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BANK REFORM LAW WON'T SLOW NCUA'S CORPORATE PROPOSAL

ALEXANDRIA, Va.-NCUA is not expected to delay a final vote on its corporate credit union regulation to implement provisions of the newly passed Wall Street reform bill, including the measures requiring certain credit ratings for corporate investments, and is still expected to vote the final rule next month.

Instead, the agency is expected to implement the credit rating and other provisions within the year period allowed under the new law, rather than delay the long-sought corporate rule even more, a top agency official told Credit Union Journal.

The NCUA Board is expected to approve the corporate rule at the same time as it releases details of a plan to dispose of as much as $50 billion of toxic assets held by the corporates, the NCUA official said, but emphasized that a final decision on the timing is up to the NCUA Board.

The bank reform law enacted last month calls for reducing the influence of the three big rating agencies-Moody's Investors Service, Standard & Poor's and Fitch Ratings, which were widely discredited for giving high ratings to risky mortgage securities. But banking regulators are searching for alternatives to the credit agencies for determining the quality of investments held by banks.

NCUA's corporate proposal lays out various requirements for corporate investments that include reliance on ratings provided by the rating agencies.

The NCUA source said rather than wait any longer to pass a corporate rule they plan to pass the new rule in September and use the 12-month implementation period to amend the rule afterward. The next NCUA Board meeting is scheduled for Sept. 16.

 

MUNICIPAL DEPOSITS BILL GOES DOWN IN NEW YORK

ALBANY, N.Y.-A bill that would have allowed municipalities and other government entities to deposit funds in credit unions failed again this week, meaning the credit union lobby will have to wait until next year.

The bill, which has been introduced at least two times before, would have allowed government entities to deposit up to the federally insured $250,000 limit in federally insured credit unions.

This year's bill had the backing of Gov. David Patterson and New York City Mayor Michael Bloomberg, who had pledged $25 million in deposits for credit unions if the legislation had passed.

New York is one of several states where the legislature is mulling a municipal deposits bill for credit unions this year.

 

BANK FAILURES HIT 110 WITH CLOSURE OF PALOS B&T

CHICAGO-The FDIC recently closed Palos Bank and Trust Co., a $495-million bank in nearby Palos Heights, the 110th bank failure for 2010.

The bank was assigned to First Midwest Bank of Itasca, Ill., which agreed to share losses on the institution under a purchase and assumption agreement.

There have been 21 credit union failures so far this year.

 

SUIT CLAIMS CUSTOMIZED CARDS INFRINGE ON BRANDING PATENTS

MARSHALL, Texas-In a legal action that could have wide-ranging ramifications for credit unions, banks and retailers, a local firm filed suit in federal court claiming America First CU, Wescom CU, Zions Bank, Capital One, and major retailers are infringing on its patent for creating online customized branded merchandise.

The plaintiff, Quark Images LLC of Longview, Texas, claims the defendants are infringing on its eight-year-old U.S. patent for creating and ordering customized branded merchandise over a computer network, including credit unions' growing use of customized credit and debit cards.

Named as defendant is also Serverside Group Ltd., which provided the card customization technology allowing America First, Wescom, Zions Bank and Capital One to offer customized cards over the web.

America First used Serverside technology to become the first card issuer to offer personalized Visa gift cards at its website in 2007. And Wescom began offering customized credit cards through Serverside at its website in 2008.

Also named as defendants are PAYjr, a provider of customized stored value cards, and Shoreline Business Solutions, a Serverside partner which shared its customizable art technology with dozens of credit unions through TNB Card Services.

Several major retailers are also cited in the suit, including Adidas, Nike, Hallmark Cards, Reebok, Mars candy, Oakley, Ralph Lauren, and Topps baseball cards, as well as BMW autos.

The company is seeking a jury trial and damages from each of the entities. The suit was filed in the U.S. District Court for the Eastern District of Texas, the Marshall Division.

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