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Sen. Levin, Rep. Holt State CU Tax Status Support

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WASHINGTON (8/20/13)--The list of credit union tax status backers in the U.S. Congress continues to increase as that body remains in summer recess: Sen. Carl Levin (D-Mich.) and Rep. Rush Holt (D-N.J.) are the latest legislators to voice their support.

Levin, Michigan's senior senator, said he continues to "support the work of service-oriented, not-for-profit, member-owned credit unions and their tax exempt status." The senator's comments, which were released by the Michigan Credit Union League, come as members of Congress continue to work on a comprehensive rewrite of the U.S. tax code. Tax policy leaders have planned a "blank slate" approach to reform legislation, which would remove all tax expenditures from the code and would add back in those that make the grade (Michigan Monitor, Aug. 19).

Levin said he wants to see loopholes that big corporations use to pay less taxes closed and to add more revenue, but he said he doesn't think raising taxes on credit unions is the way to achieve that goal. "Tax reform efforts should not undermine our economy, or remove useful exemptions such as the tax exemption for credit unions," he said.

Rep. Holt's recent comments were similarly supportive. Responding to a New Jersey Credit Union League survey of that state's congressional delegation, Holt's office said the legislator supports the continuation of the federal tax exemption for the nation's credit unions (The Daily Exchange, Aug. 19). "He always has and will continue to support the credit union tax exemption because credit unions provide needed and valued services in our local communities," his staff added.

The legislators join Sen. Tammy Baldwin (D-Wis.), who last week told a standing-room-only crowd of credit union supporters in Madison, Wis., that she fully backs credit unions' continued tax status as corporate tax-exempt institutions. (See News Now story: Sen. Baldwin Joins Growing List Supporting CU Tax-exempt Status.)

Other key lawmakers who have spoken in favor of credit unions include Rep. Dave Camp (R-Mich.), chairman of the House Ways and Means Committee overseeing the tax reform measures.

Legislators who have stated they support keeping the credit union tax exemption include House Financial Services Committee member Keith Rothfus (R-Pa.); House Ways and Means Democrat Rep. Sander Levin and seven other Michigan legislators; and Joe Pitts (R-Pa.).  In Texas, 38 House and Senate members said they support credit unions, with 32 members specifically mentioning their support for credit unions' tax-exempt status.

Credit unions have urged Congress to preserve their tax status by launching a website, www.DontTaxMyCreditUnion.org, and a nationwide campaign reminding the 96 million credit union member-owners about the financial benefits they would lose if credit unions' tax status were eliminated through congressional tax reform efforts.

NCUA Newsletter Covers Secondary Capital Accounting Issues

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ALEXANDRIA, Va. (8/20/13)--In the second part of its three-piece series on secondary capital benefits for small credit unions, the National Credit Union Administration's Office of Small Credit Union Initiatives (OSCUI) outlined rules and regulations governing secondary capital accounting treatments and the net worth valuation of such accounts.

Once the remaining maturity of the account is less than five years, a low income-designated credit union must reflect its net worth value in the financial statement according to the following schedule, the National Credit Union Administration said. (NCUA Graphic)
In the latest installment of OSCUI's monthly FOCUS eNewsletter, the agency notes that once the remaining maturity of a secondary capital account is less than five years, a low-income credit union (LICU) must reflect the net worth of that account in the financial statement in line with a set valuation schedule.

The article provides a standard net worth determination schedule and range for credit unions holding secondary capital (see photo), and discusses interest rates on secondary capital loans, and how those rates can impact net worth. What happens in the final year of the term of a secondary capital loan, and what credit unions should do with the funds during the final year of the term, is also addressed in the OSCUI article.

The first article in the series outlined general secondary capital information. The third article will address prompt corrective action considerations, OSCUI said.

For the full article and more from this month's FOCUS eNewsletter, use the resource link.

The NCUA last August notified 1,003 credit unions of their eligibility for LICU status, and many accepted the NCUA designation.

Access to secondary capital is one benefit of this status.

Interchange Case, Fed Regulations In Reg Advocacy Report

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WASHINGTON (8/20/13)--Credit Union National Association preparations for the next round of the ongoing debit interchange fee case are detailed in the latest edition of the Credit Union National Association's Regulatory Advocacy Report.

The upcoming hearing follows a recent ruling in which U.S. District Court for the District of Columbia Judge Richard Leon struck down the Fed's rules on debit interchange fees and routing procedures under the Durbin Amendment, but stayed the order for the moment.

The next phase of the interchange case will take place this Wednesday, when Leon is scheduled to hear the Federal Reserve Board's thoughts on issuing an interim final rule, and an interim final rule implementation timeline. (See Aug. 15 News Now story: Judge Fierce On Fed Interchange Rule.)

At a scheduling hearing held last week, Leon asked whether the court should order issuers to "disgorge revenue" obtained due to the Fed regulation. In this week's Regulatory Advocacy Report, CUNA Deputy General Counsel Mary Dunn said CUNA is doing all it can to protect credit union interests in this case, and CUNA is already devising legal strategies should the judge move forward on his theory of "damages."

Other items addressed in this week's CUNA Regulatory Advocacy Report include:
  • The scheduled swearing in Friday of National Credit Union Administration Board Member Richard Metsger;
  • The Consumer Financial Protection Bureau's release of updated exam procedures and small-entity compliance guidance for mortgage rules;
  • The Federal Reserve's finalization of a large financial companies assessments rule; and
  • The Federal Housing Finance Agency's eminent domain policy.
Employees or volunteers of CUNA- and state credit union league-member credit unions can sign up below to receive the Regulatory Advocacy Report.

The Regulatory Advocacy Report is archived on cuna.org.

Matz, Regulators Talk Dodd-Frank Implementation With Obama

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ALEXANDRIA, Va. (8/20/13)--Strengthening the financial system was the central topic of a Monday meeting between President Barack Obama, National Credit Union Administration Chairman Debbie Matz, and other federal regulators.

Matz following the meeting reiterated that "NCUA remains committed to working in coordination with other regulators to build a stronger financial services industry."

The meeting was called, in part, to discuss the implementation of the Dodd-Frank Wall Street Reform Act, according to a White House release. White House Deputy Press Secretary Josh Earnest told Bloomberg News that Obama called the meeting to encourage the regulators to act urgently in getting Dodd-Frank regulations in place.

Matz was joined at the meeting by leaders from the Office of the Comptroller of the Currency, Consumer Financial Protection Bureau, Federal Housing Finance Agency, Federal Reserve, Commodity Futures Trading Commission, Federal Deposit Insurance Corporation and Securities and Exchange Commission.