MICHIGAN CREDIT UNION LEAGUE
IssueSummaryStatusElectronic NotarizationCurrent law in all but two states requires that an individual seeking the performance of a notarial act must physically appear before a notary public for positive identification. While Michigan has adopted the Uniform Electronic Transaction Act, it does not participate in electronic notarization (e-notary). Representatives from the Secretary of State indicated that E-SIGN and UETA already authorized e-notary; however, current state rules do not permit electronic notarization.Remote electronic notarization (REN) would allow notary publics and individuals to sit at their own personal computers and conduct a notarial transaction. The parties would log into a platform that would verify identities and then would proceed to create a video chat connection between the notary and the individual. The entire transaction would be done via the video chat and the document would be signed and sealed entirely online. Senator Peter MacGregor is the main sponsor of SB 664. This legislation passed out of the senate 37-0 and is now in the House Financial Services committee where it will be taken up in the fall. Under the legislation, the Secretary of State and DTMB would approve tamper-evident technologies within 90 days after enactment for notaries to use if they choose to notarize documents electronically. Representative Diana Farrington is the main sponsor of HB 5811. This legislation would allow for remote electronic notarization in the State of Michigan. This legislation passed both Chambers and is headed to the Governor’s desk. Please encourage your Representative to support SB 664. Lienholder NotificationCredit unions have reported an increase in delayed or untimely notices on vehicles considered to be abandoned or involved in a crime. Under current law, the Secretary of State has seven days to notify the owner and lienholder of record that the vehicle has been abandoned. The owner or lienholder then can redeem the vehicle by paying the towing and storage fees in their entirety. If they do not pay the fees within 20 days of receiving notice, the vehicle’s ownership is transferred to the towing and storage facility and is then sold at auction.House Financial Services Chairwoman Diana Farrington introduced HB 5181 in October. This legislation allows for a more expedient notification to the lienholders. A more expedient notification to the lienholder will help lower the amount of tow and storage fees the lienholder has to pay to retrieve an abandoned vehicle. There is also a provision allowing lienholders to contest fees if they deem them unreasonable. A committee hearing will be held in the coming months in the Senate Judiciary Committee. Please encourage your State Senator to support HB 5181 through to passage in the Senate. Data Breach Notification & LiabilityOver the past decade, an increasing number of businesses and state agencies have reported massive data breaches. Wendy’s had a large data breach in 2015 impacting hundreds of thousands of Michigan credit union members. Credit unions continue to bear the majority of financial costs of data breaches. While pin-chip cards (EMV technology) represent an improvement in payment technology, these only impact one aspect of the electronic payment process. States must ensure all of those who participate in the payments system share the costs resulting from data breaches. Additionally, State laws should ensure institutions and citizens impacted by breaches are notified in a timely fashion. In early October, Data Breach legislation (SB 632-633) was introduced in the State Senate by Chairman Darwin Booher.This legislation will require the individual, agency or business that incurs a breach to notify their card processor that a breach has occurred. Then the card processor is required to notify the financial institutions that a breach has occurred in the most expedient time possible without unreasonable delay. The legislation also includes a provision for increase liability in the event that the retailer/breached entity doesn’t contact their card processor within the requisite timeframe (currently as drafted 3-days). SB 632 establishes a formal structure for a cybersecurity council, which would provide annual reports to the Governor and legislative leaders.The MCUL supports SB 623-633 and encourages you to contact your State Senator to encourage their support as the bill moves through the legislative process.Payday Lending ExpansionMany Michigan consumers are feeling the pinch from revolving, high-interest credit extended by alternative financial service providers such as payday lenders. Credit unions and other depository institutions are heavily regulated at both the state and federal levels whereas payday lending storefronts are only regulated at the state level. In Michigan, the Deferred Presentment Service Transaction Act (DPSTA) regulates these alternative provider products. However, in advance of new federal rules seeking to curb industry abuses, several payday lending companies are pursuing state reforms to further expand their product and lending authority. SB 430-432 were introduced in June of 2017 by State Senators David Robertson (R) and Vincent Gregory (D). This legislation would create an entirely new act for payday lenders called the Small Loan Regulatory Act. Under the Small Loan Regulatory Act created in SB 431, a licensee would be able to offer borrowers a small loan with a maximum $2,500 to be repaid within 2 years with triple-digit interest rates (vs. current 30 day, $600 loan). These bills expose Michigan consumers to predatory loan products with inadequate consumer protections. Please encourage your State Senator to oppose this legislation. IssueSummaryStatusCommon Sense Regulatory ReliefRegulatory relief continues to be a significant issue of concern for Michigan’s credit unions. Credit unions must comply with a number of new and revised requirements from not only NCUA and the CFPB, but other regulators as well. The regulatory burden under which credit unions must operate stifles their ability to efficiently serve their members and creates a pocket of the financial system unserved and underserved. The cost of regulatory burden on credit unions has increased to more than $7.2 billion, according to a study commissioned by CUNA.In May, Congress passed and the President signed S. 2155, the Economic Growth, Regulatory Relief, and Consumer Protection Act into Law (P.L. 115-174). While the bill isn’t perfect it includes many important and beneficial regulatory reform provisions for credit unions, including- QM rule relief, changes to HMDA reporting requirements for certain lenders, and parity with banks on 1-4 non-owner occupied real estate loans. It also provides immunity to employees of financial institutions who, in good faith, disclose suspected senior financial abuse to a regulatory or law-enforcement agency.U.S. Senators Gary Peters (D) and Debbie Stabenow (D) both voted for final passage of the bill and their support for the bill behind the scenes and within their caucus was critical to the bill passing the Senate and establishing momentum for a vote in the House. Senator Peters was also a bill co-sponsor. On the House side, the following 9 members from Michigan voted for passage:Reps: Amash, Bergman, Bishop, Huizenga, Mitchell, Moolenaar, Trott, Upton and Walberg. Please contact both Senate offices and your Representative, if listed above, and thank them for supporting and voting for S. 2155. Maintain CU “Not-for-Profit” Tax Status In 1937, Congress granted credit unions a not-for-profit status based on their cooperative structure. To this day, credit unions continue to operate as democratically controlled cooperative institutions, serving their members on a not-for-profit basis. As cooperatives, credit unions have a long-standing tradition of protecting their members’ interests. The credit union not-for-profit tax status is good public policy that benefits all Americans. More than 5 million consumers have chosen to become a member at one of Michigan’s 230 credit unions. Nationally, there are more than 100 million credit union members. The credit unions’ not-for-profit tax status enables all CUs, regardless of asset size, to provide high quality, low cost financial services to their members. In late 2017, Congress passed and the President signed into law, H.R. 1, the Tax Cuts and Jobs Act (PL. 115-97). While this bill did impact many popular tax provisions, it did not change the credit union not-for-profit tax status. Credit unions must remain vigilant as those opposed to the credit union not-for-profit tax status will continue to advocate for change. When speaking with your federal lawmakers please: Thank them for their 2017 statement in support of the credit union not-for-profit tax status. One was received from each member of the delegation. Ask the lawmaker for their continued support of the credit union tax status and urge them to work with leadership to ensure that it is preserved in the future. Update the Federal Credit Union ActMichigan’s member-owned credit unions compete in a rapidly changing industry. Updating the Federal Credit Union Act (FCUA) is necessary to ensure federal chartered credit unions have the powers and flexibility necessary to be competitive and continue serving their members. In 2016, the Michigan Legislature enacted a comprehensive six-bill legislative package to update the Michigan Credit Union Act (MCUA). More than 40 reforms were signed by the Governor, providing much needed regulatory relief, expanded powers, and definition clarity in a variety of areas. Congress should update several provisions of the Federal Credit Union Act to ensure a healthy and robust dual charter system exists for credit unions.Currently, there is no legislation pending in Congress pertaining to the modernization of the FCUA. Working with CUNA, MCUL continues to identify key areas of the Act that need to be revised and will work with Congress to pass legislation that modernizes the Act. Please ask your lawmakers to support an update to the FCUA that does the following: Allows the NCUA board to permit supplemental capital for credit unions. Eliminates the arbitrary member business lending cap. Provides credit unions additional authority to determine their fiscal year, schedule board meetings, and removing abusive members. Data Security ReformIn recent years, several major national retailers reported massive data breaches. The list of retailers incurring breached card data continue to grow, and includes national names such as Target, Home Depot, Michaels, Neiman Marcus and Wendy’s, among others. The Target breach exposed card or personal identifying information of nearly 70 million consumers nationwide. Stolen information from this breach began turning up in the illegal marketplace, costing credit unions over $30 million. The retail industry’s self-policing is clearly inadequate. Financial institutions are required to assume the costs related to card replacement, fraud control and member communication.MCUL supports efforts to help Michigan credit unions combat data breaches. Credit unions should be able to tell their members where the breach occurred. MCUL and CUNA will continue to work with Congress at all stages of the legislative process until common sense data breach legislation is passed into law. Please ask your lawmaker to support legislation that reflects the following five principles: Includes strong national data protection and consumer notification standards with effective enforcement provisions. Recognizes robust data protection and notification standards to which credit unions and banks are already subject. Provides for preemption of inconsistent state laws and regulations in favor of strong federal data protection and notification standards. Affords credit unions and banks the clear authority to inform customers and members about a breach, including where it occurred. ................
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