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Flood insurance other programs expire as tax bill awaits Senate action

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WASHINGTON (3/1/10)—The Senate adjourned last week without taking up a temporary extension for such programs as the National Flood Insurance Program, Stimulus Act small business loan guarantee programs, as well as federal unemployment insurance and COBRA benefits. The House last week passed similar legislation that would have extended these and other federal programs through March 28. However, since the Senate did not act, those and other federal programs expired Sunday. It is expected that the Senate may vote on H.R. 4154, the American Workers, State, and Business Relief Act, this week. That bill would extend these federal programs through the end of the year. That legislation also has several other provisions that are of interest to credit unions, including language affecting the new markets tax credit. The legislation would also extend some fee reductions and eliminations associated with the small business loan programs contained in the Stimulus Act until the end of 2010. Credit unions should also note S. 3018, the Bipartisan Tax Fairness and Simplification Act, Senate tax legislation that was introduced by Sens. Ron Wyden (D-Ore.) and Judd Gregg (R-N.H.) last week. The legislation, which is a comprehensive tax reform package, would, among other things, legalize, regulate and license Internet gambling. The compliance date for the Unlawful Internet Gambling Enforcement Act (UIGEA), which would require credit unions and other financial institutions to establish and implement policies and procedures to identify and block restricted Internet gambling transactions, was recently pushed back until June 1, 2010. However, the Credit Union National Association and others have stated that simply pushing back the compliance date does not resolve the many issues that credit unions and other financial institutions have with the tenor of the UIGEA legislation.

Inside Washington (02/26/2010)

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* WASHINGTON (3/1/10)—The Financial Crimes Enforcement Network (FinCEN) is proposing revisions to its Bank Secrecy ACT (BSA) rules that address reports of foreign financial accounts. The changes are intended to clarify which persons are required under the law to file reports of foreign accounts and more clearly identify which accounts are reportable. The plan also carries an exemption—noting that certain individuals with signature or other authority over foreign financial accounts do not have to file the reports. The BSA provisions that authorize reports of foreign financial accounts reflect the concerns of federal lawmakers that Americans were using foreign financial institutions to evade domestic criminal, tax, and regulatory laws. Written comments are due to FinCEN, a bureau of the U.S. Treasury, by April 27… * WASHINGTON (3/1/10)—Those drafting a Senate version of a financial regulatory reform package are noting that they have made great progress of late—perhaps 90% done with hammering out the provisions of the legislation. (American Banker 2/26/10) However, not surprisingly, one of the looming issues still to be nailed down is just how to beef up consumer protections as they relate to financial products. That was one of the most controversial proposals when the Obama administration announced its reform plan last summer, and continues to be the most problematic section of the bill. The concept of a stand-alone consumer financial protection agency has been given up in the Senate, but there are thoughts being given to creating a division within the U.S. Treasury Department or a proposed new and powerful banking regulator that would focus on consumer protections. At a recent administration meeting with bankers, Treasury Secretary Timothy Geithner, it was reported, warned that if a final reform bill was not strong enough, he would urge the president to reject it…

BITS advises CUs on helping elderly avoid fraud

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WASHINGTON (3/1/10)--BITS, a financial service industry consortium, has released a new paper, entitled “Protecting the Elderly and Vulnerable from Financial Fraud and Exploitation." The paper addresses many means of financial abuse that specifically target older Americans, including exploitation of their finances by relatives, businesses, real or false financial institution employees, or other financial service providers. The paper advises credit unions and other financial institutions on potential enhancements to their internal training programs. The paper lists several red flags that financial institution support staff can look for to spot potentially risky situations, including changes in a customer or members account documentation, deposit or withdrawal patterns, and overall demeanor. Loss prevention and legal departments can also play a role in fraud prevention, as can local law enforcement, and the document also provides tips on how financial institutions can best interact with state and federal authorities to combat fraud. The Credit Union National Association (CUNA) is a member of BITS. To view the full document on CUNA's BITS page, use the resource link.

GAC grassroots advocacy gets results

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WASHINGTON (3/1/10)--Activists from North Carolina credit unions and the North Carolina Credit Union League (NCCUL) were among the legions of credit union representatives making Hill visits as part of last week's Credit Union National Association (CUNA) Governmental
Click to view larger image (From Left) Rep. Nydia Velazquez (D-N.Y.), head of the House Small Business Committee, spoke with representatives from New York credit unions Wednesday afternoon. Pictured with Velazquez are Mira Ness, CEO, New York University FCU, and John Gibardi, president/CEO of Entertainment Industries FCU, New York City. (CUNA photo)
Affairs Conference (GAC), and the visits by the N.C.-based group garnered great results, getting two legislators to sign on to support member business lending (MBL) legislation. One new supporter of the MBL legislation is Rep. Walter Jones (R-N.C.), who told the group that he was concerned about small businesses in his district that were in good shape financially, but were still having trouble obtaining loans. H.R. 3380, the Promoting Lending for America's Small Business Act, would raise the amount of money a credit union can devote to business lending. The legislation, which was introduced by Rep. Paul Kanjorski (D-Pa.) late last year, would provide up to $10 billion in capital to credit union member-owned small businesses, and could create as many as 108,000 new jobs, according to CUNA estimates. Rep. Larry Kissell (D-N.C.) also signed his intentions to support H.R. 3380 during an earlier visit. NCCUL Director of Political Affairs Mickey Fanney told News Now that gaining this kind of support is important for credit unions, especially in North Carolina, where it can be difficult to get credit union views through the clutter caused by the large banks that also reside in the state. "But many congressmen are starting to realize that small businesses need the funding, and credit unions are here to help," he added. Representatives from New York-based credit unions were also on Capitol Hill Wednesday. Melrose CU's Robert Nemeroff also sought congressional support for the member business lending legislation, telling Rep. Nydia Velazquez (D-N.Y.) that the level of business that his credit union works with is "the level of business that both President Obama and his administration are looking to stimulate." "Since the banks have shown that they aren't going to lend to them, let credit unions do it," he said, adding that there is "no systemic risk" in increasing lending to credit union members. "We know these people." The Wisconsin Credit Union League and representatives from Wisconsin credit unions met with Sens. Herb Kohl and Russ Feingold, both Democrats, to encourage their delegates to support raising caps on member business lending and to oppose legislation that would regulate interchange fees. They also touched on the need for secondary capital for credit unions. “I have strong sympathy for the role you play in your communities,” Feingold told credit union representatives. He also noted that the Wisconsin credit union representatives presented him with some solid arguments for raising the cap on member business lending. Kohl also commended credit unions for their work, especially efforts to improve financial literacy in schools. “All areas of Wisconsin appreciate the service that you provide,” Kohl said. “I am very proud of what you do. Our relationship has been strong, and it will continue to be strong.” More than 4,000 credit union employees and activists from across the country have attended CUNA's GAC, which ended late last week.

Small biz owners write Congress to support CUs

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WASHINGTON (3/1/10)--While Credit Union National Association (CUNA) representative Ronald Covey testified before a joint House committee hearing on Friday, credit union advocacy on the Hill was also taking place at other levels, with credit union members that are also small business owners testifying on credit union’s behalf. The testimony came in the form of 400 letters from both longtime and rookie small business owners who employ as few as 15 and as many as 100 employees in fields as disparate as medicine and manufacturing. Fourteen of the letters were collected by Rep. Paul Kanjorski and were submitted for the record during Friday’s joint House committee hearing on small business lending, and a total of 400 letters have been sent to various Representatives and Senators in Washington. In the letters, the business owners testified on the boost that credit union lending has provided to their businesses. Many of these business owners were rejected by their banks when they came looking for loans, and turned to their community credit unions for the funds needed to pay their employees and take care of both themselves and other business expenses. In his testimony delivered Friday before the House finance and small business committees, Covey said that restricting business lending by credit unions “does a great disservice to business owners everywhere, and stymies job growth.” (See related story: CUNA to Congress: MBL restrictions harm job growth.) CUNA has estimated that legislation that would increase the “de minimis” threshold of a member business loan and lift the current member business lending cap of 12.25% to 25% of a credit union’s assets could create as many as 108,000 new jobs during the first year following its enactment. Such legislation, which is currently awaiting action in both the House and the Senate, would also create as much as $10 billion in new funding for small businesses over the course of a year, and would not cost a dime of taxpayer money.

MBL backers increase after CU Hill visits

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WASHINGTON (3/1/10)--Credit union advocacy gained great results during last week’s Credit Union National Association (CUNA) Governmental Affairs Conference (GAC), with various credit union representatives securing 16 new co-sponsors for legislation that would increase the 12.25% of assets cap on member business lending by credit unions. The legislation in question, H.R. 3380 and S. 2919, would allow credit unions to lend as much as 25% of their total assets to members that own small businesses and would raise the "de minimis" threshold related to these loans to $250,000. The adding of these new cosponsors happened as 4,000 credit union representatives blanketed Capitol Hill during CUNA’s GAC, meeting with lawmakers on top credit union issues such as interchange and increasing the MBL cap. The House version of the bill is now also cosponsored by Rep. Carolyn Maloney (D-N.Y.), Rep. Chellie Pingree (D-Me.), Rep. Carolyn Kilpatrick (D-Mich.), Rep. James Langevin (D-R.I.), Rep. John Sarbanes (D-Md.), Rep. Elton Gallegly (R-Calif.), Rep. Gary Peters (D-Mich.), Rep. Larry Kissell (D-N.C.), Rep. Candice Miller (R-Mich.), Rep. Patrick Kennedy (D-R.I.), Rep. Alan Grayson (D-Fl.) Rep. Christopher Carney (D-Pa.), Rep. Steve Kagen (D-Wisc.), Fortney Stark (D-Calif.), Rep. Gus Bilirakis (R-Fl.) and Rep. Neil Abercrombie (D-Hi). Senators Bernie Sanders (I-Vt.) and Arlen Specter (D-Pa.) signed on to support S. 2919. (See related story: GAC grassroots advocacy gets results)

CUNA to Congress MBL restrictions harm job growth

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WASHINGTON (3/1/10)--Restricting credit union business lending “does a great disservice to business owners everywhere, and stymies job growth,” St. Mary's Bank CU President/CEO Ronald Covey told assembled lawmakers on Friday.
Click to view larger image Testifying on behalf of CUNA, Ronald Covey said his credit union and others should be able to put more money back into their communities through increased member business lending. (CUNA Photo)
Testifying on behalf of the Credit Union National Association (CUNA) before both the House Financial Services Committee and Small Business Committee, Covey said that his credit union does not “see a scarcity of credit-worthy business borrowers.” Rather, he said, given the demand that his credit union faces for loans, “it is difficult to understand why” his credit union “should not be able to put more money back into the community, into the hands of hard working business owners, so they can employ more people and create more opportunities.” The hearing, which took up much of the workday on Friday, centered on the condition of small business and commercial real estate lending and featured testimony from regulators, small business owners, and lenders. In his testimony, Covey said that lending to members who own small businesses is a central part of credit union business practices. Covey said that his credit union has an average loan size of under $200,000 and currently lends a total of $75 million in funds through 959 member loans. However, Covey added, with 2,201 members who own small businesses, the potential amount of loans that could be made by his credit union is “much greater.” According to CUNA estimates, lifting the member business lending cap to 25% of a credit union's assets would result in $10 billion in new capital for small businesses and could potentially create as many as 108,000 new jobs within one year. Further, CUNA estimates that 60% of the business loans in credit unions affected by the current statutory cap are in credit unions that are within one month to three years of having to sharply curtail business lending because of the cap. Regulators also addressed credit union concerns during an earlier panel, with Treasury Assistant Secretary for Financial Stability Herbert Allison saying that the Treasury intends to continue its ongoing dialogue with credit unions and the National Credit Union Administration in order to better understand the needs of credit unions. Commenting on the hearing, CUNA Senior Vice President of Legislative Affairs John Magill said, "This was a good vetting of member business lending issues for credit unions. The lawmakers did not question, not did the bankers dispute, the facts that more business lending by credit unions to their members is good for the country--good for the economy." Also at the hearing, U.S. Small Business Administrator Karen Mills said that her organization is discussing the expansion of its Community Development Financial Institution (CDFI) programs with both individual CDFIs and the U.S. Treasury.