DECEMBER 6, 2013
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Showering the CU Message on Congress
Keeping directors and members educated is one key to sustaining effort in the "Don't Tax My Credit Union" campaign, and one credit union CEO explains how to go about it.

 
     
  Tax Reform: What to Anticipate
The chairman of the Senate Finance Committee released three draft proposals for tax reform, and more components of a broader reform effort are expected before the end of the year.

 
  Patent Troll Bill Passed by House
The U.S. House of Representatives passed bipartisan legislation to restrain “patent trolls” - non-practicing entities that bring abusive patent litigation against credit unions, banks and other businesses.

 
  Give Us Relief!
A credit union CEO from Akron, Ohio, testified in a hearing before a U.S. House panel that regulatory compliance issues hamper credit unions’ ability to serve their members.

 
  Senators Urge CFPB Mortgage Rule Delay
More than two dozen U.S. Senators, including one from Georgia, urged the Consumer Financial Protection Bureau to heed the concerns of credit unions and other small institutions by delaying implementation of new mortgage regulations.

 
  Credit Union Leader Wins Special Election
Brian Prince, an associate board member at Augusta Metro FCU, won a special election runoff to fill a Georgia House of Representatives post left vacant by the death of Rep. Quincy Murphy.

 
  Your Involvement Helps!
Forging personal connections with elected officials helps generate valuable influence for the credit union movement, as exemplified by recent efforts by three credit unions across Georgia.

 
  NCUA Wins $1.4B Settlement
The National Credit Union Administration will receive $1.4 billion from JP Morgan Securities' $13 billion settlement in a case involving residential mortgage-backed securities of alleged questionable quality.

 
  Payday Lenders Beware: CFPB on the Case
The Washington Post reported that the Consumer Financial Protection Bureau reached a $19 million settlement with payday lender Cash America over alleged abusive practices, including high interest rates and faulty collection lawsuits.

 
  Eye on Teller Wages
Low wages paid by major banks have left some tellers relying on food stamps, Medicaid and other assistance, costing millions in public dollars, The Washington Post reported.

 
 
 
RainyShowering the CU Message on Congress

More than 87,000 messages from Georgia credit union advocates have been sent to Congress asking legislators to please Don’t Tax My Credit Union. These messages have been showered on D.C. since mid May, and this credit union campaign will definitely lead in to 2014 as Congress is slowly tackling the issue of tax reform. As of press time, some initial tax reform proposals have been released (see related article below); however, none of them involve credit unions. The volume credit unions across the country have generated on this issue has definitely made an impact, as this is not one of the issues Congress chose to address first. However, it will be addressed; the only question is when. As such, it is important credit unions continue to shower Congress with the message that the credit union income tax exemption is valuable to members, and is one worth preserving.

There are always opportunities to engage your staff and membership in speaking out for what is important to the industry. One significant aspect, however, of a long campaign (such as this) is to keep everyone informed and updated on the status. Below is one credit union’s secret to success in being engaged, and keeping its team dialed in to react strongly on behalf of members.

GEMC Federal Credit Union
GEMC FCU has actively engaged in the Don’t Tax campaign through a variety of avenues: emails to Congress, placing the alert on its website, engaging in the Twitter Tuesday events, getting members involved in postcards, and sharing the message on social media. The credit union membership is spread out across the state, and as such, the efforts in the campaign touch all of the members of Congress.

The loss of the income tax exemption would impact EVERY credit union, and CEO Denise Swan shared that it is important to get involved because “there are so many issues out there, but this one hits right to the heart of who we are. And without our fundamental business model preserved, our efforts to address other matters are fruitless.” Excellent point, and this would impact not just credit unions, but the 1.9 million credit union members in the state. But how does the credit union sustain efforts, not just with the geographic location of membership, but with this long campaign? Easy. Through education! Swan shares the tips on how any credit union can achieve this:

What steps did you take to educate your board, team and/or your members? Swan noted she has “kept our board informed about many timely industry issues, and when it became apparent that credit unions’ tax exemption could be at risk, I brought this to their attention immediately.” She used all the resources available to help. “I gave them CUNA’s web link and we began discussing the implications that may occur.” Afterwards, they engaged their team: “Key staff immediately started to formulate plans to get the word out through as many channels as possible to the membership as well.” Going directly to the members was an easy move for the credit union, as “we recognized that ultimately our members were our strongest voice.”

What was the secret to being successful in getting contacts? GEMC FCU has generated more than 1,100 messages, which is 200 percent of their goal. Swan shared the success stems from “creating a message in all the touch points we have with members and having those personal, one-on-one conversations. Members appreciate being given the opportunity to have their ‘voice’ heard.”

What advice/encouragement would you share to help others? Swan’s advice is right on point: “Keep the messaging going even though it may seem tired. There’s at least one member who hasn’t heard yet!” The reason behind this motivation to reach out to members is the members themselves: “All things worth fighting for take effort, and we need to be in this for the long haul to successfully preserve our industry. Your members care about keeping ‘their credit union’ theirs, and that’s strongly evidenced by the thousands of responses our Congressional leaders have received from them.” Excellent message for any credit union!

Swan leaves a parting inspirational thought based on the credit union mission, past and future: “As credit union leaders, our instinctive desire is to do what is best for our membership. We pour our hearts and souls into this mission each and every day. If, at the end of the day, at least one member has been touched by the goodness that credit unions stand for, we have accomplished much. If we unite together we can accomplish even more.” We encourage each and every credit union to take this advice to heart, as the absence of credit unions in the lives of the consumers would be devastating. Your members are worth your efforts!

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Tax Reform: What to Anticipate

The week of November 18th brought the release of three draft tax reform proposals in the Senate. Senate Finance Committee Chairman Max Baucus (D-MT) has elected to release components of a comprehensive reform bill, as opposed to putting the entire proposal out for public consumption. The three pieces released were on international tax reform (released Nov. 19th), tax administration (released Nov. 20th) and tax accounting rules (released Nov. 21st). Additional information regarding these proposals can be found here. What’s next? CUNA expects additional components to be released that would round out a broader reform effort before the end of the year.

Tax reformThe next steps are not immediately clear, but to a large extent the immediate future of tax reform is linked closely to the outcome of the budget conference committee, the debt ceiling and (to a lesser extent) the appropriations process. Finance Committee Ranking Member Orrin Hatch (R-UT) indicated he did not join Baucus in the release of these drafts because he wanted to wait for the budget conference committee to complete its work. Certainly, there seems to be a preference on the House side to slow the process down at least to see whether Senate Budget Committee Chairman Patty Murray (D-WA) and House Budget Committee Chairman Paul Ryan (R-WI) can come to any agreement on the budget; the budget conference committee has a “deadline” of December 13th.

The budget process deserves close attention, as in the unlikely event an agreement is reached, the conference committee could set targets, guidelines or instructions for tax-writers to follow in reform legislation. Further, an agreement on the budget, which would be bipartisan, might facilitate bipartisan agreement on key areas of tax reform. That scenario is still a long shot with just a few weeks to go in the legislative year. However, absent an agreement on the budget, there seems to be very little political incentive for the House GOP to put out a tax reform bill before the Christmas recess. Nevertheless, all signs point toward this moving forward in 2014. With that in mind, the debt ceiling seems to be the next potential catalyst for significant movement in the tax reform process, and that reinforces the notion tax reform will continue to be a front-burner issue next year, even though it seems to be simmering at the moment.

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Patent trollPatent Troll Bill Passed by House

House leaders brought the Innovation Act (H.R. 3309) to the House floor on December 5th and the House approved the bill by a vote of 325 to 91. Judiciary Committee Chairman Bob Goodlatte (R-VA) introduced the bipartisan legislation, which the Judiciary Committee passed by a 33-5 vote in November, to restrain "patent trolls" – non-practicing entities that bring abusive patent litigation against credit unions, banks and other businesses. The bill includes several credit union-supported provisions, including language that would allow the Director of the Patent and Trademark Office discretionary authority to waive the costly filing fee required to initiate a proceeding to examine the underlying validity of a patent (Section 18 appeals). It also would enhance pleading standards to make it harder to bring frivolous patent infringement claims and limit discovery costs borne by targeted business. The bill, which will now move on to the Senate, included a credit union-supported amendment that would require patent trolls to identify the ultimate parent entity in claim letters filed as part of their patent litigation.

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Paper waveGive Us Relief!

Members of Congress heard the credit union perspective in a hearing on December 4th on a number of issues, including duplicative and inconsistent federal rules. Rose Bartolomucci, president/CEO of Towpath CU, a state-chartered, privately insured credit union in Akron, Ohio, testified on CUNA's behalf before the House Financial Services subcommittee on financial institutions and consumer credit. The hearing focused on:

  • A bill to require federal financial regulators, including NCUA and CFPB, to assess whether proposed rules are duplicative or inconsistent with other federal rules, to take steps to address the duplication or inconsistency, and report to Congress within 60 days of issuing the rules;
  • A CUNA-supported bill that would permit privately insured credit unions to join a Federal Home Loan Bank; and,
  • A bill that would adjust the CFPB's rural designation to align with the definition used by the U.S. Department of Agriculture.

Responding to questions during the hearing, Bartolomucci shared that regulatory compliance issues hamper credit unions’ ability to serve members. The cost of compliance makes it more difficult for credit unions to offer products, and she shared that some credit unions cannot afford the cost of the compliance burden, thereby increasing mergers.

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Senators Urge CFPB Mortgage Rule Delay

Sen. Roger Wicker (R-MS) called on the Consumer Financial Protection Bureau to hear the concerns of credit unions and other small institutions and "consider providing appropriate relief" from pending mortgage regulations, "including deferring implementation." Georgia U.S. Sen. Saxby Chambliss (R) was among the 25 colleagues to sign the letter to the CFPB with Sen. Wicker.

CFPB logoThe letter, which was sent to CFPB Director Richard Cordray before the Thanksgiving break, addresses the CFPB’s six rules for mortgage products and services. The rules, which are required by the Dodd-Frank Act, are set to go into effect in January 2014 and include the bureau's Ability-to-Repay and Qualified Mortgage standards.

Credit union concerns are reflected in the letter, although the senators did not specify a time period for an implementation delay. CUNA has suggested Congress grant a one-year extension of compliance deadlines for the pending CFPB mortgage rules, and if such a delay cannot be created, Congress should provide credit unions with a buffer of at least six months as they work to come into compliance with qualified mortgage standards. It has also been recommended a similar six-month delay should also be applied to legal liability provisions of mortgage regulations.

The senators in the letter noted their constituents "are concerned that they will be hard pressed to come into compliance with the significant changes called for under these rules by the current deadline."

Compliance with these changes "will prove daunting" for small financial institutions with few compliance officers, and many institutions will not have appropriate software in place as of January 2014, the senators added. Failure to comply with the pending regulations "could lead to market distortions" which could "adversely affect the availability of mortgage credit for consumers" in several states, particularly in rural or remote areas of the country, the legislators added.

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Prince campaign buttonCredit Union Leader Wins Special Election

On December 3 the ranks of credit union board members serving in the state Legislature increased. Brian Prince (D-Augusta), associate board member for Augusta Metro FCU, won the special election runoff for House seat 127 to fill the vacancy created by the passing of Rep. Quincy Murphy (D-Augusta).

Representative-elect Prince was supported in his campaign by Augusta Metro FCU CEO Sherry Saxon, and by credit unions through Georgia CUPAC. Congratulation to Prince; we look forward to seeing you under the Gold Dome!

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You can helpYour Involvement Helps!

Credit union leaders are encouraged to build personal connections with their legislators, as these inroads provide valuable influence for the entire industry. When a legislator considers a bill, what sways their thinking? Personal knowledge, political preferences, district needs, constituent reactions? Yes. But what has strong influence is when a legislator can connect an industry issue with someone they know personally from the industry. Enter credit unions and developing personal connections; this is a continual work in progress as elected leaders can and do change, but is work that is worth your time. Below are two examples of how credit unions build this type of connection:

  • Pinnacle CU, led by Diane McCoy, is creating a personal connection force by its active presence at legislative and civic functions. At these events, credit union representative Leslie Brown Clark reaches out to the legislators to ensure they take note of the credit union impact in their district. Cynthia Rainey, marketing manager for the credit union, shared the thought process behind this focus: “We at Pinnacle Credit Union believe that relationships are important whether it’s with our members or with our legislators. Credit unions represent thousands of Georgians and it is our responsibility to build the relationship with those that make the laws that we must abide by. Although we have long realized the importance of this, we have just recently begun sponsoring and attending legislative meetings. Not every employee is interested in attending but encouraging those that are is very beneficial, not just to our credit union but to all Georgia credit unions.”

    Powerful sentiment, and this last sentence is important in creating your credit union’s personal connections: Tap into those who are interested, those employees or board members who are wired for this type of involvement, and it will only create success for your credit union and the industry!
  • DOCO CU, led by Barry Heape, is creating a personal connection with their Congressman Austin Scott (R-8) through regular attendance of political fundraisers. This type of involvement is powerful as it grows an awareness of the industry and develops a personal connection for the individuals who take the time to engage at their events. Vice President Robert Youngblood has shared how this type of connection pays off nicely when traveling to Washington, D.C., as there is an immediate bond with the legislator from attending his events, and the Congressman’s appreciation of the support of credit unions as an industry.
  • Hallco Community CU, led by Joe Foster, is creating a personal connection with their Congressman Doug Collins (R-9) not only through Hike at Home visits but also by attending fundraising events. Foster, as well as other credit union leaders in the Northeast Georgia chapter, has taken to heart the idea of being present with new members of Congress. Recently Foster attended a fundraising reception in Gainesville that allowed him not only to continue to spread the credit union message to Congressman Collins, but provide valuable time with Governor Nathan Deal, Congressman Jack Kingston, State Sen. Butch Miller, State Rep. Terry Rogers, State Rep. Carl Rogers, and State Rep. Emory Dunahoo. Excellent work by Foster on building ties to elected officials.
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CashNCUA Wins $1.4B Settlement

NCUA has added another settlement to its pile of victories related to lawsuits to regain costs associated with losses to the corporate credit unions brought by residential mortgage-backed securities of alleged questionable quality. The U.S. Department of Justice on November 19th announced JP Morgan Securities would pay $13 billion in total. NCUA will receive $1.4 billion under the terms of the settlement. NCUA Chairman Debbie Matz said the settlement "will greatly benefit credit unions" and "will enable NCUA to greatly reduce the assessments that all credit unions have to pay.”

The DOJ is also reportedly considering criminal charges against JP Morgan. The NCUA lawsuits alleged JP Morgan oversold the quality of certain mortgage-backed securities (MBS's) it issued, underwrote and sold to U.S. Central FCU, Western Corporate FCU and other corporates from 2006 to 2007. The corporates collapsed in 2009, and NCUA, as their liquidating agent, sued a number of Wall Street banks that issued or underwrote the securities contributing to the corporates' collapse. The agency alleged systemic disregard of underwriting guidelines stated in the offering documents and says the alleged misrepresentations caused U.S. Central and WesCorp to believe the risk of loss on the investments was minimal, when in fact, the risk was substantial. In addition to JP Morgan, NCUA has also filed lawsuits against RBS Securities, Wachovia Capital Markets and Wells Fargo, Barclay's Capital Inc., Goldman Sachs, and UBS Securities. The agency has also settled claims of more than $170 million with Citigroup, Deutsche Bank Securities and HSBC.

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Payday loansPayday Lenders Beware: CFPB on the Case

On November 20th The Washington Post reported the Consumer Financial Protection Bureau has turned its attention towards payday lenders. Credit unions will likely breathe a small sigh of relief! The article highlights abusive practices at Cash America, one of the country’s largest payday lenders, and how the CFPB has reached a $19 million settlement with the company for the abusive practices. This is the CFPB’s first with a short-term, small-dollar lender.

What abuses? Robo-signing, charging military members more than 36 percent on the payday loans, and faulty debt-collection lawsuits to consumers. Cash America must pay up to $14 million to borrowers who were subject to faulty debt-collection lawsuits in Ohio from 2008 to January 2013, and has repaid about $6 million to military ­borrowers and victims of robo-signing. In addition, it stopped attempting to collect on debts the CFPB identified as problematic and alerted the credit bureaus to the erroneous black mark on borrowers’ reports. Cash America also must pay a $5 million civil penalty and ­­de­velop better compliance-management systems, according to the order.

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Pyramid and eyeEye on Teller Wages

On December 3rd, The Washington Post reported on low bank wages costing the public millions in public assistance, with tellers needing to rely on food stamps, earned income tax credits, and/or Medicaid. The article cites Bank of America and Wells Fargo as some of the institutions with poor wages. To read more please click here.









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