Deposit Insurance Boost Hits A Bump
WASHINGTON,D.C.-The pending deposit insurance reform bill, which would boost insurance coverage by 30%, was put in jeopardy last week when top Bush administration officials testified against the plan.
Federal Reserve Chairman Alan Greenspan told the Senate Banking Committee last week that the current $100,000 per account limit was adequate and that the proposed increase to $130,000 per account and $260,000 for retirement accounts could be harmful. An increase in coverage could encourage greater risk-taking by institutions, Greenspan told the panel.
The Fed chairman's views were echoed by a top Treasury official and the head of the FDIC, the chief banking regulator. The House Financial Services Committee overwhelmingly approved a bill earlier this month that would boost the coverage to $130,000 per account and double that amount for all retirement accounts. The credit union lobby has been slow to support the increase but has been insistent that any increase provided for banks be extended to credit unions, too.
Bill Calls For Agency To Oversee Accounting
WASHINGTON, D.C.-A bill "to prevent more Enrons" passed the House last Wednesday that would establish a regulatory agency to oversee the accounting industry. The bill leaves much of the details of implementation of such an agency up to the Securities and Exchange Commission. "It's unclear how this will impact credit unions directly, but we believe there is going to be some sort of impact long term on credit unions, whether it be reporting, new standards or this new agency," said CUNA's Pat Keefe. "At this point, the question is what's going to happen on the Senate side. (Senate Banking Committee Chair Paul) Sarbanes has indicated he might have another approach to this." NAFCU's John Zimmerman noted a survey found 72% of CUs responding indicated they work with a an outside auditing firm, and those CUs could feel an impact from any bill seeking big changes to the auditng industry.
Guarantee Can't Be Provided
ALEXANDRIA, Va.-A federal credit union may not provide a guarantee of the principal for a $600,000 deposit from the local library with a specific security for the life of the deposit, NCUA said in a new legal opinion letter. The opinion, issued to Suffolk FCU, Medford, N.Y., says an FCU may pledge loans as collateral for shares but not other assets, like securities. An FCU may pledge securities to guarantee shares for government agencies or subdivisions, but a library does not qualify as a political subdivision, NCUA said. One option would be to purchase excess share insurance, as long as the it were made available for individual accounts, too.
Loanliner.com Links To 7 Firms
MADISON, Wis.-CUNA Mutual Group has teamed up with seven data processors to create interfaces that automatically download loan data from the loanliner.com web server directly into the data processors' loan origination systems. CUNA Mutual said its software now works with CMC Flex's Loan Application Module; CUSA Technologies' Loan Workstation 3.0; SUMMIT Information System's On Line Loan Application Revised and Lender Advantage; Symitar System's Loan Application System (developed by CU Technologies Inc.); ULTRADATA Systems' FSP- ALPS; USERS' Data Safe LOS, and XP Systems' QwikLoan.
Member Indicted In Scheme
LUBBOCK, Texas-A Texas Plains FCU member was indicted by a federal grand jury on two counts of bank fraud in connection with car loans totaling $215,000 he had with the CU and nearby Lubbock National Bank. Authorities charge that Clarence Law, Jr., gave the CU a photo of a different car than the one he purchased and made false statements to obtain a $41,000 loan; inflated the appraised value of the car and forged the signature of the appraiser for an $8,000 car loan. Law is also accused of falsifying statements on $165,636 in car loans from the bank.