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CUs must keep August heat on advocacy efforts CUNA

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WASHINGTON (8/6/12)--With the U.S. Congress's August recess beginning this week, the Credit Union National Association (CUNA) has called on credit unions to make sure credit union issues are at the forefront of legislators' minds as they campaign in their home districts.

All members of the U.S. House, and one-third of sitting Senate members are facing November reelection campaigns, and will have more on their minds, and schedules, than usual, CUNA Senior Vice President of Political Affairs Richard Gose said. Credit unions should make sure that any face time they can schedule with their legislators is time well spent, he added.

CUNA has counted around 150 scheduled town halls, spread among several states, and credit unions and leagues should keep an eye out for any meetings scheduled in their area. In-district meetings are also being held in several states.

Member business lending (MBL), supplemental capital access and examination fairness remain key concerns for credit unions.

Here is an update on the status of those concerns:

  • MBL cap increase bills in the U.S. House (H.R. 1418) and Senate (S. 2231) enjoy strong support from Democratic and Republican legislators. Both bills would increase the MBL cap to 27.5% of assets, from 12.25%. CUNA has estimated this increase would create 140,000 jobs and inject $13 billion in new funds into the economy during the first year after enactment. Both benefits would come at no cost to taxpayers. Senate leadership remains committed to a floor vote on the MBL legislation;
  • House and Senate examination fairness bills (H.R. 3461 and S. 2160) would make information gathered by financial regulatory examiners available to financial institutions and codify certain examination policy guidance. The bills would also establish an ombudsman at the Federal Financial Institution Examination Council (FFIEC), and establish an exam appeals process that would allow financial institutions to air grievances before an independent administrative law judge. Both bills have been referred to their respective financial institution committees;
  • H.R. 3993, which would modify the definition of credit union net worth to include supplemental forms of capital for credit unions, has been referred to the House Financial Services subcommittee on financial institutions and consumer credit.

A bill that would help eliminate frivolous lawsuits by removing dual ATM disclosure requirements, H.R. 4367, passed the House last month, but the Senate has not yet acted on the legislation. CUNA continues to work with members of Congress to move the ATM legislation toward a vote.

The House and Senate are scheduled to return to Washington in early September.

Banks tax-status arguments absurd Cheney

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WASHINGTON (8/6/12)--When the bank lobby calls on Congress to tax credit unions, they are really demanding that Congress do away with credit unions, Credit Union National Association (CUNA) President/CEO Bill Cheney said in a letter to the chairman and ranking member of the House Ways and Means subcommittee on oversight.

Cheney in the letter noted that the bank lobby "absolutely refuses" to accept the fact that the credit union tax status has always been a function of the ownership structure of credit unions.

"It has never been about the power or mission of the credit union," Cheney wrote to Chairman Charles Boustany (R-La.) and Ranking Member John Lewis (D-Ga.).

Cheney's letter came in response to an American Bankers Association (ABA) statement submitted for the record of a July 25 tax hearing. The ABA in the statement asserted credit unions were created to "service people of modest means," that credit unions are "complex," and that credit unions are "indistinguishable from banks."

Credit unions serve all of their members regardless of their means, Cheney said. "'One member, one vote' is a critical component not only to the membership structure but also to the credit union philosophy; a member of greater means has just as much right to the use of the credit union as a member of small means. It's because of this ownership structure that Congress granted the tax status and has reaffirmed it several times."

And, like other financial institutions--including banks--credit unions have evolved over time. "Indeed, if credit unions were not evolving to meet the needs and demands of their members in the 21st century, one might very well call into question whether they were fulfilling their mission."

Banks are squarely wrong to assert credit unions are indistinguishable from banks, he added. "For all of the evolution and development that has taken place over the last century, one thing that has remained the same is the credit unions' cooperative ownership structure and democratic governance. The members of the credit union own the credit union; a bank is owned by its shareholders. This means what motivates credit union leaders and bank executives is different, and it boils down to this: credit unions use members' money to help members; banks use customer's money to make money for shareholders."

Cheney added that there is irony in bank complaints that credit unions have evolved into "complex and full service financial institutions.

"[Banks] think they are making the point that credit unions are not fulfilling their mission," Cheney wrote. "But in reality, they are making the point that credit unions are. Congress provided a federal charter to credit unions to promote thrift and make credit available at a time when the banks were not doing that. They established credit unions to give people the ability to do business with a financial institution and also have a voice and a vote in how their money was to be used by the institution," he said.

For the full CUNA letter, use the resource link.

Cheney talks CUs economy on iBloomberg Radioi

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WASHINGTON (8/6/12)--With the day's economic news serving as a backdrop, Credit Union National Association (CUNA) President/CEO Bill Cheney discussed the financial state of the credit union system, and the push for job-creating member business lending (MBL)  legislation on Bloomberg Radio's "Taking Stock with Pimm Fox."

Recent data suggest a slow, painful economic recovery for the nation, but Cheney said that credit unions continue to thrive. Credit union lending portfolios are improving, with lower chargeoff rates and steadily declining delinquency rates.

While demand for some loans has slowed, there is still demand for small business loans, and credit unions want to do more to help small business owners, he added. However, the MBL cap, which stands at 12.25% of total assets, remains a barrier to some.

The U.S. Congress could remedy this by approving legislation to increase the MBL cap to 27.5% of assets. Doing so would create 140,000 jobs and inject $13 billion in new funds into the economy in the first year following enactment, at no cost to taxpayers.

Overall, Cheney said, credit unions continue to gain market share because credit unions "are a better deal" for consumers. Credit unions have seen the strongest membership growth rate in 26 years, he said.  Asked about federal deposit insurance for credit unions, Cheney explained that accounts insured by the National Credit Union Share Insurance Fund receive the same level of U.S. government guaranteed insurance backing, $250,000, as the Federal Deposit Insurance Corp. provides to bank accounts.

Inside Washington (08/03/2012)

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  • WASHINGTON (8/6/12)--During a U.S. Senate securities subcommittee hearing Thursday, Sen. Jack Reed (D-R.I.) pointed out that no single regulator oversees the financial market. Without a single regulator, none of the regulators are effectively in charge of the market, Reed said (American Banker Aug. 3). The hearing was called after the release last month of the Financial Stability Oversight Council's latest annual report, which warned about the slow pace of reform in the tri-party repo market. The tri-party repo market offers a short-term borrowing source for the financial industry. The report called for reform of the industry within the next year. Industry officials have advocated making the reforms over several years …
  • WASHINGTON (8/6/12)--House and Senate Republicans Thursday introduced measures that would prevent the spread of "too-big-to-fail" to non-bank financial institutions.  The bills would remove the government's authority to designate non-bank financial institutions as "systemically important financial institutions" as described in the Dodd-Frank Act. The House bill is being sponsored by Rep. Scott Garrett (R-N.J.). The Senate version was introduced by Sen. David Vitter (R-La.). "This 'too-big-to-fail' virus is now poised to spread beyond banks to other types of financial firms," Garrett said. "Not surprising, it is the government that is preparing to label other financial firms "too-big-to-fail" by designating them as systemically important and spreading these market distortions"  …
  • WASHINGTON (8/6/12)--The Consumer Financial Protection Bureau (CFPB) is investigating mortgage insurance deals between banks and several large insurers. Genworth Financial said in a public filing Friday that it had received a subpoena from the agency for information about captive mortgage reinsurance deals (The New York Times Aug. 3). American International Group and MGIC Investment Corp. earlier in the week made similar disclosures. In some instances, mortgage borrowers must buy private mortgage insurance to cover the lender's losses in case of a default. Some borrowers have accused mortgage insurers of paying banks millions for a share of the reinsurance market. The deals have resulted in lucrative kickbacks for banks, according to civil lawsuits filed by the borrowers …

Fryzel applauds African-American CU outreach

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CHARLESTON, S.C. (8/6/12)--National Credit Union Administration (NCUA) board member Michael Fryzel, addressing the 14th annual conference of the African-American Credit Union Coalition, highlighted the importance of credit unions' work to serve the nation's underserved populations.

"Your goals and objectives of increasing the number of minorities in the credit union industry, along with your outreach of the credit union movement in African countries and in the U.S. through credit union mentoring, providing scholarship programs and educational opportunities, are important efforts as economic struggles abound," he told the audience of credit union professionals, volunteers, and nonprofit member organizations of the coalition.

Fryzel commended the coalition members for their commitment to the credit union philosophy and charged the group to "learn from one another and leave Charleston with new energy."

"Use the credit union philosophy to bring America back home to its tried and tested values of work, achievement and helping others," said Fryzel.

The African-American Credit Union Coalition is a nonprofit organization of African-American and African descent professionals and volunteers in the credit union movement.

Rutherford confirmed for Treasury financial markets post

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WASHINGTON (8/6/12)--The U.S. Senate confirmed Matthew Rutherford to serve as the Treasury Department's assistant secretary for financial markets.

Rutherford will advise Treasury Secretary Timothy Geithner on matters of domestic finance, financial markets, federal, state and local finance, and federal government lending policies.  He also will be responsible for Treasury's management of the public debt.

The areas of responsibility will not be new to Rutherford, confirmed Aug. 2, because he has served at the Treasury since 2009 as deputy assistant secretary for federal finance, where he advised on issues involving Treasury financing, public debt management, federal regulation of financial markets, and related economic matters, including regulatory issues in the government securities markets and the futures markets.

Geithner, announcing the confirmation on Aug. 3, said Rutherford's "substantial experience and skill" will make him a strong asset in his expanded role.