Fryzel, a former director of the Illinois Department of Financial Institutions,was nominated for the position last year and confirmed by the Senate in June. He practiced business law in Chicago and represented credit unions and other financial institutions before regulatory agencies.

He has made few public comments since he was nominated, though at his confirmation hearing he promised to establish a "healthy and dynamic, arms-length relationship with industry characterized by active listening, open-mindedness and a willingness to work together to achieve a shared goal of a strong and vibrant credit union industry."

His term on the board runs through 2013, but his chairmanship could be shorter. Each president has the right to name his or her chairman.

If Sen. Barack Obama is elected president, he wouldn't have the chance to change the board's 2-1 GOP majority until next year, when Vice Chairman Rodney Hood's term expires. Board Member Gigi Hyland is the panel's sole Democrat. She is also the only Board member with direct experience in the credit union industry. That's because federal law allows there to be just one NCUA board member who has worked in the credit union field.

–[email protected]

House Panel Considers Card Measure

WASHINGTON — Credit unions were mostly out of the line of fire as a congressional panel considered a measure to overhaul what some consider the abusive practices of credit card issuers.

Many of the concerns raised by lawmakers on the House Financial Services Committee at last Wednesday's hearing are not practices employed by credit unions. But some provisions of the measure caused concern. Specifically, a ban on raising
rates on outstanding balances unless a customer paid late or if a promotional rate had expired.

NAFCU President Fred Becker expressed concern about a proposed ban on raising rates on outstanding balances unless a customer paid late or if a promotional rate had expired. He said this provision would "remove a vital risk management too," in case a credit union needs to protect its credit card portfolio because of rising interest rates.

CUNA President Dan Mica didn't address that aspect but took issue with other provisions. He expressed opposition to a provision requiring a 45-day notice of rate increases, suggesting that it be changed to 30 days. Currently, creditors must give a 15-day notice. He also expressed support for a provision banning creditors from applying payments to balances with lower interest rates before applying it to those with higher interest rates.
Many of the provisions in the bill, H.R. 5224, are similar to regulations that have been proposed by the NCUA, the Federal Reserve and the Office of Thrift Supervision.

Comments are due by Aug. 4 and more than 30,000 letters have been filed. Those agencies have said they will issue final rules before the end of this year.

Becker also expressed concern about provisions in the bill that mandate a specific cut-off times for payments. This would create a "significant burden" for credit unions with limited hours, he wrote.

The committee was still discussing the bill at press time. Even if the panel approves the measure, it is not clear if there are enough legislative days left this year for the full House to consider it.

–[email protected]

Housing Law's Reverse Mortgage
Provisions Won't Affect CU Programs

WASHINGTON — The housing relief bill that was signed into law by President Bush last week contains new limitations on reverse mortgages, but they aren't likely to have much effect on credit union programs, said representatives from two of the industry's largest financial cooperatives.

The law's restrictions are two-part: It places a $6,000 cap on origination fees, and it prohibits lenders from requiring consumers to purchase additional products. Wally Welter, president of Reverse Mortgage Lending Inc., a Tustin, Calif.-based subsidiary of the $3.7 billion Wescom Credit Union, said he's seen the restrictions before, proposed last year as part of the FHA Modernization Act. Some modernization items made it into the economic stimulus package passed earlier this year, but the reverse mortgage line items were put on the back burner, Welter said, and added to the housing relief bill.

"In reality, it's not a big difference, maybe a 15% drop in the maximum previously allowed by the FHA," Welter said of the law's origination cap, which limits lenders to 2%, up to $200,000 and 1% beyond that, up to a maximum of $6,000.

Phil Greer, senior vice president of loan administration at the $16 billion State Employees Credit Union, said the cap shouldn't be a hurdle for credit union originated reverse mortgages and will have no effect on the new reverse mortgage program SECU launched August 1. Most credit unions make it a habit to charge less than the allowed maximum, regardless of the number, he said.

"To get to the crux of the matter, it's often been said that fraud follows the money, and I think there are many leaders in financial services industry that believe the reverse mortgage product will become the next predatory product," Greer said.

Greer said the restriction prohibiting lenders from requiring borrowers to purchase additional products is long
overdue, though many states already have such provisions in place.

"The sad truth is, we need limitations on things such as mandatory additional financial products to protect this segment of our population, who are all too often financially abused," Greer said. "Hopefully, more consumers will feel comfortable in proceeding with reverse mortgages in the future, because they know there are consumer protection provisions. It should not cause any reputable lender to withdraw from the marketplace."

Greer said he doubts SECU phones will start ringing off the hook with reverse mortgage requests but agrees with many experts who are predicting the product will gain popularity as baby boomers retire in greater numbers.

Welter agreed that the product is a very individual choice and said he thinks of himself more as an educator than a salesman.

"In the years I've been in this business, I've talked to thousands of people, and it's certainly not for everybody," Welter said. "Some are so hung up about leaving an estate for children, particularly that World War II generation, the thought of losing equity, even to live a better life, they just can't get their minds around it."

–[email protected]