Archive Links

Consumer Archive
CU System Archive
Market Archive
Products Archive
Washington Archive
150x172_CUEffect.jpg
Contacts
LISA MCCUEVICE PRESIDENT OF COMMUNICATIONS
EDITOR-IN-CHIEF
MICHELLE WILLITSManaging Editor
RON JOOSSASSISTANT EDITOR
ALEX MCVEIGHSTAFF NEWSWRITER
TOM SAKASHSTAFF NEWSWRITER

Washington Archive

Washington

Hill Hikes Keep CU Tax Status In Focus

 Permanent link
WASHINGTON (6/24/13)--Wisconsin and Arkansas credit union representatives kept the "Don't Tax My Credit Union!" message in front of the U.S. Congress last week as they met with their respective elected officials on Capitol Hill.

Click to view larger image Rep. Paul Ryan (R-Wisc.) (center-left) poses in his Capitol Hill office with, from left to right, Landmark CU COO Eric Kase, Summit CU CLO Dan Milbrandt and Wisconsin CU League Vice President of Government Affairs Tom Liebe. (WCUL photo)
These Hike the Hill visits followed on the heels of earlier efforts from credit union leaders from North and South Carolina, Oregon, Washington, Missouri, Michigan and Texas.

"Reports I am receiving back from these states focus on the importance of emphasizing the message that credit unions are concerned about preserving their tax exemption. Even our staunch supporters must be reminded how important the exemption is to credit unions," Credit Union National Association President/CEO Bill Cheney said in this week's edition of The Cheney Report.

The credit union tax status was a top topic for the Wisconsin Credit Union League, but they also addressed other key credit union issues, including:
  • The role of credit unions in a future housing finance system;
  • Member business loans; and
  • Supplemental capital.
Regulatory relief was another topic of conversation, and one credit union representative, Dan Milbrandt of Summit CU, Madison, Wisc., told a member of Rep. Jim Sensennbrenner's (R-Wisc.) staff that burdensome regulations are creating issues for his credit union. "We're just simple little town lenders trying to make loans to people," he emphasized.

The Northwest Credit Union Association also reported positive meetings with legislators from Washington and Oregon, where the benefits of the credit union structure and the importance of the not-for-profit tax exemption were central themes.

"As these visits to the Hill are going on, the message is being echoed by a growing number of contacts by credit unions and their members," Cheney noted.

The groundbreaking "Don't Tax My Credit Union!" campaign, which uses traditional means and social media to spread a pro-credit union message, has resulted in more than 120,000 contacts with lawmakers. Facebook and Twitter have pushed this message to a potential 240,000 persons, and hundreds of thousands of others have visited CUNA's website, donttaxmycreditunion.org.

The first stage of the 2013 Hike the Hill season wrapped up with last week's visits, but more visits are being planned for September.

"It's important to remember that this is not a three- or six-month campaign--this is a long-term effort," Cheney said of the tax status advocacy effort. "While these initial numbers are outstanding, we must keep the messages flowing throughout the Ssmmer, and well into the Fall," Cheney added.

This week's Cheney Report also includes:
  • Details on CUNA testimony before Congress;
  • An update on loan participation and qualified mortgage regulations; and
  • A preview of this week's America's Credit Union Conference.
Each Friday, The Cheney Report 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.

NEW: NCUA Nomination Could Move Quickly

 Permanent link
WASHINGTON (UPDATED: 6/24/13, 1 P.M. ET)--Former Oregon State Sen. Rick Metsger's (D) nomination to become a member of the National Credit Union Administration board could progress quickly if, as expected, it is approved by the Senate Banking Committee this week.

Metsger's nomination will be discussed before the committee on Thursday, June 27, at 10 a.m. (ET).

Credit Union National Association Senior Vice President of Legislative Affairs Ryan Donovan said there is an interest in the Senate to hold confirmation votes on non-controversial nominations such as Metsger's in July. "There is a plausible path to have it happen in July," he added.

Metsger, who would fill the vacant NCUA board seat created when former member Gigi Hyland exited last year, served as Oregon state senator from 1999 to 2011, where he chaired the Oregon Senate committee that heard all financial institution legislation. He was a member of the board of directors at Portland Teachers CU from 1993 to 2001 and has also been a board member of Financial Beginnings, a nonprofit focused on increasing students' financial literacy.

Other nominees on the committee's June 27 include Rep.  Melvin L. Watt (D-N.C.) to be director of the Federal Housing Finance Agency; Dr. Jason Furman, of New York, to be a member and chairman of the Council of Economic Advisers; Kara M. Stein of Maryland, to be a member of the Securities and Exchange Commission; and Dr. Michael S. Piwowar of Virginia, to be a member of the Securities and Exchange Commission.

CUNA: FASB Framework Must Recognize CU Structure

 Permanent link
WASHINGTON (6/24/13)--The Credit Union National Association supports the efforts of the Financial Accounting Standards Board (FASB) to recognize "that there are material differences between private companies and public companies and that reporting requirements should reflect those distinctions, at least in some instances," in its proposed private company decision-making framework.
 
However, in a Friday comment letter to the standard setter, CUNA Assistant General Counsel Luke Martone said the uniqueness of the credit union structure should be recognized as FASB develops a decision-making framework that will guide the Private Company Council (PCC) as it determines whether exceptions to U.S. Generally Accepted Accounting Principles--or GAAP--for credit unions and other private entities are appropriate.
 
The framework should also help identify opportunities for reducing the complexity and costs associated with preparing financial statements in accordance with U.S. GAAP.

FASB and PCC are working to improve the process of setting accounting standards for private companies, and this process began with the release of a July 2012 discussion paper. The proposed framework followed the release of that paper, and many CUNA suggestions have been incorporated into the framework. Those suggestions regard:
  • The use of alternative recognition and measurement standards; and
  • The application of industry-specific guidance.
Use the resource link to read the complete CUNA comment.

SBA Raises CU Small Biz Standard

 Permanent link
WASHINGTON (6/24/13)--A rule to raise the "small business" size standard for credit unions from $175 million in assets to $500 million, which was strongly supported by the Credit Union National Association when it was proposed, was approved last week by the U.S. Small Business Administration.

It goes into effect July 22.

The new size standard permits a greater number of credit unions, though still a relatively small number, to benefit from provisions that require federal agencies to assess and minimize regulatory costs for smaller entities, including those associated with the Regulatory Flexibility Act (RFA) and the Small Business Regulatory Enforcement Fairness Act (SBREFA).

When commenting on the proposed rule, CUNA noted research results that showed SBA that both credit unions and banks with less than $500 million in assets are unlikely to have a compliance officer on staff.

CUNA also documented that credit union and banks with $175 million to $500 million in assets employ 75 FTEs on average, whereas those with $500 million to $750 million on average have double the number of employees.

"This further supports the concern that smaller institutions simply have fewer resources to meet compliance responsibilities," CUNA wrote.

While CUNA welcomed the higher standard, the group noted that the impact of the change will be relatively small. The change from $175 million to $500 million would increase the percent of total credit union and bank assets under the threshold from 3.5% today to still only 8.6%.

Freddie Confirms Fee Reversal For CUs

 Permanent link
WASHINGTON (6/24/13)--The Credit Union National Association quickly secured confirmation last week: Freddie Mac will reverse course and refrain from imposing fees on mortgage sellers and servicers--including credit unions--that do not meet minimum activity thresholds.

The government-sponsored enterprise on May 15 had announced that effective Jan. 1, 2014, sellers and servicers that did not meet minimum activity thresholds for the prior calendar year would have been assessed a fee of $7,500 for low activity. Sellers and servicers would have had to sell loans with an aggregate unpaid principal balance of $5 million, or service or act as servicing agent for loans with an aggregate unpaid principal balance of $25 million in the prior calendar year, to avoid the fees.

Freddie Mac has changed course, stating that the fee will only apply to lenders that have Freddie Mac approval but do not sell or serviceanyof the company's mortgages. As long as a lender handles or writes at least one Freddie Mac loan over a three-year period, it will be able to avoid the fee.

"This is a welcome development," CUNA President/CEO Bill Cheney wrote in a letter sent last week to Freddie Mac CEO Donald Layton. "The fee would have unfairly burdened credit unions in rural and underserved areas where annual real estate sales activity and housing prices are not high enough to generate the dollar figures that meet Freddie Mac's thresholds," he said.

Earlier CUNA requested that the decision imposing these fees be revisited in a letter sent to Federal Housing Finance Agency Acting Director Ed DeMarco last week. It also was a topic of the testimony given by CUNA witness Jerry Reed of Alaska USA FCU to the House Financial Services subcommittee on financial institutions and consumer credit.

PEF FCU Placed Under NCUA Conservatorship

 Permanent link
ALEXANDRIA, Va. (6/24/13)--PEF FCU, Highland Heights, Ohio, has been taken under conservatorship, the National Credit Union Administration announced Friday.

The NCUA said it will work to resolve safety and soundness issues at the 2,974-member, $31.3 million-in-assets credit union.

Chartered in 1957, PEF Federal Credit Union serves 2,974 members and has assets of approximately $31.3 million, according to the credit union's most recent Call Report.

PEF was originally chartered in 1957 as Picker X-ray CU, and currently serves those that live, work, worship or attend school in the eastern section of Cuyahoga County, Ohio.
 
Members will still be able to conduct business at the credit union during the conservatorship.
 
For the full NCUA release, use the resource link.

WOCCU: Basel External Audit Rule Should Factor Complexity

 Permanent link
WASHINGTON (6/24/13)--Although the Basel Committee developed its External audits of banks consultative document to apply only to commercial banks and banking system, the World Council of Credit Unions recently asked the committee to consider its impact on smaller, less complex financial institutions because national and provincial credit union supervisors frequently apply the Basel Committee's international standards to credit unions.

In a comment letter to the committee sent Friday, World Council Chief Counsel Michael Edwards noted that his organization supports the external audits proposal in most respects.

"External audits are an important element of the safety and soundness regime of many banking institutions," Edwards wrote. But he added that whether external audits under the auditing standards applicable to publicly traded companies apply to an institution should depending on the size and complexity of the institution since public company audit standards can "impose significant regulatory burdens on small and medium institutions such as credit unions."

Those burdens, he added, can negatively impact credit unions' abilities to promote financial inclusion of unbanked persons and would be inconsistent with regulatory requirements for smaller credit unions in some jurisdictions that require on-site supervisory examinations of credit unions.

Edwards cites U.S. credit unions as an example of institutions that could be unduly burdened.  In this country, he says, credit unions are subject to examination by the National Credit Union Administration and, in some cases, also by state financial institution supervisors.

The Federal Credit Union Act does not require an external audit unless the credit union has more than $500 million in assets but federally insured credit unions with more than $10 million in assets that have an external audit must have the audit conducted according to generally accepted auditing standards.

"We believe that an external examination of a small credit union can limit the need for an external audit in a safe and sound manner, as is the case with smaller federally insured credit unions in the United States," Edwards wrote.