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Banks Ask For Regulatory Relief

WASHINGTON-Representatives of the banking community called on Congress last week during hearings before the Senate Banking Committee for dozens of regulatory relief provisions, many of which would gut existing consumer protection laws.

Dale Leighty, chairman of the Independent Community Bankers Association of America and president of First National Bank of Las Animas, Colorado, suggested Congress repeal of ease consumers' three-day right of rescission for mortgages; cut back disclosure requirements for the Truth-In-Lending Act; and increase consumer liability for electronic funds transfer from $50 to $500. A witness representing America's Community Bankers, the S&L trade association, urged that numerous provisions be included in the soon-to-be drafted relief measure that would expand S&Ls ability to make auto and business loans, make loans to insiders.

A regulatory relief bill has passed the House but has yet to be introduced in the Senate, making it unlikely a measure will be passed this year.

CUs Preparing For Rising Rates

WASHINGTON-The credit union movement is preparing itself for higher interest rates when the Federal Reserve's Open Market Committee meets this week. Credit union economists are projecting slight hikes in the benchmark overnight rate, a broad determinant in the market.

Tun Wai, chief economist for NAFCU, predicted the Fed will raise short-term rates by 25 basis points (a quarter-percent) next week, and by as much as 100BPs over the next year, in an effort to tamper rising inflation. That could be goods news for credit unions, he suggested.

"Loans (rates) will actually go up, so it will release some pressure (on margins)," said Wai.

Interest rates have hovered near 50-year lows for the past year since the Fed lowered the target rate on overnight Fed Funds to 1%. The Fed's action has not only pushed down mortgage rates to decades-lows, but prompted credit unions to slash their savings rates to all-time lows, with the benchmark rate on regular shares holding well below 1%, at 0.75%.

Ex-Branch Manager Sentenced

FORT WAYNE, Ind.-A former branch manager for Financial Partners FCU was sentenced to two years in prison and ordered to pay $197,000 in restitution for defrauding the CU. Lisa Harris, who was branch manager for the credit union from 1995 through 1999, pleaded guilty in March to bank fraud. Prosecutors said Harris made fictitious loans, some of the proceeds of which she used to pay off credit cad debt of more than $27,000.

Ex-Operations Mgr. Is Sentenced

HONOLULU-A former assistant operations manager for Hawaii USA FCU was sentenced to 18 months for bank fraud last week and ordered to make $113,000 in restitution.

Zenaida Pena, 46, of Waipahu, pleaded guilty to a scheme with which she drained the accounts of elderly credit union members she had befriended and made cashier's checks payable to herself and to her creditors. Pena misappropriated about $108,000 between May 2001 and January 2003. The restitution order covers the funds, with interest, the credit union spent to reimburse the members.

PEFCU Donates $500,000

WEST LAFAYETTE, Ind.-Purdue Employees FCU is donating $500,000, one of the biggest credit union contributions ever, to its sponsor, Purdue University, help fund construction of new tennis and golf facilities on campus. The contribution will be split equally between a new tennis and a new golf facility.

The $400-million credit union has already donated more than $144,000 to the college's $1.3 billion fundraising campaign, and has also committed to funding $20,000 in scholarships for undergraduates.

WalMart Accepting MasterCard

PURCHASE, N.Y.-MasterCard International said Monday that Walmart Stores Inc. has resumed accepting the company's signature-based debit card after discontinuing it in February. Walmart stopped accepting MasterCard's signature-based debit card at the time because of its interchange, citing high fees, security, and the greater ease of use for PIN-based debit. Sources indicate that MasterCard agreed to reduce its fees to return to the good graces of the retail giant. The card will be accepted at all Walmarts and subsidiaries.

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