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									                                                        Michigan Credit Union League
                                                     2009 Federal Legislative Issues Agenda

       ISSUE                           BACKGROUND                                             STATUS                             MCUL POSITION

Preserve the Credit     Now more than ever, it is critical for the         Included in letter to Dan Mica, CUNA              The MCUL will work with
Union Federal Tax       corporate credit union tax exemption to remain     President, on January 8, 2009.                    CUNA to oppose all attempts
Exemption               in place. It provides pricing advantages that                                                        to subject credit unions to
                        translate into a lower cost of financing for                                                         taxation, as well as efforts to
                        consumers and small businesses. It also keeps                                                        use the tax debate to prevent
                        credit unions focused on value and service                                                           credit unions from gaining
                        versus profit.                                                                                       much needed changes to the
                                                                                                                             Federal Credit Union Act
Establish Home          The savings rate among Americans is critically     Included in letter to Dan Mica, CUNA              Provide for a federal income
Savings Account         low or non-existent. Offering incentives to save   President, on January 8, 2009.                    tax benefit for creating and
with Tax Deductible     could reverse this dangerous trend, and in the                                                       contributing to a Home
Contributions for       process help to build wealth for life’s largest                                                      Savings Account.
Homeowners              investment and also provide financial
                        depositories with an additional stable source of

Federal Tax             Our domestic automakers have for decades           Included in letter to Dan Mica, CUNA              Amend the Internal Revenue
Incentives for the      been the engine of growth for our nation’s         President, on January 8, 2009. The federal        Code to provide tax
Purchase of New         economy. As the effects of the subprime            stimulus bill provided a deduction to all         incentives for the purchase of
Automobiles             mortgage crisis have spread to the broader         taxpayers for any sales and excise taxes on the   new automobiles. This could
                        financial system, there has been a significant     purchase of new cars bought in 2009. This         come in the form of a tax
                        decrease in lending activity for the purchase of   deduction phases out for taxpayers incomes        deduction for interest paid
                        new automobiles. Incenting consumers with a        over $125,000 ($250,000 for couples). In          similar to the mortgage
                        tax credit for purchasing a new automobile will    addition, US Rep. Miller (R-Harrison)             interest deduction, or in the
                        not only help consumers, but also the auto         introduced a bill that would give car buyers      form of an income tax credit
                        companies, lenders, and the economy generally.     thousands of dollars in vouchers for replacing    for a percentage of the
                                                                           vehicles at least eight years old with fuel       purchase price.
                                                                           efficient vehicles.

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                                                      Michigan Credit Union League
                                                   2009 Federal Legislative Issues Agenda

      ISSUE                           BACKGROUND                                          STATUS                    MCUL POSITION

Allow Consumers         Due to the economic crisis, many consumers      Included in letter to Dan Mica, CUNA    Amend the Internal Revenue
Greater Flexibility     are in need of emergency access to cash. IRA    President, on January 8, 2009.          Code to permit consumers to
in Accessing Funds      and 401k accounts represent a possible                                                  temporarily (up to 3 years)
in IRAs and 401K        temporary solution.                                                                     tap into their IRAs and 401ks
Accounts                                                                                                        and deferred contribution
                                                                                                                retirement accounts without
                                                                                                                penalties for certain

Student Lending         Student loan programs have become the            Included in letter to Dan Mica, CUNA   Change federal law to allow
and Loan                exclusive province of large commercial banks.    President, on January 8, 2009.         third party marketers like
Guarantee               Credit union involvement has diminished due to                                          American Education
Programs                lesser negotiating power with universities and a                                        Services (AES) to re-enter
                        recent change in federal law prohibiting                                                the student loan market as
                        payment of fees that had helped all lending                                             affiliate marketing agents.
                        institutions market their products through third
                        parties. These factors have proportionately had                                         Continue to support the
                        a higher impact on smaller higher educational                                           funding of federal student
                        institutions as well as many credit unions.                                             loan guarantee programs

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                                                        Michigan Credit Union League
                                                     2009 Federal Legislative Issues Agenda

      ISSUE                           BACKGROUND                                                STATUS                           MCUL POSITION

Regulatory             The Treasury Blueprint for revising the               Included in letter to Dan Mica, CUNA           Oppose any plan that would
Restructuring          regulatory structure of financial institutions puts   President, on January 8, 2009.                 weaken or eliminate the
                       the federal credit union charter at risk. An                                                         federal credit union charter
                       independent credit union regulator can more           NCUA Chair Mike Fryzel testified to the Senate and its independent
                       easily understand and focus on the unique, not-       Banking Committee on March 19, 2009 that the regulatory structure.
                       for-profit role of credit unions. Both credit         independence of the NCUA and NCUSIF
                       union regulations and deposit insurance               should be preserved.
                       guidelines should take into account and
                       encourage credit unions’ investments in their         CUNA believes regulatory restructuring could
                       members and communities. This would be                become a frequent topic of discussion for both
                       diminished or lost under a bank focused super         House and Senate committees during the work
                       regulatory/deposit insurance structure.               periods on Capitol Hill.

                                                                             U.S. Treasury Secretary Timothy Geithner has
                                                                             promised to present a comprehensive blueprint
                                                                             for regulatory reform; however, differences in
                                                                             regulatory approach may prevent lawmakers
                                                                             and other government officials from completing
                                                                             any substantive regulatory reform in the near
                                                                             future. President Barack Obama's
                                                                             administration has not yet spelled out how it
                                                                             thinks the current regulatory structure should be
                                                                             reformatted, although it has been reported that
                                                                             senior administration officials are considering a
                                                                             single agency to regulate the banking industry.

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                                                         Michigan Credit Union League
                                                      2009 Federal Legislative Issues Agenda

      ISSUE                            BACKGROUND                                               STATUS                            MCUL POSITION

Community              Congress enacted the Community Reinvestment            U.S. Rep. Eddie Bernice Johnson, (D-Texas)      The MCUL will continue to
Reinvestment Act       Act (CRA) in 1977 in response to the unjustified       introduced HR 1479 that would, in part, apply   defend credit unions against
(CRA)                  “redlining” of lower income and minority               Community Reinvestment Act (CRA)                the banker lobby attacking
                       neighborhoods by banks and thrift institutions         requirements on credit unions. The MCUL sent    credit unions and suggesting
                       during the 1960s and early 1970s. The purpose          letters of opposition to the bill to all 17     that CRA be applied to them.
                       was to ensure that for-profit financial institutions   members of Michigan’s Congressional
                       (including both federal and state-chartered            Delegation on March 16, 2009.
                       commercial and savings banks) were adequately
                       meeting the financial service needs of all parts of
                       the communities from which they draw deposits.
                       Credit unions, as not-for-profit, community based
                       institutions, have been exempt from CRA
                       requirements. On March 14, 2008, Chairman
                       Frank stated next year the House Financial
                       Services Committee would re-examine whether to
                       require credit unions and insurance companies to
                       comply with Community Reinvestment Act

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                                                       Michigan Credit Union League
                                                    2009 Federal Legislative Issues Agenda

       ISSUE                          BACKGROUND                                               STATUS                             MCUL POSITION

FCUA                   1. Member Business Lending - Remove                  Included in letter to Dan Mica, CUNA              The MCUL supports
                       Federal Cap. Credit unions have been making          President, on January 8, 2009. Sen. Chuck         meaningful FCUA
                       member business loans (MBL) since their              Schumer (D-NY) has announced his intention        modernization and regulatory
                       inception in the early 1900s. Throughout most        of introducing legislation to eliminate the MBL   relief for credit unions.
                       of this period there were no limits on the           cap.
                       volume of member business loans credit unions
                       could originate or hold. In fact, statutory limits
                       on credit unions’ member business lending did
                       not appear until passage of the Credit Union
                       Membership Access Act in 1998. Now more
                       than ever when small businesses are struggling
                       to get financing due to the current credit crunch,
                       credit unions can provide an alternative source
                       of capital, which will not cost the government
                       or taxpayers a penny.

                       2. Field of Membership. FCUs operate under           Included in letter to Dan Mica, CUNA
                       restrictive FOM laws and regulations with the        President, on January 8, 2009.
                       constant threat of banker lawsuits. FCUs
                       should be able to expand into underserved
                       geographical areas as was permitted prior to
                       1998. A number of states already allow for
                       flexible FOM for state-chartered credit unions,
                       including the Michigan.

        Last Updated: 2/12/2012                                                                                                                5
                                                 Michigan Credit Union League
                                              2009 Federal Legislative Issues Agenda

ISSUE                          BACKGROUND                                             STATUS               MCUL POSITION

                3. Risk-Based Capital. The Credit Union            Included in letter to Dan Mica, CUNA
                Membership Access Act mandated a capital and President, on January 8, 2009.
                PCA system for federally insured credit unions
                that has proven to be too restrictive. In an April
                2005 report, the NCUA determined that the
                PCA system created by the 1998 CUMAA was
                too inflexible and that a more risk-based
                approach would both foster healthy
                capitalization levels and permit better capital

                4. Investments – Community based housing            Included in letter to Dan Mica, CUNA
                and small business loan pools. As credit            President, on January 8, 2009.
                unions continue to evolve and become more
                integrated into their broader communities,
                opportunities will arise to cooperate with other
                financial institutions to pool funds that will be
                loaned to local citizens in community-based
                programs to assist with housing and/or small
                business needs. Credit unions should be
                empowered on a limited basis to participate in
                these programs.

                5. Investments in Corporate Bonds.                  Included in letter to Dan Mica, CUNA
                Michigan credit unions are permitted to invest      President, on January 8, 2009.
                in non-speculative corporate bonds that meet
                certain requirements. In addition, flexibility in
                making some higher risk business loans to
                include an equity interest especially for start-
                ups or other appropriate situations may make
                good sense.

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                                                 Michigan Credit Union League
                                              2009 Federal Legislative Issues Agenda

ISSUE                          BACKGROUND                                              STATUS               MCUL POSITION

                6. Investment - Housing Cooperatives for             Included in letter to Dan Mica, CUNA
                Members. The Michigan Credit Union Act               President, on January 8, 2009.
                (MCUA) permits a SCU to invest in
                cooperative housing and related facilities for its
                members with an investment cap of no more
                than 5% of the SCU’s unimpaired capital,
                provided the interest in the property is disposed
                of within 3 years and the purchase price does
                not exceed the appraised value of the property
                as determined by a competent disinterested
                appraiser retained by the SCU. These
                provisions allow for one or more SCUs to act in

                7. Investments - Expand FCU CUSO                     Included in letter to Dan Mica, CUNA
                Investment Authority. The MCUA permits a             President, on January 8, 2009.
                larger percentage of a SCU’s assets to be
                invested in a CUSO (up to 6% of assets without
                regulator approval, and not to exceed 12% of
                the SCU assets unless approved by the state
                regulator). FCUs have a lower percentage.

                8. Investments - Empower FCUs to Make                Included in letter to Dan Mica, CUNA
                and Hold Venture Capital Investments.                President, on January 8, 2009.
                Equity investments by FCUs are generally
                prohibited. In this troubled economic
                environment, allowing for broader investment
                options could help stimulate the economy by
                assisting businesses looking for additional
                lending sources.

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                                               Michigan Credit Union League
                                            2009 Federal Legislative Issues Agenda

ISSUE                          BACKGROUND                                            STATUS               MCUL POSITION

                9. Investments - Allow CUs to Create a            Included in letter to Dan Mica, CUNA
                Membership Share Class (Class B Shares).          President, on January 8, 2009.
                Currently credit unions may not share capital by
                investing in another credit union. Allowing
                financially strong credit unions to invest in
                other CUs would provide a low-cost source of
                funding. It would also allow the borrowings to
                be treated as regulatory capital, thus protecting
                the NCUSIF from exposure. It would also
                create additional yields for the lending CU that
                has excess capital. The lending credit union
                would also be a potential acquisition partner in
                the event of failure.

                10. Investments - Empower FCUs to Invest           Included in letter to Dan Mica, CUNA
                in Commercial Real Estate. The FCUA                President, on January 8, 2009.
                currently does not provide credit unions with
                the authority to invest funds in the development
                of commercial or residential real estate for the
                purposes of sale or lease. This new authority
                could enhance the involvement of community
                based credit unions located in blighted areas.
                Banks currently have this power.

                11. Convert Troubled Borrowers to Renter           Included in letter to Dan Mica, CUNA
                Status. Depending on the individual                President, on January 8, 2009.
                circumstance, it might be beneficial to both the
                financial institution and a troubled homeowner
                to permit the borrower to stay in the home by
                becoming a renter or a rent-to-own option if the
                lease payments can be structured to be
                significantly less and thus more affordable than
                when structured as a loan.

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                                                 Michigan Credit Union League
                                              2009 Federal Legislative Issues Agenda

ISSUE                          BACKGROUND                                          STATUS                MCUL POSITION

                12. Purchase Assets and Assume Liabilities        Included in letter to Dan Mica, CUNA
                of a Commercial Bank or Thrift. Due to the President, on January 8, 2009.
                current economic crisis, troubled banks and
                their regulators will be increasingly looking for
                buyout or merger partners. The MCUA permits
                a domestic credit union to purchase the assets of
                another domestic credit union, or with the
                approval of the commissioner, assume any of
                the liabilities. Why shouldn’t credit unions be
                allowed to assume assets and liabilities of a
                local community bank if it’s in the best interest
                of both the CU members and the bank’s

                13. Trust Services. With recent Wall Street      Included in letter to Dan Mica, CUNA
                sandals and financial bailouts, consumers would President, on January 8, 2009.
                probably like the option of receiving trust
                services through their local, trustworthy
                member-owned institution. While many credit
                unions would not desire this power, a limited
                number of larger CUs would desire this for their

                14. Alternative Capital. Unlike other
                financial institutions, credit unions have been
                able to increase their capital only by retaining a
                portion of their net earnings. NASCUS firmly
                believes that credit unions should have access
                to alternative capital and that it can be done in a
                safe and sound manner.

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                                                       Michigan Credit Union League
                                                    2009 Federal Legislative Issues Agenda

      ISSUE                           BACKGROUND                                               STATUS                               MCUL POSITION

Interchange Fee        An interchange fee is one of the fees retailers      Rep. Pete Hoekstra (R-Holland) has indicated        The MCUL and CUNA will
Caps                   pay to credit card issuers (including credit         possible support and co-sponsorship for a bill to   oppose this issue as the
                       unions) and to the payment networks. The card        limit the interchange fee.                          belief is that any legislation
                       issuers and the payment network provide the                                                              would interfere with
                       operational framework for credit card                H.R. 2382 has been introduced to regulate           essentially a market-driven
                       transactions. Interchange fees are payable to the    interchange. The proposed legislation would         process. Consumer options,
                       credit union (or other card issuer) and the          give merchants an antitrust exemption in            competition and innovation
                       payment network operator, with respect to each       interchange negotiations. However, the              would be adversely effected.
                       credit card sales transaction as a contractually-    merchants attempt to utilize vehicle bills, such
                       fixed percentage of the amount of the sale, a flat   as the credit card reform legislation, to address
                       fee, or a formula with both factors. Merchants       interchange have been unsuccessful. The
                       contract with an acquiring bank, aggregator, or      MCUL and CUNA will oppose this issue as the
                       independent payment processor to provide             belief is that any legislation would interfere
                       payment processing services for card                 with essentially a market-driven process.
                       transactions and negotiate terms with the
                       payment networks on their behalf. Among the
                       costs covered by interchange fees is a credit risk
                       premium earned by card issuers to cover losses
                       resulting from card users’ failure to pay their
                       accounts. Several bills were introduced last
                       session to cap these fees.

        Last Updated: 2/12/2012                                                                                                                   10
                                                        Michigan Credit Union League
                                                     2009 Federal Legislative Issues Agenda

       ISSUE                           BACKGROUND                                            STATUS                            MCUL POSITION

Credit Card Reform As credit cards are rarely collateralized, the risk    The U.S. House had passed H.R. 627, the          Although the MCUL and
                   of borrower default rises with this type of credit     Credit Cardholders' Bill of Rights Act which     CUNA support banning
                   line. This forces credit card issuing financial        largely paralleled the Reg Z and Unfair and      deceptive practices, there
                   institutions to impose relatively higher costs,        Deceptive Practices Act (UDAP) rules that        was a concern that legislation
                   fees, and repricing practices on credit cards.         NCUA and the Fed adopted. The U.S.               could result in unintended
                   Perceived abuses in the credit card industry           Senate Banking Committee had reported S.         consequences such as
                   have prompted Congress to hold hearings and            414, the Credit Card Accountability,             restricting the range of
                   introduce legislation to curb industry practices       Responsibility and Disclosure Act (CARD          products and services that
                   viewed as deceptive or abusive.                        Act). However, there were concerns since         credit card issuers currently
                                                                          this legislation went much further than the      offer, which may cut off
                        The Credit Cardholders' Bill of Rights Act,       Reg Z and UDAP rules. The Senate                 credit to some and raise the
                        H.R. 5244, was reported out of the House          amended H.R. 627 to look more like S. 414        price of credit for all.
                        Financial Services Committee last session to      but did not consider interchange amendments
                        ban a number of unfair card practices. The        to the bill. The bill requires card issuers to   Credit unions did not support
                        NCUA has recently approved stricter rules to      notify a cardholder at least 45 days in          the consideration of
                        ban unfair and deceptive credit card practices,   advance of increasing the APR or fees. In        interchange amendments in
                        many which were encompassed in H.R. 5244.         addition, the APR generally will not be          conjunction with the credit
                                                                          allowed to increase on existing balances,        card reform bill.
                                                                          unless covered by an exception in the bill.
                                                                          The President signed H.R. 627 on May 22.

         Last Updated: 2/12/2012                                                                                                            11
                                                       Michigan Credit Union League
                                                    2009 Federal Legislative Issues Agenda

      ISSUE                           BACKGROUND                                              STATUS                                MCUL POSITION

Internet Gambling      Under the 2006 Unlawful Internet Gambling          Rep. Barney Frank (D-Mass.) is launching a            While the MCUL and CUNA
                       Enforcement Act (UIGEA), financial                 new attempt to revise conditions imposed by a         support enforcement of
                       institutions must establish and implement          controversial 2006 law that, in part, forces          reasonable laws to prohibit
                       policies and procedures to identify and block      financial institutions to block restricted Internet   unlawful Internet gambling,
                       certain online gambling transactions, or rely on   gambling transactions.                                the UIGEA and the proposed
                       those established by the payments system.                                                                rules would inflict a set of
                                                                          H.R. 2266 and 2267 would delay the                    unreasonable policing
                       On November 12, 2008, the Treasury                 implementation of UIGEA rules for a year              requirements which will
                       Department and Federal Reserve issued a joint      beyond their current effective date of Dec. 1,        undoubtedly prove difficult
                       final rule that implements the UIGEA. The final    2009 and create the Internet Gambling                 for financial institutions to
                       rule requires U.S. financial firms that            Regulation, Consumer Protection, and
                       participate in designated payment systems to       Enforcement Act of 2009. This act would
                       establish policies and procedures that are         establish a federal regulatory and enforcement
                       "reasonably designed" to prevent payments to       framework under which Internet gambling
                       gambling businesses in connection with             operators could obtain licenses authorizing
                       unlawful Internet gambling. However, CUNA          them to accept bets and wagers from
                       continues to work with Chairman Frank and          individuals in the United States.
                       others on the Committee to resolve this issue

        Last Updated: 2/12/2012                                                                                                                  12
                                                      Michigan Credit Union League
                                                   2009 Federal Legislative Issues Agenda

     ISSUE                           BACKGROUND                                             STATUS                              MCUL POSITION

Mortgage              Given the high number of mortgage related          The U.S. House of Representatives passed H.R.      The MCUL will continue to
Bankruptcy            bankruptcies, legislation is being pushed that     1106, the Helping Families Save Their Homes        advocate that CUNA oppose
                      would allow a mortgage holder to ask a             Act, with language permitting bankruptcy           any legislation that
                      bankruptcy judge to reduce the interest rate and   courts to modify the terms of loans secured by a   unnecessarily burdens credit
                      extend the length of a mortgage if the             debtor's principal residence (cramdown).           unions with restrictions and
                      foreclosure process has been started. Primary      However, over concerns regarding the               changes relative to mortgage
                      residence mortgages are treated differently        cramdown provision, the Senate introduced S.       bankruptcies.
                      under Chapter 13 proceedings compared to           896, a new housing bill which did not include
                      other types of secured debts, such as vacation     the controversial language. When the Senate        The MCUL and CUNA did
                      homes and car loans. Many lenders have stated      considered S. 896, an amendment allowing for       support S. 896 which enacted
                      that changing existing mortgage terms would        judicial mortgage modification was defeated but    the NCUA Corporate
                      cause mortgage premiums to increase as much        an amendment adding the NCUA Corporate             Stabilization proposal and
                      as 2 percent because lenders would have to         Stabilization Plan was adopted. The President      did not include cramdown
                      factor these potential losses into future          signed the bill on May 20.                         language.
                      mortgage loans. Lenders also argue that
                      secondary mortgage market investors may flee
                      from these investments if loan terms can be
                      changed at a judge’s discretion.

       Last Updated: 2/12/2012                                                                                                              13

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