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Powerful tax committee starts reform discussions

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WASHINGTON (1/20/11)—The House Ways and Means Committee later today will discuss federal tax reform during its first hearing of 2011. The hearing, according to a committee statement, will examine the economic and administrative burdens imposed by the current structure of the federal income tax and will explore costs associated with individual and corporate income tax regimes. Credit Union National Association (CUNA) Senior Vice President of Legislative Affairs John Magill said that this is the first of many hearings examining the current tax system, and CUNA will monitor this and other developments for any discussion of the credit union tax exemption. CUNA is a staunch advocate for the current credit union tax status, maintaining that the strong public-policy reasons that first inspired that tax status remain valid today. CUNA President/CEO Bill Cheney has said, "It may be the case that not all tax preferences have lived up to expectations, but the credit union tax exemption is one of the highest-yielding investments the federal government has made." CUNA figures show that America's 92 million credit union members receive substantial benefits in the form of better pricing on services, saving them about $7.5 billion a year. The $7.5 billion savings to consumers is especially significant when measured against the $1.5 billion in lost federal revenue a year that the government says is represented by the credit union tax exemption. "Further, the tax exemption helps to ensure consumers have choices beyond commercial banks in the financial marketplace. It is appropriate to view these results as evidence of sound public policy," Cheney has remarked.

Bachus names Republican members of finance subcommittees

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WASHINGTON (1/20/11)--The names of the Republican members of House Financial Services subcommittees were released on Wednesday by the new full committee chairman, Rep. Spencer Bachus (R-Ala.). The financial institutions and consumer credit subcommittee, a key group for credit unions, will be chaired by Rep. Shelley Moore Capito (W. Va.), and Rep. Kenny Marchant (Texas) has been named to serve as vice chair. Capito is a featured speaker at the Credit Union National Association’s Governmental Affairs Conference, which kicks off in Washington, D.C. on Feb. 27. Also named to the committee are Reps. Ed Royce (Calif.), Don Manzullo (Ill.), Walter Jones (N.C.), Patrick McHenry (N.C.), Thaddeus McCotter (Mich.), Kevin McCarthy (Calif.), Stevan Pearce (N.M.), Lynn Westmoreland (Ga.), Blaine Luetkemeyer (Mo.), Bill Huizenga (Mich.), Sean Duffy (Wis.), Jim Renacci (Ohio), Robert Dold (Ill.), Francisco Canseco (Texas) and Jeb Hensarling (Texas). Hensarling will serve as Bachus’s vice chair on the full House Financial Services Committee, according to the Bachus announcement. The Texan also has been named a member of the capital markets and government-sponsored enterprises subcommittee, which will be headed by Rep. Scott Garrett (N.J.). Rep. Ron Paul (Texas) will chair the domestic monetary policy subcommittee, with Jones, of North Carolina, joining him as vice chair. Illinois’ Rep. Dold will work with Rep. Gary Miller (Calif.) as Miller chairs the international monetary policy subcommittee. Randy Neugebauer (Texas) will chair the oversight and investigations subcommittee, with Michael Fitzpatrick (Pa.) serving as vice chair. Bachus’s financial services committee has also added two more members for the 112th congress, bringing the total number of members on that committee to 61. For the full subcommittee lineups, use the resource link.

State regulators back NCUA supplemental cap. push

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WASHINGTON (1/20/11)--The National Association of State Credit Unions (NASCUS) this week backed the National Credit Union Administration’s (NCUA) support for potential additional sources of capital for credit unions by noting that credit unions can manage the complexities of supplemental capital, and that NCUA and state regulators are fully capable of managing its regulation. NCUA Chairman Debbie Matz, in a letter to the top members of the Senate Banking Committee and the House Financial Services Committee, recently urged statutory changes that would correct the disincentive that she said is impacting even strong, well-capitalized credit unions. She recommended allowing qualifying credit unions to issue supplemental capital and excluding assets that carry zero risk, such as short-term U.S. Treasury securities, from the definition of total assets. In the group’s letter to the NCUA, NASCUS President/CEO Mary Martha Fortney said that achieving capital reform has long been a matter of safety and soundness, and added that increased capital and investor discipline can provide credit unions with critical buffers during economic downturns. Earlier this week, Credit Union National Association (CUNA) President/CEO Bill Cheney commended the NCUA’s public support for capital reform. He said the regulator’s letter could be helpful as CUNA works to “educate members of Congress about the importance of establishing risk-based and supplemental capital avenues for credit unions."

NACUSO team will ID issues facing CUSOs CUs

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NEWPORT BEACH, Calif. (1/20/11)--The National Association of Credit Union Service Organizations (NACUSO) has launched a new advocacy committee charged with identifying and addressing the legislative and regulatory issues facing credit union service organizations (CUSOs). The committee, which was founded last December, will be chaired by CU Holding Company CEO Lisa Renner and will feature input from NACUSO CEO Jack Antonini and former National Credit Union Administration Chairman Dennis Dollar. The committee will focus on issues related to collaboration, innovation, industry growth and entrepreneurship--called the “four pillars” by the group--and will oppose anything that undermines those pillars, while “enthusiastically and strongly” supporting anything that promotes those ideals. Renner told News Now that the credit union industry as a whole must find ways to increase member service, thus increasing revenue while lowering operating expenses. “CUSOs are a business model that has proven successful in creating an efficient and effective platform for collaboration and innovation to achieve these two goals,” she added. The group will identify legislative and regulatory issues that impact CUSOs and their credit unions; determine what role NACUSO, as an organization, can play in those issues; and bring a recommendation before the board for actions to be taken, according to Renner. The committee is developing a focused, three- to five-point legislative and regulatory advocacy agenda, and that agenda will likely be released later this year. “There are many great advocacy groups in the industry, and we look forward to working with each of these groups to turn up the volume on the credit union industry voice as a whole--particularly on the important issues impacting how CUSOs can play a key role in the industry’s future,” Renner said. NACUSO was formed in 1985 to help credit unions explore the use of credit union service organizations and the delivery of non-traditional products and services.

Inside Washington (01/19/2011)

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* WASHINGTON (1/20/11)--The Federal Deposit Insurance Corp.’s board of directors on Tuesday said regulators would soon release a proposal to bar risky compensation agreements, a plan required by the Dodd-Frank Act (American Banker Jan. 19). Dodd-Frank requires banking agencies, the Securities and Exchange Commission and the Federal Housing Finance Agency to author a rule by April that mandates financial companies to disclose incentive executive compensation agreements and prohibit excessive pay packages. Such compensation issues drove up risk during the banking crisis, according to observers. Also, on Tuesday, the FDIC board approved an interim final rule clarifying how the agency will treat certain creditor claims under the new orderly liquidation authority established under Dodd-Frank. The law gives the FDIC the authority to provide some creditors in similar classes more relief than others. The agency indicated it would grant that relief only to cover general services crucial to operating a receivership …