Posts filed under ‘Political’
NYC’s medallion credit unions recently suffered another legal setback in their effort to level the regulatory playing field between the heavily regulated yellow cab industry and ride sharing companies such as Lyft and Uber.( Melrose Credit Union v. City of New York, 15-cv-9042)
This morning’s New York Law Journal is reporting that on January 26th federal judge Southern District Judge Analisa Torres rejected claims that NYC’s Taxi and Limousine Commission was violating the equal protection rights of medallion owners. In its complaint the plaintiff’s contended that, by imposing onerous requirements on medallion cabs without imposing similar requirements on ride sharing networks they were being subjected to unequal treatment under the law, which has already diminished the value of their medallions by 40%.
According to the NYLJ, “Torres said the different rules for taxis and for-hire vehicles were “rationally related” and “allow the TLC to achieve the legitimate government objectives of increasing the accessibility, availability, and diversity of cost-effective transportation.”
That same day a separate court refused to block from taking effect regulations requiring half of the city’s medallion cabs to be wheelchair accessible by 2020.
So it begins
Your blear-eyed blogger had the first of several late nights last evening watching the results of the Iowa caucuses. Bernie Sanders and Hillary Clinton essentially tied-49.6 to 49.9- for Hillary and Ted Cruz soundly defeated “The Donald” who eked out a second place finish against Marco Rubio.
The line of the night was from Republican Mike Huckabee, the former Arkansas governor and past caucus winner. He announced he was quitting the race explaining that he was not withdrawing because of the vote-he finished tied for ninth-but “because of illness…obviously the voters are sick of me. ”
My take away: both parties are in for one of the most drawn out and competitive primary seasons in modern history. The electorate doesn’t know what it’s in favor of but it sure does know what it’s against, which is just about everything. We are a nation of rebels in search of a cause.
The Next Love Canal?
While the water problems in Flint, Michigan have understandably garnered the national spotlight, the potential that toxic dumping has been taking place in Hoosick Falls, New York is beginning to impact not only the community but lenders.
On Friday, the Albany Business Review reported that Trustco Bank and The Bank of Bennington have temporarily suspended mortgages in the village. The announcement underscores that environmental problems inevitably have a banking component. Obviously, problems like this make it almost impossible for homeowners in affected communities to sell their properties. Less obvious is the fact that lenders could retroactively be made to buy back mortgages on property that is found to be contaminated.
I went back through my archives and as I explained in this blog about the potential risks of fracking, Fannie and Freddie have set up a system where lenders can be forced to buy back mortgage loans years after they were sold to the secondary market. Let’s hope for the best in the case of Hoosick Falls.
CUSO Registration Takes Effect
For years now, our good friends at the NCUA have expressed concern that they don’t have adequate oversight over CUSOs. Starting today, CUSOs, irrespective of whether they are owned by state or federal credit unions, must be registered with the NCUA. As part of this new requirement, all CUSOs must now provide information directly to the agency. I know this has been a real hot button issue for some credit unions, but the final regulation is much less onerous than what was initially proposed and, the more I look into this issue, the more I agree with NCUA. It makes sense to increase its ability to assess the impact of CUSOs on the industry as a whole.
The Most Important Election
The election that will have the most direct and immediate impact on your credit union is not the one for President this November. Governor Cuomo announced Saturday that a special election will be held on April 19 to fill the Senate and Assembly seats of Senator Dean Skelos, Republican and Assemblyman Sheldon Silver, Democrat. Right now, the Republicans hold a one seat majority in the Senate chamber, but a victory by Assemblyman Todd Kaminsky would mean that the continuing control of Republicans is dependent on the continued support of the Independent Democratic Caucus.
In the movie The Untouchables, in which Kevin Costner plays an idealistic Eliot Ness trying to take down Al Capone within the law, an exasperated, street-wise beat cop played by Sean Connery explains that to take down the mob, if they put one of your guys in the hospital, you put one of their guys in the morgue.
News Flash: The banking lobby is out to kill the credit union industry or at least maul it beyond recognition. This is one of those times when it’s important to fight back for the sake of fighting back. I am usually not a big fan of comment letters for the sake of comment letters but this is an exception. And if you get a chance, tell your Congressmen and Senators that the Bankers have gone off the deep end.
The ostensible issue triggering the latest scrap is NCUA’s proposed amendments to its Chartering and Field of Membership manual to give federal credit unions greater flexibility in expanding their fields of membership. As highlighted by an article in this morning’s American Banker, the bankers are going downright apoplectic over the proposal, implying that NCUA is trying to circumvent the law and putting tax dollars at risk. We have heard it all before. (http://www.americanbanker.com/news/community-banking/fight-over-credit-union-membership-flares-up-again-1079054-1.html?utm_medium=email&ET=americanbanker:e5995385:4561993a:&utm_source=newsletter&utm_campaign=daily%20briefing-jan%2028%202016&st=email&eid=346f8f5eef3bcd6205524af410f42291)
In reality, many of the proposed changes, though important, are not the type of fundamental changes that would provide huge benefits for all credit unions. This is not a criticism of NCUA simply a recognition of the fact that it is adhering to the laws that bankers are suggesting they are seeking to violate. The result is that the banking industry is more ginned up in opposing these regulations than the industry is about supporting it. And that has to change. There are some fights that have to be fought out of principal, and this is one of them.
I’m not suggesting that NCUA will back away from these amendments. What concerns me is that, in an age when the person who screams the loudest, no matter how incoherently he rants, gets the most attention. Banks are coming across as more upset over the proposal than credit unions are enthusiastic about it. While both reactions make some sense this is the latest skirmish in which the industry has to fight back and fight back hard.
Why is it so important? The banking industry has a two prong strategy for attacking our industry: (1) Keep it from growing by strangling credit unions within their antiquated FOM constraints; and (2) end the tax exempt status of the industry by arguing that it is putting community banks at risk and is somehow unworthy of the exemption.
The first goal can be achieved primarily with lawsuits and regulatory advocacy. The second goal is a legislative one.
The uncompromising opposition of bankers to any credit union growth already has impacted all credit unions. The implicit message the banks consistently send to politicians is that helping credit unions simply isn’t worth the hassle. And NCUA’s amendments, while helpful, are still more restrictive than they need to be. The industry has to lay the groundwork for amendments more dramatic than HR 1151. If it doesn’t use this and other opportunities to be heard above the banker noise, this is never going to happen.
Internships are all the rage. For example, my niece and nephew both attended Northeastern University, where admission standards have sky rocketed over the last few years largely in response to the school’s heavy emphasis on work co-ops. In this tough economy parents and students understandably love the idea of getting a leg up on the competition by getting real life experience and making contacts that could lead to future employment.
That’s nice Henry, but what does that have to do with the price of tea in China, you may ask. Well, I am assuming that a fair number of credit unions either hire interns or are considering doing so. Besides, I overhead the Association’s HR guru Chris Pajak fielding a question on this very issue the other day and I thought it was an intriguing issue. I’m here to remind you that rising interest in internships is growing hand in hand with increased legal scrutiny of what interns can and cannot do.
Most importantly, disgruntled interns have brought lawsuits claiming that they were actually employees and should have been treated as such under the Fair Labor Standards Act. The bad news is that there are no hard and fast rules to determine when an intern is actually an employee. The good news is, as explained in a recent article in the Legal Intelligencer, that the Second Circuit has provided employers with several criteria to be considered when determining if an intern is properly classified. These criteria include the extent to which: the intern clearly understands that there is no expectation of compensation; the internship provides training similar to that provided in an educational environment; the internship is tied to the intern’s formal education program, such as through coursework and the receipt of academic credit; the internship accommodates the intern’s academic commitments; the intern’s work complements rather than replaces an existing employee; the internship’s duration is tied to beneficial learning; and the employer and intern understand that the internship is being conducted without the assurance of a job at its conclusion.
Now remember, these are criteria, not requirements, which means that not every single one of these elements have to be present for you to legally provide someone an interning opportunity. The overriding gist of cases that have reviewed this issue is that employers have to be able to demonstrate that an intern is receiving academic benefit, and not simply being used to substitute for an employee.
Congressman Israel to Retire
Eight term Long Island Congressman Steve Israel announced that he would not be seeking re-election. One of his goals apparently is to have more time to write the Great American Novel. According to the Huffington Post, he plans to write a satire on the gun lobby. His district represents Northern Long Island and part of Queens. Best of luck, Congressman.
Transportation Bill Christmas Tree Contains Reg Relief
President Obama signaled he will sign the five-year $305 billion transportation bill that is being fast tracked through Congress in the hopes of beating a December 4th deadline. With Congressman passing so little major legislation these days-lest they be accused of legislating by their constituents-the bill has become a vehicle for a wide range of interests and credit unions and banks are getting something out of the feeding frenzy.
The most direct impact on your credit union is a provision eliminating the requirement for financial institutions to send out privacy notices on an annual basis provided that there has not been a change in their policies regarding the sharing of nonpublic information with unaffiliated third parties(Sec 7501).
Another provision that caught my eye is one setting up a system for credit unions to apply to the CFPB for a community to be classified as “rural.” (Sec 89001) Currently there is no public application process. The designation is important because credit unions and banks operating in these communities have greater flexibility in making Qualified Mortgages under Dodd Frank. The provision also intrigues me as a potential model to be used by the NCUA in designating areas as “well defined local Communities” for purposes of community expansions.
Finally, if you live in a state that allows your credit union to be privately insured, your credit union can now join the Federal Home Loan Bank system, (sec 82001). Here is the bill.
Right on Target?
Target has agreed to pony up $39 million to settle a class action lawsuit brought by credit unions and banks that issued credit and debit cards that may have been compromised by hackers during the Christmas shopping season two years ago. The payout is open to all banks and credit unions that have not already settled with Target.
If the settlement is approved impacted institutions will have the option to make a claim to either receive at least $1.50 per compromised payment card over and above any per-card payment they will receive from MasterCard and Visa’s fraud recovery programs or up to 60% of their total fraud, reissuance and other costs related to the data breach, less any amounts received through the MasterCard and Visa fraud recovery programs.
In re Target Corporation Customer Data Security Breach Litigation was the outgrowth of Target’s announcement in December 2013 that its stores had been hacked by malware that was imbedded on POS terminals. Subsequent disclosures of the company’s lax security precautions led to the resignation of its CEO and provided the highest profile example of why Congress needs to act on data security.
The resolution also underscores the value of state level statutes imposing liability on merchants that negligently contribute to data breaches. Target had the misfortune of being headquartered in Minnesota, a state with a law making merchants responsible for the reimbursement costs of card compromises caused by their negligence.
This Time she Means It!…Really…She Does
Federal reserve Board Chairman Janet L. Yellen gave yet another speech in which she all but promised that we will see the Fed move to raise interest rates later this month. Is it just me or would the Fed do us all a favor by talking less? Forward guidance is great in theory but lousy in practice. Here is the speech.
Not Too Hot Not too Cold
Economic activity in the New York metropolitan area is leveling off as a growing number of industries “appear to be facing increased headwinds from a strong dollar” according to the New York Fed which released its latest snapshot of economic activity in New York, Northern New Jersey, and southwestern Connecticut. In the “tell me something I don’t know” category the Bank’s sages s conclude that “the outlook for the quarter will largely depend on consumer spending in the upcoming holiday season.” Here is a link to its analysis:
One of my faithful readers emailed yesterday and asked me what I thought of the cyber security legislation that passed the Senate earlier this week. So here goes: Quite simply any action that shows Congress is waking up to the need for federal action aimed at creating a more robust cyber security infrastructure is a step in the right direction, but since the core challenge of making merchants more responsible for how they protect consumer information remains. credit unions will see little direct or immediate benefit if this legislation becomes law.
Senate bill 754, The Cyber Security Information Sharing Act of 2015, passed with strong bipartisan support and takes some important steps designed to make it easier for the government and the private sector to respond to and deter cyber threats. For example Homeland Security, the Director of National Intelligence, the Department Of Defense and the Justice Department would have to promulgate procedures for the “timely sharing” of classified cyber threat indicators. The bill would also setup a framework that would allow companies to voluntarily monitor each other’s information systems. Companies that exercise these powers are shielded from lawsuits, including those alleging violations of antitrust law.
Now all of this might be real important stuff for fortune 500 companies, including the largest banks that are such tempting targets for hackers, but none of it addresses the concerns of credit unions wondering why merchants don’t have to pick of the tab for data breaches caused by merchant negligence.We not only need more information sharing but we also need to make sure that all businesses have to adopt common sense procedures to protect the personal information of consumers.
The bill also makes the civil libertarian in me that much more concerned about how easy we are making it for the government and business to spy on us in the name of national security but that goes beyond the scope of this post or the concerns of credit unions. Stay dry out there.
Here is a link to information about the bill.
Today my blog is like a mall food court – there is a little something for everyone just so long as you aren’t expecting a great meal.
Senate Minority Leader Chuck?
This is huge news that might be even bigger for New York. It’s just been reported that current Senate Minority Leader Harry Reid, D-NV, will not seek reelection. Power abhors a vacuum and you can bet that Senators are already talking about who will replace Reid as the Chamber’s top Democrat. One of the most likely candidates is New York’s own Chuck Schumer. He has developed a reputation as one of the Senate’s top tacticians and his past chairmanship of the Democrat’s Senate Campaign Committee means that he has fostered the type of long term relationships that are awfully important in leadership fights.
Smartphones Are Smarter Than You Think
Just how important is the smartphone to your growth plans? Whether you want it to be or not, it is absolutely crucial because more and more of your members are using their smartphones to access services. Yesterday, the Fed released its fourth annual survey of mobile phone use. According to the Fed, as of December 2014, 39 percent of adults with mobile phones and bank accounts reported using mobile banking – an increase from 33 percent a year earlier. Furthermore, although people continue to use their phones for the more basic transactions – such as checking account balances – they are getting more adventurous. I was surprised that 51 percent of mobile banking users reported depositing a check using their mobile phones, up from 38 percent a year earlier.
Viewing the mobile phone as just another access device is tantamount to describing the Model T as just another vehicle. It magnifies the power of the web by cost effectively giving everyone the means to transact business with anyone else anywhere in the world at the touch of a button. For those of you who want to delve more deeply into the issue, here is a link to a great recent article in the Economist magazine. Here is my favorite quote:
“Smartphones are more than a convenient route online, rather as cars are more than engines on wheels and clocks are not merely a means to count the hours. Much as the car and the clock did in their time, so today the smartphone is poised to enrich lives, reshape entire industries and transform societies—and in ways that Snapchatting teenagers cannot begin to imagine.”
The Great Bank Robbery
I’ve always been ambivalent about the Tea Party movement. On the one hand, it started as a visceral reaction to the banking crisis. People saw the average middle class family losing their homes in the name of capitalism while the very institutions that tanked the economy got a taxpayer bailout. On the other hand, their misdirected rage has been harnessed by a clever group of anti-government extremists masquerading as Republicans, but that’s a blog for another day.
This morning’s WSJ has an extensive article about how “regional banks” are once again lending money to factories. What caught my eye and stirred my ire in the article were quotes from small business owners about how difficult it was to get the loans three or four years ago when they would have been most useful.
Let’s not let bygones be bygones. Every time a legislator questions why credit unions need authority to make member business loans or worries that the big bad credit union movement is somehow undermining community banking, let’s remind them that the same institutions he or she wants to protect are those that took Government handouts and did nothing to help the American consumer in return. Sometimes the truth hurts.
About That Pregnant Employee. . .
Here’s one for your HR people. A couple of days ago the Supreme Court decided one of the most interesting HR cases of the year: Young v. United Parcel Service. I thought the case involved a fairly straightforward question – asking whether a pregnant part-time employee was discriminated against after the company refused her request that she not be required to lift heavy packages. Apparently, the issue is not as clear cut as I thought. The Court’s ruling seems to make dealing with the claims of pregnant employees more complicated than it was just a few days ago. As summarized by the SCOTUS blog, the ruling “sets up this scenario for a female worker claiming she was the victim of pregnancy bias: she must offer proof that she is in the protected group — that is, those who can become pregnant; that she asked to be accommodated in the workplace when she could not fulfill her normal job; that the employer refused to do so, and that the employer did actually provide an accommodation for others who are just as unable, or unable, to do their work temporarily.”
A man, even one who blogs, has to know his limitations. This is a case to ask your seasoned HR professional about.