chief counsel for competition policy and intergovenmental relations at the Justice Department.

 

SIX MORE BANKS SHUTTERED, MAKING 96 FAILURES IN 2010

WASHINGTON-Regulators closed six more banks recently, including three in Florida, two in South Carolina and one in Michigan, making 96 bank failures so far in 2010.

The assets of two of the failures, $442-million Miami-based Metro Bank of Dade County and $264-million Aventura, Fla.-based Turnbery Bank, were acquired by a private equity company, NAFH National Bank of Miami, marking the increasing sales of failed banking assets by the FDIC to private capital.

Among the most recent failures were: $682-million First National Bank of the South, in Spartanburg, S.C.; $377-million Woodlands Bank, Bluffton, S.C.; $169-million Olde Cypress Community Bank, Clewiston, Fla.; and $97-million Mainstreet Savings Bank, Hastings Minn.

There have been 18 credit union failures so far this year.

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