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NEW: Operating fee invoices will come out in March

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ALEXANDRIA, Va. (1/29/13, UPDATED 11:30 a.m. ET)--Federal credit union (FCU) operating fees is the topic of the National Credit Union Administration's most recent Letter to Federal Credit Union (13-FCU-01); the letter reminds of the agency's action in November that increased the fee for credit unions with more than $1 million by 0.24% and eliminated the fees for those with assets less than or equal to $1 million.

Included with the letter is an NCUA chart intended to help a federal credit union calculate the exact dollar amount of its operating fee. The chart also includes the NCUA web link to the online calculator. The letter also provides insight into the calculation method.

The letter states that FCUs with over $1 million in assets will be sent an invoice for the operating fees in March. The operating fee will be based on assets reported Dec. 31, 2012. At the same time, all federally insured credit unions will receive notice of any amount needed to adjust their National Credit Union Share Insurance Fund capitalization deposit to 1% of insured shares.

The NCUA will combine the operating fee and capitalization deposit adjustment into a single payment. That payment is due April 2013, the letter notes.  The agency adds that for FCUs signed up to pay via Pay.Gov, no further action is required; payment will occur by April 30.

All others must send payment according to the instructions included with the invoice.

Questions regarding details for the letter should be directed to the NCUA's Office of the Chief Financial Officer at ocfomail@ncua.gov.

CUNA underscores public policy behind tax status to lawmakers

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WASHINGTON (1/29/13)--Credit Union National Association President/CEO Bill Cheney has had at least 20 meetings recently with federal lawmakers and those meetings have underscored that legislators have a "fairly broad understanding about the public policy reasons for the credit union tax-exemption," Cheney said Monday.

"CUNA has had very positive discussions about the need to protect the credit union tax status," Cheney reported. No legislator CUNA has spoken with has suggested that the credit union tax status is currently on the table as a tax reform or spending issue. However, Cheney emphasized, none have suggested that CUNA should be anything but vigilant on this key issue as tax reform talks move forward and all sorts of ideas are thrown into the discussions.

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, which will be held Feb. 24-28. Debt and tax discussions are scheduled to be held on Capitol Hill around March 1 and Cheney said he "could not think of a better time for credit union supporters to be in Washington, in force."

Overall, Cheney said, it has "been interesting to say the least to hear what's on the minds of members and how credit unions are viewed."

CUNA has also found broad agreement on the need to reduce the regulatory burden on credit unions and other smaller financial institutions. "While no one thinks Dodd-Frank will be repealed, many expressed support for efforts moderating its excesses along the lines of last year's CUNA-backed exam fairness bill to scale back regulatory barriers," he said.

Meanwhile on Capitol Hill, the Senate is in session this week and the House is in recess. The Senate is expected to begin consideration of debt ceiling legislation approved last week by the House, and attend to other matters.

CUNA Senior Vice President of Legislative Affairs Ryan Donovan said the Senate Banking Committee could hold its organizational meeting on Feb. 14, and conduct an oversight hearing on Dodd-Frank implementation on the same day. However, he noted, the committee has not released an official schedule.

The House Financial Services Committee is set up and ready to begin its work soon, and could soon take on Consumer Financial Protection Bureau issues. That committee is also set to hear Federal Reserve Chairman Ben Bernanke's regular "Humphrey-Hawkins" testimony in the coming weeks.

Banker names MBLs among bills to watch for this year

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WASHINGTON (1/29/13)--In a special slideshow presentation entitled "Eight Banking Bills That Aren't Going Away," American Banker named credit union member business lending (MBL) as number four.

"(T)he business-lending cap is a huge issue for credit unions," so expect the credit union bill to be back, the paper said.

CUNA confirmed as much when it named its top 2013 action priorities.

Earlier this month CUNA announced that along with its top priority of preserving the credit union tax status, CUNA also will pursue charter enhancements this year that improve the operating environment for credit unions.

Two major initiatives that remain as priorities from 2012 are supplemental capital and increased member business lending.  A 2012 House MBL bill had 145 bi-partisan supporters, and a Senate bill had 22. 

In its Jan. 28 piece, American Banker noted that the credit union initiative to increase the MBL cap to 27.5% has "always been a bone of contention" with banks, but acknowledged the bill "is not likely to go away."

CUNA has estimated that the proposed MBL cap increase could inject $13 billion in funds into the economy, creating as many as 140,000 new jobs in the first year following enactment.

CUNA tried to "bring the banks to the table" through much of 2012 to get them to ease their opposition to CUNA-backed MBL  legislation. But as CUNA Executive Vice President of Legislative Affairs John Magill has pointed out, "Despite the boost an increased cap would give the economy, the banks continued their knee-jerk opposition to these credit union bills."

CUNA, the state credit union leagues, and credit unions responded and, as Magill describes it, "made a loud statement" when, late last year, they aggressively opposed the banks' legislation that would have extended the Transaction Account Guarantee (TAG).

In its MBL segment, the Banker noted that the TAG bill failed to pass Congress last year.

CUNA watches for credit card surcharge change impact

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WASHINGTON (1/29/13)--New rules that allow retailers to assess "check out" fees or surcharges on credit card purchases took effect in many states on Jan. 27, and the Credit Union National Association is watching to assess how these rules could impact credit unions.

The Electronic Payments Coalition (EPC) has developed this word cloud to demonstrate how various media sources have covered the credit card surcharge issue since Dec. 2012. (EPC Photo)
The surcharge rule change is one result of a 2012 interchange fee class action lawsuit settlement. CUNA has explained that the surcharging aspect of the settlement--as well as the provision that consumer-owned credit unions would see a reduction in interchange revenue--are signs that the settlement does nothing for consumers.

As CUNA President/CEO Bill Cheney explained last year, "We all know that interchange revenue enables credit unions to provide essential and cost-effective credit card services to their consumer members. We also know that the temporary reduction in interchange revenue that credit unions will experience will not likely find its way into the pockets of consumers, but will more likely into those of merchants."

Visa and Mastercard rules previously prohibited merchants from charging surcharges on credit card purchases. The new surcharges could be as high as 4% of a given transaction, and may be charged in 40 states. California, Texas and New York are among the ten states that forbid merchants from assessing surcharges for credit card use.

The surcharges cannot be applied to debit transactions.

Merchants can decide whether or not they want to assess the surcharge. Toys-R-Us and Target are among those that have said they will not charge a credit card fee, NBC News reported. News of the surcharge has received widespread media coverage. (See related story: Retailers' new checkout fees create ruckus in media)

Arrowhead Central CU condition improves under NCUA oversight

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ALEXANDRIA, Va. (1/29/13)--"Things are moving in the right direction" at Arrowhead Central CU, National Credit Union Administration Region II Director Jane Walters said in a Monday release.

That credit union, which has been under agency conservatorship since 2010, posted a 324 basis point improvement in its net worth ratio in 2012. Arrowhead Central's year-end income was $25.5 million, and the credit union held nearly $700 million in assets at the end of 2012.

The NCUA in June 2010 took control of Arrowhead Central, and fired then-CEO Larry Sharp and three other senior-level employees, due to the credit union's declining financial condition.

"Arrowhead has maintained a strong community presence, and we've expanded products and improved service," Walters added.

For the full NCUA release, use the resource link.

WOCCU urges clear international disclosure standards for CUs and members

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LONDON (1/29/13)--The World Council of Credit Unions (WOCCU) has urged an International Accounting Standards Board (IASB) panel to make financial disclosures more succinct and easier to understand.

"Doing so would increase their meaningfulness to credit union members and reduce compliance burdens on credit unions," Michael Edwards, WOCCU vice president and chief counsel, said.

WOCCU made the recommendations at a Monday IASB Discussion Forum on Disclosures in Financial Reporting in London.

Edwards attended the disclosure forum and commented that complex financial disclosures are often impenetrable to people who are not financial professionals, such as most credit union members and small retail investors. He asked the panelists to consider simplifying financial disclosure requirements so that they are easier to prepare and more easily understandable to ordinary people.

"All credit unions would benefit from reduced accounting compliance burdens," WOCCU President/CEO Brian Branch added.

"Easily understandable financial disclosures will be most useful to credit union members in developing countries where shares and deposits are often not protected by savings guarantee schemes and many members do not have a university education," he said.

The panel will report these and other recommendations to IASB within the next two months, WOCCU said.

IASB sets International Financial Reporting Standards (IFRS), which apply to credit unions in a growing number of jurisdictions including Australia, Brazil, and Canada. IASB and the U.S. Financial Accounting Standards Board (FASB) are also in the process of converging IFRS with U.S. Generally Accepted Accounting Principles, which will make U.S. credit unions subject to accounting rules that are the same as IFRS in most respects.

In April 2012, IASB and FASB issued a report predicting that they would jointly issue final accounting standards regarding financial instruments, leases and insurance contracts by mid-2013.