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April 27, 2018

Senate tax writer asks IRS to consider Form 990 filing for large FCUs

Large federal credit unions should be required to file with the IRS a Form 990 return – something all state-chartered credit unions are already required to do -- the chairman of the tax-writing Senate Finance Committee this week suggested in a letter. Writing to the acting commissioner of the IRS, Sen. Orrin Hatch (R-Utah) wrote that filing the Form 990 (which outlines the revenue, expenses, mission and leadership of non-profit organizations) would provide “greater transparency” to both the IRS and the public for the operations of a credit union.

“Should the IRS consider this change - which is well within the authorities Congress has granted to IRS - it may be appropriate to expand the information return requirement only to the largest federal credit unions or those with expanded commercial activities or fields of membership,” Hatch stated in his letter to acting IRS Commissioner David Kautter.

Hatch’s request to IRS followed his letter sent early this year to NCUA Board Chairman Mark McWatters, requesting that the agency provide information that shows how the credit union tax exemption is justified. McWatters responded to the leader of the tax-writing committee in a letter dated March 28 (and made public this week). The senator’s letter was also sent while more than 1,200 bankers were in Washington attending a national trade group conference in the capital (and visiting members of Congress).

“For decades, the IRS has exempted federal credit unions from the annual information return filing requirement, in part because they are supervised by NCUA and also because they do not pay the Unrelated Business Income Tax,” wrote Hatch this week. “But during that time there is no question that federal credit unions have grown in size and complexity, which would give us pause to reflect whether that exemption is still warranted.”

NASCUS has made it clear, most recently in 2017, that federally insured, state-chartered credit unions (FISCUs) are already subject to more extensive disclosure requirements than their federal counterparts. NASCUS President and CEO Lucy Ito pointed to the association’s 2017 comment letter about NCUA’s proposed rule on voluntary mergers, in which NASCUS noted that all FISCUs must complete annual Internal Revenue Service Form 990 filings. “In last year’s letter, we argued that FISCUs should not be subject to that proposal,” Ito said. “FISCUs are already disclosing compensation of ‘key employees’ and ‘highly paid employees’ through their 990 filings. More fundamentally, it is not NCUA’s proper role to dictate governance and business decisions for FISCUs. NCUA’s sole role should be to ensure that the surviving institution does not pose a material risk to the share insurance fund. It is for state regulators to decide whether a FISCU board decision to merge was invalidly influenced.”

Sen. Hatch letter to acting IRS Commissioner David Kautter

NASCUS Comments: Voluntary Mergers of Federally Insured Credit Unions


NCUA has told a federal court that it will not grant any new federal community charters under provisions of its rules that were vacated in a decision March 29. The regulator also told the court that it is considering an appeal of the ruling from last month, which found that two of the regulator’s chartering and field of membership (FOM) rules in effect since early last year are invalid. (The court decision does not address state charters.)

In its notice, NCUA also told the U.S. District Court for the District of Columbia that it has instructed affected federal credit unions during this time not to accept any new members who would only be eligible for membership under those provisions. The agency will not, it stated, require credit unions to de-list members who became members on or before April 4, 2018.

The NCUA notice says, among other things, that requiring de-listing “would serve only to punish individuals and entities who did nothing wrong and who were not parties in this litigation” and would be “highly disruptive” if the Court of Appeals overturned the district court’s finding.
The plaintiff in the suit, the American Bankers Association (ABA), “at this time” has no plans to ask that such members be de-listed, the NCUA notice states.

According to a NASCUS summary of the decision (available to members only), the court’s ruling decision speaks only to FCUs’ FOM, not to state credit union FOM. This decision, the summary adds, would not be controlling even in a case where a state might have a similarly worded FOM statute, because in the case of a state FOM, it would be state law, state understanding of terminology, and state jurisprudence on statutory interpretation that would matter.

NASCUS summary/analysis, ABA vs. NCUA FOM decision (members only)

NCUA notice filed April 19, 2018, in FOM lawsuit


May 25 is the effective date for NCUA’s final rule providing federally insured credit unions (FICUs) with more flexibility in the use of the official advertising statement, which holds three key provisions, according to a NASCUS summary posted this week.

The NASCUS summary notes that the rule:

  • Allows FICUs to use a new, third version of the official advertising statement, “Insured by NCUA” (as well as the 4th option of including the official sign);
  • Expands the official statement exemption for TV and radio advertising spots from 15 seconds to 30 seconds;
  • Eliminates the requirement for the inclusion of the official advertising statement on statements of condition required to be published by law.

The new rule eliminates the 2011 requirement that FICUs include the official statement on statements of condition required to be filed by law, the summary also points out. With respect to social media (a topic raised by NASCUS in its comment letter on the proposal), NCUA determined that given the rapidly evolving nature of social media, it was best to defer making changes to the advertising rule regarding social media, the summary points out.

NASCUS Summary: Final Rule: Accuracy of Advertising and Notice of Insured Status

NASCUS comment letter: Advertising, notice of insured shares


An amendment removing a timing restriction on when a creditor may use a closing disclosure in a mortgage loan to communicate closing costs increases has been finalized by the CFPB. In a release Thursday, the agency (now referring to itself as the Bureau of Consumer Financial Protection, BCFP) said the amendment to its “Know Before You Owe” mortgage disclosure rule addresses when mortgage lenders with a valid justification may pass on increased closing costs to consumers and disclose them on a “Closing Disclosure.” The agency said the update to its rules “is intended to provide greater clarity and certainty to the mortgage industry.”

NASCUS noted that the goal of the proposal, in its summary of the proposal issued by the last year, was to remove a four business-day limit for providing “Closing Disclosures” for the purpose of resetting tolerances and determining if an estimated closing cost was disclosed in good faith. As NASCUS pointed out, the proposal (now final) would allow creditors to reset tolerances using a “Closing Disclosure,” without regard to the current four business-day limit. 

Bureau press release: Bureau of Consumer Financial Protection Finalizes Amendment to "Know Before You Owe" Mortgage Disclosure Rule

Final rule: Federal Mortgage Disclosure Requirements under the Truth in Lending Act (Regulation Z)

NASCUS Summary: Proposed Amendments to Federal Mortgage Disclosure Requirements Under the Truth in Lending Act (Regulation Z)


The acting head of the consumer financial protection agency said this week he was officially changing the name – and acronym – of the organization to reflect what the law says; as of Thursday, however, no such change had been made on the agency’s website. Speaking to a bankers’ conference in Washington, Mick Mulvaney (acting director of the agency) said he was officially changing the name of his group to “Bureau of Consumer Financial Protection,” instead of the “Consumer Financial Protection Bureau,” as it has been known since its inception eight years ago. The acronym “BCFP” would also be used.

Mulvaney read the statutory language from the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank), to the applause of the audience of bankers in making the announcement. “That is what the law says,” Mulvaney noted; he also said the first thing he did when he was named acting director of the agency in November was to “read the law” creating the bureau.

To date, however, there have been few outward changes – but some confusion. The agency’s website still holds the logo containing the “CFPB” acronym. A notice in the Federal Register this week announcing a meeting of the bureau’s “academic research council” (set for May 2 to consider methodology and direction for bureau research) repeatedly makes reference to the “CFPB,” but is signed by the “chief of staff, Bureau of Consumer Financial Protection.”

The agency did, however, early this month unveil a new seal prominently displaying the revised moniker for the agency (but that seal has yet to appear on the home page of the agency’s website).


Qualified persons interested in serving on one of three advisory bodies for CFPB can still apply if they do it by April 30 – an extension from last Monday -- according to the CFPB’s updated online applications page. The bureau is looking to fill posts on its Credit Union Advisory Council (CUAC), Consumer Advisory Board (CAB) and Community Bank Advisory Council (CBAC). In a blog post, the bureau says it has 10 advisory board, 15 bank council and 12 credit union council seats becoming vacant this fall. The April 30 application deadline is one week later than the original. Members on the advisory bodies are selected by the CFPB director and include representatives of consumers, communities, the financial services industry and academics.

CFPB Online Application Page for Advisory Board, Council Seats


Nominations are open for the 2018 Pierre Jay Award, an honor presented by NASCUS to an individual, program or organization which is making or has made significant contributions to the state credit union system. Deadline for nominations is June 25.

According to NASCUS’ Lucy Ito, the award winner will exemplify outstanding service, leadership and commitment to the state credit union system. “In July, when the state system gathers in Orlando for our 2018 NASCUS State System Summit, we will be presenting the award to the worthy winner, based on the selection from among the nominees by our awards committee.”

The NASCUS Summit is July 16-19 at the Disney Yacht and Beach Club in Orlando, Fla.

Created in 1997 by NASCUS, the Pierre Jay Award honors the first Commissioner of Banks in Massachusetts, Pierre Jay. He learned of the cooperative credit union movement in Milan, Italy and quickly embraced the concept. Working with philanthropist and credit union pioneer Edward Filene of Boston, and despite objections from the banking industry, Jay went on to champion credit union development in the United States. Through Jay's perseverance and service, he profoundly shaped credit union history.

Eligibility for nomination to the 2018 Pierre Jay Award is open to anyone, program or organization that has made a significant contribution to the state credit union system over the last year (or years); the nominee does not necessarily have to be affiliated with NASCUS. Nominees could include credit union regulators, practitioners (paid staff, volunteers or members) federal or state lawmakers, trade groups or others. Only NASCUS members are eligible to submit a nomination for consideration.

More information/nomination form, 2018 Pierre Jay Award

BRIEFLY: Metro CU, Utah CU Association join; Catching up with MI leaders; NASCUS 101 Monday; Summit coming up, July 16-19

NASCUS welcomes two organization as its latest members: Metro CU in Chelsea, Mass.($1.7 billion in assets, and membership of 196,500, led by President and CEO is Robert Cashman), and; the Utah Credit Union Association, which represents credit unions in the state of Utah (including 32 state-chartered CUs, with $1.6 billion in assets and 146,000 memberships); Scott Simpson is president and CEO of the association … More than 65 credit union directors and senior staff attending the NASCUS Michigan Directors College in Battle Creek learned about cannabis banking, board challenges and responsibilities, and retirement banking; NASCUS and the Michigan Department of Insurance and Financial Services also met with some of the state’s largest credit unions to discuss SCU issues at the national level … Monday is THE DAY for “NASCUS 101,” a no-charge event featuring an overview of the benefits of membership in the association. Participants will learn about the NASCUS commitment to the state credit union system, and NASCUS’ unique role. There’s still time to register; see the link below … and, don’t forget: the 2018 NASCUS State System Summit is fast approaching, July 16-19 in Orlando. To register or for more information about the event – which includes about 22 hours of presentation and discussion, featuring topics chosen in consultation with NASCUS members which reflect the interests of the state system – see the link below.

Info/registration for NASCUS 101; Monday, April 30, 2-3 p.m. ET

2018 NASCUS State System Summit, July 16-19, Orlando/information and registration

Information Contact:
Patrick Keefe,