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Washington Archive

Washington

CUNAs Hampel at White House tax discussion

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WASHINGTON (11/15/12)--How to avoid falling off the approaching "fiscal cliff" was the subject of a White House meeting Wednesday that was attended by Credit Union National Association (CUNA)Chief Economist Bill Hampel.

"Fiscal cliff," of course, is the newly minted and widely used phrased used to refer to the effect of a number of laws which, if unchanged, could result in a tough combination of tax increases and spending cuts that could weigh heavily on economic growth starting in 2013.

Hampel said the meeting he attended was a forum to discuss generating grassroots support for President Obama's approach to addressing the fiscal cliff.

Hampel told News Now that the White House emphasized that the president wants to proceed with policy that would avoid raising taxes on the middle class or eviscerating government spending.

"The credit union tax status was not an issue at this meeting," Hampel said, "nor was the subject of later tax reforms raised during the Wednesday session."

The tax-exempt status of credit unions, in fact, has not been mentioned in any of the current tax reform discussions. However, preserving the credit union tax status is a top CUNA priority, and CUNA will remain engaged and vigilant as tax reform discussions move forward.

CUNA identifies CU tax language is an error in bill

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WASHINGTON (11/15/12)--When the full text of H.R.6474 became available Wednesday and the Credit Union National Association (CUNA) identified language within that threatened the federal income tax exemption for federal and state-chartered credit unions, CUNA and the League of Southeastern Credit Unions immediately arranged meetings with the office of the bill's drafter, Rep. Dennis Ross (R-Fla.), and learned an error had been made.

The bill was noticed on Sept. 20 in the Congressional Record but at that time only the bill number and a very generic description was published.  There was no further bill text made available until yesterday.

"When we became aware of the specific language in this legislation, we immediately sought a meeting with Rep. Ross's staff," CUNA President/CEO Bill Cheney said Wednesday.

"In the course of our discussions with staff, they indicated emphatically that the inclusion of the credit union tax status was a drafting error--the credit union tax status was intended to be retained, not eliminated," Cheney emphasized.

Unfortunately, Cheney advised credit unions, the rules of the House do not permit the withdrawal or modification of the bill at this time.

However, the congressman's staff assured CUNA changes to bill would be made immediately if the bill sees any movement in the House. With the short remaining legislative calendar, it is considered unlikely that the bill will see action.  It would have to be re-introduced next year to be considered, and, based on the congressman's assurances, it would be modified before re-introduction.

Cheney pointed out that Ross is a strong supporter of credit unions and noted that CUNA appreciates the quick clarification his staff has made on this issue.

"This episode is a reminder of the threat that the tax status is under in an environment where Congress is considering comprehensive tax reform.  We have been and continue to monitor tax legislation closely; and, we will continue to work closely with policymakers to ensure that the credit union tax status is maintained," Cheney vowed.

CFPB reaches out to financial services innovators

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WASHINGTON (11/15/12)--Project Catalyst, a new Consumer Financial Protection Bureau (CFPB) initiative that will bring the agency and innovators together to promote consumer-friendly innovation and entrepreneurship in financial services and financial products markets, was announced on Wednesday.

Through Project Catalyst, the agency said it hopes to:

  • Establish firm lines of communication with innovators and be accessible to all those who may be affected by the CFPB's regulations, including those on the front lines of innovation;
  • Better understand new and emerging financial market products, and potentially adapt existing regulations to address new innovations in financial market products; and
  • Engage with innovators that have new ideas that beget consumer-friendly innovation.
CFPB Director Richard Cordray in a release said the collaborations fostered by the project will help the agency "better understand what works and does not work to improve life for consumers in the marketplace." Disclosure testing will also be an area of emphasis for the new project, and Cordray said the CFPB will also work with groups that are trying to improve consumer disclosures The CFPB may develop trial disclosures in the future, he added.

The agency has asked for information from individuals or groups that have noticed ways financial regulations could be improved to better foster consumer-friendly innovation, and said that these suggestions could be forwarded on to financial policymakers. The CFPB is also reaching out to employees or firms that are developing their own new consumer-friendly products, and wish to collaborate with the agency or launch a pilot version of these products.

The CFPB is already sharing data about consumer behaviors and trends with three firms. Those firms are consumer account protection provider BillGuard and "alternative banking" firms Plastyc and Simple.

The CFPB said its work with BillGuard will help it better understand trends in billing dispute resolution and consumer complaints. The collaborative efforts with Plastyc and Simple will will give the CFPB insight on consumer spending habits and saving.

For more on the CFPB project, use the resource link.

Assessments budget top todays NCUA agenda

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ALEXANDRIA, Va. (11/15/12)--Potential share insurance and corporate assessment ranges for 2013, and an agency budget for that year, will be some of the items unveiled when the National Credit Union Administration (NCUA) meets today.

The Credit Union National Association (CUNA) on Tuesday urged the agency to contain its 2013 costs, suggesting that the NCUA reject additional budget growth and hold the line on travel expenses. CUNA also recommended the NCUA increase budget transparency and accountability. CUNA President/CEO Bill Cheney noted that these recommendations are based on the "very serious concerns" credit unions have about the management of the agency's budget, based on "substantial increases the NCUA has approved" over the last three years.

CUNA has also suggested the agency could charge a 2013 Temporary Corporate Credit Union Stabilization Fund (TCCUSF) assessment of no more than 5 basis points (bp). That level of TCCUSF assessment "would be sufficient to responsibly make headway on paying down the fund, pending further information on what the ultimate losses will actually be," CUNA Chief Economist Bill Hampel said last month. The NCUA has said the 2013 TCCUSF assessment is likely to be in the range of 5 bp to 10 bp.

The agency did not charge a National Credit Union Share Insurance Fund (NCUSIF) premium in 2012, and the amount of a 2013 assessment, if any, is not known.

Overhead transfer rates (OTR) and operating fee scales are also on the agenda.

For more on the NCUA board meeting, use the resource link.

Higher small CU threshold needed at SBANCUA CUNA

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WASHINGTON (11/15/12)--More credit unions could see their regulatory burdens ease if the Small Business Administration goes through with its proposal to raise the size standard to $500 million for a credit union to be considered a small entity, the Credit Union National Associatin (CUNA) wrote in a Nov. 13 comment letter.

Raising the threshold from its current level of $175 million would enable more credit unions "to benefit from provisions that require federal agencies to assess and minimize regulatory costs for smaller entities, including the Regulatory Flexibility Act (RFA) and the Small Business Regulatory Enforcement Fairness Act (SBREFA),'' wrote CUNA Deputy General Counsel Mary Mitchell Dunn.

She noted those credit unions with assets under $500 million generally have fewer human resources to address their large and growing regulatory burdens and most do not have a full-time compliance officer on their staff. Raising the threshold would increase the percent of credit union and bank assets under the threshold from 3.5% today to 8.6%. 

As required by the Small Business Jobs Act of 2010, the SBA must conduct a detailed review of at least one-third of the size standards that apply to small businesses every 18 months.

Dunn also urged the SBA and its Office of Advocacy to support a substantial increase in the threshold that the National Credit Union Administration (NCUA) uses to define "small entity," NCUA's equivalent of "small business." NCUA's size standard, $10 million, has not been revised since 2003 and the NCUA is seeking comments now on how its size standard should be revised.  

Dunn said CUNA favors having the NCUA set the size standard at the same level as SBA and supports having the NCUA review the standard every 18 months. CUNA has communicated those views to the NCUA via a separate letter.

She also urged the SBA and Office of Advocacy to continue to actively participate in the SBREFA review process and do all they can to urge the Consumer Financial Protection Bureau to minimize costs for smaller credit unions that result from new or existing regulations.

More guidance for FIs to help Sandy-stricken borrowers

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WASHINGTON (11/15/12)--The National Credit Union Administration (NCUA) and other federal financial regulators have urged financial institutions to "consider all reasonable and prudent steps" to help members and customers impacted by Hurricane Sandy.

The Federal Reserve, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency joined the NCUA in releasing supplemental guidance to their Oct. 30 statements about financial institutions and borrowers affected by the storm.

In a release on the guidance, the agencies said prudent efforts by institutions to meet members' or customers' cash and financial needs generally will not be subject to examiner criticism.

The efforts may include:

  • Waiving ATM fees for customers and non-customers
  • Increasing ATM daily cash withdrawal limits
  • Waiving overdraft fees
  • Waiving early withdrawal penalties on time deposits
  • Waiving availability restrictions on insurance checks
  • Easing restrictions on cashing out-of-state and non-customer checks
  • Easing credit card limits and credit terms for new loans; and
  • Waiving late fees for credit card and other loan balances.
Financial institutions may also offer payment accommodations, such as allowing loan customers to defer or skip some payments or extending the payment due dates. These steps would avoid delinquencies and negative credit bureau reporting caused by storm-related disruptions, the release said.

The release also addresses loan modifications and customer/member identification requirements.

For the full release, use the resource link.

For more coverage of credit union work post-Sandy, see these related stories: CUANY, NCUA reps meet on post-Sandy strategies; and N.J. CUs continue struggles from Sandy's aftermath.

2013 CUNA compliance school dates set

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WASHINGTON (11/15/12)--Two Credit Union National Association (CUNA) Regulatory Compliance School dates have been scheduled for 2013: April 21-26 in New Orleans and Sept. 15-20 in Tempe, Ariz.

The compliance schools feature annual regulatory updates, general overviews and advanced sessions. They are designed to provide credit union professionals of all backgrounds and skill levels an understanding of the major regulations affecting credit unions and their regulatory duties.

To account for differing degrees of compliance familiarity, the school offers two learning levels: Introduction and Update.

The Introduction curriculum will provide attendees with full day courses on sections of regulations, and same-day tests on those regulations. Rather than requiring memorization of all regulatory elements, attendees are instead provided with the knowledge and resources to locate those intricate details when future compliance questions arise.

The Update curriculum focuses on today's most pressing compliance issues, with information straight from CUNA's compliance team. Breakout sessions will also allow attendees to choose specialized pursuits that are of the most value to them.

Testing to earn the Credit Union Compliance Expert designation will also be made available onsite.

Topics for the 2013 Compliance School sessions are still being developed.

For more on the 2013 schools, use the resource link.

Inside Washington (11/14/2012)

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  • WASHINGTON (11/15/12)--The Nov. 13 issue of American Banker reported that the House Financial Services Committee is set to lose 20% of its make up due to retirements and campaign losses among its 61 panel members. The article said five Democrats and seven Republicans will be exiting--and there will be a leadership shake up as well as the current chairman, Rep. Spencer Bachus (R-Ala.), is "widely anticipated" because of term limits to make way at the top for Rep. Jeb Hensarling (R-Texas). And on the Democrats' side, Rep. Maxine Waters (D-Calif.) is expected to take over as ranking minority member for retiring Rep. Barney Frank (D-Mass.). Frank is cited as the loss to the committee membership that may make the biggest impact, in part, because of his deep and extensive knowledge of financial services issues …
  • WASHINGTON (11/15/12)--Newly elected senator from Massachusetts Elizabeth Warren, a Democrat, is seen as a natural to become a member of that body's banking committee and has leadership support for such a position if she reveals an interest in it, according to a recent article in Politico (Nov. 13).  Warren helped build the Consumer Financial Protection Bureau, which was created under the Dodd-Frank Wall Street Reform and Consumer Protection Act, and is generally viewed as a Wall Street critic. Among her supporters Politico notes that Senate Banking Committee Chairman Tim Johnson (D-S.D.) has said he had a good working relationship with Warren and would welcome her to the committee if she wishes to join its ranks …
  • WASHINGTON (11/15/12)--The Financial Stability Oversight Council (FSOC) is trying to force the U.S. Securities and Exchange Commission (SEC) to strengthen its rules for money market mutual funds (MMMF)--a move FSOC has criticized the SEC for failing to take since the financial crisis. FSOC is comprised of a group of 10 regulators including the S.E.C. chair. On Tuesday, FSOC voted to recommend that the SEC adopt one or all three of actions backed by the council. They include  requiring MMMFs to establish a floating net-asset value, replacing the currently used $1-a-share price, or requiring the funds to set aside more cash to offset potential lost value  of their holdings (The New York Times, Nov. 13) …