FEBRUARY 27, 2015
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Calendar Two Bills Beneficial to Credit Unions
Move Forward (Issue 1 of 6)

Two bills of potential significance to the credit union industry - dealing with ride-share company insurance issues and real estate escrow funds - moved forward in the Georgia Legislature this week.

  Committee Hearings on Overdrive as State Session
Counts Down (Issue 2 of 5)

More than halfway through the 40-day state legislative session, the volume of committee hearings continues to be high, as legislators work to advance their bills.

  Large Number of New State Bills Continues! (Issue 3 of 5)
Legislators continue to introduce numerous bills; many have potential relevance to credit unions, including legislation dealing with tax reform, consumer leases, abandoned property, cybersecurity and other issues.

  Congress: Hearings on Data Security, Patent Trolls
(Issue 4 of 5)

Committees of the U.S. House of Representatives held hearings dealing with patent demand letters and the President's cybersecurity information-sharing initiative.

  NCUA Proposes Increase to Small-Entity Definition
(Issue 5 of 5)

The National Credit Union Administration proposed expanding its definition of "small entity" to include credit unions with assets of less than $100 million, far less than the CUNA- and league-preferred level of $500 million.

Capitol domeTwo Bills Beneficial to Credit Unions Move Forward (Issue 1 of 5)

This week the state Legislature met for four days, bringing the schedule past the halfway point to day 23 of the 40-day session. There are seven legislative days before day 30, otherwise known as "crossover day," which is the last day for bills to pass the chamber in which they were introduced to continue forward in the process. For the bills that do not pass their originating chamber by day 30, they are stopped in their tracks and would need to wait until 2015 (or find another bill to be amended onto to move forward). As such, the level of hearings continues to be high as legislators work to pass bills through the committee process. In the midst of the activity, two bills beneficial to the credit union industry took significant strides forward:

  1. HB 190 by Rep. Rich Golick (R-Smyrna) passed two major hurdles this week on the 24th and 25th when the House Insurance subcommittee and full committee voted to move the bill forward. HB 190 seeks to provide insurance standards for any Transportation Network Company (TNC), such as Uber and Lyft, that operates in Georgia. If it became law, HB 190 would provide clarification of appropriate insurance parties and coverages, and help to protect consumers and the collateral.

    Why would credit unions care about TNC insurance? If an individual operates their vehicle with a TNC as a ride-share car, it is a commercial activity, something typically not covered by personal insurance policies. It would be financially detrimental to an individual if they unexpectedly realize they do not have coverage AFTER an accident. But because HB 190 identifies the TNC as the provider of primary first-party coverage, the driver, as well as the collateral, would be covered at all times while operating in the TNC.

    The credit union lobbying team has been engaged on this issue since November to protect credit unions and their members, working to keep the bill moving forward at each step. However, the TNCs have been lobbying to stop this legislation and do not want to be required to maintain insurance coverage, with corporate individuals of Uber and Lyft speaking out against the bill to legislators. The credit union lobbying team continues to work to advance this legislation as this issue has a long way to go in the remaining days of the state legislative session. It is now one of several bills in Rules for consideration for the full House floor for a vote.

    Special thanks to the two legislators who have been instrumental at shepherding the bill through the committee process, as well as standing firm against the TNCs who wanted the credit union language on required insurance coverage removed from the bill: bill sponsor Rep. Rich Golick, and House Insurance Chairman Rep. Richard Smith (R-Columbus). Both of these individuals are repeatedly pushed by TNCs to “water down” or stop the bill outright. If you would like to send thanks from the industry to both of them you can do so at:

  2. SB 95 by Sen. Michael Williams (R-Cumming) passed the full Senate on Monday, February 23rd. This legislation would create a new opportunity for credit unions to serve their members in a way not permitted presently. The 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 can provide this service. Sen. Williams reached out to the credit union lobbying team before introducing the bill to ensure that it would be something that would be positive for the industry, and the lobbying team addressed several questions from members of the legislature on this bill to help move it forward. The bill is now assigned to the House Banking Committee for consideration once they begin work on legislation from the Senate. 
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Committee Hearings on Overdrive as State Session Counts Down (Issue 2 of 5)

StaircaseAt this point in the state session, there is no shortage of committee hearings as legislators are working frantically to move their bills forward. Hearings were held as early as 7:30 am and as late as 6:30 pm this week with a packed schedule (and that was including the brief stop in activity due to weather!). In addition to the above mentioned hearings on HB 190, there were many issues of interest to credit unions addressed in Senate and House committees:

  • On February 26th the Senate Judiciary Committee heard testimony from interested parties, including credit unions, on SB 117 by Sen. Jesse Stone (R-Waynesboro). The credit union lobbying team spoke in opposition on this bill that seeks to force foreclosing parties to pay back fees and fines to condo associations (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. While no vote was taken, more work continues to combat this issue.
  • On February 24th the Senate Banking Committee passed SB 104 by Sen. Mike Dugan (R-Carrollton) with no issues. This legislation is a cleanup bill regarding provisions in the state depository code, removing references to entities no longer in existence.
  • HB 322 by Rep. Brian Strickland (R-McDonough) was debated in a House Judiciary subcommittee meeting on February 24th, and will be addressed again in an upcoming hearing. This bill seeks to address city/county concerns surrounding abandoned properties by placing a $500 penalty for noncompliance of recording a deed after foreclosure (originally the penalty was to be $5,000 per instance and the period in which to file the deed shortened from 90 days to 60 days). While these factors were worked down before the bill was introduced, the bill is still sought by several legislators as there are some large banks and mortgage lenders that have been guilty of not filing the deed under power. However, the credit union lobbying team helped procure additional changes with the bill sponsor prior the hearing. Rep. Strickland as well as subcommittee Chairman Rep. Mike Jacobs (R-Brookhaven) have committed to:

    • change the requirement from "recorded" to "filed" (as credit unions have no control when a county clerk of court processes the recordation), and
    • insert a grace period before the penalty applies, to provide for innocent mistakes.

  • On February 24th the House Banking Committee heard debate on HB 387 by Rep. Trey Kelley (R-Cedartown), which seeks to permit debt settlement companies to operate in Georgia. No vote was taken on the bill. However, it continues to be monitored to ensure credit unions are not wrapped into the compliance requirements, as well as to protect consumers’ ability to utilize credit union accounts to pay back debts.
  • In addition to the above, on February 24th 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. This bill passed the committee and now moves forward to Rules.
  • The House Judiciary Committee and subcommittees held multiple hearings on HB 267 by Rep. Trey Kelly (R-Cedartown) this week. This bill seeks to clarify the requirement in law of two witnesses attesting to deeds and mortgages, with the notary public sufficing for one.
  • HB 72 by Rep. Wendell Willard (R-Sandy Springs) was addressed in a House Judiciary Non-Civil Committee on February 24th. This bill seeks to further protect senior citizens from being taken advantage of, add trust companies to the same elder abuse financial requirements and protection standards in place for financial institutions presently. A hearing in the full Judiciary Non-Civil Committee is anticipated soon.
  • The full House Judiciary Committee passed HB 245 by Rep. Matt Dollar (R-Marietta) on February 24th. This bill seeks to allow certain condo associations to assess a special fee on their members, and is being monitored closely as it is a vehicle for condo association interests to force financial institutions to pay back fees/fines upon foreclosure.
  • The House Regulated Industries Committee met on February 24th to address HB 253 by Rep. Mandi Ballinger (R-Canton). This bill seeks to hold appraisal management companies to the same level of regulation as that of appraisers, and is being monitored to ensure that no unwanted amendments are included that could increase the compliance burdens of credit unions when ordering appraisals.

There were other hearings monitored on behalf of credit unions, including Ways and Means on tax-related legislation, and Motor Vehicles on bills that seek to alter ad valorem taxation on autos. Stay tuned for more hearings of interest, and for additional information you can also follow the activity at the statehouse on Twitter, and access the bills monitored on behalf of credit unions here.

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LegislatorsLarge Number
of New State Bills
(Issue 3 of 5)

This year the level of bills introduced has been high, as freshmen legislators seek to make their mark and veteran legislators seek to tackle controversial issues in a non-election year. But one would think that at this late point in the session, the stream of bills that are introduced would slow down. That perception is incorrect, as a large volume of new bills is seen daily. Bills introduced this week of note to credit unions were:               

  • HB 435 by Rep. BJ Pak (R-Lilburn) is a tax-reform proposal that would lower the personal income tax, but cap the mortgage interest deduction.
  • HB 445 by Rep. John Carson (R-Marietta) is extensive tax-reform proposal that removes a large number of credits and deductions and expands several areas of what is taxable. Currently out of the 81 pages of changes there are no financial transaction items in the bill, intangible property taxes, or credit union income taxes.
  • HB 456 by Rep. Tom Weldon (R-Ringgold) seeks to alter the state law regulating spendthrift trusts and how they are operated.
  • HB 457 by Rep. Lee Hawkins (R-Gainesville) seeks to change the ad valorem tax on watercraft held at dealerships, and is being monitored for any amendments that credit unions would need to be aware of before financing boats.
  • HB 462 by Rep. Alan Powell (R-Hartwell) seeks to outline certain consumer leases as pawn transactions, and not loans or extensions of credit. This legislation is being monitored for any inadvertent changes that could impact lending operations.
  • HB 466 and HB 467 by Rep. Jay Powell (R-Camilla) are two tax bills that open the code of law regarding sales and business tax, and while they presently do not do anything yet, they are being watched carefully for changes.
  • HB 477 by Rep. Jan Jones (R-Milton) is legislation on abandoned railroad property; however, its reference to property associations creates the need to monitor as it is a vehicle for the superseding lien attempts. 
  • HR 473 by Rep. Dudgeon (R-Johns Creek) seeks to create a study committee in the off session to committee to analyze cybersecurity and card breaches. The credit union lobbying team will be watching this closely for any activity.
  • SB 148 by Sen. John Kennedy (R-Macon) is a 100-plus-page revision that transfers oversight of several areas from the Department of Consumer Affairs to the Attorney General. Of interest, it would include areas regarding contracts, credit cards, debtor and creditor relationships among others.
  •  SB 170 by Sen. Brandon Beach (R-Alpharetta) is similar to the above HB 477 in terms of opening the section of law on property and associations, and is being monitored to prevent any unwanted amendments regarding property association superseding lien attempts.
  • SR 350 by Sen. Judson Hill (R-Marietta) is another bill directed at tax reform; however, it urges Congress to enact the Fair Tax Act.
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U.S. CapitolCongress: Hearings on Data Security, Patent Trolls (Issue 4 of 5)

On February 26th the House Energy and Commerce subcommittee on commerce, manufacturing and trade met concerning patent demand letters. The Georgia credit union lobbying team supported a state-level patent-troll bill that was passed into law in 2014. However, credit unions across the country would like to see Congress enact a national patent-troll bill that would combat abusive lawsuits and address the practice of deceptive patent demand letters. CUNA, along with a coalition of other financial services trade associations, outlined principles to Congress to address these growing problems.

On February 25th the House Committee on Homeland Security conducted a hearing examining President Barack Obama's new cybersecurity information-sharing initiative. Obama signed an executive order promoting cybersecurity information sharing at the White House Cybersecurity Summit in California earlier this month. 

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ApplesNCUA Proposes Increase to
Small-Entity Definition (Issue 5 of 5)

NCUA issued a proposal that would increase the definition of "small entity" to include credit unions with assets of less than $100 million; however, credit unions, Leagues and CUNA would prefer a much higher threshold of $500 million to reduce regulatory burden. The current threshold defines a small credit union as one with assets of less than $50 million. That standard was set by the NCUA board in 2013, at which time the agency said it would be revisited in two years. 

The Regulatory Flexibility Act (RFA) generally requires federal agencies to determine and consider the impact of proposed and final rules on institutions defined as "small entities." According to the NCUA, this change would allow an additional 745 federally insured credit unions to be defined as small entities, bringing the total number of federally insured credit unions covered by the RFA to 4,869.

All three NCUA board members voted their approval of the proposal, but board member J. Mark McWatters said he was in favor of a small-entity definition of no lower than $250 million in assets, and said he would support a threshold of $550 million in assets. Vice Chair Rick Metsger said while he supports the recommendation, adjusting the threshold to more than $100 million could make it harder for smaller credit unions to receive assistance from the NCUA's Office of Small Credit Union Initiatives (OSCUI).

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