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Survey shows continuing growth in CU reputation

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WASHINGTON (2/23/12)--Credit unions outshone banks in consumers' perceptions of safety and soundness with 40% of respondents to a recent poll saying they believe credit unions are the safest financial institutions, compared to 34% naming banks. Nineteen percent of respondents said they trusted both types of institutions equally.

The numbers are the results of the 2012 Credit Union National Association (CUNA) National Voter Survey, which drew responses from 1,000 randomly selected registered voters in locations throughout the country.

"This result is remarkable in light of the fact that many of those polled were not even aware that credit unions are insured just the same as banks," said CUNA Senior Vice President of Political Affairs Richard Gose. Federally insured credit unions and banks are backed by the full faith and credit of the U.S. government up to $250,000.

"It is significant that credit unions have pulled so far in front of banks in terms of voters' trust," Gose added.

The perception of credit unions being as safe or safer than banks first appeared in CUNA's 2009 survey, when credit unions eked a slight advantage over banks at 37% versus 36%.  The 2012 six-percentage-point difference favoring credit unions is a far cry from 2004 results when 49% of voters sided with bank safety compared to 25% claiming the safety and soundness crown for credit unions. (That year 24% rated trust in credit unions and banks equally.)

In other results, the CUNA survey found that consumers' favorable opinions of credit unions held steady at 80%--a ranking that has varied little between 2004, when the question was first included in the survey, and 2012.  However, the favorability rating of banks continued its drop in 2012, hitting the lowest mark in over a decade.

The survey found that 69% of voters polled had a favorable view of banks.  That was a six percentage point drop from the previous year, and an even more dramatic drop from the 90% level banks held in 2004.

Another important finding for credit unions: In 2012 they pulled even with banks in consumer opinions about what form of financial institution is the best place for day-to-day checking and savings accounts. 

Back in 2004, banks, at 59%, had a 29-percentage point lead over credit unions at 30% (with 7% of respondents voting for both credit unions and banks).  That advantage dropped to 52% for banks, 33% for credit unions, and 11% for both 2009.

In the 2012 results, credit unions pulled up even at 43% with banks, with 10% of respondents choosing both.

"From a credit union perspective," Gose said, "voters' views are all trending in the right direction."

Look for more coverage of CUNA's National Voter Survey results in future editions of News Now. CUNA has been conducting an annual voter survey since 1999.

CUNA warns of burden in Reg B changes

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WASHINGTON (2/23/12)--Although the Consumer Financial Protection Bureau's (CFPB) interim final rule implementing the Equal Credit Opportunity Act substantially duplicates the Federal Reserve Board's Regulation B,  the few changes suggested by the bureau could impose unnecessary reporting burdens on credit unions, the Credit Union National Association (CUNA) warned the bureau.

The interim final rule was issued as part of the CFPB's ongoing project of requesting comment on how to streamline the regulations that were transferred to its authority from other agencies under the Dodd-Frank Wall Street Reform and Consumer Protection Act.

In supplementary information accompanying the CFPB's request for comments, the bureau noted there are some changes to Reg B required by the Dodd-Frank Act.  They are, according  to the CFPB, needed to implement small business loan data collection requirements, as well as the right of consumers to be provided a copy of an appraisal.

CUNA urged the CFPB to do all it can to minimize the impact of any new reporting requirements on credit unions.  Also, CUNA recommended that the CFPB coordinate with the Fed to insure motor vehicle dealers are subject to the same data collection requirements as traditional depository institutions.

The supplementary information also said the CFPB may increase the duration of a record-keeping requirement. The change would recognize that Dodd-Frank expands a statute of limitations under Reg B from two to five years for filing civil actions, such as when a borrower or potential borrower files suit against a lender under the regulation.

"In recognition of the regulatory burdens that credit unions must already operate under, CUNA urges the CFPB to refrain from extending the recordkeeping requirements," CUNA wrote.

Use the resource link to read CUNA's complete comment letter.

CUs represented in CFPB overdraft discussion

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NEW YORK, N.Y. (2/23/12)—Helping members avoid overdrafts is consistent with the central mission of credit unions, Robert Allen, president/CEO of Long Island, N.Y.'s Teachers FCU, said in a Wednesday meeting with the Consumer Financial Protection Bureau (CFPB) in New York City.

Allen appeared on behalf of his credit union, the Credit Union Association of New York, and the Credit Union National Association (CUNA) at a panel discussion on overdraft fees. He was the only credit union representative speaking during the meeting. Representatives from large and community banks and consumer groups also joined CFPB staff at the meeting.

CFPB Director Richard Cordray during the meeting announced a new overdraft fee initiative, for which the bureau will seek public comment.  Cordray said the bureau will use the comments from consumers, the financial services industry, and other interested parties to craft new overdraft fee disclosures and rules.

He added that the CFPB also will use the commentary to assist with policymaking on overdraft practices and to prioritize the bureau's regulatory and education work. It is not clear to what extent credit unions will be part of this effort.  CUNA will be meeting again with CFPB staff on this issue.

Cordray will be speaking to CUNA's Government Affairs Conference next month at the Washington, D.C. Convention Center.

The agency has distributed questionnaires to large banks in an effort to evaluate how those institutions' overdraft policies affect consumers. The CFPB in a Wednesday release said it plans to examine the practice of re-ordering purchases and payments to maximize overdraft fees charge, whether consumers can anticipate and avoid overdraft fees, and how differences in the way institutions explain and promote overdraft programs may affect opt-in rates. As part of the project, the CFPB will also reexamine a recent Federal Deposit Insurance Corporation study that suggested that overdraft programs disproportionately impact low-income and young consumers.

The CFPB is also considering requiring a so-called "penalty fee box" – which would add information on the amount overdrawn, and total overdraft fees charged each month – be added to a consumers monthly checking account statement, and is developing a consumer overdraft fee education project.

Citing industry estimates, the CFPB said the average overdraft fee ranged from $30 to $35 in 2011, and has increased by 17% since 2005.

A study by the Federal Deposit Insurance Corporation published in 2008 found that consumers who overdrew 20 or more times per year paid an average of $1,610 in overdraft fees annually.

Allen said credit unions support meaningful overdraft fee disclosures, but added that the CFPB needs to consider the costs that credit unions and other institutions would bear as it addresses overdraft fee issues.

He noted that credit unions routinely charge lower overdraft fees than those charged by banks, and said his credit union refunds many account fees and makes financial counseling available to members. CUNA Regulatory Counsel Jared Ihrig accompanied Mr. Allen.

For more on the CFPB overdraft project, use the resource link.

Obama tax reforms do not address CUs CUNA

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WASHINGTON (2/23/12)—While the Obama administration's new corporate tax reform plan calls for a wide-range of corporate tax law changes, nothing in the proposal specifically targets credit unions, the Credit Union National Association (CUNA) has found.

The 25-page proposal seeks to lower the overall corporate tax rate across the board to 28% from 35%. It would eliminate many corporate tax loopholes and broaden the tax base, but would also expand access to some corporate tax deductions, and make some temporary deductions permanent.

CUNA President/CEO Bill Cheney noted Wednesday, "While credit unions are not mentioned specifically, the administration's plan does speak broadly of starting 'from a presumption that we should eliminate all tax expenditures for specific industries, with the few exceptions that are critical to broader growth or fairness.'"

"We believe, of course, that credit unions are essential to broad economic growth and that we provide fairness to consumers and small businesses in the financial marketplace. In recent months we have made this point repeatedly in multiple discussions with senior officials in the White House, at the U.S. Treasury and with key members of the tax-writing Senate Finance and House Ways and Means Committees," Cheney said.

Debate over the tax proposal is expected to be contentious, and Cheney said it could continue into next year. CUNA will, he said, continue to remain "engaged and vigilant" as the debate move forward.

"Preserving credit unions' tax status remains our highest legislative priority," the CUNA leader added.

Inside Washington (02/22/2012)

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  • ARLINGTON, Va. (2/23/12)--While state regulators share some concerns about loan participations with the National Credit Union Administration (NCUA), the National Association of Credit Union Supervisors (NASCUS)  wrote in a Tuesday comment letter that it cannot support the proposal in its current form. In its letter, NASCUS said that concerns about loan participations can be reduced with strong underwriting, adequate program contract review and effective third party due diligence. "We strongly recommend NCUA work with state regulators to address supervisory concerns regarding loan participations in a manner that does less harm to the dual chartering system, more effectively mitigates material risk, and improves oversight while not unnecessarily burdening credit unions," NASCUS wrote. NASCUS agreed that loan participations present some material risk, but it said NCUA's proposed rule fails to make a convincing case that is the best way to mitigate that risk, especially considering its impact on dual chartering and state law. Historically, state-chartered federally insured credit unions have looked to state law and regulation to govern their loan participation activities. The NCUA proposal effectively wipes out the distinction between state and federal charters, NASCUS said …

NCUA issues second economic update video

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ALEXANDRIA, Va. (2/23/12)--Recent national economic improvements, and the impact those improvements could have on credit unions, are discussed in the National Credit Union Administration's (NCUA) latest YouTube briefing by its Office of the Chief Economist (OCE).

NCUA Chief Economist John Worth, in the agency's second YouTube installment, also addresses how budget reductions by federal, state, and local governments could impact credit unions with government-focused fields of membership in the YouTube video.

The agency earlier this year announced it would release an ongoing series of YouTube videos to inform the public and credit unions about general economic and credit union specific developments.

The NCUA videos can be viewed on the NCUA's YouTube page by using the resource link below.