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CUNA Supports CU Tax Status At Congressional Staff Briefing

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WASHINGTON (4/12/13)--The Credit Union National Association Thursday participated in a House Ways and Means Committee briefing on the credit union tax status, talking to four members of the powerful tax-policy committee and about 15 staffers. CUNA 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.

Cheney, after the meeting, reiterated that preserving the credit union tax status continues to be a top CUNA priority. He said CUNA was at the meeting to share 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.

FHA May Request Treasury Infusion

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WASHINGTON (4/12/13)--The Federal Housing Administration (FHA) may need a $943 million credit from the U.S. Treasury in October to make certain sufficient reserves are on hand today to cover projected losses over the next 30-years, FHA Commissioner Carol Galante said this week.

In a release, Galante said the FHA is still under stress from loans insured in 2009 and earlier, and from mortgages insured under its reverse mortgage programs. However, she added, the FHA "is taking every appropriate action to reduce the likelihood" that Treasury assistance is needed going forward. The FHA has not required this type of appropriation from the Treasury in the past, agency staff told News Now.

The FHA's single-family insurance fund is currently facing a projected shortfall of $16.3 billion due to mortgage loan defaults by borrowers, and House Financial Services Committee Chairman Rep. Jeb Hensarling (R-Texas) and others have called for serious reforms to the agency.

Legislation that would strengthen the FHA and help ensure that agency's long-term solvency was reintroduced by Financial Services Committee Ranking Member Maxine Waters (D-Calif.) last month. The bill, known as the FHA Emergency Fiscal Solvency Act (H.R. 1145), would give the FHA greater flexibility to take action against loan originators that have high loan losses or take part in faulty underwriting; and authorize the FHA to require indemnification for improperly written loans.

The agency earlier this year announced some of its own reforms that could help improve its financial condition and manage and protect its single-family insurance programs. The changes will also encourage the return of private capital to the housing market. Galante last year said she would consider down payment requirement and insurance pricing changes to protect the FHA against losses on high-balance loans that are outside Fannie Mae and Freddie Mac conforming loan limits. This change could also help to scale back the government's footprint in the housing market, the FHA said.

CLF, CDRLF, CDFI Fund Spending Changes Are In Obama 2014 Budget

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WASHINGTON (4/12/13)--The maximum loan limitation of the National Credit Union Administration's Central Liquidity Facility (CLF) would continue at its current fiscal 2013 level under the Obama administration's proposed budget for fiscal 2014. The CLF is authorized by the Federal Credit Union Act to lend up to 12 times its paid-in capital.

Under the Obama administrations proposed 2014 budget, funding for the NCUA's Community Development Revolving Loan Fund (CDRLF) program would fall slightly from 2013's funding total. The administration has requested $1.127 million for 2014. A total of $1.144 million in CDRLF funding was approved in the 2013 budget. The CDRLF provides loans and technical assistance to federal and state credit unions that are designated as low-income credit unions, as defined by NCUA regulations. Last August, the NCUA awarded $1.4 million in technical assistance grants to just over 100 small credit unions through the CDRLF.

Funding for the U.S. Treasury's Community Development Financial Institutions (CDFI) fund would be increased under the Obama budget plan, totaling $224.9 million. That fund received $210 million in government backing for fiscal 2013.

The CDFI Fund late last year said it expects to provide up to $165 million to eligible financial institutions in 2013. The fund helps locally based financial institutions--including credit unions--offer small business, consumer and home loans in communities and populations that lack access to affordable credit. Credit unions that are certified to take part in the CDFI program may apply for as much as $2 million in funding to help maintain their credit union's presence in the community.

Times Square Lights Up With CU Difference

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WASHINGTON (4/12/13)--Springtime in New York City is legendary.  And starting Monday, the throngs of people moving through one of Manhattan's most bustling thoroughfares, Times Square, will see a message in the neon lights letting them know they'll get better rates and lower fees by switching to a credit union, and urging them to find one at www.aSmarterChoice.org.

The Credit Union National Association has arranged for the message to run
A series of messages about the benefits of credit union membership will be rotated on this  26-feet wide,  20-feet high video billboard starting Monday. Credit unions and aSmarterChoice will  be featured on the CBS Screen at Times Square (shown center), in New York City, from April 15 through July 4.
hourly on the iconic CBS Screen on famed 42nd Street starting Monday, April 15, through July 4, a period that also encompasses CUNA's America's Credit Union Conference in New York City June 30  to July 4 at the nearby Hilton New York.

"CUNA and the leagues developed and launched aSmarterChoice to raise consumer awareness about credit unions and grow membership," noted Paul Gentile, CUNA EVP of Strategic Communication and Engagement.  "We are thrilled to have our message running so prominently in one of the most famous venues in the world, during one of its busiest periods."

Over 450 million people pass through Times Square annually, and some 60,000 cars cross 42nd Street and 7th Avenue every day.  CUNA's video billboard ad for aSmarterChoice will appear over an eight-week period when New York will celebrate such high-profile events as the Tribeca Film Festival, Memorial Day, the AIDS Walk, Father's Day and Independence Day.

The full-color, full-motion 15-second ad will be shown throughout the day and evening, repeating hourly on the CBS Screen, which is 26-feet wide and 20-feet high.  The message tells consumers if they want a bank they can actually trust, go to a credit union, where they'll find better rates, lower fees, and no stockholders competing against their interests.  The logo and URL for aSmarterChoice are displayed throughout the message's duration.

"Since launching the site, we've seen a significant spike in visitors whenever it is featured in the media," Gentile noted. "We anticipate a significant boost in traffic to the site as a result this ad run in Times Square. That means more people from all walks of life discovering and joining credit unions.  It is a great example of how we are putting our new strategic vision into practice."

Raising awareness about credit unions is a key tenet of the strategic vision that CUNA President/CEO Bill Cheney debuted at CUNA's Governmental Affairs Conference.  "Uniting for Good" to raise awareness, remove barriers and foster service excellence will achieve a vision where "Americans choosing credit unions as their best financial partner." (See related story: Cheney in NewsWatch: Concrete Steps Lead To CU 'Vision.')

Quarterly Insurance Report Is Lone NCUA Agenda Item

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ALEXANDRIA, Va. (4/12/13)--A quarterly insurance fund report will be the lone item on the agenda when the National Credit Union Administration board meets on Thursday, April 18.

"It is always a good development when credit unions don't need to worry another new rule or proposal will be issued," Credit Union National Association Deputy General Counsel Mary Dunn said of the abgreviated agenda.

The agency has not scheduled a closed board meeting at this time.

The previous quarterly report, released at the February open board meeting, showed that the number of federal credit unions with CAMEL codes 3, 4 and 5 dropped significantly during 2012.

The agency also reported the National Credit Union Share Insurance Fund NCUSIF ended 2012 with a 1.30% equity ratio, after transferring $88 million in "excess equity" to the Temporary Corporate Stabilization Fund (TCCUSF). The NCUA said it calculated the ratio on an insured share base of $839.4 billion, compared to $795.3 billion at the end of 2011, indicating growth of 5.5%.

The last quaterly report also showed good 2012 results for the TCCUSF. Based on "preliminary and unaudited" information, for 2012 the total net position of the fund improved nearly $1.8 billion.

For the full agenda, use the resource link.

Cheney in NewsWatch: Concrete Steps Lead To CU 'Vision'

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WASHINGTON (4/12/13)--Sustained, unified action will enable the credit union movement to achieve its vision where "Americans choose credit unions as their best financial partner," Credit Union National Association President/CEO Bill Cheney noted in the latest issue of CUNA's Credit Union NewsWatch. He shared concrete steps that will help take the system toward its new vision.

Cheney was discussing the new "Unite for Good" rallying cry for credit unions that CUNA unveiled at its 2013 Governmental Affairs Conference here in March. CUNA has called upon credit unions to work toward a movement-wide strategic vision, collaborating to remove barriers, raise awareness, and  foster service excellence under the "Unite for Good" banner.

"By achieving the goals that underlie the new vision our movement has embraced, credit unions will be able to make an even greater impact than we do today on our members' financial well-being.  That, in turn, will get us to a place where millions of more Americans choose credit unions as their best financial partner," Cheney wrote in NewsWatch, CUNA's members-only bi-weekly newsletter.

Cheney shared action steps credit unions can take to achieve the system goals:

• To remove barriers, action steps include having regular contact with elected officials, participating in CUNA's Hike the Hill program, supporting credit union-friendly candidates, and regularly filing regulatory comment letters;

• Increase consumer awareness by being active with social media, stay in contact with local reporters and editors, and be active in local civic organizations; and

• Foster service excellence by such things as being competitive on rates and fees, being more convenient through ATMs, shared branching and online solutions, and staying current with in-demand product offerings.

The "Unite for Good" vision was developed over more than a year from discussions with credit union and league leaders, credit union system partners, and CUNA's own leadership.

CUNA member credit unions can use the link below to access a full list of action steps and more on the Unite for Good website. However, the CUNA list is not meant to be exhaustive and CUNA encourages credit unions to share additional ideas by emailing them to uniteforgood@cuna.coop.

HARP Extended Through 2015

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WASHINGTON (4/12/13)--The life of a government mortgage financing program known as HARP--the Home Affordable Refinance Program--was extended by two years yesterday when the Federal Housing Finance Agency directed Fannie Mae and Freddie Mac to extend it to Dec. 31, 2015. The program was set to expire Dec. 31, 2013.

FHFA Acting Director Edward DeMarco called the HARP program a "useful tool for reducing risk," which has helped more than two million homeowners refinance their mortgages if held by Fannie or Freddie.

He announced that his agency soon will launch a nationwide campaign to inform more homeowners about HARP and its eligibility requirements and to motivate them to explore their options and utilize HARP before the program ends.

HARP was launched in 2009 to let troubled homeowners bypass a requirement that they have at least 20% equity in their home to be able to refinance their mortgages at lower rates. Late in 2011 changes were made to the program--removing certain restrictions--to help more underwater borrowers benefit from refinancing their home mortgages through HARP.

Use the resource link to access FHFA's Refinance Report.