2015 State Roundup
Published March 6, 2015 12:46 PM
|
Updated June 1, 2021 1:27 PM
1 Min Read
Credit Union Journal asked the state leagues what their top priorities will be when their member credit unions descend on Capitol Hill to lobby their lawmakers during CUNA's Governmental Affairs Conference this week.
ALABAMA/FLORIDA
The credit union tax exemption, data security, and regulatory relief are the top issues for Alabama and Florida credit unions during the CUNA GAC visits. With comprehensive tax reform on Congress' agenda, preserving the tax exemption and educating lawmakers is always a top priority. In 2013, the "Don't Tax My Credit Union" campaign was successful. Many of our Alabama and Florida lawmakers gained a greater understanding of what the tax exemption means for members. This is a good baseline for the tax discussion this year. We hope to build on our past efforts to educate the lawmakers on the credit union tax exemption by continuing to show the value credit unions bring to members. Taxing credit unions is taking money out of the member's pocket. We also hope to show that credit unions remain committed to the country's economic recovery by doing things the right way.
With so many merchant data breaches in 2014, it's imperative that Congress updates the data breach laws. We saw last year that Target and Home Depot had major breaches that cost credit unions millions even though they didn't cause the breaches. The Anthem breach this year might be bigger than Target and Home Depot. Financial institutions should be able to inform consumers when and where a breach occurred, and merchants should be responsible for reimbursement to financial institutions when they don't protect consumers' information.
Progress on regulatory relief is incremental. Last year, Congress failed to pass privacy notice reform, which would have relieved credit unions from the duty of sending an annual privacy notice if nothing had changed. We have to continue to educate lawmakers that small pieces of relief can make a big difference.
ALASKA
The Alaska League will be discussing a number of issues with our Congressional delegation during the GAC. The top three are as follows: taxation, merchant data breaches, regulatory relief.
On the taxation issue we will continue to educate our delegation on the potential impact of a federal income tax on Alaska credit unions and the cost to Alaska credit union members. CUNA estimates a tax cost for Alaska of $15,744,261 as of September 2014. As part of our briefing to the delegation we will provide them with the overall member value transfer Alaska credit unions provide to their members through reduced fees, lower loan rates and higher deposit rates. The value transfer through September 2014 was $78,794,412, $108 per member or $205 per member household. Taxing credit unions would be a taxation of members and it would reduce the amount of the member value transfer.
Credit unions are advocating for a strong national data protection and consumer notification standards with effective enforcement provisions and applicable to any party with access to important consumer financial information. These standards would be applied to merchants to strengthen the payment systems network and protect consumer information.
Credit unions have been subject to numerous regulatory changes after passage of the Dodd-Frank Act in 2010. This bill was intended to reel in Wall Street and big banks based on the financial collapse. Credit unions were repeatedly told that they were not the problem with the financial collapse; however five years later the number of regulatory changes introduced has had a dramatic impact and cost to credit unions and their members. Credit unions are tackling regulatory relief through specific bills to remove the unnecessary regulatory requirements or by changing the Administrative Procedure Act to a more stringent process to improve how federal agencies write the regulations (H.R. 185).
All three of these issues are making good progress in this Congress.
ARIZONA/COLORADO/WYOMING
The top priorities for the Mountain West CU Association and its member credit unions are:
- Data Breaches Data breaches continue to be a growing cost for credit unions. Credit unions bear all the cost associated with a data breach, and we believe a national standard should be set up. In addition, we believe merchants should pay their fair share of the cost associated with a breach, as well as proper notification to consumers and financial institutions when a breach occurs.
- Regulatory Burden The regulatory burden on credit unions continues to grow, and Congress should pass common sense regulatory relief to allow them to better serve their members. Issues such as member business lending increase, elimination of unnecessary privacy notifications and exam fairness are among those that will help credit unions.
- Credit Union Difference We have several freshman members in our state delegation, and many new legislative staff. Since this will be our first meeting this Congress, we will be using the opportunity to educate them on credit unions.
ARKANSAS/OKLAHOMA/TEXAS
There are four issues we are focusing on: data security, CFPB reform/regulatory reform, of course protecting the tax exemption, and member business lending. Cornerstone has been active in meeting with elected officials and their staffs and communicating on all of these issues and will continue to do so. This week we want to educate members of Congress on all of these issues. We want them to understand what happens to a credit union as the result of a data breach. We want them to appreciate the burdens credit unions are under from the CFPB and share some of the specific regulatory burdens. We want to express the importance of the tax exemption to the entire system. We want to explain that credit unions are willing and able to help small businesses gain access to capital via member business lending legislation. We have been working on MBL legislation for a long time, so it is time to get it done. Hopefully we will walk away with good support from the members of Congress.
CALIFORNIA/NEVADA
Our top three priorities are data security, charter enhancements/regulatory relief, and preserving the tax status.
Data Security California is one of 48 states with a standing notification law. Ensuring that Congress protects our state's ability to have our own standing law, while establishing a national standard is among our top priorities. Congress will hopefully establish a notification law as a floor, not a ceiling. Last session, few committees paid attention. This session, everyone in Congress is talking about data and cyber security. The states are pressuring Congress to act.
Charter enhancements/regulatory relief Last year's victory with the IOLTA bill was small and symbolic. We plan to build on this process by further advancing several items that will enhance the our member's ability to serve their members. That's the long-term game and we're keeping our eyes on the prize. California and Nevada have consistently led the nation in co-sponsors on member business lending, an issue we take to heart. Someone was once quoted as saying "a marathon, not a sprint." In the last Congress, 75% of the California delegation and 100 percent of the Nevada House delegations were MBL co-sponsors. Did this lead to the bill's passage, no. Did it make sure that everyone in our delegation understands the importance of this and our other measures absolutely. We can't get to 218 in from California and Nevada alone, but we're committed to doing our part. It's obvious conversations are happening in the halls of Congress on enhancing business lending for credit unions. Being preserved in then-Chairman Camp's bill was a big success. It took more than a million contacts to Congress to get there. It would be great to see the nation unified with 10 million contacts.
The GAC is about grassroots voices. If credit union leaders do not carry the message to D.C. then our adversaries (not just banks) carry the message for us. The power is not in packing 25 credit union leaders into a small congressional office; rather it is moving credit unions from an afterthought to a forethought. Credit unions need to be there from the beginning. During three recent hearings of the Senate Banking Committee (including two with CUs being the direct topic), credit unions were roped in with community banks. We need to change the congressional vernacular. We're not others, we're credit unions. Our message is about strengthening credit unions which is achieved through grassroots voices. Lobbying, that's the impact of those voices.
CONNECTICUT
The top issue for Connecticut's credit unions this year remains preserving the credit union tax status. Educating members of Congress about the credit union structure and mission is vital. One high priority is encouraging action to hold merchants accountable for data breaches. Congress needs to enact legislation that elevates the data security standards for merchants. Another area of importance is removing barriers and easing the regulatory burden that has hit credit unions in recent years. The regulatory burden under which credit unions must operate stifles their ability to effectively serve their members.
It was encouraging to see data breach notification legislation introduced by President Obama in January. While the proposal would strengthen obligations companies have to notify customers of a breach, there is still more work to be done to hold merchants accountable to the same security standards that credit unions are held to. It is also encouraging to see the Senate Banking Committee seeking real-life regulatory burden examples of how the growing regulatory burden results in reduced service for members.
We are optimistic that the GAC and our continued efforts will shed more light on these matters and encourage further development on issues that directly affect consumers.
DELAWARE
Two major issues we need to focus on are data breach and security; and loans to small business owners. With respect to data breaches, this is a serious problem for credit unions as they incur big losses when this happens and we think that merchants and retailers should be more responsible in complying with data protection standards. We also need to establish more parity with respect to making loans to small business owners and entrepreneurs. A key component of this issue is to lift the caps on loans that credit unions can make to small businesses.
GEORGIA
As is probably the case with most states, the highest priority of discussion topics on Capitol Hill will be protecting the credit union tax exemption. With five new offices to cover, Georgia credit union representatives will be spending time with new staff educating them about credit unions and the value they provide in helping people afford life. Beyond preserving the current tax status for credit unions, the three main topics the Georgia contingent will focus on will be data security legislation, reducing the regulatory burden placed on credit unions and removing barriers to credit union member service (i.e. member business lending, supplemental capital, privacy notice and Federal Home Loan Bank membership for privately insured credit unions).
HAWAII
For Hawaii Credit Union League and credit unions in Hawaii, our top three congressional priorities are (1) preserving the credit unions' tax exemptions, (2) reducing regulatory burden, and (3) holding retail merchants accountable for data breaches.
Because all credit unions in Hawaii are federally-chartered, they are exempt from federal income taxes under Section 501(c)(1) of the Internal Revenue Code. In addition, under section 122 of the Federal Credit Union Act, federal credit unions are exempt from state income and franchise taxes. The 114th Congress is looking for comprehensive tax reform, so we must work hard to preserve those exemptions.
Many of the mergers of credit unions in Hawaii since the Great Recession were attributable in large part to the creeping complexity of regulatory compliance. We need to seek a legislative solution to ensure that NCUA, CFPB and other federal regulators exercise greater regulatory flexibility especially for smaller institutions. This would allow such institutions to devote more time to member service and business development.
Studies of recent data breaches involving Target, Home Depot and other major retailers have found those breaches were preventable. Yet credit unions and other credit and debit card issuers were left "holding the bag" for all costs of card replacement and guarding against unauthorized use of compromised cards. Companies responsible for data breaches should be held liable for those costs.
IDAHO
Idaho's credit union representatives will focus on conveying the importance of regulatory reform to reduce the compliance burden on credit union when they meet with lawmakers. Members of the Idaho Congressional Delegation generally favor limited regulation and have been supportive of our advocacy efforts. Specifically, we will seek support for changes in the structure of the Consumer Financial Protection Bureau and in how the Bureau receives its funding. Idaho's credit unions will also seek support for national data protection standards and shared responsibility for those standards among all payment system participants. In addition, we again will convey what makes credit unions different and the concrete benefits they generate for their members and communities.
ILLINOIS
Nearly 70 credit union activists from Illinois will be attending the CUNA Governmental Affairs Conference as part of our ongoing advocacy efforts. The top three issues we will focus on when meeting with lawmakers include: maintaining the credit union tax exempt status, regulatory relief, and data security issues. A key component of the Illinois Credit Union League's advocacy efforts continues to be focused upon lawmaker education. Venues for these efforts include: in-district meetings, credit union tours, chapter legislative appreciation events, as well our state legislative lobby day. The results we hope to achieve relate to enhanced awareness of our core issues and well as developing relationships between credit union officials and their elected officials. Advocacy has been, and will continue to be, a primary focus of the Illinois League and Illinois credit unions.
INDIANA
This year, Indiana's credit unions will be talking about three critical issues data security, protecting the tax exemption, and the need for regulatory relief. Retailer data breaches are costing credit unions and their members millions of dollars and Congress must act to hold retailers more responsible for protecting consumer information and for paying the costs when they are breached. Congress will continue to look at tax reform and the tax exemption remains as important as ever to credit unions. Finally, a real and pressing threat to credit unions is the crush of ever-increasing federal regulations. We have received good feedback from our lawmakers on all of these issues, especially regulatory relief, during visits over the last year and we hope to continue to make progress toward common-sense solutions that help credit unions and their members. Indiana's legislators, like most, love to hear from people from home and are interested in finding ways to help credit unions serve their members and communities.
IOWA
There are several issues Iowa will be discussing with its delegation, but the three main issues are the credit union tax status, data security and privacy notification. Out of these three issues, privacy notification appears to be the most likely issue that Congress can move forward right now, and we hope to help get movement on this common sense issue in the near future. In addition, eliminating burdensome regulation has overwhelming bipartisan support, and it would be a great way for Congress to show they can work together on regulatory reform. Beyond the legislative issues, three of the six members of Iowa's delegation are new to Congress, and GAC provides a great opportunity to visit with the Senators, Congressmen and staff. While in DC, we will provide information about what makes Iowa's credit unions different and how we are improving the financial lives of more than one million Iowans everyday.
KANSAS
The top three issues on the minds of Kansas credit unions as they head to Capitol Hill are reducing the regulatory burden, stopping merchant data breaches, and modernizing the Federal Credit Union Act. All three issues have one thing in common making it easier for credit unions to serve their members each and every day. Increasingly complex compliance requirements and the costs tied to merchant data breaches take resources directly away from serving the membership. Modernizing the Federal Credit Union Act will ensure that credit unions have the flexibility they need in the future to meet the needs of the members. In addition, our visits will highlight the importance of credit unions to the Kansas financial services marketplace. We have seen growing support for reducing the regulatory burden for credit unions in sponsorships of legislation to reduce or remove duplicative and unnecessary regulation.
MAINE
The top three issues currently for Maine credit unions at the federal level are member business lending, regulatory burden, and data breaches. We have had strong support from our delegation on member business lending in the form of co-sponsorship of various MBL bills, including Sen. Susan Collins being the first Republican co-sponsor of the original MBL legislation several years ago. Sen. Angus King and U.S. Rep. Chellie Pingree have also been co-sponsors in recent years; U.S. Rep. Bruce Poliquin is new to the House, and we have met with him to explain this legislation can help credit unions further assist small businesses in Maine. Regulatory burden is another frequent topic in communications and interactions with members of our Delegation and their staffs. In December, Sen. King was a lead sponsor and helped to successfully pass IOLTA legislation. This legislation was spurred in part from previous conversations we had with Sen. King on this issue, and we are appreciative in the passage of this bill. We also have had ongoing conversations with Sen. Collins, who chairs the Committee on Aging, about the significant focus Maine credit unions place on preventing financial abuse of our elders across Maine. Finally, Sen. King has also referenced the costs of data breaches and has used data supplied by the league in several speeches on this topic in the Senate and elsewhere. We anticipate discussing these and other issues and topics during at our Annual Breakfast for Maine's Congressional Delegation held in conjunction at this year's GAC.
MARYLAND/WASHINGTON, DC
The top three issues the MD I DC Credit Union Association has been engaging our Delegation on over the last several months and will continue through GAC:
- Data breaches and cyber security legislative solutions and general awareness
- Tax reform proposals and maintaining the industry's tax exempt status
- Regulatory Relief issues including field of membership, supplemental capital and on-going discussion of amended RBC regs from NCUA.
In terms of progress, all our members have a great awareness regarding data breaches but there is no consensus on a legislative fix, especially as the retailers and trades push back. However, as more breaches occur, that will likely help in terms of increased hearings and on legislation which will include more transparency and public disclosure when breaches occur.
We don't see much appetite from our delegation for comprehensive tax reform, but to the extent business taxes get put on the table, no office sees the CU tax status as being affected. In fact one of our MD Senators who sits on a Senate tax reform working group, told us point blank that "credit unions have nothing to worry about."
On regulatory relief, we see increased interest in reg. relief issues with the change-over in Congress overall, however it is doubtful that any legislation would move forward in the short term, this would be more about building the case moving forward, which includes the expansion of field of membership and a supplemental capital bill. The amended RBC regs are still an important discussion point if not quite the front burner issue it was in the spring on 2014.
MASSACHUSETTS/NEW HAMPSHIRE/RHODE ISLAND
Data breach will be a core topic. Our credit unions want to see progress on this issue. Too many consumers have been put at risk because of breaches. We have a working group on the issue and will be delivering some core principals we would like to see develop in legislation. We have already started the dialogue with our delegation and hope given the recent Congressional hearings on this topic that the timing is good for our message to resonate.
We will also focus on the importance of more flexibility for Member Business Lending. Here in New England in particular, legislation that exempts one to three non-owner occupied mortgages from the cap is critically important. Credit unions are the only institutions where these loans are classified as business loans.
We will also update our delegation on overall reg relief and, in particular, NCUA's status on risk-based capital. We do not support a separate interest-rate risk rule from NCUA and will stress that the regulator has sufficient administrative powers already.
Of course, we'll spend some time giving lawmakers an overall update on the health of credit unions in each of our states. We think that's important. Given the regulatory environment we are in, we want our lawmakers to understand that through all the economic challenges in the country, credit unions continue to lend, build capital and serve members. We do not need more regulations. We need to put our resources into efforts like building financial literacy, not complying with more regs.
MICHIGAN
The Michigan Credit Union League's Government Affairs team will land in Washington, D.C., with three important issues to discuss with lawmakers: data breach liability, regulatory relief and the tax exemption.
These issues are key for credit unions going forward. It's all about providing high quality, low-cost services to members.
In several major data breaches over the last few years, Michigan credit unions have spent more than $1.6 million to serve members and replace cards.
What credit unions and consumers really need are strong national data protection and consumer notification standards to force retailers to do the right thing for their customers.
Regulatory relief discussions will be focused on full exemption from regulations and oversight by the Consumer Financial Protection Bureau, as well as modernization of the Federal Credit Union Act. Specific areas targeted for FCUA reform are capital reform, enhanced business lending, expanded investment authority and membership reforms.
Credit unions didn't cause the problems that led to creation of the CFPB, but are paying a huge price in both staff time and financial costs. Unfortunately, we believe the steady drumbeat of regulations is leading to consolidation of the industry, which will ultimately limit consumer choice. Eliminating CFPB oversight over credit unions and revising the Federal Credit Union Act will work together to expand choice for consumers.
Finally, no visit to Washington is complete without discussion of the tax exemption. MCUL strongly urges lawmakers to continue to support this exemption, which benefits consumers by more than $8 billion annually.
MINNESOTA
For 2015, the top issues for the Minnesota Credit Union Network (MnCUN) to discuss with lawmakers at GAC are:
- Preserving the Credit Union Tax Status the credit union tax status is based on their not-for-profit structure and mission of providing access to credit and promoting thrift and that non-members benefit as well because credit union competition helps keep bank savings rates higher and loan prices lower.
- Protecting Credit Union Members from Merchant Data Breaches financial institutions, including credit unions, bear much of the costs when a merchant data breach occurs. Congress needs to enact legislation that holds merchants to the same data security standards as credit unions, requires merchants to reimburse credit unions for data breach costs and allows credit unions to disclose where a data breach has occurred when notifying members.
- The Need for Patent Reform vaguely-worded demand letters have been used by patent trolls to entice small financial institutions, including credit unions, to enter into unnecessary licensing agreements and royalty payments even though they have simply purchased a product from a legitimate vendor and used it as intended. There should be heightened requirements to bring a patent case, and reforms to the process to limit discovery and make it easier for a credit union to fight back.
MnCUN is currently following developments at the federal level on both the tax status and merchant data breach issues, and patent reform is advancing at the state level in Minnesota.
MISSOURI
The key issues for credit unions in Missouri are protecting the credit union tax status, easing regulatory burden, and data security. The tax status first and foremost because it is key to the future existence of credit unions and affects all credit unions in the Show-Me State. Regulatory reform is a huge concern because all credit unions of all sizes feel the impact of growing regulatory burden from multiple directions. Data security is a priority because this issue affects credit unions and credit union members statewide. A localized retail data breach in Missouri, combined with the many national breaches, has had a continued negative impact on Missouri's credit unions and members.
Missouri federal lawmakers have introduced legislation, written letters, and voiced support in connection with many of these issues. For example, Missouri's U.S. Senators and eight U.S. Representatives all wrote to the NCUA in connection with the initial Risk-Based Capital (RBC) proposal. Credit union leaders have worked consistently with Missouri's members of Congress to highlight concerns, which is essential to move legislation and/or help prevent negative action. Meeting with our lawmakers and their staff during CUNA's GAC provides yet another opportunity to reiterate the importance of these issues and provide first-hand knowledge and examples from our credit union leaders. Missouri credit union leaders recognize that this is an ongoing process, and plan on more Hike the Hills and in-district meetings in the months ahead. We look forward to more conversation and cooperation with our delegation moving forward.
MONTANA
We were pleased to see the hearings for regulatory relief this month in the Senate Banking Committee; since Montana Senator Jon Tester serves on the committee, we will thank him for his work to keep this important issue moving. We will stress the importance of removing unnecessary regulation with both Senator Tester and Senator Steve Daines. With a large contingent of credit union volunteers attending the Hill Visits, we always spend time educating on the credit union difference and highlighting volunteers' service, this year will be no different. The Senator's appreciate the time and effort it takes to get to D.C. from our state (especially the rural parts of our state) and they love to hear what's going on in our communities back home. Montana's credit unions are actively engaged in hosting VITA (Volunteer Income Tax Assistance) programs so we will provide an update on the number of low- and moderate-income Montanans that have been served in this program.
NEBRASKA
During the CUNA GAC, Nebraska credit union advocates are asking Congress to continue their support of the credit union federal tax status, hold merchants accountable for data breaches, and reduce the ever-growing regulatory burden that credit unions are facing. These three areas have one common theme... the members! Preserving the tax status of credit unions is a benefit to not only all members but also all consumers. The rising number of merchant data breaches across the country and the costs associated with them to our credit unions reduces the resources credit unions have to provide services to their members and places members' personal data at risk. The ever-growing regulatory burden coming from Washington is good for a government that wishes to grow but crippling to credit unions that have to comply with those regulations. The more regulations that Washington place on our local credit unions, the more time and resources credit unions have to spend to comply. We believe that Nebraska's Congressional Delegation understands that a tax on credit unions is a tax on 469,000 Nebraskans. That merchants have a responsibility to protect consumer data. That there are many rules and regulations that come out of Washington that do more for government bureaucrats than they do for the consumers.
NEW YORK
New York's credit unions remain committed to ensuring that our operating environment allows us to focus on our members and how to best serve them. Specifically, at this year's Governmental Affairs Conference, we will speak to lawmakers about the importance of regulatory relief, enhancing the charter and stopping merchant data breaches. Data breaches and unnecessary regulations are costly, create member inconvenience and require staff time and effort to address. We believe that time, energy and money is better directed towards serving our members and our communities. We also know that charter enhancements, such as authorizing supplemental capital, will ensure that our credit unions can continue to invest in new products and services that create efficiencies and convenience for members. Both the state's credit unions and the Association have built strong relationships with the New York congressional delegation. We are confident that our GAC Hill visits will strengthen these relationships and build additional support for the credit union movement.
NORTH CAROLINA/SOUTH CAROLINA
Credit unions from the Carolinas have defined our priorities and shared those with congressional offices in an advance communication. We will focus on: (1) the status of tax reform and each member's statement of support for credit unions' tax exemption; (2) balanced responsibility and accountability for data security, and equitable commitment to restoring affected consumers; and (3) regulatory relief that allows our institutions to remain focused on serving their member-owners. We especially look forward to sharing our perspective with legislative staff, including four new members of the North Carolina congressional delegation, with staff of Congressman Mick Mulvaney (SC-5) author of the NCUA Budget Transparency Act and with Sen. Tim Scott (SC), now serving on the U.S. Senate Committee on Banking, Housing and Urban Affairs.
NORTH DAKOTA/SOUTH DAKOTA
The GAC delegation from the Dakotas will be the largest we have had at the GAC in the last six years with nearly 70 members, guests and staff expected to participate in our congressional visits this week.
Credit unions from across the Dakotas submitted 24 comments on the NCUA proposed risk-based capital rule, including a video comment letter produced and submitted by the Association in July 2014. Even as the revised rule awaits further comment, many of our members will be anxious to share their concerns on the proposed rule and the impact with our Senators this week, two of which serve on the Senate Banking Committee (Heitkamp, D-ND; Rounds, R-SD).
Members are also coming prepared to engage our Senators on the continuing complexities of regulatory barriers as well, specifically, sharing stories on how CFPB rules will negatively impact their members.
Merchant data breaches and cyber security are also on our short list to discuss this week. Our message is pretty clear: there needs to parity or shared responsibility across the board in electronic payment systems so that the consumers are protected on all fronts.
If given the opportunity, we will ask our members of Congress to look seriously at providing parity in the Federal Home Loan Bank (FHLB) on eligibility requirements for all lenders and allow credit unions to have access.
Finally, with tax reform on the lips of many lawmakers these days, we will strongly advocate for the preservation of the tax exemption status for the not-for-profit financial cooperative alternative to traditional banking. We need to continue to change the conversation and define the debate on this front. Because when public opinion, policy shifts, and regulations affect how we serve our members, it's worth committing our time and resources to an effort that defines the debate on our terms!
OHIO
Ohio credit unions have given us a clear picture of what they want us to fight for in Washington, D.C.: meaningful regulatory relief, equality in the consumer data security space, and supplemental forms of capital. Ohio is home to 325 credit unions, all of which are consumed by a crisis of creeping compliance complexity. Smaller-asset credit unions are finding the environment particularly difficult, as regulators take a one-size-fits-all approach. For many, legislative action on regulatory relief is a matter of survival, and this is evident by consolidation in the marketplace. Adding to bottom line pressures is the need to employ equal data security standards for all involved in the payments process. The goal is to find a legislative solution that ensures consumer data is protected. The necessary steps taken after data breaches are not only costly, but are the source of reputation risk for credit unions and an inconvenience for members. Burdensome regulation, data breaches beyond control, and the strain on income all underlie the need for supplementary forms of capital. Capital restraints limit a credit union's ability to offer newer, better, and more technologically-advanced products and services members seek. Allowing credit unions new capital avenues will help solve many dilemmas.
Progress has been limited, but the CUNA GAC serves as another opportunity to move this agenda forward. We'll look for tangible support from Ohio's delegation, and work hand-in-hand with CUNA's aggressive advocacy leadership to fight for an environment the creates growth, not restricts it.
OREGON/WASHINGTON
Ours is a message about the structure, value and impact of credit unions.
First and foremost, all consumers benefit by having credit unions in their economy. We're excited to share new information in Washington D.C. documenting the economic impact of credit unions. An independent economic firm, ECONorthwest, just completed an analysis and found that Northwest credit unions drove $6.8 billion in economic impact. For example, Northwest credit unions delivered $352 million in direct benefit value to members, and when those members reinvested that money into the economy it had a ripple effect buying power of $732 million.
The cooperative structure of credit unions is the foundation for the movement's tax-exempt status. The significant value of the benefits credit unions deliver to members and to all of society as a whole, far outweigh the benefits of any additional tax.
We'll also discuss the need for productive regulatory relief that will allow credit unions to focus more on member service.
We're concerned about the impact that merchant data breaches are having on credit unions and their members.
Credit unions bear the expense of not only the fraud, but also the cost of blocking transactions and replacing members' credit cards. For members, it's terribly inconvenient to change passwords and activate new cards. We believe the costs of a merchant data breach should ultimately be borne by the entity that caused the breach.
PENNSYLVANIA
Credit unions in the Commonwealth of Pennsylvania continue to feel the burden of increased regulatory rules and regulations. These burdens interfere with credit unions' ability to best serve their members by taking resources and time away from our primary mission. Our GAC attendees will detail to their Congressmen the specific impacts that these regulations have had on their credit union operations.
Data breaches continue to be a major concern for Pennsylvania credit unions. These too sap valuable resources in having to address, both through re-issuing cards and member inquiries. We will advocate for merchant responsibility and detail ways Congress can assist us in this matter.
Lastly, we will talk with our delegation of lawmakers about the ways in which our credit unions are benefiting their communities, whether through member business lending activities or financial education efforts, such as classroom education, reality fairs or student branches. This will display why we are afforded our tax-exemption by Congress.
VIRGINIA
We look forward to attending the CUNA's Governmental Affairs Conference again this year. We expect roughly 100 representatives from our Virginia credit unions to make the trip to Washington to meet with their elected officials and representatives. The three things that we want to discuss are:
Modernization of the credit union charter: The financial services marketplace is ever changing. We need a credit union charter that allows members to be more fully served today and going forward.
Whether it is overly restrictive field-of-membership laws, the inability to accept supplemental capital, or limits on member business lending the 1998 Credit Union Membership Access Act is standing in the way of making it possible for the most members getting the most benefit from their credit unions.
Changes are needed that will allow credit unions to access and count secondary capital. This promotes safety and soundness. Supplemental capital may be necessary to manage a credit union's balance sheet as markets fluctuate and growth occurs. The limits imposed by the Credit Union Membership Access Act (HR 1151) on member business loans are arbitrary, and they prevent credit unions from fully serving the small businesses that could benefit from the capital that we are willing to provide.
Regulatory Relief: Since the inception of the economic crisis of 2008, credit unions have faced increasing regulations.
In many instances, regulations result in inefficiency and increased costs without any real benefit to consumers and members.
Recently, a proposed Federal Housing Finance Agency rule would make it harder for some credit unions to qualify for membership in the Federal Home Loan Bank.
Creating a greater barrier in accessing a key liquidity provider is a regulatory complexity without benefit.
Requiring credit unions to annually send millions of privacy notices to members (when there have been no changes) has no real consumer benefit. It simply adds costs.
While not regulatory relief per se, credit unions need Congress to act to ensure merchants and processors abide by national consumer protection and notification standards with respect to data breaches. Credit unions pay a disproportionate cost of data breaches.
Preservation of the credit union tax exemption: All consumers benefit by having an alternative to for-profit banks. Credit union members obviously benefit by paying lower interest on loans, paying fewer fees, and receiving higher deposit yields. Consumers in general benefit as banks are forced to keep their rates and fees competitive.
Credit unions provide market stability. We continued lending during the recent economic downturn. The cooperative credit union model serves 100 million U.S. consumers. Congress should continue to recognize the unique role of credit unions and ensure that any tax reform legislation not eliminate or alter our tax status.
WEST VIRGINIA
With two of our three House members newly elected, we will first want to make sure that they understand the positive impact credit unions have had in their respective districts.
Before we start lobbying on issues, it is critical in the early phase of relationship building to help them grasp the purpose and history of credit unions, and our non-partisan approach to the process.
Fortunately, the credit union movement has a great story to tell. With regard to key issues, we will emphasize the importance of the tax exemption, the regulatory burden that is choking growth, and the pressing need to have effective data security legislation.
Clearly we were successful in the last Congress in preserving the tax exemption something we can't take for granted in this new Congress. Getting data security legislation passed will be an uphill climb, but we believe it is on Congress' radar. We will continue to press on this issue since it affects every credit union member to varying degrees.
Credit Union Journal's Annual State Roundup Project is conducted in conjunction with CUNA's Governmental Affairs Conference and the Hike the Hill campaign. Each year, the State Roundup Project offers credit unions a look at their state leagues' lobbying strategies to help prepare credit union executives in advance of their meetings with their lawmakers.
