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News Now:April 21, 2014

Grassroots key to passage of Maine's patent 'troll' law

CU System

WESTBROOK, Maine (4/21/14)--In a victory for state credit unions earned on the strength of their grassroots efforts, Maine's patent "troll" bill became law last week.
L.D. 1660, An Act Regarding Bad Faith Assertions of Patent Infringement, will become effective 90 days after the Legislature adjourns (Weekly Update April 18). The bill's passage required grassroots efforts and advocacy from the Maine Credit Union League and credit unions to House members communicating the importance of  passing the bill's Majority Report, which was identified as the version with the best chance to become law.
Patent law reform to address "trolls" is a significant issue for credit unions and is seeing a lot of attention from lawmakers on both the federal and state levels.
Without actually inventing anything or adding to innovation, patent trolls buy up patents in order to extract fees--or legal settlements--from other companies that may use that technology. Small companies such as credit unions find themselves between a rock and a hard place: paying what amounts to extorted fees may be cheaper than fighting the trolls in court.
After state credit union advocates and the members of the league's governmental affairs team made hundreds of calls and scheduled multiple meetings with legislators, the House voted to accept the version passed unanimously by the Senate.
"It was truly a team effort, and a remarkable demonstration of the importance of getting involved. Achieving this outcome represents a significant victory for credit unions in reducing and preventing frivolous and costly bad faith patent assertions," said league President John Murphy. "We appreciate everyone's hard work on this effort including a number of legislators who stood up and spoke in support of this bill and the credit union position."
Lawmakers who Murphy cited for their support include:

  • House Minority Leader Ken Fredette (R-Newport), who is a board member at $78 million-asset Sebasticook Valley FCU, Pittsfield;
  • Rep. Mike Lajoie (D-Lewiston), board chair, $19 million-asset Lewiston Municipal FCU;
  • Rep. Henry Beck (D-Waterville and Oakland); and
  • Assistant Majority Leader Sen. Anne Haskell (D-Portland and Haskell).

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CUNA: New data breach shows need for improved merchant security standards

WASHINGTON (4/21/14)--A data breach at Michaels Stores and associated business Aaron Brothers may have impacted 2.6 million cardholders, the arts and crafts retailer confirmed late last week.
The security breach was created by "criminals using highly sophisticated malware that had not been encountered previously by either of the security firms," Michaels said in a statement. The retailer said the incident has been contained. This is the second such incident that has occurred at Michaels since 2011.
The Credit Union National Association is pressing federal lawmakers to address data security relative to merchants, who are not held to the same standards of security as credit union and other financial institutions.
In particular, CUNA maintains that all payments system participants must be held to comparable levels of federal data security requirements; those responsible for the data breach should be responsible for the costs of helping consumers; and those responsible should ensure consumers know where their information was breached.
The newest Michael's breach took place between May 8, 2013, and Jan. 27, 2014, according to reports. The 2.6 million cards that were potentially impacted represent 7% of cards that were used at Michaels stores during that time period. Another 400,000 cards may have been impacted at Aaron Brothers stores between June 26, 2013, and Feb. 27, 2014.
"There was no evidence that data such as customers' name or personal identification number were at risk," Michaels Stores said in their release.
In March, the National Credit Union Administration launched a new resource for credit unions--a webpage that provides links to cybersecurity and data security resources. Use the resource link.

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Lawmakers seek colleagues' backing on RBC plan changes


WASHINGTON (4/21/14)--Two members of the House Financial Services Committee, Reps. Peter King (R-N.Y. ) and Gregory Meeks (D-N.Y.), are circulating a letter among House colleagues urging the National Credit Union Administration to consider changes to its proposed risk-based capital (RBC) regulations. The letter expresses the concern that any final RBC rule should not unduly burden credit unions and should not adversely affect healthy credit unions' ability to meet the financial services needs of their members.

The letter notes several concerns that must be addressed before the NCUA adopts a rule. The legislators plan to forward the letter to the agency once congressional signatures are collected.

The letter encourages the NCUA to:

  • Take into account the cost and burden of implementing new risk-based capital requirements beyond the current leverage ratio;
  • Provide justification and more clarity as to why the proposed risk weights differ from those applied to other community financial institutions; and
  • Give credit unions more time than the proposal's allotted 18 months to come into compliance after it is finalized.

"During the financial crisis, natural person credit unions served as an important source of liquidity in local communities and the overwhelming majority of them successfully weathered the downturn. These cooperatives did not engage in the risky lending practices that led up to the crisis and nearly all maintained their well-capitalized status," the letter notes. It adds that the crisis did not provide evidence for greater capital reserves for natural person credit unions, and the NCUA's across-the-board approach seems burdensome and raises concerns.

At a congressional hearing earlier this month, many lawmakers' expressed interest in the RBC proposal.

"We have urged Congress to take a particular interest in the proposed risk-based capital rule, and clearly the issue has piqued interest," Credit Union National Association President/CEO Bill Cheney said following the hearing. The questions during the hearing about the risk-based capital proposal reflect "a level of concern in Congress that the proposal is in need of significant improvements," he added.

Comments on the RBC plan are due to the agency by May 28. CUNA and the National Association of Federal Credit Unions last week repeated their call on the agency to extend the comment deadline by 90 days.

CUNA has extensive resources for credit unions regarding the RBC plan. Use the resource link.

Surf's up for National CU Youth Week

CU System

MADISON, Wis. (4/21/14)--Grab your surfboard and sunscreen today and get ready to "Catch the $ave Wave" at credit unions during National Credit Union Youth Week.

Elena Neyman, left, Samantha Horstman and Karena Thomas prepare for a tidal wave of interest in National Credit Union Youth Week at Catholic FCU, Saginaw, Mich. (Catholic FCU photo)

Set within National Financial Literacy Month, this is the 13th Youth Week sponsored by the Credit Union National Association. CUNA encourages credit unions and their members to tweet pictures and success stories using #CUYouthWeek.
Kearney (Neb.) FCU, with $34 million in assets, is hosting a beach party, complete with photo booth, grass skirts, beach chairs, leis and giveaways. Each child who signs up for a new youth account receives a prize package.
Mountain CU, Waynesville, N.C., is asking members to vote for what movie they want to see at Friday's Kids' Outdoor Movie Night by visiting the $156 million-asset credit union's Facebook page to vote for "Finding Nemo" (current leader), "Soul Surfer," "Rio" or "Surf's Up."

This week, $667 million-asset Interra CU, Goshen, Ind., is hosting a kids' picnic. Kids can participate in essay and coloring contests, answering the question, "What are you saving for?" The winners will receive money toward their unique goal.
Keesler FCU, Biloxi, Miss., with $2.1 billion in assets, gets a lot of mileage out of Youth Week. "We promote Youth Week/Month via our annual membership meeting, Facebook, our website, a teacher email list, drive-up flyers, and at every event we have through April," said Terri Gonzalez, financial education manager. "I give Youth Week promotional items as prizes at every financial session I host and also promote the CUNA $100 cash giveaway as part of the Saving Challenge." Each branch gets creative with their props, too.
On Saturday, Michigan State University FCU, a $2.5 billion-asset credit union in East Lansing, is inviting members and the community to its Kids' Day, where they can see zoo animals and science exhibits. Young members get a free pair of shades when they visit the credit union this week.
Envista CU, Topeka, Kan., with $247 million in assets, is making a splash with its promotion: any young member who makes a deposit during Youth Week will have a chance to win six Schlitterbahn Waterpark passes.
According to The Point, as of April 14, the following New York credit unions had registered to "Catch the $ave Wave:" Buffalo Metropolitan FCU, $85 million in assets; CFCU Community CU, Ithaca, $871 million in assets; First Heritage FCU, Painted Post, $385 million in assets; First New York FCU, Albany, $257 million in assets; Greater Chautauqua FCU, Falconer, $55 million in assets; Greater Niagara FCU, Niagara Falls, $38 million in assets; Hudson River Community CU, Corinth, $179 million in assets; Hudson Valley FCU, Poughkeepsie, $3.8 billion in assets; Lower East Side Peoples FCU, New York, $36 million in asset; Nassau Financial FCU, Westbury, $393 million in assets; Niagara's Choice FCU, Niagara Falls, $130 million in assets; Niagara Regional FCU, North Tonawanda, $25 million in assets; School Systems FCU, Troy, $72 million in assets; Sidney FCU, $370 million in assets; St. Pius X Church FCU, Rochester, $71 million in assets; Ticonderoga FCU, $89 million in assets; UFirst FCU, Plattsburgh, $54 million in assets; Utica Gas and Electric EFCU, New Hartford, $56 million in assets; and Western New York FCU, West Seneca, $38 million in assets.
This week also is the National Youth Saving Challenge, hosted by CUNA and sponsored by GreenPath Debt Solutions. The challenge encourages young members to set goals and save to reach them.  "We're grateful for generous sponsorship funds from GreenPath Debt Solutions this year which allowed us to increase the number of $100 cash prizes given to participating youth to 25 from 10," said Jan Garkey, CUNA's Youth Week coordinator. To be eligible for the drawing, participating credit unions must submit Saving Challenge results by May 14, with cash prizes awarded after May 16.

Mass. league stresses CU-community ties during public funds hearing

CU System
BOSTON (4/21/14)--The Massachusetts Joint Committee on Financial Services hosted a public hearing last week to discuss a bill that could open the door for state- and federally chartered credit unions to become public funds depositories (Daily CU Scan April 17).

Sen. Michael Rodrigues, who has sponsored S.B. 479, or An Act Relative to Public Funds, made remarks during the session about how the legislation would benefit public agencies.

Specifically, Rodrigues (D-Westport) said the law would allow "for flexibility in depository arrangements of public funds and encourage competition for funds, thus driving better rates of return on public monies optimizing economic benefits for citizens."

Massachusetts Credit Union League President Paul Gentile offered both written and oral testimony to support the legislation during the hearing.

Gentile emphasized that because of the close relationships credit unions have with their communities, local public officials often approach them seeking an alternative to deposit public funds.

Deposits made in credit unions are also made in locally owned and governed cooperatives, Gentile said. And those cooperatives are headquartered and make loans in the communities where they reside.

About 50% of Massachusetts bank deposits are made in banks outside of the state, the league president added. Meanwhile, more than 30 state legislatures have approved laws that permit credit unions to act as public depositories, including nearby Maine and Rhode Island.

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FHFA seeks comment on mortgage database expansion


WASHINGTON (4/21/14)--The Federal Housing Finance Agency is considering expanding the scope of a planned national mortgage database, and is seeking public comment on the potential expansion, Politico reported last week.
The database expansion would provide space for specific loan information and details on mortgage borrowers.
The FHFA will accept comment on the database expansion until May 16. The agency plans to begin collecting the additional loan and borrower information on May 27, but that date could be moved back, Politico said.
The FHFA and Consumer Financial Protection Bureau joined to develop the National Mortgage Database in late 2012, saying it would be the first comprehensive repository of detailed mortgage loan information.
The database, once completed, will primarily be used to support the two agencies' policymaking and research efforts and to help regulators better understand emerging mortgage and housing market trends. The designers said it will include information spanning the life of a mortgage loan from origination through servicing and include a variety of borrower characteristics.
Specifically, the database will include loan-level data about the mortgage including:

  •  A borrower's financial and credit profile;
  • The mortgage product and terms;
  • The property purchased or refinanced; and
  • The ongoing payment history of the loan.

Data will be updated on a monthly basis and track as far back as 1998.
The agencies have said that the database will not contain personally identifiable information and that precautions will be taken to ensure that individual consumers cannot be identified through the database or through any datasets that may be made available to researchers or the public.

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