SENATE REJECTS STUDENT LOAN
BILL AS JULY DEADLINE LOOMS
WASHINGTON-The Senate has rejected dueling Democrat and Republican proposals to extend the low interest on federally guaranteed student loans as the July 1 deadline to double the rate to 6.8% draws closer.
Both Republicans and Democrats believe the subsidized Stafford loan rates should not be doubled from the current 3.4%. But they cannot agree to how to pay for the $6 billion bill.
Consumer groups are lobbying hard for the student loan bill because seven million young people would see an increase in their monthly payments if the rate goes up. The rate is also a key benchmark for the student loan market and helps sets the rate on private loans that are proliferating among credit unions.
The Democratic plan proposes paying for the bill by raising the Medicare and Social Security payroll taxes on high-earning stock holders of some privately owned companies. Republicans oppose the measure.
The Republicans propose to pay for the bill by getting rid of a preventative health fund that was created in the health care bill. Democrats oppose this and the proposal has no chance of getting though a Democratically controlled Senate.
The Senate was out recently for its annual Memorial Day recess and will have to move fast when it returns o prevent the student loan rates from doubling July 1.
CANDIDATE GETS BACKING FROM CA/NV CU SUPER PAC
SAN BERNARDINO, Calif.-In seeking the House seat in the state's newly formed 31st Congressional District Pete Aguilar, the mayor of Redlands and the former head of government relations for Arrowhead Central CU has a major ally, a new Super PAC formed by the California & Nevada CU League called Restoring Our Community.
Super PACs, better known for their assistance in this year's presidential primaries, were created under the 2010 Citizens United court case and allow corporations and individuals to send unlimited amounts on behalf of candidates-as long as it is not coordinated with the candidate's campaign.
In this case, the California/Nevada league created the new Super PAC with a $250,000 contribution April 27 and the PAC had $325,000 to spend as of May 25, according to Federal Election Commission records. Aguilar's own campaign spending-$231,000 as of May 16-has been overshadowed by assistance from the leagues' Super PAC, according to FEC reports.
The credit union community has also come out strongly for the former credit union exec, with contributions coming in from executives at Xceed Financial FCU, BECU, San Mateo CU, Cal Com CU, Alaska USA FCU, Alta Vista FCU and CUNA, among others.
Aguilar, however, has a steep road to climb if he candidate survives next week's non-partisan primary with a likely opponent Republican Gary Miller, who is a seven-time incumbent in the former 42nd District.
Miller, a senior member of the House Financial Services Committee who is championing the cause of the home mortgage deduction, has a powerful ally too, the National Association of Realtors, which has already spent $1.2 million to help his reelection. In squaring off against the Realtors, the credit unions have picked one of the best-financed interest groups in Washington, with the group expected to spend more than $10 million this election cycle.
NCUA ELIMINATES REGFLEX,
EASES BURDEN ON ALL CUS
ALEXANDRIA, Va.-The NCUA Board has extended most of the provisions of the agency's regulatory flexibility, or RegFlex, program to all credit unions, which had been reserved for the healthiest credit unions.
The move allows all federal credit unions to: make charitable contributions to charities of their choosing; accept non-member deposits, up to the greater of 20% of shares or $3 million, from local governmental entities or other credit unions; use a six-year time horizon (instead of three years) to partially occupy unimproved property acquired for future expansion; and obtain certain exceptions to constraints on purchasing whole loans from other federally insured credit unions.
It will also allow all credit unions to engage in the following activities, subject to certain net worth requirements: enter into borrowing-repurchase transactions in which the purchased securities have maturities exceeding the maturity of the borrowing-repurchase agreement; purchase private-label commercial mortgage-related securities; and invest in zero-coupon securities.
WASAU POSTAL ECU FAILURE
MAKES 8 SHUTTERED, SO FAR
ALEXANDRIA, Va.-There has been eight credit union failures so far this year, ahead of last year's pace when there were 16 failures the whole year.
NCUA said there were seven failures in the first quarter, and last week's failure of $10-million Wasau Postal Employees CU was the eighth.
The biggest failure of the year was Eastern New York FCU, a one-time $60-million credit union. Next biggest was Saguache County CU, a one-time $24-million Colorado credit union.
A credit union is considered to have officially failed if it is liquidated or merged with NCUA assistance.
Last year's 16 failures was down from 28 in both 2009 and 2010.
