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Washington Archive

Washington

CU Parity Bill For Underlying Owners Of Lawyers' Trust Accounts Introduced

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WASHINGTON (11/14/13)--Legislation that would extend share insurance coverage to all of the underlying owners of funds held by lawyers in trust accounts and realtors in escrow accounts was introduced late Wednesday.
 
The bill, supported by the Credit Union National Association, is known as the Credit Union Share Insurance Fund Parity Act (H.R. 3468) and was introduced by Reps. Ed Royce (R-Calif.) and Ed Perlmutter (D-Colo.), as expected (News Now Nov. 12).
 
Specifically, the bill would provide National Credit Union Share Insurance Fund coverage for accounts such as Interest on Lawyers Trust Accounts (IOLTAs) so they are treated for deposit insurance purposes on the same basis as similar accounts insured by the Federal Deposit Insurance Corporation.

The House Financial Services Committee has scheduled a markup on the bill for today.

CUNA President/CEO Bill Cheney thanked the House Financial Services Committee chairman, Rep. Jeb Hensarling (R-Texas), and its ranking Democrat, Rep. Maxinie Waters (Calif.), for their leadership in bringing this relief measure up for committee action.
 
Upon the bill's introduction, CUNA sent a letter of support to Hensarling and Waters saying the credit union relief legislation is needed to correct a National Credit Union Administration interpretation of the Federal Credit Union Act that puts credit unions at a disadvantage. The NCUA has said that for full insurance coverage, all the clients must be members, rather than just the attorney establishing the account.
 
The inability of federally insured credit unions to extend share insurance coverage to IOLTAs and similar escrow accounts means that the accountholder must use a bank or thrift in order to receive the maximum deposit insurance coverage for all owners of the funds held in trust or escrow, the CUNA letter said.

Also to be considered at the Thursday markup is H.R. 3329, a bill introduced by Rep. Blaine Luetkemeyer (R-Mo.) to increase from $500 million to $1 billion the cap on the application of the Small Bank Holding Company Policy Statement on Assessment of Financial and Managerial Factors.

CUNA, Others Oppose G-Fees' Use In Revenue Reconciliation

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WASHINGTON (11/14/13)--Credit risk guarantee fees charged by government-sponsored enterprises Fannie Mae and Freddie Mac must not be used as a potential revenue source during budget reconciliation talks, the Credit Union National Association said in a Wednesday letter to members of the U.S. Congress.

The letter was sent as a statement for the record of a Wednesday House-Senate conference committee meeting on S.Con.Res.8. That bill would revise fiscal 2013 budget levels, set the congressional budget for fiscal 2014, and set budgetary levels for the 2015-2023 fiscal years.

Members of Congress are currently working to reconcile Senate and House versions of the Fiscal Year 2014 Budget Resolution.

In a letter to the two legislators, CUNA and others noted that guarantee fees (g-fees) are a critical risk management tool used by Fannie Mae and Freddie Mac to protect against losses from faulty loans. Increasing guarantee fees for other purposes effectively taxes potential homebuyers and consumers wishing to refinance their mortgages, the letter added.

"Though we are seeing signs of improvement in the real estate sector, we must avoid taking any steps that could keep housing consumers on the sidelines and hinder that recovery. Moreover, adopting another g-fee increase will further tie policymakers' hands just as Congress is beginning to consider broader housing finance reform legislation and a resolution to the conservatorship of Fannie Mae and Freddie Mac," the letter said.

The letter was cosigned by the American Bankers Association, American Land Title Association, Community Mortgage Lenders of America, Housing Policy Council, Mortgage Bankers Association, National Association of Federal Credit Unions, National Association of Home Builders and the National Association of REALTORS®.
 
For the full letter, use the resource link.
 
Other hearings held on Wednesday included:
  • A Joint Economic Committee hearing on the current economic outlook; and
  • A House Financial Services monetary policy subcommittee hearing on international central bank models.

CBO Lists 'Tax Large CUs Like Thrifts' As Discussion Item

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WASHINGTON (11/14/13)--Taxing large credit unions as thrift institutions is one option noted in the Congressional Budget Office's (CBO) list of budget and revenue options presented to the House-Senate Budget Conference Committee on Wednesday. The CBO made it clear that its list of options were discussion items and not recommendations.

"It's no surprise that credit unions are listed," Credit Union National Association Senior Vice President of Legislative Affairs Ryan Donovan said. Taxing credit unions was mentioned as an option in 2005, 2007 and 2009 versions of the biennial report, but was not listed in or 2011.

Donovan said the addition of credit unions into this year's report shows they should remain focused on the budget process and how it could impact tax reform.

Other options listed in the CBO report include:
  • Treating large pass-through entities as C corporations. This change would impact many Subchapter S banks;
  • Eliminating the subchapter S option and taxing limited liability companies as C corporations. This change would impact one-third of the banks in the U.S. that are organized as Subchapter S corporations;
  • Taxing income earned by public electric utilities;
  • Capping nonprofit organizations' outstanding stock of tax-exempt bonds;
  • Taxing the Federal Home Loan Banks under the corporate income tax; and
  • Taxing qualified sponsorship payments to postsecondary sports programs.
As budget and tax talks continue, CUNA is urging credit unions and their members to use social media sites including Facebook, micro-video site Vine and other outlets to tell their legislators, "Don't Tax My Credit Union!"

Credit union and member tax advocacy efforts have remained strong. Almost 1.2 million separate congressional contacts have been made since mid-May to support credit unions in the tax talks.

For more on the Don't Tax my Credit Union efforts, use the resource link.

NEW: CUNA-Supported IOLTA Fix Passes House Committee

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WASHINGTON (11/14/13, UPDATED: 10:55 A.M. ET)--The House Financial Services Committee has just approved legislation that would extend share insurance coverage to all of the underlying owners of funds held by lawyers in trust accounts and realtors in escrow accounts. The bill, known as the Credit Union Share Insurance Fund Parity Act (H.R. 3468), was approved by voice vote.

Credit Union National Association President/CEO Bill Cheney this week thanked committee chairman, Rep. Jeb Hensarling (R-Texas) and ranking Democrat Rep. Maxine Waters (Calif.) for their support of the measure. "We hope that H.R. 3468 is the first of many regulatory relief bills to move through this committee," Credit Union National Association Senior Vice President of Legislative Affairs Ryan Donovan said following the vote.

The bill would provide National Credit Union Share Insurance Fund coverage for accounts such as Interest on Lawyers Trust Accounts (IOLTAs) so they are treated for deposit insurance purposes on the same basis as similar accounts insured by the Federal Deposit Insurance Corporation.

CUNA supports the bill, which would correct a National Credit Union Administration interpretation of the Federal Credit Union Act that puts credit unions at a disadvantage. The NCUA has said that for full insurance coverage, all the clients must be members, rather than just the attorney establishing the account.

CUs, League Bring QM Concerns To CFPB Hill Roundtable

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WASHINGTON (11/14/13)--Qualified mortgages, exemption authority and secondary mortgage markets were among the items discussed when representatives from the Pennsylvania Credit Union Association (PCUA) and local credit unions met members of the U.S. Congress for a roundtable on Consumer Financial Protection Bureau mortgage regulations.

The Pittsburgh roundtable was hosted by House Financial Services financial institutions and consumer credit subcommittee Chairman Shelly Moore Capito (R-W.Va.) and Rep. Keith Rothfus (R-Pa.). WEST-AIRCOMM FCU, Beaver, Pa., CEO Ray Brunner, Clearview FCU, Moon Township, Pa., Associate Vice President of Real Estate Lending Sharon Sweeney, PCUA Vice President of Governmental Affairs Christina Mihalik and PCUA Senior Account Executive Monika Edlis shared credit union concerns during the roundtable. The meeting was also attended by representatives from community banks, mortgage banks, title insurance companies, and community development corporations.

Several concerns regarding the CFPB's qualified mortgage rule were addressed. Comments on the QM rule included:
  • The total debt to total monthly income ratio of 43% should be expanded;
  • The 3% limitation on points and fees for a qualified mortgage loan may be problematic for some credit unions; and
  • Credit unions should not have to face retribution from examiners when writing non-qualified mortgage loans.
Greater use of the CFPBs exemption authority was also encouraged by the credit union roundtable participants.

The credit union advocates also noted the need for a secondary market to accept non-QM loans, and urged congressional support for the Consumer Mortgage Choice Act. That bill would address some credit union concerns regarding point and fee definitions in the Consumer Financial Protection Bureau's amended final "Ability to Repay" rule.

The CFPB should delay the effective dates of the upcoming mortgage rules, and protect credit unions and other mortgage originators from litigation, they said. The Credit Union National Association has called on the CFPB and Congress to delay until September 2014 possible sanctions and legal liability under QM and other mortgage rules. CUNA has also sought a one-year mortgage regulation implementation delay.

Waters Calls For Quick TRIA Reauthorization

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WASHINGTON (11/14/13)--The Terrorism Risk Insurance Act should be reauthorized "quickly, cleanly and for the long-term," ranking House Financial Services Committee Democrat Maxine Waters (D-Calif.) said during a Wednesday hearing.

TRIA, which requires property and casualty insurers to offer coverage for foreign acts of terrorism on U.S. soil and provides a federal backstop for that coverage, is scheduled to expire at the end of 2014.

"TRIA must remain in place to ensure a speedy recovery after an attack, to avoid market disruptions, and to protect schools, jobs and businesses," she added.

The National Association of Realtors, U.S. Chamber of Commerce, International Association of Amusement Parks & Attractions, Jewish Federations of North America, National Conference of Insurance Legislators, U.S. Conference of Mayors, American Hotel and Lodging Association, National Association of Mutual Insurance Companies, the International Council of Shopping Centers and every major national sports league and organization are among the groups supporting a TRIA renewal, Waters noted.

The Terrorism Risk Insurance Program Reauthorization Act of 2013 (H.R. 2146), which would extend TRIA coverage until Dec. 31, 2024, was introduced this May by Rep. Michael Capuano (D-Mass.). The bill has 42 cosponsors.

Wednesday's hearing, entitled "The Future of Terrorism Insurance: Fostering Private Market Innovation to Limit Taxpayer Exposure," featured testimony from:
  • Lloyd's of London Risk Management Director and General Counsel Sean McGovern;
  • Validus Reinsurance, Ltd. CEO Kean Driscoll;
  • Former South Carolina Director of Insurance Ernest Csiszar;
  • Fermat Capital Management, LLC Managing Principal Dr. John Seo; and
  • Insurance Information Institute President and Economist Robert Hartwig.