Washington Legislative Week in Review, Jan 26-30

It was a busy week in Olympia  as the House took early action on a supplemental operating budget and two new credit union bills were introduced.

On Thursday, the House passed a supplemental operating budget (House Bill 1105) by a vote of 83-15.  The bill adjusts state spending through June 30 and would pay for more mental health treatment capacity, the eastern Washington wildfire response, the Oso landslide response, the homecare shared living lawsuit, and children’s services.  After passing the House, the bill was then referred to the Senate Ways & Means Committee where it is scheduled for a hearing on February 5.

Two New Credit Union Bills

On Friday, two new credit union bills were introduced to implement NWCUA-recommended changes to the Washington Credit Union Act.

House Bill 1871 sponsored by Rep. Ryu and its companion Senate Bill 5757 sponsored by Sen. Benton are NWCUA request bills to update and modernize the Washington Credit Union Act, addressing credit unions’ corporate governance and investments.

The bills make the following changes to the Credit Union Act:

  • Simplify and clarify the duties of the board of directors.  The duty to establish loan policies is replaced by a more general duty to establish policies governing the operation of the credit union.  Certain specific duties that are currently listed as delegable are deleted because they are subsumed under the overall duty to manage the credit union’s affairs, and need not be specifically allocated to the board. 
  • Eliminates the requirement to “declare” dividends to conform to common business practices and member expectations.  (As a practical matter, dividends on share accounts are authorized and paid substantially similar to the way that interest is authorized and paid on deposit accounts.)  The bill also authorizes dividends to be paid without the need for board declaration.
  • Clarifies that gifts of nominal value, insurance coverage, and expense reimbursement may continue to be treated as they always have, and are not subject to the rules on compensation.
  • Permits credit unions to invest in and make loans to CUSOs in an aggregate amount up to five percent of the credit union’s assets.  (The limit is currently an aggregate of one percent for investments and another one percent for loans.)

House Bill 1872 sponsored by Rep. Ryu is also an NWCUA request bill addressing credit unions’ capital.  The bill authorizes credit unions to receive investments that would be treated as supplemental capital for purposes of calculating the credit union’s net worth.  Under current federal law, secondary capital is not treated as part of the credit union’s net worth for purposes of satisfying net worth requirements.  The bill would make it clear that Washington state-chartered credit unions have the authority to receive such investments once there is a change to at the federal level to count supplemental capital as a part of net worth.

Data Breach Legislation

While the greater business community and others in the financial services industry continue to negotiate on concerns with the Attorney General’s data breach notification bill, the Association has secured two key changes in the bill, which have brought us to support the legislation.

The first was to include language clarifying that if unusable encrypted information was lost, no notification would be required, and the second was to limit Consumer Protection Act enforcement to the Attorney General, and not allow private party enforcement.

House Bill 1078 and its companion measure Senate Bill 5047 would require any person or business/agency to notify possibly affected persons when security is breached and unencrypted personal information is (or is reasonably believed to have been) acquired by an unauthorized person.  The disclosure of a security breach of personal information is required to be made no later than 30 days after the breach was disclosed, and makes the failure to notify affected consumers of a security breach a violation of the Consumer Protection Act (CPA).

Washington’s CPA declares that “unfair or deceptive acts or practices” occurring in trade are unlawful.  The CPA provides that any person who is injured in his or her business or property through such practices may bring a civil action to recover actual damages sustained and costs of the suit, including reasonable attorney’s fees. Treble damages may also be awarded in the courts discretion, provided the damage award does not exceed $25,000. 

“Our work with the Attorney General’s office on data breach notification aligns with our efforts at the federal level,” said NWCUA Senior Vice President of Advocacy Jennifer Wagner.  “One of our guiding principles for federal legislation states that credit unions and banks, which often have the most direct relationship with affected consumers, should be able to inform their members and customers about the information regarding the breach, including the entity at which the breach occurred.   We appreciate Attorney General Bob Ferguson’s focus on the importance and costs of consumers not being adequately informed, and his office for working with us.”

Lien Priority

The Association supports the robust protection of creditor lien rights, and laws that reinforce an equitable and efficient recovery process.  Association staff has identified two bills which include lien priority provisions which we oppose.  Staff will be working with the sponsors of Senate Bill 5263, Concerning the Washington uniform common interest ownership act, scheduled for a public hearing on February 4 before the Senate Financial Institutions & Insurance Committee, and House Bill 1518, Creating the Washington wage recovery act, which is scheduled for executive session in the House Labor Committee on February 3. 

Other bills we are tracking:

Patent Trolling

House Bill 1092 is AG request legislation which creates the Patent Troll Prevention Act prohibiting a person from making assertions of patent infringement in bad faith.  Substitute House Bill 1092 received a do-pass recommendation by the House Judiciary Committee on January 29 and was referred to the House Rules Committee.  The substitute version of the bill includes modifications to the nonexclusive lists of factors that courts may use to determine good or bad faith and states that demand letters may not be used to move for declaratory judgment, but may be used as evidence in trial or to move for summary judgment.

Financial Fraud

House Bill 1090 reauthorizes and expands the Financial Fraud and Identity Theft Crimes Investigation and Prosecution Program.  The bill received a do-pass recommendation by the House Judiciary Committee on January 29 and was referred to the House Rules Committee.

First Mortgage Interest B&O Tax Deduction

Senate Bill 5475 is related to the B&O tax exemption for income on loans secured by a first mortgage, and is being supported by the Community Bankers of Washington.  The bills require the Department of Revenue to administer the deduction for income on loans secured by a first mortgage fully and according to the original intent of the legislature, without regard for accounting peculiarities required by GAAP.  The bill is scheduled for a hearing before the Senate Financial Institutions & Insurance Committee on February 4.

Credit Union Day at the Capitol

Washington credit unions need to present a strong, unified voice at the capitol on Thursday, February 19 for the annual Credit Union Day at the Capitol advocacy event. Advocacy is important, and it does not have to be intimidating. You and your credit union peers are the natural advocates of the movement. You know the members and their stories, which is what legislators need to hear.

If you have not participated in Credit Union Day at the Capitol before, we’re here to help you prepare. We are hosting a complimentary Advocates Training Webinar on Thursday, February 5 from 1:30 p.m. to 3:00 p.m. to give you all the information you need. To sign up for the Advocates Training Webinar visit the registration page or email Samantha Beeler at sbeeler@nwcua.org.

If you are not able to join in on the webinar we would still love to see you in Olympia on February 19. Visit our website to register for Washington Credit Union Day at the Capitol.

Let’s come together to speak up for credit unions! 

Look for the Washington Legislative Week in Review each week in Anthem during legislative session which runs January 29 – April 26, 2015.

Look for the Washington Legislative Week in Review each week during session in Anthem. If you have questions or comments, please contact Mark Minickiello, mminickiello@nwcua.org, 206.340.4812.

Posted in Advocacy News, NWCUA.