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Survey Finds Public Unaware of Credit Union Tax Treatment

The 1934 law establishing the federal credit union charter stated its purpose was "to make more available to people of small means credit for provident purposes through a national system of cooperative credit." Today, credit unions have expanded into lucrative, billion-dollar entities providing a comprehensive array of financial services to nearly everyone. While these institutions operate similarly to banks, they do not adhere to the same tax requirements or regulatory standards as traditional banks.

A recent survey conducted by Morning Consult on behalf of the American Bankers Association (ABA) reveals that U.S. consumers are generally unaware of the differences between banks and credit unions. Most Americans (82%) are unaware that credit unions do not pay federal taxes, and a significant number (49%) believe credit unions should pay federal taxes like banks. Additionally, the majority of consumers feel that credit unions should be subject to community reinvestment reporting requirements, similar to banks. The survey also found that most people (80%) care about the regulation of businesses handling their finances and believe that any entity offering bank-like services should adhere to the same rules and regulations as banks.

Your NBA team will continue working aggressively to level the playing field between tax-subsidized credit unions and Nebraska banks.

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Legislative, Policy & Regulatory Updates

CFPB, DOJ Warn Against Immigration Status-Based Credit Discrimination

The Consumer Financial Protection Bureau (CFPB) and the Department of Justice (DOJ) issued a joint statement last week cautioning financial institutions against using a consumer's immigration status as the sole basis for determining creditworthiness. They noted some consumers have reported being denied credit cards and loan solely due to their immigration status, even when they have strong credit histories. While the Equal Credit Opportunity Act (ECOA) permits creditors to consider immigration status, excessive reliance on this factor could be viewed as discrimination based on national origin, race or other protected statuses. The agencies stressed that such policies must be supported by evidence of necessity and cannot be a pretext for discrimination. They also emphasized that the ECOA's allowance for considering immigration status doesn't provide a safe harbor from other laws explicitly banning discrimination based on that status.

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Regulators to Finalize CRA Changes

The Federal Reserve Board of Governors will vote next Tuesday to finalize proposed changes to the Community Reinvestment Act. In 2022, the Federal Reserve, the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC) proposed major revisions to the 46-year-old law. The NBA previously submitted comments in response to the proposed changes.

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FHFA to Allow COVID Forbearance for 'Rep and Warrant' Relief

Fannie Mae and Freddie Mac will extend their representation and warrant policies to include mortgages that have successfully exited a COVID-19 forbearance plan. Previously, these policies only covered loans affected by natural disasters. This change means that the time a borrower spent in COVID-19 forbearance will also be considered when evaluating their payment history for the first 36 months after the loan's origination. These new policies will take effect on October 31.

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Review Alliance

Did you know that there are four (4) pillars to a Cybersecurity program?

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Compliance Alliance

Q: If we are making a change to online banking, is there a 30-day prior notice required to go out to the customer?

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