Posts tagged ‘New York State Senate’

FCU’s Can Access Federal Courts

Executives at larger credit unions have one more thing to be thankful for as they celebrate Thanksgiving on Thursday. The Court of Appeals for the Fourth Circuit reversed an earlier lower-court ruling which would have denied federal credit unions access to the federal courts in most circumstances. This may not sound like a big deal, but as credit unions grow larger and serve members in multiple states, the access to federal courts is crucial for these institutions going forward.

Federal law provides that a corporation  “shall be deemed a citizen of every State and foreign state by which it has been incorporated and of the State or foreign state where it has its principal place of business.” 28 U.S.C. § 1332(c)(1) (emphasis added). 

Navy FCU was suing a company based in Florida, Delaware and New York to which it sold some of its loans for violating its contract by reselling the loans to another party. The defendant successfully argued that under 1332, a federally chartered credit union was not able to obtain jurisdiction or access to the federal courts. In the type of argument that thrills textualists on steroids, the district court interpreted the statute as requiring that a credit union must be both chartered by a state and have a principal place of business in order to be eligible to start a suit in federal court. Federal credit unions are chartered by the federal government, not states.

Fortunately for the home team, common sense prevailed. In reversing the lower court, the Fourth Circuit reached three conclusions that are fundamental to credit union operations. First, credit unions are corporations even though they are cooperatives. Second, the statute covers federally chartered credit unions which are either chartered by a state or have a principal place of business in a state. Third, as a result, Navy FCU with it’s C-suite of top executives located mainly in Virginia, qualified as a Virginia resident. This decision is not binding on other federal circuits. Still, it does represent persuasive authority if, and I believe when, federal credit unions face similar challenges in places like New York. 

After Further Review…

It took a mere three weeks to figure it out, but at long last, the electorate in New York has solidified Democratic control in the State Senate. Yesterday, Senate Majority Leader Stewart-Cousins and her top deputy Michael Gianaris announced that when all the votes were counted, Senate Democrats would hold at least 42 seats, but with other races still to be decided, this majority may grow. 42 is a magic number not just because it was worn by Jackie Robinson, but because it is also the threshold for a supermajority in this chamber, giving the Senate the ability to override a Governor’s budget proposal. The Assembly already has a supermajority. 

On that note, enjoy your Thanksgiving. I’ll be back next week.

November 24, 2020 at 10:01 am Leave a comment

New York On Verge of Historic Power Shift…Again

Image result for senator jeff kleinThis headline might be a tad premature but it appears that the State Senate Democratic Caucus headed by Andrea Stewart-Cousins and the 8 member Independent Democratic Caucus by Senator Jeff Klein have reached a preliminary agreement to unify, potentially paving the way for cutting Republicans out of holding any power in the state legislature.

How big of a deal is this? Since the end of WWII, Democrats have held power without Republican help only briefly in 1964, 2008, and 2010. In the latter two cases, Republicans maintained control by entering into power sharing agreements with a group of breakaway Democrats.

Yesterday, Senator Jeff Klein issued a statement in which he indicated that the Democratic factions had come to an agreement about how to work together. In a statement released yesterday evening, “The State Party’s assurance that our progressive legislative agenda will be advanced is a victory for the people of New York,” Klein said. “I look forward to implementing the terms that have been outlined in yesterday’s letter.”

Still this appears to be an agreement to agree. The new power sharing arrangement is reportedly scheduled to take effect only after the state budget is negotiated. Currently there are 23 Democrats in the traditional Senate Democratic Caucus and 8 Democrats in the breakaway IDC. Simcha Felder is a Democrat who currently caucuses with the Republicans but has indicated in the past that he is willing to work with whatever party can most help his constituents. With special elections taking place next year, a unified Democratic conference should be able to take control without needing Republican help, but then again we have been here before.

NY Credit Union Fined By DFS

New York’s Department of Financial Services announced that The United Nations Federal Credit Union and Lloyds of London were fined $1.47 million for marketing and offering life insurance tied to the credit union’s credit and debit card program without being appropriately licensed. Here is some additional information.

Round One Goes To Mulvaney

Also yesterday evening, a Federal District Court Judge refused to block Mick Mulvaney from taking over as the interim head of the CFPB while continuing to serve as the Director of the Office of Management and Budget. I haven’t seen a transcript of the proceedings yet but according to this article, the Judge explained “Nothing in the statutes prevents Mr. Mulvaney from holding both of these positions.” Hopefully this silliness can end soon and we can start concentrating on working with Mr. Mulvaney to bring much needed mandate relief to credit unions.

November 29, 2017 at 9:11 am Leave a comment

Congressman to CUNA: My Bad

So, it ends up that yesterday’s biggest story isn’t about a bill to effectively end the credit union industry by doing away with its tax exempt status.  Instead, the Wall Street Journal reported that the Federal Housing Administration is once again on the verge of needing a bailout from the American taxpayer.  If this is true, and looking through some previous blogs I would note that the Wall Street Journal has made similar assertions in the past, it would mean not only that taxpayer funding would have to prop up the agency for the first time in its 78 year history, but that housing policy would finally be on the legislative agenda.  Depending on your perspective, the FHA is either a villain of scandalous proportions or a shining light in America’s housing industry. Here is why.

The FHA insures mortgages of individuals who may not otherwise qualify for a conventional mortgage.  The homeowners put down as little as 3.5% at closing and they pay back the insurance premium as part of the mortgage payments.  When Fannie and Freddie effectively went bankrupt at the start of the mortgage crisis and were taken over by the United States Government the FHA essentially filled the void left by its sister entities.  Today, it is responsible for one third of all mortgages in the country and together with Fannie and Freddie these government created entities are responsible for 90% of the mortgages in this country.

Those inclined to think of its behavior as scandalous would ask what other entity would increase lending during a mortgage crisis?  While artificially propping up the housing market, it has just put the American taxpayer on the hook and put off the day of reckoning for the government to actually decide what type of housing support to have in this country and how to pay for it.

For those inclined to see it as a beacon of sanity, it is safe to say that as bad as the housing market has been for more than five years now it would have been much, much worse without the FHA.  In addition, according to the Wall Street Journal, a disproportionate number of FHA’s delinquencies are on mortgages dating to early in the crisis.  Presumably this means that the worst may be over if only we can get through this rough spot.  I’ll let you decide whether you think the FHA should be considered a friend or foe of the American consumer, not to mention the credit union member who wants to get a house.  But I do know that if the Treasury has to extend a lifeline to this institution it will be seized on as an example of government overreaching and hopefully start a discussion about what the future of housing policy should look like in this country.

Congressman to CUNA:  My Bad

I didn’t think anything could take my attention away from the Peyton Place drama unfolding in Tampa Bay involving the top echelon of our military and intelligence establishment, but I was jarred back into reality when I saw the news bulletin from CU Times announcing that Florida Republican Congressman Dennis Ross had put forward a bill that would end the credit union tax exemption for both state- and federally-chartered institutions.  In fairness to the Congressman, he actually put forward the recommendations of the Boles-Simpson Commission on deficit reduction, which, as I pointed out in a recent blog, included ending the tax exemption for credit unions.

We can all breathe easy.  According to CUNA, conversations with staff revealed that the proposal eliminated the tax exemption as a result of a drafting error and that if the bill ever did start moving it would be amended.  Even assuming that the Congressman mistakenly proposed effectively doing away with our industry, the incident demonstrates just how fluid the next several weeks of congressional action is going to be.  If there is going to be a deal on deficit reduction, it is going to be a lot of last-second horse trading and a lot of it will take place behind closed doors.

New York Senate Republicans move closer to majority coalition

Speaking of late night horse trading behind closed doors, the New York State Senate Republicans are now within one seat of putting together a majority in the Senate with absentee ballots in one crucial upstate seat still being counted.  Senator-elect Simcha Felder, a conservative Democrat from Brooklyn will caucus with the Republicans.  If the Republicans don’t obtain a majority, the balance of power will hinge on the four Senate Democrats who created an Independent Democratic Caucus.  Stay tuned, I’m sure there is more fun to come.

 

November 15, 2012 at 8:08 am 1 comment


Authored By:

Henry Meier, Esq., Senior Vice President, 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. In addition, although Henry strives to give his readers useful and accurate information on a broad range of subjects, many of which involve legal disputes, his views are not a substitute for legal advise from retained counsel.

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