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The Advocate - Legislative Update
Friday, January 17, 2014 8:00 AM


Legislative Initiatives for 2014

With 2013 rolled up and tucked away, we can look forward to the issues and initiatives your league will focus on this year. Here's a brief rundown:

Tax Reform

With the nomination of Senate Finance Committee Chair Max Baucus (D-MT) to serve as ambassador to China, the push for tax reform in the senate appears to be in limbo. However, that's not the case in the House where Ways and Means Committee Chair Dave Camp (R-MI), has indicated he still wants to pursue a tax reform bill. House leadership, however, has been urging him to hold off in order for Republicans to capitalize on the problems with the Affordable Care Act implementation.

It's widely expected that the new chairman of the Senate Finance Committee will be Sen. Ron Wyden (D-OR), and would take the helm as early as February. Wyden reportedly has interest in tax reform too, but has signaled he wants at least some action on tax extenders in the short term. As discussions gear up, credit unions must press on with the "Don't tax my credit union" message because, well, it's not over till it's officially over.

Regulatory Reform

  • The Eliminate Privacy Notice Confusion Act (S 635/HR 749) passed the House by an overwhelming margin and is pending final approval in the Senate. The bill would eliminate the requirement for credit unions and other financial institutions to send out the annual privacy notice to their members if there were no changes to the institution’s privacy policy. This will be a significant cost and administrative savings for credit unions.
  • Over the past several years, credit unions have seen a dramatic increase in demand letters from "patent trolls" seeking to gain licensing payments for use of various forms of technology. Credit unions in most cases are merely users of the technology and not the owners or creators. Nonetheless, the cost to defend against these actions is very expensive. CUNA is working with coalition partners to push for changes in the patent law that would make it easier/cheaper to defend against patent abuse lawsuits and to limit the ability of patent trolls to exploit the patent system, and several bills have been introduced to address the problem.
  • Housing Finance Reform. Congress is looking at several variations of comprehensive housing finance reform. It's imperative that any new system ensures that credit unions have access to a secondary market and a source of reliable mortgage credit for their members. Credit unions must tell Congress that it would be detrimental for them to put control of the secondary market exclusively in the hands of a few major banks. Instead, the government must remain involved to create a viable market for credit unions. 

Other Federal Issues

Target Breach

The Target data breach in December compromised 70 million debit and credit cards and included stolen encrypted PIN data. CUNA is requesting all affected credit unions to complete the Target data breach survey about their known and expected losses from the breach. If you've yet to fill this out, please head over there now and take part. This info will be useful in CUNA and league efforts to change the laws surrounding retailers' liability for losses that financial institutions incur from data breaches at retailers.

  • Several credit unions have filed lawsuits against Target to recover their losses and more are likely.
  • Senate Banking Committee members Mark Warner (D-VA) and Robert Menendez (D-NJ) have indicated they want to hold a hearing on consumer data security early this year.
  • Senator Judiciary Chairman Pat Leahy (D-VT) and Senate Homeland Security Chairman Tom Carper (D-DE) announced plans to introduce separate bills on data privacy, including a measure to impose the same kind of security requirements on retailers as those mandated for financial institutions. 
  • We anticipate the CUNA Survey will lead to the introduction of legislation. The exact nature of that legislation has not yet been determined but will likely address the issue of "responsibility" for losses when such breaches occur.


Chairman Matz has indicated there are two key issues that the agency will be focused on in 2014: (1) interest rate risk exposure on balance sheets and (2) paying closer attention to cyber security.

With regard to cyber security, Matz stated in an article in Credit Union Journal on January 6, 2014, that credit unions "really need to stay on top of the issue, which means working with experts outside the credit union and not just relying on internal IT staff to protect their systems."

In the same article, she also said, "We do intend to propose a regulation on risk-based capital. We cannot change the 7% floor because that is statutory. But we do believe strongly that the credit unions holding more risk on their books should hold higher amounts of capital." She further said, "We anticipate that [the new risk-based capital system] will only impact a couple hundred credit unions."


Director Cordray recently implied the agency may slow down its issuance of new rules in 2014, because much of the big push for new rules, including those relating to mortgages, was mandated by Dodd-Frank. Nonetheless, the one that's lurking in the background which credit unions need to be most concerned with relates to overdrafts. The agency hasn't tipped its hand yet, but we can expect they'll want to impose some type of regulations in this area in 2014 or 2015. We don't know whether that would entail limits on the number of overdrafts, amount of fees, methods of processing, disclosures, or some other type of change.  



2014 State Legislative Luncheon

Arkansas credit unions have received their invitations to the upcoming legislative luncheon at the Arkansas State Capitol on February 12, 2014. This annual event kicks off our advocacy efforts at the Arkansas State Legislature, and it's an excellent opportunity for credit union leaders to meet their senators and representatives in a relaxed and friendly setting.

We need your attendance to ensure this event is a success for credit unions in Arkansas. The event will be held on the first floor of the Arkansas State Capitol Hill Building from 11:30 a.m. – 1:00 p.m.


54th Legislative Session and Title 42

The second half of the 54th Legislative Session begins on Monday, February 3. Issues front and center are HB 2506, relating to an amendment to the small claims procedure; SB 582, relating to service liens on personal property (Title 42); and SB 1081, amending an act relating to vehicle liens.

The issues surrounding SB 582 and Title 42 are a little alarming to not only vehicle owners but dealerships and lawmakers because of fraud and abuse. One simple scenario quoted in The Journal Record illustrates the problem well:  ". . . someone will arrange to take a vehicle from a car dealership under false pretenses and deposit the car with an accomplice running a repair shop. That second person will immediately file a lien on the vehicle, ostensibly to pay for repairs. The state law lacks enforcement on oversight measures, however, so the original owner has little recourse [without significant legal fees] to reclaim the vehicle. In short order, the vehicle's title is passed on to the scammer."

One Oklahoma City dealer said he loses an average of one car per month due to Title 42 abuse. "[The cars are] being legally stolen," he said. "I can take a tow truck to haul away your car while you sleep, and then file a Title 42 lien process, and you’d have a hard time proving it was stolen."


A Banner Year

Yes, to be a tad cliché, it's been a banner year and will continue to be so until we no longer hear the drumbeat in Congress for tax reform that might include credit unions. Here are just a few of the active advocates for the "Don't Tax My CU" campaign, educating their members on a major issue for credit unions.

Concho Valley CU

Lone Star CU, Dallas

Prestige Community CU

Upper left, Concho Valley Credit Union, San Angelo, Texas

Upper right, Lone Star Credit Union, Dallas, Texas

Bottom left, Prestige Credit Union, Dallas, Texas



CUNA GAC and Cornerstone Events

One of the priority events for 2014 happens Feb. 23-27 at the CUNA Governmental Affairs Conference in Washington, DC. This is one of our biggest and best opportunities to make our collective voices heard loudly on Capitol Hill, with somewhere in the vicinity of 4,000 credit union professionals attending. What an impact we can make! While banks are crowing loudly against the competition, our powerful credit union voice can drown them out.

In addition to the Hill visits, your Cornerstone League events include:

Feb. 23 & 24            Hospitality Suite at the Renaissance Hotel

Feb. 24                   Special legislative briefing

Feb. 25                   Spirit of Washington Dinner Cruise

For information on the Cornerstone League hotel block, please contact Cookie Dorsey at or (469) 385-6635.

For more information about the conference or Cornerstone events, email Gretchen Ziegler at or call (469) 385-6484 or (800) 442-5762, ext. 6484.

CUs Stepping Up and Stepping Out

Cornerstone PedometerAnybody who's ever been to DC to meet with lawmakers knows how much walking is involved from one building (or one office) to another. In honor of all that foot traffic, this year we're doing something fun. We're distributing pedometers—yes, pedometers!—to all attendees.

Get your pedometer with the Cornerstone logo at the legislative briefing on Monday, Feb. 24, and track your steps throughout the week. At the end of the conference, as people turn in their meeting follow-up forms, we'll ask you to let us know how many steps you took. The person accumulating the highest number of steps will win a $50 gift card.

Cornerstone CUs Strengthen the Economy

If you're visiting your lawmaker soon, you'll want to have your arsenal of good news ready. Here are some stats about Cornerstone credit unions—things they do every day—worth bragging about!

  • Wrote 11,302 new loans every business day;
  • Added over $118 million in new money to their local economies every business day through wise lending to members; 
  • Added $8.4 million to their local economies every single day by buying products and services to support their operations; 
  • Increased their headcount by three percent by adding 747 more people to their staff of over 26,000 employees; 
  • Spent more than $1.5 billion employing those 26,000 people at a time when banks were closing down operations and terminating employment; 
  • Supported federal, state and local governments by paying over $227.8 million in taxes; 
  • Spent nearly $31 million training and educating their staff at conferences and meetings; 
  • Spent over $118 million advertising and promoting their services to their both members and non-members; 
  • Hired additional help outside of their payroll, purchased services such as information technology, and spent over $260 million for those professional services. 

Source:  Rick Grady, VP Research, Cornerstone Credit Union League, January 14, 2014.