2012%20Florida%20State%20Issues%20Agenda%20-%20FINAL

League of Southeastern Credit Unions 2012 Florida State Issues Agenda Issue Public Deposits

Background The safeguarding of public funds is an essential and increasingly crucial function of state and local governments. A great variety of state and local governmental entities are charged with managing billions of dollars annually. Although the Federal Credit Union Act (FCUA) authorizes all federally-chartered credit unions to accept public deposits, Florida law does not grant state governmental entities the authority to deposit funds in federally-chartered and/or state-chartered credit unions. Currently, 33 states have some sort of public deposit authority for credit unions.

LSCU Position The LSCU will vigorously advocate for legislation that grants credit unions the ability to accept public deposits.

A key advantage to allowing credit unions this authority is that interest paid by credit unions on deposits, on average, continues to exceed interest paid by banks. In some states where public entities are not permitted to deposit public funds into credit unions, banks are taking advantage of the situation by paying no interest on public deposits.

Expanding public deposit authority to credit unions would spur competition and lead to public entities earning more income on their decreasing deposits of public funds.

HB 999 by Rep. Clay Ingram was filed and passed through one committee of reference last session. The companion measure, SB 1976

by Sen. Oscar Braynon, was not heard in committee. LSCU has commitments from Rep. Jason Brodeur (R-Sanford) and Sen. Chris Smith (D-West Palm Beach) to file the bill for 2012.

Charter Conversion Strengthening

Preserving, protecting and promoting the credit union charter are fundamental to the role of the leagues and CUNA. Ensuring that credit union members are fully informed of the pros and cons of a proposed credit union to bank charter conversion is paramount to a fair and democratic process. The LSCU believes the credit union charter is the charter of choice for best serving consumers’ financial needs. Currently, Florida’s credit union to bank charter conversion statute leaves the door open for possible abuse. It is prudent to look at ways to strengthen the current statutory language, thus ensuring members are fully informed of both the advantages and disadvantages of a charter change.

The LSCU will advocate for legislation that strengthens consumer safeguards when a credit union is attempting to convert to a bank.

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Issue

Background

LSCU Position

Data Breach

Current Florida law does not provide a remedy to card issuers should a merchant fail to properly maintain access devices to personal information. A change to federal law recently placed a cap on interchange debit fees, thus creating less of a protection to issuers should a data breach occur. It should be the responsibility of a retailer to ensure their access devices and systems are maintained with proper security provisions, as well as all security protocols are followed. A change to state law protecting issuers from negligent retailers should be explored.

The LSCU will advocate for legislation that protects card issuers and financial institutions from data breaches caused by the failure of a retailer to maintain security protocols to access devices.

Taxation

The credit union tax exemption is a vital component of the credit union charter and is created by the not-for-profit, mutual ownership structure of credit unions. The exemption is applicable regardless of the size or charter type of credit unions, or the products and services offered. The tax exemption translates into a lower cost of financing for consumers and small businesses as well as higher interest rates paid on savings accounts, CDs, etc. It has been estimated that Florida credit unions provided over $297 million in direct financial benefits to the state’s 4.6 million credit union members during the first quarter of 2011. These benefits are equivalent to $65 per member or $124 per member household. Now more than ever, it is critical for the credit union tax exemption to remain in place.

The LSCU will oppose any and all attempts to subject credit unions to any new form of taxation.

Verification of Identity

Last session, legislation was introduced (SB 116-Bullard) that would have required lender or creditors to verify the identity of persons applying for a loan, credit card, or extension of credit. The bill provided for the forfeiture of indebtedness for failure of the lender or creditor to verify an applicant's identity. No companion measure was filed and SB 116 died without being heard in committee. However, it is likely the legislation will be re-introduced next session.

The LSCU will oppose any effort to penalize credit unions for unknowingly failing to verify an applicant’s identity when applying for credit.

Home Owners Association Foreclosures

Recent legislation was passed which allows homeowners associations to foreclose on residents who don’t pay their assessments. HOA’s are not required by law to give notice to the lender, and thus have a head-start on the “race to the courthouse steps” when it comes to filing for foreclosure. This loophole allows HOA’s to foreclose and sell the property for pennies on the dollar and has created a market for unscrupulous “businessmen” to purchase these cheap homes and rent them out without notifying the tenant that the original mortgagor can still foreclose and evict the occupant.

The LSCU will advocate for legislation to close this loophole by requiring a notice provision be added to the HOA foreclosure process.

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Issue

Background

LSCU Position

Foreclosures/Mortgage Lending

The high foreclosure rate in Florida has led lawmakers to look at a number of proposals that call for sweeping changes to the mortgage lending industry in an effort to go after “bad actors” with an emphasis on protecting borrowers. With the recent news stories of “robo signing” and other foreclosures related issues from some of the nation’s largest banks, we expect legislation to be reintroduced that attempts to further address the foreclosure problem.

The LSCU will closely monitor and oppose any legislation which hinders the rights of the lender or creditor in the mortgage relationship.

Unnecessary Consumer Protections

Various bills relating to Chapter 501 (Consumer Protection), Chapter 516 (Consumer Finance) and Chapter 517 (Securities Transactions) are introduced each year to strengthen consumer protections that have unintended consequences for credit unions and other financial institutions.

The LSCU will oppose any effort to place unnecessary regulatory or financial burden on credit unions that do not have a clear and compelling benefit to society.

Judicial Foreclosure Process/Mortgage Workouts

Florida has one of the highest foreclosure rates in the country. The backlog of foreclosure cases making their way through the judicial system has paralyzed the courts. During this time, many foreclosed homes sit empty and become a neighborhood eyesore and/or easy pray for criminals. Some states are now using foreclosure mediation to produce loan modifications and other settlements at substantially higher rates.

The LSCU will work to improve the current judicial foreclosure process while protecting the rights of credit unions and borrowers by streamline the process through use of nonjudicial foreclosure.

Regulatory Relief

The Dodd-Frank Wall Street Reform and Consumer Protection Act was passed in response to the failures of several large financial services companies and the associated costs incurred by the government to prevent other similar failures. This legislation included reforms to the regulation of systemically significant financial institutions, hedge funds, securities, and credit rating agencies. The bill also created a Bureau of Consumer Financial Protection, which has the authority to write consumer protection regulations related to financial products and examine financial companies for compliance. While credit unions did not cause the Wall Street meltdown, this legislation affects our institutions just the same. However, the “One Size Fits All” approach to regulation has put an undue strain on Florida credit unions’ resources particularly small asset size credit unions.

Continue to work with the Florida Office of Financial Regulation (OFR) to reduce the regulatory burden for credit unions and advocate for greater flexibility from the regulator for credit unions seeking to achieve regulatory compliance.

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Issue

Background

LSCU Position

Debit Card Fees

HB 375 was filed by Rep. Jeff Clemens (D-Lake Worth). If passed, this legislation would prevent any financial institution from charging a fee for holding or using a debit card. The legislation is in response to the increased fees that banks have placed on consumers and is not aimed at credit unions; however, we must be vigilant of all attempts to implement price fixing in our industry. While credit unions remain committed to not assessing fees for debit card usage, the unintended consequences of this legislation are too great to ignore.

The LSCU will oppose any effort to implement a legislative ban on fees associated with accounts held at financial institutions.

Examination Process

Concerns from credit union officials regarding the examination process, procedures for appeals, and examiner relations have surfaced with greater frequency over the past few years, perhaps in conjunction with the rise in new regulations and addition of new less experienced examiners.

Continue to work with OFR to improve communications between the agency and credit unions. Make clear credit unions rights and appeals process.

Title Loans

In 2011, HB 877 by Rep. Joe Gibbons, was filed which would have allowed title lenders the ability to charge up to 264% APR on vehicle title loans. This legislation would have eliminated the current 30% cap on these types of loans, and allowed for predatory lending practices to return to Florida after nearly a decade of being banned. The League does not expect this legislation to be reintroduced in 2012, but must be vigilant of all attempts to change this law.

The LSCU will oppose any effort to undo a decade long cap of 30% APR on title loans in Florida.

Questions regarding these or any other issue should be directed to LSCU Director of Legislative Affairs Jared Ross at 1-866-231-0545, extension 1012 or LSCU President/CEO Patrick La Pine at 1-866-231-0545, extension 1002.

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