Member Control is 'Strength and Beauty' of Credit Unions, Senator Sanders Says
WASHINGTON -- "The strength and beauty of credit unions is they are owned and controlled by the members," Senator Bernie Sanders (I-Vt.) told participants in NAFCU's 2007 Congressional Caucus.
He may have left the House for the Senate, but his vigorous support of credit unions and criticism of the big banks has not changed. "I want to see credit unions grow and flourish because they are good for the working people of Vermont and the working people of America," Sanders said.
Credit unions are vitally important to helping low-income families get a leg up, he continued. "You understand that while some talk about a booming economy, five million more people have slipped into poverty and the middle class has begun to shrink," Sanders stated. These are the people most susceptible to the "outrageously high rates" of predatory lenders, he pointed out. "That should not be happening in the United States."
The way credit unions are constantly under attack from the bankers, he added, "You must be doing something right."
No matter the arguments of the banking groups against the credit union tax-exemption, Sanders said, "Let me tell you, as long as I'm a member of the United States Senate, they are not going to tax credit unions...The American public would be much better off if the United States Senate looked at the tax breaks...and general rip offs by the big banks." Sanders cited many of the statistics from the recent General Accounting Office report, which he had requested, including that banks have grown at twice the rate of credit unions and that the lost revenues from the credit union tax-exemption are a pittance in comparison to the big bank tax breaks.
Ways & Means Committee Member Vows to Defend Tax-Exempt Status
WASHINGTON -- Congressional partisanship invaded the credit union sphere as Democrats took the stage at NAFCU's 2007 Congressional Caucus promising not to tax credit unions, while Republicans warned participants of the tax increases under the Democratic majority that could reach credit unions.
"I come from credit union country. Where I come from, people work for a living," House Ways & Means Committee Member Phil English (R-Pa.) said. Noting the improving economy yet greater income disparities, he said, "I've been a supporter of the credit union movement and I believe the credit union movement has a particular salience today." With savings at an all-time low, he explained how he and others are working to establish automatic individual retirement accounts and similar savings vehicles for children at birth.
English said that, as a Ways & Means subcommittee ranking member, he was "looking to continue tax policies that encourage economic growth." He said the subcommittee was debating pro-growth measures as Congress already has levied the second largest tax increase in American history.
English added that, generally speaking, he is interested in removing the tax on savings. However, in the current, Democrat-controlled Congress, he warned, "We need to be prepared to stand tough against any repeal of the tax-exemption of credit unions."
Tyner Named 2007 Paul Revere Award Winner
WASHINGTON -- George Tyner, secretary of the board of Direct Federal Credit Union, was recognized as NAFCU's grassroots activist of the year with the 2007 Paul Revere Award during NAFCU's Congressional Caucus.
In presenting the award to Tyner, NAFCU Senior Vice President of Government Affairs Dan Berger said, "When it comes to participating in the political process, this man does it all. He exemplifies what it means to ride out front, trumpeting the position of the credit union community."
Tyner has been a member of Direct Federal Credit Union of Needham, Mass. for 38 years and volunteered on its board of directors since 1988. He also currently serves on NAFCU's Legislative Committee. He has been particularly helpful to NAFCU's legislative staff with regular updates on his conversations and communications with lawmakers on Capitol Hill.
The Paul Revere Award is presented annually, recognizing an individual who regularly and effectively carries the credit union banner just as Paul Revere did in his day, based on grassroots contacts reported to NAFCU.
CUs Help Members, Politicians in Good Times and Bad
WASHINGTON -- Congressman Jon Porter (R-Nev.) said credit unions have helped him out and that is why he helps them when he can.
"I'm currently a member of two credit unions. I say that out of due respect," he commented. "I've been a member of these credit unions for a long time and they've helped me in good times. They've helped me through the bad times." Porter quipped, "Credit unions provide something really unique and that's customer service."
But more than financially, his local credit unions have helped him on the campaign trail. For the last 20 years, he estimated, credit union people, like NAFCU Vice Chair Brad Beal, CEO of Nevada Federal Credit Union, have been volunteering on his campaigns. The first people he listens to, Porter said, are those who are out in the heat of August in Nevada pounding the pavement and knocking on doors for him. He also emphasized being involved in the political action committee and holding fundraisers for candidates.
This type of work helps credit unions politically in staving off attacks to the tax-exemption and on other issues. "This Congress is going to be looking at you to raise new revenues," Porter warned.
Johnson: Vigilance Key To Credit Union Success In Many Areas
WASHINGTON -- NCUA Chairman JoAnn Johnson said that credit unions must remain vigilant on the impact of the subprime mortgage market problems and the tax-exempt status of credit unions while lending their voices to these and other causes.
Credit unions must keep a keen eye out for the side effects of the subprime crisis on their balance sheets as well as letting their members of Congress know that "credit unions are not part of the problem but part of the solution." Johnson told the attendees of NAFCU's Congressional Caucus that she did just that when testifying before Congress earlier this year.
Credit unions also need to be vigilant when it comes to talk of removing their tax-exemption. Johnson commented, "I commend you for your quick and effective action." Last month Treasury released a corporate taxation backgrounder that mentioned the credit union tax-exemption as a possibility for replacing funds lost to a lower corporate tax rate. Treasury has since clarified that the backgrounder was informational and did not advocate the taxation of credit unions in a letter to NAFCU and in a meeting.
That was a good outcome, Johnson noted, but advised credit unions to "stay on guard."
She highlighted NCUA's Member Service Assessment Pilot that provided information on credit union services to the underserved. Johnson said that while the report was "very well received," the current "more consumer oriented Congress" could seek further information or tie it to the tax-exemption.
Thus transparency will be an overarching theme. In that vein, NCUA has issued some proposed rules regarding member access to books and records, reincorporating the bylaws into regulation, and merger compensation disclosure.
Johnson applauded the credit union movement for being vigilant over NCUA's rulemaking process. She said that NCUA would soon be coming out with its final rule on member access to books and records, which is certain to be better than the proposal because of industry input. The other rules will likely take more time, she added.
CURIA, and in particular the risk-based capital scheme, is another area where credit unions should vigilantly pursue a more accurate measure of capital, Johnson said. "What we want is comparability. Ours isn't going to be better but its going to be comparable," she stated.
Finally, Johnson urged NAFCU to remain vigilant on the private insurance issue. "I believe that you've had a very clear headed approach on this issue and I know you've been vocal about it," she said, referring to NAFCU's comment letters, op-ed, and other opposition to private primary deposit insurance. She said neither the adequacy of reserves nor the diversification is comparable to deposit insurance backed by the federal government and consumers receive more protection in cases of involuntary termination of coverage.
SARs, CTRs Have Variety of Uses, FinCEN Director Tells NAFCU Audience
WASHINGTON -- Financial Crimes Enforcement Network Director James Freis touted the importance of financial intelligence gleaned from suspicious activity and currency transaction reporting.
"Tomorrow, as you know, is 9/11, 2007. Over the past six years, members of the financial industry such as yourselves have taken unprecedented further steps to support government efforts to try to prevent terrorist attacks in part by helping us harness the value of financial intelligence," Freis told the participants of NAFCU's Congressional Caucus last week. "For credit unions and other depository institutions, this means primarily the Suspicious Activity Reports and the Currency Transaction Reports, which you do in a diligent way and devote significant resources."
These filings help primarily in four ways: tipping off suspicious activity; providing identifying information in an ongoing investigation; identifying trends; and deterring criminal behavior or at least making it more difficult. FinCEN's database allows the agency and law enforcement to see a wide array of activities that no one institution could detect.
However, Freis acknowledged that credit unions and others complain of the regulatory burden these filings impose. Treasury Secretary Henry Paulson has announced an "efficiency and effectiveness" initiative, including FinCEN. Freis said, "The first thing we announced is matching risk-based examination to risk-based obligations." FinCEN will also work to narrow the definition of a money services business, business with which imposes additional regulatory burden.
"Another thing we're doing is making regulations more intuitive," Freis said. FinCEN will work on a new chapter in the Code of Federal Regulations to include one general part and separate, specific sections for each industry.
Finally, FinCEN is working to share, to the extent it can, how much SARs and CTRs aid law enforcement investigations.