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Washington Archive

Washington

House Committee Tax Policy Report Out Today

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WASHINGTON (5/6/13)--The Joint Committee on Taxation (JCT) is expected to deliver its working groups' report on tax policy reform today to the House Ways and Means Committee, which writes tax policy.

The report will broach a broad spectrum of tax issues, including those impacting credit unions. However, the Credit Union National Association does not expect the report to contain any policy recommendations.

"The fact of the matter is that this is a kitchen sink report. It's not the job of the staff of JCT to make decisions about what is included or not included in legislation to address tax policy," explains Ryan Donovan,  CUNA's senior vice president of legislation affairs.

"This is a critical time for credit unions to be educating their members on the value of the credit union tax status and encouraging them to contact lawmakers to express their support," Donovan added. CUNA research has revealed that the more credit union members understand the value of the tax exemption, the more likely they are to take action to protect it.

"For instance, when members understand that for every $1 of the credit union federal income tax exemption, $10 goes back to consumers in better rates and lower fees, they are motivated to advocate for the exemption," Donovan said.

He also noted that the next several weeks will be key in terms of what actually goes into a tax reform bill in the House. "It's possible that the House could consider comprehensive tax reform legislation before the end of July."

"Ever since the Speaker of the House announced at CUNA's Governmental Affairs Conference in February that the first action of the House this year would be the tax reform bill, the expectation has been that they would try to complete House consideration before August recess," said Donovan.

CUNA provides a Tax Advocacy Toolkit to its member credit unions to help with their efforts to educate their own members on credit union tax issues. CUNA members can use the resource link to access the toolkit.

Cheney Report: CUs Must Be Heard As Tax Talk Intensifies

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WASHINGTON (5/6/13)--The Credit Union National Association is vigorously defending the credit union tax exemption as the U.S. Congress continues to consider broad tax code changes. However, "the days of playing defense are coming to an end--and the time for actively advocating for a continued tax exemption is here," CUNA President/CEO Bill Cheney wrote in this week's edition of The Cheney Report.

A comprehensive tax reform report is expected to be released today, and the report could include some commentary about the credit union tax exemption. "Our tax preference won't be alone--any and all others will be mentioned, most likely, in one way, shape or form. So, from that point of view, we will have plenty of company," Cheney wrote. (See related story: House committee tax policy report out today)

Credit unions will need to rise above the resulting din and stand up for their tax status. "We can't be drowned out by all of the noise that will likely erupt early next week and continue throughout the process of tax reform," the CUNA CEO said. As many as 400 other affected parties will also be speaking up to defend their own priorities, and in times like this, "the squeaky wheel gets the grease," he emphasized.

Credit unions "are going to have to become the 'squeaky wheels'" and makes as much noise as possible, Cheney wrote.

One way credit unions can become "squeaky wheels" as quickly as possible is using CUNA's Tax Status Advocacy Toolkit to help their member outreach efforts, he noted. The importance of incorporating 96 million members into credit union advocacy efforts was also covered in a CUinsight.com column by CUNA Executive Vice President of Strategic Communications Paul Gentile. (Use the resource link for May 2 News Now story: CUNA In CU Insight: 96 Million Voices Can Back CUs In Tax Battle.)

This week's Cheney Report also includes:

  • Cyber security news;
  • Comments on remittance regulations;
  • News on credit union Financial Literacy Month activities; and
  • An update on credit union auto lending activities.
Each Friday, The Cheney Report delivers Cheney's insights on three to four key events and policy developments affecting credit unions into the e-mail inboxes of credit union CEOs. The report also provides a valuable window into CUNA's actions on behalf of member credit unions and reinforces the value of CUNA membership.

To sign up for The Cheney Report, click the resource link below and use the "subscribe" tab on the right of the page.

Past issues of The Cheney Report are also archived on cuna.org.

NCUA Supports CU Capital Bill

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WASHINGTON (5/3/13)--The National Credit Union Administration backs a bill that would allow well-capitalized credit unions to match a growing deposit base from a growing membership with capital from sources other than retained earnings--which currently is the only type of capital that counts toward capital ratio.

Under current law, the more deposits a credit union accepts, the more its capital ratio declines. When capital ratios decline, credit unions could face prompt statute regulated corrective action by their regulator.

NCUA Chair Debbie Matz pledged in a May 2 letter to Rep. Peter King (R-N.Y.), the bill's chief sponsor along with Rep. Brad Sherman (D-Calif.), that if the U.S. Congress enacts King's Capital Access for Small Business and Jobs Act (H.R. 719), her agency will "promptly propose the necessary rule changes required for implementation."

Matz wrote, "As we witnessed during the recent economic crisis, maintaining sufficient capital is critical at time of economic stress...Your legislation would provide credit unions with an additional tool to promote sufficient capital--even under adverse economic conditions--and ensure that healthy credit unions would no longer be forced to turn away deposits in order to protect their net worth."

The Credit Union National Association strongly advocates for giving credit unions access to supplemental capital. In a recent letter, CUNA urged federal lawmakers to consider the capital concerns of credit unions as Congress discusses Basel III exemptions for small banks.

"To be clear: we would have very significant concerns if Congress were to exempt the small banks from the Basel III capital requirements and not at the same time address reforms to credit union capital requirements," CUNA President/CEO Bill Cheney urged in the letter to all members of the U.S. House.

Basel III standards would require U.S. banks to hold common equity of 4.5% by 2015. In addition, banks would be required to hold a 2.5% conservation buffer, which would be gradually introduced by 2019, and increase Tier 1 levels from 4% to 6% by 2015.

Recent House legislation (H.R. 1693) would exempt community banks from the application of Basel III capital standards.

Lynrocten FCU Closed By NCUA

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ALEXANDRIA, Va. (5/6/13)--The National Credit Union Administration (NCUA) Friday liquidated Lynrocten FCU. The Lynchburg, Va., credit union had 1,068 members and about $13.8 million in assets, according to the agency.

The federal regulator made the decision to liquidate Lynrocten and discontinue operations after determining the credit union was insolvent and had no prospect for restoring viable operations.

Lynrocten FCU is the sixth federally insured credit union liquidation in 2013. The credit union was chartered in 1936 and served the employees of Rock-Tenn Co. and their immediate family members.

Member deposits are federally insured by the National Credit Union Share Insurance Fund up to $250,000. NCUA's Asset Management and Assistance Center will issue correspondence to individuals holding verified share accounts in the credit union within one week.

NEW: Ways And Means Working Group Tax Reform Report Delivered

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WASHINGTON (5/6/13, UPDATED, 2:07 p.m. ET)--The credit union tax status is one of many issues discussed in the just-released report on tax policy reform created by 11 House Ways and Mean working groups and delivered to the Joint Committee on Taxation.

The 550-plus page report does not contain any policy recommendations, but lists the pluses and minuses of around 400 different tax expenditures.

"Our tax preference is not alone, we have plenty of company," Credit Union National Association President/CEO Bill Cheney said Monday. "But credit unions need to be alert to the fact that our tax status is being discussed."

Cheney added, "It is vital that credit unions move to educate more of their members on the value of the credit union tax status, as their advocacy efforts could play a key role in deciding what goes into a final tax reform bill."

The U.S. House could consider comprehensive tax reform legislation before the end of July.

CUNA provides a Tax Status Advocacy Toolkit to its member credit unions to help with their efforts to educate their own members on credit union tax issues. CUNA members can use the resource link to access the toolkit.

Credit Access Compliance Date Is Nov 4

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WASHINGTON (5/6/13)--The Consumer Financial Protection Bureau's new credit access rule went into effect Friday and credit unions and others have until Nov. 4 to comply.

The regulatory changes, which were released early last week and published in the Federal Register on May 3, will allow credit card applicants who are 21 years of age or older to list joint-account income as an asset on credit applications. The regulation applies to all applicants regardless of marital status, but the bureau expects that it will ease access to credit particularly for stay-at-home spouses or partners who have access to a working spouse or partner's income.

Before this CFPB change, Regulation Z's ability-to-repay rule did not specifically address joint accounts or even checking accounts. It merely advised card issuers to take into account assets such as savings accounts when it determines whether it will allow an applicant to open a new card account or increase the credit limit on an existing account. The regulation, as originally written, created unintended issues for many couples and families.

For the regulatory changes, as published in the Federal Register, use the resource link.