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Fed Policy, Housing System, Reg Burden On House Financial Services March Agenda

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WASHINGTON (2/28/13)--Monetary policy, the U.S. housing system, and regulatory burdens that hinder economic growth are areas of focus on the House Financial Services Committee's hearing agenda next month, according to a schedule released Wednesday by its chairman.

Rep. Jeb Hensarling (R-Texas) said his committee's attention in March will also focus on ending "Too Big to Fail."

Of particular interest to credit unions will be a March 20 hearing by the Financial Institutions and Consumer Credit Subcommittee on the growing burden of federal regulations on small financial institutions across the country.

Noting that the schedule can change and that each meeting will become final only when an official notice is distributed, the committee also released these dates:

  • March 5--The Monetary Policy and Trade Subcommittee will explore reactions to Federal Reserve Chairman Ben Bernanke's recent testimony before the House and Senate on the economy and monetary policy;
  • March 6--The Capital Markets and Government-Sponsored Enterprises Subcommittee will examine the onset of the financial crisis of 2008-09 and any role Fannie Mae and Freddie Mac may have played;
  • March 13--The Housing and Insurance Subcommittee will examine competitive advantages that might be enjoyed by the Federal Housing Administration and how they could crowd out private capital in housing finance;
  • March 14--The Oversight and Investigations Subcommittee will hold a hearing on the Financial Stability Oversight Council and its role in determining which institutions are "Too Big to Fail"; and
  • March 19--The Financial Services Committee will hold a hearing on the Federal Housing Finance Agency.
Also this week committee chairman Hensarling, speaking Tuesday at the Credit Union National Association's Governmental Affairs Conference in Washington, D.C., said he will help credit unions preserve their tax status.

Lew Confirmed As Next Treasury Secretary

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WASHINGTON (2/28/13)--The U.S. Senate on Wednesday approved Jack Lew to serve as U.S. Treasury Secretary.

Lew was approved by a 71 to 26 vote.

"At this critical time for our economy and our country, there is no one more qualified for this position," President Barack Obama said in a release.

Lew previously served as Obama's chief of staff.

Sen Warren: CU 'Reliable' Model a Bright Spot In Economy

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WASHINGTON (2/28/13)--Sen. Elizabeth Warren (D-Mass.), speaking to the Credit Union National Association's Governmental Affairs Conference here Wednesday, directed the spotlight to shine brightly on the credit union difference.

Across her state of Massachusetts--and all around the country--member-owned credit unions are looking out for people, she said. "That's what credit unions do-they work for their members."

Click to view larger image Dan Egan (left), president of the Massachusetts Credit Union League, and the new Democratic senator from that state, Sen. Elizabeth Warren, greet on the CUNA GAC stage. (CUNA photo)

Remembering the unfolding of the country's recent financial crisis, the senator said that as one Wall Street banking scandal after another unfolded, credit unions remained a bright spot in the financial industry.

"Credit unions did not break this economy. They did not build business models around tricking their customers. When the economy faltered, they did not turn their backs on the families and small businesses that needed them.

"On the contrary, credit unions worked hard to lead our economic recovery, responsibly and reliably providing credit to their members that need it. The credit union motto says it all: 'not for profit, not for charity, but for service,'" said Warren, who was instrumental in setting up the Consumer Financial Protection Bureau before she won election to become Massachusetts' new senator.

Warren talked about the changes to the financial services market from a generation ago to the time the financial crisis hit. She said that by the time of the crisis some financial services providers no longer provided transparency for consumers on such things as terms for credit cards, checking accounts, mortgages and signature loans.

"While credit unions continued to provide clear, high-quality service for millions of Americans, a different form of pricing had become all too prevalent elsewhere. Too many credit card companies and mortgage lenders used a low advertised price on the front end to entice customers, and then made their real money with fees and charges and penalties and re-pricing on the back end. The costs and risks of products became harder to see, which meant that comparison shopping was almost impossible and the market became less and less efficient."

She said families and small financial institutions alike were hurt.

"Credit unions that wouldn't adopt a business model based on tricks and traps were competing with slick outfits that pretended to underprice them. In other words, the game was rigged--rigged against consumers and rigged against small financial institutions," Warren said.

"When I set up the Consumer Financial Protection Bureau, I wanted to increase transparency in the marketplace and to level the playing field for credit unions and other providers that want to do right by consumers."

Warren criticized GOP opposition to confirming a CFPB director and asked credit unions to encourage lawmakers to approve his appointment.

King Urges Budget Compromise, Lauds CUs

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WASHINGTON (2/28/13)--Rep. Peter King (R-N.Y.) says lawmakers on Capitol Hill need to begin resolving the budget impasse that has paralyzed Congress.

Click to view larger imageRep. Peter King (R-N.Y.) praises credit unions for the role they took in easing the pressures caused by "the crash of 2008." (CUNA photo)

"It's time for politicians to stop blaming each other," he said during a speech before the Credit Union National Association's Governmental Affairs Conference Wednesday. "Nobody is going to get what they want. In a democracy you sit down and bring people together."

The observation sparked applause during the general session.

King said any solution must include accommodating spiraling costs of Social Security and other such programs. He said all parties must put the impasse behind them so the government and Congress can go forward.

He told the audience that credit unions will have an important contribution to make in in this effort.

King praised credit unions' role in easing the pressures caused by "the crash of 2008." He also lauded the "strong response" by credit unions during the recent Hurricane Sandy disaster. The storm hit parts of New York with devastating results.

In addition to serving on House Committee on Financial Services, King is a member of the Homeland Security's subcommittee on counterterrorism and intelligence. He expressed concerns during his GAC talk about increasing evidence of cybersecurity attacks.

"We have to get busy with this crisis so that U.S. business can operate without worrying about such threats," he told the session.

CUNA Officials Pledge To Redouble Efforts To Reduce Regulatory Burden

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WASHINGTON (2/28/13)--Reducing credit unions' regulatory burden--one of the top priorities of the Credit Union National Association for this year--will be pushed for aggressively on Capitol Hill and when dealing with the regulatory agencies that have jurisdiction over credit unions, CUNA executives said Wednesday.

"We plan to continue our good working relationships with the agencies--we want them to respect us even if they don't like us--and continue to provide them with data to show how regulations impact credit union operations,'' CUNA Deputy General Counsel Mary Dunn said during a panel discussion at CUNA's 2013 Governmental Affairs Conference held here through today. More than 4,200 credit union leaders registered for the conference.

Dunn said CUNA will be targeting problems, using data and cost-benefit analysis, and will be working with the CUNA Councils and credit unions to focus on problem regulatory areas.

Click to view larger image CUNA's Mary Dunn (second from right) says CUNA will continue to provide regulators with data that shows how regulations impact credit union operations.  Also shown (from left): CUNA General Counsel Eric Richard, Georgia Credit Union Affiliates President/CEO Michael Mercer and CUNA Senior Vice President for Legislative Affairs Ryan Donovan. (CUNA photo)

CUNA Senior Vice President for Legislative Affairs Ryan Donovan said the association will be making its case on Capitol Hill through testimony at congressional hearings and conversations with lawmakers and staff members about disturbing regulatory trends. For instance, he said CUNA has pointed out that the National Credit Union Administration is the only financial regulator that increased its budget last year.

"We hope that will result in calls of concern to the agency from Congress,'' he said.

Donovan added that while lawmakers pass laws with good intentions, the impact of their efforts is often more burdensome than they intended.

He noted that when Congress "shines a light on regulations and their impact, regulators pay attention.''

Dunn said that even though credit unions are pro-consumer, it is a "phony argument,'' that they aren't going to be adversely impacted by additional regulations that government agencies deem to be pro-consumer. She noted that there are additional costs always involved when a new rule is issued, even if it doesn't change a credit union's practice in a particular area.

Georgia Credit Union Affiliates President/CEO Michael Mercer said the excessive regulatory burden has three main effects: Small credit unions feel "beat down,'' and their leaders spend most of their time trying to keep up with the regulations so they survive their next exam. Often the boards of these credit unions discuss whether the regulatory climate makes it viable for them to survive; the increased costs and inconvenience of taking steps to ensure that a credit union isn't "inadvertently" out of compliance; credit unions have less ability to be innovative.

Mercer, who just ended his term as CUNA's chairman, said the increasing tendency of regulators to issue one-size-fits-all rules has resulted in the "homogenization and commoditization of consumer financial services, which makes it harder for credit unions to differentiate themselves.''

CUNA General Counsel Eric Richard moderated the panel.

Cordray Calls On CUs To Help CFPB Aid Consumers

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WASHINGTON (2/28/13)--Consumer Financial Protection Bureau Director Richard Cordray on Wednesday called on credit unions to work with the agency "to address the consumer financial issues central to the lives of people all across this country."

CFPB Director Richard Cordray said the CFPB and credit unions have worked well together since the agency's inception, and added that both groups "have much more good work" ahead. (CUNA photo)
For two years, the CFPB has enjoyed a relationship with credit unions "based on mutual respect and a common understanding of who it is we serve: the people of this country," Cordray said. "We have done good work together, and we have much more good work ahead of us.

"The people we jointly work for, your members, and American consumers, are eager to discover a new and improved consumer financial marketplace. And they deserve it," he added.

In his remarks before the Credit Union National Association's 2013 Governmental Affairs Conference, Cordray noted that it was not the traditional lending practices of credit unions that created the financial crisis.

"You were not underwriting the bad loans that brought down the housing market. Instead, you were sounding the alarm bells well before the sinking of the economy. And you were upholding sound underwriting standards even though you lost customers and market share to the financial predators," he told the CUNA GAC audience.

Cordray also addressed the CFPB's recent mortgage regulatory releases. The agency has exempted many credit unions from portions of some of these rules, and he said the exemptions express the CFPB's "recognition and acknowledgement that the traditional credit union lending model is deserving of respect and should be treated differently."

Credit unions "are member-focused," and carefully protect the people they serve, he said. "This is just the kind of service-based model that we want to encourage in the consumer financial marketplace," he added.

The mortgage market in general was also addressed during Cordray's comments. "As you know, the current mortgage market is so tight that lenders are leaving good money on the table by not lending to low-risk applicants seeking to take advantage of the current favorable interest rate climate. This actually creates a window of opportunity for credit unions that helped 'write the book,' so to speak, on what it means to underwrite responsibly," he said.

"In short, we believe that credit unions and the consumer bureau see the world in the same way: Consumers who understand their options, weigh choices appropriately and make sound decisions are good for responsible businesses and the economy as a whole," Cordray said.

For Cordray's full prepared remarks, use the resource link.

GAC Brings CUs To Washington At 'Critical' Time: House Majority Leader Cantor

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WASHINGTON (2/28/13)--The U.S. Congress could learn much from credit unions, House Majority Leader Eric Cantor (R-Va.) suggested in a Wednesday speech at the Credit Union National Association's 2013 Governmental Affairs Conference.

House Majority Leader Eric Cantor (R-Va.) told a Wednesday GAC audience that the regulatory burdens imposed on credit unions and other financial institutions over the past 15 years must be addressed. (CUNA photo)

"I know our credit unions at home are focused on community, I know that you are focused on helping your members and giving back to community…I think that the advice I would seek from you--is how to best apply that here in Washington," he said.

Americans want the U.S. Congress to seek common ground, the same common ground that credit unions find in their communities, Cantor noted. Too many people are affected by "a stagnant economy," and those are the people that credit unions hear from, and serve, he added.

Cantor noted credit unions are here in Washington at CUNA's GAC at a very critical time in the nation's history, as Congress is dealing with controversial issues such as deficit reduction and tax codes reform.

More than 4,200 credit union representatives were registered for CUNA's GAC and many will have flooded Capitol Hill to discuss credit union issues before they leave CUNA's four-day meeting this week.

In closing, Cantor said he wants to try and make sure credit unions can work with legislators "as partners in the mission of making life work again" for credit union members and for the people of this country.

"That's how we can grow together; that's how we can begin to see a brighter future," he said.

Johnson Notes CUs' Role In National Recovery

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WASHINGTON (3/22/12)--Senate Banking Committee Chairman Tim Johnson said Wednesday that the No. 1 priority of his panel is the "continued recovery of the national economy."

In a video address to the Credit Union National Association's Governmental Affairs Conference, he said, "Credit unions are playing an important role in that recovery and, as you know, across the nation nearly one in three Americans rely on the services you provide.

"In my home state of South Dakota, I have seen how credit unions strengthen communities by investing in their members' success and I thank you."

Johnson said overseeing the implementation of the 2010 Dodd-Frank Wall Street Reform Act will remain a committee priority.

"I am especially aware of avoiding unintended consequences. As you well know, credit unions did not cause the financial crisis and we are working to make sure they are not overly burdened by the (reform) law," he said.

On the topic of credit union member business lending, Johnson noted that the Senate did not vote last year on a bill to increases the cap and he added that he expects the debate to continue in this session of Congress.

GAC: Sherman With CUs 'Every Step Of The Way'

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WASHINGTON (2/28/13)--Rep. Brad Sherman (D-Calif.) reiterated his support for virtually all significant credit union issues Thursday during a speech at the Credit Union National Association's Governmental

Click to view larger image Rep. Brad Sherman (D-Calif.) offers strong support for credit union issues during a speech Wednesday at the Credit Union National Association's Governmental  Affairs  Conference. (CUNA photo)
Affairs Conference.

Perhaps most significantly, Sherman vowed to stand by credit unions in preserving their tax status. Under the Federal Credit Union Act, 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 reaffirmed periodically by the U.S. Congress and is supported by many lawmakers.

Sherman noted that credit unions merit their tax status because they are member-owned, not-for-profit financial institutions.

Sherman said that if credit unions had to pay more taxes, "The cost to our economy and the resulting loss of revenue would be far greater than any amount of tax we would collect from your institutions."

"We have got to fight for this exemption and I will be with you every step of the way," he pledged.

Sherman, along with co-sponsor Rep. Peter King (R-N.Y.), recently reintroduced CUNA-supported legislation that would permit the National Credit Union Administration to allow credit unions to accept additional forms of capital.

If the legislation is passed, credit unions could hold subordinated debt instruments, which would allow them to retain member ownership, Sherman said.

Let's contrast this to the banks, Sherman said. "They asked us for $700 billion in capital. You're asking us to get out of the way and let you raise capital from the private sector. Which is the better way to provide capital for America's financial institutions?"

Sherman also expressed support for the Small Business Lending Enhancement Act, which would increase the credit union member business lending cap to 27.5% of assets from the current 12.25%-of-assets level.

The bill, if enacted, would help credit unions lend an additional $14.5 billion to small businesses in just the first year after enactment. This money, which would be made available at no expense to taxpayers, would in turn help small businesses create more than 158,000 new jobs.

"What's not to like," Sherman said. "All you need is for us to get out of the way. I don't know a single member of Congress that can't give you a list of 100 small businesses in his or her district that need a loan and want to expand."

Sherman, with Rep. Blaine Luetkemeyer (R-Mo.), also recently introduced a 2013 version of The Eliminate Privacy Notice Confusion Act, which is backed by CUNA. Sherman called the current privacy requirements "a complete waste of paper."

Tester Praises CUs, Offers To Help Ease Reg Burden

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WASHINGTON (2/28/13)--Credit unions stress the value of self-reliance and a pragmatic
Click to view larger image Financial regulations should be fair and based on an institution's size and risk profile, says Sen. Jon Tester, adding that credit unions should not have to "pay for the sins of Wall Street." (CUNA photo)
approach to problem solving, just like people in rural areas in places like Montana, Sen. Jon Tester (D-Mont.) told the Credit Union National Association's 2013 Governmental Affairs Conference Wednesday.

He said that because of their uniqueness and service to their communities, he has worked to exempt small financial institutions from some of the regulations aimed at big banks.

"You shouldn't have to pay for the sins of Wall Street,'' he told attendees at the conference, which has more than 4,200 and runs through today. "I have fought to make sure that regulations are fair and are based on an institution's size and relative risk.''

Tester, whom CUNA and the state credit union league strongly supported in his successful re-election campaign last year, was the lead sponsor of efforts to delay the implementation of the Durbin Amendment regulating debit interchange fees. He noted that even though backers of the amendment had promised that it wouldn't negatively impact small financial institutions, that hasn't been the case and he would continue to urge regulators to fine tune the regulations.

He said that through the efforts of credit unions and their allies on Capitol Hill, the Federal Reserve's final rule on interchange better "reflects the costs that you bear,'' when offering debit cards.

He urged credit unions to be vigilant about lobbying elected officials and letting them know of the added costs from regulatory burdens.

Waters Pledges Support For CU Charter Enhancement Bills

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WASHINGTON (2/28/13)--Rep. Maxine  Waters (D-Calif.) said the pro-consumer record of credit unions justifies proposed legislation to raise limits on member business loans (MBLs) and to improve capital
Click to view larger image Rep. Maxine  Waters (D-Calif.) commends credit unions their performance during past scandals in other financial sectors that caused the recent recession.  (CUNA photo)

"I thank you for wanting to do this, and I'm going to help you," she said during a speech before the Credit Union National Association's Governmental Affairs Conference here. Waters is the ranking Democrat on the House Financial Services Committee.

Waters stressed during the GAC speech her long-time admiration of credit unions. "You are the ones that help provide the kind of products we can depend on," she said.  

She noted the commendable performance of credit unions during past scandals in other financial sectors that caused the recent recession. Credit unions were not part of the "debacle," she said.

Waters said increasing the MBL cap would help all consumers, and promised to support future credit union legislative initiatives. "I am you, and you are me," she told the session. 

Two key pieces of CUNA-supported legislation that would enhance the credit union charter were re-introduced in the House just about a week before CUNA's GAC. One bill would increase the MBL cap to 27.5% of assets, up from the current 12.25% limit. The other would broaden credit unions' access to secondary capital beyond retained capital.