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Risk-based capital rule comments due 90 days from today

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WASHINGTON (2/27/14)--The risk-based capital rule proposed by the National Credit Union Administration (NCUA) at its February open board meeting--and hotly discussed by credit unions since--is scheduled to be published today in the Federal Register.

That publication, in a sense a formality, changes nothing but it is considered "constructive notice," meaning interested parties are now at notice that the rule or proposal exists and what its precise parameters and details are.

Often comment periods or effective dates aren't set until the Federal Register notification occurs.

For the risk-based capital rule that means comments will be due 90 days from today.

The Credit Union National Association urged the NCUA from the start to address credit unions' "deep-seated concerns" regarding the risk-based plan. In fact, CUNA President/CEO Bill Cheney encouraged the regulators earlier this month to hold public hearings on the plan.

Cheney noted that hearings would produce an official record of discussions between credit unions and NCUA leadership that, in addition to comment letters, could assist the NCUA board in determining the best path for proceeding on the rule.

CUNA also has produced a video segment on the steps for writing an effective comment letter on this issue. (See resource link.)

Udall rallies GAC to support MBL legislation

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WASHINGTON (2/27/14)--Sen. Mark Udall (D-Colo.), called 'a true credit union friend" when he was introduced by Scott Earl, president of the Mountain West Credit Union Association at the Credit Union National Association's 2014 Governmental Affairs Conference, urged credit union advocates to continue pressing for passage of higher member business lending authority.
Click to view larger image Sen. Mark Udall (D-Colo.) urged credit union advocates to continue pressing for passage of expanded member business lending authority during remarks at CUNA's 2014 Governmental Affair's Conference. (CUNA Photo)
In 2013, Udall sponsored the Credit Union Small Business Lending Enhancement Act, which would increase the credit union member business lending (MBL) cap to 27.5% of assets, from the current 12.25%-of-assets level.
CUNA estimates the MBL cap change would help credit unions lend an additional $13 billion to small businesses in just the first year after enactment. This money, which would be made available at no expense to taxpayers, would in turn help small businesses create around 140,000 new jobs.
He asked GAC attendees to urge lawmakers, during their Capitol Hill visits, to co-sponsor the bill.
"Together, we are not giving up until we see final passage of this bill," Udall said. "For all the partisanship here in D.C., the formula for getting things done is the same as it's always been: Get people informed and then get support from everyone who's willing to give it."
Udall said if credit union advocates continue to "beat the drums," potential supporters will have an "aha" moment and realize the wisdom on expanding member business lending authority.
Udall, who proposed that members of Congress set aside partisan interests by sitting together during President Barack Obama's State of the Union address following the 2011 shooting of U.S. Rep. Gabby Giffords (D-Ariz.), praised credit unions for focusing on solutions rather than party politics. "You come together to improve our communities," Udall said.
He also praised credit unions for assisting Colorado residents during the 2013 government shutdown and during floods that plagued the state last summer. "Your commitment to the community underscores why the credit union model is as important to community as it has ever been," Udall said.

NEW: May 28 is comment deadline on NCUA risk-based capital plan

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WASHINGTON (2/27/14, UPDATED 9:16 a.m. ET)--May 28 is the public comment deadline for the risk-based capital plan proposed by the National Credit Union Administration earlier this month, according to a document publish this morning in the Federal Register .

The Credit Union National Association urges credit unions to weigh in on the proposal and let regulators know their concerns regarding the risk-based approach to capital.

CUNA, as reported, has also encouraged the agency to hold public hearings that, in combination with the important step of comment letters, it says will produce an official record of discussions between credit unions and NCUA leadership that could do much to assist the NCUA board in determining the best path for proceeding on the rule.

CUNA supports a modern risk-based capital system for credit unions--in fact, CUNA President/CEO Bill Cheney declare that from the podium in front of 4,400 credit union advocates here this week for the association's 2014 Governmental Affairs Conference.

"What we don't support is layering additional capital requirements on top of our one-size-fits-all outdated system of prompt corrective action," he said
CUNA has also voice concerns about credit unions' capital buffers. The association has executed a detailed analysis that indicates the proposed risk-based capital rule would require credit unions to add a combined $10.5 billion to their capital just to maintain the levels that they have now to retain current margins above proposed "well capitalized" thresholds
CUNA has produced a video segment on the steps for writing an effective comment letter on this issue. (See resource link.)

Millions exposed to 'Don't Tax' message by CUNA social media blitz

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WASHINGTON (2/27/14)--Nearly 5.3 million Twitter and Facebook followers were exposed to the credit union message Tuesday through the latest "Don't Tax My Credit Union" social media event--hosted by the Credit Union National Association and state credit union associations on the eve of Rep. Dave Camp's (R-Mich.) expected release of a tax code reform draft.

Federal lawmakers got into the act to back the credit union tax status too--like with credit unions' two previous "Don't Tax Tuesday" advocacy blitzes.
  • Sen. Tammy Baldwin (D-Wis.) tweeted: @lakeviewcu Thanks for making your voices heard & engaging on this important issue. I stand with you - #DontTaxMyCU - TB
  • Rep. Lloyd Doggett (D-Texas) tweeted: I support credit unions as essential banking options to all Texans. Having worked with #creditunins for 3+ decades, I agree #DontTaxMyCU.
  • And from Sen. Mark Udall (D-Colo.): Glad to meet w Mtn West Credit Union Assoc. Credit unions play critical role in protecting consumers, creating #jobs.
As with two previous efforts, on July 23 and Sept. 10 last year, CUNA and state credit union leagues used social media to encourage credit unions, credit union members and other credit union advocates to contact state and federal lawmakers directly with the unified message of "Don't Tax My Credit Union."

Some of the tweets incorporated videos. Below are just three of the kinds of messages sent during those two earlier rounds of credit union mega-advocacy:
  • Shiro-oni: @MaxBaucus @OrrinHatch Truth is, credit unions provide superior deposit & loan rates & greater protection from risk than banks #DontTaxMyCU.
  • StevePoniewaz: Cooperative status is not a subsidy. Credit Union Members have paid their tax; #DontTaxMyCU@RepAnnWagner
  • Alabama CU: CUs return profits to their members. Taxing CUs hurts 1.8 million Alabamians. Visit and ell Congress #DontTaxMyCU
CUNA's "#DontTaxTuesday" Twitter and Facebook campaigns walked away with a Grassroots Innovation Award from the Public Affairs Council earlier this month.

Tax committee staff clarifies: No intention to impose additional tax on CUs--including UBIT

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WASHINGTON (2/27/14)--The specific credit union tax status is left untouched in a tax reform plan released Wednesday by House Ways and Means Committee Chairman Dave Camp (R-Mich.), and staff of the tax writing committee have clarified that the proposal has "no intention of imposing any additional taxes on credit unions."
The discussion draft of the tax reform plan does not change or eliminate the specific credit union federal tax exemption. CUNA President/ CEO Bill Cheney said the association considered that to be "an endorsement of our long-held position that credit unions' cooperative, not for profit structure remains the bedrock upon which the tax exemption is built."
"Reinforcing our position over the past nine months were the actions by CUNA, state associations and credit unions, which together amassed 1.3 million contacts with lawmakers urging them 'don't tax my credit union,'" Cheney added.
However, as CUNA experts were reviewing the details of the discussion draft of the proposal yesterday afternoon, they found that the provisions addressing taxes on unrelated business activities (or UBIT) seemed to subject federal credit unions to the tax for the first time.
CUNA senior staff, early Wednesday evening, contacted senior staff of the House Ways and Means Committee, pointing out the impact of the UBIT provisions on federal credit unions and asking why the provision had been applied.
"As a result of our discussion, the Ways and Means Committee senior staff members told us that it was never their intention to impose any additional taxes on federal credit unions," Cheney said after the discussion. "Further, they told us that anything that would impose taxes on credit unions--including UBIT--was unintentional and that is why they have established a process that includes release of a discussion draft."
Cheney added that credit unions greatly appreciate the willingness of the Ways and Means Committee staff to listen to their concerns and respond accordingly. "We look forward to working with them, and Chairman Camp, as the tax reform process moves forward," he added.

The CUNA leader added that the Camp proposal is the first word on tax reform, but not the last. "We know the tax reform process will be long, and will not conclude until a president signs a tax reform bill. Throughout the process, credit unions will continue to actively advocate for the credit union tax status."

CUNA, state credit union associations, credit unions and credit union members have been tireless in their advocacy on behalf of the credit union tax status. The "Don't Tax My Credit Union" campaign started in May 2013, for example, producing the millions of direct messages to the U.S. Congress noted by Cheney.

Camp's plan to overhaul the tax code does recommend that the biggest U.S. banks and insurance companies would be required to pay a quarterly 3.5 basis-point tax on assets over $500 billion, according to various media outlets.

More generally, the plan for simplification of the tax code would cut the top income tax rate to 25% from 39.6% and impose a surtax on some of the wealthiest households in the country.

Financial Services members spotlight CU support at GAC podium

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WASHINGTON (2/27/14)--Key House Financial Services Committee members are looking out for credit unions, and they detailed what they are doing to ensure credit unions are protected in remarks at Wednesday's Credit Union National Association 2014 Governmental Affairs Conference session.

Rep. Peter King (R-N.Y.), a senior committee member, thanked credit unions for stepping forward after recent financial and natural disasters that affected his city and his state. "I want to make sure the strength of credit unions is maintained going forward. I want to make sure you are still there to support the community," he said.

Rep. Shelley Moore Capito (R-W.Va.), chairman of the House Financial Services subcommittee on financial institutions and consumer credit, said she will closely monitor the progress and impact of the Consumer Financial Protection Bureau's qualified mortgage rule. She said she is also working to get regulatory relief for credit unions through this Congress, and is organizing her subcommittee to address data security issues. The subcommittee will hold a hearing on liabilities and penalties related to data security issues next week, she noted.
Click for slide showRep. Peter King (R-N.Y.) said he would oppose any attack on the credit union tax status, noting that a tax on credit unions is a tax on 99 million credit union members. (CUNA Photo)

Another credit union priority, member business lending, was a hot topic for committee members, including Rep. Denny Heck (D-Wash.). Heck called on credit unions to make this the year that MBL legislation is passed into law.

"The engine of America is small business, and you can provide the fuel. We just have to let you do it," Rep. Brad Sherman (D-Calif.) said of the MBL situation. Sherman supports increased MBL and supplemental capital authority for credit unions, and said credit unions "are not asking for taxpayer money," but are just asking for the federal government to get out of the way and let them grow.

Rep. Steve Stivers (R-Ohio) also backed an MBL increase. "We need to do everything we can to get money in the hands of people who want to create jobs, and that's what member business lending is about. It's about creating jobs and supporting growth," he said. The two-term congressman also urged credit unions and CUNA to get even more engaged in the fight for data security. Credit unions can either be engaged on the issue and come out with something that works for them, or disengage and have new rules imposed on them, Stivers emphasized. Congress needs "to make sure credit unions are seeing their members, not just serving regulators," he added.

Rep. Gary Peters (D-Mich.) also spoke up on the issue of regulatory relief. "You can count on me as we work through financial regulations, and getting rid of financial regulations that are not designed for you but designed for Wall Street firms. I stand with you each and every day," he said.

Less conventional topics were also discussed by Wednesday GAC speakers, such as Rep. Ed Perlmutter (D-Colo.) who said he is working with some in Congress to address legal, regulatory issues that prevent credit unions and other lenders from working with now-legal marijuana dispensaries in his state and Washington. He also addressed the ongoing discussions on housing finance market reforms. Credit unions and homeowners alike need to ensure that small financial institutions maintain access to the secondary mortgage market, he said.

Internet domain name just for CUs is on its way

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WASHINGTON (2/27/14)--A new Internet domain name just for credit unions, .creditunion (dot credit union), is just about a reality.

The Internet Corporation for Names and Numbers (ICANN) has notified the Credit Union National Association that the domain name has been approved--and there are just a few more steps to take before it becomes available for credit unions' use.

Back in 2011, ICANN announced it would significantly broaden the number of approved top-level domain names beyond the limited number in use, such as .com, .org, .gov, .edu, CUNA submitted a .creditunion application on behalf of the credit union movement.

After this notice of approval, explained CUNA General Counsel Eric Richard, the next step for CUNA to negotiate a contract with ICANN and CUNA's designated registrar company.

"People are not just using dot-com domains anymore," said Richard. "This influx of new domain names could change the way people use the internet, and credit unions are evolving with the new digital landscape."

As Richard further noted, the new top level domain is beneficial both as a marketing opportunity and a tool for enhanced security.

"This new domain will be an excellent tool for marketing as well as an opportunity to establish legitimacy and online security. In the wrong hands a 'creditunion' domain could allow someone intent on committing fraud to do so from a seemingly legitimate platform.

"That is why CUNA will only allow credit union entities to obtain a '.creditunion' extention. As the largest national trade group for credit unions, we felt it important to secure the domain," Richard explained.

CUNA has nine months to take that next step and Richard predicted Wednesday that CUNA would likely make full use of that timeframe before completing the step.

But in nine months? Credit unions may see the arrival of a new domain name that looks a lot like them.

Hoyer tells GAC to push Congress on clarity in tax code

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WASHINGTON (2/27/14)--House Minority Whip Steny Hoyer (D-Md.) on Wednesday morning urged credit union industry stakeholders gathered in Washington to push the U.S. Congress to agree to long-term tax reform. 

Simplifying the tax code, he told the Credit Union National Association's 2014 Governmental Affairs Conference, would restore certainty and predictability and "produce a better economy." 

"Clarity on tax reform would go a long way, in my opinion, in finding a fiscal consensus that has been elusive," he said hours before attendees from across the country set out to talk about key credit union issues to legislators on Capitol Hill. "Congress needs to hear your voice in this debate," he later added.

Hoyer made the remarks as House Ways and Means Committee Chairman Dave Camp (R-Mich.) was preparing to publicly release his proposal for tax reform later in the afternoon. (See today's News Now for related story.) The Democratic leader said he couldn't comment on the proposal because he had not seen it.

Surveys have shown that reduced bickering over fiscal matters, in the form of the December 2013 budget approved by Congress, has improved business and consumer optimism (Market News Dec. 26, 2013, and Feb. 11). The agreement will, for two years, avert another partial government shut down like the one that ground Washington to a halt in October.

Begich promises to 'twist arms' to raise MBL cap

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WASHINGTON (2/27/14)--Sen. Mark Begich (D-Alaska) on Wednesday repeated his commitment to work relax regulatory limits on credit unions' ability to make member business loans (MBLs).
Begich said at the Credit Union National Association's 2014 Governmental Affairs Conference in Washington that he would continue to be a "supporter and sponsor" of a bill designed to lift the federally mandated cap on credit unions' small business loans--currently at 12.25% of assets.

"I will twist arms of other members to sign that piece of legislation," he said. Begich is one of 18 co-sponsors of legislation--introduced in May 2013 by Sen. Mark Udall (D-Colo.)--that would raise the credit union MBL cap to 27.5% of assets (News Now May 16, 2013). The bill, S.968, was referred to the Senate Banking Committee, where it has not progressed under the chairmanship of the soon-to-retire Sen. Tim Johnson (D-S.D.).

Begich also said he wants to generally "streamline regulations for credit unions" because of their relative stability throughout the subprime housing boom and in the aftermath of its collapse in 2008.

"You are not the problem. You are not the risk," he told attendees, calling credit unions a "backbone" during the tumult.

The senator also reiterated on Wednesday his pledge to protect credit unions' tax exempt status.

He told the conference that he asks banking lobbyists, seeking to change the credit union exemption, to "keep it off the list" during meetings with him.  In July, Begich, who is not a member of the Senate Banking Committee, sent a letter to Johnson and the panel's ranking Republican Sen. Mike Crapo (R-Idaho), asking that the exemption be preserved in any reform of the tax code (News Now July 30, 2013).

The senator, who is facing his first re-election campaign this November, spoke of his own personal enthusiasm for credit union membership. Begich said he opened his first credit union account at the age of 14, received his first car loan from a credit union, and said that he opened a U.S. Senate FCU account for his then eight-year-old son, who, he proudly said, now has his account number memorized. He also said that he is excited when asked as a credit union member to vote in board member elections. 

Begich urged attendees to stress their member-ownership status when lobbying legislators on Wednesday afternoon and throughout the week. He argued earlier in the speech that the tax exempt status was justified because of member ownership, with savings incurred by the status spread throughout the cooperatives. The senator said this structure makes credit unions "powerhouses," and urged the audience to flaunt membership logs when consulting with their legislators.

CU in the street: Talking to GAC first-timers

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WASHINGTON (2/27/14)--There were an estimated 650 first-time attendees at the Credit Union National Association's 2014 Governmental Affairs Conference, and one of them, Willie Hannah, waited a long time to get there: He is a 42-year veteran of his credit union's board.
Click for slide show One of those attending their first CUNA Governmental Affairs Conference is Willie Hannah, who has been with his credit union 42 years. He is board vice president at NGH CU in Nashville, Tenn. (CUNA Photo)

So, what took him so long? Hannah, pictured at right, said with a laugh that he "just didn't do it." The current board vice president for NGH CU, a $7.6 million-asset credit union in Nashville, Tenn., said he was most looking forward to catching up on the latest credit union trends.

View the slideshow for more on first-timers' GAC impressions.

For Braley, CUs are a longtime choice

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WASHINGTON (2/27/14)--U.S. Rep. Bruce Braley (D-Iowa) reminded the Credit Union National Association's 2014 Governmental Affairs Conference audience Wednesday that he supported credit unions before he was voted into office.
Braley showed the GAC audience a copy of the statement of organization he filed when he first ran for the office in. In the document, each candidate must declare a financial institution in which to deposit campaign funds. Braley's choice: A credit union.
"In one of my very first acts as a candidate for federal office, I stood with credit unions," he told the GAC audience. "I want you to know that wasn't some random act of a campaign staffer; it was a deliberate decision based on my values and my beliefs, and our shared beliefs and values."
Since he was elected, Braley has supported credit union legislation related to member business lending, supplemental capital and regulatory relief.
Braley reminded the audience that he serves 319,000 credit union members in his district, the most of any lawmaker in the House's Iowa delegation.  Overall, Iowa has more than 1 million credit union members.
He praised credit unions for their grassroots efforts. "What  I love about my credit union friends in Iowa is that when I get together with them, they bring their members," Braley said. "They get them engaged in public policy so they know that the things we do in Washington affect their lives, and that is something that my staff and I appreciate so much."
Braley said the ability of credit unions to bring people together and educate them to make informed financial decisions is especially important during a time when Washington is sharply divided along party lines.

Kilmer: MBLs create local jobs

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WASHINGTON (2/27/14)--U.S. Rep. Derek Kilmer (D-Wash.) praised credit unions for creating jobs locally through member business lending during remarks made Wednesday at the Credit Union National Association's 2014 Governmental Affairs Conference.
"I have seen how important it is for businesses to get access to economic capital," Kilmer said. "It can be the difference for a business being able to invest in a new facility--and those are not just numbers on a spreadsheet. They translate into jobs."
He told the story of a manufacturing company in his district that received an MBL from a credit union to invest in a new facility two years ago. The company has been able to increase its workforce by 30%, Kilmer said.
CUNA is pressing the U.S. Congress to increase the member business lending cap to 27.5% of assets, from the current 12.25%-of-assets level.
CUNA estimates the MBL cap change would help credit unions lend an additional $13 billion to small businesses in just the first year after enactment. This money, which would be made available at no expense to taxpayers, would in turn help small businesses create around 140,000 new jobs.
Kilmer also praised credit unions for helping Americans save. He is co-sponsor of a House bill that would allow credit unions and other financial institutions nationwide to offer prize-linked savings (PLS) accounts (News Now Oct 31). A similar bill was introduced in Senate.
Kilmer, as a state senator,  was also the primary sponsor of legislation that brought PLS to the state of Washington in 2011.
Credit unions have a presence at nearly every community event he attends in his district, Kilmer said. "The reason for that is credit unions are making a difference in our communities. They are a critical part of the communities they serve, and I want to thank you for that, and Congress ought to understand that."