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

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

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

Those wishing to make oral remarks at the meeting shouldregister through the NCUA Board Secretary Mary Rupp. The deadlineto register is Oct. 15. In the interest of time, NCUA reserves theright to select participants but will attempt to accommodate allrequests.

“The annual Budget Briefing and Public Forum provides theopportunity for participants to engage with NCUA staff in theformulation of the agency's budget, within full view of thefinancial public,” NCUA Chairman JoAnn Johnson said. “Since NCUA isfunded by the credit union system, not tax dollars, I encourage allinterested parties to contribute to this meeting by attending andproviding their input. The insights gained will assist the agencyin serving as an efficient and effective steward of itsresources.”

Participants submitting written comments must file the BudgetBriefing and Pubic Forum–Comment with the Secretary of the Board byNov. 1 to be considered. Mail comments and participation requeststo Mary Rupp, Secretary of the Board, National Credit UnionAdministration, 1775 Duke Street, Alexandria, Va. 22314, fax703-518-6319, or e-mail [email protected].

Thousands of Financials Ready Themselves for PandemicFlu Outbreak

WASHINGTON — The Federal Banking Information InfrastructureCommittee and Financial Services Sector Coordinating Council havelaunched a pandemic flu simulation to last through Oct. 12.

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

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

A full 65% of participants are banks and credit unions whilesecurities 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 $100million in revenue, almost 800 having less than $100 million inassets and 1,000 having $100-$500 million in assets.

He added, “This will give regulators and the financial industrylots of data regarding where financial institutions are andpossibly give regulators some data from which they can craft bestpractices or regulatory relief.” After Hurricane Katrina, forexample, NCUA gave the affected credit unions extra time to filetheir 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 happyto tell the story. Credit unions really, really got involved withthis.”

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

Comments on Federal Benefit Garnishment Exemption BestPractices Sought

WASHINGTON — The federal financial regulatory agencies yesterdayissued a request for public comment on a statement encouragingfederal financial institutions to follow best practices to guardagainst garnishment of protected federal benefit payments.

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

“The Agencies encourage financial institutions to stay apprisedof any future guidance issued by the SSA or VA regardinggarnishment practices and of developments in the courts in theirjurisdiction regarding garnishment practices,” the guidanceread.

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

However, NCUA said it still “took a very active role in craftingthis guidance,” which clarifies the federal benefit protectionsversus the rights and responsibilities of financial institutionsconcerning garnishment orders.

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

Banking Agencies Issue Final Rules Expanding ExtendedExamination Cycle

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

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

The rule implements section 605 of the Financial ServicesRegulatory Relief Act. The final rules, issued by the Board ofGovernors of the Federal Reserve System, the FDIC, the Office ofthe Comptroller of the Currency, and the Office of ThriftSupervision, are effective upon publication in the FederalRegister.

New $5 Bill Gets First-Ever DigitalUnveiling

WASHINGTON — Officials from the U.S. Treasury, Federal ReserveBoard, Bureau of Engraving and Printing, and U.S. Secret Serviceparticipated in the first-ever electronic unveiling of theredesigned $5 currency.

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

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

Michael Lambert, assistant director for the Fed's Division ofReserve Bank Operations and Payment Systems explained, “There is noneed to trade in your old $5 bills for new ones. All U.S. currencyissued by the U.S. government–old and new–is legal tender andcontinues to be redeemable at full face value.”

“We are working with manufacturers of ATMs and othercash-oriented machines to ensure they have the information theyneed to adjust their machines to accept the new bills,” BEPDirector Larry R. Felix said. “Just as importantly, we areeducating cash handlers on how to use the improved securityfeatures. They are the first line of defense againstcounterfeiting, and their familiarity with the new design and itsimproved security features is vital to a smooth transition.”

A new look for the $100 bill will follow. The $5 was redesignedto eliminate similarities with the $100 bill and counter a form ofcounterfeiting called “bleaching” where the ink is removed from a$5 and then used to create a fake $100 bill. The security threadwas 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 takenplace. The new currency features improved, user-friendly securityfeatures that are more difficult to counterfeit, includingwatermarks and a security thread.

Free educational materials are available to credit unions andother businesses.