Barney Frank (D-Mass.), chairman of the House Financial Services Committee, has agreed to exclude credit unions with $10 billion or less in assets from the examination and supervision authority of the proposed Consumer Financial Protection Agency (CFPA), a move strongly advocated by the Credit Union National Association (CUNA).

 

An earlier version of the bill published in mid October set the threshold at $1.5 billion and $10 billion for banks. When those limits were announced, League President Daniel F. Egan, Jr. immediately contacted House Financial Services Committee Chairman Barney Frank’s office to request an emergency meeting. That meeting was granted and Egan flew to Washington, D.C. the next morning for a meeting with Frank. At that meeting, Egan and CUNA CEO Dan Mica made an impassioned case for the fact that $1.5 billion limit for credit unions was unfair and impractical.

 

Chairman Frank was not easily swayed; but after a long discussion, he indicated that he would work with the committee to gather support for a threshold that did not discriminate against credit unions.

 

On December 2 Frank announced that he would modify the current language of his CFPA bill so that credit unions with $10 billion or less in assets would not be subject to examination and supervision by the CFPA.  Instead, their primary regulator would enforce rules established by the CFPA.  CUNA has learned that the bill is being modified at the request of many Democratic members.

 

This change boosts the current carve out up from $1.5 billion in assets and puts credit unions on equal footing with community banks, who were given the higher exemption under a recently adopted amendment.

The Internal Revenue Service (IRS) recently issued the 2010 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes

 

Beginning on January 1, 2010, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

·         50 cents per mile for business miles driven

·         16.5 cents per mile driven for medical or moving purposes

·         14 cents per mile driven in service of charitable organizations

 

The new rates for business, medical and moving purposes are slightly lower than last year’s.  The mileage rates for 2010 reflect generally lower transportation costs compared to a year ago.

 

The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs as determined by the same study. Independent contractor Runzheimer International conducted the study.

 

A taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle. In addition, the business standard mileage rate cannot be used for any vehicle used for hire or for more than four vehicles used simultaneously.

 

Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.

 

Revenue Procedure 2009-54 contains additional details regarding the standard mileage rates.

http://www.irs.gov/pub/irs-drop/rp-09-54.pdf

In a December 7 letter to Representative Barney Frank (D-Mass.), National Credit Union Administration Chairman Debbie Matz asked for legislators to address issues with Prompt Corrective Action (PCA) capital standards by allowing qualified credit unions "to issue alternative forms of capital to supplement their retained earnings."

 

Legislators could also modify the Federal Credit Union Act "to permit qualifying credit unions to offer uninsured alternative capital instruments subject to regulatory restrictions" and expand the Act's "definition of 'net worth' to include those instruments."

 

While the intent of PCA is to control potentially "accelerated, unmanageable growth of credit union assets," PCA can at times "discourage manageable asset growth by financially healthy credit unions in times of economic distress," Matz said.

 

In the letter, Matz states that "the risk of reputational damage from being branded less than 'well capitalized' and in need of 'restoring' net worth, and from being subjected to the mandatory and discretionary restrictions that accompany a falling net worth ratio, is reportedly having a significant chilling effect on the willingness of some "well capitalized" credit unions to accept new share deposits."

 

"In effect, the reward for their success in attracting new shares is the risk of a demotion to a lower net worth category, if accepting those shares drives down the credit union's net worth ratio," she added. Declines in net worth ratio can expose a given credit union to a "range of mandatory restrictions imposed by law, as well as discretionary restrictions imposed by regulation—all designed to restore net worth," according to the letter.

 

Another potential legislative remedy proposed by Matz was "allowing qualifying credit unions to exclude from the 'total assets' denominator those assets that have a zero risk-weighting, exposing the credit union to virtually no risk of loss."