June 1, 2012
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U.S. Capitol Credit Unions Keep Up Efforts on Congress for MBL Increase
A Senate vote on increasing the member business lending cap is still pending, so credit union advocates must continue to reach out to their U.S. senators and urge them to support this important legislation.

 
     
  Growing Georgia Support on ATM Disclosure Bill
Both of Georgia's U.S. senators and two new House members have signed on as co-sponsors of a bill to repeal a burdensome regulation that requires duplicate withdrawal-fee notices on ATMs - a rule that has led to baseless lawsuits.

 
  Pushing Back Against Tax Exemption Revocations
CUNA and other credit union groups asked the Internal Revenue Service to ensure that federal credit unions won't receive erroneous notices again this year that their tax-exempt status is being revoked.

 
  Flood Insurance Extension Passes
President Obama signed into law a bill extending the National Flood Insurance Program for 60 days, and the Senate majority leader scheduled debate on a measure that would extend the program for five years.

 
  Opportunity for Credit Unions: 2012 Elections
The upcoming elections provide an excellent opportunity for credit union advocates to promote the movement by working on behalf of candidates, especially those knowledgeable about and sympathetic to credit unions.

 
  Looking Ahead at Legislative Issues
Credit union leaders held a Hike at Home meeting with a high-ranking member of the state House Judiciary Committee to discuss future legislation that might affect the credit union industry.

 
  Cutting a Path to Regulatory Relief
In a meeting with NCUA Board member Michael Fryzel, CUNA President/CEO Bill Cheney urged the regulatory agency to drop proposed new rules on loan participations and credit union service organizations.

 
  Potential New Mortgage Rules
CUNA asked Consumer Financial Protection Bureau officials, who are formulating new rules for the mortgage industry, to be mindful of the potential impact of such rules on credit unions, and to minimize that impact.

 
  Banks’ Tactic to Attract College-Age Customers
The New York Times reported that banks are teaming up with universities to turn student IDs into debit cards, but consumer advocates are concerned about potential fees and other problems that can result from such arrangements.

 
  JP Morgan Chase, Campaign Contributions, and the Regulatory Environment
An opinion article in The Washington Post drew a connection between campaign contributions by JP Morgan Chase and at least one senator's apparent hostility toward federal regulators during a hearing on the bank's huge investment losses.

 
  Well-Timed Positive Press for Credit Unions
An Atlanta Business Chronicle article pointed out that doing business with credit unions instead of banks holds potential advantages for small businesses, especially those in need of relatively modest loans.

 
  Georgia Credit Unions Support Co-Op’s Bike Tour
Georgia's Coastal Empire Credit Union Chapter played host to a group of cyclists stopping in Savannah during the Cabot Creamery 2012 Community Tour, a 2,300-mile ride to celebrate the power of cooperatives and their members.
 
 
 
Credit Unions Keep Up Efforts on Congress for MBL Increase

U.S. CapitolWith the Senate vote on credit union member business lending legislation (S. 2231) still pending, credit unions and small-business owners are keeping up the pressure on the U.S. Congress to increase small-business access to much-needed credit by raising the MBL cap. Credit unions, leagues, small business owners and CUNA have met with staff of every U.S. Senate office ahead of a potential Senate vote on member business lending cap increase legislation.

Pending Senate and House bills (H.R. 1418) would increase the MBL cap to 27.5% of a credit union's assets, up from 12.25%, under certain conditions, and CUNA has estimated that this increased MBL authority would help inject $13 billion in loans into the economy and create as many as 140,000 new jobs, with no cost to taxpayers. Senate leadership remains committed to a floor vote on the MBL legislation; a voting date has not yet been determined. CUNA President/CEO Bill Cheney and CUNA staff have also met personally with 35 senators, and have plans to meet with more in the coming weeks, Cheney said. "CUNA will work with leagues to ensure that every senator and every representative hears from small-business owners and credit unions about this bill – not just once or twice, but on a very regular basis. We need a steady stream of contacts not only in Washington, but also in every state and every congressional district across the country," he added.

To help these ongoing MBL advocacy efforts, Cheney emphasized that credit unions that lend to small businesses must reach out to those they have served and encourage them to reach out to their senators. Credit unions that do not lend to small-business owning members should reach out to their senators and representatives and let them know that it is important that more small business credit is made available, because if small businesses are successful, credit unions will be successful. To date the two Georgia senators, Saxby Chambliss (R) and Johnny Isakson (R), have not yet signed on to the bill. To engage your credit union today, please click here.

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Watering canGrowing Georgia Support on ATM Disclosure Bill

As mentioned in the May 18th Creating Influence, on May 17th Senator Michael Johanns (R-NE) along with three of his fellow senators introduced S. 3204, the Senate companion legislation to H.R. 4367. The legislation would repeal the outdated and duplicative requirement that notices must be given to consumers if a fee may be charged for withdrawals. The current rule requires both a notice on the screen and a physical notice attached to the ATM, each  stating that a fee may be charged. If the notice is not attached, the rule permits class-action lawsuits to recover up to $500,000 plus attorneys’ fees and costs. As a result, notices have been purposely removed in order to sue, or threaten to sue, financial institutions and merchants for noncompliance with the requirement.

By updating the dual-disclosure requirement, the legislation would:

  • Protect credit unions and other financial institutions from frivolous lawsuits.
  • Reduce the regulatory burden on all financial institutions.
  • Continue to ensure consumer protections for all ATM users through mandated on-screen fee disclosures.
Without this important reform, the number of these baseless lawsuits will continue to rise, as will the cost of this service to consumers. The most recent news is that on May 24th both Georgia senators (Senator Isakson and Senator Chambliss) signed on as co-sponsors. And late-breaking news as of press time: Reps. Tom Graves (R-9) and Rob Woodall (R-7) have agreed to co-sponsor H.R. 4367.
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Pushing Back Against Tax Exemption Revocations

Concerned that another round of problems with the Internal Revenue Service's (IRS) "automatic revocation process" for federal credit unions' tax exemption is about to occur, CUNA joined three other credit union groups in a bid to head off potential Form 990-T issues for credit unions. In a letter from a law firm representing CUNA, the National Association of State Credit Union Supervisors (NASCUS), CUNA Mutual Group and the American Association of Credit Union Leagues (AACUL), the IRS was asked to confirm that steps are "being taken to prevent a significant re-occurrence of the automatic revocations for the federally-chartered credit unions filing the Form 990-T."

PushThe issue arises from federal credit unions' claiming the health insurance premium tax credit. To do so, federal credit unions are required to file Form 990-T, even though, as federal credit unions, they are exempt from filing Form 990 itself. The IRS requires Form 990 filers to disclose the names and compensation of certain key employees such as directors, their 20 highest compensated non-executive employees, any independent contractors that work for the firm, and former high-ranking or key employees.

The filing of 990 forms apparently triggers a search by the IRS computer for past Form 990 filings. If none are found for the federal credit union, an exemption revocation letter is automatically sent to the credit union. "But federal credit unions are not required to file Form 990 and should not be receiving these letters," said CUNA General Counsel Eric Richard. The IRS last year notified several state-chartered credit unions, and some federally chartered credit unions, that they would lose their tax-exempt status after their respective regulators failed to file Form 990 tax returns on their behalf.

May 15 marked the annual deadline for filing a new Form 990 for those organizations that are required to file it. "The concern is now that we will see a whole new round of erroneous revocation letters from the IRS to federal credit unions because of that filing deadline and the situation that federal credit unions find themselves in, at no fault of their own," Richard said. Stay tuned!

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FloodFlood Insurance Extension Passes

On May 30th, the House passed by a vote of 402-18 the Senate-passed version of a bill (H.R. 5740) that would extend the National Flood Insurance Program for 60 days, and President Obama signed it into law on May 31st. The legislation also includes a provision that would phase out premium-rate subsidies for people buying second homes and vacation homes in flood-prone areas. Without the passage of legislation and the President’s signature the NFIP’s current authorization was slated to expire at midnight on May 31st.

Looking ahead at a longer-term solution, Senate Majority Leader Harry Reid (D-Nev.) has agreed to schedule a floor debate in June on the Senate’s draft bill that would reauthorize the NFIP for five years. The Senate Banking Committee approved the legislation on September 9. The House passed an NFIP five-year reauthorization and reform bill (H.R. 1309) last July.

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VoteOpportunity for Credit Unions: 2012 Elections

One does not need to be a political person to know that election season is here. Signs for local, state and Congressional races are already plastered across Georgia. Qualifying (which is the period of time where someone must register to run for office) ended on May 25th; the primary election is on July 31st, and the general election is on November 6th. There are months of campaigning, ads, fliers and fundraisers by hundreds of candidates.

From a credit union perspective, why is this important?

  1. Elected officials can, and do, impact how you serve your members. We all have our political preferences, but it is important to be aware of how candidates stand on credit union issues. The actions they take (or do not take) have a direct impact on your credit union and your members. To get a broad overview of the previous stance of legislators, please click here for the Congressional Profile, here for state House Voting Scorecard and here for state Senate Voting Scorecard.
  2. Engaging in campaign activity is a powerful action. It is a way to help ensure that those who protect and promote credit unions return to office, and is a way to strengthen bonds with legislators. By participating in campaign activities, credit union volunteers build influence on future legislative initiatives in D.C. and at the Statehouse. If you are interested in getting involved in a campaign, contact a member of the Government Influence Team and we can help put you in contact with one of your local candidates.
  3. Elections are a way to engage all of the 1.8 million members in Georgia. Sound daunting or potentially contentious from a member service standpoint? Absolutely not. It could not be easier. By providing the nonpartisan election education resource ElectionWatch, credit unions offer a tool to help members know how, when and why to vote. This resource is free for all affiliated credit unions. Link it to your site today to help engage your members in the political process . . . without being political.

Credit union advocates in Georgia have been more active than ever engaging in campaign activities, with more credit unions scheduled to hold or participate in campaign events in the upcoming months, and several other credit unions that are in the planning stages as of press time. Already there have been credit union tours for two Congressional candidates, there are credit union tours scheduled for a state legislator, and a campaign volunteer day scheduled for a Congressional candidate . . . all by credit union people just like you. Click here for the campaign events held to date.

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Jacobs
From left: Tim Bridges, Associated CU; Tyrone Burke, Georgia’s Own CU; Kathy Igou, Georgia’s Own CU; State Rep. Mike Jacobs; Mike Culbertson, GCUA
Looking Ahead at Legislative Issues

On Tuesday, May 29th credit union leaders sat down with State Rep. Mike Jacobs at a local Hike at Home meeting. Rep. Jacobs is the vice chair of the Judiciary Committee, and chairs the subcommittee that hears testimony on the majority of lending and foreclosure related bills that are introduced in the state House. As such, this was an ideal opportunity to educate him on credit unions, and the importance of having the ability to lend without cumbersome regulations – a point that Rep. Jacobs echoed in his efforts to keep Georgia “open for business” for financial institutions and other industries.

Looking ahead at upcoming legislative issues, Rep. Jacobs was not aware of any legislative efforts that would be detrimental to credit unions. Although he anticipates another bill next session that would attempt to change the foreclosure process in Georgia to a judicial procedure, he did not view this as an issue that had traction and would work against it again if re-elected. Looking back to the 2012 session, this meeting was also an opportunity to thank Rep. Jacobs for the work he put forth to pass the Uniform Foreclosed Property Registry Standards Bill (H.B. 110) in the past session. Readers of Creating Influence will recall that this bill exempts financial institutions from city/county property registries, fees and fines if they file the deed within 60 days with the required information sent to the ordinance.

Hike at Home meetings are a quick, inexpensive way for credit union advocates to engage with their elected officials. This activity pays off in dividends: Stronger relationships equate to stronger legislative influence for the entire industry. Thank you to the Hike participants for sharing their time. When an opportunity arises for you to engage in a local Hike at Home meeting, take advantage of it as it is time well spent.

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PathCutting a Path to Regulatory Relief

In a meeting with senior CUNA staff urging regulatory relief for credit unions, NCUA board member Michael Fryzel indicated there are no new rules on the NCUA's horizon, except for ones already proposed, such as those addressing loan participations and credit union service organizations (CUSOs). CUNA President/CEO Bill Cheney reiterated CUNA's concerns with both pending proposals, which the trade group have called "regulatory overkill" and urged the agency to drop or change significantly. Both proposals would introduce unnecessary limitations, CUNA has told NCUA, which "would add to the regulatory burden of affected credit unions in a manner that is wholly disproportionate to the risks associated" with the governed activities.
 
CUNA and GCUA have urged a more targeted approach for the CUSO rule than exists within the proposal's existing parameters, and Fryzel at the meeting said he wanted to see any future NCUA regulations targeted to address a specific risk or risks and rules should be written in plain English so that credit unions have a clear understanding of their responsibilities. Fryzel encouraged CUNA and credit unions to weigh in with further ideas for regulatory relief. He reiterated that credit unions are having a good year and while the NCUA must address any problem areas, it should not interfere with sound credit union operations.

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CFPB logoPotential New Mortgage Rules

CUNA has significant concerns regarding both the individual and cumulative effects that the Consumer Financial Protection Bureau’s (CFPB) planned changes to mortgage rules will have on credit unions, and CUNA continues its meetings with the agency to detail these concerns. The CFPB is developing mortgage-related proposals in such areas as mortgage originations, mortgage servicing, appraisals, Truth in Lending Act/Real Estate Settlement Procedures Act form consolidation, changes to the Home Owners Equity Protection Act (high rate, high fee mortgages) and requirements to consider a borrower's ability to repay a mortgage loan. Most of these proposals are expected to be issued for comment in July.
 
In a meeting with CFPB officials, CUNA urged the bureau to consider, as it moves forward with drafting the mortgage rules, that credit unions did not cause the financial crisis and have not engaged in abusive mortgage lending practices. As consumer-owned cooperatives, credit unions have developed programs and services that seek to meet their members' needs for affordable lending products, rather than to maximize credit unions' income from fee-based services, as many banks do. Peter Carroll, CFPB assistant director of mortgage markets, Sean O'Mealia, CFPB fellow, and Bart Shapiro, of the CFPB's office of community banks and credit unions, met with CUNA Deputy General Counsel Mary Dunn, Jared Ihrig, CUNA regulatory counsel, and Kristina Del Vecchio, CUNA counsel for special projects.
 
The CFPB is empowered to exempt financial service providers from certain regulatory requirements and CUNA called on the agency to work with the credit union system and to invoke that authority as broadly as possible to minimize the impact of these rules on credit unions. For any rules that credit unions are subject to, CUNA urged the agency to be mindful of the overall impact on credit union mortgage originators and servicers, particularly since a number of credit unions rely on vendors to provide statements and meet other compliance responsibilities.

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AppleBanks’ Tactic to Attract College-Age Customers

The May 30th edition of The New York Times highlighted a bank tactic to gain a strong foothold in the college-age demographic: partnering with universities by turning student IDs into debit cards, and taking over disbursement of financial aid.

 In recent years, however, their efforts to woo students have gotten banks and other financial institutions in trouble with regulators. They are now effectively prohibited from providing gifts to students who sign up for credit cards. The colleges can no longer be paid by the lenders to steer students to student loans. But many colleges, struggling to offset cuts in state funds and under pressure to keep tuition down, are finding new ways to strike deals with financial institutions.

Consumer advocates worry that financial firms are again profiting from unsuspecting students, by charging them fees and even gaining access to their financial aid funds. Now a prominent consumer group has tried to document the extent of the practice. In a report released on May 30th, the group, the United States Public Interest Research Group Education Fund, found that nearly 900 colleges and universities have card partnerships with financial institutions; in some instances, the colleges receive hefty payments from banks for the exclusive access to students. In other instances, the schools save money by outsourcing financial functions to banks or other vendors.

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JP Morgan Chase, Campaign Contributions, and the Regulatory Environment

An opinion piece in the May 22nd edition of The Washington Post suggested that senators are focusing more attention on the regulators than on JP Morgan Chase, which has been in the press as of late for its issues. JP Morgan Chase has spent upward of $20 million on lobbying and campaign contributions in the past three years, and the article stated that the bank received a “healthy dividend on that investment” in a recent Senate hearing on its recent losses ($2 billion), in which Sen. Richard Shelby (Ala.), the committee’s ranking Republican, glowered at federal regulators and charged that they “didn’t know what was really going on.”
 
RegulationsThe article also cited how much JP Morgan Chase and its employees have donated $72,950 to Shelby’s campaign in the past five years, making the bank his second largest source of campaign cash. The trading scandal at JP Morgan highlighted the urgent need for tougher regulation of Wall Street, but Shelby’s dialogue was part of a larger effort to repeal regulations. The article continues that key provisions of Dodd-Frank have not worked because it haven’t been put in place, such as the “Volcker rule,” which attempts to separate banks’ gambling from their government-backed deposits.

Data from the Center for Responsive Politics was cited in the article on how most senators on the Banking Committee have received sizable checks from JP Morgan and its employees over the past five years. They are the largest source of funds for Republicans Bob Corker (Tenn.), $61,000, and Mike Crapo (Idaho), $33,982, and the committee’s Democratic chairman, Tim Johnson (S.D.), $38,995. They gave $108,800 to Mark Warner (D-Va.), $34,800 to Chuck Schumer (D-N.Y.) and lesser amounts to three other members. The article also denotes that 38 members of Congress, including three on the committee, were JP Morgan shareholders as of 2010.

How might the above impact credit unions? Every action has a reaction, and when Congress seeks legislative changes based on a handful of players in the marketplace, all of the marketplace is impacted. Making it all the more important for elected leaders to understand how credit unions are unique, and the positive impact they have in the lives of members.

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Exclamation markWell-Timed Positive Press for Credit Unions

In a recent article, the Atlanta Business Chronicle explains that big banks aren’t necessarily the best choice for small businesses in Georgia. Touting the accessibility, convenience and lower rates and fees offered at credit unions, the article describes many of the ways business owners can benefit from credit union membership.

“One of the attractions of credit unions is that they are nonprofit cooperatives. If you open an account, you are a member and an owner,” the article reports. It goes on to explain the convenience of the shared branching network, and the accessibility that many credit unions offer through online and mobile banking. The article also mentions that many credit unions now offer business loans. “In fact, they’re the best place to go for small business loans. That’s because many banks aren’t interested in lending less than $100,000, but credit unions are,” according to Caroline Lane, senior vice president for CO-OP Financial Services.

Top tips featured in the article to help business owners decide on the best credit union include:

  • Confirm eligibility
  • Consider location
  • Compare services

Each year, the Atlanta Business Chronicle features an article about how to choose a credit union. This offers great visibility for Georgia credit unions, and is an opportunity for your credit union to tout its business services. The GCUA Public Influence Team encourages your credit union to share this and other information about your credit union’s business offerings within your local business community.

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Cabot Tour
From left: Cyclist Bob Spiegelman from Londonderry, NH; Don Hill, President/CEO of Memorial Health Credit Union and Coastal Empire CU Chapter President; Susan Jaycox from the Coastal Georgia Greenway; Kimberly Ford of Georgia Heritage Federal Credit Union; Alan Fitton, bicycle mechanic from Dunmore, PA; Jo Claire Hickson of Coastal Georgia Greenway; Myron and Cathy Skott, cyclists from Johns Creek, GA; Basil Campbell, cyclist from Athens, GA; and Louise and Jerry Gill of Georgia Heritage FCU.
Georgia Credit Unions Support Co-Op’s Bike Tour

The Coastal Empire Credit Union Chapter welcomed the cyclists of the Cabot Creamery 2012 Community Tour to Savannah, Georgia at a reception held at the downtown SpringHill Suites on May 23. The cyclists enjoyed an overnight stop in Savannah during their 2,300-mile bicycle ride along the East Coast Greenway. The tour started in Miami on May 12 and will end on July 7 in Portland, Maine.

The Chapter provided snacks and beverages to refresh the cyclists, among whom are a husband and wife team from John’s Creek, GA who will participate in the entire tour. “We’re happy to host the cyclists and welcome them to Savannah,” said Don Hill, president/CEO of Memorial Health Credit Union and Coastal Empire Credit Union Chapter president. “This is a great way to show the spirit of the cooperative movement. We’re proud to partner with Cabot for this event.”

Cabot Creamery is a farm family-owned cooperative located in Vermont producing all natural, award-winning cheeses. The 2012 Community Tour was created to spotlight the power of cooperatives during the International Year of Cooperatives, as well as to celebrate those who give their hearts, time and skills to strengthen communities. “Our Community Tour is an opportunity to spread the word about co-ops, communities and volunteerism,” said Michelle Silver, project manager at Cabot Creamery Cooperative. “We’re so pleased that Georgia credit unions joined us in this effort to celebrate those who give of themselves to strengthen our communities.”

Click here to read more in Credit Union Times.

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