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It’s a Wrap . . . State Session Adjourned!

WrapThe General Assembly completed its 40th day on April 14th, bringing a close to the 2011 session, the earliest adjournment in recent history. While the legislators will return in August for a “special session” to draw new district lines for Georgia, barring any additional “special sessions” legislative issues will not be addressed until January 9th, 2012, when the second half of the two-year session will commence. When the Legislature reconvenes next year, any piece of legislation that did not pass in 2011 will be available for action in 2012 . . . along with all the bills that will be newly introduced. For credit unions, the 2011 session was one of what passed, what did not move forward, and what remains pending for 2012. Some activity of industry note:

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State News

It's a Wrap . . . State Session Adjourned!
Georgia Immigration Reform and Your Credit Union
State Session's Over: What's Next?

Washington, D.C. News

Obama Signs 1099 Extension Repeal
Senate Champion Repeats Call for Interchange Implementation Delay
House Financial Services Hearings Gearing up for May

Industry News

Two Credit Unions Placed into Conservatorship

Public Influence News

Another State Legislator's Op-Ed on Interchange

News of the Competition

Two GA Banks Fail – First in 8 Weeks

April 22, 2011

 
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 State News
 

It’s a Wrap . . . State Session Adjourned!

The General Assembly completed its 40th day on April 14th, bringing a close to the 2011 session, the earliest adjournment in recent history. While the legislators will return in August for a “special session” to draw new district lines for Georgia, barring any additional “special sessions” legislative issues will not be addressed until January 9th, 2012, when the second half of the two-year session will commence. When the Legislature reconvenes next year, any piece of legislation that did not pass in 2011 will be available for action in 2012 . . . along with all the bills that will be newly introduced. For credit unions, the 2011 session was one of what passed, what did not move forward, and what remains pending for 2012. Some activity of industry note:

Bills Passed in 2011:

  • Morris
    State Rep. Greg Morris
    The Department of Banking and Finance’s Housekeeping Bill HB 239 by Rep. Greg Morris from Vidalia passed on April 11th. This bill addresses several non-controversial technical changes, including a provision that reconciles any conflict between O.C.G.A. §§ 7-655(c) and 7-1-658(3) regarding who can serve on the credit committee of a credit union.
  • Standardized Insurance Certificate Bill HB 66 by Rep. Howard Maxwell from Dallas passed its last hurdle on April 14th. This bill seeks to put into law the January 10th directive by the Insurance Commissioner on a new process of creating/approving forms to be used to provide evidence of an insurance policy’s existence. This legislation was amended early in the process to ensure that financial institutions are notified in the event of a lapse in coverage.
  • Ethics Reform HB 232 by Rep. Ed Lindsey from Atlanta was signed into law by the Governor on March 15th. This bill resolved the issue of almost everyone in the state from having to register as a lobbyist (and as such, required to pay fees and file reports . . . or be fined). An ethics commission opinion ruled that anyone communicating with a legislator on a bill that could have an impact on their respective place of business would have been deemed a lobbyist. This new law overrides this ruling and states that anyone whose legislative involvement is less than 10 percent of their working time is not deemed a lobbyist.
  • Ethics Reform SB 160 by Sen. Don Balfour of Snellville passed on April 14th. Originally drafted to allow public utility corporations to make campaign contributions, it was amended to also require that registered lobbyists report any expenses made on behalf of a public employee.
  • Immigration Reform HB 87 by Rep. Mat Ramsey from Peachtree City passed on April 14th, which institutes changes to public and private employers, and law enforcement investigations. Please see article on immigration reform below for how it could impact your credit union.
  • Reasonable Attorney’s Fee Bill HB 64 language by Rep. Mike Jacobs from Atlanta (passed as SB 181 on April 14th by Sen. Charlie Behel of Dalton). HB 64 relates to the validity and enforcement of obligations to pay attorney's fees upon notes or other evidence of indebtedness. It removes specific percentages based on amount of the indebtedness (currently 15 percent of the first $500 of principal and interest owing and 10 percent in excess of $500) and replaces that with a fee that would be an amount found by the court to be reasonable and necessary for asserting the rights of the aggrieved party. This language was added to Sen. Bethel’s bill regarding contingent compensation with the Attorney General’s office.
  • MVR Security Interest Bill HB 323 by Rep. Michael Harden from Toccoa passed on March 31st. This bill would expand the period of time in which a motor vehicle security interest is perfected from 20 to 30 days.
  • Abandoned Vehicles Lien Bill HB 114 by Rep. Alan Powell from Hartwell passed on April 14th. Originally only focused on limiting what cities and counties could charge to place a lien on abandoned vehicles, it was amended to include language from a similar bill by Rep. Powell HB 113 which allows towing companies to place a lien on vehicles and the contents to cover towing and storage fees.
  • The Individual Development Accounts Bill HB 226 by Rep. Donna Sheldon from Dacula passed on March 28th. This bill, which is the identical bill that was sought in 2010 but failed during that session, allows for IDA accounts for the disabled.

Bills Available for 2012:
 
Bankruptcy

  • Bankruptcy Exemption Reform Bill SB 117 by Sen. Jesse Stone of Waynesboro was heard in committee but was not called for a vote after concerns were raised by the Government Influence Team and others. In previous sessions this issue has arisen over the years with no change in Georgia while it has been increased in other states, and was back this session with even higher exemption increases than ever before attempted. The bill seeks to increase several of the exemptions: increase the personal and property exemption from $5,000 to $25,000 for personal property, and $50,000 for real property per debtor, and increase the wild-card exemption from $5,000 to $25,000.

Foreclosures

  • Jacobs
    State Rep. Mike Jacobs
    Property Registry Bill HB 110 by Rep. Mike Jacobs from Atlanta was active all session, but was not selected for the full Senate for a vote on day 40 (among several others, as the Senate had many bills that were not able to be selected for the last day). In a creative attempt to have it move forward, the bill was amended onto another bill in the House on day 40, but the session adjourned as the bill was being debated in the Senate. HB 110 seeks to set uniform standards on how cities and counties could set up vacant property and/or foreclosure registries. The bill contains an exemption for financial institutions as owner through foreclosure from registering (and as such, being subject to the fees) provided they file the deed within 60 days with the required contact information sent to the city and/or county. The bill also maintains the preferred definition of “registered agent,” which would constitute anyone in the state, as opposed to the previous language that would have required having a registered agent in the county where the property is located.
  • Foreclosure Extension Bill HB 419 by Rep. Billy Mitchell from Stone Mountain passed committee on March 14th, but was recommitted in the House and did not move forward. This bill originally sought to extend the foreclosure notice period from 30 days to 90 days, and would have provided a defined right to cure to the debtor during the notice period. The foreclosure extension was removed from the bill in Committee after concerns were addressed, and in its present form only retains the right-to-cure language.
  • The Attorney General’s Robo-Signing Foreclosure Bill HB 237 by Rep. Rich Golick from Smyrna passed out of committee on March 22nd, but did not move forward in the full Senate by day 40. This legislation would provide the AG’s office with subpoena powers over foreclosure documents, and retains the safe harbor provision for innocent mistakes.
  • Condo Association Lien Bill SB 136 by Sen. Bill Hamrick of Carrollton was amended in committee to remove a provision that would have provided that any lien filed by a homeowners association for past due condo fees would be superior to the lien of any mortgage in a foreclosure for amounts represented by the lien equal to the previous 12 months of fees. After these provisions were removed in committee, the bill was not called for a vote.
  • Welch
    State Rep. Andy Welch
    Tenant Property Rights Bill HB 445 by Rep. Andy Welch from McDonough was heard in committee but put on hold until next session. This bill, as drafted, mirrors much of the federal regulations protecting tenants, but would (among other things) require specific notice of foreclosure to be provided to the tenant, and of particular note: if one foreclosed on a property where there was a tenant residing, the foreclosing party would be responsible to pay the security deposit to the tenant (which the tenant had paid to the previous owner). The Government Influence Team addressed concerns on the bill with Rep. Welch, and will continue to work with him as he rewrites this legislation as he has shared that he intends to move legislation forward early in 2012.
  • Foreclosure Process Reform Bill “Neighborhood Stabilization Act” HB 338 by Rep. Bob Bryant from Garden City was selected for a hearing, but was not addressed in committee. This bill seeks to comprehensively reform the entire foreclosure process from beginning to end.
  • Foreclosure Rescue Scam Bills “Protecting Georgia’s Homeowners Act of 2011” HB 204 and HB 447 by Rep. Billy Mitchell of Stone Mountain were not heard in committee. This legislation aimed at curbing foreclosure rescue scams, and the current version exempts financial institutions in its language to prevent homeowners from falling victim to individuals who defraud consumers out of their homes under false pretenses.
  • Foreclosure Rescue Scam and Foreclosure Extension Bill SB 123 by Sen. Lester Jackson of Savannah was not heard in committee. While directed at foreclosure/mortgage fraud, this legislation would also increase the timeframe to foreclose from 30 to 60 days.
  •  Military Foreclosure Protection Bill HB 527 by Rep. Terry Johnson of Marietta was introduced after Crossover Day and was not considered this session. This legislation would levy penalties on any foreclosing entity that is in violation of the Federal Service Members Civil Relief Act. Penalties include paying fair market value of the property, damages and fees to the borrower.
  • Post Foreclosure Property Registry Bill SB 262 by Sen. Ronald Ramsey of Decatur was apparently a reaction to the above Property Registry Bill HB 110 passing the House earlier in the session. SB 262 would allow cities and counties to charge fees of $100 a day for code violations, and would permit local governments to institute post-foreclosure registries. This bill was not addressed in committee this session.

Lending/Financial Industry Operations

  • Cosigner Notification Bill HB 245 by Rep. Rusty Kidd of Milledgeville passed through subcommittee, but did not move forward when it was heard in full committee after hesitation by Representatives on legislating internal policies. This legislation would require the notification of a co-signer whenever a loan was in default. The intent of the bill sponsor was to require notification of the cosigner before the loan is reported to the credit bureau.
  • State Treasury Funds Recall Bill SB 35 by Sen. Mitch Seabaugh from Sharpsburg passed committee on March 10th, but was not selected for consideration of the full Senate. This bill sought to prevent state agencies from withdrawing deposited funds out of individual’s accounts without permission, and is a reaction to the much-publicized state tax refund debacle.
  • Usury Bill HB 281 by Rep. Ben Harbin from Evans was selected for a hearing in subcommittee, but was not addressed. This bill would clarify the way that interest is calculated based on loaned, pledged amounts.
  • Deposit Account Fraud Bill HB 488 by Rep. Mike Cheokas from Americus passed out of committee on March 10th, but was not considered for debate on the House floor. This bill would allow a victim of account fraud to recover court and mailing costs associated with recovering funds.
  • Gold Standard Bill HB 3 by Rep. Bobby Franklin from Marietta was heard in subcommittee, but did not move forward. This bill would require financial institutions that serve as state depositories to accept and offer gold and silver for accounts. Similar legislation was introduced in the Senate (SB 116) by Sen. David Shafer of Duluth, but was not addressed.
  •  Credit Report Review Bill SB 42 by Sen. Donzella James of College Park was not moved forward. This bill would limit when an employer could review a credit report for hiring purposes, but exempts federally insured credit unions and banks (but not CUSOs or support organizations).
  • Weldon
    State Rep. Tom Weldon
    Two bills regarding conveyances passed committee but did not make it all the way to become law: HB 465 by Rep. Tom Weldon of Ringgold, which seeks to allow security instruments to be transferred in the same manner that they are released, and HB 129 by Rep. Doug McKillip from Athens, which seeks to prevent the practice of some property developers who assign perpetual fees on the transfer/sale of the property to be passed down over the years.

Tax Reform

  • State Tax Council Reform Recommendations Bills (HB 385, 386, 387, and 388) introduced by Rep. Mickey Channell of Greensboro did not pass this session, despite a late-breaking attempt by leadership to move something forward in the last days of the session. The bills called for a decrease in (most) business tax and personal tax, and a decrease in contributions due to a change in personal income tax deductions . . . which drew concerns from legislators. For credit unions, the tax reform proposals did not seek to tax financial services as a whole (and not at all in the most recent versions of the proposal), and never sought to remove the state tax exemption for our industry. Staff will continue to monitor as there was discussion that all exemptions will be analyzed in the off session.
  • Motor Vehicle Ad Valorem Tax Reform Bill HB 259 by Rep. Harry Geisinger from Roswell passed committee, but did not move forward. This bill represents another attempt to change the way in which ad valorem taxes are paid on vehicles. The bill would require taxes to be paid on vehicles at the moment of purchase as opposed to an annual assessment, and the tax would also apply to casual vehicle sales. The idea of taxing casual vehicle sales also was included in some of the later proposals of the above state tax code reform bills which did not move forward.
All of these pending bills and more will be “live” pieces of legislation in 2012 along with the new bills that are introduced. For additional information on the above bills and more that were monitored on behalf of credit unions, please access the Georgia credit union legislative tracking site.
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Georgia Immigration Reform and Your Credit Union

ReformThe press has focused much attention throughout the session on the immigration reform measures that were debated in the state Legislature (click here for the April 15th Atlanta Business Chronicle article). In the 40th day of the session, after compromises, one of the comprehensive immigration reform measures HB 87 by Rep. Matt Ramsey passed and Gov. Nathan Deal is expected to sign it into law.

While much of the bill addresses public employers and subcontractors, and how law enforcement investigates immigration status, one of the provisions applies to almost all Georgia businesses, including credit unions. This provision will require all private employers in Georgia with 10 or more employees to participate in the federal E-Verify system . . . the online federal database that allows prospective new hires to be checked for the legal status of their residency in America. A provision to protect businesses was added, providing a 30-day grace period to correct any good-faith violations. While many credit unions already utilize E-Verify, it is important to revisit your hiring procedures to ensure compliance.
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Georgia HouseState Session’s Over:
What’s Next?

State legislators are returning to their districts, and for credit unions, this provides a perfect window to reach out to them to build the grassroots strength of our industry. Legislators are much less likely to pass legislation that could negatively impact the businesses that they know well! Utilize this time to get to know your respective legislators; below are a few items that can fit in anyone’s schedule:

  1. First and foremost, send a thank you note in the next 4 to 6 weeks to your legislators thanking them for their time that they give in the Legislature (to obtain the contact information for your legislators, click here and enter your address). Most state legislators have “real” jobs in the off session that are EXTREMELY behind, and a small personal thank you note can go a long way in building relationships that will benefit our industry for years to come.
  2. In the next several months, invite your legislators to visit your credit union. This could be an opportunity to provide a tour and speak on what your credit union does for your members (and their constituents). This could be in conjunction with credit union festivities or a grand opening, or an educational event, etcetera. Please note that it may take invitations to multiple events to get attendance, so please don’t be discouraged if this is the case . . . keep asking!
  3. Many legislators have town hall meetings in the districts to discuss issues of area importance. Contact your legislators’ offices to be added to the e-mail list of when these are announced, and see if they fit into your schedule. Make sure the legislator knows you are from a credit union.
  4. Credit union chapters are an excellent avenue to reach out to area legislators. Some chapters invite their local legislators to speak at a meeting on the recent session and/or what they foresee for the area. Chapter agenda already set for the rest of the year? Still invite the legislator to attend a meeting so they can learn more about the credit union industry.
  5. Keep an eye out for opportunities to meet with your legislators. This could be from attending civic meetings, community events, Hike at Home meetings, and anything in between!
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Washington, D.C. News
 
Obama
President Barack Obama
Obama Signs 1099 Extension Repeal

President Barack Obama on April 14th signed into law legislation that repeals an extension of IRS Form 1099 reporting requirements that was approved last year. The extension, which was approved as a "pay-go" effort to offset the cost to taxpayers of the new health-care reform law, would have extended existing 1099-MISC reporting provisions to cover payments for goods valued over $600. Credit unions and other businesses have long been required to report on their form 1099-MISC certain payments of $600 or more that will be considered income by the IRS. CUNA backed the repeal, noting that requiring 1099-MISC forms on goods would have been extremely burdensome and would have had questionable value in actually increasing federal revenue. Rep. Dave Camp (R-Mich.), who sponsored an early version of the bill, estimated that the tax law change would save taxpayers $20 billion over a 10-year span and would reduce the deficit by more than $166 million over that same time period.

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Call to ActionSenate Champion Repeats Call for Interchange Implementation Delay

Sen. Jon Tester (D-Mont.) again called for further consideration of an interchange fee cap proposal, saying in an April 14th floor statement that Congress needs to stop, study and "make sure [it is] doing the right thing" before moving forward. Tester, along with Sen. Bob Corker (R-Tenn.) and 15 additional colleagues have introduced legislation that would delay implementation of the interchange legislation by two years and would order federal regulators to study the impact that the interchange changes could have on consumers, financial institutions and others. The interchange provisions, which could become effective in late July, could lower the amount of transaction fees charged to seven cents per card swipe. The legislation would exempt credit unions and other small institutions with assets of $10 billion and under from the terms of the regulations. However, there is much debate over whether this proposed exemption would work as planned.

The senator noted that federal regulators, including FDIC Chairman Sheila Bair, have publicly questioned whether small issuers would benefit from this exemption. Tester in his comments also said that while backers of the interchange legislation claim that it would help small businesses, it can actually present greater problems for them by potentially limiting their access to free checking accounts.  

In the House, there is legislation that seeks to delay the implementation of interchange legislation by one year (H.R. 1081). As of press time, the House bill has 84 cosponsors, with two from Georgia: Reps. Hank Johnson and David Scott. On both bills, CUNA President/CEO Bill Cheney last week said that "the time window for action is relatively short," and urged credit unions and their members to take part in a "Call on Congress" campaign launched by CUNA and the leagues that will encourage legislators to "stop, study and start" over on interchange. In Georgia, more than 2,400 messages have been sent to our Congressmen; if your credit union has not engaged its staff and volunteers, do so here today!
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House Financial Services Hearings Gearing up for May

Hearings on the impact of regulations and government policies on job creation and the economy in general have been tentatively scheduled for May, once House members return from their home district work period, by House Financial Services Committee Chairman Spencer Bachus (R-Ala.):

  • An in-depth review of the Dodd-Frank Act, and a markup of legislation that would extend the deadline of derivative-related portions is set for May 12. National Flood Insurance Program reauthorization and the Consumer Financial Protection Bureau (CFPB) will also be discussed.
  • CFPB-related bills will also be marked up on May 4, and a subcommittee will examine the Federal Reserve's compliance with the Dodd Frank Act and the Freedom of Information Act on May 11. The House subcommittee on capital markets and government-sponsored enterprises will hold a hearing on a to-be-determined topic later on that same day.
  • The committee on May 3 will focus on job creation and capital formation. Bachus in the release said that the economy needs "government policies that promote growth, job creation and a competitive financial marketplace."
  • The U.S. Treasury Department will deliver its yearly report on the international finance system on May 5.
The committee in a release noted that the schedule "remains tentative and will depend upon witness availability and other factors that may require changes." Witnesses for the hearings will be announced in the near future.
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Industry News
 

Two Credit Unions Placed into Conservatorship

NCUA on April 15th placed Mesa, Ariz.'s Vensure FCU and Texans CU of Richardson, Texas, into conservatorship. The agency said that it continues to insure the shares of members of both credit unions. Texans CU holds $1.6 billion in assets from 133,000 members. Vensure currently holds $4.7 million in assets from 144 members. Texans CU serves residents of Collin, Dallas, Rockwall, Travis, and Williamson counties as well as parts of Denton County. Vensure FCU serves employees of Vensure Employer Services Inc., employees of various related companies, and their families.

NCUA in its release said that it is authorized under the Federal Credit Union Act to appoint itself as conservator "to conserve the assets of a federally insured credit union, protect members' interests, or protect the National Credit Union Share Insurance Fund." The pair of conservatorships were the second and third to take place this year; there have also been four credit union liquidations this year.
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Public Influence News
 
Another State Legislator’s Op-Ed on Interchange

Jerguson
State Rep.
Sean Jerguson

In the April 17th edition of The Cherokee Tribune, State Rep. Sean Jerguson of Canton wrote a guest column titled “Big Banks’ Swipe Fees Hurt Small Businesses.” In the article, Rep. Jerguson praises U.S. Sens. Johnny Isakson and Saxby Chambliss for their vote on the Durbin amendment for interchange regulation, and urges the opposition to the two interchange delay bills in DC S. 575 and H.R. 1081 (which credit unions across the state have been supporting through the call to action).

This guest column is reminiscent of another guest column mentioned in the last edition of Creating Influence where Rep. Terry England of Auburn had submitted a similar letter to Insider Advantage. The Government Influence Team has learned that the merchants are asking all members of the General Assembly to send letters to their local papers similar to the above. GCUA, GBA and the Community Bankers Association, along with other interested organizations, have written to all state legislators explaining a different perspective than the ones the retailers mentioned. In the letter we explain that there is more than one side of the issue and what they have heard so far dramatically understates the potential effects on Georgia's financial companies of all sizes and the consumers they serve. The Government Influence staff will continue to communicate with legislators on the credit union perspective.
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News of the Competition
 

TwoTwo GA Banks Fail – First in 8 Weeks

Two Georgia banks were closed by the FDIC on Friday, April 15th: New Horizons Bank in East Ellijay and Bartow County Bank in Cartersville. These were the first banks to fail in Georgia in the past 8 weeks; to read the Atlanta Business Chronicle article on the closings please click here.

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