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CUNA 35-point Plan Could Help Spell Out Relief Bill

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WASHINGTON (4/11/13)--U.S. House members showed interest in regulatory relief for credit unions, and outlined some of their own plans for credit union action, during a Wednesday hearing in which the Credit Union National Association released a 35-point plan for relieving credit union regulatory burden.

Click to view larger image Security One FCU CEO Pamela Stephens, testifying on CUNA's behalf, described for members of a House Financial Services subcommittee how there seems to be a "treadmill' of regulatory burden. "I'm constantly running, trying to catch up and fear we are not in compliance," she said. Security One is a $55-million-asset credit union in Arlington, Texas. Shown behind Stephens is (left) CUNA Senior Vice President of Legislative Affairs Ryan Donovan and (right) CUNA President CEO Bill Cheney. (CUNA Photo)
CUNA's comprehensive plan, presented to the subcommittee by its witness, Pamela Stephens, highlights ongoing concerns with the National Credit Union Administration, the Consumer Financial Protection Bureau, and the Financial Accounting Standards Board, among other things. Stephens is CEO of $55-million-in-assets Security One FCU of Arlington, Texas.

Ryan Donovan, CUNA senior vice president of legislative affairs, said the hearing is an indication that lawmakers have heard the need for credit union regulatory relief "and are preparing to put a solution on the table."

The chairman of the House Financial Services financial institutions subcommittee, Rep. Shelley Moore Capito (R-W.Va.), and ranking subcommittee member Rep. Gregory Meeks (D-N.Y.) both noted the importance of credit unions to their communities.

Subcommittee members said they favored streamlining regulations for credit unions and allowing greater credit union investment opportunities, including access to supplemental capital. Lawmakers also asked pointed questions about qualified mortgages and the true costs of regulatory burdens, and commented on the need for increased lending to small business owners during the hearing.

Legislative fixes to some of the burdensome issues facing credit unions were also discussed.  For instance:

  • Rep. Gary Miller (R-Calif.), vice chairman of the House Financial Services Committee, announced he will introduce a credit union relief bill; and
  • Rep. Carolyn Maloney (D-N.Y.) said she is working on legislation that would ensure that credit union loans made to businesses impacted by disasters do not count against the member business lending (MBL) cap.
Rep. Ed Royce (R-Calif.) also discussed the MBL cap, and his bill (H.R. 688) that would increase that cap from 12.25%-of-assets to 27.5%-of-assets. He noted that many of his constituents have turned to credit unions to help them fund their businesses, and said many small businesses are still in dire need of sources of funding.

During the hearing, Stephens likened credit union battles with regulatory burden with being on an endless treadmill. She said she feels her credit union is constantly running, trying to catch up and be in compliance with all the rules. Stephens emphasized that her credit union is trying to reach out to the Hispanic community in her area, but regulatory burden and issues raising capital have made that more difficult.

The Hispanic community in her area makes a great deal of remittance transfers, and Stephens said her credit union is "trying to get into that business."

Stephens addressed a Consumer Financial Protection Bureau proposal to allow a safe harbor exemption from certain requirements of a developing remittance rule.  The safe harbor would release remittance providers that transact 100 or fewer remittances per year from disclosure and other requirements. However, Stephens said that such a low threshold "in no way addresses where we need to be."

Credit unions could better serve their members if resources were not drained on compliance issues, she told lawmakers.

To address regulatory burdens, CUNA has developed its 35-point plan, described by Stephens in her testimony.  Items suggested in that plan include:

  • Requiring the National Credit Union Administration budget process to become more transparent by, for instance, requiring an annual open hearing on its spending plans;
  • Helping credit unions make more small business loans by:  fully exempting government-guaranteed business loans from the MBL cap; and increasing the de minimis credit union business loan amount to $500,000, among other changes;
  • Making improvements to Regulation D, such as increasing the number of automatic transfers allowed from a members savings to share accounts;
  • Increasing the maturity limit for higher education loans made by federal credit unions; and
  • Increasing  the NCUA board membership from three members to five members, including a state regulator's presence, and modernizing other aspects of the board structure;
The CUNA regulatory relief document also addresses concerns regarding CFPB, NCUA and Financial Accounting Standards Board projects and their impact on credit unions.

For prepared hearing testimony, a summary of CUNA's regulatory recommendations, and more News Now coverage of the hearing, use the resource links.

CFPB 'Open' To Info Privacy Comments On Database

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WASHINGTON (4/11/13)--In the April 10 issue of the Federal Register, the Consumer Financial Protection Bureau acknowledged the concerns of the Credit Union National Association and others that public disclosure of consumer complaints could have the unintended consequence of unmerited reputational damage.

The CFPB officially launched a database of consumer complaints regarding financial products and services in late March by making more than 90,000 comments publicly available.

CUNA had underscored that while credit unions will not likely be the subject of a sizable number of consumer complaints, the database still could have unintended negative consequences. CUNA has warned that sensitive or confidential business or consumer information could be inadvertently disclosed when consumer complaints are filed in the database.

"The bureau should take steps to minimize privacy risks and other unintended consequences," CUNA has said in a series of comment letters.

The bureau, in the April 10 document, acknowledged the possibility that "some consumers may draw (or be led to) erroneous conclusions from the data."

Although the CFPB also makes the point that the same would be true of "any market data," it went on to say the agency is "open, however, to further suggestions from trade associations, companies, and other concerned stakeholders on how best to provide additional context for the public database."

Political Advocacy Award Goes To CUNA/MCUN Ad

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WASHINGTON (4/11/13)--Credit union-backed political campaign materials have again been recognized for their effectiveness, as an ad produced by the Credit Union National Association, the Montana Credit Union Network (MCUN) and partner Compass Media Group took home a bronze trophy at the 2013 edition of the "Pollies."

Click to view larger image This award-winning ad was one of many ways CUNA and MCUN supported Sen. Jon Tester (D-Mont.) in last year's elections. Tester fended off a strong Republican challenge to retain his Senate seat.
The "Pollie" awards are presented each year by the American Association of Political Consultants (AAPC). The awards have been called the "Oscars of political advertising."

A direct mail piece for Sen. Jon Tester (D-Mont.), entitled "Farmer," won third prize in the best direct mail for membership organization--Democrat category. CUNA Vice President of Political Affairs Trey Hawkins thanked the AAPC for its recognition of the quality of this credit union political communication.

Tester's 2012 reelection was one of CUNA's highest political support priorities, and this and other mailers were sent to credit union members in Montana as CUNA teamed up with MCUN to support the senator. Tester also received CUNA and credit union backing in the form of volunteerism, phone banking, fundraisers and neighborhood canvassing.

"I'm delighted that this beautiful piece won a prestigious 'Pollie' Award. It is wonderful to be validated by peers. However, the best prize of all was the reelection of Senator Jon Tester--I know that these professional, positive messages assisted us in keeping a great credit union friend in the U.S. Senate," Tracie Kenyon, MCUN President/CEO, said.

NEW: CUNA: Good Public Policy Dictates CU Tax Status

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WASHINGTON (4/11/13, UPDATED 4:55 p.m. ET)--Participating today in a House Ways and Means Committee staff briefing on the credit union tax status, Credit Union National Association President/CEO Bill Cheney underscored that the U.S. Congress conveyed an exemption from federal income tax to state- and federally chartered credit unions because of their ownership structure and special mission.

Of the briefing's importance, Cheney said CUNA was there to educate on the public policy reasons for the credit union tax status: "Credit unions are Americans' best option for financial services, and the credit union tax status represents one of the best investments that the government makes in its citizens.  Not all tax preferences are alike.  Some benefit a small group.  Others encourage socially beneficial behavior.  The credit union tax exemption clearly falls into the second category."

Credit unions were first made tax-exempt by a ruling by the U.S. Attorney General in 1917, less than 10 years after the first one appeared in this country and 17 years prior to the enactment of the Federal Credit Union Act. CUNA senior staff reminded the tax-policy staffers that the exemption has been reaffirmed many times, including in 1935, 1936, 1937, 1951 and 1998.

Credit unions behave differently from for-profit institutions due to their not-for-profit financial cooperative structure, the CUNA group said. That structure allows credit unions to focus totally on member value and service, and, overall, prevents them from taking the types of risks banks take in the name of profits.

This resulting difference in behavior creates substantial benefits for both the nation's 96 million credit union members and non-members as well, they said. Members benefit from lower rates on loans, lower fees on services, and higher returns on deposits. Credit unions' focus on exceptional service also keep competitive pressure on banks to the benefit of consumers.

Cheney and the CUNA group noted these economic benefits provide gains to tax-paying credit union members and other consumers that far outweigh any funds that would be brought in by imposing a federal income tax on credit unions: While the Joint Committee on Taxation estimated the credit union "Tax expenditure" meant $0.5 billion in unclaimed government revenues in 2012, CUNA estimates that credit unions gave $8 billion back to their members in the form of low fees, low rates and other benefits.

Simply put, but with profound results, the CUNA group said, a tax on credit unions is a tax on 96 million Americans who are their members.

Further, CUNA pointed out,  credit unions provide full and fair service to all members and  more than half of members that rely on credit unions for their primary financial services are middle class Americans, bringing in annual incomes of $25,000 to $75,000.

The credit union tax status was the sole topic of the briefing, which was also attended by other stakeholders. 

CUNA Executive Vice President of Government Affairs John Magill, Senior Vice President of Legislative Affairs Ryan Donovan, Vice President of Legislative Affairs Sam Whitfield, Senior Legislative Representative John Hildreth and Chief Economist Bill Hampel also took part in the meeting.

'Plain Language' Guide Available For QM Rule

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WASHINGTON (4/11/13)--A "Small Entity Compliance Guide for the Ability-to-Repay and Qualified Mortgage Rule" is now available from the Consumer Financial Protection Bureau.

This is the first of a series of planned "plain language" compliance guides and other informational materials the CFPB plans to provide over the next few months on its new mortgage regulations.

The bureau has said the goal of the guidance series, including the Wednesday release, is to provide a comprehensive rule summary in a plain language and FAQ format, which makes the content more accessible and consumable for a broad array of industry constituents, especially smaller businesses with limited legal and compliance staff.

The CFPB issued standards to define a "qualified mortgage" under the agency's "ability to repay" rules in January. The rule amended Regulation Z, which implements the Truth in Lending Act, to require creditors to make a reasonable, good faith determination of a consumer's ability to repay any consumer credit transaction secured by a dwelling (excluding an open-end credit plan, timeshare plan, reverse mortgage, or temporary loan) and establishes certain protections from liability under this requirement for "qualified mortgages."

The Credit Union National Association is reviewing the guide and will be following up with the CFPB on any issues of concern.

Use the resource link below to access the guide.