NCUA's Seventh Annual Budget Briefing Slated for Oct. 22

ALEXANDRIA, Va. — NCUA recently announced that its seventh annual Budget Briefing and Public Forum will be held Oct. 22.

At 10 a.m., NCUA Executive Director Len Skiles will present the proposed 2008 budget, and then industry participants will have the opportunity to present their comments.

Those wishing to make oral remarks at the meeting should register through the NCUA Board Secretary Mary Rupp. The deadline to register is Oct. 15. In the interest of time, NCUA reserves the right to select participants but will attempt to accommodate all requests.

“The annual Budget Briefing and Public Forum provides the opportunity for participants to engage with NCUA staff in the formulation of the agency's budget, within full view of the financial public,” NCUA Chairman JoAnn Johnson said. “Since NCUA is funded by the credit union system, not tax dollars, I encourage all interested parties to contribute to this meeting by attending and providing their input. The insights gained will assist the agency in serving as an efficient and effective steward of its resources.”

Participants submitting written comments must file the Budget Briefing and Pubic Forum–Comment with the Secretary of the Board by Nov. 1 to be considered. Mail comments and participation requests to Mary Rupp, Secretary of the Board, National Credit Union Administration, 1775 Duke Street, Alexandria, Va. 22314, fax 703-518-6319, or e-mail [email protected].

Thousands of Financials Ready Themselves for Pandemic Flu Outbreak

WASHINGTON — The Federal Banking Information Infrastructure Committee and Financial Services Sector Coordinating Council have launched a pandemic flu simulation to last through Oct. 12.

There are 2,725 participants in the electronic exercise sponsored by Treasury and the Securities Industry and Financial Markets Association, according to the official Web site, www.fspanfluexercise.com. Of those, “hundreds” are credit unions according to NAFCU Director of Compliance Anthony Demangone.

NAFCU is serving as part of the control team sifting through participant comments weekly through the end of the exercise on Oct. 12. Demangone called it “very impressive tabletop exercise. It's one of the very few times where we've been able to get in front of a major issue, similar to Y2K.”

A full 65% of participants are banks and credit unions while securities firms (20%), insurance companies (10%), and regulators, industry associations, and utilities (5%) make up the remainder. The majority are smaller organizations, Demangone shared, with 68% having less than 250 employees, over 1,900 having less than $100 million in revenue, almost 800 having less than $100 million in assets and 1,000 having $100-$500 million in assets.

He added, “This will give regulators and the financial industry lots of data regarding where financial institutions are and possibly give regulators some data from which they can craft best practices or regulatory relief.” After Hurricane Katrina, for example, NCUA gave the affected credit unions extra time to file their 5300 Call Reports.

While no details of the exercise are available right now, Demangone said after it is over, “I certainly for one will be happy to tell the story. Credit unions really, really got involved with this.”

The testing is not pass/fail he emphasized and participation is strictly voluntary. “The reaction just shows the desire for credit unions that their members–and other financial institutions–are prepared for unexpected occurrences,” he observed.

Comments on Federal Benefit Garnishment Exemption Best Practices Sought

WASHINGTON — The federal financial regulatory agencies yesterday issued a request for public comment on a statement encouraging federal financial institutions to follow best practices to guard against garnishment of protected federal benefit payments.

Federal law prohibits garnishment of federal benefit payments, such as Social Security and veterans' benefits, for garnishment orders. Among the best practices proposed when a garnishment is received were to notify the consumer promptly when the order is received and a freeze is placed on the account; provide information on the exempted federal benefits; promptly determine if an account contains only exempt funds; and notify the collector or court that the account contains protected funds, among other things.

“The Agencies encourage financial institutions to stay apprised of any future guidance issued by the SSA or VA regarding garnishment practices and of developments in the courts in their jurisdiction regarding garnishment practices,” the guidance read.

The guidance was issued the day before a hearing in the Senate Finance Committee where the FDIC, Office of the Comptroller of the Currency, and Office of Thrift Supervision testified on bank and thrift treatment of federal benefit deposits and garnishments. A representative from the National Consumer Law Center was also on the witness list along with a beneficiary. A CUNA lobbyist told the press earlier in the week that credit unions were not involved in the hearing because they are not causing any problems.

However, NCUA said it still “took a very active role in crafting this guidance,” which clarifies the federal benefit protections versus the rights and responsibilities of financial institutions concerning garnishment orders.

The proposed guidance was issued with a 60-day comment period by NCUA and the other federal financial regulators.

Banking Agencies Issue Final Rules Expanding Extended Examination Cycle

WASHINGTON — The federal bank and thrift regulators issued final rules Sept. 21 to allow CAMEL 1 and 2 institutions with up to $500 million in assets to follow an 18-month examination cycle.

The final rule codifies, without amendment, the proposed interim rules issued in April; previously the asset cap had been $250 million. NCUA has a similar system for well-capitalized, well-managed credit unions.

The rule implements section 605 of the Financial Services Regulatory Relief Act. The final rules, issued by the Board of Governors of the Federal Reserve System, the FDIC, the Office of the Comptroller of the Currency, and the Office of Thrift Supervision, are effective upon publication in the Federal Register.

New $5 Bill Gets First-Ever Digital Unveiling

WASHINGTON — Officials from the U.S. Treasury, Federal Reserve Board, Bureau of Engraving and Printing, and U.S. Secret Service participated in the first-ever electronic unveiling of the redesigned $5 currency.

The entirely digital unveiling event, “Wi-5″ preview, emphasized the government's commitment to keeping ahead of counterfeiters. The new $5 will enter circulation early next year.

“The government uses the best tools available so that it will be unlikely that you will receive a counterfeit bill,” said U.S. Treasurer Anna Escobedo Cabral. “Improved security features are at the heart of this currency series–security features that are easy for everyone to use. Learn how to use them, so you don't lose your hard-earned money in the unlikely event that someone tries to pass a counterfeit bill to you.”

Michael Lambert, assistant director for the Fed's Division of Reserve Bank Operations and Payment Systems explained, “There is no need to trade in your old $5 bills for new ones. All U.S. currency issued by the U.S. government–old and new–is legal tender and continues to be redeemable at full face value.”

“We are working with manufacturers of ATMs and other cash-oriented machines to ensure they have the information they need to adjust their machines to accept the new bills,” BEP Director Larry R. Felix said. “Just as importantly, we are educating cash handlers on how to use the improved security features. They are the first line of defense against counterfeiting, and their familiarity with the new design and its improved security features is vital to a smooth transition.”

A new look for the $100 bill will follow. The $5 was redesigned to eliminate similarities with the $100 bill and counter a form of counterfeiting called “bleaching” where the ink is removed from a $5 and then used to create a fake $100 bill. The security thread was also moved from the left side of the portrait, similar to the $100, to the right side.

Similar redesigns for $10, $20, and $50 bills have already taken place. The new currency features improved, user-friendly security features that are more difficult to counterfeit, including watermarks and a security thread.

Free educational materials are available to credit unions and other businesses.