Patelco CU Seeks Return To NCUSIF Insurance
SAN FRANCISCO-Patelco CU, which rocked NCUA when it became the largest credit union to convert from the NCUSIF to private insurance in 2002, is now seeking to return to the federally insured fold.
"My reaction is that the credit union has made a decision to seek application for NCUSIF. We support that decision. We support the choice," said Dennis Adams, CEO of American Share Insurance, Dublin, Ohio, which has been providing private insurance for the $4-billion Patelco. "The credit union has indicated some change in their business strategies. They're healthy and safe and so are we. We are fine with it."
Adams also added that although they hate to lose a credit union-the largest credit union ever to be privately insured-this actually helps ASI, too, for two reasons: it helps them reduce their concentration in California and it improves their equity ratio.
Giant Sallie Mae Takeover Teeters, Buyer Wants Out
RESTON, Va.-A group that agreed to acquire Sallie Mae has notified the student loan giant it no longer plans to complete the deal at under the terms of the $60-a-share agreement, throwing the $25 billion deal in doubt.
Sallie Mae, the nation's largest student lender, said it does not believe the group, led by private equity fund J.C. Flowers and bank giants JP Morgan Chase and Bank of America, has a contractual basis to repudiate the deal and it intends to pursue all remedies available to it under the law, including a $900-million break-up fee. Sallie Mae said it does not agree with the buyers that the recently passed College Cost Reduction and Access Act of 2007 amounts to a "material adverse" event that would allow the group to terminate the giant takeover. Sallie Mae estimated the new law will cut between 1.8% and 2.1% off of its net income over the next five years. Shareholders of Sallie Mae approved the deal last month during a special meeting.
CUs Seek Carve-Out in Overdraft Bill
WASHINGTON-CUNA was working with key lawmakers late last week to limit the potential effects of a bill that would bring overdraft protection fees under the Truth In Lending Act, thereby counting the fees in the interest rate.
CUNA lobbyists were working with members of the House Financial Services Committee to get the bill amended so the newly computed interest rate on overdraft protection would not violate the 18% ceiling set by NCUA. The committee put off a vote on the bill until next week because of other pressing business. Both CUNA and NAFCU insist the bill's provisions, which also include a requirement that members opt-in to the service, could force thousands of credit unions to scrap overdraft protection programs.
Market Doubts PHH Deal
MOUNT LAUREL, N.J.-Shares in PHH Corp. traded up slightly after shareholders overwhelmingly approved the takeover of the largest mortgage bank for CUs by GE Capital.
But the shares still traded 16% below the $31.50 a share price of the takeover, indicating great doubt by investors that the deal will be completed. Investors' doubts were fueled last week when private equity giant the Blackstone Group said it was having trouble raising money for its end of the buyout, an acquisition of PHH's mortgage business, which includes the remnants of CUNA Mutual Mortgage it acquired in 2005. As a result, PHH owns more than $12 billion in residential mortgages originated by credit unions and has relationships with more than 2,000 credit unions.
Under the original terms of the deal, GE Capital is supposed to buy PHH Corp. for $1.8 billion, then retain PHH's fleet management business and sell the mortgage business to Blackstone.
Regulators Collar FHLB Chicago
CHICAGO-The Federal Home Loan Bank of Chicago said it has received a cease and desist order from the Federal Housing Finance Board, which will prevent the bank from repurchasing or redeeming capital stock without the consent of the regulator.
The Chicago FHLB is currently in discussions with the Finance Board regarding the terms of a consensual cease and desist order, but we cannot predict whether the bank's board of directors and the Finance Board will reach agreement as to the terms of a consensual order, the bank reported.
