CU-Backed Candidate To Face Ex-ABA Lobbyist
BOISE, Idaho–A credit union-backed candidate here has won a Republican primary to fill the Senate seat vacated by retiring Sen. Larry Craig (R-ID.) Idaho Lt. Gov. Jim Risch will now face Democrat Larry LaRocco, who is a former lobbyist with the American Bankers Association, in the fall election. The Credit Union Legislative Action Council and the Idaho Credit Union League were involved in Risch's campaign.
Patelco Reaches Deal To Assist Troubled Sterlent
SAN FRANCISCO–Patelco CU, which agreed last week to acquire the remains of failed Cal State 9 CU (see related story, page 3), said last week it reached a preliminary deal to assist Sterlent CU, another California credit union left on the brink from mortgage lending.
“As a much larger and more highly capitalized credit union, Patelco has the depth to provide Sterlent with additional experienced support and resources sorely needed in these turbulent times," Andy Hunter, president of the $4-billion Patelco said in a statement. "Patelco’s role now is to assist Sterlent’s management team in their continued efforts to provide stable member services and stem future losses wherever possible and that is what we intend to do."
The two credit unions said they will disclose the details of the initiative after it is reviewed and approved by regulators.
Sterlent, beset by high delinquencies in its home equity loan portfolio, has accruing losses of $4.8 million for 2007, then of $5.5 million for the first quarter of 2008, erasing all of its equity.
S&Ls Continue To Report Losses Due To Mortgages
WASHINGTON–The ongoing mortgage crisis continued to take its toll on the nation’s savings and loans, which reported a $617- million loss for the first quarter.
The 831 S&Ls set aside a record $7.6- billion to cover losses on problem loans in the first quarter as the mortgage crisis deepened. The thrifts set aside $5.5 billion for loan losses in the previous quarter and $1.2 billion in the first quarter of 2007.
The first quarter losses, however, were an improvement from the fourth quarter when the S&Ls lost $8.75 billion as they moved billions of additional funds into loan loss reserves.
John Reich, director of the Office of Thrift Supervision, lamented the first quarter losses but said the increase in loan loss reserves should strengthen the S&Ls. “This forceful response to the housing market crisis continues to depress industry earnings, but it also strengthens institutions to withstand future challenges,” Reich said.
Senate Eyes Card Interchange Fees
WASHINGTON–In what is expected to be a preliminary step prior to introduction of a new bill, several U.S. senators called on Visa and MasterCard to make full disclosure of the fees charged during credit and debit card transactions.
The fee structure, the target of reform efforts in the House, has come under increasing criticism even as the two card giants have posted partial summaries on the Internet. Merchants, who are required to charge the fees to customers at an estimated $42 billion last year, claim the two cards giants set the fees in tandem, in violation of antitrust laws. They want the ability to negotiate their own fees, with a federal panel overseeing the bilateral negotiations.
Interchange fees have become a lucrative revenue source for CUs, which earned more than $3 billion in such income last year. In letters sent to Visa and MasterCard, the senators demanded information by June 3 about methodologies and specific data used to establish interchange fees. The letters were signed by Democrats Richard Durbin of Illinois and Herb Kohl of Wisconsin, and Republicans Olympia Snowe of Maine and Arlen Specter of Pennsylvania.
The letters follow hearings in the House Judiciary Committee on a bill that would allow a large merchant, such as Wal-Mart, to negotiate its own fees and have a three-person federal panel oversee the process. The huge amount of interchange fees paid by its customers have prompted Wal-Mart to seek its own bank charter in order to bypass the interchange system, but the company abandoned the plans because of vehement opposition by banks and consumer groups.
During the House hearings, representatives from Visa and MasterCard insisted the fees were set without consultation, even though they are very similar and that most, but not all, of the fee information is readily available over the Internet.
But the retailers claim some of the most important fees still are not public and the method in which they are disclosed on the Internet is difficult to understand.
