Document Sample
RANK Powered By Docstoc
					                                                          Michigan Credit Union League
                                                        2010 State Legislative Issues Agenda

       ISSUE                            BACKGROUND                                                STATUS                            MCUL POSITION

Michigan Business       With the State of Michigan currently running a         Current versions revising the MBT do not tax     The MCUL will vigorously
Tax (MBT)               deficit, and with the opposition to the newly          credit unions and does not appear to be          oppose any effort to impose
                        enacted Michigan Business Tax (MBT) which              interested in doing so.                          new taxation on credit unions
                        many feel is overly burdensome, there have                                                              by altering the MBT.
                        been calls from the Speaker and other
                        legislators to revisit the structure of this tax.
                        Now more than ever, credit unions need to be
                        vigilant in ensuring that the business tax
                        exemption remains in place if the MBT is

Allow for Direct        In a new vehicle transaction, the dealer               The MCUL has been in discussions with the        The MCUL supports
Auto Lien               assembles all documents, including lien                SOS on this issue to determine whether           developing a more
Placement with          information and files with SOS. For used               legislation is necessary to make this process    streamlined, electronic
Secretary of State      vehicle transactions, it is incumbent upon the         more fluid or if there is another avenue to      mechanism to enable direct
(SOS)                   borrower to bring the title back to the lender         explore.                                         placement liens on vehicles
                        that shows that they are listed as the lien holder.                                                     with the SOS.
                        With more borrowers defaulting on loans, it is         The MCUL conducted a conference call to
                        critical for the lender to be listed on the title in   discuss direct auto lien placement with credit
                        order to have the legal right to repossess the         union officials, the SOS office and MCUL.
                        auto and sell it, to recover sums owed.                While the SOS states their computer system
                        Financial institutions may place liens and have        currently is not updated to handle electronic
                        new title sent directly to them using the TR-114       liens, the MCUL will continue to research this
                        form.                                                  possibility.

         Last Updated: 7/25/2011                                                                                                                  1
                                                       Michigan Credit Union League
                                                     2010 State Legislative Issues Agenda

      ISSUE                           BACKGROUND                                               STATUS                               MCUL POSITION

Zero-Dollar            In 2000, changes were made to the Michigan          Last session, a bill passed the House of             The MCUL will actively
PAC Reporting          Campaign Finance Act that require political         Representatives sponsored by State Rep. Fred         pursue passage of any
                       action committees (PACs) to report a donor’s        Miller (D-Mt. Clemens) which would raise the         legislation to raise the zero
                       personal information (name, address and             reporting threshold to $20, restoring the limit to   dollar reporting threshold.
                       employer) to the Secretary of State’s office        the pre-1999 first dollar reporting change.
                       regardless of contribution level. Subsequently,     Although the House passed HB 4628, State Sen.
                       donations to PACs that specialize in low dollar     Michelle McManus (R-Lake Leelanau) Chair of
                       fundraising have been negatively impacted,          the Senate Campaign and Election Oversight
                       including MCULAF.                                   Committee, opposed the bill and did not support
                                                                           taking up the issue for consideration.

                                                                           This session, State Rep. Doug Geiss (D-Taylor)
                                                                           introduced HB 4997 that would increase the
                                                                           reporting threshold to $20. The MCUL attended
                                                                           the House committee hearing and turned in a
                                                                           testimony card in support of the bill. HB 4997
                                                                           was reported out of committee and the full House,
                                                                           advancing to the Senate Committee on Campaign
                                                                           and Election Oversight.

Credit Card Fraud      Several states including Minnesota, Texas and       The MCUL has been working with CUNA on               The MCUL will advocate for
Liability              California are looking at or have already           draft language. Senator Richardville is              legislation that has been
                       adopted laws shifting costs of data breaches        supporting the issue this session and has            successful in other states to
                       from financial institutions to merchants when       expressed interest in sponsoring the legislation     increase liability on the part
                       the merchant’s mishandling of consumer              again.                                               of merchants for their role in
                       information caused the breach. These proposals                                                           credit card fraud as well as
                       give retailers added incentive to protect                                                                pushing credit card
                       consumers' information. These various                                                                    companies to enforce their
                       proposals put into state law the already existing                                                        existing merchant liability
                       payment card industry data security standards                                                            agreements.
                       that merchants are required by contract to
                       follow but are often not enforced by credit card
                       companies. State Sen. Randy Richardville (R-

        Last Updated: 7/25/2011                                                                                                                    2
                                                         Michigan Credit Union League
                                                       2010 State Legislative Issues Agenda

      ISSUE                            BACKGROUND                                             STATUS                               MCUL POSITION

                        Monroe), Banking Chair, introduced SB 1022
                        last session on this issue.
CDARS Investment        The Certificate of Deposit Account Registry        Sen. Tony Stamas (R-Midland) introduced SB          The MCUL finalized bills in
Option                  Service program (CDARS) is a funding tool for      195 and 196 to include credit unions in the         2009 to give credit unions
                        financial institutions to offer customers          legislation. In the House, Rep. Jeff Mayes (D-      parity with the banks in their
                        insurance on deposits greater than $250,000.       Bay City) also introduced similar bills with HB     ability to participate in a CD
                        In 2008, legislation was enacted to allow          4397 and 4398. The Senate passed SB 195-6 in        registry.
                        municipalities and school districts to invest in   February and the House passed HB 4397-98 in
                        CDs with financial institutions participating in   March. Based on House and Senate Leadership
                        CDARS. Since CDARS only allows FDIC                negotiations to split the bills between sponsors,
                        insured institutions to participate in the         SB 195 and HB 4397 ultimately passed the
                        network, the legislation also restricted           Legislature and were signed by the Governor as
                        participation to FDIC insured institutions.        Public Acts 21 and 22 of 2009, respectively.
                        Although the MCUL worked to change this
                        restriction before passage, the bills were fast    Sen. Stamas introduced SB 583 that would
                        tracked. The MCUL is seeking changes in state      allow community colleges to invest in CDs with
                        law to be prepared in the event CDARS is           financial institutions participating in CDARS.
                        opened up to credit unions or a similar registry   SB 583 was signed into law on 12/17/2009
                        is created for CUs.                                becoming Public Act 179 of 2009.

Encourage state tax     Our domestic automakers have for decades           A number of bills have been introduced to give      The MCUL will advocate for
deductions for          been the engine of growth for our nation’s         consumers incentives to help spur purchases of      initiatives, such as tax
interest paid on new    economy. As the effects of the subprime            new autos. There are various tax bills such as      incentives, to help spur new
vehicle loans           mortgage crisis have spread to the broader         exempting the sales tax on a new auto purchase,     auto purchases.
                        financial system, there has been a significant     allowing for the sales tax on the difference
                        decrease in the availability of financing for      between a trade-in and purchase price of a new
                        consumers wishing to purchase a new                auto, and income tax credit for purchase of new
                        automobile.                                        auto.

                        Credit unions have access to capital and can       The MCUL continues to support these bills as
                        help consumers by making affordable auto           they are considered in the Legislature.

         Last Updated: 7/25/2011                                                                                                                  3
                                                       Michigan Credit Union League
                                                     2010 State Legislative Issues Agenda

      ISSUE                           BACKGROUND                                             STATUS                               MCUL POSITION

Penalize               With so many people upside down in their           The MCUL will continue to monitor this issue         The MCUL will advocate for
Unscrupulous           mortgages, there may be the temptation for         to see if credit unions do feel there is a cause for fines for realtors (and other
Advisors               prime borrowers with assets and income to          concern and if legislation should be pursued.        licensed parties such as
                       walk away from a negative equity mortgage to                                                            brokers) or others who
                       instead buy another home at a low price. It has                                                         encourage people to walk
                       been suggested that realtors who want to make                                                           away from their mortgages to
                       a sale, may also be encouraging this practice.                                                          buy a new home.
                       Lenders are ultimately hurt most by this
                       practice and given that there is likely negative
                       equity, losses could be significant.

Income Tax Credit      House Bill 6589 (Rep. Richard LeBlanc, D-         According to Rep. LeBlanc’s office, he will be      The MCUL will encourage
for Purchase of        Westland) from last session provided an income reintroducing this legislation again.                  the adoption of legislation to
Foreclosed Property    tax credit to buyers who purchase foreclosed                                                          help spur the purchase of
                       property. The credit would have been equal to                                                         foreclosed property by
                       the difference between the property tax liability                                                     utilizing an income tax credit
                       with and without the Principal Residence                                                              as an incentive.
                       Exemption applied. In the case of a home with
                       a Taxable Value of $100,000, the income tax
                       credit would be $1,800.

                       The bill did not move before the end of the

Foreclosure            1. Shortening the Foreclosure Redemption           The MCUL continues to advocate for a               The MCUL will pursue
                       Period. Under the Foreclosure by                   shortened redemption period.                       legislation to streamline the
                       Advertisement statute [Chapter 32 of PA 236 of                                                        foreclosure process and
                       1961], foreclosed properties larger than 3 acres                                                      protect lenders from
                       are entitled to a 1-year redemption period. This                                                      additional costs due to
                       protection was granted to protect agricultural                                                        property damage caused by
                       property, but many such properties are not                                                            the borrower.
                       being used for agricultural purposes.

        Last Updated: 7/25/2011                                                                                                                 4
                                                       Michigan Credit Union League
                                                     2010 State Legislative Issues Agenda

   ISSUE                             BACKGROUND                                             STATUS                            MCUL POSITION

                      2. Shortening the Foreclosure Redemption        The MCUL continues to advocate for a                On June 29, the MCUL
                      Period for Abandoned Homes. There are two shortened redemption period for abandoned                 hosted a Foreclosure webinar
                      sections in the Foreclosure by Advertisement    homes.                                              to discuss the new
                      law that deal with redemption periods for                                                           requirements for the
                      abandoned property. The first provides for 3-                                                       Mortgage Mediation law that
                      month redemption (mailing, no response,                                                             is effective July 5. A
                      inspection, no notice within the 3-month                                                            borrower is eligible for a
                      redemption period that the property is in fact                                                      loan modification under the
                      occupied [or will be]). The second provides for                                                     Act if a combination of
                      a 30-day redemption period for properties not                                                       adjustments to the interest
                      exceeding 4 units (mailing, no response,                                                            rate and/or loan term, a
                      inspection, posting of accelerated redemption,                                                      deferral of some portion of
                      no response after 15 days of notice that the                                                        the principal, or a reduction
                      property is in fact occupied [or will be].                                                          or elimination of late fees
                                                                                                                          can lower the borrower's
                      3. Early Inspection and Liability for               The MCUL continues to advocate for this issue   housing-related debt to
                      Borrower Damage to Property. It often               with lawmakers and will work on possible        income ratio to 38%. For
                      happens that troubled borrowers intentionally       legislation.                                    more information, click here.
                      damage the property they know they will lose.
                      This ultimately is a cost to the lender. Borrower
                      should be made to pay criminally for their

MCUA                  1. Allow credit unions to invest in venture         The MCUL met with OFIR in April to discuss a    The MCUL supports
                      capital funds. Currently equity investments by      comprehensive review and refresh of the         amending the MCUA to
                      credit unions are not permitted and they also       MCUA and will begin to work with the            allow credit unions to be part
                      cannot own stock in companies. In this              Legislature on those issues as well.            of the solution to the current
                      troubled economy, allowing for more                                                                 economic and financial
                      investment options by credit unions could seek      The MCUL met with the State and Federal         crisis. At this time however,
                      to assist businesses looking for other lending      Issues Working Group in June to discuss         the Forum has voted to hold
                      opportunities.                                      MCUA. In July at the AC&E, the decision was     off from pursuing these
                                                                          made not to review and refresh this year.       changes to the MCUA. The

       Last Updated: 7/25/2011                                                                                                              5
                                                  Michigan Credit Union League
                                                2010 State Legislative Issues Agenda

ISSUE                           BACKGROUND                                     STATUS       MCUL POSITION

                2. Empower SCUs to participate in                                       MCUL will continue to
                community-based housing and small                                       compile suggested changes
                business loan pools. As credit unions continue                          to the Act to revisit in the
                to evolve and become more integrated into their                         future.
                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/micro business needs.
                Credit unions should be empowered on a
                limited basis to participate in these programs.

                 3. Empower SCUs to purchase any of the
                 assets and liabilities of a commercial bank or
                 thrift. Due to the current economic crisis,
                 troubled financial institutions other than credit
                 unions may be looking for buyout or merger
                 partners. Why should this other financial
                 institution not be a state chartered credit union,
                 especially if the credit union is community
                 based and where fields of membership would
                 not be an issue? MCUA Section 401(2)(q)
                 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.

                4. Allow SCUs to offer trust services. Because
                of the Lehman Bros. debacle and the
                remoteness of mutual funds only available via
                an 800 number, SCUs should be permitted to
                offer trust services to their members as a more
                local, and trustworthy alternative. While many

 Last Updated: 7/25/2011                                                                                  6
                                                Michigan Credit Union League
                                              2010 State Legislative Issues Agenda

ISSUE                          BACKGROUND                                    STATUS   MCUL POSITION

                credit unions would not be able to offer trust
                services, a limited number may desire this for
                their members.

                5. Expand Credit Union Investment
                Authority. Creativity in making some higher
                risk business loans to include an equity interest
                especially for start-ups or other appropriate
                situations may make good sense.

                6. Allow Non-members to Assume Member
                Mortgages and Other Loan Products. NCUA
                Part 701.21(g)(7) permits FCUs to allow non-
                members to assume a member’s mortgage
                provided the assumption is only for the unpaid
                balance, the loan terms remain unchanged, and
                there is no extension of the original maturity
                date specified in the loan agreement. In a down
                market with rising interest rates, potential
                buyers might be more willing to purchase a
                member’s home at the current interest rate
                provided to the member (with some additional
                cash paid to the member), than to take out a
                new mortgage at a higher rate. The member
                would then be able to “walk away” from the
                property with some cash in hand, the non-
                member would be able to get a good deal on a
                home, and the credit union would not suffer a
                loss or have to deal with a potentially
                abandoned, or otherwise foreclosed, property.

                7. Increase Borrower Loan Limits. Under the
                MCUA, the loan limit for borrowers and any

 Last Updated: 7/25/2011                                                                      7
                                                  Michigan Credit Union League
                                                2010 State Legislative Issues Agenda

ISSUE                          BACKGROUND                                      STATUS   MCUL POSITION

                affiliates of the borrower is the greater of
                $20,000 or 25% of the credit union’s net worth.
                No exception is made for fully secured loans.
                In these difficult economic times, it might be
                necessary for members to borrow in amounts
                that exceed these limits.

                8. Empower Credit Unions as Investors in
                Commercial Real Estate. The MCUA
                currently does not provide credit unions with
                the authority to invest credit union funds in the
                development of commercial or residential REO
                real estate for the purposes of sale or lease. This
                new authority could enhance the involvement of
                credit unions located in blighted areas. Banks
                currently have this power.

                9. Converting Troubled Borrowers to Renter
                Status. Depending on the financial calculation,
                it might be beneficial to both a financial
                institution and a troubled borrower to permit a
                borrower to become a renter of a house it is
                buying, if the amount of the lease payments can
                be structured to be significantly less, and thus
                more affordable, than when structured as a loan.
                The goal would be to keep a borrower in the
                home if possible.

                10. Fixed Asset Cap Flexibility and Relief.
                The 5% fixed asset investment/contractual
                obligation limit in section 401(2)(hh) is too low.
                A reasonable increase should be considered.

 Last Updated: 7/25/2011                                                                        8
                                                           Michigan Credit Union League
                                                         2010 State Legislative Issues Agenda

      ISSUE                              BACKGROUND                                               STATUS                              MCUL POSITION

ID Theft                  Identity theft is reported to be the fastest         A bi-partisan package of bills has been            Though there are already
                          growing crime in the United States. With the         introduced in the House to address the issue of    state ID Theft laws
                          use of the Internet, identity theft becomes easier   identity theft. This package mirrors legislation   addressing this issue, the
                          with the use of “phishing” and other methods.        from last session which passed the House but       MCUL agrees that ID Theft
                          These tactics lure individuals into divulging        died in the Senate. HB 4732 sponsored by State     is a serious problem. The
                          personal information. This information is then       Rep. Mary Valentine (D-Muskegon) is similar        MCUL was supportive of the
                          used to open fraudulent accounts. Last session,      to HB 6102 from last session which requires        package in 2008 based on
                          a package of bills was moved by the House to         certain financial institutions to establish a      changes made in the House
                          require additional reporting regulations.            written identity theft prevention program. The     passed versions including
                          However, credit unions were ultimately               MCUL was successful in receiving an                exemption from the written
                          exempted from the bills. The bills died in the       exemption from this requirement for credit         program. The MCUL will
                          Senate.                                              unions that comply with the FACT Act. HB           continue to lobby to have
                                                                               4734 sponsored by Rep. Robert Dean (D-Grand        state-chartered credit unions
                                                                               Rapids) is similar to HB 6105 from 2008 which      exempted from any
                                                                               provides that disposal of any data from a          legislation.
                                                                               database which included any unencrypted,
                                                                               unredacted personal information would have to
                                                                               be destroyed.

                                                                               The MCUL turned in a neutral testimony card
                                                                               for HB 4732 in the House Judiciary Committee.
                                                                               Since then, HB 4732 and 4734 have passed the
                                                                               House and advanced to the Senate Judiciary

Predatory Lending         The high foreclosure rate in Michigan and the        State Rep. Tim Melton (D-Auburn Hills) and         The MCUL supports efforts to
                          issue of sub-prime lending nationally has led        Rep. Jon Switalski (D-Warren) are the leads on     deter predatory lending and
                          lawmakers and the Granholm Administration to         the predatory lending package which includes       remove “bad actors” from the
                          begin looking at a number of proposals that call     HB 4066-67 and HB 4585-93. The legislation         marketplace including
                          for sweeping changes to the mortgage lending         mirrors bills from the 2007-08 session which       providing OFIR with the
                          industry in an effort to go after “bad actors”.      passed the House but were not considered in the    resources it needs to enforce
                          Legislation was passed by the House with             Senate. The bills would prohibit certain actions   existing statutes. The MCUL
                          greater regulations on mortgage lenders;             by creditors, including giving out a loan if the   will also continue to advocate

           Last Updated: 7/25/2011                                                                                                                  9
                                                        Michigan Credit Union League
                                                      2010 State Legislative Issues Agenda

      ISSUE                           BACKGROUND                                                STATUS                                MCUL POSITION

                       however, credit unions and banks were               borrower isn't reasonably determined to be able        that credit unions should be
                       exempted. The Senate did not report the bills       to pay it back and giving out a high-cost home         exempted from any legislation
                       from committee.                                     loan without documenting whether a borrower            that seeks to add further
                                                                           received counseling on the advisability of that        regulation to already highly
                                                                           loan. The legislation exempts depository               regulated entities.
                                                                           institutions from the act just as the bills did last

Small Claims Court     The $3,000 threshold for suing in small claims      The MCUL has already met with Sen. Kuipers             The MCUL will continue to
                       court has not risen in years. Increasing this       who is again interested in sponsoring the bill.        advocate for legislation that
                       limit would provide credit unions with a less       In addition, the MCUL has met with House               raises the current threshold
                       expensive alternative to pursuing claims in the     Judiciary Chair Mark Meadows (D-East                   for filing in small claims
                       civil division of district or circuit courts. In    Lansing). The Governor’s staff sat down with           court.
                       2008, Sen. Wayne Kuipers (R-Holland)                the MCUL to discuss the issue and a workgroup
                       sponsored a bill to raise the ceiling to $6000. A   was held with key stakeholders to assess what
                       compromise was reached in the Senate for            level and timeframe the Governor is willing to
                       $5000. After much opposition from the judges,       support on this issue.
                       trial lawyers, and State Bar, the bill ultimately
                       passed the House the last day of session with a     Follow up with the Governor’s staff was made
                       tiered increase over three years. However, the      in December of 2009 and the MCUL indicated
                       bill was subsequently pocket vetoed by the          this bill would be a priority for 2010.
                       Governor. The Governor reportedly supports
                       smaller increases in the ceiling over longer        The MCUL sent a comment call letter in May.
                       periods of time.                                    To view the letter go to, Michigan Credit Union
                                                                           League: Legislative Comment Calls.

        Last Updated: 7/25/2011                                                                                                                    10

Shared By: