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President touches on CU-interest issues in annual address

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WASHINGTON (1/29/14)--Job creation and  tax reform were topics of President Obama's State of the Union address last night, and the Credit Union National Association is urging the president to consider the credit union perspective in these and all important financial policy discussions.
Of key interest to credit unions, Obama made broad remarks about possible changes to the country's tax code.
CUNA President/CEO Bill Cheney assured credit unions that nothing in the SOTU remarks indicated that the credit union tax status is under any more scrutiny right now than any other tax expenditure.
"In fact," Cheney said, "through our conversations with the administration and on Capitol Hill, it is apparent that not all tax provisions are created equal, and the strong public policy reasons behind the  credit union tax status remain as compelling today as they were when first adopted."
Cheney added, however, that  tax policy discussions are still very much in play, and it is imperative that credit unions continue their strong advocacy efforts on behalf of their federal income tax exemption throughout those discussions, through CUNA's "Don't Tax My Credit Union" initiative and through in-person meetings with policymakers of all levels of government.  
Related to the president's remarks on job creation, Cheney reminded that credit unions stand ready to create 140,000 new jobs through increased member business lending authority.
That is the estimated number of new jobs that would be added to the economy if credit unions were given the statutory authority to write more member business loans (MBLs).
CUNA and credit unions support the Credit Union Small Business Jobs Creation Act (H.R. 688), which would increase the MBL cap to 27.5% of assets, up from the current cap of 12.25%.  In addition to increasing available jobs, CUNA has estimated that lifting the MBL cap would inject $13 billion in new funds into the economy, at no cost to taxpayers.
Obama also spoke in favor of patent reforms. CUNA backs legislation that would curb abusive patent litigation by removing some of the financial incentives sought by firms that assert low-quality patents.  So-called "patent trolls" continue to use low-quality patents to try to extract settlements from credit unions and others. Credit unions have been sued for the use of certain ATM technologies, check imaging applications and check cashing applications, and providing members with mobile transactions through their smartphones.
Obama also took the occasion of his annual address, his fifth, to encourage the U.S. Congress to move forward on restructuring the country's housing finance system. CUNA urges the U.S. Congress as it considers comprehensive housing finance reform, to ensure that credit unions and other community financial institutions continue to have access to the secondary mortgage market.
Other themes of the president's speech included rebuilding American's trust in the political process, economic growth, eliminating pay inequality, creating a new savings instrument to help Americans save for retirement--to be called MyRA--and the Affordable Care Act.

CUNA: CUs, not USPS, best to serve communities' financial services needs

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WASHINGTON (1/29/14)--The Credit Union National Association has strong reservations about the U.S. Postal Service's potential move to provide financial services to underserved communities, and questions why the postal service would step into such a role.
The CUNA comments follow this week's release of a USPS Inspector General white paper which noted that "postal financial services may appeal to many customers who feel abandoned by major financial institutions." The USPS paper noted that many international postal service providers are already garnering significant new revenue through providing financial services. Providing such services could bring in $8.9 billion per year in new revenues, according to the white paper.
CUNA General Counsel Eric Richard said some credit unions would be happy to explore possible creative partnerships with USPS or anyone else who can help bring financial services to more people at less cost. "But, to the extent that the goal here is more profit for USPS, there could be some problems," he said.
"The field of financial services is already extremely crowded and competitive, and credit unions already provide a cooperative, not-for-profit alternative that benefits consumers, including many who would otherwise be unbanked. This is not an area in which there is a lot of low-hanging fruit that others have not picked," Richard noted.
For the full USPS white paper, use the resource link.

Net worth, loan portfolio up at conserved Texans CU

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ALEXANDRIA, Va. (1/29/14)--Texans CU, Richardson, Texas, continues to improve under National Credit Union Administration conservatorship, reporting an increased net worth ratio, expanding loans and the shedding of distressed assets in 2013.

The NCUA placed Texans into conservatorship in April of 2011, citing service and operational issues. In its 2013 financials, the recovering credit union reported:
  • Year-end 2013 net income of $23 million;
  • Consumer loan portfolio growth of more than $19 million;
  • Total assets of more than $1.4 billion; and
  • A net worth ratio of 3.64%.
More than $200 million in distressed assets have been divested since early 2012, the NCUA added.

NCUA Region IV Director C. Keith Morton said the agency is "pleased with Texans' progress through the rebuilding process."

The credit union is on the right path," and will continue to focus on members, introduce new services and operate efficiently in 2014, he added.

The credit union was chartered in 1953 and operates 13 branches in the metropolitan Dallas area. Individuals and their family members who live, work or attend school in Collin, Dallas, Grayson, Rockwall, Travis, Williamson counties and parts of Denton County, and employees of Texas Instruments, Raytheon, Ericsson and other select groups may join the credit union.

Data protection, QM concerns lead CFPB hearing

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WASHINGTON (1/29/14)--Consumer data protection and qualified mortgage regulations were two main themes of Tuesday's House Financial Services Committee hearing on the progress of the Consumer Financial Protection Bureau.

CFPB Director Richard Cordray also delivered his semi-annual report on agency activities during the hearing. He also fielded questions on some of the major rules coming down the pike, including:
  • Rules addressing credit ratings for small business owners;
  • Prepaid card regulations; and
  • Overdraft protection rules.
Committee members during the hearing raised concerns regarding the security of consumer data that is collected by the CFPB, the agency's collection of that data, and the ability of the bureau to reverse-engineer that data to tie it to a particular consumer. Cordray was adamant that the CFPB aggregates the data and has no reason to reverse engineer the information.

The Credit Union National Association has supported the Consumer Right to Financial Privacy Act (H.R. 2571), which would prohibit the CFPB from requesting, accessing, collecting, using, retaining or disclosing nonpublic personal information about a consumer unless proper disclosures are provided to the consumer, and H.R. 3183, which would require the CFPB to provide at a consumer's request one free annual report disclosing all of the information about the consumer held by the CFPB.

Rep. Ed Perlmutter (D-Colo.) during Tuesday's hearing asked what actions the CFPB has taken to address recent merchant data breaches. Cordray said the CFPB issued an alert to consumers on what they should do if their credit or debit card has been compromised, and acknowledged that there are broader issues regarding how retailers keep data secure.

Regarding QM rules, several legislators said they are concerned by the rigid nature of the regulations. Rep. Bill Huzienga (R-Mich.) spoke on points-and-fees issues created by the regulation, noting that nearly 60% of loans under $60,000 would not qualify as QMs if an affiliate's title policy was included on the CFPB's points-and-fees calculation. Current CFPB regulations dictate that for a mortgage to be considered a "qualified mortgage," total points and fees generally may not exceed 3% on a loan of $100,000 or greater. These fees include affiliate and non-affiliate charges such as title insurance, surveys, appraisal fees, underwriting, processing and application fees. Rep. Huizenga has introduced legislation to change the overly restrictive definition of points and fees, which CUNA supports.

Cordray reiterated that the CFPB gives lenders three QM options, and noted that thousands of credit unions and community banks are allowed to take advantage of provided small issuer adjustments. CUNA has suggested to the Committee that credit unions should be exempt from the ability-to-repay/qualified mortgage rule.

For CUNA comment letters on consumer data security and QM issues, use the resource links.