Posts filed under ‘Political’

Six Things To Know Before You Start Your Summer Vacation

You can tell everyone’s getting ready for a long summer hibernation with the amount of stuff that came out yesterday. Here is a list of the big news:

  1. The Association’s very own Michael Lieberman just informed me  that the President not only pulled out of the North Korean Summit today but he signed S.2155. This means that I have to start looking at all those effective dates. You’ll be hearing more about this in the days to come.
  2. I was beginning to think this day would never come. The NCUA yesterday filed a Notice of Appeal seeking to reverse the district court decision holding that the NCUA did not have authority to automatically qualify credit unions to expand communities comprised of combined statistical areas up to 2.5 million members. The ruling also changed the definition of rural community in a way that the court says was an abuse of discretion. There’s no sense understating the importance of this appeal. NCUA’s ability to define what constitutes a local community for purposes of permitting credit unions to expand to meet member needs.
  3. NCUA is proposing regulations that would give credit unions authority to offer new types of payday loan alternatives. These would be in addition to the PAL loans which credit unions can already offer. Among the new features in the proposed PAL II (that’s NCUA’s term) are: permitting loan amounts of up to $2,000 and loan terms as long as a year. The NCUA isn’t the only regulator looking to thread the needle by encouraging lenders to make short-term loans but discouraging them from making payday loans. Just two days ago the OCC created a minor stir when it “encouraged” banks to make responsible short-term loans. Let’s face it, short-term loans are the financial equivalent of needle exchange programs: In an ideal world, you wouldn’t need them but allowing mainstream lending institutions to provide short-term loans is a responsible alternative to the worst excesses of payday lending.
  4. NCUA clarifies vacation payouts for liquidating credit unions. Hopefully this is a bit of information that will never be relevant to you. At its Board meeting yesterday, the NCUA also harmonized two conflicting regulations to clarify when CEO’s of credit unions being involuntarily liquidated are entitled to a payout of their vacation time. The new regulation clarifies that such payments will not constitute a prohibited golden parachute so long as it is provided for in the credit union’s handbook and is consistent with payments provided to all employees who meet the eligibility requirements.
  5. As I’ve explained in previous blogs, Chairmen McWatters has never been a fan of the risk based capital rule which takes effect in January 2019. So it is not surprising that he wrote a letter in support of legislation that would push back the effective date until 2021. Hopefully McWatters can be joined by a board member who is also willing to acknowledge that NCUA’s risk based capital rules were and remain a solution in search of a problem.
  6. Finally, just how much does the Trump administration dislike New York and California? Remember that the tax legislation caps at $10,000, the amount of money that can be deducted for the payment of state and local taxes. Two days ago, the IRS released this memo explaining that: “some state legislatures are considering or have adopted legislative proposals” that attempt to circumvent the property cap limit by re-categorizing property tax payments as other types of payments. The stated aim of both New York and California is to minimize the impact that the new federal tax law will have in high property tax areas such as Westchester and Long Island. The IRS goes on to explain that “Despite these state efforts to circumvent the new statutory limitation on state and local tax deductions, taxpayers should be mindful that federal law controls the proper characterization of payments for federal income tax purposes.”

On that note, enjoy your summer. If past readership trends are any indication, many of you will be taking a break from the nitty-gritty of reality for the next couple of months. I will be joining you on occasion.

 

May 25, 2018 at 7:53 am 2 comments

3 Things To Know On Tuesday Morning

If you’re a recent visitor from another planet, you could be forgiven for thinking that the world is dominated by misogynists and would be predators so I’ve decided to lead with news, while not directly related to credit union land, shows that progress is in fact being made.

Yesterday, the New York Stock Exchange, the Capitol home of what the late great Tom Wolf described for the Masters of the Universe announced that it would be naming Stacey Cunningham as its first female President of its 226 year history. What would Sherman McCoy say?

Just how big of a deal is this? I believe symbolism matters and even though the NYSE isn’t quite what it used to be, this is still a big deal. This morning’s WSJ points out that when Cunningham started working for the Exchange as an intern in the early 90’s, the woman’s bathroom was a converted phone booth on the 7th floor. And when she started trading she was only one of 1,365 traders. True, the NYSE only accounts for 22% of trades these days but just as we continue to look for ways to improve corporate culture, we should also take the time to put these efforts in their proper context. On balance things have gotten a heck of a lot better for everyone.

Must See TV

Today is one of those must see TV days or must hear days for those of you with satellite radio. If all goes according to plan, the House of Representatives will be voting on S.2155, the Regulatory Relief bill that you have heard so much about. I’ll be talking about the specifics of this bill until you get sick of reading about it but today keep an ear out for how many Congressmen take the opportunity to praise not just banks but credit unions. Also, keep an eye on how many Democrats ultimately vote for the bill. Since there is a strong possibility that the Democrats will take control of the House next year, their attitude towards this bill will be an early indicator of just how radical a regulatory agenda a Democratic majority will push.

What’s Next for Payday Lending Rule?

That is the headline in this morning’s Law360 email blog now that the Senate has failed to muster enough votes to repeal the Cordray era regulation. There is still much the CFPB can do to obstruct implementation of this controversial regulation.

May 22, 2018 at 8:22 am Leave a comment

In Albany, The More Things Change The More They Stay The Same

Image result for simcha felder

By winning two special elections last night for vacant State Senate seats combined with the recent dissolution of the Democratic Independent Caucus, the Democrats now have a numeric majority in the New York State Senate. This is a big deal. With the exception of short stints in 2008 and 1965, the Republicans have controlled the State Senate since World War II.

In addition, the fact that the Republicans lost decisively in the special election in Westchester where Democrat Shelley Mayer will now serve out the remainder of that Senate term, is a sure sign that State Senate Republicans may very well pay a hefty price for the Trump Presidency. When I started working in the State Senate in 1989, the general rule of thumb was that national politics didn’t really have too much of an impact on the State Senate. Clearly this is no longer true.

Now for the good news if you’re a Republican. Despite this historic election, not all that much has changed this morning. That’s because Simcha Felder who runs on the Democratic and Republican line has indicated that he is going to continue to support the Republicans at least until the end of session. Stay tuned, this is a story that will be playing out at least through November and one that which will have a huge impact on the shapes and prospects for the credit union legislative agenda for years to come.

By the way, a special thanks to all of you who took the time to show up in Albany for our annual State GAC event. It’s always great to see all of you who make the extra effort to help out with the cause.

Mulvaney To Shut Down Public Complaint Portal

Since its inception in 2014, yours truly has been a vocal critic of CFPB’s public complaint portal under which complaints lodged against financial institutions are available for public review. Talk about guilty until proven innocent.

In the latest example of his efforts to fundamentally reform the Bureau of which he is head, Acting Director Mick Mulvaney indicated in a speech before the American Bankers Association yesterday that he whole-heartedly agrees with me. The American Banker quotes him as saying, “I don’t see anything in here that says I have to make all of this public. We are going to maintain the consumer database. It is mandated by law,” but “I don’t see anything in here that I have to run a Yelp for financial services sponsored by the federal government.” His comments come as the CFPB has made a request for the public to comment on CFPB’s existing public complaint process.

Enjoy your day.

April 25, 2018 at 8:58 am Leave a comment

Banker Hypocrisy At Its Worst

Image result for bankerI love bankers and banker lobbyists. Some of my best friends are banker lobbyists but the display of hypocrisy that will no doubt be on display at the State Capitol in the coming days is a ritual of which I am tiring.

Assembly bill 6949-B has been put on the Assembly’s debate list, which means that it can be debated and voted on notwithstanding the objections of opponents. The bill would allow localities to participate in Banking Development Districts with credit unions. For more than two decades the BDD program has allowed localities in need of banking services to jointly apply with interested financial institutions for designation as a BDD. In return for opening up a branch in the area, the financial institution receives incentives including low-interest deposits from the comptroller. Despite these incentives, banks have been less than enthusiastic in embracing the program and last year the Governor proposed extending it to credit unions. Nevertheless, the word on the street is that banking lobbyist were scurrying around legislative offices yesterday with memos in opposition to this bill. Don’t get me wrong, I’m not the slightest bit surprised but at some point enough is enough.

I haven’t seen this year’s version but I’m sure it’s the same old song, maybe with a slightly different tune. Credit unions don’t pay taxes – they do, just not corporate taxes – because they are after all not for profit corporations. That’s right, credit unions pay a host of taxes like any other employer in New York State.

I love the fact that bankers become so concerned about tax policy as soon as credit unions enter the conversation. Today’s Wall Street Journal is pointing out that some of the nation’s largest banks, including Wells Fargo, which has done so much to earn the public’s trust over the last couple of years, are among the big winners of the so-called tax reform. I would love to know how much of this tax windfall – $2.5 billion and counting – is going to be returned to consumers in the form of cheaper products and more compliance services, but I’m not holding my breath for an answer.

But having heard the same old arguments for almost two decades now, first in the legislature as a staffer and now as a member of the Credit Union Association, there’s only so much time we should be wasting on responding to tired old arguments. BDD districts should be extended to credit unions because they are potentially innovative economic development tools that help people in areas in need of investment. What I’ve always liked most about the program is that it reflects a three-way consensus between local, financial and state stake holders about the best way to bring needed financial services to an area in need.

In my last blog, I talked about the Lower East Side People’s Federal Credit Union. Even though it was started precisely to serve the areas that banks have historically shied away from serving, it cannot participate in this program. Why? Because the banking industry is increasingly devoid of a positive legislative agenda and instead is obsessed with zero-sum politics in which if credit unions lose, they win, consumers be damned. In fact, if anyone reading this blog today is approached by a banking lobbyist explaining why this bill should be opposed, please ask that lobbyist what positive, constructive proposals the banking community has to make financial services better for New York State consumers?

Of course, the banking lobbyists are just doing their job. It’s time for legislators to stop hiding behind their increasingly hollow rhetoric and do what’s right for the New York State consumer.

 

April 18, 2018 at 9:06 am 1 comment

Another CU Pioneer Stepping Aside

Linda Levy is about to become a key part of credit union history, at least for New York State institutions. As the New York Times reported in a profile over the weekend, she’s retiring as CEO from the credit union she started in 1982. In direct response to a lack of banking services in certain parts of the Lower East Side in Manhattan.

Today the credit union is $54 million assets and hasn’t lost one bit of its fighting spirit. It recently filed its own lawsuit, since dismissed, contending that President Trump acted illegally in appointing Mick Mulvaney as the acting head of the CFPB. It actively aided and encouraged the Occupy Wall Street movement, even though it meant losing a $5,000 donation from Goldman Sachs.

Her most important accomplishment though is the simple existence of the credit union. It was created in direct response to Manufacturers Hanover bank’s decision to close down a branch. The credit union was created to fill the void. The example it set provided a model for New York state to follow when it implemented the Banking Development District program which provides incentives to banks to set up branches in areas in need of banking services. Ironically, as a credit union, Lower East Side is not eligible to participate in the program, an oversight which continues to be a black mark on New York State’s banking development policies to this day.

Let’s face it, the environment in which credit unions are operating is changing. Increasingly, we seem to be living in a go big or go home environment, in which any credit union with less than $500 million in assets is struggling to grow.

It is also fair to say that not all credit unions think that supporting the CFPB or movements such as Occupy Wall Street are in the long-term interest of consumers. But let’s not ever lose sight of the fact that even as credit unions grow, they owe their existence to institutions from all across the state and country that were started to help the little guy. Today that little guy is still not all that attractive a customer for the largest banks that now dominate the financial landscape.

To be absolutely clear, you don’t have to be small to be a true credit union and there are many credit unions that both grow and help in ways that banks do not. After all, increased resources mean more can be done, ranging from helping out small businesses to providing fair, short-term loans. But let’s face it, one of the great challenges and responsibilities of the credit union movement is to retain the spirit and commitment of the Linda Levy’s of the world, even as it competes in an ever-changing and ever more competitive financial environment. It is that spirit, not a Federal tax break, which ultimately sustains the credit union movement.

Are Medallions Tied In With The Cohen Investigation?

Unless you spend your free time in a bomb shelter, a mile under the Earth’s surface somewhere in North Dakota, you know that Federal prosecutors took the unusual and dramatic step last week of obtaining a search warrant for the office of President Trump’s long time lawyer, Michael Cohen. My brother tipped me off to some news stories over the weekend reporting that the search warrants executed last Monday included a request for documents related to Cohen’s ownership of taxi medallion loans. For example, CNN is reporting that “Cohen has held numerous New York City medallions in his portfolio according to records, where the value has been diminished since the onset of Uber and Lyft.” A similar report was made by NPR over the weekend.

Is it only a matter of time before the medallion loans become the subject of cable news rants? Stay tuned.

April 16, 2018 at 9:31 am 1 comment

5 Things You Need To Know About Last Week

Increasingly it seems that there’s no down time for credit union news anymore, which is good if you’re a blogger but bad if you are a blogger who took an Easter break. So here in order of descending importance is a look back at some of the key developments that occurred last week with the understanding that I may expand further on these developments in the coming weeks.

DC Federal Court Strikes Down Key Provisions of NCUA’s Community Membership Rules

I know you’ve already heard about this one but considering that it takes about a week to read the decision, there’s still much more that needs to be said about Am. Bankers Ass’n v. Nat’l Credit Union Admin., No. CV 16-2394 (DLF), 2018 WL 1542049, (D.D.C. Mar. 29, 2018). Suffice it to say, that in its ruling the court held that NCUA overstepped its authority in defining a local community as any portion of a combined statistical area that contains no more than 2.5 million people. The court also ruled that the Board did not act rationally in defining a rural district as an area containing up to one million people. The court put a monkey wrench in many credit union expansion plans. Without getting this decision overturned or at least modified on appeal, community based credit unions will find it increasingly difficult to grow to meet member needs. On the bright side, portions of the rule were upheld and there may be a path forward for credit unions and NCUA, even if this decision is not reversed.

Prodigal Son Returns

When I left for vacation, an eight member democratic faction in the state Senate provided an independent power base at the state Capitol. When I came back, the Independent Democratic Caucus was no more. What’s more, Governor Cuomo was vociferously campaigning for Democrats in two upcoming special elections. The practical impact of this development was seen immediately as Senate Majority Leader John Flanagan replaced Jesse Hamilton as the Chair of the Senate Banks Committee with Long Island Republican Elaine Phillips. Remember, for the Democrats to take control of the Senate, they have to win two upcoming special elections in seats vacated by Democrats and convince Democrat Simcha Felder to caucus with them instead of the Republicans.

State Budget Impact

When the legislator finally got the budget deal done on Saturday, it contained a few provisions that will impact credit unions and their operations. S. 7508-C PART QQQQ creates a revolving loan fund for community development financial institution.

The bill imposed a $2.75 charge on ride sharing vehicles in Manhattan. A charge of $2.50 is imposed on medallion taxis. Why does this matter? Because critics of the approach argue that ride sharing vehicles are much more able to absorb the cost of the fee increase than are their medallion counterparts, making it even more difficult for the medallion industry to remain competitive.

This is the way the plan is described in the Governor’s budget press release: “Enact a $2.75 Surcharge on For-Hire Vehicles: To establish a long-term funding stream for the MTA and to reduce motor vehicle congestion, the FY 2019 Budget enacts a surcharge on for-hire vehicles below 96th Street. The surcharge is $2.75 for for-hire vehicles, $2.50 for yellow cabs, and $0.75 for pooled trips. This funding will go into an MTA “lock box,” and will provide long-term funding to sustain for the Subway Action Plan, outer borough transit improvements, as well as a NYC general transportation account.”

 Beneficial Owner Q&A Release

Regulations requiring credit unions and banks to identify the beneficial owners of accounts must be complied with by May 11, 2018. Although many credit unions may not deal with the type of sophisticated entities that this regulation is designed to address, you still need policies and procedures in place to know who the beneficial owner of an account is. You should definitely take a look at this Q&A if you haven’t done so already.

State Treasurers Want Cannabis Meeting With Sessions

With confusion continuing to reign regarding the legal status of marijuana proceeds in states that have legalized its use, a group of state treasurers wrote a letter last Thursday to Attorney General Jeff Sessions requesting a meeting with him to discuss this issue. Since withdrawing the Cole Memorandum in November, the AG has imposed radio silence on how financial institutions should deal with this issue.

 

 

April 9, 2018 at 8:59 am Leave a comment

Citibank Is Wrong To Take Stand On Gun Debate

On Saturday, as kids across the country advocated for gun control measures, Citibank became the first major financial institution in the country to announce that it was placing restrictions on gun retailers with whom it does business. In a blog accompanying the announcement, it explained that its new policy will require retailers to refuse to sell firearms to someone who hasn’t passed a background check, restrict the sale of firearms for individuals under 21 years of age, and not sell bump stocks or high-capacity magazines. Citibank has gotten positive reviews for its actions and even seen an uptick in deposits. I’m giving the bank the benefit of the doubt and saying it’s doing the wrong thing for the right reasons. Its decision to coerce gun retailers will make providing needed services more difficult for all financial institutions, including credit unions, while doing little to achieve needed gun control reforms.

First, let me explain where I am coming from. I actually agree with every policy Citibank is supporting and would like to see even more restrictions on gun use in this country. But the job of a credit union or bank is tough enough without taking sides on the hot button issues of the day. How many of the people applauding Citibank’s actions would applaud if Citibank decided that it was not providing banking services to anyone associated with the NFL so long as some of its players boycott the National Anthem? Perhaps Citibank should take a stand on abortion or even merchants who sell cereal loaded with junk.

My point is that the primary purpose of banking is to provide people and businesses with a safe place to put their money and take out loans; not to pass judgment on how they choose to make a living provided what they are doing is legal. Done properly, this is a noble calling. It helps people save their money and provides a ladder for upward mobility. Credit Unions have the especially unique responsibility of assisting people of modest means. But these worthwhile goals don’t give credit unions or any other financial institution a license to pass judgment on how our customers spend their money or grow their businesses provided that they are doing so legally and in a financially sound manner.

By taking a stand on such a high-profile issue, Citibank has opened the door to litmus test banking in which institutions will be pressured, not only to know their customers but to make sure that their customers only engage in activities that would be approved of at a dinner party in the Upper East Side of Manhattan. All financial institutions have just been put on a slippery slope that it will be almost impossible to get off.

Morelle To Run For Slaughter House Seat

Long-serving Democratic Assemblyman Joe Morelle, who represents the Rochester area, was greeted with a standing ovation as he entered the chamber yesterday following news that the second ranking member of the Democratic Leadership Team has announced he is a candidate to fill the vacancy caused by the recent death of Congresswoman Louise Slaughter. Morelle, who has been in the Assembly since 1990, has been the Majority Leader since 2013. A special election has not been called yet but at the very least a primary will have to be held. Either way, the winner will have to stand for reelection this November.

A special election would receive national attention. Slaughter survived a scare when she ran for reelection in 2014 and Republicans could view the 25th Congressional District as they head in to what promises to be a very tough battle to hold onto their majority in Congress.

 

 

March 27, 2018 at 9:15 am 1 comment

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Authored By:

Henry Meier, Esq., General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association.

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