Deborah Matz was confirmed to join the National Credit Union Administration (NCUA) Board of Directors by the full Senate on Friday, August 7, and is soon expected to be named chair of the NCUA by President Barack Obama.

 

Credit Union National Association (CUNA) President/CEO Dan Mica congratulated Matz on her confirmation, saying that CUNA looks forward to working with Matz to ensure the "continued safety and soundness of credit unions" and to foster "a regulatory environment in which credit unions may continue to grow, prosper and effectively serve their members."

 

Matz was unanimously confirmed by both the full Senate and the Senate Banking Committee, and should soon join the NCUA board for the second time.  Matz's nomination was scheduled for Senate approval several times in recent days, but a busy Senate calendar, dominated by such things as okaying $2 billion to extend the "cash for clunkers" program, and approving Sonia Sotomayor as a Supreme Court Justice, pushed back the Matz vote.

 

Matz last served on the board between 2002 and 2005, and most recently held the position of executive vice president and chief operating officer of Maryland-based, $800 million-in-assets Andrews Federal Credit Union, an experience which Matz said "sensitized" her "to the need for effective, rather than excessive, regulation."

 

Matz in 2002 voted against what she has called "overly broad and permissive" NCUA corporate credit union regulations, and she said during recent Senate committee testimony that further work is needed to stabilize the corporate credit union system. Matz has promised to revamp some aspects of the NCUA's rules governing corporate credit unions once she takes on her new position at the NCUA, adding that such a rule would combine needed regulatory "flexibility" with the safeguards needed to prevent the current corporate credit union hardships from happening again.

 

 

The Credit Union National Association (CUNA) is working for legislative or regulatory relief for the by-now well known 21-day notice provisions for open-end credit plans, other than credit cards, set to take effect August 20.  The Fed rule implements provisions of the Credit Card Accountability Responsibility and Disclosure Act of 2009 (CARD Act).  CUNA is seeking a law change so the notice provision would apply only to credit cards.  Concurrently, CUNA is addressing the problem via a regulatory route urging the Federal Reserve Board to approve a compliance date delay.

 

Meanwhile, however, CUNA has pulled together a variety of resources to help credit unions tackle the tremendous compliance challenges that loom ahead.

 

In this memo, CUNA details steps that credit unions must take to comply with the 21-day requirement and the 45-day change-in-terms requirement.  CUNA provides an overview of these regulatory requirements, provides information on some of the alternative approaches that credit unions are considering, and addresses some of the more frequent questions that have been asked about the regulations.

 

While CUNA does not specifically advocate or suggest any specific method of complying with the 21-day requirement, the memo does present a number of options that have been taken by some credit unions, including changing due dates to establish a uniform payment due date, printing the current and following month's payment due dates on the account user's periodic statement, and retaining the existing due dates, but providing additional periodic statements.

 

CUNA has also provided answers to which types of loans are covered by the 21-day requirement, how the 21-day period is determined, and which actions a credit union could take to assure delivery when a member has decided to use electronic periodic statements.

 

For access to the document, use the resource link. CUNA compliance guide

 

 

The Association’s Infosight provides fast, accurate, easy-to-read compliance information on this and a vast range of regulatory issues that credit unions face today. League/Association members have free access to Infosight, which covers both state and federal regulations. To obtain a login ID and password, click here and follow the directions to “Request an Account”.

 

Massachusetts InfoSight:

 

New Hampshire InfoSight:

 

Rhode Island InfoSight:

 

 

The Internal Revenue Service (IRS) has released a new Technical Advice Memorandum (TAM) stating that income derived by state-chartered credit unions from shared-branching arrangements, management services to other credit unions, certain CUSOs, and sales of financial management services and certain insurance products are subject to unrelated business income tax (UBIT).

 

"We think this decision is clearly erroneous on multiple levels.  Most basically, it fails to recognize the cooperative, interdependent nature of the credit union system as reflected in shared branching and management of one credit union by another," said Eric Richard.  Richard is general counsel of the Credit Union National Association (CUNA).

 

Richard also pointed out that the new TAM does not sufficiently analyze whether particular functions of credit union service organizations further the purposes of credit unions, which "should be the test of tax exemption."

 

This new UBIT TAM is the first such memorandum issued by the tax agency since it sent out a spate of such opinions in 2007.

 

Two credit unions have filed suit against the IRS over its UBIT policies.

 

Community First Credit Union, based in Appleton, WI, filed suit in January 2008 against the government after the IRS determined that certain guaranteed auto protection (GAP) and insurance products offered to members fall outside the credit union's main mission and are subject to UBIT.  The credit union sought a $54,604 refund and a jury in May of this year found in the credit union's favor.

 

The latest TAM was drafted before the decision in the Community First case was issued.

 

Bellco Credit Union, Greenwood Village, CO, also has filed a complaint against the IRS, seeking a refund of $199,000, based on UBIT taxes paid for 2000, 2001 and 2003.

 

"The parts of this newest UBIT decision that deal with credit life and disability are at odds with the jury's decision in Community First, but this TAM was in the works long before that decision came down.  It was officially issued to the credit union and the IRS agent in the applicable state in May, before the Community First trial," CUNA's Richard said.  "Hence, even though the timing might look suspicious to outside observers, this TAM cannot be treated as a response to the Community First verdict," he added.

 

The CUNA UBIT Steering Committee will meet this week to discuss its next steps in UBIT strategy.