CUAD Advocates meet with Senator Elect Heidi Heitkamp
Date Posted: December 17, 2012
Photo L to R: CUAD President/CEO Robbie Thompson, CUAD VP of Advocacy and Awareness Jeff Olson, Senator Elect Heidi Heitkamp, and Steve Davis, CUAD Board Chair and COO of Capital Credit Union.
by Jeff Olson, VP of Advocacy and Awareness
Fresh off the heels of her impressive U.S. Senate campaign victory over Rick Berg, Senator-Elect Heidi Heitkamp met with Credit Union Association of the of the Dakotas leadership at her campaign office last Friday, December 14th.
Educating the Senator-elect on the credit union difference was not the focus of our meeting as the former North Dakota Attorney General is very familiar with the financial cooperative model. We used the opportunity to get more acquainted with our new Senator. Since one of Senator-elect Hektkamp’s committee assignments will be to serve on the Senate Banking Committee, CUAD legislative Advocates took the opportunity to discuss several issues that may impact credit unions during the 113th Congress. Here is a list of items that we had the chance to discuss with the Senator-elect in our meeting.
Tax Exemption for Credit Unions
Eliminating the credit union tax status eliminates credit unions. It is that simple, and given what our economy has just been through, that would be a shame for consumers.
If credit unions are taxed, there is no incentive to remain “not-for-profit”; they will convert to banks; and our economy will lose the only sector of the financial industry that is not driven by profit, but rather driven by a dedication to serve its members.
One positive aspect of Congress’s inability to enact legislation is that the tax status has been preserved and the threat to the credit union tax status remains low (but not zero) in the near future. The tax status was never placed under serious threat during the Super Committee process for two key reasons: by all accounts, the Super Committee never got to a place where there was any proposal given serious consideration and many on the Committee perceived the tax status to be too small in terms of revenue generation relative to the trouble it would cause to include it. Nevertheless, as we get closer to the end of the year, Congress will have to make decisions on how to avoid the so-called “fiscal cliff.” It is possible, but not probable, that the credit union tax status could come up in the context of those discussions. We also remain vigilant because the likelihood that Congress and the administration attempt to tackle comprehensive tax reform increases significantly next year.
Regulatory Burden: Addressing the Crisis of Creeping Complexity
As the Consumer Financial Protection Bureau (CFPB) works to implement major portions of the Dodd-Frank Act, much of the credit union legislative activity in the 112th Congress has been focused on encouraging Congress to engage the CFPB and other regulators in an effort to reduce regulatory burdens on credit unions. This has manifested itself in several areas, including interchange fees and remittances regulation. We have also asked Congress to enact legislation to reduce burden on credit unions including examination fairness legislation, ATM fee disclosures legislation, and privacy notifications legislation. We were involved in advocacy efforts that resulted in the enactment of patent reform legislation which will reduce lawsuits against credit unions and flood insurance legislation which will provide credit unions with greater certainty when making mortgage loans in flood prone areas.
Interchange Fees
CUNA led an effort in Congress to delay the implementation of debit interchange regulations included in the Dodd-Frank Act. This effort resulted in 12 Senators who voted for the Durbin amendment changing their vote, and supporting the delay; and, nearly every new Senator voted to delay the Durbin amendment. The real-world impact of this vote, however, was the political pressure that it put on the Federal Reserve, which resulted in the 12 cent proposed cap being increased to 24 cents, and the attention it gave to the concerns of small issuers.
Remittances Regulation
Credit unions raised concerns regarding the CFPB’s remittance regulation with Congress at two Congressional hearings in 2012 and worked with other interested parties to organize 32 Members of Congress to send a Congressional letter to the CFPB to urge them to delay implementation of the remittance rule. As a result of our efforts, the CFPB increased the exemption threshold for the regulation from 25 per year to 100 per year; while this threshold remains too low, we continue to work with Congress to put pressure on the CFPB to make additional changes to this regulation.
Examination Fairness
We support legislation in both chambers (H.R. 3461 / S. 2160) to require NCUA to cite the statutory and regulatory authority for examination determinations, make other examination reforms, establish an independent ombudsman to hear complaints about the examination process, and establish an independent appeals process to resolve disputes.
Supplemental Capital
Credit unions continue to engage Congress on the issue of supplemental capital. Legislation was introduced earlier this year to provide credit unions the opportunity to utilize supplemental capital instruments, and the advocacy efforts this year have focused on educating Members of the House of Representatives on this issue. We have been working closely with those interested in this legislation, including Treasury and NCUA, to make changes and refinements to the legislation, and look forward to having it considered in the next Congress.