e-Weekly
December 2, 2009
UIGEA Compliance Pushed Back to June 1
Just days before the compliance date rolled around—and months after urgings to delay implementation of the Unlawful Internet Gambling Enforcement Act (UIGEA)—the Federal Reserve and U.S. Department of Treasury announced they were pushing back the law's December 1 compliance date.
The new compliance date is June 1 for the rules requiring credit unions and other financial institutions to establish and implement policies and procedures to identify and block restricted Internet gambling transactions, or rely on those procedures established by the payments system. The Federal Register document states that the effective date of the final rule published November 18, 2008 (73 FR 69382) remains January 19, 2009—the new rule just gives more compliance leeway.
CUNA President/CEO Dan Mica applauded lawmakers' efforts when in October House Financial Services Committee Chairman Barney Frank (D-Mass.) and 18 other members of that panel sent a letter to the heads of the Treasury Department and the Fed noting that at a time of economic crisis, it is too great a burden on regulators and the financial services industry to move ahead with rules to UIGEA.
CUNA opposes the agencies' draft implementation proposal because of the compliance burdens associated with UIGEA. The current plan to implement the complicated law lacks clarity and sufficient definition of terms.
Prior to the regulators' announced delay the House Financial Services, had already scheduled hearing this week on two internet gambling bills.
NCUA: CU net worth remains above 10% in 3Q 2009
In its comprehensive report on third-quarter numbers for credit unions, the National Credit Union Administration (NCUA) disclosed increases in membership and lending from its 2008 levels and reported that the net worth of credit unions remained above 10 percent.
First mortgage real estate loans, credit cards, and used auto lending "gained momentum in the third quarter," the NCUA added.
The call report data, which was gathered from all 7,637 federally insured credit unions, also showed a 7.7% increase in assets, an 8.4% increase in shares, a 24.7% increase in investments, and a 1.9% increase in membership, when compared with the numbers reported as of December 31, 2008.
However, the NCUA also noted some less fortunate news, reporting a "modest" 0.28% return on average assets and a slight increase in delinquent loans as a percentage of total loans, which were up to 1.68% as of September 30, 2009. Net charge-offs to average loans also increased to 1.17 percent during the quarter, according to the NCUA.
Federally insured credit unions increased provisions for loan and lease losses by 30.7% and have set aside a total of over $2 billion to cover losses on real estate loans.
This data strengthens "the case for increased regulatory oversight as credit unions deal with adverse economic conditions," NCUA Chairman Debbie Matz said.
2% growth thru 2010, CUNA’s Schenk to Investor's Biz Daily
The economy grew at a 2% annual rate during third quarter, and that means credit unions and others can expect a 2% growth rate during fourth quarter and throughout 2010, a Credit Union National Association (CUNA) economist told Investor's Business Daily. The third quarter growth is below the initially expected 3.5%, according to Commerce Department figures.
"My recollection is that you'd see quarterly growth in the neighborhood of 5% or higher" exiting a recession," said Mike Schenk, vice president of economics and statistics and senior economist at CUNA. "This is substantially lower," he told the publication.
He sees 2% growth in fourth quarter and for all of 2010, but "that all hinges on the health of the U.S. consumer," who faces high debt, rising unemployment and depressed stock and home values, Schenk indicated.
The Federal Reserve, which upgraded its view on the U.S. economy last week, says this year's contraction won't be as steep as previously thought and that growth next year may be better than expected. However, it noted the recovery will be sluggish and will keep the unemployment rate high over the next several years.
The Fed said the economy would shrink 0.1% to 0.4% this year. That compares with a 1%-1.5% contraction it predicted in June.
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