Legislative Challenges and Opportunities NASCUS State System Summit August 14, 2019

CUNA Mutual Group Proprietary | Reproduction, Adaptation or Distribution Prohibited | CUNA Mutual Group © 2017, All Rights Reserved. Data Privacy – Overview

• Consumer Control & Transparency vs. Convenience, Discounts, & Information – Result: Changing public policy on data privacy

• California Consumer Privacy Act – CCPA (2018) – Addresses: data collection, use, and sharing concerns – Applies to: “businesses” broadly defined, credit unions in and outside of California meeting certain criteria – Impacts: joint marketing, purchase of marketing data, digital profiling

• 20+ state data privacy bills (2019) • 2020 state data privacy bill prospects

• No federal data privacy consensus

2 US Data Privacy Legislation (2018)

3 US Data Privacy Legislation (2019)

4 Data Privacy – Preparations

• Seek legal counsel to understand scope and obligations • PI collected by the credit union could be subject to CCPA • Exemptions limited for information covered by Gramm-Leach Bliley Act (GLBA) and Fair Credit Reporting Act (FCRA)

• Know your data; update privacy disclosures as needed • What personal information does the credit union collect?

• Stay informed

5 Data Security

• The issue: inconsistent data security standards

• Headwinds – Competing federal data security agendas – No current federal bill under consideration – Possible consumer breach fatigue

• Action – Continue to advocate for comprehensive data security legislation

https://www.idtheftcenter.org/wp-content/uploads/2019/02/ITRC_2018-End-of-Year-Aftermath_FINAL_V2_combinedWEB.pdf 6 Telephone Consumer Protection Act (TCPA)

7 TCPA: Cost of Non-Compliance/Consent Requirements • Cost of non-compliance – $500 – $1,500 per call or text – No cap on the number of penalties for multiple violations – Possible class action litigation

Mobile Residential Landline TCPA Consent Overview Telemarketing Non- Telemarketing Non- Telemarketing Telemarketing Autodialer Prior Express Prior Express N/A N/A Written Consent Consent Artificial/Prerecorded Prior Express Prior Express Prior Express N/A Voice Written Consent Consent Written Consent Manually Dialed/No N/A N/A N/A N/A Autodialer

8 Americans with Disabilities Act (ADA) Website Litigation

• Plaintiffs’ lawyers aggressively alleging ADA non-compliance on websites – February 2016: first credit union claim (CA) – 2017-2018: ~1000 claims – 2018 (Q3/4)-2019: Slow down in credit union claims activity • Credit union standing defense

• Ambiguous current ADA compliance requirements/conflicting case law complicate efforts to comply with ADA

• Solution: Compliance guidance/ regulations from the Department of Justice (DOJ) – Congress and state attorneys general seeking clarity – Credit union movement efforts ongoing

9 H.R. 1: Tax Cuts and Jobs Act (November 2017)

• Technical corrections impact – Not-For-Profit organizations (e.g., credit unions, other , trade associations) – Non-Profit organizations (e.g., churches, foundations, charities)

• Technical corrections issues – Unrelated Business Income Tax (UBIT) on Employee ‘Perks’ (e.g., parking) • H.R. 3300 – Excise Tax on Executive Deferred Compensation, 457(f) plans • Retroactive to 1986

10 Collaborators

• Tax Working Group – Organized by CUNA Mutual Group and National Cooperative Bank – Includes • NASCUS, CUNA, NAFCU, AACUL • National Cooperative Business Association • National Rural Electric Cooperative Association • American Society of Association Executives

11 Credit Union Taxation (2017 – 2020)

2019: Iowa 2019-2020: In 2019- bankers threaten 2020 legislative 2017: new bill to give sessions, new bills Comprehensive credit unions a to tax credit federal tax reform choice: Continue to passes – No new taxes grow (e.g., $$/FOM) or unions expected for credit unions face taxation in KY, IA, IL, & KS

2018: Iowa bill to 2019: Trump create franchise Administration report - tax for large credit union tax credit unions costs government $24B over 10 fails – Bill passed Senate, narrowly years defeated in House

12 Marijuana Legislative Activity

* 2020 pending Gov. signature

Source: American Property Casualty Association | June 2019

13 Marijuana Banking

• Secure and Fair Enforcement Banking Act of 2019 (SAFE Act) – H.R. 1595; introduced March 6, 2019 – S. 1200; introduced April 11, 2019

• Clarifying Law Around Insurance of Marijuana Act (CLAIM Act) – S. 2201; introduced July 22, 2019 – H.R. 4074

14 Flood

• Where it can rain, it can flood. – Flooding: the most common and costly natural disaster in the US, causing billions of dollars in damage each year. – Excluded from most homeowners, renters, and business property and contents coverage. – Credit unions can educate members on flood insurance to ensure faster recoveries

15 “What the Flood!” – MythBusters

• MYTH: Only homeowners can purchase flood insurance. • MYTH: I live in a 100-year floodplain, so there is very little chance of flooding. • MYTH: My homeowners insurance covers me against floods. • MYTH: Flood coverage is unnecessary because FEMA’s individual disaster assistance will fill policy gaps.

https://www.naic.org/Releases/2019_docs/what_the_flood_quiz.htm 16 Government-Sponsored Enterprise (GSE) Reform

Dr. Mark Calabria, nominated by President Trump in January 2019, was confirmed by the U.S. Senate, and sworn in as Director of FHFA in April 2019.

17 GSE Reform: Privatizing – Status Quo – Public-Private Partnership

FHFA Strategic Plan: Fiscal Years 2018 – 2022

Performance Goal 3.2: Reduce Taxpayer Risk from Enterprise Operations “FHFA is focused on introducing additional private capital into the housing system to lessen taxpayer risk by reducing Fannie Mae and Freddie Mac’s overall risk exposure.

“FHFA’s objective is to shift risk to private market participants and away from the Enterprises in a responsible way that does not reduce liquidity or adversely impact the availability of mortgage credit.”

18 19 Q & A

20 • Larry Blanchard • Megan Balogh – CUNA Mutual Group Public Affairs – CUNA Mutual Group Director, Consultant Corporate & Legislative Affairs – [email protected] – [email protected]

21 www.cunamutual.com