NWCUA Regulatory Advocacy Update
February 9, 2012
February 9, 2012
NWCUA Weighs in on Federal Housing Finance Agency Proposal
The Northwest Credit Union Association (NWCUA) recently sent a letter in opposition to a Federal Housing Finance Agency (FHFA) proposal that would require each of the Federal Home Loan Banks (FHLB) to be responsible for determining compliance of each member bank with first-time homebuyer and community support requirements. Currently the FHFA reviews and evaluates the compliance of each FHLB Member Bank with these standards to determine eligibility for access to long-term funds.
The proposal would essentially turn each FHLB across the country into a regulator, making this determination with its own staff, funds and standards. The current system works, and developing regional standards without one overarching regulator is not beneficial to lenders or consumers.
The proposal has some good aspects, including an expansion of what constitutes community support. While the Association supports and would be pleased to assist in expanding these efforts, it asked that the FHFA rescind the proposal as written.
Cordray Appointment in for a Challenge
Thirty-nine Senate Republicans have sent a letter to President Obama stating they plan to “jointly file an amicus brief challenging the constitutionality” of the appointments of Cordray as director of the Consumer Financial Protection Bureau (CFPB) and three members of the National Labor Relations Board.
Although the Justice Department has already issued an opinion that the appointments were constitutional, this promises to be a drawn-out legal challenge, as the Senators contend pro-forma sessions of the United States Senate were being held and that the body never recessed. This moves into an interesting area of constitutional law and tradition.
Dodd-Frank Timeline? Feds Don’t Seem to Care
A recent report on the Dodd-Frank rulemaking process found that as of Feb. 1, 2012, 225 rulemaking requirement deadlines have passed. Of those, 164 have been missed and 61 have been met.
“This means only 27.1 percent of deadlines have been hit,” said NWCUA Director of Regulatory Advocacy Jaycee Winn. “Not sure I’m complaining about that.”
IRS Comes Around on “Tax Exempt” Correction
Many credit unions were startled last year to receive a letter from the Internal Revenue Service (IRS) revoking their tax-exempt status due to a filing error by their “central organization.” As all Northwest credit unions know, state regulators have not been filing group returns for several years, and there was no problem with their tax filing or status.
This week (after several months), the IRS issued a clarification letter to those credit unions originally misinformed about their tax status issue. The letter stated:
“’Revenue Ruling 60-364,1960-2 C.B. 382, held that a state agency may file a group information return on behalf of all the exempt state-chartered credit unions under its control and supervision, in lieu of each individual state-chartered credit union filing a separate information return. You received the letter containing the erroneous information because of the way state credit unions that filed group returns were maintained on our systems.
“If you continue to meet your annual filing requirements, you may hold yourself out as tax exempt as long as you meet all other applicable requirements for tax exemption under the Internal Revenue Code.”
Better late than never, it seems. The IRS apologized for the confusion caused by the original Letter 4777, and a credit union may request a determination letter recognizing its tax-exempt status using Form 1024, Application for Recognition of Exemption Under Section 501(a) or for Determination Under Section 120, and pay the applicable user fee.
The letter included a toll free phone number (1.877.829.5500) for any further questions.
Association Offers More Regulatory Tools
In addition to an ongoing list of current comment calls on important regulatory proposals, the Association also maintains an archive of all letters submitted on its behalf. This allows credit unions to review the latest proposals and take a look back at the issues as they’ve progressed. It can be found here.
The Association has also developed a Regulatory Advocacy Blog, which covers the latest updates on regulatory advocacy and activity from both the NWCUA and CUNA.
To sign up for weekly regulatory updates, special comment calls, and other Association updates, click here.
The NWCUA Regulatory Advocacy team works with state and federal regulators to help reduce the regulatory burden on credit unions and protect the credit union movement. The Association encourages members to participate in the regulatory process. If you have any questions on these or any regulatory issues, please contact Director of Regulatory Advocacy Jaycee Winn at email@example.com, or at 800.995.9064 x209.