Appropriate loss mitigation strategies may include loan modifications, conversion of an adjustable rate mortgage into a fixed rate, deferral of payments, or extending amortization. In addition, the regulators recommended referring appropriate borrowers to homeownership counseling services to avoid foreclosure.

Treasury Freshens Up Web Site

WASHINGTON — The Treasury Department announced the launch of its updated Web site last week, which aims to improve information sharing on key issues.

Treasury's homepage (www.treasury.gov) has a new look, including additional options for Web-users to access press releases, speeches and reports. The day's top news and most recent releases will continue to be featured in the center column of the page.

At the top of the page, information tabs on Treasury's core issues–financial markets, taxes, economy, fighting illicit finance, international affairs and coins and currency–are displayed. Links to the left were consolidated and reorganized for easier access to the most popular pages on the site while priorities for Secretary Hank Paulson are featured in the right hand navigation bar. The Secretary's speeches, testimony and travel updates have been consolidated in the lower right-hand corner.

Treasury also updated its e-mail subscription service and added RSS capability for specific topics visitors are interested in.

NCUSIF Reserves $7.5M in July

ALEXANDRIA, Va. — The NCUSIF announced over $90 million in reserves after $7.5 million was added in July to cover specific problem credit unions.

The federal insurer, administered by NCUA, maintained a provision for credit union losses of $91.2 million, including an additional $7.5 million for insurance losses. The fund held onto an equity ratio of 1.27% in July, based upon an estimated insured share base of $558.0 billion for June 30.

However, investment income was nearly $1 million higher than June due to one more calendar day in July. The total NCUSIF operating expenses of $6.7 million includes $95,900 in direct expenses paid by the NCUSIF for state examiner training, leasing expense for state examiner laptop computers, and other insurance related items.

ICBA Asks Washington State to Reject Private Share Insurance

OLYMPIA, Wash. — In the latest round of comments, the Independent Community Bankers of America has joined the American Bankers Association, other banking groups, and NAFCU calling for the state to reject a regulation to permit credit unions to carry private primary deposit insurance coverage.

“ICBA opposes the privatization of federal deposit insurance for financial institutions whether such institutions are credit unions or commercial banks,” ICBA President/CEO Camden Fine said. “Without the federal government guarantee, consumers would lose confidence in the deposit insurance system and its ability to withstand a financial crisis.”

ICBA's letter stated that systemic risk protection cannot be privatized. “Preventing a systemic failure will always remain a government function and a top government priority. A plan with anything less than the backing of the unlimited resources of the federal government would not be able to handle a banking crisis and stem panic or contagion,” it read.

ICBA also pointed out times in the past when other state or private primary deposit insurance programs have failed, such as Rhode Island, Ohio and Maryland. “These failures demonstrate that inadequate reserves and lack of diversification can undermine state-sponsored or private primary deposit insurance funds,” according to ICBA.

ICBA also noted that some state-chartered credit unions will seek private primary deposit insurance as a way to avoid regulations that apply to federally insured credit unions, including the 12.25% of assets cap on member business loans. Among them is the congressionally mandated rule that caps business lending at 12.25 percent of assets.

CUNA, the Washington Credit Union League, interested credit unions and others have weighed in supporting the state's right to permit the private insurance option.

Vermont Proposal Would Require Limited Insurance Licensing for CUs

MONTPELIER, Vt. — The Vermont Department of Banking, Insurance, Securities and Health Care Administration has issued two proposed rules that would require licensing for financial institutions offering credit insurance.

The Insurance Division issued the proposals after consumer reports that some lenders did not inform them of additional insurance premiums tied to the loans, provided incomplete information, or practiced questionable tactics, according to the Vermont Credit Union League's Newsline Express. The proposed regulation would allow credit unions and other lenders to license all of their loan officers or just the credit union and one employee.

The proposal explained, “Under current law any person engaged in the sale of Credit Insurance must be licensed as an insurance producer, but the sale of Credit Insurance does not require the professional competency demanded for an insurance producer's license…A Limited Lines Credit Insurance Producer licensed under the Regulation will be subject to the requirements of the Regulation only, and not to all requirements applicable to fully licensed insurance producers.”

According to the regulator, it should reduce the time and cost of obtaining a license for those who only sell credit insurance. Credit insurance is defined as credit life, credit disability, credit property, credit unemployment, involuntary unemployment, mortgage life, mortgage disability, and guaranteed automobile protection insurance, but not private mortgage insurance.

VCUL President/CEO Joseph G. Bergeron and Attorney Jacqueline Hughes representing CUNA and the league were listed among those involved in the development of the proposed rules. The league had not returned requests for comment as of press time.

A public hearing is scheduled for Sept. 24.

NAFCU Gets Confirmation Treasury Is Not Looking to Tax Credit Unions

WASHINGTON — Treasury Deputy Assistant Secretary for Tax Analysis Robert J. Carroll explained that the department is not suggesting taxing credit unions in a letter to NAFCU Senior Counsel and Director of Regulatory Affairs Carrie Hunt.

NAFCU had written the Treasury Department following the release of its background paper for the July 26, 2007 Business Taxation and Global Competitiveness Conference, concerned it was suggesting repealing the credit union tax-exemption. The tax-exemption was listed along with several others that cost the government more than $5 billion over 10 years.

Carroll wrote in response, “The Administration recognizes the important role credit unions play in our financial system. Let me assure you that the Treasury Department is not proposing that the tax exemption for credit unions be repealed.”

He further explained that the backgrounder was simply an illustration of how much the corporate tax rate could be reduced. “The analysis shows that repeal of all special corporate tax preferences would permit the 35 percent corporate income tax rate to be reduced to 27 percent. However, that should not be viewed as a specific proposal to repeal all corporate tax preferences, but rather as an illustration of the potentially difficult policy trade-offs involved when revenues from broadening the tax base are used to finance lower rates.”

Following Treasury's response, NAFCU President/CEO Fred Becker commented, “I want to thank the Treasury Department and the White House for quickly clarifying the Administration's position on the tax exemption and reaffirming the president's long-standing support for credit unions.”

The Treasury Department's background paper raised a stir in the credit union community, particularly after the discovery of a June 28 letter from the IRS commissioner to the leaders of the Senate Finance Committee surfaced suggesting that the line between banks and credit unions was becoming blurred and in the current unrelated business income tax (UBIT) environment.

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