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Bipartisan housing finance reform bill expected soon

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WASHINGTON (3/12/14)--Housing finance reform got a shot in the arm yesterday. After five years of debate and delay among policymakers, Senate Banking Committee Chairman Tim Johnson (D-S.D.) and the committee's top Republican member, Sen. Mike Crapo (Idaho), announced Tuesday that they have agreed upon a bipartisan plan to overhaul the housing finance market, as well as to wind down government-owned Fannie Mae and Freddie Mac.

The Credit Union National Association has and will continue to advocate for credit unions as housing reform moves forward.

CUNA has repeatedly said that credit unions appreciate the need to reform the current housing finance system, but any reforms must not hinder the ability of credit unions to meet their members' housing finance needs in a member-friendly cooperative way.

CUNA Senior Vice President of Legislative Affairs Ryan Donovan said that, based on early information, the Johnson-Crapo initiative seems to include many of the housing finance reform suggestions CUNA made during testimony last year.
"We look forward to reviewing the legislative text when it is made available and are hopeful this will be a bill that credit unions can strongly support," Donovan stated.
A draft bill could be unveiled in the next few days, with a committee vote to follow in the next weeks. Information released by Johnson and Crapo indicated the legislation will reflect significant provisions of S. 1217, a bill introduced by Sens. Bob Corker (R-Tenn.) and Mark Warner (D-Va.) last June.
Like that legislation, the new bill would wind down government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac and replace them with a new mortgage guarantor, the Federal Mortgage Insurance Corporation (FMIC).
The winding down of Fannie and Freddie, and the Federal Housing Finance Agency, would be accomplished within five years of the bill's potential passage. GSE assets would be sold off, and their charters would be revoked once the FMIC is established.

Under the terms of the bill, private entities would purchase mortgages from lenders. Those mortgages would then be reissued as securities and sold on to investors. Investors would need to maintain a 10% interest of equity for every dollar of risk.

New loans would not be required to go through the FMIC. Only those that wanted the government guarantee would be processed by the agency.
"This bipartisan effort will provide the market the certainty it needs, while preserving fair and affordable housing throughout the country," Johnson said in a statement. "I look forward to moving this effort through committee once members have had a chance to review our forthcoming legislation." 
CUNA's Donovan said, "We appreciate that the committee engaged CUNA frequently through the development of this legislations, and we look forward to its consideration in the Banking Committee very soon."

NEW: Royce set to introduce MBL-related bill

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WASHINGTON (3/12/14, UPDATED 5:38 p.m. ET)--As he pledged to 4,400 credit union advocates at the Credit Union National Association's 2014 Governmental Affairs Conference less than two weeks ago, Rep. Ed Royce (R-Calif.) is ready to introduce a bill to exempt loans for one- to four-unit non-occupied dwellings from the credit union member business lending cap.
CUNA expects the bill to be introduced tomorrow.
In a letter to his House colleagues describing the bill and seeking support, Royce wrote: "When a bank makes a loan to finance the purchase of a small apartment building it is called a residential real estate loan.  When a credit union makes the same loan it is call a business loan" and thereby falls under the low 12.25%-of-assets MBL cap.
Royce tells House lawmakers that his common-sense credit union reform bill, called the "Credit Union Residential Loan Parity Act," would fix that disparity.
He added that, if enacted, the bill would allow credit unions to lend an estimated additional $11 billion to small businesses, freeing up "much needed private sector financing for commercial businesses and rental housing without costing taxpayers a dime."
The bill also authorizes the National Credit Union Administration to apply strict underwriting and servicing requirements for the loans.

NEW: CUNA launches national search for new president/CEO

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WASHINGTON (3/12/14, UPDATED 2:32 p.m. ET)--A national search for a new president/CEO of the Credit Union National Association will be launched immediately, the association's chairman said, to find a successor to Bill Cheney, who is returning to California in June to be president and CEO of SchoolsFirst FCU in Santa Ana.

CUNA Chairman Dennis Pierce said the search would consider candidates from both inside and outside of the credit union movement.

"We will be looking for leadership that can bring to bear the talents of the exceptional team that we have on board at CUNA now, and leverage the strengths of the three-tiered system of CUNA, the state credit union leagues, and credit unions to achieve our goals and strengthen the movement," Pierce said.

Pierce thanked Cheney for his service, and praised his accomplishments as president/CEO since 2010. Among them, the CUNA chairman said, were:
  • Successfully protecting the credit union tax exemption, ensuring that the recent tax reform draft from the House Ways and Means Committee made no changes to the tax status of credit unions. Pierce pointed to the award-winning "Don't Tax My Credit Union Campaign," which Cheney launched, as a key reason for the "big win" for credit unions in the tax reform proposal. The campaign generated 1.3 million contacts with Congress from credit union supporters in less than nine months' time--a record for such efforts--urging lawmakers "don't tax my credit union."
  • Establishing the first-ever shared, strategic vision for the credit union movement: "Americans choose credit unions as their best financial partner." The initiative is aimed at guiding, uniting and helping credit unions achieve a shared agenda of removing barriers, creating awareness and fostering service excellence, with the ultimate goals of increasing credit union membership and delivering to members more value.
  • Developing an approach to communicate credit union concerns and interests to Congress with a "535-seat strategy," designed to reach every single member of Congress on behalf of credit unions.
"In addition, Bill and his team this year planned and executed the most successful CUNA Governmental Affairs Conference ever, which drew more than 4,400 credit union supporters to rally and then deliver the credit union message to Capitol Hill," Pierce said. The CUNA chairman also noted the association's continued financial health during Cheney's tenure, as well as its strengthened communications program as hallmarks of his leadership.

Cheney expressed his thanks to the movement for its support over his nearly four years of leading the national trade association.

"I take on this new role at SchoolsFirst knowing that, with the backing of the CUNA board, the state leagues, and CUNA staff, we have accomplished much. However, the work will continue without interruption.

"Protection of our tax exemption, pursuit of regulatory relief, enhancing the charter and working toward achievement of a shared strategic vision--among other key issues--must proceed, with guidance from our board, partnership with the leagues and efforts of our talented, professional staff," Cheney said.

Pierce noted that Cheney will take a consulting role in the leadership search for the association during his remaining tenure at CUNA.

Current SchoolsFirst FCU president/CEO, Rudy Hanley, announced early this year that he would retire from the credit union after 31 years of service.  Although he was originally scheduled to retire in March, Hanley has said he will stay on at the $9.7 billion-asset credit union until Cheney comes aboard.

CompBlog Wrap-Up reminds CUs of tax fraud potential

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WASHINGTON (3/12/14)--With the April 15 tax return due date approaching, credit unions must stay on their toes to protect themselves and their members from fraud schemes, the Credit Union National Association warned in this month's edition of the CompBlog Wrap-Up.
"As always, but particularly during tax season, credit unions must protect their members' personal information, and stay on top of suspicious activity," Kathy Thompson, CUNA senior vice president for compliance and legislative analysis, wrote.

One type of fraud credit unions have alerted CUNA to is non-member tax refund checks going into member accounts. Not only must credit unions note and potentially report such suspicious activity for Bank Secrecy Act purposes, they must also be on the lookout for members using personal accounts for business purposes, such as a tax return filing business, she added.

Thompson noted the U.S. Internal Revenue Service has reported a steady increase in instances of tax refund fraud between 2011 and 2013. From 2011 through November 2013, the agency has stopped 14.6 million suspicious returns involving more than $50 billion in fraudulent refunds, she wrote.
This month's CompBlog Wrap-Up also features:
  • Top concerns outlined by credit unions at last month's Governmental Affairs Conference;
  • Recent Foreign Account Tax Compliance Act amendments and clarifications;
  • Final Affordable Care Act employer regulations; and
  • News on student lending issues.
The Wrap-Up also updates credit unions on the latest regulatory changes and offers a question-and-answer section.

For the full CompBlog Wrap-Up, use the resource link.

FINRA warns of Bitcoin-related risks

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WASHINGTON (3/12/14)--While many have reported on the great promise that Bitcoin and other virtual currencies hold for consumers and businesses alike, buying and using digital currency such as Bitcoin carries certain risks, the Financial Industry Regulatory Authority Inc. (FINRA) warned Tuesday.
FINRA bills itself as the largest independent securities regulator in the U.S., with a central task of protecting investors by maintaining the fairness of U.S. capital markets.
"Speculative trading in Bitcoins carries significant risk. There is also the risk of fraud related to companies claiming to offer Bitcoin payment platforms and other Bitcoin-related products and services," FINRA wrote in an investor alert.

The alert reminds that:
  • Digital currency such as Bitcoin is not legal tender, and businesses and individuals are not legally required to accept it as payment. If no one accepts Bitcoins, Bitcoins will become worthless, FINRA writes;
  • Platforms that buy and sell Bitcoins, and digital wallets, can be hacked, costing consumers;
  • Bitcoin transactions can be subject to fraud and theft;
  • The account insurance and other safeguards provided by credit unions and banks are not provided to users of digital wallets;
  • Bitcoin payments are irreversible, and refunds are only made if a seller decides to provide them;
  • Bitcoin has been used in illegal activity, and thus, Bitcoin exchanges could be shut down by law enforcement agencies; and
  • Bitcoin prices can fluctuate wildly.
Many criminals also view Bitcoin "as a chance to steal your money through old-fashioned fraud," FINRA added. Warning signs of fraud include business claims that are not backed by financial reality, FINRA said.

For the full FINRA alert, use the resource link.

CUNA online update details post-GAC political landscape

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WASHINGTON (3/12/14)--Top credit union priorities coming out of last month's Credit Union National Association Governmental Affairs Conference are detailed in the March edition of CUNA's "Legislative Update Webcast."
The advocacy efforts of 4,400 credit union supporters during the GAC "certainly made an impact that will last for a long time," CUNA Senior Vice President of Legislative Affairs Ryan Donovan said in this month's webinar. "As we turn the page from the GAC, several of our priorities are on the front burner of Congress," Donovan noted.
In the webinar, Donovan provides updates and analysis of key credit union issues, including:
  • Tax reform;
  • Merchant data breaches;
  • Housing finance reforms;
  • Patent reforms; and
  • Capital reform.
On the credit union tax status, Donovan emphasized that the recently released draft "is just the first chapter in tax reform," and groups that did not do as well as credit unions did in the first draft will be seeking to improve their own position in future drafts. Credit unions must defend their hard-earned gains in the future, he emphasized.

Donovan said CUNA does not expect the U.S. House to consider Rep.Dave Camp's (R-Mich.) tax plan this year, and it is not clear if the Senate will introduce its own tax reform document this year.

However, he added, Rep. Paul Ryan (R-Wis.), who could take on House Ways and Means Committee chairmanship, has said he would use Camp's proposal as a starting point for his own work on taxes.

Each month, CUNA's legislative update webinar breaks down vital information on top congressional concerns into an easy to access and understand format.

For the full 15-minute webinar, use the resource link.

Pat Keefe is CUNA's new top communications officer

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WASHINGTON (3/12/14)--Pat Keefe has been promoted to senior vice president of communications by the Credit Union National Association.
Keefe, who has nearly 30 years of experience with communications at the national level, has been with CUNA since 2000, most recently serving as vice president of communications.
CUNA President/CEO Bill Cheney noted that Keefe was named to the position after CUNA conducted a broad search to fill the chief communications officer position, considering nearly 90 applicants from across the nation. That list was winnowed down to about a half-dozen finalists, who themselves held impressive credentials and experience, Cheney said.
"Pat was promoted to this position based on his long service to credit unions, his experience here at CUNA and his interaction with our executive team," said Cheney. "As senior vice president of communications, his role will be to ensure that CUNA continues to enhance its strong reputation as the leader of the credit union movement with all of our audiences, especially our member credit unions, the financial services industry, the Washington community and the public at large."

Prior to working at CUNA, Keefe was a communications executive with the National Association of Federal Credit Unions in Arlington, Va., for 16 years. He is a former newspaper reporter and editor.
During his credit union career, he has been engaged in communications strategies and tactics affecting nearly every key issue for credit unions, including: Protecting the tax-exempt status of credit unions, bankruptcy reform, debit interchange and--most recently--dealing with data security breaches.
In the late 1990s, Keefe played a substantial role in planning and executing the Credit Union Campaign for Consumer Choice, which passed legislation to overturn a Supreme Court decision limiting credit union membership.
"I'm greatly honored to represent the credit union movement and will use my experience and background to help protect and advance the movement's interests," Keefe said Tuesday.