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FHLBs ask to be named a CU emergency liquidity provider

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WASHINGTON (2/4/13)--As the National Credit Union Administration considers its emergency liquidity proposal for credit unions, the 12 Federal Home Loan Bank (FHLB) presidents have sent a joint letter asking the agency to name their system specifically within the plan as a source of backup liquidity.

The NCUA proposal, issued last summer, would require federally insured credit unions with assets of $10 million or more to develop contingency funding plans describing how their credit union would address liquidity shortfalls in emergency situations. The Credit Union National Association opposes the plan as written and urged the agency last September not to go forward with a final rule without changes.

In its proposal, the NCUA said credit unions can ensure access to backup liquidity by:

  • Becoming a member of the Central Liquidity Facility (CLF);
  • Becoming a CLF member through a CLF agent; or
  • Establishing direct borrowing access to the Federal Reserve's Discount Window.
CUNA noted in a comment letter to the agency that a major issue of concern for a number of credit unions is the exclusion of the Federal Home Loan Banks as a permissible source of emergency liquidity and CUNA has strongly advocated this position.

In their Jan. 31 letter to NCUA Chairman Debbie Matz and board member Michael Fryzel, the FHLB presidents wrote, "The FHLBanks serve as a reliable source of liquidity for all of their members during all economic cycles, and we urge the NCUA to include the FHLBanks among the eligible sources of emergency liquidity.

"Such action would encourage and facilitate a stable source of funding to assist credit unions of all sizes in meeting their business, community, and member needs."  The letter was a follow up to earlier comments to the agency on the issue.

The FHLB president wrote that they appreciate that the NCUA recognized in its notice of proposed rulemaking the importance of the FHLBanks in providing liquidity and other services to credit unions.

"We also agree with your recommendation that credit unions of all sizes should consider the merits of membership in their local FHLBank, but we believe that the FHLBanks are and should be included as a reliable source of emergency liquidity."

The FHLBs were created by Congress in 1932 to provide liquidity support to the nation's mortgage lenders. Credit unions and other financial institutions can access the FHLB liquidity system by becoming FHLB members.

Sandy foreclosure relief extended

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WASHINGTON (2/4/13)--The Federal Housing Administration (FHA), Fannie Mae, and Freddie Mac will extend expiring protections against foreclosure actions against homeowners whose properties were damaged or destroyed due to Hurricane Sandy.

The 90-day extension of the foreclosure moratorium applies to homeowners with properties in states declared major disasters by the president after the storm and it applies to the initiation of foreclosures and foreclosures already in process.

"Given the magnitude of this disaster, extending the moratorium on foreclosures and evictions will allow homeowners in the affected areas, and their servicers, the time needed to assess individual circumstances and options," said Federal Housing Finance Agency acting Director Edward DeMarco when announcing the extension late last week.

FHA is also suspending evictions of persons from properties secured by FHA mortgages in the affected counties through April 30.

A closer look: Tax status, grassroots at heart of CUNA advocacy in 2013

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WASHINGTON (2/4/13)--Preserving the tax status of credit unions is the Credit Union National Association's top priority, and CUNA Vice President of Political Affairs Trey Hawkins said maintaining that status will be the main goal of credit union grassroots and political advocacy efforts in 2013.

"CUNA's Political Affairs team is prepared to back up tax status advocacy efforts at both the federal and state levels," Hawkins said.

Hawkins noted that the member-owned, member-directed credit union model has offered working families a more affordable and trusted alternative to traditional banking for over a century. "Credit union members who understand and appreciate that difference are ready and willing to oppose any threat to their credit union's cooperative structure and the value it provides," he said.

"The best defense is a good offense, and we encourage credit unions to remind their members of the credit union difference at every opportunity," Hawkins added.

In addition to issue advocacy aimed at countering federal tax threats in Congress, Political Affairs staff will also provide strategic assistance to credit union leagues facing tax status attacks in state legislatures. Political Affairs will also expand their advocacy outreach efforts in social media channels, Hawkins added.

"CUNA Political Affairs will also continue its work to promote general grassroots and political involvement by credit unions, from increased Action Alert responses, promoting Hike the Hill attendance and Project Zip Code use," Hawkins said.

The Credit Union Legislative Action Council (CULAC) had a record setting year in 2012, raising more than $2 million to support credit union-friendly candidates, and CULAC aims to maintain its growth momentum going into the next electoral cycle. CULAC's goal is to have more resources for its independent expenditures and candidate contributions going forward, Hawkins added.

"Credit union supporters nationwide are still fired up and ready to support credit union candidates," he said.

New bill re-introduces five-member CFPB leadership plan

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WASHINGTON (2/4/13)--Sen. Jerry Moran (R-Kansas) introduced a bill (S. 205) Friday that would replace the director's position at the Consumer Financial Protection Bureau with a five-person panel. The bill mirrors one Moran offered in the last Congress.

The Credit Union National Association backs the concept of a multi-member directors panel but maintains it should go beyond the five-member model. CUNA believes a CFPB board should include seats statutorily designated for industry representatives, including a state or federal credit union regulator, and possibly a state consumer agency representative.

CUNA maintains that industry representation would enhance the quality of regulation promulgated by the CFPB by ensuring both the consumer perspective as well as the industry perspective is represented in the decision-making process.

The Moran bill also would bring the CFPB under the regular appropriations process; currently the bureau receives around $400 million in funding directly from the Federal Reserve. 

Many proponents of the changes carried in Moran's bill argue that they would make the CFPB more accountable and provide additional checks and balances.

A number of GOP lawmakers vowed last year to block confirmation of a director unless those changes were made. In fact, 43 Senate Republicans sent a letter to President Obama Friday and re-committed to their vow.

That opposition, in large part, led to President Obama's recess appointment last year of Richard Cordray as CFPB director.

CFPB's Cordray, Financial Service's Waters to speak at 2013 GAC

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WASHINGTON (2/4/13)--Two more Washington heavy hitters have been added to the lineup for the Credit Union National Association's 2013 Governmental Affairs Conference (GAC): Consumer Financial Protection Bureau Director Richard Cordray and House Financial Services Committee Ranking Member Maxine Waters (D-Calif.).

"Director Cordray has been accessible and open to listening to the views of CUNA and credit unions on CFPB's agenda and proposed regulations," CUNA President/CEO Bill Cheney noted. "We are excited to have him speak at this year's GAC," he added.

President Barack Obama appointed Cordray to serve as agency director in early 2012, and he was recently nominated to continue in this role for a five-year term.

Cordray will speak during the morning general session on Feb. 27.

Waters, who has served in the U.S. Congress since 1993, is a frequent GAC guest. She has identified herself as a member of Congressional FCU, believes strongly in credit unions' ability to improve people's financial lives, and last year told GAC attendees she would be "the best friend credit unions ever had" in her time with the Financial Services Committee. Waters was a cosponsor of the Small Business Lending Enhancement Act (H.R. 1418) during the 112th Congress, and has said she is "very much involved" in the credit union member business lending cap issue.

Also on the GAC speaking schedule: Speaker of the House Rep. John Boehner (R-Ohio), Democratic National Committee Chairman and credit union supporter Rep. Debbie Wasserman Schultz (D-Fla.), and credit union champions Sen. Mark Udall (D-Colo.), Rep. Ed Royce (R-Calif.) and Rep. Brad Sherman (D-Calif.). House Financial Services Committee Chairman Jeb Hensarling (R-Texas), House Majority Whip Kevin McCarthy (R-Calif.), House Financial Services Committee senior member Spencer Bachus (R-Ala.), Rep. Gregory Meeks (D-N.Y.), Sen. Elizabeth Warren (D-Mass.), Rep. Peter King (R-N.Y.) and Rep. Blaine Luetkemeyer (R-Mo.) are also slated to speak at the 2013 GAC.

CUNA's 2013 GAC will take place Feb. 24-28 at the Washington Convention Center in Washington, D.C. This year's GAC theme, "Powerful Cause, Positive Effect," reflects the credit union commitment to the 95 million working Americans who rely on credit unions every day.

For more information, follow the @CUNAverse twitter hashtag #CUNAGAC. Use the resource link to register for the GAC.

Hampel views job numbers, economy on Bloomberg TV

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WASHINGTON (2/4/13)--Credit Union National Association Chief Economist Bill Hampel addressed recent job numbers, and what they mean for the overall economy, in a Friday appearance on Bloomberg Television's Bottom Line with Mark Crumpton.

Hampel noted that recent revisions and January job numbers added around 800,000 employees to government employment estimates. "That suggests there is quite a bit more momentum in the economy than we thought," he said.



The U.S. Department of Labor on Friday reported that employers added 157,000 jobs in January. The unemployment rate remained essentially unchanged at 7.9%, the department added. Hampel said these monthly numbers were close to what was expected. January's growth, combined with a 650,000 job revision to previous estimates, produced the 800,000 additional worker result.

The unemployment rate should gradually improve if the U.S. economy adds more than 200,000 jobs per month, resulting in an unemployment rate of 7.5% or less by the end of 2013, he noted.

"What's going on in the economy right now is that the private sector is actually establishing some momentum." Household sector and corporate balance sheets are improving, and business investment is improving. While looming public sector cuts would not be good for the overall economy, this private sector improvement could help make up for "any significant reduction in employment caused by any federal cuts," he added.

Low income communities were disproportionately hurt by the economic slowdown, and "it's only now that many of the lower income communities are beginning to see gains in employment and gains in income. "They typically lag the rest of the economy, that's one of the reasons it's so important to get the economy going," Hampel said.

CUNA punches back at bank attacks

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WASHINGTON (2/4/13)--The Credit Union National Association continues its one-two punch against bank attacks targeting the credit union tax status.

As reported, CUNA President/CEO Bill Cheney has had at least 20 recent meetings with federal lawmakers underscoring the public policy reasons for the credit union tax-exemption mandated by the Federal Credit Union Act of 1934.

And last week, CUNA Executive Vice President of Legislative Affairs John Magill refuted bank attempts to tie together the issue of increased member business lending for credit unions with the separate issue of tax status.

In a recent article in Politico titled "The never-ending feud: Banks vs. credit unions," which focused primarily on bank rhetoric against increased MBLS, Magill said, "When they start talking about our tax exemption, they're changing the subject. They've run out of arguments opposed to the member business lending."

"They know they can't defeat us on the policy argument so they talk about tax exemption, trying to put us in a position to defend that."

He added, "The fact of the matter is, we don't believe Congress has an appetite to tax 95 million Americans, which is exactly what would happen if Congress were to tax credit unions. It's simply a tax on Americans."

As CUNA President/CEO Bill Cheney noted in last week's "Cheney Report," CUNA will be emphasizing repeatedly on Capitol Hill in the months to come, including during CUNA's Governmental Affairs Conference Hill visits in February, how it is the credit union member who would be harmed most by the banks' push to increase taxes on credit unions.

Under the Federal Credit Union Act, federal and state-chartered credit unions are exempt from federal income tax because they are cooperatives operated for and by their members, and because credit union shares are essentially members' deposits. The tax status has been re-affirmed periodically by the U.S. Congress and is supported by many lawmakers.