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CUNA: Tax Reform Efforts to Continue, With or Without Baucus

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WASHINGTON (12/26/13)--President Barack Obama's nomination of Max Baucus to serve as the next U.S. ambassador to China adds an element of uncertainty to the future of tax reform efforts. However, Credit Union National Association Senior Vice President of Legislative Affairs Ryan Donovan reminds, "tax reform isn't about one person."

The veteran senator has held his seat since 1978 and was scheduled to retire after the 2014 elections. Montana Gov. Steve Bullock (D) would likely appoint his replacement if he is confirmed by the U.S. Senate. Current Lt. Gov. John Walsh is running for Baucus's seat.

Baucus is chairman of the tax-writing Senate Finance Committee and has been central to recent tax reform efforts. Lawmakers had planned to launch into tax reform and prepare for a vote this past fall, but missed that deadline.

"The circumstances which have made tax reform necessary continue to exist, and we expect Congress to continue to try to make progress on tax reform in 2014," Donovan said. "The likelihood they will complete the process may be smaller, but the likelihood they will continue to work on the process remains the same. Even if they are not able to complete a bill the work they do could have implications on credit unions," he added.

Donovan also emphasized that a high level of advocacy on behalf of credit unions must continue. "Credit unions must make sure that lawmakers on all levels truly understand that a new tax on credit unions would be a tax on their 97 million members," Donovan said.

CUNA continues to encourage credit unions and their members to use CUNA and state credit union league resources, social media sites including Facebook, and micro-video site Vine, to tell their legislators, "Don't Tax My Credit Union."

Stress Test Comment Deadline Approaching, CUNA Says

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ALEXANDRIA, Va. (12/26/13)--The Dec. 31 deadline for comments on the National Credit Union Administration Board's proposed stress testing regulations is rapidly approaching, the Credit Union National Association says in this week's Regulatory Advocacy Report.

Under the NCUA proposal, federally insured credit unions with assets exceeding $10 billion would be required to develop and maintain capital plans, and undergo annual stress tests.

The stress test requirements, drafted by the agency's Office of National Examinations and Supervision, would require impacted credit unions to conduct specific capital analyses to evaluate how changes in variables, parameters and inputs used by credit unions in their capital plans could affect their capital. Credit unions would also need to test how interest rate shocks of at least plus or minus 300 basis points would impact their net economic value.

CUNA has encouraged all interested credit unions and leagues to comment. Among other issues, CUNA is focusing on:
  • Whether a rule is needed;
  • Whether NCUA should assess a credit union's stress testing instead of developing and utilizing its own;
  • Whether the results of stress testing should be made public; and
  • Whether elements of the proposal such as the nine-quarter horizon, the +/- 300 basis point shock, and the two-year assumption of the maturity of non-maturity shares are appropriate.
CUNA will share a draft of key concerns regarding the proposal with state credit union leagues, the CUNA Examination and Supervision Subcommittee, CUNA Council members, and others shortly.

Other issues addressed in the Regulatory Advocacy Report include:
  • CUNA's work to address issues created by the recent Target stores data breach;
  • Extension of the comment period until February 7, 2014 for a joint agency diversity proposal;
  • The Consumer Financial Protection Bureau's mortgage rule education campaign; and
  • CUNA's comments on the Federal Reserve Banks' payment system improvement paper.
A resource chart with information on current CUNA comment calls is also provided in the Report.

For this week's Regulatory Advocacy Report, CUNA members can use the resource link.

Watt to Re-examine Planned FHFA Guarantee Fee Hikes

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WASHINGTON (12/26/13)--Incoming Federal Housing Finance Agency Director Rep. Mel Watt (D-N.C.) will delay and re-examine planned guarantee fee hikes when he takes control of the agency next year, The Wall Street Journal reported  Dec. 20.

The FHFA early this month announced it would:
  • Increase base guarantee fees for all mortgages by 10 basis points;
  • Update the up-front guarantee fee grid to better align pricing with the credit risk characteristics of the borrower; and
  • Eliminate the up-front 25 basis point adverse market fee, except in the four states whose foreclosure carrying costs are more than two standard deviations greater than the national average.
The FHFA said these fee structure changes would result in average guarantee fee increases of approximately 11 basis points based on loan purchases of Fannie Mae and Freddie Mac in the third quarter of 2013.

Watt was confirmed by the Senate on Dec. 10 and is scheduled to be sworn in on Jan. 6.

ABA to Challenge Volcker Rule Trust-preferred Securities Provision

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WASHINGTON (12/26/13)--The American Bankers Association is reportedly planning to challenge trust-preferred securities provisions of the Volcker rule, Politico reported this week.

Exemptions are needed, the bankers told Federal Reserve Chairman Ben Bernanke, Federal Deposit Insurance Corp. Chairman Martin Gruenberg and Comptroller of the Currency Thomas Curry. The banker group is planning a lawsuit if no action is taken on exemptions.

The bankers encouraged regulators to suspend portions of the Volcker rule that treat trust-preferred security debt interests as covered fund ownership interests.

NCUA Video Covers 4Q Economic Trends

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ALEXANDRIA, Va. (12/26/13)--In a new YouTube video, National Credit Union Administration staff discuss positive economic signs from the fourth quarter of this year.

However, the agency notes, expected changes in the interest rate environment will present challenges to future credit union performance. The YouTube spot is hosted by NCUA Chief Economist John Worth.


Cheney, CUNA Congratulate McWatters on Pending NCUA Nomination

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WASHINGTON (12/26/13)--Credit Union National Association President/CEO Bill Cheney last week congratulated Mark McWatters, who has been selected by President Obama to serve on the National Credit Union Administration Board, pending confirmation by the U.S. Senate.

"We are pleased that an individual of your caliber and extensive background has been chosen for the NCUA board. A number of important issues for credit unions are pending at the agency, and we look forward to working with you, once you are confirmed, as you address these matters with the other NCUA board members," Cheney wrote.

Obama announced his intent to nominate McWatters in mid-December. McWatters' nomination is subject to a nomination hearing by the U.S. Senate Banking Committee and a confirmation vote by the Senate.

If confirmed, McWatters would replace board member Michael Fryzel, whose term ended Aug. 2 this year, but he is allowed to continue serving until another Board member is confirmed. (See Dec. 20 News Now story: Obama to Nominate McWatters for NCUA Board.)