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NCBA Urges Tax Policy Writers To Support CUs

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WASHINGTON (8/7/13)--The National Cooperative Business Association (NCBA) has sent letters to every member on the House Ways and Means and Senate Finance committees to "to strongly encourage" the federal tax policy makers to "advocate for the retention of the credit union tax exemption during your deliberations on tax reform."
NCBA President/CEO Michael Beall wrote, "As not-for-profit, member-owned financial cooperatives, credit unions return almost all of their earnings to their member-owners. Whether this is in the form of better rates on savings and loans, lower fees, or generally better services, this is a real-world example of how credit unions use the tax exemption to make a difference in the financial lives of their members.
"In addition, the credit union presence in the financial marketplace demonstrably benefits non-members as well, by providing marketplace competition and enhanced consumer choice.
"Studies have shown that credit unions provide over $10 billion annually in benefits to members and non-members, an amount that far exceeds the Joint Committee on Taxation estimate of $500 million that a tax on credit unions would generate."
Credit Union National Association President/CEO Bill Cheney said credit unions deeply appreciate cooperatives' voice in supporting the credit union tax exemption.
CUNA has noted that August, with its five-week congressional district work period, is just the time for credit union advocates to meet with their lawmakers at home to spark more public messages of support, on tax and other key credit union issues.

July 26 was the deadline for senators to submit their tax reform proposals to that chamber's Finance Committee leaders.  But, says CUNA Vice President of Legislative Affairs Ryan Donovan, "While that deadline has passed, you can bet legislators will be talking to each other over the summer."

After CUNA and the state credit union leagues ran a successful social media campaign, known as "DontTaxTuesday," more than 875,397--including lawmakers--viewed tweets that were posted in support of credit unions and their tax exemption.

NEW: NCUA: Progress Seen In First Year Of LICU Initiative

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ALEXANDRIA, Va. (UPDATED: 8/7/13, 10:15 A.M. ET)--The National Credit Union Administration today released numbers to mark the one-year anniversary of its low-income credit union (LICU) initiative, with NCUA Chairman Debbie Matz noting that "the number of designated credit unions has grown significantly, creating the potential for greater community investment and access to financial services in underserved communities."

"Since last August, 821 federally insured credit unions, with 11 million members and $101.8 billion in assets, have accepted the low-income designation. There are now 1,961, two-thirds of which are federal credit unions, with the low-income designation. The most recent data show these credit unions have 17.8 million members and assets of $157.6 billion. By streamlining the designation process, we have been helping more credit unions help more people," Matz said.

To qualify as a LICU, a majority of a federal credit union's membership must meet low-income thresholds based on 2010 Census data. In addition to the exemption from the 12.25% statutory cap on member business lending for credit unions, other advantages derived from the LICU designation include:
  • Eligibility for Community Development Revolving Loan Fund grants and low-interest loans;
  • Ability to accept deposits from non-members; and
  • Authorization to obtain supplemental capital.
For the full NCUA LICU release, use the resource link.

Appeals Court Gives Plaintiffs Standing In ATM Suit

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WASHINGTON (8/7/13)--The U.S. Court of Appeals for the Eight Circuit earlier this month overturned a 2012 decision which ruled that plaintiff Jarek Charvat lacked constitutional standing to file suit against First National Bank of Waterloo for violating the Electronic Fund Transfer Act as it applies to fee disclosure notices on ATMs.

The 2012 decision was made in the U.S. District Court for the District of Nebraska.

The Eighth Circuit court said the district court "erred in finding plaintiff did not have standing because he did not have an injury in fact; assuming without deciding that plaintiff waived the claim that the $2.00 fee he was charged constituted an injury in fact, plaintiff still had standing to pursue his claim against the defendants based on the informational injury he allegedly sustained because of the failure to post the notice."

Once Charvat alleged a violation of EFTA notice provisions in connection with his ATM transactions, he had standing to claim damages, the Eight Circuit statement read. "Further, the injury was fairly traceable to defendants' conduct," the statement added.

Charvat's lawsuit was one of many alleging that individual credit unions and other financial institutions violated EFTA by failing to provide fee disclosures at their ATMs. In some cases, plaintiffs vandalized or removed disclosure stickers from ATMs and then photographed the ATM. These photos were used as evidence of noncompliance in their court cases against individual institutions.

Last year, Regulation E was revised to require that ATM fee disclosures only need to be presented on an ATM's screen. The law eliminated a duplicative provision that required a physical notice also be posted on the ATM machine. The Consumer Financial Protection Bureau in March implemented a rule to eliminate redundant ATM disclosures.

Obama Outlines Housing Reform Goals In Speech

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WASHINGTON (8/7/13)--President Barack Obama on Tuesday again entered the debate on the future of housing finance, outlining his principles for market reforms in a speech delivered in Phoenix, Ariz.

"We have to build a housing system that's durable and fair and rewards responsibility for generations to come," Obama said in his remarks.

Obama in a release said credit unions and other small institutions "must be given the same opportunity to compete in any future system to ensure that consumers have the broadest number of options."

Credit Union National Association President/CEO Bill Cheney said "much of what the president discussed is consistent with CUNA's principles for housing finance reform.We're gratified to see that he is also recommending credit unions and other small institutions have the same opportunity to compete in any future system."

Ensuring widespread access to safe, responsible financing like the 30-year fixed rate mortgage is another pillar Obama proposed. Maintaining consumer access to products that provide predictable, affordable mortgage payments to qualified borrowers, such as the 30-year fixed rate mortgage, is one of the principles CUNA has said must be a part of any mortgage market reform effort. The continued availability of the 30-year fixed rate mortgage has been a consistent theme in CUNA's testimony to the U.S. Congress on housing issues.

Other housing reform priorities detailed in an Obama administration release include:
  • Putting private capital at the center of the housing finance system;
  • Winding down Fannie Mae and Freddie Mac;
  • Ensuring prospective homeowners receive a single, simple three-page mortgage disclosure form;
  • Increasing incentives for lenders to deliver high quality loans and products; and
  • Supporting affordability and access for renters and homeownership for first-time buyers, in part by continuing the historic affordability role of Federal Housing Administration (FHA).
Additional market fixes promoted by the Obama administration include streamlining refinancing for borrowers with government-insured mortgages, waiving closing costs for homeowners that borrowers who refinance into shorter term loans, and expanding mortgage refinancing eligibility to borrowers without government-backed mortgages by creating special programs through the FHA or Fannie Mae and Freddie Mac.

The administration estimated these changes could result in $3,000 or more in yearly savings for eligible families.

Obama said the government would also need to establish bright-line rules for when mortgage guarantees would be rescinded. The U.S. Department of Housing and Urban Development is working to update its rules along these lines, and will work with the Federal Housing Finance Agency and other federal agencies to institute a common framework for government guarantees across the market, he said.

The president also called on regulators to implement mortgage related rules in a way that encourages the clarity and certainty that leads to broad access to credit and a safe and sound system.

For more on the Obama administration's mortgage plans, use the resource link.

CUNA Takes CU Cybersecurity Concerns To Treasury

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WASHINGTON (8/6/13)--The Credit Union National Association brought credit union cybersecurity concerns directly to the U.S. Treasury during a recent Financial Services Sector Coordinating Council for Critical Infrastructure meeting in Washington.

At the meeting, U.S. Treasury Assistant Secretary for Financial Institutions Cyrus Amir-Mokri and other senior government and financial services officials discussed efforts to facilitate the coordination on cybersecurity developments.

As detailed in this week's edition of the CUNA Regulatory Advocacy Report, CUNA has repeatedly emphasized that credit unions are already subject to robust data security requirements and standards, and should not be subject to additional regulations.

Additional coordination on cybersecurity would be helpful, CUNA has said.

CUNA continues to be engaged on cybersecurity issues, by working with the credit union system, FSSCC, regulators, BITS, and other entities. CUNA is also monitoring developments with the National Institute of Standards and Technology (NIST) framework.

On July 1, NIST released a discussion draft outline on a "Framework to Reduce Cyber Risks to Critical Infrastructure." CUNA is encouraged that the draft framework is "being developed through a private-public partnership" and is designed to be an "adaptable, flexible, and scalable tool for voluntary use" to "complement rather than to conflict with current regulatory authorities," Deputy General Counsel Mary Dunn wrote.

NIST plans to issue a proposed cyber framework this October for notice and comment, and to finalize the framework by February 2014.

Incentives to support adoption of this voluntary framework are being considered by the White House. Potential incentives include expedited government technical assistance, reduced tort liability, limited indemnity, lower burdens of proof, or the creation of a federal legal privilege that preempts State disclosure requirements in some cases, and public recognition for cybersecurity program participants.

Other items addressed in this week's Regulatory Advocacy Report include:

  • A CUNA letter that encouraged Congress to prohibit Federal Housing Administration insurance on mortgages seized through eminent domain;
  • A regulatory alert on appraisal regulations; and
  • News on federal student loan legislation.

For the full Regulatory Advocacy Report, use the resource link.

Archived July NCUA Town Hall Is Out

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ALEXANDRIA, Va. (8/7/13)--Did you miss out on the National Credit Union Administration's July 18 town hall webinar? If so, you are in luck: The NCUA on Tuesday released an archived version of the event.

Topics addressed by NCUA Chairman Debbie Matz and agency staff during the webinar included:
  • NCUA's development of a new risk-based capital framework;
  • Member business lending and small business guaranteed loan programs;
  • NCUA's regional realignment;
  • The 2013 Temporary Corporate Credit Union Stabilization Fund assessment; and
  • The proposed Minority Credit Union Preservation Program.
The archived webinar will be available until Oct. 17.

N.Y. Issues C-and-Ds To 35 Online Payday Lenders

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NEW YORK CITY (8/7/13)--Thirty-five payday lenders have been warned by the New York Department of Financial Services to "companies cease and desist offering illegal payday loans to New York consumers."

The DFS said that its extensive, ongoing investigation uncovered that those companies were offering payday loans to consumers over the Internet in violation of New York law, including some loans with annual interest rates as high as 1,095%.

Payday lending, via the Internet or otherwise, is illegal in New York under both civil and criminal usury statutes. New York state law prohibits unlicensed nonbank lenders from making loans of $25,000 or less with interest rates greater than 16%.

"We're going to use every tool in our tool belt to eradicate these illegal payday loans that trap families in destructive cycles of debt," Superintendent Benjamin Lawsky said in a press release. Lawsky said the lenders have two weeks to confirm that they have stopped offering the loans in the state.

Lawsky also sent letters to 117 banks, as well as NACHA, which administers the automated clearing house, asking them to cut off for illegal payday lenders' access to New York customer accounts. The DFS release notes that illegal payday loans made over the Internet are made possible in New York by credits and debits that must pass through the ACH network. Gov. Andrew M. Cuomo is requesting that those banks and NACHA work with DFS to create a new set of model safeguards and procedures to cut off ACH access to payday lenders.

Some credit unions offer members payday loan alternatives.  Under federal rules, credit unions are generally limited to an annual percentage rate of no more than 18%, although there is some flexibility under the National Credit Union Administration's short-term, small amount loan program.

That program permits federal credit unions to charge an interest rate that is a maximum of 10 percentage points above the established usury ceiling at that time. Currently, this amounts to an interest rate ceiling of 28%.

Most credit unions offering payday loan alternatives also limit fees, provide member financial counseling and encourage members to open savings accounts.
Use the resource link to read the names of the 35 companies that were the subjects of the C-and-D orders.