The President's Perspective
by Jeff Olson
CUAD President/CEO
3/12/2018

Greetings!

I was invited to join Senator Heitkamp in a meeting (photo below) with about a dozen other banking leaders in Fargo last Friday. The meeting focused on the current debate in the U.S. Senate, S. 2155, which will likely continue today in Washington, D.C. as the Senate reconvenes at 4 P.M (ET), with a vote on the motion to invoke cloture on the substitute amendment scheduled for 5:30 p.m. (ET).

As you know, this bill provides targeted and much needed regulatory relief for credit unions and community banks. While many on the financial service side would like to see a total repeal of the Dodd-Frank Act, the credit union backed bill, which is being referred to as The Economic Growth, Regulatory, and Consumer Protection Act, is probably the best we’ve seen since 2010 to provide significant regulatory reform. Specifically, this bi-partisan common sense legislation will enhance consumer protection from fraud. It also makes the mortgage processing easier and quicker, and will aid in providing more affordable rental housing in our communities. It will ultimately help credit unions provide better service to their members.

There are several provisions in the bill that are specific and necessary reforms for credit unions. The bill provides relief from some of the requirements of the Qualified Mortgage Rule for credit unions that hold mortgage loans in portfolio. Treating these loans held on balance sheets as QMs is appropriate for credit unions not only because they retain all the risk involved with these mortgages and are subject to significant safety and soundness oversight from regulators, but also because credit unions have unique knowledge of their members’ financial circumstances.

The bill also included changes to the Home Mortgage Disclosure Act (HMDA) reporting requirements, including raising the reporting threshold to 500 closed-end and open-end loans in one calendar year. This is where Senator Heitkamp wants our specific help. She is planning to return to the floor to rebut some of the claims from Senator Warren that this action is discriminatory to consumers. Senator Heitkamp is asking for specific talking points and responses from our members that directly refute this claim. If you have an example or a response, please forward them to me today.

Also, this bill provides a simple fix, based on consistency and fairness. Under current law, when a bank makes a loan for the purchase of a 1-4-unit, non-owner occupied residential property, the loan is classified as a residential real estate loan. Credit unions that make the same type loan are forced to classify them as business loans.

More importantly, S. 2155 continues to hold Wall Street Banks accountable, protects consumers, and ensures the safety and soundness of our financial system. The Senate debated the measure most of last week, will continue today, with a final vote on passage potentially coming sometime this week as well.

Could we be next? All eyes on Iowa as banks attempt pass a bill that would tax state chartered credit unions.

Having experienced a local threat on our tax status, we here at CUAD are paying close attention to what is currently happening at the Iowa state legislature. I see this as potential threat to us here in the Dakotas.

Last week, the Iowa State Senate debated a bill that has been presented as a tax cut for working families. However, the truth behind this legislation is that it’s a state bill that would increase taxes on the state’s credit unions, while lowering them for banks. According to the Iowa Credit Union League, the bank lobby, unable to find broad support for increasing taxes on credit union, urged Senate Republicans to take a “divide and conquer” strategy by taxing large state chartered credit unions.

We need to remind ourselves that a credit union is a credit union, regardless of size, its membership, or the services offered. An attack on one credit union is an attack on the cooperative spirit that guides our industry. Kudos to Iowa credit unions for this outstanding grass roots response: Iowa Credit Unions converge on the State Capitol.

I ask, if this were happening in Bismarck or Pierre, could we respond this way? 

Have a great week serving your members!

Jeff

 

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