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Congress' Exempt-Entities Tax Plan Expected Thursday

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WASHINGTON (6/11/13)--The Senate Finance Committee is expected to release its staff-prepared tax reform options paper on exempt organizations Thursday and according to Credit Union National Association Senior Vice President of Legislative Affairs Ryan Donovan it would be a surprise--although a pleasant one--if the credit union tax status was not mentioned as a revenue option.

"The papers that have been released have laid out all of the options available under each particular subject matter--a kitchen sink approach, if you will.

"So, I'd expect credit unions to be discussed to some extent in the paper. In fact, I'd be pleasantly surprised if we're not," Donovan said.

Papers on simplifying the tax system for families and businesses, business investment and innovation, infrastructure, international competitiveness, and economic development are among those that have been released by the committee and discussed in private meetings.

Donovan emphasized that continued grassroots action is critical as the U.S. House and Senate continue their tax reform efforts. CUNA and the state credit union leagues continue to encourage the more than 96 million credit union members nationwide to present a unified message to members of Congress: Don't Tax My Credit Union!

The groundbreaking grassroots campaign combines CUNA traditional efforts of such things as email-writing drives, with new social media and online outreach efforts. (For more CUNA/league advocacy resources, use the resource links.)

Other items of credit union importance on this week's congressional calendar include a Wednesday House Financial Services Committee hearing entitled: "Beyond GSEs (government-sponsored enterprises): Examples of Successful Housing Finance Models without Explicit Government Guarantees," a House Financial Services capital markets subcommittee hearing on reducing barriers to capital formation, and a Senate Appropriations Committee hearing on cybersecurity threats and responses.

Thursday House and Senate hearings include:

  • A House Ways and Means Committee hearing entitled: "Tax Reform: Tax Havens, Base Erosion and Profit-Shifting";
  • A House Financial Services monetary policy and trade subcommittee hearing entitled "Assessing Reform at the Export-Import Bank.";
  • A House Financial Services housing and insurance subcommittee hearing on international regulations and U.S. insurer competitiveness; and
  • A Senate Banking Committee hearing entitled "Lessons Learned From the Financial Crisis Regarding Community Banks." (See June 10 News Now story: Senate Panel Looks For Community Bank Lessons From Financial Crisis)

CU Supporters Among N.J. Special Election Candidates

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WASHINGTON (6/11/13)--The Credit Union National Association is closely watching the planned New Jersey special U.S. Senate election as the race unfolds.

A number of candidates that have entered the race are credit union supporters, including two-term Newark, N.J. Mayor Cory Booker (D), State Assembly Speaker Sheila Oliver (D), and U.S. House members Rush Holt (D) and Frank Pallone (D). Holt and Pallone have been credit union member business lending cap increase supporters in Congress, and Booker has expressed his support speaking at a number of credit union-related events. Oliver was a key sponsor of state assembly legislation to enable credit unions to become eligible municipal depositories.

Former Bogota, N.J., mayor and state gubernatorial candidate Steve Lonegan (R) and Dr. Alieta Eck (R) will compete for the Republican nomination in this contest.

"We've built strong relationships with many candidates, and credit unions are in good shape whatever the outcome of the special election," New Jersey Credit Union League Director of Government Affairs Chris Abeel said.

"Credit unions, the state league and CUNA have almost an embarrassment of riches with credit union-friendly candidates to choose from during this election," CUNA Vice President of Political Affairs Trey Hawkins added.

A Quinnipiac University poll released Monday indicates Booker is the early favorite. New Jersey has not elected a Republican to the U.S. Senate since 1972.

The candidates will vie for the former Senate seat of Frank Lautenberg (D-N.J.), who died at age 89 on June 3. The special election will be held on Oct. 16.

In the interim, State Attorney General Jeff Chiesa (R) will fill New Jersey's vacant Senate seat. Chiesa was appointed by Governor Chris Christie (R) late last week, and was sworn in on Monday.

CUNA, the leagues and credit unions have supported special election candidates in the past. One recent example of interim-election success is Rep. Suzanne Bonamici (D), who won the right to represent Oregon's first congressional district in early 2012.

Bonamici made her support for member business lending a key part of her campaign and platform, and has remained a strong credit union supporter during her time in office.

CFPB Overdraft Report Doesn't Suggest Rule Changes

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WASHINGTON (6/11/13)--The Consumer Financial Protection Bureau has released its report on overdraft protection plans, and while the report--embargoed until midnight this morning--expresses concern about the ability of consumers to avoid overdraft costs, it does not recommend regulatory changes or changes to business practices.

The bureau used more than 1,000 consumer-submitted comments, and its own data research, to compile the report.

Current checking account issues, information on opt-in rates and disclosures are also discussed in the CFPB release.

The Credit Union National Association is studying the report this morning.  Watch News Now for a live update on its contents.

CUNA will clarify the following points, and more,  with the CFPB:
  • Did the study include credit unions? If so, how many? How many banks?
  • When does CFPB plan to target its next study, which will be on micro data?
  • Following that, are there additional plans in the works on these programs?

NEW: CFPB Overdraft Report Out: Study Will Continue

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WASHINGTON (6/11/13, UPDATED 11:27 a.m. ET)--Consumer Financial Protection Bureau Director Richard Cordray states clearly in the bureau's report on financial institutions' overdraft programs, released at midnight, that the bureau does not intend to impede the offering of this service. The Credit Union National Association was among stakeholders included in an early briefing on Monday and CUNA President/CEO Bill Cheney had a personal call from Cordray.

CUNA clarified with the agency this morning that the report focuses on large bank practices and that no credit unions were directly studied by the CFPB. However, the report does include information voluntarily submitted by credit unions or their vendors in response to the bureau's request for information preceding the report.

Although no policy recommendations were forthcoming, the bureau will, however, continue to dig and sift for more information about the variety of programs offered and how they affect consumers' ability to anticipate and control their costs for financial services.

"Our report today examined overdraft practices at some of the country's larger (banks) and found wide variations across them when it comes to overdraft opt-in rates and costs," Cordray explained in a statement accompanying the report's release. 

"The gap may reflect differences in the substance of overdraft programs, or differences in customer base, or differences in marketing approaches. On this point, we are interested to dig in and learn more about the reasons why."

"Our review is intended to provide the factual basis to inform efforts to develop more uniform treatment of these issues across financial institutions," the report's executive summary declares.

The CFPB has supervisory and enforcement authority over financial institutions with more than $10 billion in assets, but its policies affect the overall financial market.

For small institutions, the report notes that an industry vendor that services 1,800 predominantly small institutions reported to the CFPB that NSF and overdraft revenues accounted for 78% of its community bank and thrift clients' deposit service charges and 51% of its credit union clients' fee income in 2012.

In a conversation with CFPB staff this morning, CUNA Deputy General Counsel Mary Dunn reminded that the difference is even more notable because of the capital pressures that face credit unions.  Unlike banks, credit unions can build capital only from retained earnings, from such things as fees for services. "Still affected credit unions work to provide the overdraft protection services their members want but with more reasonable fees."

Data in the report from a research firm strongly suggests fees are lower at many smaller institutions. The median NSF and median overdraft fee across nearly 800 smaller banks and credit unions (outside of the nation's 50 largest depositories) were both $30 in 2012. Per-item fees ranged across this sample from a low of $10 to a high of $45.

In his accompanying remarks, Cordray said the report has three "major takeaways":

  • First, the CFPB claims that data show that opting into overdraft coverage of ATM and debit card transactions makes consumers more vulnerable to increased costs and involuntary account closures;
  • Second, financial institutions have very different policies, procedures, and practices that can be highly complex and difficult for consumers to understand, yet greatly affect whether and how often they will incur overdraft fees; and,  
  • Third,the outcomes for consumers vary widely across financial institutions. The average amount of annual overdraft charges in the study of the largest banks was $225. But consumers at some other banks paid an average of $147, while consumers at others paid $298, more than twice as much.
CUNA is studying the report and is continuing conversations with the bureau to clarify key points. CUNA will be included in future meetings with the CFPB  on this issue.  

Use the resource link to access the CFPB report and Cordray's accompanying statement.

Obama Taps Furman To Lead Econ Advisory Council

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WASHINGTON (6/11/13)--President Barack Obama Monday nominated Jason Furman to serve as the next chairman of the White House Council of Economic Advisers.

He would replace Alan Krueger if confirmed by the U.S. Senate. Furman joined the Obama administration as an assistant to the president for economic policy and the principal deputy director of the National Economic Council in 2009. He also served as a special assistant to the president for economic policy at the National Economic Council during the Clinton administration.

President Obama said "[Furman] understands all the sides of an argument, not just one side of it.

"He's worked tirelessly on just about every major economic challenge of the past four and a half years, from averting a second depression, to fighting for tax cuts that help millions of working families make ends meet, to creating new incentives for businesses to hire, to reducing our deficits in a balanced way that benefits the middle class," Obama added.

CUNA Continues Talks On Derivatives Concerns

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WASHINGTON (6/11/13)--The Credit Union National Association's efforts to express credit union derivative concerns continued during a June 6 conference call between National Credit Union Administration staff and members of CUNA's Examination and Supervision Subcommittee.

NCUA staff answered questions on the derivatives proposal. Details of the call are reported this week in CUNA's Regulatory Advocacy Report.

Concerns raised by CUNA subcommittee members included:

  • Application and examination fees;
  • The possibility of waivers to gain additional derivatives authority;
  • The $250 million net worth requirement to qualify for derivatives authority; and
  • Expertise requirements.
When asked about expertise requirements, NCUA staff said that under the proposal credit unions would have to have an experienced person on staff at the credit union and that contractors or third-parties would not be permissible to meet this requirement.

Overall, NCUA staff said the rule is designed to be workable and that the NCUA board welcomes comments on all aspects of the proposal.

CUNA's Examination and Supervision Subcommittee is developing recommendations on the proposal. omments on the proposal must be filed with the NCUA by July 29.

Other developments detailed in this week's Regulatory Advocacy Report include:

  • The Consumer Financial Protection Bureau's issuance of exam procedures for new mortgage rules;
  • CUNA concerns with NCUA delinquency reporting changes; and
  • CUNA's new survey on CFPB mortgage regulations, and requests for comment on remittance and Bank Secrecy Act developments.
Employees or volunteers of CUNA and state credit union league member credit unions can sign up below to receive the Regulatory Advocacy Report.

The Regulatory Advocacy Report is archived on