Legislative Hot Topics

Preserving the Credit Union Tax Status
Congress has provided the credit union federal tax-exemption because of the not-for-profit, cooperative structure of credit unions, and the special mission credit unions have to serve consumers. The credit union tax status is not based on the size of credit unions or the products and services that they offer; it is based on the credit union structure. This rationale for the tax-exempt status has been ratified several times by Congress.

Removing Barriers
Credit unions face a crisis of creeping complexity with respect to regulatory burden. Every dollar a credit union spends on complying with regulation is a dollar that is not used for the benefit of its members. Most of the costs of compliance do not vary by size, and therefore proportionately are a much greater burden for smaller as opposed to larger institutions.

NCUA's Risk-Based Capital Proposed Rule
The NCUA has recently reissued its risk based capital proposed rule. We ask that Congress consider the new proposal and giving credit unions access to supplemental capital to meet the new risk-based capital requirements.

CFPB Reform
In the years since the CFPB stood up, the crisis of creeping complexity with respect to credit union regulatory burden has not diminished; rather it has gotten worse. Changes to the structure of the Bureau could help improve the regulatory environment for credit unions, which is why CUNA supports legislation to change the leadership structure of the CFPB, the powers of the Financial Stability Oversight Council (FSOC), the funding of the Bureau and the use of consumer information by the Bureau. 

FHLB Membership Eligibility Parity
A proposed Federal Housing Finance Agency (FHFA) rule would require all Federal Home Loan Bank (FHLB) member credit unions, but only certain banks, to hold 10 percent of assets in “residential mortgage loans” on an ongoing basis.

Access to Federal Home Loan Banks for Privately Insured Credit Unions
State-chartered credit unions that are privately insured cannot apply for membership to the FHLB system under current law; H.R. 299 would correct this drafting error and allow them access.

The Privacy Notice Modernization Act
The Eliminate Privacy Notice Confusion Act would provide benefits for both credit unions and their members, by streamlining compliance burden and enhancing greater member awareness of the credit union’s privacy policies.

Mortgage Rules
Eight mortgage rules which were finalized in October of 2013 have come into effect in January of 2014 and have drastically affected credit unions. We ask that Congress supervise the implementation of these rules allowing flexibility within the tight deadlines which have been set and exempt credit unions from the QM rule or at least alter the definition of points and fees.

Federal Credit Union Act Modernization
The National Credit Union Act has not been significantly updated since 1998, We suggest modernizing the Act to reflect the more complicated financial services marketplace today.

The Need for Capital Reform
Congress should enact the Capital Access for Small Businesses and Jobs Act (H.R. 719), which would modify the definition of credit union net worth to include supplemental forms of capital for credit unions and allow the regulator to develop risk based capital standards for the purposes of prompt corrective action (PCA).

Member Business Lending
Congress should eliminate the business lending cap or allow well-capitalized credit unions operating near the business lending cap to increase their business loan offerings to 27.5% of total assets, if they receive approval by the NCUA. They should also exempt 1-4 family non-owner occupied residential loans to be exempt from the cap; the entirety of an SBA backed loan should also be exempt. 

Patent Litigation Reform
Recently, credit unions have experienced a dramatic increase in the number of demand letters from non-practicing entities (NPEs). These firms, commonly referred to as “patent trolls,” acquire large numbers of obscure or dormant patents and then blanket an industry with demands for licensing fees. Credit unions are often forced into settlements or face expensive litigation. Congress should support legislation that diminishes the predatory practices of patent trolls, particularly in the area of curbing demand letter abuse, lessening impediments to appeal frivolous infringement allegations, and requiring stronger indemnification policies for end-users.

Data Security
Credit Unions are strictly regulated with regard to data security and notification of data breaches to affected members under the Gramm-Leach Bliley Act. CUNA supports legislation which holds all entities responsible for data security and that which would allow credit unions to notify members not only that a data breach has occurred but also the source of the breach.

Examination Fairness
Concerns regarding bank and credit union examinations increase during difficult economic times. Congress is considering legislation to bring fairness to the examination process.

Housing Finance Reform
As Congress considers comprehensive housing finance reform, it is imperative that the new system facilitate credit union lending so that credit unions may continue to be a source of reliable mortgage credit for their members.

Interchange Fees
The Merchant Payment Coalition continues their effort to reduce the fees merchants pay in order to accept payment cards. While these groups continue to raise this issue with Congress, much of the more recent action is taking place in the courts and in state legislatures.

Foreign Account Tax Compliance Act (FATCA)
The Foreign Account Tax Compliance Act (FATCA) places new and significant compliance costs on U.S. credit unions, especially those that engage in remittances and/or have members who are not US citizens. Congress should repeal FATCA in order to stop the law’s increasing regulatory burdens.

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