FEBRUARY 20, 2015
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Gold Dome Banking Committees Address Bills
of Interest to Credit Unions (Issue 1 of 4)

The Georgia Senate and Georgia House Banking Committees held hearings this week to consider a number of bills that could affect the state's credit union industry.

  No Shortage of Activity in the State Legislature! (Issue 2 of 4)
Near the midpoint of the state Legislature's 40-day session, there is plenty of activity of interest to credit unions, much of it involving issues not on the agendas of the banking committees.

  Congress: Bill Introduced to Allow Credit Unions to Raise
Supplemental Capital (Issue 3 of 4)

Two U.S. Representatives introduced in the House a bill that would allow credit unions to raise capital in forms other than retained earnings, the only form now permitted.

  Credit Card Companies Seeking Stronger Security
in Reaction to Data Breaches (Issue 4 of 4)

In the wake of several large and well-publicized data breaches, Visa and MasterCard are taking steps to boost the security of customer data by means such as removing account numbers from cards and introducing chip cards.

Capitol interiorBanking Committees Address Bills of Interest to Credit Unions (Issue 1 of 4)

It’s a common misconception that the only committees that address legislation that can impact credit unions are the two banking committees. This is incorrect, as there are 65 separate committees between the Senate and the House, and countless bills spread across most if not all of these committees that need to be lobbied to protect credit unions (see related article below)! However, it is accurate to assume that if the banking committees meet, the credit union lobbying team is on hand monitoring closely as they hear bills of keen interest to the industry! This week, both the Senate and House Banking Committees met to debate bills that seek to make changes that involve credit unions:

Senate: On February 17th the Senate Banking Committee passed SB 95 by Sen. Michael Williams (R-Cumming); this bill seeks to expand where real estate agents can deposit escrow funds outside of just a bank and would broaden the law to include credit unions as one of the entities that provide this service. Sen. Williams reached out to the credit union lobbying team beforehand to ensure that it would be something that would be positive for the industry, and we have heard from various members of the legislature on this legislation. The bill now moves forward to Senate Rules for consideration.

House: On February 19th the House Banking Committee met to address the Department of Banking and Finance’s Housekeeping Bill HB 184 by Rep. Bruce Williamson (R-Monroe). This legislation contains several “clean up” edits, such as removing the filing-in-triplicate requirements peppered throughout the financial law code of Title 7. While the bill encompasses changes for many of the industries under the Department’s supervision, there are several sections that pertain to credit unions solely and the lobbying team provided insight beforehand in the halls as well as in the hearing on some of the questions from legislators. The bill passed the committee and now moves forward to House Rules. Of interest to credit unions, this bill seeks to:

  • Provide state-chartered financial institutions stronger parity with federally chartered institutions (which is beneficial when there are issues on the state level that negatively impact credit unions),
  • Outline in law how a bank could convert to a credit union,
  • Require out-of-state credit unions operating in Georgia to have federal insurance,
  • Provide the Department the option to conserve a troubled credit union (as opposed to taking a stronger measure) to give another avenue to return a credit union to a positive status,
  • Require that the comprehensive audit of a credit union be done by a licensed, independent public accountant or firm (unless the credit union is less than $15 million in assets, in which case an independent accountant or firm or internal auditors would be permitted),
  • Set a minimum standard of conduct of directors by outlining impermissible actions (such as conflict of interest in voting on purchases/sales where they personally benefit, i.e., receiving an “insider” deal), and
  • Provide credit unions the ability to pay the required amount to join the credit union on the members' behalf if they so choose.

In addition to the above, the House Banking Committee also heard HB 299 by Rep. Emory Dunahoo (R-Gainesville), which seeks to outline in law the ability to charge a convenience fee on payments made by credit cards in certain circumstances. This bill is sought by those entities that fall under the Georgia Industrial Loan Act, and is being monitored closely as it could open up unwelcome amendments on the topic of fees,  as well as state-level interchange attempts. There has been no vote taken on the bill yet, but that is anticipated in another hearing.

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No Shortage of Activity in the State Legislature! (Issue 2 of 4)

Rotunda interiorThe state Legislature commenced six weeks ago, and as of press time they are in session for the 19th day of the 40-day schedule. They will pass the midway point next week. However, even with the session almost halfway complete, the bills are still being introduced in a rapid-fire procession, with daily schedules packed with hearings to address legislation. From a credit union perspective, there is a large volume of issues to navigate to help protect and promote the industry, and we are already tracking as many bills as we monitored for the entire full session of 2013! There are more bills introduced and hearings held each day. Some of the highlights of interest to credit unions this week outside of the two Banking Committees:


  • In three separate hearings on February 17th, 18th, and 19th the House Judiciary Committee and subcommittee addressed HB 197 by Rep. Mike Jacobs (R-Brookhaven). This bill is an extensive rewrite of state law to bring Georgia up to standards of the uniform commercial code as it pertains to several financial statues that regulate debtor/creditor relationships. This bill now moves forward to Rules and will continue to be monitored throughout the process for any changes that could impact credit union operations.
  • HB 115 by Rep. Billy Mitchell (D-Stone Mountain) passed out of the House Judiciary Committee on February 17th and now awaits selection in Rules. This bill seeks to allow a debtor the right to "cure" a foreclosure by making all past-due payments, late fees and charges up to five days prior the sale of the property. This bill is a prime vehicle for attempts to increase the foreclosure notice period and lengthen the time individuals can stay after a foreclosure is initiated, and continues to be monitored closely in the process.
  • SB 88 by Sen. Burt Jones (R-Jackson) passed the Senate Insurance Committee on February 18th and now awaits selection in Rules. This bill seeks to provide companies the option to pay employees with a payroll card, and the credit union lobbying team has actively worked with multiple interested parties to address issues. This bill opens up concerns regarding card and general noninterest account fees, as well as ensuring that there would be nothing that would prevent a person from having direct deposit with their credit union. In the course of the hearing, there was discussion on how this bill was a ruse to help financial institutions recoup money from Dodd-Frank provisions and overdraft fees! Much misinformation abounds on this bill, and it will need to be watched carefully as it will likely be amended by legislators on the Senate floor. It is in these amendments where “anything and everything” can happen and as such, will require much effort to keep from being swept into negative operational (or even interchange) issues.
  • On February 18th a House Ways and Means subcommittee addressed tax redemption sales, and the nuance in the law that allows other parties to purchase and redeem tax liens through a series of shell corporations to create a "super lien" status that is at the same level as a tax lien, thereby superseding the lien priority status of credit unions and other financial institutions. The bill addressed was HB 81 by Rep. Scot Turner (R-Holly Springs), which seeks to prevent these "super liens" from happening. The committee has postponed voting on the bill to provide time to perfect the language, and another hearing is anticipated soon.
  • This week the House Judiciary Committee and subcommittees held multiple hearings on HB 267 by Rep. Trey Kelly (R-Cedartown), which seeks to clarify the requirement in law of two witnesses attesting to deeds and mortgages, with the notary public sufficing for one.
  • On February 17th the House Judiciary Committee debated HB 51 by Rep. Tommie Benton (R-Jefferson), which seeks to prevent individuals from being forced to pay homeowner association fees (with no means of recourse) if purchasing a tax lien on a property. This bill passed and now moves forward to Rules; however, it is being monitored closely as the intent of the bill can greatly change in the process and become a vehicle for homeowner associations’ superseding lien language to try to require foreclosing parties to pay past-due fees.

Capitol interior stepsIn addition to the above, there were other hearings on the topics of motor vehicle ad valorem taxes, strengthening joint tenancy provisions (as it pertains to divorces and who owns the property), as well as studying broad tax reform measures for the state. Each day there are more bills introduced that will queue into the committee process. Some of the bills introduced this week of interest to credit unions:

  • HB 347 by Rep. Dustin Hightower (R-Carrollton) is a bill that opens the interest and usury section of law in Title 7, and while it pertains to calculating interest on child support payments it is being watched closely due to its being an “open door” for any unwanted amendments that could apply to how interest is regulated in general.
  • HB 356 by Rep. Ron Stephens (R-Savannah) is the anticipated boat-titling bill that seeks to implement a taxation and titling process for boats similar to the one that is in place with the TAVT system for autos.
  • HB 364 by Rep. Jay Powell (R-Camilla) opens up the section of law that pertains to the real estate transfer tax, and while it presently does not make any changes, it likely will in the process and will need to be watched closely for amendments that could impact credit unions.
  • HB 381 by Rep. Andy Welch (R-McDonough) seeks to overhaul the section of law regulating notaries public in an effort to clean up perceived abuse. Rep. Welch had reached out to the credit union lobbying team beforehand to share his desire to move this issue forward and we will continue to work with him on the bill.
  • HB 384 by Rep. Bill Werkheiser (R-Glennville) seeks to require all employers to submit a report on all the wages paid to employees to the Revenue Department each year.
  • HB 387 by Rep. Trey Kelley (R-Cedartown) which seeks to permit debt settlement companies to operate in Georgia.
  • SB 104 by Sen. Mike Dugan (R-Carrollton) is a cleanup bill regarding provisions in the state depository code, removing references to entities no longer in existence.
  • SB 117 by Sen. Jesse Stone (R-Waynesboro) is the anticipated bill from the condo association interests that seeks to force foreclosing parties to pay back fees and fines (a maximum of six months’ worth of charges). This would increase the cost of foreclosure, as well as impact the ability of loans on Georgia properties to be sold in the secondary market. The credit union lobbying team spoke with Sen. Stone the day it was introduced to voice our opposition to the bill. However, much work will continue to combat this issue.
  • SR 259 by Sen. Judson Hill (R-Marietta) seeks to review the tax exemption status of 501c-3 charitable hospitals and the benefit returned to the state. While this is directed at the medical community, it is a prime example of the environment down at the Capitol where everyone is in search of funds to pay for the transportation initiative.

Next week the Legislature will be in session Monday through Thursday, and there will be another packed week of hearings. Stay tuned; for more details you can also follow the activity at the statehouse on Twitter, and access the bills being monitored on behalf of credit unions here.

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U.S. Capitol stepsCongress: Bill Introduced to Allow Credit Unions to Raise
Supplemental Capital (Issue 3 of 4)

A reintroduced bill that would allow credit unions to raise other forms of capital has been met with strong support from CUNA. Reps. Peter King (R-NY) and Brad Sherman (D-CA) introduced the Capital Access for Small Businesses Act on February 13th. Credit unions are currently unable to raise capital other than through retained earnings.

The bill would permit the NCUA Board to allow credit unions to accept other forms of capital, provided that the Board's action does not alter the cooperative ownership structure of credit unions. The capital would be required to be uninsured and subordinate to other claims against a credit union. The NCUA Board would also be allowed to set maturity limits on supplemental capital, and restrict the ability to raise such capital to credit unions that are sufficiently capitalized and well managed. CUNA testified in favor of supplemental capital before the Senate Banking Committee recently, and NCUA testified in favor of it before the same committee. NCUA has also asked for comments on whether supplemental capital should be permitted in the context of the risk-based capital proposal.

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CardsCredit Card Companies Seeking Stronger Security in Reaction
to Data Breaches (Issue 4 of 4)

Amid a sea of data breaches, Visa and MasterCard are taking long-awaited next steps to ramp up security of customer data as concerns over cyberattacks continue to mount. The Wall Street Journal reported February 13th on the separate plans unveiled by the world’s largest payments networks. These plans include the expansion of tokenization - a way to obscure a customer’s information during a transaction - and biometrics verification. The announcements came as President Barack Obama and a large group of government officials descended on Stanford University to meet with top executives from a number of industries, including Apple Inc. Chief Executive Tim Cook, for a first-of-its-kind cybersecurity "summit," part of an effort to combat future cyberattacks.

Concerns over cybersecurity are growing as high-profile data breaches have hit nearly every corner of corporate America - from retailers such as Target Corp. and Home Depot to Sony Pictures Entertainment and J.P. Morgan Chase & Co., and most recently to health insurer Anthem Inc. Credit unions are too painfully aware of the impact of many of these breaches. Meanwhile, Visa and MasterCard have managed to emerge from these scandals relatively unscathed, according to Gil Luria, an analyst at Wedbush Securities. "Part of their role, part of what they charge for, is setting the rules of the road and enforcing them," said Mr. Luria. "What hasn’t happened yet is that there’s been very little blame put at Visa and MasterCard’s doorstep."

Visa said it would bring its Visa Token Service, which replaces cardholder information such as account numbers and expiration dates with a unique series of numbers that validates the customer’s identity, to device manufacturers beyond Apple. Visa launched the service on Apple devices in October, allowing users to wave an iPhone in front of a wireless reader and complete the transaction with a fingerprint. Visa said it also plans to tokenize online transactions for retailers that use its Visa Checkout service, including Gap Inc. and Orbitz Worldwide Inc. By getting rid of the sensitive card information it can leave hackers with nothing of value to steal if they break into their computer servers. MasterCard said it would also continue to push forward with the rollout of chip cards.

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