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Ways and Means launches look at tax reforms with charitable deductions hearing (02/07/2013)

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WASHINGTON (2/7/13)--The tax policy-writing House Ways and Means Committee has scheduled a hearing next week on itemized charitable deductions. The hearing is part of what will be a broader look by the committee at the subject of comprehensive tax reform.

"We do not expect the credit union tax status to be any part of the focus at this upcoming hearing," said Ryan Donovan, Credit Union National Association senior vice president of legislative affairs, Wednesday.

"However," he added, "we will be watching this closely, as it could shed light on how the committee intends to evaluate tax provisions going forward."

Preserving the credit union tax status is always a top CUNA priority. CUNA's 2013 four-pillar legislative agenda focuses on: preserving the credit union tax status; reducing regulatory burden; engaging in housing finance reform; and advancing credit union charter enhancements, such as increased member business lending authority and supplemental capital.

House Ways and Means Chairman Dave Camp (R-Mich.) announced the hearing will take place on Thursday, Feb.  14,  in room 1100 of the Longworth House Office Building, beginning at 9:30 a.m. (ET).

Obama nominates REI co-op CEO for cabinet position

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WASHINGTON (2/7/13)--Sally Jewell, president/CEO of the nation's largest consumer cooperative, REI, has been nominated to serve as Secretary of the Interior by President Barack Obama.

National Cooperative Business Association (NCBA) President/CEO Michael Beall said the association and its members are energized by the selection. "We are proud that the president turned to the cooperative sector to select the newest member of his cabinet… Sally Jewell leads an extraordinary organization that represents the best of the cooperative business community," he added.

Jewell has also worked in the energy and banking industries. If confirmed, she will replace outgoing Secretary of the interior Ken Salazar.

Obama called Jewell "an expert on the energy and climate issues that are going to shape our future," and said "she knows the link between conservation and good jobs... She knows that there is no contradiction between being good stewards of the land and our economic progress; that in fact those two things need to go hand in hand." The Secretary of the Interior oversees 500 million acres of government owned public land.

The National Cooperative Bank (NCB) ranked REI as the 27th largest cooperative business in the nation on its 2012 NCB Co-op 100 List. REI's 2011 sales totaled $1.8 billion, and the business welcomed more than 840,000 new members during that year. The company returned $137.2 million to its members and invested $4.48 million in national and community-based conservation organizations.

REI is the nation's largest consumer cooperative, but there are cooperatives in virtually every sector of the economy, the NCBA noted.  The nation's 29,000 cooperatives generate 2 million jobs each year, contribute $652 billion in annual sales, and possess $3 trillion in assets, according to the NCBA.

"Whether it's providing affordable housing through a housing cooperative, providing affordable financial services through a credit union, providing affordable and reliable utility services to rural residents, providing farmers and small businesses with access to markets, cooperative business enterprises are major players in the U.S. economy," Beall said.

House Majority Leader Cantor to address 2013 GAC

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WASHINGTON (2/7/13)--Another high-profile political name has been added to the Credit Union National Association's 2013 Governmental Affairs Conference (GAC): House Majority Leader Eric Cantor (R-Va.).

The majority leader has made headlines in recent days as he has outlined a new vision to move the Republican party forward following the 2012 elections. Part of that vision includes reforming the country's tax laws, a goal others in Congress share as well.

Preserving the tax status of credit unions is a top CUNA priority and will be a key discussion item during the GAC. As lawmakers move toward March 1 federal debt and tax discussion deadlines, CUNA President/CEO Bill Cheney has said he can't "think of a better time for credit union supporters to be in Washington, in force."

Cantor spoke at the GAC in 2009 and 2010, and in 2010 he noted the importance of expanding credit unions roles in helping their communities. More than 600,000 businesses are started each year--about one per minute--and those individuals need credit unions, Cantor said.

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

Other legislators on the GAC speaking schedule include: 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 Financial Services Committee Ranking Member Maxine Waters (D-Calif.), 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.), Sen. Jon Tester (D-Mont.), 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.

Housing reform a committee priority, Hensarling says

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WASHINGTON (2/7/13)--Forging a sustainable housing finance system will be a House Financial Services Committee priority going forward, committee chairman Jeb Hensarling (R-Texas) said during a Wednesday hearing on the state of the Federal Housing Administration (FHA).

"Hardworking Americans demand a healthy economy, and we cannot have a healthy economy until we have a housing finance system that is both sustainable and competitive," Hensarling said.

The FHA's single-family insurance fund is facing a projected shortfall of $16.3 billion due to mortgage loan defaults by borrowers, and Hensarling and others have called for serious reforms to the agency.

In his opening hearing statement, Hensarling noted that the FHA controls 56% of the total mortgage insurance market. "Instead of complimenting a robust private mortgage market, the FHA's high cost loan limits and extremely low down payment requirements put it in direct competition with the private sector," he added.

Witness Anthony Sanders of the Mercatus Center at George Mason University said the FHA's current policies encourage risk taking by low-income households that should not be buying properties.

Increasing the FHA's FICO score floor to 660, imposing a minimum down payment requirement of 5%, lowering loan limits to $625,000 and eventually to $350,000, or less, and reducing government loan insurance to 80% of the total loan amount would "reduce the FHA's substantial, high-risk footprint in the mortgage market," he said.

Center for American Progress Housing Finance and Policy Director Julia Gordon, however, noted that the FHA's risk profile is improving. FHA loans taken on since 2010 are performing well, she said. Gordon acknowledged that the FHA's share of the mortgage market "should and will return to its historical norms," and suggested that the FHA could improve its risk estimate and loss mitigation efforts. She also cautioned against quickly reforming the agency. "To the extent we move, we need to move very slowly and very carefully," she said.

The FHA late last month announced it would increase some premiums and alter some underwriting requirements in a bid to improve its financial condition, manage and protect its single-family insurance programs and encourage the return of private capital to the housing market.

Wednesday's hearing was the first in a series of hearings that will be held throughout the year. FHA Commissioner Carol Galante will testify before the committee on Feb. 13, and more hearings will be held at the full committee and subcommittee levels.

For more on the Wednesday hearing, use the resource link.

Senate bill would crack down on e-payday loans

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WASHINGTON (2/7/13)--A bill has been introduced in the Senate intended to crack down on the worst practices of the online payday lending industry and give states more power to protect consumers from predatory loans.

Stopping Abuse and Fraud in Electronic (SAFE) Lending Act (S. 172) was introduced by Democratic Sens. Jeff Merkley (Ore.), Tom Udall (N.M.),  Richard Durbin (Ill.) and Richard Blumenthal (Conn.).

"We threw the payday lenders, who prey on families when they're at their most vulnerable, out of Oregon back in 2007," said Merkley when the bill was introduced. "Technology has taken a lot of these scams online, and it's time to crack down. Families deserve a fair shake when they're looking to borrow money, not predatory loans that trap them in a vortex of debt."

Credit unions and the Credit Union National Association are committed to providing a safe and affordable alternatives to predatory payday lenders, and credit unions across the country have implemented various programs in order to provide individuals in their communities an alternative to high-priced payday lenders.

CUNA supports the ability of credit unions to provide beneficial short-term, small amount loans as alternatives to predatory payday lending, which have "no place in the financial marketplace."

Payday loans from federal credit unions are generally limited to an annual percentage rate of no more than 18%, although there is some flexibility under the National Credit Union Administration's short-term, small amount loan program.

The Senate's SAFE Lending Act has four main provisions to:

  • Ensure that consumers have control of their accounts so that a third party doesn't gain control through remotely created checks (RCC). Consumers would be able to preauthorize may create an RCC on his/her behalf;
  • Allow consumers to cancel a debit, as they can a check,  in connection with a payday, thereby preventing an Internet payday lender from stripping a checking account without a consumer being able to stop it;
  • Require all lenders to abide by state rules for the small-dollar, payday-like loans they may offer customers in a state loans. Merkley's release notes that only states, not the federal government, have laws to prevent 400% annual percentage rate loans; and
  • Ban websites from describing themselves as payday lenders when they are actually "lead generators" that collect applications and auction them to payday lenders and others.
The bill, introduced Jan. 29, also would give the Consumer Financial Protection Bureau authority on its own behalf and upon petition by state Attorneys General or other local regulators to shut down payment processing for lenders that are violating state and other consumer lending laws through the Internet.