|Positive News on UBIT
(Issue 1 of 6)
On April 9th credit unions received a much welcomed interpretation by the Internal Revenue Service that clears nearly all credit union products from being subject to unrelated business income tax (UBIT).
Finally bowing to the results of two federal court cases brought by credit unions, the IRS recently issued a memorandum that defines nearly all credit union products at stake in the litigation as "substantially related income"– not subject to UBIT.
Royalty income from the marketing of accidental death and dismemberment (AD&D) insurance to credit union members is also exempt. The IRS has also indicated it will incorporate the memo into its Examination Manual to guide future audits of credit unions.
|Regulatory Relief Bill Introduced
(Issue 2 of 6)
On April 10th the Community Financial Protection (S. 2242) act was introduced in Congress to give credit unions and community banks some relief from crippling financial regulations enacted in the wake of the 2008 financial crisis. Sen. Dan Coats (R-IN) said his bill would modify the way in which the Consumer Financial Protection Bureau (CFPB) requests information from financial institutions with less than $10 billion in assets. The CFPB would be required to use publicly available information or seek the requested information from existing banking regulators. This bill would be a good first step to bringing a measure of relief from some of the burdens created for credit unions and community banks by the Dodd-Frank Act and its creation of the CFPB.
|Financial Coalition on Housing Finance Reform (Issue 3 of 6)
As part of a coalition of small financial institutions – both credit unions and banks – CUNA has urged improvements to proposed housing finance reform legislation that would address the unique needs of those institutions in the housing market. The creation of the coalition enables CUNA, along with NAFCU and the Independent Community Bankers of America, to present a united front on key changes needed in proposed housing finance reform legislation. The changes address:
The letter is addressed to Senate Banking Committee Chairman Tim Johnson (D-SD) and ranking member Sen. Mike Crapo (R-ID) and thanks the senators for introducing their Housing Finance Reform and Taxpayer Protection Act discussion draft. The coalition letter notes that the current secondary market structure works well for credit unions and community banks, and allows them to meet their borrowers' needs. It warns that restructuring the system is "unchartered and untested" territory and therefore raises numerous questions regarding fees and functionality when applied to the real-world marketplace.
|Tools to Get out the CU Vote (Issue 4 of 6)
Credit unions around the state are engaging in efforts to build awareness of the May 20th primary elections – in less than two weeks, advance voting begins in many areas! Has your credit union engaged? You can do so easily:
Curious where your legislators stand on credit union issues? Check out the “Credit Union Resources” page of ElectionWatch, where in addition to the above you can access the stance of your federal and state legislators on issues of importance to your credit union.
|CFPB Hits BoA with $772 Million in Penalties for Card Marketing Practices
(Issue 5 of 6)
On April 9th, The New York Times reported that Bank of America has been ordered to pay roughly $772 million in refunds to customers and fines to federal regulators to settle allegations the bank used deceptive marketing and billing practices involving credit card products. The Consumer Financial Protection Bureau (CFPB) said Bank of America “illegally charged” its customers for credit monitoring and credit reporting services that were not received.
Under the terms of the order, Bank of America will be prohibited from marketing any credit protection or credit monitoring add-on products until it submits a compliance plan and repays impacted consumers, the CFPB said. More actions are presumed to be brought against other banks that may have misled or overcharged credit customers.
|Small Business Credit Kabbage in Your Backyard
(Issue 6 of 6)
The Atlanta Journal-Constitution reported on April 9th that Kabbage, an Atlanta-based online company providing cash advances to small businesses, said it has closed on a $270 million credit facility that will enable it to serve more clients. It is the largest credit facility Kabbage has opened since starting in 2011, and the second in the past year. Guggenheim Securities, the investment banking and capital markets division of Guggenheim Partners, is behind the latest agreement, while Victory Park Capital was behind a $75 million facility last April.