By David Adams
As your trade association, we have the privilege of serving as the voice of the Michigan credit union community in Lansing and in Washington, and that’s a responsibility we take very seriously. We strive to listen to your concerns and challenges, and then communicate those issues to our state and federal lawmakers, and to fight for what we as an industry need and deserve. Today I’d like to share with you our legislative priorities and initiatives at the state and federal levels for 2013.
First, let’s start with some of the big issues we’re tackling in Lansing. Ever since the foreclosure crisis really took hold in our state, we’ve been pushing for legislative reforms. We know that credit unions weren’t the reason that Michigan at one point led the nation in foreclosures, and we shouldn’t bear the burden of many of the laws that were put into effect as a result.
One of those laws is the 90-day pre-foreclosure workout period. As you know, this legislation was supposed to be a temporary fix to provide borrowers the chance to sit down with their lenders and discuss possible alternatives to foreclosure. We supported this legislation when it was introduced in 2009, because of the rise in foreclosures and because it was supposed to sunset in two years. It has now been extended twice, and will sunset again on June 30 of this year. This law requires financial institutions to provide certain information to borrowers, along with building protections into the process for homeowners seeking modification or relief on their mortgage loans, extending the foreclosure process by three months or more. This was meant to be a temporary solution, and extending it will not slow down the rate of foreclosures in our state. Furthermore, this is a situation where the state law runs the risk of duplicating and over-reaching pending federal requirements from the CFPB on mortgage servicing. As we see it, when included with the redemption period, the length of the foreclosure process is already unnecessary and leads to devaluation and damage of properties, which in turn hurts institutions and realtors, consumers and communities.
On that front, we’re also seeking a reduction in the statutory redemption period for foreclosed property, which is currently set at six months, and we’re keeping a close eye on legislative amendments regarding the retention of homestead exemption on foreclosed properties.
Urban blight legislation is another one of our state-level priorities. We are working to ensure that credit unions are exempt from any potential new legislation that would increase fines and create heightened sanctions for blight violations. We will also be working with lawmakers and other stakeholders to identify and craft an appropriate model for Michigan to help implement a proactive tool for urban centers to combat blight.
Our team is also exploring legislation at the state level to combat fraud as it relates to vehicle titling, as well as increased penalties and accountability for the solicitation of fraud. We know that scams cost you time and money, and we’re working to fight that.
At the federal level, our efforts fall into three main categories.
First, preserving the credit union tax status. Congress plans to undertake comprehensive tax reforms this year, and that could potentially bring the credit union tax exemption under review. The good news is that Michigan Reps. Dave Camp and Sander Levin have both indicated support for our tax status and have indicated that we are not on their radar. Still, if the issue comes up, we need to be prepared to go up against a vigorous lobbying effort from the bankers. We’re working closely with CUNA to develop and execute a comprehensive grassroots, communication and legislative strategy. We will be ready to make our case and to illustrate the many ways that credit unions are fulfilling their statutory mission of service to their members.
Next, let’s talk about our advocacy efforts in terms of reducing regulatory burdens for credit unions. Both MCUL and CUNA know that this is a top concern for you, and that makes it a top priority for us. We should be proud of the success we had in this area last session, particularly with the passage of legislation to eliminate duplicative ATM fee disclosures, but we know there is much more to be done. Working hand in hand with CUNA, we’re keeping an eye on legislation that could potentially reform the CFPB, and bills that could provide more direction to the CFPB on its mortgage servicing regulations. We’re also concerned about what seems to be an ever-expanding NCUA budget, as well as cases like the “troubled condition” rule and the expansion of the small credit union support division that raise concerns the agency is overstepping its bounds. We will continue to watchdog the agency’s expenses and operations and advocate against any overreach, particularly since we are at a time when credit union metrics are improving, and what we need is less regulation, not more.
We’re also working with CUNA to delay implementation of the CFPB’s rule on remittance transfers. While the agency did recently tweak its rule to accommodate some of our industry’s concerns, we still feel like it will drive many credit unions away from offering this very important service. We’ll be working with CUNA to set a higher minimum exemption threshold.
We’ll also be picking up where we left off last session in the effort to provide more transparency and fairness in the examination of federal credit unions. And we’re keeping an eye on any potential attempts to restrict or prohibit the use of legitimate noninterest income products, such as Overdraft Protection.
Finally, we’ll continue to advocate for at least two specific charter enhancements: legislation to raise the cap on credit union member business lending from 12.25 percent of assets to 27.5 percent, and legislation to allow NCUA to authorize appropriate forms of supplemental capital. The MBL bill came as close as it has ever come to vote last year, and we shouldn’t see that as a defeat but rather as a sign of how much of an impact our advocacy efforts are having. We will not give up.
I share these legislative and regulatory priorities with you because these are goals that we can only achieve together. Our governmental affairs team and our regulatory specialists are working day in and day out to advocate on your behalf, but we need your help as well. We need you to continue to tell the credit union story in your community, to your lawmakers, and to the media. We need you to join us at events like the CUNA GAC in Washington where we will visit every member of the Michigan congressional delegation and at our state GAC in April where you can meet face-to-face with our state senators and representatives. Our lawmakers and regulators need to hear from you first-hand about the challenges you face and how their decisions impact their members. We also need you to support state and federal PAC fund-raising efforts in any way that you can. We can’t do it alone, but together we can be heard. Together we can make a difference.
View the “Michigan Priority Report” on CUBE TV for a video summary of MCUL & Affiliates CEO David Adams’ February Priority Report introduction.