Big Issue In New Year Was Raised During Last Year

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For the credit union trade associations, they'll be spending a lot of time in 2006 dealing with thorny issues that arose in 2005.

Case in point is demonstrating that credit unions continue to deserve the federal tax exemption. That issue was raised during a November 2005 hearing by House Ways & Means Chairman Rep. Bill Thomas' (R-CA) during which Thomas put NCUA Chairman JoAnn Johnson on the spot by demanding some evidence of credit union claims that credit unions remain true to their "original mission" and are providing services to underserved and low-income markets. Credit unions and their trade groups responded by saying the data is available, but has not been collected in the form Congress is requesting.

CUNA Spokesperson Pat Keefe said that in addition to working to collect such data, the trade group will also work to showcase other work being done by credit unions to serve such markets, including CUNA's Home Loan Payment Relief (HLPR, pronounced "Helper") program, which was rolled out around the same time as the hearings in the House. Under that program, credit unions commit to offering mortgages to qualified borrowers with an APR one percentage point below prevailing rates. As of late December, credit unions had pledged more than $1 billion to the program.

CUNA's primary legislative goal remains passage of the Credit Union Regulatory Improvement Act (CURIA), which has grown to more than 100 co-sponsors and which seeks to provide charter enhancements and more flexibility in serving members. Its fate as a standalone bill remains shaky, and Keefe said CUNA would be looking for opportunities to attach provisions of CURIA in other legislation hoping to enact the legislative language sooner.

Of course, one other priority for all of the CU trade groups in 2006 is an annual issue: responding to the banking industry's challenges, including a new lawsuit over FOM (see related story, page one). Keefe said CUNA will continue to "counterpunch banker attacks" and continue with the argument that bankers aren't seeking "fairness" but the removal of CUs as financial alternative to consumers.

"There is little doubt to us that the bankers see an opportunity to attack the credit union tax status and are taking whatever advantage they can from that opportunity," Keefe said.

For the National Association of State Credit Union Supervisors (NASCUS), which is headquartered in Washington but more focused on state capitals, it will be placing its emphasis on strengthening of corporate governance practices, according to NASCUS President Mary Martha Fortney.

Fortney said the creation of strong governance standards has been a NASCUS interest for some time and has led to the formation of a Corporate Governance Task Force to formalize examination standards of state-chartered CUs related to board education, diversity and the selection process. The standards could then be modified per each state's regulations, she said. For example, there are no present guidelines on board term limits. Increased standards will strengthen boards and ease the burden on examiners, she said.

Fortney said strengthening governance will also serve Ways & Means Committee guidance on transparency and accountability in the credit union industry. Fortney said NASCUS will continue with its educational program with 15 seminars and schools set for 2006. Classes on Member Business Lending (MBL) will continue, as will a partnership with CUNA to teach the intricacies of the Bank Secrecy Act (BSA). Fortney said NASCUS will carry on with the traditional task of supporting state charters and monitoring federal preemption of state regulating authority.

National Association of Federal Credit Unions (NAFCU) Manager of Public Relations Rebecca Somers said defending the CU tax exemption is the No. 1 priority for the association, but regulatory relief is close behind. Somers said she doesn't see much interest in repealing the tax exemption in Congress but recognizes the importance of keeping Congress informed.

Somers said NAFCU is also serious about transparency and accountability issues raised during the Thomas hearings, but also noted that CUs aren't hiding the relevant information. Somers said that 5300 Call Reports and IRS Form 990 are publicly available through NCUA's website, and some credit union's, including Navy Federal, also offer that data through their own sites.

"The information is there for the taking," she said.

Somers said NAFCU will seek to improve its existing relationship with secondary mortgage giant Fannie Mae. Somers said a person or family of modest means has a better chance at a home loan through a credit union due to different regulations and other programs, such as subprime lending.

Somers said using the Fannie Mae loan products are a benefit of NAFCU membership and expands lending opportunities.

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