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Hensarling to lead Fin Services Committee

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WASHINGTON (11/29/12)--Rep. Jeb Hensarling (R-Texas) will serve as House Financial Services Committee chairman when the 113th U.S. Congress convenes next year.

Hensarling was nominated by the House Republican Steering Committee on Tuesday, and that nomination was approved by the House Republican Conference on Wednesday. He will replace outgoing House Financial Services Committee Chairman Rep. Spencer Bachus (R-Ala.), who must move on from the financial services leadership position due to term limits.

In a release, Hensarling thanked Bachus "for his outstanding service on this committee over the last six years," calling the legislator "a tireless proponent of free enterprise and free markets."

The five-term Texas legislator added that he is grateful for the opportunity to lead the financial services committee, and looks forward to working alongside his colleagues "to foster the deepest, most liquid, competitive, efficient, innovative, and transparent capital markets the world has ever known."

Addressing "too big to fail" and regulatory burdens will be two priorities for the committee, Hensarling said.

Small biz stories highlight a day of MBL advocacy

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WASHINGTON (11/29/12)--Dayton, Ohio-area real estate developer Jerry Bush said he might not still be in business today were it not for his credit union.

Click to view larger image Sen. Sherrod Brown (D-Ohio), far right, heard the stories of several Ohio business owners whose businesses have survived the recession and prospered with the help of credit union loans. (CUNA photo)

He was one of 500 small business owners and credit union advocates from across the country that stormed the halls of the U.S. Congress to urge legislators to give credit unions the freedom to grow their member business lending (MBL) portfolios, and help small businesses, during the Credit Union National Association's (CUNA) National Hike the Hill.

Bush, who runs his custom homebuilding business with the help of his two sons, said his operation is one of hundreds in the state that have seen trouble in a down economy. His credit union, RiverValley CU, came through and gave him the loans that allowed him to keep his business running in troubled times. However, Bush noted that some credit unions are prevented from offering loans to businesses in similar straits by the 12.25%-of-assets credit union MBL cap.

Click to view larger image Rep. Lloyd Doggett (D-Texas), center right, speaks with with Daniel La Rocca, owner of Austin trucking company Rigar International, Carol Huntberger of Quality seafood , also of Austin, and Austin-area credit union CEOs. (Texas Credit Union League photo)
In one of many Wednesday meetings between his Ohio Credit Union League-led group and members of Congress, Bush told Sen. Sherrod Brown (D) he would "talk to anybody" to support his credit union. "These guys are the only ones over there helping people like me, and there are thousands of us," Bush said.

Government and Political Affairs John Florian said his group's meeting with Portman was very productive.

Overall, banks are not making the types of loans that credit unions are making, several small business owners and credit union representatives stressed.

Click to view larger image A League of Southeastern Credit Unions-led group discusses MBLs with Rep. Spencer Bachus (R-Ala.). (CUNA Photo)
One such lending situation was covered in a Texas Credit Union League meeting with congressional staff. In that meeting, Harriet May--who is a former president/CEO of El Paso, Texas-based GECU and is currently president emerita of that credit union--said her credit union stepped in when it was needed. She recounted one $20,000 loan that GECU made to a nearby Mexican restaurant.

The owner only needed the small loan to buy chiles for the next year--and could not get such a loan from nearby banks. GECU worked with the restaurant owner to develop a loan arrangement that would work for both parties, and the restaurant owner was able to keep her business going. "That's what credit unions do," May said, adding that these efforts make a difference in the greater community.

Credit union advocates and business owners noted throughout the day that the business loans made by credit unions are not high-risk loans. Further, the business loans credit unions are making are not being taken away from banks… they are loans that banks are, in fact, giving up.

Click to view larger image The Michigan Credit Union League and Affiliates group pauses for a photo in front of the U.S. Capitol. The group was scheduled to meet with 14 legislators and their staff on Wednesday. (Michigan Credit Union League and Affiliates photo)
In a meeting between a League of Southeastern Credit Unions group and outgoing House Financial Services Committee Chairman Spencer Bachus (R-Ala.), Alabama CU COO Kayce Bell said her credit union does not advertise its business lending practices in Tuscaloosa. Borrowers come to her credit union on their own, she said, because they have been rejected by banks.

Senate legislation (S. 2231) that would increase the MBL cap from the current 12.25%-of-assets lending limit to 27.5% of assets could be considered any day during the lame duck session. Similar U.S. House legislation, H.R. 1418, has also been introduced, and that bill has 142 cosponsors.

If enacted, the MBL bills would help credit unions inject $13 billion in new funds into the economy. This money, which would be made available at no expense to taxpayers, would in turn help small businesses create over 140,000 new jobs in the first year after enactment.

CUNA President/CEO Bill Cheney this week stressed that how the MBL legislation gets passed does not matter. The point, he said, is making sure it passes. "This is the best chance that we have had in the past ten years to get this bill passed, once and for all," he said.

In support of the credit union, league and small business representatives hiking the Hill, CUNA has been running ads in Capitol Hill publications this week showcasing small business borrowers that credit unions helped when banks wouldn't.

The ad notes the Small Business Lending Enhancement Act is endorsed by the Conference of Mayors and almost 40 organizations committed to small business, and emphasizes that "it's time for Congress to enhance credit union lending to small businesses" by enacting the MBL bill.

NCUA releases additional budget info

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ALEXANDRIA, Va. (11/29/12)--The National Credit Union Administration's (NCUA) Tuesday release of supplemental 2013 budget information "is a positive step that can shed more light on the agency's allocation of resources," Credit Union National Association (CUNA) President/CEO Bill Cheney said.

"Further, the disclosure by the agency that it plans to make available to credit unions more information regarding its budget process is, in our view, movement toward greater transparency and accountability, which CUNA has strongly recommended. While we continue to have overall concerns about the growth of the budget, we are grateful the agency is listening to, and acting on, credit union views in this critical area," he added.

The agency this week made available:

  • A detailed budget narrative explaining changes in each major budget category, accompanied by graphics showing historical budget level trends, dollar and percentage changes from 2012, and a description of essential spending in each category;
  • A detailed pay and benefits narrative, showing expenditures with and without possible congressional approval of a federal employees' pay increase in 2013;
  • A chart illustrating the dollar changes in the 2013 budget components by category;
  • Graphics detailing trends for the past 14 years in the agency's budget relative to federally insured credit union deposits and assets, as well as the dollar value of federally insured credit union assets per NCUA full-time employee; and
  • A table contrasting changes in operating fees for federal credit unions in several asset ranges compared to their net income.
The NCUA said the release of the 2013 budget documents is the first step in making agency budget information more accessible. The agency plans to consolidate more 2013 budget information on its homepage,, in the first quarter of next year.

For the NCUA budget information, use the resource link.

Inside Washington (11/28/2012)

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  • WASHINGTON (11/29/12)--Rep. Shelley Moore Capito (R-W.Va.), who chairs the House Financial Services subcommittee that oversees credit unions and other financial institutions, is running for the U.S. Senate.  Capito told the Associated Press that her state is experiencing changing leadership resulting in what she called a greater political balance between parties.  She said West Virginia needs a new and diverse voice in the U.S. Senate.  Capito is seeking the seat that has been held since 1985 by Democratic Sen. John D. Rockefeller.  The Credit Union National Association, through its Credit Union Legislative Action Council, backed Capito in this year's reelection campaign …
  • WASHINGTON (11/29/12)--The Federal Reserve isn't disclosing enough consumer information about credit cards, according to a report by (American Banker Nov. 28)  A report by the website, which provides comparative information on credit cards for consumers, said the Fed's guidelines didn't require disclosure of what factors can cause rate increases on existing balances and in new transactions. The report said the rules will confuse consumers about what part of their card balances will be impacted by a rise in the annual percentage rate. It also noted that the Fed had told card issuers not to tell consumers when they are obliged to reverse a penalty APR.  The Federal Reserve has since ceded authority on credit card disclosure regulations to the Consumer Financial Protection Bureau. Then CFPB issued its own disclosure form last December, which the report praised
  • WASHINGTON (11/29/12)--An overwhelming majority of consumers don't obtain multiple offers nor do they do any other kinds of comparison shopping when buying their house, according to a report issued Tuesday by mortgage buyer Fannie Mae. (American Banker Nov. 28) A Fannie Mae survey found that 70% of consumers rely on the reputation of a financial institution when picking a lender and 58% of homebuyers didn't use any tool to figure out how much they will spend to purchase a new residence. Respondents said pre-existing relationships with the financial institution and referrals were more important than the recommendations of mortgage brokers or real estate agents.  According to the survey, 14% of lower-income respondents and 4% of higher-income consumers said advertising influenced them when deciding what lender they should use.  The data came from a survey of 3,003 consumers from April to June …
  • WASHINGTON (11/29/12)--In remarks to address the Exchequer Club here on Wednesday, the acting director of the Federal Housing Finance, Edward DeMarco, identified what he said were the  2012 accomplishments or his agency and also gave his perspective on the future of housing finance. Among his points, DeMarco noted that the government touches more than 9 out of every 10 mortgages. "With this in mind, it is essential that we transition the mortgage market to a more secure and sustainable and competitive model," he said. "FHFA is taking a number of steps – whether it is increasing guarantee fees or pursuing risk sharing alternatives – that have the potential to transfer some credit risk to the private sector. We will continue to try to make progress in this area, but if policymakers are serious about limiting the government's role, more direct action may be needed to have significant near-term effects. And, elected officials must give direction on how to end the conservatorships," he said …