Olin community credit union

Promoting and Defending Credit Unions

Regulatory Advocacy and Compliance

CUNA combined its sophisticated Washington regulatory advocacy operation with the powerful grassroots support of its members to win expanded field of membership and member business regulations in 2003. It was a year of major successes on the regulatory front for credit unions and their members.

Having Our Say

Last year, CUNA sent 46 comment letters expressing the credit union point of view to NCUA, the Internal Revenue Service, Federal Reserve Board, and Federal Trade Commission and such quasigovernmental bodies as NACHA and the Federal Accounting Standards Board.

Big Help For Small Businesses

CUNA refuted banker claims that credit unions should not be given more power to make member business loans with a detailed comment letter to NCUA as it considered a proposal to grant more flexibility in making the loans. The board approved the final rule after hearing from credit unions that voiced their support for the measure to NCUA through CUNA's Operation Comment. At CUNA's urging, the Small Business Administration approved a policy change to make all credit unions-not just those with community charters -eligible to participate in the SBA 7 (a) guaranteed loan program.

Expansion Of FOM Regulation

NCUA overhauled its field of membership (FOM) regulations to make it easier for credit unions to convert to community charters and created a new type of charter to allow a credit union to serve all members of a trade industry or profession. CUNA strongly supported the changes as a necessary response to changing market conditions that are clearly within the intentions of Congress when it passed Credit Union Membership Access Act in 1998.

More Conversion Disclosure

NCUA, with the strong support of CUNA and the credit union community, significantly strengthened its conversion disclosure requirements. CUNA and the regulator agree that credit union members are free to vote for conversion to a mutual savings bank, but only if they are informed of the consequences to their voting representation and of any financial gains to management.

NCUA Budget

NCUA's budget increased by a modest 2.63% for the 2004 fiscal year after the first-ever decrease in fiscal 2003. The board also approved a new methodology for calculating the overhead transfer rate that CUNA supports as an improvement in accountability and transparency.

Check 21

The law, passed in October 2003, goes into effect in October 2004. CUNA wrote a lengthy comment letter to the Federal Reserve Board outlining how the new payment system can attain maximum efficiency without creating an undue burden on credit unions. The final regulations are due on July 28, 2004. In the meantime, CUNA is planning its third Webinar on the topic and has posted a Web page to keep its member credit unions abreast of the latest developments. A Check 21 Tool Kit will be available when the new law takes effect.

USA PATRIOT Act

CUNA helped credit unions comply with the new member identification requirements by publishing a "USA PATRIOT Act Guidebook," available in Internet, CD-ROM, or paper versions. CUNA also offered an audio conference, prepared a new section in its dues-supported e-Guide to Federal Laws and Regulations, and focused several monthly Compliance Challenge newsletters on the new U.S. Treasury Department requirements.

A Focus On Assistance

CUNA continues to offer timely audio conferences and Webinars, often with the participation of key government policy makers. 2003 compliance topics included NCUA's examination program, Check 21, unrelated business income tax (UBIT) developments, Treasury benefit checks, and lending disclosure requirements.

More than 10,000 messages were exchanged in 2003 on the CUNAsponsored COBWEB (Compliance Srainstorming on the Web) listserv, an Internet message board that allows credit unions to exchange operational and policy information. CUNA's cucomply@cuna.com e-mail address also assures credit unions that compliance assistance is easily accessible.

The UBIT Tax Threat

State-chartered credit unions in Alabama, Colorado, and Connecticut were hit with an "unrelated business income tax" or UBIT on income derived from activities the IRS does not regard as "core" services. These include insurance activities, ATM fees, and debit/credit card interchange operations. CUNA believes these are legitimate nontaxable activities and is working with state credit union leagues, CUNA Mutual, and NASCUS to persuade the IRS not to tax them.

CUNA Goes To Court

In California: CUNA was on the winning side in a case that successfully defended state- and federally chartered credit unions against being forced to comply with onerous and expensive credit card disclosures mandated under a new state law. The case was dismissed with prejudice, discouraging other states from enacting similar laws.

In Missouri: CUNA won a victory in a lawsuit brought by Gold Bane over alleged trademark infringement for using the brand slogan, "America's Credit Unions: Where people are worth more than money." The case was dismissed with prejudice and cannot be reopened.

In Illinois: CUNA joined the Illinois and Wisconsin CU Leagues in filing an amicus brief in support of Olin Employees CU of East Alton, Ill., previously found liable for $330,000 in forged checks. The credit union and its supporters want the court to view the deposits of the stolen checks as multiple transactions, each with its own statute of limitations. If the appeals court accepts the argument, the credit union's liability would be cut almost in half.

In Utah: CUNA intervened in a lawsuit brought by the ABA and Utah bankers that charged NCUA with violating its own FOM regulations. The intervenors successfully argued that the court would have to base its decision on the administrative record of the board's decision, denying an effort by the bankers to put their spin on FOM approvals by bringing extraneous information into the case.

Eric Richard CUNA General Counsel