|The End Is Near! State Legislature Moving Fast in Remaining Days
The state Legislature has three days remaining of the 40-day session. If this week is any indication, the final three days of the session will be just as hectic as the prior 37, if not more so. The issues tackled this week were of strong interest to credit unions as the bill topics ranged from tax reform, lending, and foreclosures to the secondary market, to highlight a few. Topics addressed of industry note (for tax reform, please see separate article below):
Secondary Market: The Small Business Borrower Protection Act (SB 448) by Sen. Don Balfour (R-Snellville) was addressed in the House Banking hearing on Wednesday, March 21st. This bill is intended to rein in negative practices by some investment companies in the marketplace who are buying up large distressed asset pools of foreclosed properties with the intent of “only going after the debtors” before pursuing the properties. The bill had been amended previously to exempt all federally insured financial institutions and subsidiaries from the bill. The Government Influence Team is part of a coalition seeking to modify the bill further to avoid impacting the ability of financial institutions to sell portfolios on the secondary market. The bill was amended in a subsequent hearing on Thursday, March 22nd to exempt credit unions and other financial institutions so as to protect the ability to sell portfolios on the secondary market, and now moves to House Rules for consideration.
Lending: The Residential Real Property Rights Bill (SB 365) by Sen. Bill Hamrick (R-Carrollton), “carried” by Sen. Jesse Stone (R-Waynesboro), passed the House Judiciary hearing on Tuesday, March 20th. The Government Influence Team is pleased to share that after much discussion leading up to this hearing with the bill sponsor and parties on both sides of the issue, a compromise was reached. The bill was amended to ensure that it would not impact current operations in home equities, HELOCs, open-ended lending, and refinances (where there are no changes to existing deeds). The bill now only outlines what is defined as an unauthorized practice of law, and that attorneys are the sole entity that have the ability to close a purchase money real estate loan or initiate a foreclosure. This bill now moves to the House Rules Committee for consideration.
DBF Housekeeping Legislation: The Department of Banking and Finance’s Housekeeping Bills (HB 945 and HB 946) by Rep. Sam Teasley (R-Marietta) passed out of the Senate Banking hearing on Monday, March 19th with no attempts to alter the language as it stands presently. It currently does not contain any provisions that would impact credit unions. These bills are now eligible to be considered for a full Senate vote, and will continue to be monitored throughout the process as they open a section of law that can, if amended, change our industry. The Government Influence Team continues to work with legislators to move these bills forward, unamended.
Foreclosures: There is not a week that goes by in the state session that does not include some activity on foreclosures, whether that is existing bills, amendment attempts or new legislation.
Whenever there is a bill that encompasses any part of the foreclosure process, it provides the opportunity for others to add amendments that could alter the manner in which foreclosures are conducted in Georgia. While work continues, the two separate pieces of legislation on foreclosures that saw activity this week did not include any changes that could impact credit unions negatively.
On Wednesday, March 21st the full Senate voted unanimously to pass the Attorney General’s Robo-Signing Foreclosure Bill (HB 237) by Rep. Rich Golick (R-Smyrna). This bill includes foreclosure documents in the list of materials that could be included in residential mortgage fraud cases, and maintains a safe harbor provision for innocent mistakes. This bill now moves back to the House for a procedural action as it was modified in the Senate.
On Thursday, March 22nd the Senate Banking Committee held a hearing on the Foreclosure Right to Cure Bill (HB 419) by Rep. Billy Mitchell (D-Stone Mountain). This bill had originally sought to increase the foreclosure notice period from 30 to 90 days, but now only seeks to outline a debtor’s right to cure a foreclosure. This right to cure is contingent upon the debtor paying all past-due payments, late fees, and fines in good funds prior to the date of the foreclosure. This bill now moves forward to Senate Rules for consideration.
Lien Status: There have been several attempts this session by condo/homeowner association lobbying interests to supersede the priority lien status of financial institutions so as to recoup past-due association fees and fines. While each of these attempts has been defeated to date, the session is not over until the close of day 40, so much work continues. This week, positive movement for credit unions on this issue took place on two of the bills that are potential “vehicles” to carry the condo/homeowner association language: SB 136 by Sen. Bill Hamrick (R-Carrollton) was moved forward in the House Judiciary without any negative amendments on Wednesday, March 21st, and Rep. Doug McKillip (R-Athens) is working with the Government Influence Team to address any concerns in HB 129. This bill is in conference committee, and as such is changing almost daily. However, Rep. McKillip has been open to addressing our concerns to prevent any circumvention of lien status.
Other Industry-Related Activity: The Senate Banking Committee voted to move forward the Merchant Acquirer Limited Purpose Bank Act (HB 898) by Rep. Earl Ehrhart (R-Powder Springs). The bill would provide Georgia companies such as Global Payments and TYSYS the ability to maintain their own settlement accounts in a narrowly defined bank charter, and does not impact credit unions as currently written.
Property Registries: Last, but not least, the bill that took two years to come to fruition. The Foreclosure Registry Bill (HB 110) by Rep. Mike Jacobs (R-Atlanta) was moved forward in the House on Thursday, March 22nd and now travels to the Governor for his signature to become law! This bill would set uniform standards on how cities and counties could design foreclosure and/or vacant property registries, and would exempt financial institutions as owners of a property through foreclosure from registering (and paying fees), provided they file the deed within 60 days with required contact information sent to the city and/or county.
The final three days in the state legislative session will last well into the evening as legislators work long hours to move their respective bills forward. To see the status on all the bills that are being monitored on behalf of credit unions please access the Georgia credit union legislative tracking site. Don’t forget you can follow key activity as it happens via Twitter @GCUAGov. Follow us on Twitter if you haven’t already.
The idea of tax reform is not new for Georgia; it was analyzed during the off session of 2010, was debated heavily in 2011, and was one of the key initiatives shared by Governor Nathan Deal, Lt. Governor Casey Cagle, and Speaker of the House David Ralston prior the 2012 session. Yet there were no bills on this issue during the 2012 session until this week.
On Monday March 19th the Joint Committee on Georgia Revenue Structure introduced their tax reform proposal for 2012: the Georgia’s Jobs and Family Tax Reform Plan (HB 386). It quickly passed it out of committee on Tuesday March 20th, a supplemental Rules Committee meeting was held to get the bill on the House floor on the same day, and it passed overwhelmingly 155 to 9 by the end of Tuesday the 20th. Sound quick? It was! And, this bill does not follow the same rules as other bills; neither “crossover day” rules, nor normal committee processes, apply. It was passed out of the Senate on Thursday, March 22nd and now travels to the Governor to sign into law.
This bill is a pared-down version of the tax reform proposals of 2011, and does not retain the previously sought sales-tax expansion on services such as safe deposit boxes and credit card membership fees (among others), nor does it remove the various tax credits that were sought last year. There was no attempt to disadvantage credit unions by altering the tax status for our industry.
What this new bill does
|Georgia Credit Unions Hear From One of Their Own at GAC
Georgia credit union leaders joined more than 4,000 individuals in Washington, D.C., at the Credit Union National Association’s Governmental Affairs Conference (GAC) this week. The GAC is a prime opportunity to hear from industry leaders, as well as meet with Congress to move industry issues forward. One of the speakers at the GAC was Georgia U.S. Rep. Rob Woodall (R-7). Woodall addressed the GAC attendees on his perspective of credit unions, grassroots and the atmosphere in Congress. He shared his personal thoughts on credit unions, citing that because credit unions invest in their communities, they are key to the country's economic growth, something worth sharing to lawmakers to remind them of the hard work exhibited by credit unions.
The Congressman addressed the March 20th morning session of the GAC, and shared that politicians and credit unions have something in common. "I'm in the customer service business, all day, every day, just like you,'' noted Woodall. He pointed out that "your members are the drivers of the good things that happen in this economy.'' He noted that that surveys show that credit unions and rural electric cooperatives are among the institutions that enjoy the highest degree of respect among consumers and urged credit unions to use their popularity to try to influence lawmakers. This positive point is one that the Congressman makes privately, citing it as indicative of one of the benefits of being a cooperative.
Woodall, whose candidacy for the U.S. Congress was assisted by efforts of Georgia credit unions and CUNA (see below related article), said that the freshman lawmakers are more concerned about doing the right thing than in getting re-elected. "They don't care if they get re-elected and feel that they don't have to necessarily put together the best campaign or put out the best press release. But if they do the right thing today, tomorrow and Thursday, the election will turn out well,'' he said.
|Marshall Boutwell Wins Buck Levins Award
Each year, amid the breakout sessions, networking and keynote speeches of the GAC, awards are given to those who exemplify the credit union philosophy of “People Helping People.” This year, Marshall Boutwell, president/CEO of Gwinnett Federal Credit Union, was honored with the distinguished Buck Levins Award, which recognizes an individual whose efforts in the political arena have contributed to elevating the political presence of credit unions at the state or national level.
"Marshall believes that when credit unions speak with one voice, and put action behind their words, legislators can’t help but pay attention and do the right thing for members," said Mike Mercer, president/CEO of Georgia Credit Union Affiliates and newly elected chairman of CUNA (see related article below). "The entire Georgia credit union community congratulates Marshall on receiving this distinguished award."
Boutwell has been active in the Georgia credit union movement for more than 25 years, 18 of them as CEO of Gwinnett FCU. Over his career, Boutwell has demonstrated his commitment to political advocacy in many ways. Leading the way by actions, not just words, he has dedicated his personal time in district meetings with legislators to build strong relationships. Most recently, Boutwell took the lead in the effort to elect Rep. Rob Woodall, a credit union supporter, and veritable underdog in the 2010 Congressional races. Boutwell’s leadership and support have won respect from Woodall. "I appreciate the credit union movement, with Marshall Boutwell’s leadership, for taking a chance on me when other groups did not," says Woodall. "Marshall and his team were with me at each step of the process – in meetings during qualifying, supporting me during the runoff election, attending my victory party on election night, and traveling to Washington for my inauguration."
On a grassroots level, Boutwell has not only demonstrated his own commitment to the credit union philosophy, but he consistently encourages his staff and other credit union leaders to get involved. "Marshall exemplifies the spirit, persistence and tenacity of Buck Levins, having served with Levins in the Georgia credit union community for many years," Mercer said. "He believes in credit unions with his heart and soul."
During its annual board elections, CUNA named Mike Mercer as chairman of the trade group. For more than two decades, he has represented the interests of credit unions on the state, national and international levels, as well as being actively engaged in regional and international cooperative efforts. "I’ve known Mike for many years and have worked very closely with him on several critical advocacy efforts that have benefitted credit unions," said CUNA President/CEO Bill Cheney. "His leadership skills are second to none, and his broad insight into the needs of credit unions and their members makes him an excellent choice to lead the CUNA board. I’m proud to serve under his leadership."
In his acceptance speech, Mercer had this to say about credit unions’ ongoing service to members: "These are people trying to do good things with their lives and thus fundamentally credit unions help people afford life." He concluded his acceptance remarks by stressing that every credit union should continue to work toward protecting and enhancing the cooperative business model.
The Georgia credit union community is familiar with Mercer as the president/CEO of the Affiliates, yet many may not be aware of his vast contributions to the national and international credit union movement:
"The entire Georgia credit union movement congratulates Mike on this accomplishment," said Greg Connor, chairman of the Georgia Credit Union League Board of Directors. "I cannot think of another leader and advocate in the credit union movement who could better represent the issues of importance to credit unions than Mike Mercer. We look forward to his tenure as CUNA Chairman and wish him much success."
|Push for Member Business Lending in Congress
U.S. Senate Majority Leader Harry Reid (D-Nev.) and Sen. Mark Udall (D-Colo.) both spoke on the Senate floor on March 15th in favor of legislation to increase the credit union member business lending (MBL) cap. Reid indicated that he has been working with Udall to attach the MBL bill to a pending small-business bill, the Jumpstart Our Business Startups (JOBS) Act.
Under the process to which the Senate has agreed for consideration of the jobs bill, the Udall amendment can be added only by unanimous consent and indications are that effort would not likely be successful. However, leader Reid indicated to the Senate body that he has begun procedural steps to bring the Udall bill (S. 509) to the floor as a standalone bill. No timetable was given, but Reid pledged there would be a vote on the bill, which would increase the MBL cap to 27.5% of a credit union's assets, up from 12.25%.
|Credit Unions Join Coalition to Dismiss Merchant Interchange Suit
On behalf of credit unions, on March 15th CUNA joined a broad coalition of trade associations representing thousands of small and large financial institutions to file an amicus brief in a lawsuit brought by merchants against the Federal Reserve Board's rule that sets a debit interchange fee cap. The joint brief describes how small and large financial institutions are harmed by the Fed's tight fee ceiling. It underscores that consumers have not seen any pricing benefits for products and services promised by the merchants when they were fighting for a government-set cap on what card issuers may charge for their services.
While the merchants' suit charges that the Fed cap is too high, the amicus brief counters that it is, instead, too low and does not allow debit card issuers to cover their costs and a reasonable rate of return on their investments. An amicus brief can be filed in a court case by interested parties not named in a lawsuit, and the court can accept or reject the brief as part of the case record.
The Fed was charged with setting the debit fee limit under provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The Fed's final rule, which became effective in October, caps debit interchange fees for issuers with assets of $10 billion or more at 21 cents. The regulation also allows card issuers to charge an additional five basis points of the value of the transaction to cover fraud losses. An extra penny may also be charged by financial institutions that are in compliance with the Fed's fraud-prevention standards.The Fed rule is not meant to apply to issuers with less than $10 billion in assets, which means nearly all credit unions are exempt. However, the brief notes that there is serious doubt whether this exemption will work in practice, because merchants will have an incentive to steer transactions toward lower-fee debit cards from the bigger issuers. The coalition filing the amicus brief also includes the Independent Community Bankers of America, National Association of Federal Credit Unions, Midsize Bank Coalition of America, Consumer Bankers Association, National Bankers Association, The Clearing House Association, American Bankers Association, The Clearing House Payments Company, and The Financial Services Roundtable.
|SunTrust Fined for Foreclosure Abuse
The Atlanta Business Chronicle reported on March 20th that SunTrust is one of eight bank holding companies to be fined by the Federal Reserve on their foreclosure practices. No information has been shared about the size of the fines, or when they will be levied. However, this news comes just on the heels of the $25 billion settlement between the top five lenders in the U.S. and state and federal government agencies. To read more, please click here.