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Bloomberg spotlights CUs' 'big, big' tax win

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WASHINGTON (3/4/14)--Credit unions and the preservation of their tax status were highlighted Monday within the first 23 words of a 1,000-word Bloomberg article on Rep. Dave Camp's (R-Mich.) unveiling of his draft tax code reforms last week. And Credit Union National Association executive John Magill was quoted underscoring the importance of the "big, big win" for CUNA, the state credit union associations, credit unions and credit union members.
 
"We're very, very pleased with this very big, big win," said Magill, CUNA executive vice president for government relations. "The tax exemption is our very heart and soul."
 
And on the other side of the equation, the article noted that, "Lobbyists and companies that lost breaks or face new taxes are trying furiously to build political opposition," citing, for instance, the banks.
 
"In addition to fighting the credit union tax break, banks are attacking Camp's plan to add a 3.5-basis point quarterly tax on the assets exceeding $500 billion of the biggest U.S. financial institutions...," reporter Richard Rubin noted.
 
Regarding the credit union win, CUNA left nothing to chance.  The trade group took the lead in 2013 with an early strategy to educate and engage lawmakers and credit unions members.

The group's innovative and award-winning social media campaign, "DontTaxMyCreditUnion," generated 1.3 million contacts with lawmakers from credit union supporters since mid-May, when the campaign was launched. Through social media, the campaign helped to expose 5.3 million to the credit union message that a new tax on credit unions would be a tax on credit union members. Through lower fees on services, lower rates on loans and higher deposit rates, credit unions benefit their members to the tune of $6 billion each year. And, when there is a credit union in the market place, bank customers benefit too--by almost  $2 billion a year.

During CUNA's "Don't Tax" advocacy, it was not just credit unions and their members that took to social media to back their credit union.  Lawmakers also joined in with some tweeting their support for the credit union tax status.

CFPB should carefully target rule to rein in debt collectors

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WASHINGTON (3/4/14)--The Credit Union National Association agrees that unscrupulous business practices, including those performed by certain third-party debt collection agencies, should not be tolerated. However, CUNA urges regulators to address those issues using a targeted approach that hones in on the third-parties that engage in abusive and/or illegal collection efforts.

CUNA, addressing a 162-question Consumer Financial Protection Bureau debt collection advance notice of proposed rulemaking, told the CFPB that consumers and creditors both would best be served by a regulatory approach that focuses on problem cases rather than on the creation of broad new rules that affect good and bad actors similarly. 

The CUNA comment letter underscored that credit unions that are collecting their own debts should be treated differently than third-parties that are in the business of debt collections.
 
"As member-owned, not-for-profit financial cooperatives, credit unions are distinct from most other types of financial service providers. Repeatedly, CFPB Director (Richard) Cordray has commended credit unions for their practices and urged them to 'keep doing what you are doing,'"  the CUNA letter reminded. "We urge the agency to reflect that view in all rulemakings, including any new rules that are developed regarding debt collection practices."

To read CUNA's complete comment letter and its answers to all the CFPB inquiries, use the resource link.

2013 financials show continued positive trends at CUs

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ALEXANDRIA, Va. (3/4/14)--National Credit Union Administration 2013 call report data, released Monday, shows continued positive trends in loan, membership and net worth growth for federally insured credit unions.
 
Credit Union National Association President/CEO Bill Cheney said the year-end financials illustrate that "credit unions are experiencing a renaissance of sorts in lending, particularly in the new and used auto loans."
 
"Although credit unions never stopped lending and working with their members, they have clearly left the recession in the dust and are looking forward," Cheney noted. (See related story: Autos boost CU lending, CUNA estimates say.)
 
However, NCUA Chairman Debbie Matz used the release of 2013 call report data to warn credit unions not to take on "excessive" interest rate risk. She highlighted that growth in 5- to 10-year investments was nearly 60% and called it "cause for concern."
 
"It's easy to get trapped chasing near-term profits by increasingly concentrating investments in long terms. That can imperil a credit union because it increases interest rate risk...For many credit unions it may be prudent, at this time, to accept lower return on assets to avoid exacerbating interest rate risks," the head federal credit union regulator advised.
 
Investments grew to $299 billion, up from $280 billion at the beginning of 2013, then declined to $285 billion by the end of the year. The NCUA said most of that decline was in short-term investments; the most dramatic growth occurred in 5- to 10-year maturities, which increased by $14 billion, or the 60% noted above.
 
However, the 2013 financial reports showed strong positives, such as:
  • Strong loan growth, led by auto loans, with total loans at up close to 2.2% to $645.2 billion in the fourth quarter. Loans grew nearly 8% compared to the end of 2012, and lending continued to rise in nearly every category;
  • Membership grew by slightly more than 343,000 in the fourth quarter of 2013 and by more than 2.4 million for the year; and,
  • Net-worth ratio climbed as credit unions remained well-capitalized. Aggregate net-worth ratio was 10.78%, the NCUA reported, up 13 basis points from the end of the third quarter, its highest level since the first quarter of 2009. The vast majority of federally insured credit unions remain well-capitalized, with 97% reporting a net worth at or above the statutorily required 7%.
Delinquency and net charge-off ratios held pretty steady and even dipped slightly in the third quarter. The delinquency ratio fell to 1.01% in the fourth quarter from 1.02% in the previous quarter and from 1.16% at the end of 2012. The net charge-off ratio remained the same during the fourth quarter at an annualized 57 basis points. The percentage of loan charge-offs due to bankruptcy also held steady at 20.5%, is below the 2012 level of 21.5%.

See the resource link for more data.

CUs' advocacy marathon sets them up for gridlock 'breakthrough'

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WASHINGTON (3/4/14)--The one thing certain about the ongoing gridlock in the legislative hall of the U.S. Congress is that the voter disapproval it engenders is unsustainable. That is why advocacy groups like credit unions must be poised for an inevitable breakthrough, write Credit Union National Association Senior Vice President of Legislative Affairs Ryan Donovan and Vice President of Political Affairs Trey Hawkins in a March 1 Credit Union Magazine article.

"Waiting to engage with Congress until it's ready to vote on a matter is an almost certain way to come out on the losing end," the CUNA legislative and political experts write.

This is why credit unions must stay engaged in the process the entire time--an advocacy marathon, so to speak.
 
CUNA has spent the last year making this point as often as possible: Advocacy is a marathon; it's not a sprint.
 
Donovan and Hawkins make it clear that CUNA and others have very low expectations in terms of bills addressing threats or opportunities credit unions face actually becoming law in the short-term.
 
"But make no mistake: The work Congress does on matters such as tax reform and housing finance reform this year will significantly influence the outcome of these issues in the next Congress," they warn.
 
Already some credit unions are running in the advocacy marathon, the writers say, but they underscore that all credit union advocates must join the race by contacting legislators, educating members about the cooperative difference, involving members in advocacy efforts--in short, uniting for the good of both credit unions and members.
 
 
Look at 2013, they advise, when roughly two-thirds of the 1.3 million communications sparked by CUNA and the state credit union association's "Dont Tax My Credit Union" advocacy blitaz were delivered by members of roughly 300 credit unions.
 
"Imagine our potential if 600 credit unions--or 900 or 1,000 or more--had engaged their members similarly!"
 
Why should credit unions engage members directly?
 
Consider the results of a groundbreaking research project CUNA conducted recently with two credit unions: CommunityAmerica CU, Lenexa, Kan., and University FCU, Austin, Texas.  Researchers sent email communications to 70,000 members of these credit unions about the "Don't Tax My Credit Union" campaign and then surveyed 4,100 of those members about their attitudes toward advocacy and the credit unions in general.
 
The results:
  • Open rates on the emails were as high as 40%, with "click rates" as high as 6% and "action rates" as high as 5%.
  • Less than 0.1% of respondents opted out of these email communications, and neither credit union received any complaints.
More stunning and important: 86% of members who were contacted agree with the statement, 'In the future, I am likely to do a greater share of my personal banking with a credit union.'
 
"In other words," the article emphasizes, "the very process of educating members on the ownership structure of their credit union--and especially the value it delivers via more affordable loans, higher interest on deposits, and lower and fewer fees--increases those members' loyalty to the institution and willingness to engage it for more financial products and services."

This week in Congress: McWatters' hearing postponed, patent 'trolls'on Thurs. schedule

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WASHINGTON (3/4/14)--The congressional calendar this week has a number of items of interest to credit unions, although timing could possibly be subject to change due to Washington digging out from another winter storm.

For instance, today's scheduled nomination hearing for J. Mark McWatters to become a National Credit Union Administration board member has been postponed. A new date has not been set.

Nominations at today's Senate Banking Committee's hearing were to include McWatters; Stanley Fischer, as a member and vice chairman of the Federal Reserve Board; Jerome Powell, as Federal Reserve Board governor; Lael Brainard, as a Fed governor; and Gustavo Aguilar, to be an assistant secretary for the U.S. Department of Housing and Urban Development.

On Thursday, the Senate Commerce Committee will meet to markup S. 2049, the Transparency in Assertion of Patents Act, which is supported by the Credit Union National Association.

The bill would grant the Federal Trade Commission greater authority to require patent "trolls"--who present deceptive patent demand letters and pursue frivolous patent litigation--to include more information about the patents they dispute in demand letters. CUNA will submit a letter of support to the committee.

Also on today's congressional committee agenda:
  • The House Financial Services subcommittee on oversight and investigations will conduct a hearing on "The Growth of Financial Regulation and its Impact on International Competitiveness" ( News Now March 3); and
  • The House Science, Space, and Technology subcommittee on research and its subcommittee on technology will hold a joint hearing on whether technology can  protect Americans from international cybercriminals.
Among scheduled Wednesday hearings are:
  • The House Financial Services Committee subcommittee on financial institutions and consumer credit on "Data Security: Examining Efforts to Protect Americans' Financial Information,"  ( News Now March 3), which will feature law enforcement and technical experts. CUNA will submit a letter for the record of this hearing; and
  • The Senate Finance Committee will hold a full committee hearing on "The President's FY2015 Budget."
On Thursday:
  • The House Ways and Means Committee will hold a full committee hearing on "The President's FY2015 Budget Proposal."