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News Now: February 26, 2015

CUNA continues to press for patent law reforms

WASHINGTON (2/26/15)--CUNA continues to press for patent law reforms that would ban abusive patent demand letters and lawsuits that can harm the financial services industry, as well as the consumers it serves.

In a statement with other trades, submitted for the record of today's House Energy and Commerce Committee hearing on Patent Demand Letter Practices and Solutions, CUNA laid out principles that should be applied to any forthcoming patent reform legislation.

"We fully support (the committee's) goal of developing legislation to tackle the scourge of bad faith patent demand letters. Financial institutions of every size have been targeted by Patent Assertion Entities (PAEs), often referred to as patent trolls, who in most cases assert patents of dubious quality through vaguely worded demand letters or intentionally vague complaints."

The letter adds that hundreds of credit unions and banks have been targeted by such entities, "using tactics resembling fraud or extortion."

Chief among any legislative solution should be provisions clarifying the Federal Trade Commission's authority to fight against deceptive practices, while not affecting legitimate patent holders' rights to assert their patent rights.

"In addition, we note that states have proven to be effective laboratories for developing and furthering robust policy relating to patent trolls. While most states could see a reduction in unsubstantiated bad faith demand letters if this legislation were to be enacted, the bill should also allow states that have proactively enacted laws to discourage bad faith demand letters to continue to enforce them," the letter reads. "If state law is preempted, it is imperative that strong and enforceable national standards for demand letter transparency be put in place."

The principles that should be included in any patent reform legislation fall into three categories:
  • Efficiency of the litigation process: Improvements are needed to make the cost and burdens of patent litigation equitable and more efficient;
  • Enhanced transparency: Abuse of the patent system through the use of vaguely worded demand letters must be ended by requiring such letters to provide more details about the patent and who claims to assert it; and
  • Patent quality: Improvements are needed in the post-grant review of patents such as making the Covered Business Method (CBM) program, which allows for an administrative trial conducted by the Patent Trial and Appeal Board to determine the validity of a patent, permanent and more useable for smaller entities. The CBM program is set to expire in 2020.
The hearing is scheduled to being at 10:15 a.m. (ET) and will be streamed online .

Legislators take notice during Wash. CU advocate visits

CU System
OLYMPIA, Wash. (2/26/15)--Washington legislators took notice of state credit union advocates who gathered in Olympia on Feb. 19 for two reasons: Their wardrobe and the size of their group.
Click to view larger image Washington credit union advocates, distinguished by their yellow scarves, visited all 156 legislative offices in Olympia, sharing the results of the economic impact report and the stories about the credit union difference. (Northwest Credit Union Association Photo)
Washington state credit union advocates were decked out in distinctive yellow scarves. The 150 advocates represented the largest showing of credit union support the state Capitol has ever seen, according to the Northwest Credit Union Association (NWCUA) ( Anthem Feb. 25).
Representatives visited all 156 legislative offices to share the credit union difference with Washington lawmakers.
This is the third year Washington credit union advocates have worn the yellow scarves, in what has quickly become a tradition.
Advocates started the day by hearing from Washington Director of the Department for Financial Institutions Scott Jarvis, who is a member of the governor's cabinet. "This is a remarkable number of people," he said. "When legislators see a group of this size, they take notice."
After a send-off from the NWCUA governmental affairs team, advocates split up to strategically visit every legislative office, so that each lawmaker heard the credit union story from his or her constituents.
Advocates shared the recent economic impact report from ECONorthwest , which shows that Washington credit unions generated $4.9 billion in economic impact in 2014, employed more than 10,000 people in family wage jobs, and created $249 million in direct benefits for their members. In addition, each legislator received a report showing how his or her district benefited from the economic impact of credit unions.
"The not-for-profit cooperative credit union structure comes with an obligation--that we take seriously--to deliver real tangible value to the consumer," said Troy Stang, NWCUA president/CEO, told advocates. "You know you do that every day, and now the ECONorthwest research validates the value of the direct member benefits and their ripple impact through our local and state economy."

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CUs' youth fin. lit. initiatives get FLEC spotlight

WASHINGTON (2/26/15)--Credit unions got a chance to highlight their mission of increasing youth financial literacy Wednesday before the U.S. Treasury's Financial Literacy and Education Commission (FLEC).

Click to view larger image National Credit Union Foundation Executive Director Gigi Hyland talks about credit unions' youth financial literacy efforts at the U.S. Treasury's FLEC meeting. (CUNA Photo)
National Credit Union Foundation Executive Director Gigi Hyland and Bill Lawton, president/CEO of Plymouth, Mich.-based Community Financial CU, made up one-half of a panel highlighting efforts nationwide to increase youth financial literacy, one of the primary tasks of FLEC.

Hyland detailed the foundation and CUNA's financial literacy efforts, which include outreach to schools around the country through websites and events such as financial reality fairs. The fairs allow students to identify a career choice, see the starting salary and use that salary to create a budget for basic living expenses.

Consumer Financial Protection Bureau (CFPB) Director Richard Cordray, a member of FLEC, told Hyland he is an "enormous fan" of the financial reality fairs. He has seen the superintendent of his children's school district ensure those events take place.

Click to view larger image Bill Lawton, president/CEO of Community Financial CU, shares his credit union's financial literacy efforts in Michigan before the U.S. Treasury's FLEC. (CUNA Photo)
"It is to me a uniquely important exercise," he said. "It's a real reality check to recognize that there's a whole financial side and to see how much is involved, how complicated it can be and how perilous that can be. It's really something they do need to think about."

Lawton, when asked how to connect credit unions and other financial institutions with local schools, said it's all about relationship building.

"I think we need to build on the success stories we have," he said. "It's about building relationships and getting connected to the right person, someone who can champion it in the district and also in the schools."

He added that it's a balancing act for institutions, schools, parents and students, because while it's not prudent to expand too quickly and spread efforts too thin, financial institutions should understand that the efforts are good for everyone involved long term.

The panel came a day after the release of interagency guidance on youth savings from federal financial regulators. Video of the meeting is available online .

DHS workers can rely on CUs in case of gov't shutdown

CU System
WASHINGTON (2/26/15)--As both sides of the aisle in the U.S. Congress continue debate of a bill to fund the Department of Homeland Security (DHS), dollars needed to pay federal employees as soon as this weekend hang in the balance.

Credit unions with federal employee membership bases aren't waiting to see how the funding fight all shakes out.

For example, Transportation FCU, Washington, D.C., is offering a furlough loan program to those who might be affected by the potential shutdown, Jeffrey Arvai, Transportation president/CEO, told News Now Wednesday.

Through the program, members will have the ability to receive two weeks of net pay with an 18-month repayment term at an annual rate of 4.5%, with the first payment deferred for the first 45 days.

Transportation FCU also will allow members who already have loans with the credit union to skip one monthly payment, Arvai said.

"We have already had some members contact us," Arvai told News Now . "We've done this in the past for other government shutdowns, and I think our members are aware we try to do everything we can when situations like this arise."

Transportation serves employees within the DHS such as Transportation Security Administration employees and members of the U.S. Coast Guard, both of which may soon have to begin working without pay.

Justice FCU, Chantilly, Va., also announced recently it's prepared to offer special assistance to federal employees in the form of unsecured, low-interest rate loans and deferred payments to all members who work for the Department of Justice and the DHS.

Those affected by the shutdown can apply for an unsecured loan of up to $10,000 at an annual rate of 0% for the first 60 days. After 60 days, the rate moves to 4.9% for 24 months. The loan amount is based on the member's net pay deposit.

Further, members may defer their first loan payment for up to 60 days.

"Supporting the Justice community is a vital part of our mission," said Peter Sainato, Justice president/CEO. "We were there for our members during the last government shutdown and stand ready to offer special assistance for them once again."

Justice will allow members with existing loans at the credit union to defer one payment per loan as well.

A LifeLine Loan is being offered by Hanscom FCU , Hanscom Air Force Base, Mass. The credit union's membership also includes employees of U.S. Customs and Border Protection , Federal Emergency Management Agency and Secret Service.

Members can request the loans, equal to one month's net payroll of up to $5,000. No payment is required within the first 60 days on the 0% loan. If the loan is not repaid within 60 days, the loan converts to an installment loan at 8.49% APR that members can repay over a 12-month period.

Hanscom FCU also will waive penalties for premature withdrawals on certificates of deposit and allow qualified members to skip consumer loan payments with no fee.

"We have always stood by members whose income or benefits are affected by furloughs, and we continue to be here for members," said Hanscom Board Chair Paul Marotta.

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McCarthy, Heck visit Calif., Nev. CUs

CU System
ONTARIO, Calif. (2/26/15)--Two members of the U.S. Congress visited credit unions in California and Nevada last week during the President's Day district work period, the California and Nevada Credit Union Leagues reported.

Click to view larger image House Majority Leader Kevin McCarthy (R-Calif.), center, with California credit union leaders.
In California, House Majority Leader Kevin McCarthy (R-Calif.), visited with San Diego-area credit unions at California Coast CU, San Diego. The second-highest ranking official in the House of Representatives and longtime credit union member described his experience as a small business owner, and how his first loans were from a local credit union ( CU Weekly Feb. 23).
He also discussed cybersecurity, regulatory relief for credit unions, and the state of Congress as an institution. Participants attended from Mission FCU, San Diego; North Island CU, San Diego; Paradise Valley FCU, National City; Escondido FCU; San Diego County CU, San Diego; and California Coast CU.
In Nevada, credit union leaders met with Rep. Joe Heck (R-Nev.), a longtime ally of credit unions.
Click to view larger image Rep. Joe Heck (R-Nev.), center, with Nevada credit union leaders. (California and Nevada Credit Union Leagues Photos)
In the 2014 elections, two credit unions--Clark County CU, Las Vegas, and Boulder Dam CU, Boulder City--sent mailers to members who live in Heck's district.
The communications, known as partisan communications, were sent during the last election cycle in a coordinated effort with CUNA and the Nevada Credit Union League to support Heck in his re-election campaign.
As membership organizations, credit unions are allowed to communicate with their members about candidates for office. Unlike traditional independent expenditures, which must be implemented without the knowledge of the campaign, member-communications can be accomplished in connection with, and input from, the campaign.

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CFPB may temporarily suspend credit card agreement submissions

WASHINGTON (2/26/15)--Credit card issuers could see a reduced burden for one year under a Consumer Financial Protection Bureau (CFPB) proposal issued this week.

The proposal would temporarily suspend a requirement that each quarter certain credit card issuers send their agreements to the CFPB.

Credit card issuers' submissions that would otherwise be due to the bureau by April 30, July 31 and Oct. 31 of 2015, and Jan. 31, 2016, would be suspended. Issuers would resume submitting credit card agreements on a quarterly basis starting April 30, 2016.

The CFPB intends to develop an automated electronic submission system, meant to be easier than the current manual submission system.

The 2009 Credit Cards Accountability, Responsibility and Disclosure Act required credit card issuers to post consumer agreements on their websites, as well as submit them to the CFPB. The bureau maintains a public database on its website.

The CFPB is accepting comments on whether the one-year period should start as soon as a final rule is published in the Federal Register , or whether a later effective date is more appropriate. Comments are not being accepted on a potential new submission system.

Comments must be submitted by March 13.

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CUNA's Tiffany: Tips to hasten payment of a long-term mortgage in

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NEW YORK (2/26/15)--Increasing the frequency of mortgage payments is one way homeowners can trim some time off the length of their mortgages, according to a CUNA personal finance expert.
By bumping mortgage outlays to half-payments every two weeks from once monthly, borrowers can shave up to 2 1/2 years off a 30-year mortgage, CUNA Director of Consumer Periodicals Susan Tiffany told (Feb. 25).
Mortgages typically are the largest and longest debts a borrower carries. However, Tiffany noted that paying off high-interest debt such as credit cards, investing in retirement and building up an emergency fund should be priorities.
"If you're carrying credit card debt, I'll bet you a cookie it's at a heck of a lot higher interest rate than your mortgage is," Tiffany told MainStreet . "If you can't pay your credit card bill off every month, you shouldn't be putting extra money toward mortgage payments--you should be putting those extra mortgage payments toward your credit card bills."

Refinancing to a 20- or 15-year mortgage is another option for winnowing down the mortgage term. The longer term of 30 years does provide flexibility, though, for those who have a fluctuating income, Tiffany said. Extra cash can go to the mortgage when possible, but borrowers aren't committed to higher payments.

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