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Washington

CUNA Urges CU Tax Exemption Be Continued In Treasury Meeting

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WASHINGTON (10/23/13)--Credit Union National Association President/CEO Bill Cheney had yet another opportunity to advocate for the continuation of the credit union tax exemption when he and senior CUNA staff met with U.S. Treasury Department Assistant Secretary for Tax Policy Mark Mazur and other agency staff this week.

Click to view larger image Credit Union National Association President/CEO Bill Cheney (not shown), General Counsel Eric Richard, Deputy General Counsel Mary Dunn, Chief Economist Bill Hampel and Senior Vice President for Legislative Affairs Ryan Donovan attended a Treasury meeting to discuss credit union tax issues. (CUNA Photo)
"As key members of Congress continue to consider tax reform, I felt it was essential that we meet again with tax policy advisors at Treasury to ensure they are continually reminded that taxing credit unions would be bad public policy that would hurt consumers and small business, as well as credit unions. We had the opportunity to discuss this issue and present our views thoroughly; it was a very productive session," Cheney said.

General Counsel Eric Richard, Deputy General Counsel Mary Dunn, Senior Vice President for Legislative Affairs Ryan Donovan and Chief Economist Bill Hampel also attended the Treasury meeting.

Cheney and CUNA staff stressed the significance of the tax exemption to the credit union system but they also emphasized the benefits of the tax exemption to the consumers, small businesses and communities that credit unions serve. Such benefits include lower fees, lower rates on loans and a better return on shares and deposits than other financial institutions often provide, they said. The group discussed other benefits that credit unions offer, including loans and other services to low-income members.

The discussion also focused on the cooperative structure, one-member, one vote, and democratic control of credit unions. "These attributes are strengths and hallmarks of credit unions that make them unique among financial institutions in this country--these are key distinctions that the tax exemption ensures will remain," Cheney said. The group also emphasized that the value of the tax exemption to communities far exceeds the amount of revenue that would be collected if the tax exemption were eliminated.

CUNA has called on credit unions to redouble their tax advocacy efforts as members of the U.S. Congress return to normal business. (See Oct. 18 News Now story: CUNA: CUs Must Redouble Efforts As Normalcy Returns In D.C.)

N.Y. Officials Want Debt Collection Reg Improvements

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NEW YORK, N.Y. (10/23/13)--The New York State Department of Financial Services last week suggested a series of bold reforms to enhance consumer debt collection regulations.

The department suggestions follow the release of proposed rules that would require the use of standardized affidavits in consumer credit actions seeking default judgments. The proposed rules were released by the New York Office of Court Administration.

Reforms suggested by the department include:
  • Creating stronger affidavits to stop "robo-signing" and ensure debt collectors actually review a consumer's file;
  • Requiring debt collectors to include important information about these debts in the affidavit;
  • Requiring debt collectors to include documentation evidencing the debt with the complaint;
  • Requiring debt collectors to send consumers a pre-complaint notice before commencing a collection lawsuit;
  • Demanding demonstrable proof of service when a debt collector moves for a default judgment; and
  • Providing consumers an opportunity to vacate a default judgment if a debt collector violates the court's rules.
These reforms would help curb litigation abuse by debt collectors, the department suggested in a letter to Chief Administrative Judge of the Courts A. Gail Prudenti.

The Consumer Financial Protection bureau has also been active on the debt collection front. Noting that the Federal Trade Commission receives more complaints about the debt collection industry than any other specific industry, the bureau this spring has said it is considering debt collection actions and could develop a proposed rule to strengthen federal consumer protections for prepaid cards.

In July, the CFPB released a bulletin explaining that under the Dodd-Frank Act, debt collectors are statutorily prohibited from committing unfair, deceptive, or abusive acts or practices. A second bulletin containing guidance for creditors, debt buyers, and third-party collectors was also unveiled. Resources for consumers faced with debt-collection woes were also released: The CFPB provided a compilation of five letters that borrowers can use when replying to collectors. The letters may help consumers get valuable information about claims being made against them, or may help them protect themselves from "inappropriate or unwanted collection activities."

Remittance Exam Procedures Released by CFPB

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WASHINGTON (10/23/13)--The policies and procedures Consumer Financial Protection Bureau examiners will use when examining remittance programs were previewed in a Tuesday agency release.

The bureau also released e-Regulations, a new online tool that will make CFPB regulations "easier to find, read, and understand." Regulation E is the first regulation highlighted by the new tool.

Under the final CFPB rule, remittance transfer providers are required to provide prepayment and receipt disclosures to the consumer sender that include the exchange rate, certain fees and taxes associated with a transfer, and the amount of money that will be received on the other end of the transfer. Remittance transfer providers will also be required to investigate disputes and correct errors. The rule has an Oct. 28 effective date.

The rule will not apply to credit unions and other entities that consistently provide 100 or fewer remittance transfers each year. Transactions of less than $15 will also not be covered under the rule.

The CFPB said it is working closely with its fellow regulators to ensure they all have a shared understanding of new rules. The remittance examination procedures were developed, in part, through the Federal Financial Institutions Examination Council. "This interagency effort will promote consistent supervision of remittance providers," the CFPB said.

According to the CFPB, examiners will focus on:
  • Assessing the quality of the regulated entity's compliance risk management systems in its remittance transfer business;
  • Identifying acts or practices that materially increase the risk of violations of federal consumer financial law and associated harm to consumers in connection with remittance transfers;
  • Gathering facts that help to determine whether a supervised entity engages in acts or practices that are likely to violate federal consumer financial law in connection with remittance transfers; and
  • Determining, in accordance with CFPB internal consultation requirements, whether a violation of a federal consumer financial law has occurred and whether further supervisory or enforcement actions are appropriate.
The examiners will also check for weaknesses or other risks in the organization's remittance business model, and whether the institution's audits address all applicable provisions of Regulation E and all key business processes and functions.

Organizational charts, process flowcharts, policies and procedures, account and transaction documentation, checklists and computer program documentation will be considered as examiners determine whether an entity's internal controls are adequate to ensure compliance with various sections of Regulation E, the CFPB added.

The Credit Union National Association has provided a host of resources to help credit unions prepare for remittance rule compliance. (See Oct. 17 News Now story: CUNA Preps CUs For Oct. 28 Remittance Rule Reckoning.)

CUNA said that it will continue to urge the CFPB to minimize the regulatory burden of its rulemakings, but added this initiative will make it easier to find revisions and read the final regulations in context with the commentary.  CUNA has asked the agency to follow suit with it its mortgage rules and commentaries as quickly as possible.

NCUA Adds Diversity Briefing To Agenda

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ALEXANDRIA, Va. (10/23/13)--The National Credit Union Administration has added a new item to the agenda of its Oct. 24 open board meeting: Agency staff will brief the board on a proposed interagency policy statement addressing joint diversity standards for regulated entities.

The NCUA early last year said it and other regulators would soon begin reviewing diversity policies and practices of the institutions they regulate. The Credit Union National Association and state leagues have stressed that NCUA must do all it can to minimize any new reporting or compliance requirements that new standards could impose on credit unions.

Other items on the NCUA open board meeting agenda include:
  • A plan to require yearly stress tests at credit unions with assets exceeding $10 billion;
  • A final rule on liquidity contingency plans;
  • A board briefing on an interagency rule on loans in areas with special flood hazards;
  • The quarterly National Credit Union Share Insurance Fund report; and
  • A final rule on electronic filing of financial reports.
The Thursday open meeting is scheduled to begin at 10 a.m. (ET). Two requests made under the Federal Credit Union Act are on the closed board meeting agenda, which will follow the open meeting.

For the full agenda, use the resource link.

Politico Highlights CU-Bank Tax Battle

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WASHINGTON (10/23/13)--The nation's banks have broken an unwritten rule in tax debates in their fight with credit unions over the credit union tax status, observed a Tuesday article in Politico. 

The article said most businesses that want to influence the current efforts to overhaul the country's tax code focus on preserving their own tax "perks," not on tearing down those of others.  

However, big banks want the exemption gone, and smaller banks have named the repeal of the credit union exemption from federal income tax as their current No. 1 priority, said Politico.  

Ryan Donovan, senior vice president for legislative affairs at the Credit Union National Association, explained in the article that credit unions have their current tax status because of a fundamental difference between banks and credit unions--their not-for-profit mission.  

"We're out there helping consumers get loans and helping consumers acquire and maintain savings, while banks exist to make money for their shareholders," said Donovan. "They are completely different organizations."  

Politico highlighted CUNA's nationwide "Don't Tax My Credit Union" campaign through which credit union members have sent more than 850,000 messages to Congress.  

CUNA's Donovan noted, "There isn't a member of Congress that has come out publicly and said 'hey let's tax credit unions.' The article even mentions that a key player in the congressional push for tax reform, House Ways and Means Chair Dave Camp (R-Mich.), has said publicly that "credit unions continue to play a very important role in communities across Michigan and our nation."  

However, the Michigan Republican has also made it clear that all tax provisions are in play during tax reform--that he has started with a "blank page" approach and stakeholders must work their exemptions  back into the tax code.  

The banks say that approach, Politico noted, helps them in their fight against credit unions because each tax break has to be defended.  

Use the resource link to see more on CUNA's "Don't Tax My Credit Union" campaign.

Goodlatte To Announce Patent Litigation Bill Today

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WASHINGTON (10/22/13)--The head of the House Judiciary Committee, Rep. Bob Goodlatte (R-Va.), announced that he will introduced a bill today to address the "ever-increasing problem" of abusive patent litigation.
 
Goodlatte said Tuesday that he would unveil the bill at a press availability session at 11 a.m. (ET) today on Capitol Hill.
 
Critics of the current patent system say the problem involves some patent holders who are abusing the system. Rather than incentivizing the creation of the next-generation of advancements, they say, the abusers are instead suing unsuspecting consumers and extorting settlements.

It is a concern shared by the Credit Union National Association, which signed onto a joint letter to Congress in July that was supported by 42 trade associations in Washington, D.C., and which urged statutory changes.
 
At that time CUNA expressed deep concerns about the "patent troll" issue because credit unions have become a target of the abusive practices.
 
On the Senate side, Sens. Patrick Leahy (D-Vt.) and Mike Lee (R-Utah) penned an opinion piece in Politico.com last month that stated in no uncertain terms their belief that abuse of the country's patent system must be addressed.

The senators announced they are working to craft bipartisan legislation in the Senate to address abusive practices and restore confidence in the American patent system.
 
They said their bill will "increase the transparency of patent ownership, protect the customer of a patented product when the manufacturer should really be the defendant and improve the process for reviewing patents at the U.S. Patent and Trademark Office."

Regulators Say QM Offerings Will Not Elevate Fair Lending Risk

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WASHINGTON (10/23/13)--Offering only Qualified Mortgages "would not, absent other factors, elevate a supervised institution's fair lending risk," the National Credit Union Administration and other federal financial regulators said in a Tuesday joint statement.

The statement came in response to creditor questions to the agencies. Creditors, the regulators said, have asked for clarity regarding whether the disparate impact doctrine of the Equal Credit Opportunity Act (ECOA) and its implementing regulation, Regulation B, allows them to originate only QMs. Credit Union national Association representatives, including Deputy General Counsel Mary Dunn, raised this issue as recently as last week in meetings with the with the Consumer Financial Protection Bureau and NCUA.

The CFPB issued standards to define QMs under the agency's "ability to repay" rules, and mortgage servicing rules, in January.

In the joint release, the agencies noted that "the decisions creditors will make about product offerings in response to the Ability-to-Repay Rule are similar to decisions creditors have made with regard to other significant regulatory changes affecting particular types of loans."

Creditors, they said, "should continue to evaluate fair lending risk as they would for other types of product selections, including by carefully monitoring policies and practices and implementing effective compliance management systems." The same principles apply in determining compliance with the Federal Housing Agency and its implementing regulation, the release added.

The Federal Reserve Board, CFPB, Federal Deposit Insurance Corp., NCUA and the Office of the Comptroller of the Currency co-signed the joint statement.

For the full release, use the resource link.