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NEW: ABA targets tax exemption for 2013, CUNA primed to protect

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WASHINGTON (1/25/13, UPDATED 11:20 a.m. ET)--As if there were any doubts about what the banks are up to this year, an American Bankers Association  lobbyist was quoted today by Bloomberg BNA  that a "chief" goal for banks in 2013 is to push for legislation to change or eliminate the credit union federal tax status.

The article quotes ABA Executive Vice President James Ballentine as saying the group will be talking to federal lawmakers about statutory changes and, if that fails, pushing for congressional hearings, a Government Accountability Office study, or "a variety" of other means to go on the attack.

Protecting the credit union tax exemption tops the Credit Union National Association's list of 2013 priorities.

Under the Federal Credit Union Act of 1934, federal and state-chartered credit unions are exempt from federal income tax because they are cooperatives operated for and by their members, and because credit union shares are essentially members' deposits. The tax status has been re-affirmed periodically by the U.S. Congress and is supported by many lawmakers.

As recently as yesterday, on a call to state credit union league presidents, Credit Union National Association President/CEO Bill Cheney reiterated that preserving the tax status of credit unions is CUNA's top priority and will be the number one issue during CUNA's upcoming Governmental Affairs Conference (GAC)  here from Feb. 24-28.

Capitol Hill visits on key credit union issues are at the core of CUNA's GAC, which draws thousands of credit union representatives from across the country to Washington, D.C. each year.

"The congressional agenda for the year is unclear at this point but some expect it will include comprehensive tax reform discussions. As part of that process, the credit union tax status is likely to be examined and could come under significant threat--particularly since we know the banks will continue their paid media and lobbying barrage urging credit union taxation.

"Protecting the credit union tax exemption tops CUNA's  list of ten 2013 priorities for good reason," Cheney said.

Conserved Florida, Texas CUs in improving condition

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ALEXANDRIA, Va. (1/25/13)--Two conserved credit unions, Texans CU and Keys FCU, appear to be recovering under National Credit Union Administration supervision: both posted impressive net worth ratio gains in 2012.

The NCUA on Thursday reported that Texans, which is based in the Dallas metropolitan area, reported a net worth increase of 161 basis points (bp) for the year ended Dec. 31, 2012. The increase brings the credit union's total net worth ratio to 2.68%.

"We are delighted to see the hard work and tough choices made by management pay off like this," said Texas Credit Union League president and CEO Dick Ensweiler.

The credit union held $1.43 billion in assets at the end of 2012, and recorded $24.17 million in net income. NCUA Region IV Director C. Keith Morton said the NCUA is encouraging the credit union to offer "many new product and service enhancements, such as remote deposit capture, online account opening and debit card purchase rewards."

The NCUA placed Texans into conservatorship in April of 2011, citing service and operational issues.

The net worth ratio of Keys FCU of Key West, Fla., increased by 80 bp in 2012. Keys FCU's net worth ratio totaled 3.7% at the end of the year.

The credit union, which voluntarily entered NCUA conservatorship in 2009, also reported $965,714 in net income and $124.2 million in total assets at the end of 2012.

NCUA Region III Director Herb Yolles said the agency has "restructured Keys to provide the members greater access to services and products." Mobile banking and credit cards will be among the new service enhancements offered in 2013, he noted.

"Keys FCU is a good example of a credit union that is on a road to recovery thanks to the support and assistance of many, including the NCUA," Patrick La Pine, president/CEO of the League of Southeastern Credit Unions, said.

For NCUA releases on both credit unions, use the resource links.

President re-nominates Cordray to head CFPB

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WASHINGTON (1/25/13)--Consumer Financial Protection Bureau (CFPB) Director Richard Cordray was nominated by President Barack Obama Thursday to be confirmed as leader of that agency. Cordray called Credit Union National Association President/CEO Bill Cheney before Obama's announcement to notify CUNA that the nomination was coming.

"Director Cordray has been accessible and open to listening to the views of CUNA and credit unions on CFPB's agenda and proposed regulations," Cheney said after the nomination announcement. "CUNA continues to demonstrate to the agency that credit unions are already highly regulated and we encourage the bureau to focus their resources on less regulated financial players."

Announcing the nomination on Thursday, Obama said Cordray "has earned a reputation as a straight shooter and somebody who is willing to bring every voice to the table in order to do what's right for consumers and our economy." He urged the Senate to confirm Cordray.

Obama claimed use of his executive powers to install Cordray as CFPB director during a late 2011/early 2012 congressional recess when the confirmation process stalled in Congress. Several senators at that time said they would not vote to confirm any CFPB nominee unless changes to the CFPB were enacted. Suggested changes included increasing CFPB leadership to a five-member commission and reforming some operational rules.

Cordray's recess appointment expires at the end of this year.

House Financial Services Committee Chairman Jeb Hensarling (R-Texas) on Thursday said he hopes the decision to re-nominate Cordray will open the debate about placing certain checks and balances on the agency.

Also Thursday, the president nominated Mary Jo White to be the next chairman of the U. S. Securities and Exchange Commission. White is a former U.S. Attorney for the Southern District of New York.


GAO: Dodd-Frank implementation is slow-going

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WASHINGTON (1/25/13)--Regulators have made progress in implementing some key reforms required by the Dodd-Frank Wall Street Reform Act, but others remain incomplete, and the effectiveness of some implemented reforms remains to be seen, a new Government Accountability Office (GAO) report notes.

The report examines:
  • The overall status of U.S. financial regulatory reforms arising from Dodd-Frank;
  • Challenges affecting the implementation of these reforms; and
  • Areas that pose continued risk.
While the report does not specifically address the efforts of the National Credit Union Administration, does touch on the progress of the Financial Stability Oversight Council (FSOC), of which NCUA is a member.

The FSOC was established to identify systemic threats, and as noted in the report, has taken steps to carry out its responsibilities. The GAO notes that FSOC members have taken actions to implement some key reforms intended to reduce systemic risk. "For example, FSOC developed--and is currently implementing--a process and criteria to determine whether certain nonbank financial institutions should be designated for supervision. But, to date, no such designations have been made," the GAO said.

Overall, the GAO identified 236 provisions of the Dodd-Frank Act that require regulators to issue rulemakings across nine key areas. As of December 2012, regulators had issued final rules for 48% of these provisions, proposed rules for 29% of these provisions, and not begun the rulemaking process for 23% of these provisions, the GAO noted.

The GAO did not make any new recommendations in the report.

For the full report, use the resource link.