WASHINGTON (4/17/15, UPDATED 11:07 a.m. ET)--CUNA submitted its
this morning on the National Credit union Administration's revised risk-based capital plan (RBC2). While holding firm to the view that the rule is unnecessary and should be tabled, the letter offers a number of constructive suggestions to improve the rule since the agency appears determined to move forward.
"I've said it before. I will keep saying this. A risk-based capital rule is a solution in search of a problem. What's more, the current plan--though vastly improved from the original--is a solution that just won't work in search of a problem that just does not exist," CUNA President/CEO Jim Nussle declared this morning.
He added, "To the more than 1,200 of you that have already filed a comment letter, I thank you for participating in this important effort to improve the rule. For those who have not yet written, I encourage you to do so."
CUNA has created a
body of resources
to support credit unions' RBC
and has produced the video below describing key points of its 15-page comment letter.
Among the points made in the trade association's letter, Nussle emphasizes that the proposal, as well as other recent NCUA initiatives, goes way too far in treating credit unions like banks: It ignores the importance of the credit union difference as cooperative, not-for-profit, member-owned and directed institutions.
"There is a real danger," he warns, "that if you are regulated and supervised as banks, you will be forced to act more like banks, which would be a great disservice to your members."
Among other top points in Nussle's letter:
"We listened to our members in developing this
. We heard from CUNA's Governmental Affairs Committee and its Examination and Supervision Subcommittee, from members of CUNA's CFO Council, from many credit union CEOs and volunteers, and from leagues.
"Their input was vital in shaping our response and I urge the NCUA to consider our recommendations carefully," Nussle said.
- CUNA holds hold firm to our view that NCUA does not have the legal authority to impose a two-tiered RBC system.
- The strong performance of credit unions and their federally backed share insurance fund during and after the financial crisis demonstrates there is no need for a major overhaul of NCUA capital requirements, and CUNA finds no evidence that had RBC2 been in place before the crisis that it would have reduced National Credit Union Share Insurance Fund losses in any noticeable way;
- CUNA therefore requests that the rule be withdrawn, but in the event the NCUA moves forward, the association urges a number of changes and further improvements;
- The new proposed capital adequacy provisions, beyond net worth and RBC ratio requirements, should be dropped;
- A number of the risk weights should be reduced;
- The identification of "complex" credit unions should be based on something more than simply asset size, and should include only credit unions of at least $500 million in assets;
- The conditions under which goodwill could be included in the RBC ratio should be expanded;
- The NCUA should minimize the burden on credit unions of expanding the Call Report for purposes of RBC2;
- The agency should allow credit unions to use supplemental capital in meeting RBC requirements;
- A separate interest rate risk rule is NOT necessary; and,
- The implementation of RBC2 should be delayed until 2021, to coincide with expected refunds from the Corporate Stabilization Fund.
WASHINGTON (4/17/15)--CUNA is reminding credit unions of an impending deadline for deciding whether to become a party to a class action suit against Home Depot.
Parties must be identified and evaluated within the next two to three weeks to make a May 15 deadline for inclusion as a class participant. The suit will seek recovery and injunctive relief associated with a massive data breach at the giant retail outlet in September 2014.
CUNA announced Wednesday that it will join credit unions and other financial institutions nationwide as a plaintiff in that lawsuit. However, CUNA emphasizes its participation should not discourage any credit union or state credit union league from participating as well, as credit union participation remains vitally important.
"CUNA is pursuing every possible avenue to get merchants to raise their data security standards to protect consumers and card-issuing credit unions. We decided participation in this legal action is another route we can take to support our efforts," according to Susan Parisi, CUNA chief counsel.
CUNA Chief Advocacy Officer Ryan Donovan added, "If the court grants injunctive relief to the plaintiffs, Home Depot will likely be forced to improve its data security standards.
"That would, at least, reduce the data breach risks to consumers and card issuers at one mega-retail store while CUNA continues to advocate on Capitol Hill for higher data protection standards for all merchants."
The Atlanta-based, big-box retailer admitted that 56 million credit and debit cards were compromised after cybercriminals infiltrated its payment systems, costing credit unions alone nearly $60 million, according to data compiled by CUNA.
"For the last year and a half CUNA has been diligently working on the matter, including connecting credit unions that want to pursue legal action with the appropriate representation," Parisi said.
WASHINGTON (4/17/15)--In response to a Senate panel's effort to review the effects of federal regulations, CUNA submitted a letter to leadership of the U.S. Senate Committee on Homeland Security and Governmental Affairs Thursday.
Sens. Ron Johnson (R-Wis.), James Lankford (R-Okla.), Thomas Carper (D-Del.) and Heidi Heitkamp (D-N.D.) announced March 18 that the committee is seeking input
from those directly impacted by federal regulations of all kinds.
CUNA President/CEO Jim Nussle pointed out in CUNA's letter that regulations facing credit unions are "ever increasing, never decreasing," and cited regulatory burden as a key driver to consolidation within the credit union system.
"Credit union volunteers and executives are particularly frustrated that they are required to comply with these new and complex regulations notwithstanding the fact that they did not cause or contribute to the financial crisis," Nussle wrote. "To the extent that post-financial crisis regulations result in credit unions offering fewer services to their members or services which are more expensive, we believe the regulations have failed consumers, and add insult to injury."
CUNA highlighted more than a dozen suggested regulatory reforms, including:
Improvements to the National Credit Union Administration and Consumer Financial Protection Bureau rulemaking processes, which would include a required cost-benefit analysis of all proposals;
Amendments to the CFPB's mortgage servicing rules, such as increasing the small servicer threshold to 10,000 loans per year, up from 5,000. CUNA also believes the bureau should limit new regulatory requirements with its prepaid accounts and remittance transfers proposals;
Exempting credit unions from the Department of Defense's Military Lending Act proposal, Financial Accounting Standards Board credit impairment proposal and Internal Revenue Service's Foreign Account Tax Compliance Act proposal;
Improvements to the NCUA's Central Liquidity Facility (CLF) to eliminate the requirement it be funded by stock subscriptions paid for by member credit unions, and allowing credit unions to obtain CLF loans for short-term and longer-term liquidity purposes; and
Suggesting the NCUA work with the Treasury's Financial Crimes Enforcement Network and other regulators to exempt credit unions from "seemingly endless changes" to Bank Secrecy Act and anti-money laundering requirements;
The letter also addressed issues with the NCUA's revised risk-based capital proposal (RBC2), as well as other ways the NCUA can work with other regulators to clarify each regulator's authority over the Federal Trade Commission Act and its implementing regulations.
"This list just scratches the surface of the regulatory burden facing credit unions, but it represents a good place to start in addressing these burdens," Nussle wrote.
WASHINGTON (4/17/15)--CUNA sent a number of recommended statutory changes to the U.S. Senate Banking Committee, changes that would remove regulatory barriers for consumers obtaining mortgage credit. The committee hosted a hearing Thursday on the matter, and CUNA's letter
was sent for the hearing's record.
"As member owned, not-for-profit financial cooperatives, credit unions seek to meet members' demand for sound financial products like mortgages, but often face significant regulatory barriers as they try to help members achieve homeownership or expand the stock of affordable rental homes," reads the letter, signed by CUNA President/CEO Jim Nussle. "We welcome the opportunity to comment on a few of those barriers and to offer suggestions for relief."
CUNA made the following recommendations to remove regulatory barriers to increase access to mortgage credit:
Deem all mortgages in portfolio Qualified Mortgages (QMs), meaning a mortgage with features that make it more affordable. Should all mortgaged held in portfolio and services by the underwriting financial institution be deemed QMs, financial institutions will have very strong incentives to originate quality loans;
The Senate should enact legislation that would exclude title insurance charges and escrowed homeowners' premiums from the points and fees calculation;
Urge Congress to discuss withdrawing the Federal Housing Finance Agency's proposal to revise its Federal Home Loan Bank (FHLB) membership rules with the agency. CUNA believes Congress, not the regulator, should define who can be members of the FHLB program, since there is not statutory obligation to impose new membership limits;
Allow privately insured credit unions membership to the FHLB program. Committee Ranking Member Sen. Sherrod Brown (D-Ohio) and Sen. Rob Portman (R-Ohio) introduced a bill last Congress that would correct this, and the House just passed a similar bill;
Improve the Consumer Financial Protection Bureau's (CFPB) Truth in Lending Act-Real Estate Settlement Procedures Act (TILA-RESPA) closing disclosure waiting period. CUNA believes a personal financial emergency waiver should be clarified and expanding, and the delivery requirement should be reduced to two business days, instead of the current three days; and
Encouraging Congress to provide and exclusion to the member business lending cap for loans made for purchase of one to four unit non-owner occupied residential dwellings, to put credit unions on the same level as banks.
"These are only a few of the relevant barriers credit unions face in providing members access to affordable mortgage credit, but they are substantial," Nussle wrote.
MADISON, Wis. (4/17/15)--Credit unions nationwide will start celebrating Money Smart Week, a public awareness campaign designed to help consumers better manage their personal finances, on Saturday.
Zeal CU, Livonia, Mich., will sponsor Zombie Math, a mental math adventure for kids in grades 3 through 8. (Zeal CU Photo)
Money Smart Week, which runs through April 25, is spearheaded by the Federal Reserve Bank of Chicago and was created to provide free financial education to people of all ages and walks of life.
Aventa CU, Colorado Springs, Colo., will mark the week by hosting six financial literacy seminars in Pueblo, Colo., and by providing financial literacy information in Colorado Springs.
"Money Smart Week gives us a good opportunity to get out into the communities in which we serve and provide free financial education to those who desire it," said Karin Kovalovsky, Aventa CU vice president of corporate communications and marketing. "We want Aventa CU to be seen as the resource to go to when financial literacy is needed and offer a variety of topics to choose from."
Hundreds of Michigan organizations--including several credit unions--are hosting free Money Smart Week events, the Michigan Credit Union League (MCUL) reported (Monitor
April 15). Besides MCUL, Michigan partners include the Financial Planning Association of Michigan, Library of Michigan (and 200 hosting libraries across the state), and hundreds of organizations in the public, private and not-for-profit sectors.
Michigan Schools and Government CU, Clinton Township, Mich., will facilitate a variety of workshops across the Metro Detroit area for all ages on topics ranging from building a basic budget to managing personal assets. The workshops are free and open to the public. The credit union will also host financial education story time and Financial Jeopardy for children.
Zeal CU, Livonia, Mich., will sponsor the Grocery Game, an estimating adventure for kids ages 7 to 10 on Saturday, and two sessions of Zombie Math for third- through eighth-graders.
Dozens of communities across Wisconsin will celebrate Money Smart Week with hundreds of events focused on improving the personal financial awareness of state citizens.
"I commend Wisconsin's business community for its support of financial literacy awareness efforts," said Ray Allen, secretary of the Wisconsin Department of Financial Institutions. "The seminars and workshops scheduled throughout April will help our citizens, young and old alike, to improve their financial capabilities. These efforts are good for consumers and good for the Wisconsin economy."
Cedar Rapids, Iowa, Mayor Ron Corbett has formally proclaimed April 18-25 as Money Smart Week. More than 75 fifth-grade students will participate in the proclamation event at Bowman Woods Elementary School in Cedar Rapids. More than 160 free education workshops will be hosted in Iowa.
National Credit Union Youth Month
, sponsored by CUNA, is also celebrated throughout the month of April. The month-long celebration provides credit unions with an opportunity to connect and convey to their members the importance of financial education at a young age. The month's theme, "Wild About Saving," was chosen from ideas submitted by credit union staff nationwide.
WASHINGTON (4/17/15)--A bill to clarify Federal Trade Commission (FTC) authority to fight abusive patent assertion entities (PAEs) is a positive step forward but is in need of improvement, CUNA believes.
The Targeting Rogue and Opaque Letters (TROL) Act of 2015 was the subject of a Thursday hearing by the U.S. House Energy and Commerce subcommittee for commerce, manufacturing and trade, to which CUNA and other organizations submitted a letter for the record.
"The recent focus of patent trolls on credit unions and community banks threatens to pose additional, unwarranted costs on lenders and the communities they serve," the letter reads. "In our industry alone, there are hundreds of examples of a patent troll attempting to sell a product--the patent license--to a bank or credit union using tactics resembling fraud or extortion."
The TROL Act
would clarify the FTC's authority to fight deceptive practices while not affecting legitimate patent-holders to assert their patent rights. The FTC, along with state attorneys general, could remove financial incentive to send intentionally vague demand letters in hope of quick settlements.
CUNA and the organizations made several suggestions in the letter to strengthen the legislation. This includes removal, or expansion, of the bill's definition of "bad faith" to help more small businesses fall under the bill's protection.
The bill should also allow states that have enacted laws to discourage bad faith demand letters to continue to use those laws to protect credit unions, banks and other small businesses, as well as consumers, the letter says.
In addition to CUNA, the letter was signed by the American Bankers Association, Clearing House Payments Co., Financial Services Roundtable, Independent Community Bankers of America and National Association of Federal Credit Unions.
WASHINGTON (4/17/15)--The U.S. Senate Banking Committee will hold a full committee markup on regulatory relief matters May 14, according to the committee's schedule that was released Thursday.
While it's unclear what will be discussed at the meeting, CUNA has testified
before the committee in recent months with dozens of regulatory relief suggestions to aid credit unions in better serving their members.
Previous to a Feb. 12 hearing in which CUNA testified on the need for regulatory relief, the Senate Banking Committee conducted a hearing
with federal financial regulators seeking input on potential regulatory relief solutions as well.
CUNA is also working to collect
real-life examples of regulatory burden to submit to the Senate Banking Committee, as requested by the committee at the February hearing.
The markup is scheduled to begin at 10 a.m. (ET) May 14.
MADISON, Wis. (4/17/15)--While the housing market has made some strides in its recovery from the collapse in 2008, one fact remains: millennials continue to be absent from the market.
Part of the reason for this, Mike Schenk, CUNA vice president of economics and statistics, recently told MainStreet.com
, is that younger generations are just taking a more conservative approach to home buying.
Only 38% of millennials own homes, according to Principal Financial Group (MainStreet.com
"They're much more cautious than people were pre-crisis, and I think a big reason for that is their parents," Schenk told MainStreet.com
. "They learned from some of the mistakes that their parents made."
In addition to learning from their parents' miscues, millennials also carry historically high levels of student debt, which is an obstacle for potential borrowers.
Nationwide, student debt has climbed to $1.16 trillion, with the average borrower from the Class of 2015 on the hook for $33,050 (MainStreet.com
On a positive note for credit unions, because millennials are being more careful in the home-buying process, they have become more wary of the banks that played direct roles in causing the financial crisis.
Perhaps not coincidentally, of the 3 million people to open credit union memberships over the last year, two-thirds were millennials, according to CUNA.
"Part of the reason is that credit unions have a long history of approaching not just the home-buying decision, but financing decisions generally, in a collaborative and consultative way," Schenk said. "That consultative process and that approach to the individual, not as a mortgage borrower, per se, but as an individual that has a broad array of financial needs--with the mortgage decision as part of that context--is a big deal."
CLINTON TOWNSHIP, Mich. (4/17/15)--An afternoon visit to open a couple of youth accounts turned into a celebration for two Michigan kids, as they were honored for being Michigan Schools and Government CU's (MSGCU) 100,000th (and 100,001st) members.
Morgan Freshney and her brother Dawson were recently honored as Michigan Schools and Government CU' s (MSGCU) 100,000th and 100,001st members. From left, Darius Mikalonis, MSGCU branch manager; Kirsten Poreda, assistant branch manager; Morgan Freshney; Pete Gates, president/CEO; Dawson Freshney; Jacki Bretz; and Stefanie Throckmorton, member service representatives. (Michigan Schools and Government CU Photo)
Morgan Freshney, and her brother Dawson, arrived at the main office branch with their mother April 10 to open new memberships and accounts at MSGCU.
"While we were prepared to honor our 100,000th member, we quickly adjusted our plan when Morgan and Dawson arrived together," said Darius Mikalonis, branch manager. "They are the future of MSGCU and we were thrilled to have them both as our honored members for this momentous occasion."
"When MSGCU was founded 60 years ago, we had 12 members," said Peter Gates, MSGCU president/CEO. "Our growth is a testament to the strength of our institution and, more importantly, the loyalty of our members."
It has been a year of milestones for MSGCU. In addition to celebrating 60 years of business, MSGCU was named Outstanding Credit Union of the Year by the Michigan Credit Union League and a Top 100 Workplace by The Detroit Free Press
. The credit union is also preparing to break ground on its 12th branch, which is scheduled to open before the end of the year.
LVIV, Ukraine (4/17/15)--Operating a credit union can be challenging. Now imagine doing so in a time of war.
From left: Brian Branch, World Council of Credit Unions president/CEO; Grzergorz Bierecki, World Council chair; Petro Kozynets, Ukrainian National Association of Savings and Credit Unions president; and Volodymyr Sydorovsky, Anisia CU chair. (World Council of Credit Unions Photo)
Such is the situation facing credit unions in Ukraine, a country that has been locked in a battle with Russian-backed militants for more than a year.
The World Council of Credit Unions' board of directors recently traveled to Lviv, Ukraine, to meet with the Ukrainian National Association of Savings and Credit Unions (UNASCU) to learn more about the challenges facing the nation's credit unions as Ukraine grapples with this difficult time.
UNASCU President Petro Kozynets and CEO/General Manager Ludmila Kravchenko told the board that the political conflict, shifting regulatory and accounting requirements, shortage of liquidity, declining growth, and low-consumer awareness have negatively affected the Ukrainian credit union's ability to serve its members.
"Naturally, credit unions have much more trust than the banks, so there is an opportunity for their expansion," Kozynets said. "Yet, (the) overall situation very much depends on when the war is over."
The Ukrainian credit union movement's immediate goal is to procure new sources of funds, the representatives told the board. An improved regulatory and legislative framework is also a top priority.
Though it's hard to imagine that anything is more concerning for the nation's credit unions than the conflict with Russia.
Over the last six years, UNASCU said, credit unions have lost roughly 1.7 members and more than 70% of assets because of the war and the subsequent devaluation of the country's currency.
But the board reported that despite the recent hardship, Ukrainian's credit unions still hold optimism that they can help people by providing high-quality financial services, especially as banks continue to cut down their activities.
"Since 1992, World Council has worked to grow and strengthen Ukraine's credit union system," said Brian Branch, World Council president/CEO. "Despite various challenges, we have come a long way and will continue to provide support."