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CUNA Chair, Hill Publication Describe Tax Threat

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WASHINGTON (7/19/13)--For years, big banks have been trying to saddle their nonprofit credit-union competitors with new taxes. They see a congressional tax reform push as their best chance to sneak such taxes in. Fortunately, some groups--including credit unions--are looking out for the interests of hardworking Americans in this tax reform debate.
 
So warns Credit Union National Association Chair Pat Wesenberg, who penned a guest column on the issue in Thursday's Star-Ledger of New Jersey. The author is also president/CEO of Central City CU in Marshfield, Wis.
 
Wesenberg's Star-Ledger column appeared the same day as an extensive tax reform article in The Hill, which underscores that "the stakes couldn't be higher" for those who fear "being on the short end" of a tax reform bill. The Hill is the largest circulation Capitol Hill publication, and has a focus on business, lobbying and federal lawmaking.
 
Tax policy leaders have said they will take a "blank slate" approach to reform legislation, which would remove all tax expenditures--like the credit union exemption from federal income tax--from the code and would add back in those that make the grade. It is the scenario that CUNA warned credit unions to expect and why CUNA and the state credit union leagues launched a groundbreaking "Don't Tax My Credit Union" campaign in May to defend against a tax threat.
 
As tax reform picks up speed in the U.S. Congress, Wesenberg writes in her column, consumers should hope that the big banks don't succeed in their credit union attacks.
 
"New taxes on credit unions would pick the pockets not just of their 96 million predominantly middle-class customers, but those of all Americans--by reducing competition in the financial services sector," she explains.
 
She reminds that while credit unions and banks offer many of the same services, such as checking accounts, savings accounts and home mortgages, they couldn't be more different in philosophy and structure.
 
"As nonprofit financial cooperatives, credit unions exist to benefit their member-owners. They do so by charging low or no fees and offering higher interest rates on savings and lower rates on loans. They've advanced that mission since the 1930s, when Congress authorized their creation and granted them nonprofit status.
 
"Banks, in contrast, are obligated to maximize profits for shareholders. And profitable they are, with some of the highest margins of any industry," Wesenberg writes.
 
She goes on to note that about 40% of Americans belong to credit unions today.
 
CUNA is urging credit unions and their members to contact federal lawmakers as they consider tax reform issues to make it clear that taxing credit unions would be against good public policy.
 
Through its "Don't Tax My Credit Union" advocacy campaign, CUNA provides extensive resources to inform and facilitate communications to Congress whether they are sent by mail, e-mail, or social media outlets.
 
Use the resource link to access the "Don't Tax My Credit Union" website.

NCUA July Agenda Has Seven Items

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ALEXANDRIA, Va. (7/19/13)--The National Credit Union Administration has posted the agenda for its July 25 open board meeting.

Matters to be considered are:
  • A proposed Interpretive Ruling and Policy Statement on a  Minority Credit Union Preservation Program;
  • A briefing of the board members of an interagency proposal on joint diversity standards for regulated entities;
  • A proposed rule addressing Parts 741and 748 of NCUA's Rules and Regulations on the electronic filing of financial reports;
  • A request from San Francisco FCU to expand its community charter;
  • The quarterly National Credit Union Share Insurance Fund report;
  • Discussion of the 2013 Temporary Corporate Credit Union Stabilization Fund assessment; and
  • A reprogramming of NCUA's operating budget for 2013.
The meeting is scheduled for 10 a.m. (ET).

Senate Confirmation Vote Is Next, Final Stop For Metsger Nomination

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WASHINGTON (7/19/13)--In a voice vote, the Senate Banking Committee has cleared the nomination of Richard Metsger to the National Credit Union Administration Board. The nomination will move forward to the full Senate floor for a confirmation vote.

Although there is no definitive word yet on timing yet, Metsger's nomination is not considered to be controversial and could get a full Senate vote  before the U.S. Congress breaks in August for its Summer District Work Session.

Credit Union National Association Deputy General Counsel Mary Dunn said CUNA looks forward to working with Metsger once he is installed at NCUA.
 
The committee also voted to move forward the nominations of Rep. Mel Watt (D-N.C.) to be director of the Federal Housing Finance Agency; Jason Furman, to be a member and chairman of the Council of Economic Advisers; and Kara Stein, Michael Piwowar, and Mary Jo White, to be members of the Securities and Exchange Commission.

CUNA Urges Lawmakers To Be Alert To CU Burdens

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WASHINGTON D.C. (7/19/13)--Submitting a statement for the record of a Thursday hearing entitled "Regulatory Burdens: The Impact of Dodd-Frank on Community Banking," the Credit Union National Association alerted lawmakers that the law has affected all financial institutions--none more than credit unions.
 
In the statement to the House Government Reform and Oversight subcommittee on economic growth, job creation and regulatory affairs, CUNA President/CEO Bill Cheney emphasized that the multitude of new regulations are generating a "crisis of creeping complexity," where credit unions are forced to hire specialized employees just to ensure compliance with the new requirements and reports.
 
Because credit unions are owned by their members, the costs a credit union bears to meet the multitude of wide-ranging regulatory training and compliance responsibilities are ultimately paid by their members.
 
CUNA stressed that small credit unions are feeling the most impact and reiterated that once a new rule is implemented, credit unions must assess the rule and re-evaluate how it impacts their business. "This takes both time and money which small credit unions don't have," CUNA warned.
 
CUNA urged the subcommittee to work closely with the Consumer Financial Protection Bureau (CFPB) on its remittance proposal, specifically regarding the restriction on the amount of annual transfers.
 
CUNA noted there have been no examples of abuses regarding remittance services that credit unions provide. Unfortunately, the group has said, a number of credit unions are considering exiting the service as a result of the requirements for new disclosures regarding exchange rates, fees, taxes, the date money will be received, and more.
 
The CUNA statement also addressed how credit unions welcomed the changes made to the qualified mortgage rule but are still weary of how it will impact them directly.
 
CUNA encouraged the subcommittee to continue to exercise its critical oversight and closely scrutinize the proposals coming from the CFPB, the National Credit Union Administration and other agencies to ensure the impact on credit unions is minimal.

FCUs In Nine States To Be Supervisionally 'Re-aligned' In 2014

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ALEXANDRIA, Va. (7/19/13)--To maximize operational efficiency, the National Credit Union Administration says it will re-align its regional supervision of federally insured credit unions in nine states, effective Jan. 1, 2014.

Under the new divisions:
  • Federally insured credit unions in Colorado, Montana, New Mexico and Wyoming will be moved to Region IV from Region V;
  • Louisiana and Arkansas supervisory responsibilities will move to Region III from Region IV;
  • Wisconsin will be covered by Region I, no longer Region IV;
  • Ohio will come under Region II, moving from Region III; and
  • California will return to the supervision of Region V, not Region II.
"We continually monitor our regional workload and, when necessary, make adjustments to distribute exam hours proportionally," NCUA Chair Debbie Matz said announcing the upcoming changes.
 
"Several years ago, NCUA moved California, Nevada and several individual credit unions, for supervision purposes, to different regions.
 
"Now that the economic downturn has ended, with the economy gaining strength and with the credit union industry generally performing well, we are reconfiguring our regions to create geographically compact districts that better balance workload, improve efficiency and reduce travel costs by more than $900,000 per year," she added.
 
Also starting in 2014 and announced earlier this year, a newly created Office of National Examinations and Supervision will begin supervising the nation's largest consumer credit unions. The NCUA notes that the new office was created by the re-allocation of existing resources.

CUNA Underscores Need Of Supp Cap To Hill Staffers

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WASHINGTON (7/19/13)--At a briefing Thursday for Capitol Hill staffers on issues surrounding the need for credit unions to have access to supplemental forms of capital, Credit Union National Association President/CEO Bill Cheney said every credit union "can benefit from the option of supplemental capital."
 
Twenty percent of credit unions saw their capital decline 2% during the economic
Click to view larger image Rep. Peter King (R-N.Y.), standing at the podium, told a roomful of Hill staffers that current, restrictive rules for credit union capital are a "quirk" in the law that should be remedied. To King's left are Credit Union National Association President/CEO Bill Cheney, National Association of State Credit Union Supervisors President/CEO Mary Martha Fortnoy and Credit Union Association of New York President/CEO Bill Mellin. (CUNA Photo)
downturn, Cheney noted, adding that new sources of capital would be a tool that would help credit unions better serve their members.
 
Under current law, a credit union's net worth ratio is determined solely on the basis of retained earnings as a percentage of total assets.  
 
Also at the briefing, Rep. Peter King (R-N.Y.) called the current statute that limits credit union capital to retained earnings a "quirk" in the law.
 
"As the economy is trying to rebound, the last thing we need is quirks in the law to hurt on of our mainstays" in the financial services arena, he said.
 
King has introduced legislation 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. CUNA supports the "Capital Access for Small Business and Jobs Act" (H.R. 719).
 
"We are going to push this bill. It is not going to be easy. The banks are opposed. We are going to tie it to a larger regulatory relief bill," King told the gathering.
 
Rep. Brad Sherman (D-Calif.), King's chief co-sponsor, told the Hill staffers that, "With supplemental capital, credit unions will be strong and be in a position to do more small business loans."
 
He also backed greater authority for credit unions to make member business loans (MBLs) as proposed in pending legislation that would lift the MBL cap to 27.5% of assets, up from the current 12.25% limit. He said the pending legislation also would help create new jobs--all without costing the government any money.
 
Credit Union Association of New York President/CEO Bill Mellin, also participating in the briefing, noted supplemental capital does not change the credit union structure: "It doesn't change who owns and runs the credit union. We remain cooperative and member-owned; one member, one vote. We are very different from banks."
 
And Linda Armyn, of Bethpage FCU in Long Island, N.Y., shared a cautionary tale. Armyn said that credit unions in her state had to slow branch growth because new deposits lowered capital ratio.
 
"There is a negative effect on the community when credit unions have to slow growth," she noted.
 

PATH Act Vetted In House Financial Services Hearing

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WASHINGTON (7/19/13)--Eleven witnesses came before the House Financial Services Committee Thursday bringing, by the panel's chairman's accounting, the total to 50 witnesses testifying during 12 hearings focusing on housing finance reform in six months.

House Financial Services Committee Chairman Jeb Hensarling (R-Texas) called the
The House Financial Services Committee and its subcommittees have held a long series of housing finance reform hearings over six months, including one on June 18 in which Jerry Reed, chief lending officer at Alaska USA FCU, represented credit unions for CUNA. (CUNA Photo)
hearing to examine his recently introduced discussion draft of a bill, the "Protecting American Taxpayers and Homeowner (PATH) Act of 2013."

The bill, as Hensarling said in his remarks to open the hearing, is intended to "create a sustainable housing finance system."

"This proposal will give Americans the better, fairer, sustainable housing finance system they deserve," he said.

However, on the other side of the aisle, the committee's top Democrat, Rep. Maxine Waters of California, expressed doubt about the viability of the legislation she called the "PATH to Nowhere Bill." She said it is a "non-starter" because it is bad for community banks, bad for credit unions and bad for consumers. Democratic opponents charge that the bill would destroy access to and availabilty of 30-year, fixed-term mortgages for average Americans.

Waters said she favored an approach taken by a Senate bill, the Jumpstart GSE Reform Act.

The PATH Act would: 
  • Phase out government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac within five years;
  • Increase competition by ending the federal government's domination of the housing finance market; and
  • Give consumers more choices in determining which mortgage product best suits their needs.
The Credit Union National Association submitted a statement for the hearing record strongly supporting the regulatory relief provisions found in the language, while expressing preliminary concerns on behalf of credit unions regarding some provisions of the PATH Act.

For example, CUNA has serious concerns that the PATH Act may not provide credit union members with a sustainable secondary market that can provide the necessary liquidity and structure that will ensure the continuation of long-term, fixed-rate mortgage products.

CUNA also testified on June 18 at a House Financial Services subcommittee hearing on housing finance issues.  Jerry Reed, chief lending officer at Alaska USA FCU, represented credit unions for CUNA at a hearing conducted by the subcommittee on  financial institutions and consumer credit on "Examining How the Dodd-Frank Act Hampers Home Ownership."

Use the resource links to read CUNA's full statement and to access the hearing's witness list.