Archive Links

Consumer Archive
CU System Archive
Market Archive
Products Archive
Washington Archive

Washington Archive

Washington

Risk-based capital rule comments due 90 days from today

 Permanent link
WASHINGTON (2/27/14)--The risk-based capital rule proposed by the National Credit Union Administration (NCUA) at its February open board meeting--and hotly discussed by credit unions since--is scheduled to be published today in the Federal Register.

That publication, in a sense a formality, changes nothing but it is considered "constructive notice," meaning interested parties are now at notice that the rule or proposal exists and what its precise parameters and details are.

Often comment periods or effective dates aren't set until the Federal Register notification occurs.

For the risk-based capital rule that means comments will be due 90 days from today.

The Credit Union National Association urged the NCUA from the start to address credit unions' "deep-seated concerns" regarding the risk-based plan. In fact, CUNA President/CEO Bill Cheney encouraged the regulators earlier this month to hold public hearings on the plan.

Cheney noted that hearings would produce an official record of discussions between credit unions and NCUA leadership that, in addition to comment letters, could assist the NCUA board in determining the best path for proceeding on the rule.

CUNA also has produced a video segment on the steps for writing an effective comment letter on this issue. (See resource link.)

Tax committee staff clarifies: No intention to impose additional tax on CUs--including UBIT

 Permanent link
WASHINGTON (2/27/14)--The specific credit union tax status is left untouched in a tax reform plan released Wednesday by House Ways and Means Committee Chairman Dave Camp (R-Mich.), and staff of the tax writing committee have clarified that the proposal has "no intention of imposing any additional taxes on credit unions."
 
The discussion draft of the tax reform plan does not change or eliminate the specific credit union federal tax exemption. CUNA President/ CEO Bill Cheney said the association considered that to be "an endorsement of our long-held position that credit unions' cooperative, not for profit structure remains the bedrock upon which the tax exemption is built."
 
"Reinforcing our position over the past nine months were the actions by CUNA, state associations and credit unions, which together amassed 1.3 million contacts with lawmakers urging them 'don't tax my credit union,'" Cheney added.
 
However, as CUNA experts were reviewing the details of the discussion draft of the proposal yesterday afternoon, they found that the provisions addressing taxes on unrelated business activities (or UBIT) seemed to subject federal credit unions to the tax for the first time.
 
CUNA senior staff, early Wednesday evening, contacted senior staff of the House Ways and Means Committee, pointing out the impact of the UBIT provisions on federal credit unions and asking why the provision had been applied.
 
"As a result of our discussion, the Ways and Means Committee senior staff members told us that it was never their intention to impose any additional taxes on federal credit unions," Cheney said after the discussion. "Further, they told us that anything that would impose taxes on credit unions--including UBIT--was unintentional and that is why they have established a process that includes release of a discussion draft."
 
Cheney added that credit unions greatly appreciate the willingness of the Ways and Means Committee staff to listen to their concerns and respond accordingly. "We look forward to working with them, and Chairman Camp, as the tax reform process moves forward," he added.

The CUNA leader added that the Camp proposal is the first word on tax reform, but not the last. "We know the tax reform process will be long, and will not conclude until a president signs a tax reform bill. Throughout the process, credit unions will continue to actively advocate for the credit union tax status."

CUNA, state credit union associations, credit unions and credit union members have been tireless in their advocacy on behalf of the credit union tax status. The "Don't Tax My Credit Union" campaign started in May 2013, for example, producing the millions of direct messages to the U.S. Congress noted by Cheney.

Camp's plan to overhaul the tax code does recommend that the biggest U.S. banks and insurance companies would be required to pay a quarterly 3.5 basis-point tax on assets over $500 billion, according to various media outlets.

More generally, the plan for simplification of the tax code would cut the top income tax rate to 25% from 39.6% and impose a surtax on some of the wealthiest households in the country.

Internet domain name just for CUs is on its way

 Permanent link
WASHINGTON (2/27/14)--A new Internet domain name just for credit unions, .creditunion (dot credit union), is just about a reality.

The Internet Corporation for Names and Numbers (ICANN) has notified the Credit Union National Association that the domain name has been approved--and there are just a few more steps to take before it becomes available for credit unions' use.

Back in 2011, ICANN announced it would significantly broaden the number of approved top-level domain names beyond the limited number in use, such as .com, .org, .gov, .edu, and.coop. CUNA submitted a .creditunion application on behalf of the credit union movement.

After this notice of approval, explained CUNA General Counsel Eric Richard, the next step for CUNA to negotiate a contract with ICANN and CUNA's designated registrar company.

"People are not just using dot-com domains anymore," said Richard. "This influx of new domain names could change the way people use the internet, and credit unions are evolving with the new digital landscape."

As Richard further noted, the new top level domain is beneficial both as a marketing opportunity and a tool for enhanced security.

"This new domain will be an excellent tool for marketing as well as an opportunity to establish legitimacy and online security. In the wrong hands a 'creditunion' domain could allow someone intent on committing fraud to do so from a seemingly legitimate platform.

"That is why CUNA will only allow credit union entities to obtain a '.creditunion' extention. As the largest national trade group for credit unions, we felt it important to secure the domain," Richard explained.

CUNA has nine months to take that next step and Richard predicted Wednesday that CUNA would likely make full use of that timeframe before completing the step.

But in nine months? Credit unions may see the arrival of a new domain name that looks a lot like them.

NEW: May 28 is comment deadline on NCUA risk-based capital plan

 Permanent link
WASHINGTON (2/27/14, UPDATED 9:16 a.m. ET)--May 28 is the public comment deadline for the risk-based capital plan proposed by the National Credit Union Administration earlier this month, according to a document publish this morning in the Federal Register .

The Credit Union National Association urges credit unions to weigh in on the proposal and let regulators know their concerns regarding the risk-based approach to capital.

CUNA, as reported, has also encouraged the agency to hold public hearings that, in combination with the important step of comment letters, it says will produce an official record of discussions between credit unions and NCUA leadership that could do much to assist the NCUA board in determining the best path for proceeding on the rule.

CUNA supports a modern risk-based capital system for credit unions--in fact, CUNA President/CEO Bill Cheney declare that from the podium in front of 4,400 credit union advocates here this week for the association's 2014 Governmental Affairs Conference.

"What we don't support is layering additional capital requirements on top of our one-size-fits-all outdated system of prompt corrective action," he said
.
CUNA has also voice concerns about credit unions' capital buffers. The association has executed a detailed analysis that indicates the proposed risk-based capital rule would require credit unions to add a combined $10.5 billion to their capital just to maintain the levels that they have now to retain current margins above proposed "well capitalized" thresholds
CUNA has produced a video segment on the steps for writing an effective comment letter on this issue. (See resource link.)

Financial Services members spotlight CU support at GAC podium

 Permanent link
WASHINGTON (2/27/14)--Key House Financial Services Committee members are looking out for credit unions, and they detailed what they are doing to ensure credit unions are protected in remarks at Wednesday's Credit Union National Association 2014 Governmental Affairs Conference session.

Rep. Peter King (R-N.Y.), a senior committee member, thanked credit unions for stepping forward after recent financial and natural disasters that affected his city and his state. "I want to make sure the strength of credit unions is maintained going forward. I want to make sure you are still there to support the community," he said.

Rep. Shelley Moore Capito (R-W.Va.), chairman of the House Financial Services subcommittee on financial institutions and consumer credit, said she will closely monitor the progress and impact of the Consumer Financial Protection Bureau's qualified mortgage rule. She said she is also working to get regulatory relief for credit unions through this Congress, and is organizing her subcommittee to address data security issues. The subcommittee will hold a hearing on liabilities and penalties related to data security issues next week, she noted.
Click for slide showRep. Peter King (R-N.Y.) said he would oppose any attack on the credit union tax status, noting that a tax on credit unions is a tax on 99 million credit union members. (CUNA Photo)

Another credit union priority, member business lending, was a hot topic for committee members, including Rep. Denny Heck (D-Wash.). Heck called on credit unions to make this the year that MBL legislation is passed into law.

"The engine of America is small business, and you can provide the fuel. We just have to let you do it," Rep. Brad Sherman (D-Calif.) said of the MBL situation. Sherman supports increased MBL and supplemental capital authority for credit unions, and said credit unions "are not asking for taxpayer money," but are just asking for the federal government to get out of the way and let them grow.

Rep. Steve Stivers (R-Ohio) also backed an MBL increase. "We need to do everything we can to get money in the hands of people who want to create jobs, and that's what member business lending is about. It's about creating jobs and supporting growth," he said. The two-term congressman also urged credit unions and CUNA to get even more engaged in the fight for data security. Credit unions can either be engaged on the issue and come out with something that works for them, or disengage and have new rules imposed on them, Stivers emphasized. Congress needs "to make sure credit unions are seeing their members, not just serving regulators," he added.

Rep. Gary Peters (D-Mich.) also spoke up on the issue of regulatory relief. "You can count on me as we work through financial regulations, and getting rid of financial regulations that are not designed for you but designed for Wall Street firms. I stand with you each and every day," he said.

Less conventional topics were also discussed by Wednesday GAC speakers, such as Rep. Ed Perlmutter (D-Colo.) who said he is working with some in Congress to address legal, regulatory issues that prevent credit unions and other lenders from working with now-legal marijuana dispensaries in his state and Washington. He also addressed the ongoing discussions on housing finance market reforms. Credit unions and homeowners alike need to ensure that small financial institutions maintain access to the secondary mortgage market, he said.

Kilmer: MBLs create local jobs

 Permanent link
WASHINGTON (2/27/14)--U.S. Rep. Derek Kilmer (D-Wash.) praised credit unions for creating jobs locally through member business lending during remarks made Wednesday at the Credit Union National Association's 2014 Governmental Affairs Conference.
 
"I have seen how important it is for businesses to get access to economic capital," Kilmer said. "It can be the difference for a business being able to invest in a new facility--and those are not just numbers on a spreadsheet. They translate into jobs."
 
He told the story of a manufacturing company in his district that received an MBL from a credit union to invest in a new facility two years ago. The company has been able to increase its workforce by 30%, Kilmer said.
 
CUNA is pressing the U.S. Congress to increase the member business lending cap to 27.5% of assets, from the current 12.25%-of-assets level.
 
CUNA estimates the MBL cap change would help credit unions lend an additional $13 billion to small businesses in just the first year after enactment. This money, which would be made available at no expense to taxpayers, would in turn help small businesses create around 140,000 new jobs.
 
Kilmer also praised credit unions for helping Americans save. He is co-sponsor of a House bill that would allow credit unions and other financial institutions nationwide to offer prize-linked savings (PLS) accounts (News Now Oct 31). A similar bill was introduced in Senate.
 
Kilmer, as a state senator,  was also the primary sponsor of legislation that brought PLS to the state of Washington in 2011.
 
Credit unions have a presence at nearly every community event he attends in his district, Kilmer said. "The reason for that is credit unions are making a difference in our communities. They are a critical part of the communities they serve, and I want to thank you for that, and Congress ought to understand that."

Udall rallies GAC to support MBL legislation

 Permanent link
WASHINGTON (2/27/14)--Sen. Mark Udall (D-Colo.), called 'a true credit union friend" when he was introduced by Scott Earl, president of the Mountain West Credit Union Association at the Credit Union National Association's 2014 Governmental Affairs Conference, urged credit union advocates to continue pressing for passage of higher member business lending authority.
 
Click to view larger image Sen. Mark Udall (D-Colo.) urged credit union advocates to continue pressing for passage of expanded member business lending authority during remarks at CUNA's 2014 Governmental Affair's Conference. (CUNA Photo)
In 2013, Udall sponsored the Credit Union Small Business Lending Enhancement Act, which would increase the credit union member business lending (MBL) cap to 27.5% of assets, from the current 12.25%-of-assets level.
 
CUNA estimates the MBL cap change would help credit unions lend an additional $13 billion to small businesses in just the first year after enactment. This money, which would be made available at no expense to taxpayers, would in turn help small businesses create around 140,000 new jobs.
 
He asked GAC attendees to urge lawmakers, during their Capitol Hill visits, to co-sponsor the bill.
 
"Together, we are not giving up until we see final passage of this bill," Udall said. "For all the partisanship here in D.C., the formula for getting things done is the same as it's always been: Get people informed and then get support from everyone who's willing to give it."
 
Udall said if credit union advocates continue to "beat the drums," potential supporters will have an "aha" moment and realize the wisdom on expanding member business lending authority.
 
Udall, who proposed that members of Congress set aside partisan interests by sitting together during President Barack Obama's State of the Union address following the 2011 shooting of U.S. Rep. Gabby Giffords (D-Ariz.), praised credit unions for focusing on solutions rather than party politics. "You come together to improve our communities," Udall said.
 
He also praised credit unions for assisting Colorado residents during the 2013 government shutdown and during floods that plagued the state last summer. "Your commitment to the community underscores why the credit union model is as important to community as it has ever been," Udall said.

Millions exposed to 'Don't Tax' message by CUNA social media blitz

 Permanent link
WASHINGTON (2/27/14)--Nearly 5.3 million Twitter and Facebook followers were exposed to the credit union message Tuesday through the latest "Don't Tax My Credit Union" social media event--hosted by the Credit Union National Association and state credit union associations on the eve of Rep. Dave Camp's (R-Mich.) expected release of a tax code reform draft.

Federal lawmakers got into the act to back the credit union tax status too--like with credit unions' two previous "Don't Tax Tuesday" advocacy blitzes.
  • Sen. Tammy Baldwin (D-Wis.) tweeted: @lakeviewcu Thanks for making your voices heard & engaging on this important issue. I stand with you - #DontTaxMyCU - TB
  • Rep. Lloyd Doggett (D-Texas) tweeted: I support credit unions as essential banking options to all Texans. Having worked with #creditunins for 3+ decades, I agree #DontTaxMyCU.
  • And from Sen. Mark Udall (D-Colo.): Glad to meet w Mtn West Credit Union Assoc. Credit unions play critical role in protecting consumers, creating #jobs.
As with two previous efforts, on July 23 and Sept. 10 last year, CUNA and state credit union leagues used social media to encourage credit unions, credit union members and other credit union advocates to contact state and federal lawmakers directly with the unified message of "Don't Tax My Credit Union."

Some of the tweets incorporated videos. Below are just three of the kinds of messages sent during those two earlier rounds of credit union mega-advocacy:
  • Shiro-oni: @MaxBaucus @OrrinHatch Truth is, credit unions provide superior deposit & loan rates & greater protection from risk than banks #DontTaxMyCU.
  • StevePoniewaz: Cooperative status is not a subsidy. Credit Union Members have paid their tax; #DontTaxMyCU@RepAnnWagner
  • Alabama CU: CUs return profits to their members. Taxing CUs hurts 1.8 million Alabamians. Visit bit.ly/ZY97Pz and ell Congress #DontTaxMyCU
CUNA's "#DontTaxTuesday" Twitter and Facebook campaigns walked away with a Grassroots Innovation Award from the Public Affairs Council earlier this month.

CU in the street: Talking to GAC first-timers

 Permanent link
WASHINGTON (2/27/14)--There were an estimated 650 first-time attendees at the Credit Union National Association's 2014 Governmental Affairs Conference, and one of them, Willie Hannah, waited a long time to get there: He is a 42-year veteran of his credit union's board.
Click for slide show One of those attending their first CUNA Governmental Affairs Conference is Willie Hannah, who has been with his credit union 42 years. He is board vice president at NGH CU in Nashville, Tenn. (CUNA Photo)

So, what took him so long? Hannah, pictured at right, said with a laugh that he "just didn't do it." The current board vice president for NGH CU, a $7.6 million-asset credit union in Nashville, Tenn., said he was most looking forward to catching up on the latest credit union trends.

View the slideshow for more on first-timers' GAC impressions.

For Braley, CUs are a longtime choice

 Permanent link
WASHINGTON (2/27/14)--U.S. Rep. Bruce Braley (D-Iowa) reminded the Credit Union National Association's 2014 Governmental Affairs Conference audience Wednesday that he supported credit unions before he was voted into office.
 
Braley showed the GAC audience a copy of the statement of organization he filed when he first ran for the office in. In the document, each candidate must declare a financial institution in which to deposit campaign funds. Braley's choice: A credit union.
 
"In one of my very first acts as a candidate for federal office, I stood with credit unions," he told the GAC audience. "I want you to know that wasn't some random act of a campaign staffer; it was a deliberate decision based on my values and my beliefs, and our shared beliefs and values."
 
Since he was elected, Braley has supported credit union legislation related to member business lending, supplemental capital and regulatory relief.
 
Braley reminded the audience that he serves 319,000 credit union members in his district, the most of any lawmaker in the House's Iowa delegation.  Overall, Iowa has more than 1 million credit union members.
 
He praised credit unions for their grassroots efforts. "What  I love about my credit union friends in Iowa is that when I get together with them, they bring their members," Braley said. "They get them engaged in public policy so they know that the things we do in Washington affect their lives, and that is something that my staff and I appreciate so much."
 
Braley said the ability of credit unions to bring people together and educate them to make informed financial decisions is especially important during a time when Washington is sharply divided along party lines.

Hoyer tells GAC to push Congress on clarity in tax code

 Permanent link
WASHINGTON (2/27/14)--House Minority Whip Steny Hoyer (D-Md.) on Wednesday morning urged credit union industry stakeholders gathered in Washington to push the U.S. Congress to agree to long-term tax reform. 

Simplifying the tax code, he told the Credit Union National Association's 2014 Governmental Affairs Conference, would restore certainty and predictability and "produce a better economy." 

"Clarity on tax reform would go a long way, in my opinion, in finding a fiscal consensus that has been elusive," he said hours before attendees from across the country set out to talk about key credit union issues to legislators on Capitol Hill. "Congress needs to hear your voice in this debate," he later added.

Hoyer made the remarks as House Ways and Means Committee Chairman Dave Camp (R-Mich.) was preparing to publicly release his proposal for tax reform later in the afternoon. (See today's News Now for related story.) The Democratic leader said he couldn't comment on the proposal because he had not seen it.

Surveys have shown that reduced bickering over fiscal matters, in the form of the December 2013 budget approved by Congress, has improved business and consumer optimism (Market News Dec. 26, 2013, and Feb. 11). The agreement will, for two years, avert another partial government shut down like the one that ground Washington to a halt in October.

Begich promises to 'twist arms' to raise MBL cap

 Permanent link
WASHINGTON (2/27/14)--Sen. Mark Begich (D-Alaska) on Wednesday repeated his commitment to work relax regulatory limits on credit unions' ability to make member business loans (MBLs).
 
Begich said at the Credit Union National Association's 2014 Governmental Affairs Conference in Washington that he would continue to be a "supporter and sponsor" of a bill designed to lift the federally mandated cap on credit unions' small business loans--currently at 12.25% of assets.

"I will twist arms of other members to sign that piece of legislation," he said. Begich is one of 18 co-sponsors of legislation--introduced in May 2013 by Sen. Mark Udall (D-Colo.)--that would raise the credit union MBL cap to 27.5% of assets (News Now May 16, 2013). The bill, S.968, was referred to the Senate Banking Committee, where it has not progressed under the chairmanship of the soon-to-retire Sen. Tim Johnson (D-S.D.).

Begich also said he wants to generally "streamline regulations for credit unions" because of their relative stability throughout the subprime housing boom and in the aftermath of its collapse in 2008.

"You are not the problem. You are not the risk," he told attendees, calling credit unions a "backbone" during the tumult.

The senator also reiterated on Wednesday his pledge to protect credit unions' tax exempt status.

He told the conference that he asks banking lobbyists, seeking to change the credit union exemption, to "keep it off the list" during meetings with him.  In July, Begich, who is not a member of the Senate Banking Committee, sent a letter to Johnson and the panel's ranking Republican Sen. Mike Crapo (R-Idaho), asking that the exemption be preserved in any reform of the tax code (News Now July 30, 2013).

The senator, who is facing his first re-election campaign this November, spoke of his own personal enthusiasm for credit union membership. Begich said he opened his first credit union account at the age of 14, received his first car loan from a credit union, and said that he opened a U.S. Senate FCU account for his then eight-year-old son, who, he proudly said, now has his account number memorized. He also said that he is excited when asked as a credit union member to vote in board member elections. 

Begich urged attendees to stress their member-ownership status when lobbying legislators on Wednesday afternoon and throughout the week. He argued earlier in the speech that the tax exempt status was justified because of member ownership, with savings incurred by the status spread throughout the cooperatives. The senator said this structure makes credit unions "powerhouses," and urged the audience to flaunt membership logs when consulting with their legislators.

Rapid City Telco FCU released from NCUA cease-and-desist order

 Permanent link
ALEXANDRIA, Va. (2/26/14)--The National Credit Union Administration has lifted a cease-and-desist order that was filed against South Dakota-based Rapid City Telco FCU in early 2010.

The agency issued the order after the credit union's plan to build a new central office created regulatory and safety and soundness concerns. The NCUA release did not say whether these concerns have been addressed.

Rapid City Telco was opened in 1945, and currently serves 5,629 members through four branches. The credit union holds $45 million in assets.

NEW: Internet domain name just for CUs is on its way

 Permanent link
WASHINGTON (2/26/14, UPDATED 8:58 a.m. ET)--A new Internet domain name just for credit unions, .creditunion (dot credit union), is just about a reality.

The Internet Corporation for Names and Numbers (ICANN) has notified the Credit Union National Association that the domain name has been approved--and there are just a few more steps to take before it becomes available for credit unions' use.

Back in 2011, ICANN announced it would significantly broaden the number of approved top-level domain names beyond the limited number in use, such as .com, .org, .gov, .edu, and.coop. CUNA submitted a .creditunion application on behalf of the credit union movement.

After this notice of approval, explains CUNA General Counsel Eric Richard, the next step for CUNA to negotiate a contract with ICANN and CUNA's designated registrar company.

"People are not just using dot-com domains anymore," says Richard, "This influx of new domain names could change the way people use the internet, and credit unions are evolving with the new digital landscape."

As Richard further notes, the new top level domain is beneficial both as a marketing opportunity and a tool for enhanced security.

"This new domain will be an excellent tool for marketing as well as an opportunity to establish legitimacy and online security. In the wrong hands a 'creditunion' domain could allow someone intent on committing fraud to do so from a seemingly legitimate platform.

"That is why CUNA will only allow credit union entities to obtain a ".creditunion" extention. As the largest national trade group for credit unions, we felt it important to secure the domain," Richard explains.

CUNA has nine months to take that next step and Richard predicted Wednesday that CUNA would likely make full use of that timeframe before completing the step.

But in nine months? Credit unions may see the arrival of a new domain name that looks a lot like them.

House vote on CFPB, NFIP reform bills set for this week

 Permanent link
WASHINGTON (2/26/14)--Separate bills that would reform the Consumer Financial Protection Bureau and the National Flood Insurance Plan, respectively, are scheduled to see votes in the full U.S. House this week.

The Consumer Financial Protection Safety and Soundness Improvement Act (H.R. 3193), would authorize the Financial Stability Oversight Council to stay or set aside any CFPB regulation that is found to be inconsistent with safe and sound operations of financial institutions.

The bill would also require the CFPB to take into consideration the impact of its rules on insured depository institutions, change the bureau's leadership structure and make some operational changes.

The Credit Union National Association called the bill a step in the right direction in a letter sent to Congress last week. CUNA President/CEO Bill Cheney said the bill would help to assure credit unions--and other entities--already subject to considerable regulation are not unnecessarily burdened.

A similar bill was passed on a bipartisan House vote in 2011, but it was not approved by the Senate.

The NFIP bill would delay planned National Flood Insurance Plan rate increases for up to four years, and would require the Federal Emergency Management Agency (FEMA) to complete an insurance affordability study and propose a framework that addresses affordability issues. The bill would also:
  • Eliminate the 50% cap on state and local contributions to levee construction and reconstruction;
  • Protect the so-called "basement exception," which allows the lowest flood-proofed opening in a home to be used for determining flood insurance rates;
  • Establish a Flood Insurance Rate Map Advocate within FEMA to answer current and prospective policyholder questions about the flood mapping process; and
  • Require FEMA to certify that the agency has fully adopted a modernized risk-based approach to analyzing flood risk.

Fed will release supervisory stress test results in March

 Permanent link
WASHINGTON (2/26/14)--March 20 is the day the Federal Reserve Board will release results from the latest supervisory stress tests conducted as part of the Dodd-Frank Act.
 
The Fed conducts the forward-looking exercises on large financial companies that it supervises. The exercises determine if financial institutions have sufficient capital to support operations and absorb losses during adverse economic conditions over nine quarters.
 
The Dodd-Frank Act supervisory stress test results include data such as post-stress capital ratios, revenue and loss estimates under the Federal Reserve's hypothetical adverse and severely adverse scenarios.
 
Related results from the Comprehensive Capital Analysis and Review will be released March 26.
 

NEW: Tax plan preserves tax exemption, but raises concern in other key area

 Permanent link
WASHINGTON (2/26/14, UPDATED 2:04 p.m. ET)--The specific credit union tax status is left untouched in a tax reform plan released today by House Ways and Means Committee Chairman Dave Camp (R-Mich.), but the plan does raise some additional tax issues that are of concern to the Credit Union National Association.

CUNA President/CEO Bill Cheney said, "The release of the tax reform proposal today by House Ways and Means Committee Chairman Dave Camp marks the beginning of an important new chapter in the tax reform process. We are gratified that the specific credit union tax exemption is untouched in the Camp proposal, based on our initial read. But we do have concerns that some federal credit unions could be subjected to tax liability under other portions of the tax code.

"After three years of mostly behind-the-scenes efforts, the chairman has found that there is no reason to change or eliminate our tax exemption. We consider this an endorsement of our long-held position that credit unions' cooperative, not for profit structure remains the bedrock upon which the tax exemption is built. Reinforcing our position over the past nine months were the actions by CUNA, state associations and credit unions, which together amassed 1.3 million contacts with lawmakers urging them 'don't tax my credit union.'

"We are concerned that the tax proposal appears to subject federal credit unions to a tax on 'unrelated business activities' for the first time. We will be working with lawmakers to obtain more clarity on this provision.

"The Camp proposal is the first word on tax reform, not the last. We know the tax reform process will be long, and will not conclude until a president signs a tax reform bill. Throughout the process, credit unions will continue to actively advocate for the credit union tax status."

CUNA, state credit union associations, credit unions and credit union members have been tireless in their advocacy on behalf of the credit union tax status. The "Don't Tax My Credit Union" campaign started in May 2013, garnering the 1.3 million direct messages to the U.S. Congress noted by Cheney.

Camp's plan to overhaul the tax code does recommend that the biggest U.S. banks and insurance companies would be required to pay a quarterly 3.5 basis-point tax on assets over $500 billion, according to various media outlets.

More generally, the plan for simplification of the tax code would cut the top income tax rate to 25% from 39.6% and impose a surtax on some of the wealthiest households in the country.

NEW: Tax committee staff clarifies: No intention to impose additional tax on CUs--including UBIT

 Permanent link
WASHINGTON (2/26/14, UPDATED 6:24 p.m. ET)--It is not the intention of the House Ways and Means Committee to impart any additional taxes on federal credit unions, the committee staff clarified in response to inquiries by the Credit Union National Association. The exchange occurred just hours after House Ways and Means Committee Chairman Dave Camp (R-Mich.) unveiled his tax code reform plan.
 
As News Now reported earlier in the day, CUNA noted the specific credit union tax status was left untouched in the tax reform plan, but it did raise some additional tax issues that were of concern.
 
"This evening, CUNA senior staff contacted senior staff members of the House Ways and Means Committee to ask them why, under the tax reform discussion draft issued today by Chairman Dave Camp (R-Mich.), federal credit unions would be subject to unrelated business income tax (UBIT) under the details of the proposed tax reform measure," CUNA President/CEO Bill Cheney said after the high-level exchange.
 
"As a result of our discussion, the senior staff members told us that it was never their intention to impose any additional taxes on federal credit unions. Further, they told us that anything that would impose taxes on credit unions--including UBIT--was unintentional and is why they have established a process that includes release of a discussion draft.
 
"They told us they appreciated the head's up from us, and that they would work with us to iron out the details."
 
Cheney went on to underscore that credit unions greatly appreciate the willingness of the Ways and Means Committee staff to listen to concerns and respond accordingly. "We look forward to working with them, and Chairman Camp, as the tax reform process moves forward," Cheney added.
 
The CUNA leader also extended his thanks to the record 4,400 CUNA Governmental Affairs Conference participants who came to Washington this week to voice the views and concerns of credit unions; he emphasized that this result could not have occurred without them.

NEW: Risk-based capital rule comments due 90 days from tomorrow

 Permanent link
WASHINGTON (2/26/14, UPDATED 10:04 a.m. ET)--The risk-based capital rule proposed by the National Credit Union Administration at its February open board meeting--and hotly discussed by credit unions since--is scheduled to be published tomorrow in the Federal Register.

That publication, in a sense a formality, changes nothing but it is consider "constructive notice," meaning interested parties are now noticed that the rule or proposal exists and what its precise parameters and details are.

Often comment periods or effective dates aren't set until the Federal Register notification occurs.

For the risk-based capital rule that means comments will be due 90 days from tomorrow.

The Credit Union National Association urged the NCUA from the start to address credit unions' "deep-seated concerns" regarding the risk-based plan. In fact, CUNA President/CEO Bill Cheney encouraged the regulators earlier this month to hold public hearings on the plan.

Cheney noted that hearings would produce an official record of discussions between credit unions and NCUA leadership that, in addition to comment letters, could assist the NCUA board in determining the best path for proceeding on the rule.

CUNA also has produced a video segment on the steps for writing an effective comment letter on this issue. (See resource link.)

NEW: Millions exposed to 'Don't Tax' message by CUNA social media blitz

 Permanent link
WASHINGTON (2/26/14, UPDATED 1:04 p.m. ET)--Almost five and a half million Twitter and Facebook followers were exposed to the credit union message Tuesday through the latest "Don't Tax My Credit Union" social media event--hosted by the Credit Union National Association and state credit union associations on the eve of Rep. Dave Camp's (R-Mich.) expected release of a tax code reform draft.

Federal lawmakers got into the act to back the credit union tax status too--like with credit unions' two previous "Don't Tax Tuesday" advocacy blitzes.
  • Sen. Tammy Baldwin (D-Wis.) tweeted: @lakeviewcu Thanks for making your voices heard & engaging on this important issue. I stand with you - #DontTaxMyCU - TB
  • Rep. Lloyd Doggett (D-Texas) tweeted: I support credit unions as essential banking options to all Texans. Having worked with #creditunins for 3+ decades, I agree #DontTaxMyCU.
  • And from Sen. Mark Udall (D-Colo.): Glad to meet w Mtn West Credit Union Assoc. Credit unions play critical role in protecting consumers, creating #jobs.
As with two previous efforts, on July 23 and Sept. 10 last year, CUNA and state credit union leagues used social media to encourage credit unions, credit union members and other credit union advocates to contact state and federal lawmakers directly with the unified message of "Don't Tax My Credit Union."

Some of the tweets incorporated videos. Below are just three of the kinds of messages sent during those two earlier rounds of credit union mega-advocacy:
  • Shiro-oni:  @MaxBaucus @OrrinHatch Truth is, credit unions provide superior deposit & loan rates & greater protection from risk than banks #DontTaxMyCU.
  • StevePoniewaz:  Cooperative status is not a subsidy. Credit Union Members have paid their tax; #DontTaxMyCU@RepAnnWagner
  • Alabama CU: CUs return profits to their members. Taxing CUs hurts 1.8 million Alabamians. Visit bit.ly/ZY97Pz and ell Congress #DontTaxMyCU
CUNA's "#DontTaxTuesday" Twitter and Facebook campaigns walked away with a Grassroots Innovation Award from the Public Affairs Council earlier this month.

GAC breakout: MacAllister offers CUs payments forecast, planning advice

 Permanent link
WASHINGTON (2/26/14)--John MacAllister, principal of Dorado Industries, a global payment system consulting firm in Los Angeles,  offered credit unions a forecast on the near future of electronic payments technology and also provided tips for navigating the payments landscape during a Credit Union National Association 2014 Governmental Affairs Conference breakout session.
  • Look for a convergence of e-commerce and brick-and-mortar. As an example, MacAllister noted that PayPal accounts can be used at Home Depot. "That's good because that creates competition and innovation, and I think it accrues a benefit to the consumer and the issuer because there are more ways to use payment instruments" MacAllister said.
  • Look for more mobile clutter. Look for more instruments with names like dongles, sheaths and table stands that issue messages among mobile devices, but have one thing in common "the last message has something to do with payments," MacAllister said.
  • Look for more communications between consumers and merchants. "The minute your member approaches the store, if he or she has a Bluetooth phone, the merchant will be talking to your member," MacAllister said. "If they are talking about using a different card then the one your member has with your credit union, that's not good news for the credit union system."
  • There will be a cyber-currency.  Simply put, there is a need for it, MacAllister said. There's also a lot of money to be invested into developing one, and plenty of smart people to get it done. MacAlllister did not think that cyber-currency would be Bitcoin, however, which he called "poorly conceived and ill executed."
MacAllister also offered attendees tips to prepare for changes in the payments market:
  • Increase member card penetration. "To preserve the value of the mag stripe card ... you need to make sure that card penetration is as high as it could possibly be, as close to 85% or 95% as you can get it, and activiation or use rate is somewhere close to the national average, which is 20 uses per month, including point of sale and ATM transactions."
  • Find a relationship with the most ubiquitous mobile wallet solution for members. "If you don't have an articulation of a mobile strategy with regard to mobile payments, you need to build one pretty quick," MacAllister said.
  •  Investigate the amount of transactions that are being disintermediated by ACH and work to reverse it. About one in four PayPal transactions are made through ACH, MacAllister said. For most credit unions, "every time an ACH transaction replaces a debit transaction you're going to 44 cents in revenue to 15 cents in cost," he noted. He advised credit unions to monitor where their ACH transactions are originating.
  • Agree that merchants have something to offer and seek new relationships. "Interchange is going away," MacAllister said. "The question is, 'What are we going to replace it with?' If that happens, the next time somebody knocks on your door and offers you to authorize and settle a transaction for 15 cents, it's going to look pretty good." Also, big banks are the most likely to be the first to partner with big retailers, leaving credit unions out of the loop, MacAllister said.
Credit unions do have one advantage in the payments landscape, MacAllister said: Their willingness to collaborate. Credit unions can solve many of the above issues surround payments through credit union service organizations, MacAllister said.

"I can't imagine credit unions would approach this without taking a CUSO approach, a collaborative approach, to answer the questions, 'What do we do about a mobile wallet? What do you do about security? What do we do about cyber-currency?'" he said, "It's the only way to go."

House GOP Whip McCarthy concerned about excessive rules

 Permanent link
WASHINGTON (2/26/14)--House Majority Whip Kevin McCarthy (R-Calif.) said Tuesday that federal regulators are increasingly enacting new rules at a hefty cost to small businesses. 

Click to view larger image House Majority Whip Kevin McCarthy (R-Calif.) says credit unions are a symbol of free enterprise, risk and upward mobility and should be "unshackled to do more for small businesses." He spoke Tuesday at CUNA's 2014 Governmental Affairs Conference. (CUNA Photo)
The Republican congressional leader told the Credit Union National Association's 2014 Governmental Affairs Conference that the legislative branch issues fewer major rules than the executive branch, and that 19% of GDP is sapped by regulatory burdens. 

In a speech that cited the ideas and quotations of Abraham Lincoln, McCarthy paraphrased the 16th president, saying that "government should do for people what people can't do for themselves." 

"Credit unions do that every day in serving their members," he said, expressing concerns that regulations are hindering the not-for-profit institutions.  He said that credit unions represent the best of America's "exceptional nature."
 
"Credit unions are a symbol of free enterprise, risk and upward mobility," McCarthy said. He told attendees that he wanted the federal government to "unshackle and allow you to grow," with a particular concern for small business lending rules amid a sluggish post-2008 economic recovery. 

McCarthy also recalled how credit unions played a key role in his own life. He told the conference how after completing high school in Bakersfield, Calif., Kerns Schools FCU gave him a student loan to attend junior college.

He said that he received another line of credit after he decided to start selling cars, and that Kerns Schools allowed him to refinance his debt after he won a modest-by-today's standards $5,000 in the California lottery. He then invested in a local sandwich chain, which he sold to put himself through college. 

"I'd never make it to majority whip if I didn't belong to a credit union," McCarthy stated.  He also said, "No bank wanted to look at me."

Issa calls for data protection without CU regulatory burden

 Permanent link
WASHINGTON (2/26/14)--House Oversight Committee Chair Darrell Issa (R-Calif.) said Tuesday that congressional leaders need to strengthen cybersecurity rules without mandating additional regulatory burdens on credit unions and other financial institutions.

Click to view larger image Small credit unions shouldn't be burdened by regulations to where they feel the need to become mega credit unions, says House Oversight Committee Chair Darrell Issa (R-Calif.) in his speech during the Tuesday session of CUNA's 2014 Governmental Affairs Conference. (CUNA Photo)
Issa said at the 2014 Credit Union National Association Governmental Affairs Conference in Washington that multiple congressional committees need to bring together public and private sector stakeholders to draft rules designed to prevent data breaches like the recent high-profile holiday season attack on Target.

The congressman also told attendees that the House Oversight Committee recently sent a list of questions to the retail conglomerate. The letter asked Target to disclose internal discussion between Nov. 1 and Dec. 13 in which employees or contractors discuss "any suspicion" that its security apparatus had been penetrated (Reuters Feb. 25).

CUNA and the Consumer Bankers Association have estimated that the theft, which affected some 40 million credit and debit card users' sensitive information, cost credit unions and banks roughly $200 million. CUNA CEO Bill Cheney said that credit unions have replaced 85% of the cards targeted in the attack at no cost to members (News Now Feb. 20).

Much like the response to the recent financial crisis, credit unions are concerned that they will be held responsible for complying with additional federal rules designed to remedy a problem they did not cause--something, Issa said, he is trying to prevent.

"After 2008, it was the credit unions that were unfazed, doing their jobs," he commented. "Small credit unions shouldn't be burdened by regulations to where they feel the need to become mega credit unions, which are more and more like big banks."

He said that current cybersecurity rules, like those enacted by the Gramm-Leach-Bliley Act of 1999, "fail to give credit unions a way to deal with cyberthreats." But he warned that mandating change could lead to "a single winner."

Issa told attendees that credit unions are dear to him--that in 1971 a federal credit union gave him a loan to buy a 1961 MGA, a sports car made by the now-defunct British Motor Corp.

"It was everything to me," he recalled, and joked, "I had a car I could work on night after night." He said that the hobby kept him busy, and he wondered what he would have done without it.

"Credit unions have changed my life," he said.

Issa also told attendees that credit unions shouldn't face regulatory impediments to small business loans, speaking as the former owner of "a small business, a micro business."

"There were credit unions that believed in me," he said.

CFPB meets CUNA request for CUAC deadline extension

 Permanent link
WASHINGTON (2/26/14)--The deadline for applications to the Consumer Financial Protection Bureau's Credit Union Advisory Council has been extended to March 14, CFPB Deputy Director Steve Antonakes said Tuesday morning.

Click to view larger image At CUNA's Governmental Affairs Conference Tuesday, CFPB Deputy Director Steve Antonakes tells credit unions he recognizes that losing market share to competitors that prioritize their earnings over serving the consumer is a drag on credit unions. (CUNA Photo)
The extension was granted at the request of the Credit Union National Association (CUNA). Antonakes told CUNA the good news just before he spoke at the morning session of CUNA's 2014 Governmental Affairs Conference.

In his remarks before GAC attendees, Antonakes said he brought a deep respect for credit unions with him when he came to join the CFPB in Washington. The bureau and credit unions share the goal of protecting consumers, Antonakes said.

The CFPB official said he recognizes that losing market share to competitors that prioritize their earnings over serving the consumer is a drag on credit unions.

Regarding the CUAC announcement, there will be eight seats open on that panel this fall. The CUAC was formed to ensure that the CFPB hears from smaller credit unions that are outside of its regulatory scope but will still be impacted, in some form, by CFPB regulations and/or actions.

The CUAC advises the CFPB on how its regulation of consumer financial products or services will impact credit unions with less than $10 billion in assets, and takes on other topics.

The 15 current members of the CUAC are:
  • Bernard Balsis, Independent Employers Group FCU, Hilo, Hawaii;
  • Rose Bartolomucci, Towpath CU, Fairlawn, Ohio;
  • Gary Bell, Cooperative Center FCU, Berkeley, Calif.;
  • John Buckley, Gerber FCU, Fremont, Mich.;
  • Carla Decker, District Government Employees FCU, Washington, D.C.;
  • Ron Ehrenreich, Syracuse (N.Y.) Cooperative FCU;
  • Kevin Foster-Keddie, Washington State Employees CU, Olympia, Wash.;
  • Mitchell Klein, Police and Fire FCU, Philadelphia;
  • Lily Lo, Northeast Community FCU, San Francisco;
  • Maria Martinez, Border FCU, Del Rio, Texas;
  • Marcus Schaefer, Truliant FCU, Winston-Salem, N.C.;
  • Camille Shillenn, Unified People's CU, Cheyenne, Wyo.;
  • Helen Godfrey Smith, Shreveport (La.) FCU;
  • Gregg Stockdale, 1st Valley CU, San Bernardino, Calif.; and
  • David Wright, Services Center FCU, Yankton, S.D.

McWatters' NCUA nomination to get March 4 Senate Banking hearing

 Permanent link
WASHINGTON (2/26/14)--The Senate Banking Committee has announced a March 4 hearing for the nomination of Mark McWatters to become a member of the National Credit Union Administration (NCUA) board.

President Obama announced his intent to nominate McWatters in mid-December and sent the nomination to the Senate in early January. The NCUA nominee must be approved by the committee and the full Senate to take a seat on the NCUA board.

If confirmed, McWatters would replace board member Michael Fryzel, whose term ended Aug. 2. Fryzel will continue to serve until McWatters is confirmed.

McWatters served in 2009 as counsel for Rep. Jeb Hensarling (R-Texas), who has been the chairman of the House Financial Services Committee since January 2013. McWatters is currently dean for graduate programs at Southern Methodist University's School of Law in Dallas.

He was a member of the TARP Congressional Oversight Panel in Washington, D.C., from December 2009 to April 2011. TARP--or the Troubled Asset Relief Program--refers to the $700 billion fund established in 2008 to help stabilize the economy after the downturn caused by a burst housing market bubble.

The supervisory panel was charged with overseeing the investment of TARP funds in an array of systemically significant and other institutions including megabanks like Citigroup, Bank of America, Wells Fargo, Goldman Sachs, AIG, GM, GMAC, Chrysler as well as approximately 700 additional financial institutions.

Ways and Means members highlight their support for CUs at CUNA GAC

 Permanent link
WASHINGTON (2/26/14)--With House Ways and Means Committee Chairman Dave Camp (R-Mich.) expected to release his much-anticipated and much-delayed plan to overhaul the tax code today, attendees of the Credit Union National Association's 2014 Government Affairs Conference (GAC) lent an attentive ear to members of the committee who spoke at the GAC Tuesday.

Click to view larger image U.S. Rep. Linda Sanchez (D-Calif.) told CUNA's 2014 Governmental Affairs Conference audience that changing the credit union tax status would also severely hamper credit unions' ability to compete with banks. "More competition means more choices and better terms for consumers," Sanchez said. (CUNA Photo)
House Ways and Means Committee members who took the GAC stage offered credit unions unequivocal support. Although Reps. Linda Sanchez (D-Calif.), John Larson (D-Conn.) and Sandy Levin (D-Mich.) provided no guarantees that Camp's plan would not include a change to the credit union tax status, each spoke out against changing credit union tax status and offered high praise for the role credit unions play in their communities.
 
Sanchez, who told the audience she has been a credit union member since she was 16, said the Ways and Means Committee hopes to foster more economic certainty through tax reform. "Preserving the credit union tax status will help provide much of that needed certainty," Sanchez said. "Congress has consistently supported the credit union tax exemption because of the special manner in which credit unions serve their [members] as not-for-profit member-owned cooperatives."
 
Sanchez represents 158,000 credit union members in her district, she told the audience. "That includes firefighters, teachers, janitors, military personnel--the people who are the glue that hold our communities together," she said. "So as a member of the Ways and Means Committee, I am committed to ensuring that our tax code helps protect those middle-class families, and we've been working very hard to get a meaningful, serious tax reform bill done this year."
 
Click to view larger image U.S. Rep. John Larson (D-Mich.) said there is "broad-based support" for the preserving the credit union tax status on the House Ways and Means Committee, but urged credit unions to remain vigilant in continuing to work with legislators. (CUNA Photo)
Changing the credit union tax status would also severely hamper credit unions' ability to compete with banks. "More competition means more choices and better terms for consumers," Sanchez said.
 
Larson said there is "broad-based support" for the preserving the credit union tax status on the House Ways and Means Committee, but urged credit unions to remain vigilant in continuing to work with legislators.
 
Larson pledged his support for preserving the credit union tax status. "If we strengthen our financial institutions, if we work with credit unions, if we work with people in all walks of life that come to Washington D.C. to strengthen this country, we're going to be a better nation," he said.
 
Click to view larger image U.S. Rep. Sandy Levin (D-Mich.) advised credit unions to "make your numbers known" in Washington this week. "Yours is the voice of the typical family in this country," he said. "Let it be heard." (CUNA Photo)
As he introduced Levin, Michigan Credit Union League President/CEO Dave Adams read a statement Levin had offered the league in support of the credit union tax status: "I am committed to a thoughtful reform of our nation's tax code that ensures important policies such as the credit union tax exemption continue to serve the best interests of the American tax payer," Levin told the league.
 
Levin, who said he has been a credit union member for more than 50 years, said credit unions helped steer the U.S. economy out of the recent recession. "It was difficult for people to know where to turn if they needed to purchase something, if they needed to buy a car, if they needed to prevent foreclosure of a home," Levin said. "There was one place that people in this country could turn to, and that was a credit union."
 
Levin advised credit unions to "make your numbers known" in Washington this week, and also to court legislators that may not be familiar with the credit union story. "Tax reform is complicated, but the role of the credit unions isn't," Levin said "Yours is the voice of the typical family in this country. Let it be heard."
 

Royce to intro new MBL-related legislation this week

 Permanent link
WASHINGTON (2/26/14)--Legislation that would exempt certain housing loans from the member business lending cap will be introduced this week, Rep. Ed Royce (R-Calif.) told the Credit Union National Association's 2014 Governmental Affairs Conference attendees Tuesday.

Click to view larger image Rep. Ed Royce (R-Calif.), right, says it is fortunate that credit unions are in Washington for CUNA's 2014 Governmental Affairs Conference, the same week that House plans for comprehensive tax reform will be released. Credit union voices need to be heard, he says.  Royce is shown here being greeted by CUNA GAC emcee Paul Berry. (CUNA Photo)
The bill, known as the Credit Union Residential Loan Parity Act, would exempt one- to four-unit non-occupied dwellings from the cap.

"We should take a closer look at [the MBL regulation] and where it doesn't work, fix it," Royce said.

"While this legislation is not a panacea to your business lending woes it will provide relief," he added. The regulatory relief measure would also help increase affordable housing stock, Royce said.

These type of housing loans make up around 20% of credit union MBL balances, he noted.

He asked credit unions to add a request for bill co-sponsors to their list of asks when they hike Capitol Hill this week.

Do what you do best, "get some co-sponsors," he said.

Royce said the new bill will augment his other MBL work. His bill, the Credit Union Small Business Jobs Creation Act (H.R. 688), would increase the MBL cap to 27.5% of assets from 12.25%. CUNA has estimated that lifting the MBL cap would create 140,000 jobs and inject $13 billion in new funds into the economy, at no cost to taxpayers.

Saying "the best defense is a good offense," Royce also highlighted other recent legislation he has introduced, including a bill that would extend National Credit Union Share Insurance Fund coverage to accounts such as Interest on Lawyers Trust Accounts and prepaid debit card master accounts.

Metsger tells GAC: CU directors, regulators aren't so different

 Permanent link
WASHINGTON (2/26/14)--The role of a volunteer credit union board member and that of a federal credit union regulator are not all that different, National Credit Union Administration (NCUA) board member Rick Metsger said Tuesday during the Credit Union National Association's 2014 Governmental Affairs Conference (GAC) in Washington.

Metsger should know. He's been both. And he said that both positions, in fact, require a person to be a regulator.
Click to view larger image Rick Metsger marks his six-month anniversary as an NCUA board member at CUNA's 2014 Governmental Affairs Conference Tuesday. (CUNA Photo)

"When I was a credit union director, my job wasn't to manage or micro-manage the operation of my credit union. It was to ask intelligent questions, help set policies, offer perspectives that others may not have considered and reassure our members that our credit union was not only safe today, but would be safe tomorrow and for the foreseeable future.

"My role at NCUA is similar," he said. Metsger was sworn in as an NCUA board member Aug. 26, 2013.

He went on to say:
  • A director's job is to  make sure underwriting and investment criteria are sound; a regulator's is to make sure examination and supervision criteria are sound.
     
  • A director wants to be reassured that his or her loan officers are asking the right questions and making the right decisions; Metsger, as a regulator, wants to be reassured that NCUA examiners are asking the right questions and making the right decisions.
The NCUA board member also addressed the issues of relevancy and mission, stating that even in the pursuit of the safety and soundness of the system in light of the rapidly changing financial marketplace, credit unions must not be so constrained by their regulator--or so risk-averse--that they cannot meet the financial needs of their members.

"Credit unions must remain relevant in the mix of financial services options available to the American public. A credit union that is safe and sound, but irrelevant to its members' needs, is not a viable outcome of regulation," he said.

During his speech to the record crowd of 4,400 credit union advocates at the CUNA GAC, Metsger noted that it has been six months to the week that he joined the agency as a board member.

He used the introduction to his speech to serve also as an introduction to himself to the credit union crowd. He noted that he has been "blessed with many careers" in his life: high school teacher, college basketball coach, life insurance agent, television news reporter, small business owner and Oregon state senator.

"I remember one Thanksgiving dinner when my elderly aunt leaned over to my wife and expressed concern that I didn't seem to be able to hold on to a job," he joked to the audience's great amusement.

Tester seeks CU help to move housing reforms forward

 Permanent link
WASHINGTON (2/26/14)--Noting that the economy "will not fully recover until we further rebuild our housing market," Sen. Jon Tester (D-Mont.) on Tuesday encouraged credit unions to lobby for a bipartisan housing finance reform bill.
Click to view larger image Sen. Jon Tester (D-Mont.) says data security reforms are needed to build a system that better protects consumers through clearer rules and shared responsibility. Tester spoke Tuesday at CUNA's 2014 Governmental Affairs Conference. (CUNA Photo)

The Senate Banking Committee member made his remarks at the morning session of the Credit Union National Association's 2014 Governmental Affairs Conference.

Tester is a co-sponsor of the Housing Finance Reform and Taxpayer Protection Act (S. 1217). That bill, introduced by Sens. Bob Corker (R-Tenn.) and Mark Warner (D-Va.), would wind down government-sponsored enterprises Fannie Mae and Freddie Mac and replace them with a new mortgage guarantor.

Tester said he is still discussing the bill with Warner and Corker, and spoke Tuesday in favor of provisions that will help small financial institutions "stay in the game." He also called for the 30-year fixed-rate mortgage to be retained.

A Senate Banking Committee markup of housing finance reform legislation is reportedly coming soon, and Tester said "there is a real window of opportunity to get housing finance reform done."

The senator also said data security reforms are needed, and noted that the recent Target data breach caused credit unions more than $30 million in damages. "The bottom line is we need a system that protects consumers through shared responsibility and better, clearer rules of the road," he said.

Kirkpatrick calls CUs 'cornerstone of economic development'

 Permanent link
WASHINGTON (2/26/14)--Calling credit unions "the cornerstone of economic development,"  Rep. Ann Kirkpatrick (D-Ariz.) offered her support for preserving the credit union tax status during a Credit Union National Association 2014 Governmental Affairs Conference speech Tuesday.

Click to view larger image Rep. Ann Kirkpatrick (D-Ariz.) praises credit unions for returning profits back to their members in the form better rates on products and services.  "That is real money to real working folks," she told Tuesday's audience at the CUNA 2014 Governmental Affairs Conference. (CUNA Photo)
She was described as "a true friend of credit unions" by Scott Earl, president/CEO of the Mountain West Credit Union Association, who introduced Kirkpatrick. She serves a rural district of 60,000 square miles in eastern Arizona, an area larger than Pennsylvania or Illinois. About 25% of the district's residents are Native American, the largest percentage of any U.S. congressional district, Kirkpatrick said.

"Life is a real struggle in my area, and always has been," Kirkpatrick said. "My work is dedicated toward creating an environment in which we have a strong, stable, diversified economy, and credit unions are key players in that vision by providing service in the district."

Kirkpatrick praised credit unions for returning profits back to their members in the form better rates on products and services. "That is real money to real working folks who are struggling to put gas in their pick-up trucks, food on their tables and buy clothing for their children," she said.

During their meetings with lawmakers credit unions should provide examples of how those rates make a difference in the communities they serve, Kirkpatrick advised. "Make sure to tell the stories of the people that you serve," she said.

MAP study shows value of member issue education, advocacy

 Permanent link
WASHINGTON (2/26/14)--Member service is the core of the credit union movement, and the Credit Union National Association's new Member Activation Program (MAP) study, released Tuesday, shows the value credit unions can derive from educating their members on key issues like the tax status and credit union difference.

The study was unveiled at CUNA's 2014 Governmental Affairs Conference with a quick video in the morning and a lengthy breakout session later in the day.

The yearlong study of 70,000 members in two credit unions--CommunityAmerica CU in Kansas City and University FCU in Austin, Texas--tested both for the techniques most effective in activating members to take grassroots action on their behalf, and whether doing so would have had any negative consequences for the credit union's brand or member relationship.

The results showed that the goals of generating grassroots contacts go hand in hand with increasing member loyalty and growing wallet share for the credit union. "We found that four out of five credit union members indicated they were more likely to conduct more of their personal financial services with a credit union after receiving a 'Don't Tax My Credit Union' email communication," CUNA Senior Vice President of Political Affairs Richard Gose said.

The study also revealed:
  • Credit union members want to be known as members, not as customers;
  • The credit union "brand" has a 97% favorability rating amongst those surveyed;
  • Members respond best to messages that show the differences between credit unions and Wall Street banks;
  • Members who receive advocacy outreach from their credit unions have a stronger bond with those institutions; and
  • About 82% of members are ready to do more business with their credit union after exposure to advocacy messaging.
CUNA has used the results of the study to develop an advocacy and outreach toolkit for credit unions of all sizes, and an email template for credit unions to use in contacting and educating their members on the tax status issue. Additional training tools for credit union leaders who want to do even more with their members are also on the way.

At this stage, Gose said CUNA has a simple question to ask: Credit unions should commit to contacting their members on the tax status by Tuesday, March 11. This action will generate additional contacts to remind Congress of the need to protect the credit union tax status, and will kick off or continue an important advocacy conversation with members.

"This type of contact can only lead to increased membership loyalty for credit unions," Gose said.

'Make no little plans,' Fryzel tells GAC audience

 Permanent link
WASHINGTON (2/26/14)--Channeling architect Daniel Burnham, National Credit Union Administration board member Michael Fryzel urged 2014 Credit Union National Association Governmental Affairs Conference attendees to "Make no little plans. They have not the magic to stir men's blood."
Click to view larger image Credit unions are an unbeatable idea, the idea of people helping people get the funding they need to buy a home, purchase a car, send a child to college, and achieve a secure retirement, National Credit Union Administration board member Michael Fryzel tells a Tuesday session at CUNA's 2014 Governmental Affairs Conference. (CUNA Photo)

Burnham was instrumental in transforming an area of Washington dominated by marshland and railroad stations into the National Mall, one of the nation's jewels. Fryzel urged attendees to similarly make big plans of their own.
 
"The National Mall is pretty much finished," Fryzel said. "The credit union movement is not."
 
He urged credit unions to increase membership, provide opportunities for financial literacy and continue offering better rates on loans and savings while helping Americans prepare for retirement.
 
Fryzel acknowledged the credit union system faces challenges. He specifically identified burgeoning technology, increased regulatory burden, competition with banks, and the blind-siding nature of change as ongoing challenges.
 
He encouraged credit unions to make themselves "battle ready" and continually prepare for all challenges. "I believe you are as great as any challenge you face, because nearly all challenges are not natural disasters but human-caused," Fryzel said. 'Because they are human-caused, they can be human-fixed."
 
Again, Fryzel summoned history as a teacher. He cited the credit union movement's founders, who also faced "stiff winds" of adversity.
 
"If this movement were to suddenly disappear this morning," Fryzel said to his Tuesday morning credit union audience, "it would start right up again tomorrow."
 
"Why? Because it is a good idea, an unbeatable idea, the idea of people helping people get the funding they need to buy a home, purchase a car, send a child to college, and achieve a secure retirement. That is the banner you carry forward. Carry it higher and straighter."

Albright: Global reach--CUs can help Ukraine recover

 Permanent link
WASHINGTON (2/26/14)--Former Secretary of State Madeleine Albright said on Tuesday that credit unions can play a role in helping Ukraine emerge from its current political and economic turmoil.

The former top U.S. envoy said at the Credit Union National Association Governmental Affairs Conference in Washington that she discussed the matter with CUNA President/CEO Bill Cheney. Albright relayed to the audience during a question-and-answer period that Cheney told her Polish credit unions have been working with their Ukrainian counterparts, and "can make a huge difference."

Click to view larger image Former Secretary of State Madeleine Albright sits with CUNA's 2014 Governmental Affairs Conference emcee Paul Berry and answers questions the credit union audience tweeted in for her attention. Just prior to the question-and-answer session, Albright gave a broad speech which she wrapped up by saying that credit unions "are like Tom Hanks in the banking world: likeable, everywhere, and ain't misbehaving in 'The Wolf of Wall Street.'" (CUNA Photo)
Since the fall of the Soviet Union, the credit union movement has grown in Poland from 13 branches and 14,000 members in 1992, to almost 2,000 branches and 2.5 million members in the spring of 2012 (Polish National Association of Cooperative Savings & Credit Unions, July 2012). Former Polish President Lech Kaczynski--who was killed in a 2010 plane crash--said, during a 2009 visit to the Brooklyn, N.Y.-based Polish & Slavic FCU, that Poles visiting the U.S. two decades beforehand brought the credit union movement back to their country (News Now, Oct. 9 2009). He called it "the largest Polish social/financial success since 1989."

Now, Albright says, credit unions can pay it forward by helping the Ukrainian economy develop. 

She said that credit unions and other non-state actors--such as non-governmental organizations, multinational corporations and pension funds--can, more broadly, "help shape the international terrain" beyond any single country. Simply allowing the forces of globalization and the spread of technology, she opined, was not sufficient for creating civil society. 

"You can't tweet your way to democracy, stability and peace," she said.

Albright's speech, much like former British Prime Minister Tony Blair's CUNA GAC talk the day before, focused on a rapidly changing world. She laid out her personal philosophy of international relations, saying that foreign affairs are not like a chess game, as they are commonly described, but more akin to a game of billiards, in which a single action can have numerous unintended consequences.

Albright described globalization and information technology shaping this as a force multiplier, with crises in places like Ukraine, Pakistan, Syria and South Sudan reverberating beyond those countries' borders, and the rapid flow of information shaping the actions of people around the world.

"Gone are the days when a few countries could dominate," she said.
 
In that vein, she expressed hope that a "unity government" would emerge in Ukraine to unite the polarized eastern and western parts of the country, and that the international community would work together to "bailout" the country's ailing economy.
 
Albright also told her credit union audience about her personal history. She talked about her tumultuous childhood as a two-time refugee from Czechoslovakia--first, fleeing the Nazi invasion for England, and, after the war, seeking asylum from Stalinist rule in the U.S. Albright did note that her childhood and her diplomat father fueled her interest in global affairs and U.S. leadership--a path that led her to become the first woman secretary of state.

She told tales about her tenure as a top American diplomat, and life after prominent public service too. Albright said she would wear different types of pins to help convey the U.S. position during diplomatic negotiations, opting for a snake pin, for example, during a meeting with Iraqi officials after the state media in Baghdad under Saddam Hussein called her "an unparalleled serpent."

Albright also told the audience that former secretaries of state share a bond that crosses party lines, and that all living former secretaries of state meeting for dinner with the incumbent is a tradition--one that John Kerry's travel itinerary hasn't allowed for yet.

Albright did say that her own recent travels have bolstered her appreciation for credit unions. She fondly recalled meeting managers of a Kenyan credit union at a market in Kibera, Nairobi's largest slum, and how they described it as an institution built on mutual respect and cooperation, in which all members "put money in and trust each other." 
She also praised credit unions for being particularly welcoming of women executives, describing them "at the vanguard of progress." 

Albright also said how she was "tremendously proud" to be a part of the Aspen Institute panel of judges that awarded the 2013 McNulty Prize to Bill Bynum, president/CEO of Hope FCU, Jackson, Miss. She said that the credit union movement helps set the U.S. apart.

At the start of the speech, she had a similar message for attendees, albeit with a more light-hearted and pop-culture conscious tone. Albright told conference attendees that credit unions "are like Tom Hanks in the banking world: likeable, everywhere, and ain't misbehaving in 'The Wolf of Wall Street.'"

GAC breakout: Industry experts give tips on combating data security issues

 Permanent link
WASHINGTON (2/26/14)--"We're never going to see the end of cyberintrusion ... there is too much rich data out there," said John Buzzard, FICO fraud banking product manager. You can, however, eliminate counterfeit products down the line once data is stolen, he noted.

Buzzard and other panelists on Tuesday advised credit unions on how to cope with an evolving data security environment during the Credit Union National Association's 2014 Governmental Affairs Conference.

The session was hosted by CUNA Senior Legislative Representative Jeremy Dalpiaz and featured comments from William Nelson, president/CEO, Financial Services Information Sharing and Analysis Center; and John Wallace, vice president of commercial products, CUNA Mutual Group.

Nelson said cybercrime is a global problem, with a complete service-based economy supporting their activities. There are also hacktivists such as wikileaks, Anonymous, Lulzsec, and state-sponsored hackers from China, Iran and other nations, he said. Hackers can trick search engines into displaying infected content and can use phishing or spearphishing tools to attack vendors, administrators and staff who may have access to financial information and other information.

The panelists cited on example of how pervasive the hacking culture has become: there is a multi-million dollar bounty payment waiting for the first person to break triple-DES encryption.

Nelson said hackers will often stop an attack if it takes too long or gets too complicated, so having multiple layers of security can force them to move on before they do damage.

His organization, FS-ISAC, has helped fight hacking attempts by developing "circles of trust" among those in the payments system.

Members will report incidents, others will respond, and alerts will be issued to members of the circle, he said.

Future data security threats include:
  • Strikes with customized, flexible and adaptable malware intrusions;
  • Sales and purchases of cards based on bank identification numbers; and
  • Attacks on payment cards that develop in two phases within the same breach, such as stealing consumer data, and executing PIN fraud.
Potential losses for credit unions include lost revenues, costs to notify members, lawsuits, regulatory scrutiny, operational costs and repetitional issues. Buzzard said credit unions more than ever are stepping out with strong messages about how their members are impacted by data breaches. The human cost of reissuing plastic is exponentially higher than estimates, and could be as high as $15 to $20 per card, he said.

To combat fraud, CUNA Mutual's Wallace said credit unions can examine and upgrade fund transfer controls and online banking security, continue with strong fraud detection, and educate their members.

Other steps credit unions can take to protect themselves from data security breaches include assessing their own data security risks and vulnerabilities, whether the risks are presented by ATMs, computer systems, third-party vendors or other sources, the panelists added.

Credit unions should also be careful to take care of their members and be transparent. Staying connected to evolving data security developments, and simply being prepared, are other steps they can take, the panelists said.

42 state AGs write Congress to back patent reforms

 Permanent link
WASHINGTON (2/25/14)--Forty-two state attorneys general signed onto a letter sent Monday to key lawmakers, and which voiced their support for legislation to fight patent abuses and reform the system.

From the outset of their letter, the attorneys general highlighted their concerns regarding so-called "patent trolls," saying they "stifle innovation and harm our economy by making dubious claims of patent infringement and using the threat of expensive litigation to extort money from small businesses and nonprofits."

Credit unions are among those who have been victimized by patent trolls and the Credit Union National Association and its affiliated state credit union associations have been active on every level urging state and federal lawmakers and the Obama administration that patent reform is needed.

The AG letter went on to say patent trolls have threatened thousands of businesses and non-profits, and when the AGs receive complaints from their constituents they have responded by launching investigations and bringing enforcement actions against patent trolls.

"Our authority to protect businesses derives primarily from state statutes that prohibit unfair and deceptive acts. Though any patent holder has a right to fight infringement, it may not do so in a manner that is unfair or deceptive," the letter said.

While commending current legislation (S. 1720 and the recently passed H.R. 3309), the letter recommended four additional provisions to be added as bills work their ways through the legislative process. They are:
  • Confirmation of state attorneys generals' authority to bring the same types of enforcement actions under state law as under federal law;
  • Clarification of state-court jurisdiction over bad-faith demand letters;
  • Transparency for patentees that send demand letters; and
  • Patent litigation reform, so the cost of patent litigation doesn't far outstrip the cost of a settlement.
The letter was addressed to Sens. Patrick Leahy (D-Vt,), chairman of the Senate Judiciary Committee; Chuck Grassley (R-Iowa), the ranking member of that panel; John D. Rockefeller IV (D-W. Va.), chairman of the Senate Committee on Commerce, Science and Transportation; and John Thune (R-S.D.), ranking member of Rockefeller's committee.

CUNA is also working to enlist the help of consumers in the effort to gain patent reforms through the U.S. Congress. CUNA President/CEO Bill Cheney said recently in a Huffington Post article, ""If you are a member of a credit union, a customer at another small financial institution, or an owner of a small business, I hope you will contact your senator and let them know you are behind efforts to combat the tactics of the trolls."

Hyland challenges CUs to improve awareness outreach

 Permanent link
WASHINGTON (2/25/14)--National Credit Union Foundation (NCUF) Executive Director Gigi Hyland on Monday urged credit unions to improve their outreach efforts. 

Click to view larger image NCUF Executive Director Gigi Hyland urges credit unions to improve their information outreach efforts, saying that too often during her 23 years in the credit union movement, even friends and neighbors have responded with confusion when she discusses credit unions with them. (CUNA Photo)
Hyland listed ideas and potential partnerships for credit unions at the Credit Union National Association Government Affairs Conference in Washington, D.C. She said that while the credit union brand is strong, there is still plenty of room left to create better awareness. 

"I'm going to exert every bit of diplomacy I have learned," the former National Credit Union Administration board member said. Even so, she added that credit unions are "really bad at creating awareness." 

She said that too often throughout her 23-year career in the credit union movement, even friends and neighbors have responded with confusion when she has discussed credit unions with them. 

Hyland highlighted three ways credit unions could boost their profile.

She first told conference attendees to make themselves part of the "strategic architecture of your community's financial well-being" by collaborating with local governments, nonprofits and cooperatives such as farmers' markets that strive to implement ethical business models.

Hyland then encouraged credit unions to integrate "business and benevolence"--by tying both philanthropic efforts to improving Americans' financial well-being and financial services to institutional charitable donations.

She concluded by telling credit unions to become a trusted resource beyond their members. Holding reality fairs, retirement fairs and readily offering financial information and education could, Hyland said, turn heads. She encouraged conference attendees to consult either the NCUF or state credit union foundations for other ideas and suggestions.

Hyland said that the timing of outreach is critical, pointing to Americans' glaring lack of affordable financial services. She cited a 2012 Financial Industry Regulatory Authority survey that found 19% of Americans spend more than they earn, 26% have unpaid medical debt and 56% have no emergency savings. Credit unions can fulfill this "huge unmet need," she said.

"But if they don't know you're there, they can't choose you," she concluded.

The NCUF is the U.S. credit union movement's primary national philanthropic program provider. Through NCUF grants and programs, credit unions provide widespread financial education, create greater access to affordable financial services, and empower more consumers to save, build assets, and own homes.

CUNA and CUNA Mutual Group are among the foundation's chief corporate supporters.

NEW: Royce to intro new MBL-related legislation this week

 Permanent link
WASHINGTON (UPDATED: 9:25 A.M. ET, 2/25/14)--Legislation that would exempt certain housing loans from the member business lending cap will be introduced this week, Rep. Ed Royce (R-Calif.) told 2014 Credit Union National Association Governmental Affairs Conference attendees this morning.

The bill, known as the Credit Union Residential Loan Parity Act, would exempt one-to-four-unit non-occupied dwellings from the cap.

"We should take a closer look at [the MBL regulation] and where it doesn't work, fix it," Royce said.

"While this legislation is not a panacea to your biz lending woes it will provide relief," he added. The regulatory relief measure would also help increase affordable housing stock, Royce said.

These type of housing loans make up around 20% of CU MBL balances, he noted.

He asked credit unions to add a request for bill cosponsors to their list of asks when they hike Capitol Hill this week.

Do what you do best, "get some cosponsors," he said.

Matz at GAC: Merchants must be held to same data security standards as CUs

 Permanent link
WASHINGTON (2/25/14)--The data breach at Target is the story of a double standard "that is neither healthy nor fair,"
Click to view larger image
 National Credit Union Administration Chairman Debbie Matz said Monday at the Credit Union National Association's 2014 Governmental Affairs Conference. "While financial institutions are required by law to protect sensitive personal information, data protection standards for retailers are too often simply not adequate," Matz added.

CUNA has made this same point in several recent letters to the U.S. Congress.

The NCUA leader identified cyber-security as one of the top priorities for the regulator and the credit union system going forward.

"A data breach--even if it's outside the financial system--can have enormous negative repercussions inside the financial system," Matz said. "No matter how far removed a given data breach is from your credit union, if it affects your members, you can pay dearly--both in terms of your reputation and your balance sheet."

Data breaches are not the only cyber-security risk, according to Matz.  Hackers have used passwords stolen from a credit union to access one of the larger credit bureaus, and cyber-terrorists are now targeting credit unions.

"When these attackers break through, websites crash. Members are unable to access their accounts. It can take hours to bring systems back online," she said. Hackers can infiltrate systems and compromise or destroy data, and could use a credit union as an entry point to gain access to payment systems and vendors.

Some also use front-end denial of service attacks to create a diversion while others break into a network through a back door. "Think about the damage they could do," Matz said.

Agency examiners will be looking to see how credit unions are implementing appropriate risk mitigation controls to better protect, detect and recover from cyber-attacks. Vendor due diligence, strong password policies, proper patch management, employee training and network monitoring are among the items credit unions will need to address or improve.

To prepare for potential attacks, credit unions can share cyber-security best practices  at league meetings and take part in national information-sharing forums.

The NCUA itself is also partnering with federal law enforcement, intelligence and financial agencies to improve its own cyber-security.

"NCUA needs to be ready. The credit union system needs to be ready. Working together, we will be ready," Matz said.

NEW: Senate Committee to hear McWatters nomination March 4

 Permanent link
WASHINGTON (UPDATED: 6:15 P.M., 2/25/14)--National Credit Union Administration board nominee Mark McWatters will testify before the Senate Banking Committee on March 4.

Obama announced his intent to nominate McWatters in mid-December, and sent the nomination to the Senate in early January. The NCUA nominee must be approved by the committee and the full Senate to take a seat on the NCUA board.

If confirmed, McWatters would replace board member Michael Fryzel, whose term ended Aug. 2. Fryzel will continue to serve until McWatters is confirmed.

McWatters served in 2009 as counsel for Rep. Jeb Hensarling (R-Texas), who has been the chairman of the House Financial Services Committee since January 2013. McWatters is currently dean for graduate programs at Southern Methodist University's School of Law in Dallas, Texas.

He was a member of the TARP Congressional Oversight Panel in Washington, D.C. from December 2009 to April 2011. TARP--or the Troubled Asset Relief Program--refers to the $700 billion fund established in 2008 to help stabilize the economy after the downturn caused by a burst housing market bubble. The supervision panel was charged with overseeing the investment of TARP funds in an array of systemically significant and other institutions including megabanks like Citigroup, Bank of America, Wells Fargo, Goldman Sachs, AIG, GM, GMAC, Chrysler as well as approximately 700 additional financial institutions.

'Don't Tax My Credit Union' highlights CUNA annual meeting

 Permanent link
WASHINGTON (2/25/14)--During the Credit Union National Association's annual general meeting Monday at the 2014 Governmental Affairs Conference,  President/CEO Bill Cheney reflected on a year by highlighted the "Don't Tax My Credit Union" campaign, a grassroots effort that generated millions of contacts with lawmakers.
 
"Advocacy remains our top priority and protecting the credit union tax status is at the top of the priority list," Cheney said.
 
Among the 2013 highlights Cheney shared at the meeting:
  • CUNA, the leagues and credit unions were instrumental in making progress in protecting credit unions from patent trolls. The House passed a bill with several CUNA-supported provisions. Similar Senate action is pending.
  • Overall in 2013, CUNA testified seven times before six different congressional full committees and subcommittees, on issues including regulatory relief for credit unions, reform of Dodd-Frank, financial literacy and housing finance reform.
  • The first stand-alone credit union regulatory relief bill in 15 years was reported out of the House Financial Services Committee. It provided parity for credit unions with banks in respect to federal insurance coverage of lawyer trust accounts and other similar accounts.
  • The Credit Union Legislative Action Council raised more than $2.1 million in 2013, a record for net receipts.
  • CUNA was among the first groups to call for no more corporate credit union assessments--as early as last summer--arguing that losses had fallen dramatically. The National Credit Union Administration (NCUA) followed up by announcing in November that there wouldn't be an assessment for 2014.
  • The CUNA regulatory advocacy team filed 60 comment letters in 2013, to a variety of regulators, including: NCUA, Consumer Financial Protection Bureau, Federal Reserve Board, Small Business Administration, Financial Accounting Standards Board, Department of Defense, Federal Financial Institutions Examination Council, Department of Housing and Urban ,and Financial Crimes Enforcement Network.
Cheney also noted CUNA ability to work with NCUA, when it must regulate, citing the recent rule on loan participation as example. CUNA, representing its membership, preferred no rule at all but working with leagues and credit unions, Cheney noted, "we submitted strong comment letters outlining our suggestions for change."
 
"Fortunately, the final rule included many recommendations we sought and is a vast improvement from what was proposed," Cheney said. "It shows what we can do when we effectively voice our concerns."

GAC: Cheney challenges CUs to ramp up grassroots efforts

 Permanent link
WASHINGTON (2/25/14)--Credit Union National Association President/CEO Bill Cheney challenged 2014 Governmental Affairs Conference attendees to ramp up their grassroots efforts in engaging lawmakers on a list of issues that attracted a record attendance to the credit union movement's annual advocacy gathering.

As the credit union movement nears 100 million in membership--a mark it will most certainly pass later this year--Cheney challenged attendees to engage 10 million of those members in grassroots efforts.
 
"If we can engage our members, who want to speak up for us, not only will they support us, but they will do more business with us," Cheney said.
 
During his opening GAC remarks, Cheney cited continued increases in credit union membership and market  share as additional reasons for optimism about lawmakers listening more closely to the system's concerns about issues such as the credit union tax status and data security.
 
Cheney praised credit unions for doing an "absolutely fantastic" job in educating members about the tax exemption, with 1.3 million credit union members contacting the U.S. Congress on the issue. He said CUNA and credit unions--as well as the whole nation--expect to hear from the House Ways and Means Committee this week on the long-awaited tax reform proposal.
 
"We are confident, as confident as anybody can be in Washington, that our interests will be protected," Cheney said. "Bankers have financial resources; we have people resources, and it's making a difference.'
 
He also noted the turnout of 450 credit union advocates for a special GAC breakout session on the National Credit Union Administration's risk-based capital proposal.  Cheney said credit unions understand a risk-based system is needed; however, the system must be implemented as part of an overall restructuring of credit union capital requirements.
 
Under the current NCUA risk-based capital plan, credit unions would be limited in their ability provide loans and invest in credit union service organizations.
 
The CUNA CEO encouraged credit union to use modeling tools on the CUNA website to "drill down a couple of levels" on the effects of the proposal, and to register concerns during the NCUA's 90-day comment period.
 
"We've got to give NCUA the tools they need to address this problem, and the proposal that's on the table today is simply not acceptable," Cheney said.
 
Cheney also said members of Congress are willing to listen to credit union concerns on data security.  "We have been very successful in raising the profile of this issue," he said, citing a survey that CUNA membership survey which found the Target data security breach has cost credit unions $30.6 million.

Former PM Blair tells GAC he's impressed by CU lobbying

 Permanent link
WASHINGTON (2/25/14)--Former British Prime Minister Tony Blair praised the U.S. credit union movement Monday at the Credit Union National Association 2014 Government Affairs Conference in Washington.
Click to view larger image Former Prime Minister Tony Blair jokes with his credit union audience at CUNA's 2014 GAC that he was "feeling quite sorry lawmakers on Capitol Hill" facing credit unions' lobbying plans for later in the week. On a serious note he says he's "impressed" by such advocacy efforts. (CUNA Photo)

Blair lauded the work credit unions do for millions of Americans, opining that "we're rather behind you in the U.K. and Europe."

The former prime minister told the packed conference hall that he had learned "quite a lot" and was impressed by the impending lobbying push organized by CUNA and the credit union movement. He joked that the lobbying plans for later in the week left him "feeling quite sorry lawmakers on Capitol Hill." CUNA, the state credit union associations and credit unions launch a massive advocacy effort in conjunction with the GAC every year to much note in Washington, D.C.

Although a controversial figure in Britain throughout his leadership, Blair has enjoyed a relatively high rate of popularity in the U.S.

His approval ratings, while in office, were roughly twice as strong on the western side of the Atlantic (USA Today Jan. 24, 2006), and he was warmly received by the GAC audience, who gave him a standing ovation at both the start and end of his talk.

"It's amazing how nice people are to you when you stop being prime minister," he chuckled.

Blair highlighted a number of global issues throughout his talk. He discussed international development and how an increasingly economically integrated world has intensified the speed and scope of political change. Blair also argued that there is a need for economic reforms in both Europe and the U.S. and encouraged Americans to continue to embrace world leadership as Asian countries become more powerful.

Despite the weighty focus, Blair further seemed to endear himself to the crowd with his sense of humor. He made a number of comical remarks in a speech punctuated by laughter from the audience--described by the former leader at the onset as "light relief talking about world affairs."

He joked about how he thought it was "not very supportive" when Cherie, his wife, told him that the number of trips he has made to the Middle East as a special envoy--114, he said--isn't as important as the progress being made in Israeli-Palestinian peace talks.

Blair also poked fun at his efforts to help his 13-year-old son Leo with his homework, marveling at the gadgets the teenager uses to learn, and describing his assistance as "utterly inadequate." He also said that he never had a cell phone as prime minister, which, he said, "in light of recent events, was just as well"--a reference to the scandalous tabloid phone-hacking conspiracy that victimized his successor, Gordon Brown.

The ex-Labour Party leader's self-deprecation did serve to illustrate his point about how rapidly technology is changing the world. Blair said this was a cause for optimism. He told the audience how his recently deceased father, who was also named Leo, grew up in a working-class foster home in Glasgow and would be thrilled that extreme poverty is increasingly becoming a thing of the past.

He did warn, however, that middle-class families are being squeezed in countries throughout the world--a phenomenon that has affected security. Blair said this was most recently highlighted by unrest in Ukraine.

"We need to make work pay, which is why the minimum wage is such an issue in Europe and here, too," Blair said. Higher wages, he argued, should also be able to reduce reliance on the welfare state--something Blair sought to reform throughout his decade in office.

Whatever the course of action for tackling any problem, Blair encouraged the GAC attendees to resist the urge to resort to short-term solutions designed to placate the loudest naysayers. The challenges facing institutions throughout the world, he said, makes passivity tempting.

Successful leaders, he said, "perceive the direction of change and the leadership to take us there."

'Don't Tax Tuesday' is today

 Permanent link
WASHINGTON (2/25/14)--Today credit union advocates will reprise the Credit Union National Association's award-winning "Don't Tax Tuesday" campaign.  This time, #DontTaxTuesday will occur in tandem with CUNA's 2014 Governmental Affairs Conference (GAC), where thousands of credit union advocates will be in Washington to meet with their legislators. 
 
CUNA representatives will also be emailing past "Don't Tax My Credit Union" advocates and encouraging them to again contact legislators via the Tweet Congress tool at www.DontTaxMyCreditUnion.org
 
Additionally, CUNA staff will be live-tweeting throughout today's GAC general session. CUNA encourages credit union employees and members nationwide join in using the #DontTaxMyCU and #DontTaxTuesday hashtags.
 
CUNA has earned recognition for previous "Don't Tax Tuesday" initiatives. On July 23 and Sept. 10 last year, CUNA and state credit union league advocacy used social media to encourage credit unions, credit union members and other credit union advocates to contact state and federal lawmakers directly with the unified message of "Don't Tax My Credit Union." The campaigns earned a Grassroots Social Media Innovation Award from the Public Affairs Council.
 
There have already been more than 13,000 tweets using the #DontTaxMyCU hashtag, including 7,200 tagging a member of Congress, over the past two rounds of #DontTaxTuesday. 
 
"We continue to have more members of Congress come out in support of our tax exemption, but we need to be certain to turn these words into action," said Joe Joiner, CUNA's "Don't Tax Tuesday" coordinator. "Once they hear the strength of the credit union movement again, it will demonstrate how losing the credit union tax exemption will impact 99 million members and their communities."
 
There are many ways to participate:
  • Tweet or post on Facebook using the #DontTaxMyCU hashtag and tagging their legislators.
     
  • Go to the Tweet Congress tool on the CUNA website, put in your information, and receive pre-written Tweets and posts.
     
  • Download the CUNA Advocacy app on your iPhone or Android, click "Take Action" and "Tap Here to Tweet to Congress," where you can then receive pre-written Tweets as well.
     
  • Create a Vine video and post it to Twitter using the hashtags.
     
  • A tweet can be as simple as "Please #DontTaxMyCU @ (Twitter handle of your Congressional delegate here) #DontTaxTuesday." Credit unions and individuals can participate by tweeting to their senators and representatives using the #DontTaxMyCU hashtag, or posting on Facebook by including the senator or representative in a post by typing the "@" sign and then typing the lawmaker's name.

Sen. Corker talks tax, commends CU advocacy efforts

 Permanent link
​WASHINGTON (2/25/14)--Speaking during Monday's 2014 Credit Union National Association Governmental Affairs Conference session, Sen. Bob Corker (R-Tenn.) told credit union supporters he does not know of anyone who wants to change the credit union tax status.

Click to view larger image Sen. Bob Corker (R-Tenn.) tells credit union supporters he does not know of anyone who wants to change the credit union tax status. (CUNA Photo)
Corker is a member of the Senate Banking Committee and has served in the Senate since 2007.

The senator has recently been an active member of housing finance reform efforts, introducing the Housing Finance Reform and Taxpayer Protection Act (S. 1217). That bill would wind down government-sponsored enterprises Fannie Mae and Freddie Mac and replace them with a new mortgage guarantor.

He credited CUNA for helping push housing finance reform legislation along, and said credit union Senate testimony on reform goals was "profound." Housing finance reform legislation will likely be marked up soon in the Senate Banking Committee and could see a full vote this year, the legislator added.

Corker said two credit union priorities for reform--maintaining the 30-year fixed-rate mortgage and ensuring broad access to the secondary mortgage market--should be in the final version of the Senate bill.

Overall, the legislator said he was impressed by the record GAC crowd of 4,400, and by credit unions' positive, upbeat advocacy.

CUNA provides Hill visit support for 4,400 CU advocates

 Permanent link
WASHINGTON (2/26/14)--More than 4,400 credit union supporters are preparing to join this week's credit union Capitol Hill Advocacy efforts.

Credit union Capitol Hill hikes are a key part of the Credit Union National Association's annual Governmental Affairs Conference, and give credit union supporters the chance to take their local and national political and regulatory concerns directly to their members of Congress.

As they ready for their hikes, CUNA legislative staff have provided an overview of the key message points to deliver to members of Congress during Capitol Hill meetings.

This year, the top items on CUNA's legislative agenda include encouraging members of Congress to:
  • Tell leadership and tax writing committee members "Don't Tax My Credit Unions," and to make a public statement of support for the tax status based on structure and mission;
  • Require merchants to adhere to the same strong data security standards that credit unions must follow and to reimburse credit unions for the costs they incur as a result of merchant data breaches. Credit unions should also be permitted to identify the merchant at which a given data breach occurred when notifying members that their accounts have been compromised, if the source is known and if disclosure would not hamper an investigation;
  • Reduce credit unions' regulatory burden by supporting bills that would address privacy notification standards, make the examination process fairer and more consistent, and make structural improvements to the Consumer Financial Protection Bureau;
  • Ensure credit unions have continued access to a well regulated, well capitalized and liquid secondary mortgage market, and maintain the availability of the 30 year fixed rate mortgage; and
  • Enact charter enhancements so that credit unions can continue to serve their members. House and Senate legislation (H.R. 688/S. 968) that would permit experienced and well-capitalized credit unions to apply for expanded business lending authority, and bi-partisan legislation (H.R. 719) that would permit credit unions to accept supplemental forms of capital consistent with cooperative principles.
"Every meeting will be different, and schedules can change by the minute. Whether you are meeting with a senior member of Congress, or a House freshman staff member, remember to be clear and concise. Make sure they understand the main points," CUNA Senior Vice President of Legislative Affairs Ryan Donovan said.

For more CUNA legislative advocacy resources, use the resource link.

CU advocacy must be strong now, continue for best impact

 Permanent link
WASHINGTON (2/25/14)--Credit Union National Association legislative and political experts detailed overview of the top issues of the day in an hourlong session at CUNA's 2014 Governmental Affairs Conference (GAC).

For instance, CUNA Vice President of Legislative Affairs Ryan Donovan presented credit union issues, and encouraged more than 4,400 GAC attendees to bring their thoughts on those issues to their Capitol Hill visits. Some of the top credit union issues are:
  • The tax status, and defending credit unions from bank attacks against it;
  • The need to increase the member business lending cap for credit unions;
  • Acting to prevent future data breaches, and ensuring merchants are held to the same high security standards as credit unions;
  • Ensuring credit unions maintain access to the secondary mortgage market; and
  • Credit union charter enhancements.
Donovan reminded GAC attendees that the legislative process is a marathon, not a sprint, and "you can't win a marathon by running only the last mile." Credit unions need to remain active at the grassroots level throughout the year to rack up legislative wins, he said.

For more Hike the Hill advice for credit union supporters, see today's News Now.

CUNA Vice President of Political Affairs Trey Hawkins also stressed the importance credit union advocacy efforts could have when elections are held later this year. "We at CUNA see a sea of opportunities on the electoral map this fall," he said. "There are real opportunities out there," and credit unions can help themselves in the future by electing a pro-credit union Congress now.

This election cycle, there will be 25 open seats, four special elections and 77 competitive seats between parties in the U.S. House, and seven open seats and 17 competitive seats between parties in the Senate.

"Credit unions have a myriad of opportunities to re-elect a pro-credit union candidate or elect a new one," Hawkins said, adding credit unions have 99 million members that are willing to listen to credit union recommendations--and willing to vote for pro-credit union candidates. CUNA is planning to ramp up political advocacy activities to take advantage of these possibilities.

One factor that motivates these members is exposure to pro-credit union messaging about the not-for-profit credit union structure and the tax threat they face. The release of this type of information generates overwhelming interest, desire to act and stronger loyalty to the credit union, CUNA Senior Vice President of Political Affairs Richard Gose said.

Pat Sowick, CUNA senior vice president of league relations, said the pro-credit union message provided by CUNA's "Don't Tax My Credit Union" campaign is also resonating in state and local legislatures, where legislation can move more quickly, new credit union taxation proposals can be tough to track and a great deal of teamwork is needed.

She said many other federal issues, such as data security, are likely to be taken up in state legislatures. Four states are considering mandating chip-and-PIN cards, and 12 states last year made changes to their respective credit union acts, Sowick added. Bills to facilitate municipal deposits in credit unions have also seen success lately, she said.

Media experts tell GAC CUs how to tell their story

 Permanent link
WASHINGTON (2/25/14)--At the Credit Union National Association's 2014 Governmental Affairs Conference Monday, former ABC anchorman and GAC master of ceremonies Paul Berry lead a panel of journalists for an in-depth discussion about how credit unions can better communicate their message to the media.

The panel featured several accomplished Washington, D.C., journalists including Fox News' Tucker Carlson, The Washington Post's Ylan Mui, and Politico's Lauren French.

The panel covered a variety of topics including the Target data security breach, the National Security Agency spying scandal, online privacy, regulatory policy, tax reform, inaction in Congress, and tips on how to pitch stories to journalists.

One memorable moment came from Carlson, when asked, "How can credit unions help people understand the difference between banks and credit unions?" Carlson said banks are the greedy reckless ones who ruined the economy, and no one likes them. Credit unions are the ones who did not. It's a simple story.

In the end, each journalist offered tips to help credit unions communicate with the press.

French told GAC attendees to always know who they are talking to and what that journalist covers.

Carlson encouraged credit unions to slow down with the jargon and "industry speak," and avoid being patronizing to the journalist. Most importantly, he said, credit unions should expect some pushback on their story. Journalists are meant to ask challenging questions, he said, adding, "You should expect that and have an adult response."

Mui told credit unions to be accessible. Lunches, coffees or informational interviews are helpful to journalists who are trying to better understand the credit union story, she said.

Online power tool will drive home CU compliance concerns: GAC

 Permanent link
WASHINGTON (2/25/14)--PowerComment, a new online regulatory advocacy resource that will help credit unions take their compliance concerns directly to regulators, was unveiled Monday at the Credit Union National Association's 2014 Governmental Affairs Conference.

Click to view larger image Coming soon:  California and Nevada Credit Union Leagues President Diana Dykstra and CUNA President/CEO Bill Cheney announce a new online tool to amp up the volume of credit union regulatory comment letters. (CUNA Photo)
CUNA and California and Nevada Credit Union Leagues (CCUL) partnered to develop the tool, which helps users efficiently generate and submit letters to regulatory agencies, including the National Credit Union Administration and Consumer Financial Protection Bureau. CUNA President/CEO Bill Cheney and CCUL President Diana Dykstra announced the innovation Monday morning.

PowerComment also explains proposed rules and regulations issued by regulators and helps individuals understand how those rules may affect their credit union. The website, which will be available exclusively to CUNA-affiliated credit unions, also provides a discussion board so that credit unions can discuss any questions or concerns with other members.

"Like it or not, regulation is a major part of today's credit union movement," CUNA General Counsel Eric Richard said. "We know credit unions feel like the onslaught of regulation in recent years is one of the greatest headwinds facing the future of our movement. And we know credit unions want to do what they can to help shape the regulations. PowerComment will help credit unions take action in the regulatory arena."

CUNA Deputy General Counsel Mary Dunn added, "CUNA and the leagues are always committed to providing credit unions with the best technology to confront the challenges facing the movement.

"In the spirit of the cooperative movement, CUNA is pleased to partner with the California and Nevada Credit Union Leagues in this venture as we continue to look for ways to improve the regulatory environment for our credit union members."

PowerComment is currently being tested by seven credit union state leagues and is set to be available for all members later this year. Watch News Now for more developments on this issue.

Record crowd converges on D.C. for 2014 GAC

 Permanent link

WASHINGTON (2/24/14)--As the Credit Union National Association launches its 2014 Governmental Affairs Conference this morning, CUNA President/CEO Bill Cheney will call on a record number of 4,400 participants to keep up their vital grassroots advocacy efforts.

These efforts are more important than ever in the face of new and existing issues facing credit unions, such as the National Credit Union Administration's recent risk-based capital proposal and ongoing tax reform talks in the U.S. Congress.

Just before Cheney's remarks, the U.S. Marine Corps Band will begin proceedings with a patriotic opening and a stirring rendition of the national anthem.

Cheney will be followed on today's schedule by former United Kingdom Prime Minister Tony Blair, who will offer GAC attendees analysis of the world's most difficult and complex issues.

The CUNA Annual General Meeting is on this afternoon's agenda, and CUNA staff will also speak today: Legislative and political updates are set to be staged just before an interesting, interactive panel discussion on credit unions in the media.

During a media panel session, former Washington, D.C. anchorman and GAC emcee Paul Berry will ask Fox News' Tucker Carlson, the Washington Post's Ylan Mui, and Politico's Lauren French how credit unions can better communicate their message to the media.

Also during the 2014 GAC, credit union representatives from across the nation will hear presentations by high-profile, Washington, D.C., policymakers and get the latest information on top credit union issues.

Other highlighted speakers this week include House Majority Whip Kevin McCarthy (R-Calif.), Minority Whip Steny Hoyer (D-Md.), Sens. Bob Corker (R-Tenn.) and Mark Udall (D-Colo.), Jon Tester (D-Mont.), Rep. Darrell Issa (R-Calif.), Rep. James Clyburn (D-S.C.), Deputy Consumer Financial Protection Bureau Director Steve Antonakes and National Credit Union Administration Chair Debbie Matz.

Also sure to attract a lot of attention: CUNA's conference will feature important breakout sessions.  Even over the weekend, CUNA staff explored hot credit union topics in depth.  For instance, CUNA held a 90 minute session on the National Credit Union Administration's risk-based capital proposal (see related story: Risk-based capital concerns aired at CUNA GAC).

Other breakout sessions will explore how to navigate the current congressional gridlock, the upcoming midterm elections, new developments in cybersecurity and payments, how federal policies impact credit union lending, and many other sessions taken from the front pages of credit union news.

And thousands of credit union representatives flood Capitol Hill and regulatory offices to advocate for credit union issues, just as Rep. Dave Camp (R-Mich.) is expected to release his long-awaited tax reform plans.

Use the resource link below for more GAC information.

NEW: CUNA, league announce tool to drive home CU compliance concerns: GAC

 Permanent link
WASHINGTON (UPDATED: 12:45 P.M. ET, 2/24/14)--PowerComment, a new online regulatory advocacy resource that will help credit unions take their compliance concerns directly to regulators, was unveiled today at the Credit Union National Association's 2014 Governmental Affairs Conference.

CUNA and California and Nevada Credit Union Leagues partnered to develop the tool, which helps users efficiently generate and submit letters to regulatory agencies, including the National Credit Union Administration and Consumer Financial Protection Bureau. CUNA President/CEO Bill Cheney and CNCUL President Diana Dykstra announced the innovation this morning.

PowerComment also explains proposed rules and regulations issued by regulators, and helps individuals understand how those rules may affect their credit union. The website, which will be available exclusively to CUNA-affiliated credit unions, also provides a discussion board so that credit unions can discuss any questions or concerns with other members.

"Like it or not, regulation is a major part of today's credit union movement," CUNA General Counsel Eric Richard reminds. "We know credit unions feel like the onslaught of regulation in recent years is one of the greatest headwinds facing the future of our movement. And we know credit unions want to do what they can to help shape the regulations. PowerComment will help credit unions take action in the regulatory arena."

CUNA Deputy General Counsel Mary Dunn adds, "CUNA and the leagues are always committed to providing credit unions with the best technology to confront the challenges facing the movement.

"In the spirit of the cooperative movement, CUNA is pleased to partner with the California and Nevada Credit Union Leagues in this venture as we continue to look for ways to improve the regulatory environment for our credit union members."

PowerComment is currently being tested by seven credit union state leagues and is set to be available for all members later this year. Watch News Now for more developments on this issue.

CUNA video: How to write a good risk-based capital comment letter

 Permanent link
WASHINGTON (2/24/14)--The Credit Union National Association is planning to tackle the issues presented by the proposed risk-based capital changes from all angles, and CUNA Deputy General Counsel Mary Dunn outlines how credit unions can help this effort by writing an effective comment letter on this issue in the latest Inside Exchange video.



The risk-based capital proposal, released at the January open board meeting, would restructure the agency's current prompt corrective action regulation to include calculation of a capital-to-risk-assets ratio, analogous to Basel III for community banks. The risk weights would be substantially different, and the proposal would impose higher capital requirements for credit unions with higher concentrations of assets in real estate loans, member business loans, longer term investments and some other assets.

The proposal would apply to credit unions with assets of more than $50 million.

CUNA has developed a new Risk-Based Capital Action Center tool to help credit unions file comment letters with the agency, and the NCUA will also touch on risk-based capital rules in a series of town hall meetings scheduled for the summer.

CUNA President/CEO Bill Cheney also discussed the need for credit union action on the proposal in this week's edition of The Cheney Report.

For the Inside Exchange video, and The Cheney Report, use the resource links.

Fryzel tells defense CUs: Face future by learning from past

 Permanent link
WASHINGTON (2/24/13)--National Credit Union Administration board member Michael Fryzel, addressing the "Defense Issues 2014" meeting hosted here Sunday by the Defense Credit Union Council, advised his credit union audience that the industry must learn from the past, but not be locked into the past, when facing challenges ahead.

"As credit unions and the entire financial service industry continue to change, we need to look forward," Fryzel said. "Use the past as a relevant guide, improve and sharpen your tools based on experience, but do not assume for a minute that future challenges will bear any resemblance to past problems.

"The Federalist Papers asked what I think is a critical question," Fryzel said. "Are we capable of establishing good government through reflection and choice, or are we destined to make decisions by accident and force? I sincerely hope it is the former path, illuminated by serious, smart thinking and reasonable application of experience and knowledge."

Also during his remarks, Fryzel praised DCUC member credit unions for serving those who serve in the nation's armed services, for helping expand the middle class, and for demonstrating the importance of cooperative credit unions to the country's economy.

Fryzel also detailed his agency's efforts that marked its response to the country's recent financial crisis and how the NCUA has "applied the tough lessons learned from the market meltdown" to current regulation and supervision. He reiterated his call for  "right-sizing" regulation.

As he first said in November to the more than 110 attendees at the American Association of Credit Union Leagues' (AACUL) 2013 winter meeting in Palm Beach, Fla., regulations should take "neither an overly stringent nor an overly permissive approach" as to rules--and he cited risk-based capital rules as needing the 'right-sizing' approach.

The DCUC's "Defense Issues 2014" was a full-day meeting held here in conjunction with the Credit Union National Association's Governmental Affairs Conference, which kicked off Sunday.

Use the resource link for the full text of Fryzel's remarks to the DCUC.

NCUA readies online resources for America, Military Saves Week

 Permanent link
ALEXANDRIA, Va. (2/21/14)--Noting that "an educated consumer is better prepared to make sound financial choices," National Credit Union Administration Chairman Debbie Matz encouraged credit unions to take part in a planned Twitter talk during America Saves Week and Military Saves Week.

America Saves Week and Military Saves Week begins today and runs until March 1. Matz in recent weeks has noted it provides credit unions with an excellent opportunity to educate their communities about the importance of saving.

The NCUA will be active online during the week, hosting a Feb. 26 Twitter chat at 11 a.m. ET. During the chat, NCUA Office of Consumer Protection Financial Literacy and Outreach Analyst Kenneth Worthey will highlight the NCUA's financial literacy resources and answer credit union and member financial literacy questions. The agency has encouraged Twitter users to follow the conversation and contribute using the #NCUAChat hashtag, and to submit questions early by emailing socialmedia@ncua.gov.

The agency has also created a Virtual Campaign Headquarters page, and updated its mycreditunion.gov site and the agency's financial literacy site, Pocket Cents, with new information about saving, borrowing and managing credit.

America Saves Week and Military Saves Week are national campaigns that unite government, nonprofit and corporate groups to encourage individuals and families to save and build personal wealth. American Saves Week is coordinated by American Saves and the American Savings Educational Council. Military Saves is part of the Defense Department's Financial Readiness Campaign and has been a partner with the department since 2003. Managed by the Consumer Federation of America, both programs encourage saving, reducing debt and building wealth.

"Teaching individuals how to build wealth is a core mission of the credit union system, and I strongly encourage credit unions to take part in various activities to remind their members of the importance of saving," Matz said.

During the week-long event, the NCUA encourages credit unions to partner with local savings campaigns and consumer organizations to offer motivational workshops and obtain posters, brochures and other resources.

For more, use the resource link.

CUs detail risk-based capital rule concerns in GAC session

 Permanent link
WASHINGTON (2/24/14)--"CUNA supports a modern risk-based capital system for credit unions. Period," Credit Union National Association President/CEO Bill Cheney told an estimated 400 credit union leaders from across the country attending a Sunday 2014 Governmental Affairs Conference session on the new risk-based capital proposal. But, he declared, "What we don't support is layering additional capital requirements on top of our one-size-fits-all outdated system of prompt corrective action."

Click to view larger image A capacity crowd—estimated at 400 credit union representatives—packed the room Sunday during a special breakout session at CUNA's GAC on the National Credit Union Administration's proposed rule on risk-based capital. CUNA experts detailed the NCUA's plan and discussed its costs to credit unions, in terms of maintaining current net worth buffers. The audience was polled on such things as whether they could manage their risk-based ratio by adjusting asset composition, how long should credit union have to comply with a new rule, and much more. (CUNA photo)
The risk-based capital plan recently proposed by the National Credit Union Administration is flawed, and the best fix "would be to withdraw the proposal as written today and start over," Cheney said at the session.

As proposed, the 198-page, risk-based capital framework for credit unions would impose new requirements on credit unions with assets of $50 million and above. CUNA estimates that the rule, if made final and implemented, would push credit unions to hold as much as $7.3 billion in additional capital. (For more on the rule, use the resource link.)

The CUNA leader encouraged credit unions to take part in three NCUA "listening sessions" scheduled for this summer (News Now Feb. 21), where the risk-based capital proposal will be on the agenda. "They're there to listen to you," Cheney reminded. (See resource link for more information on the NCUA sessions.)​​

CUNA Chief Economist Bill Hampel told the packed crowd of credit union attendees that the proposed system would create a new requirement to be well capitalized that would call for more capital than the current risk-based requirement for capital adequacy. "This is where it would eat into your buffer," he said.

In an on-the-spot survey, session attendees detailed w​hat the rule would mean to their credit unions. The quick electronic survey showed:
  • 44% of session attendees believe their current capital cushion above PCA thresholds is "about right," and 33% said they have more than they need;
  • 26% said the NCUA proposal would reduce their capital cushion below what is needed;
  • More than 80% preferred the current risk-based PCA system; and
  • Most of the credit unions in attendance said they'd need 3-5 years to adjust to a new system.
"There will be strong incentives for credit unions not to make mortgages and member business loans, or to hold long-term investments as a result of the proposal," Hampel warned. "What the proposal would do by discouraging lending is put pressure on your bottom line, and induce credit unions to charge more fees to their members. The net result would likely not be what NCUA wants to see," he added.

CUNA Deputy General Counsel Mary Dunn, addressing the breakout session, said CUNA is working with others in the system to respond to the proposal. "The more united our voice on this the better off we will be," she said. CUNA is looking at potential changes, including the use of different risk weights. CUNA will also compare credit union loss weights by type of loan, and will compare credit union and bank loss rates as it continues analyzing the proposal.

And, the session leaders said, credit unions can start working on their own comment letters now. The majority of session attendees said they planned to draft a comment letter on the issue, and Hampel said credit unions have plenty of time to develop analytical, personalized comment letters.

Hampel also suggested that credit unions use CUNA's calculator tool and examine how factors such as increased numbers of second mortgages or other new products that are added to their books as the economy recovers could impact their risk-based capital numbers.

"There is a huge chance if we make cogent comments to NCUA that there will be changes in the final rule," he said.

These comment letters are part of an overall grassroots strategy that also incorporates a new resource, the risk-based capital action center.

For the CUNA tool and more on the proposed rule, use the resource link.

NEW: Matz says merchants must be subject to same data security standards as CUs

 Permanent link
WASHINGTON (UPDATED: 2/24/14, 11 A.M. ET)--The data breach at Target is the story of a double standard "that is neither healthy nor fair," National Credit Union Administration Chairman Debbie Matz said today at the 2014 Governmental Affairs Conference. "While financial institutions are required by law to protect sensitive personal information, data protection standards for retailers are too often simply not adequate," Matz added.

The Credit Union National Association has made this same point in several recent letters to the U.S. Congress.
The NCUA leader identified cyber-security as one of the top priorities for the regulator and the credit union system going forward.

"A data breach--even if it's outside the financial system--can have enormous negative repercussions inside the financial system," Matz said. "No matter how far removed a given data breach is from your credit union, if it affects your members, you can pay dearly--both in terms of your reputation and your balance sheet."

Data breaches are not the only cyber-security risk, according to Matz.  Hackers have used passwords stolen from a credit union to access one of the larger credit bureaus, and cyber-terrorists are now targeting credit unions.

"When these attackers break through, websites crash. Members are unable to access their accounts. It can take hours to bring systems back online," she said. Hackers can infiltrate systems and compromise or destroy data, and could use a credit union as an entry point to gain access to payment systems and vendors.

Some also use front-end denial of service attacks to create a diversion while others break into a network through a back door. "Think about the damage they could do," Matz said.

Agency examiners will be looking to see how credit unions are implementing appropriate risk mitigation controls to better protect, detect, and recover from cyber-attacks. Vendor due diligence, strong password policies, proper patch management, employee training, and network monitoring are among the items credit unions will need to address or improve.

To prepare for potential attacks, credit unions can share cyber-security best practices  at league meetings and take part in national information-sharing forums.

The NCUA itself is also partnering with federal law enforcement, intelligence and financial agencies to improve its own cyber-security.

"NCUA needs to be ready. The credit union system needs to be ready. Working together, we will be ready," Matz said.

HUD, Dodd-Frank see Financial Services Committee scrutiny this week

 Permanent link
WASHINGTON (2/24/14)--The U.S. Department of Housing and Urban Development and the Dodd-Frank Act will both be discussed at House Financial Services Committee hearings set for this week.

The HUD hearing will take place on Wednesday at 10 a.m. (ET). During that hearing, the oversight and investigations subcommittee will review a recent HUD Inspector General report addressing allegations of improper lobbying and obstruction at HUD.

Other hearings this week include:
  • A Wednesday 2 p.m. (ET) capital markets and government sponsored enterprises subcommittee hearing on the Dodd-Frank Act's impact on the asset-backed securities markets, and potential legislation dealing with the Volcker Rule's impact on collateralized loan obligations; and
  • A Friday 10 a.m. (ET) capital markets and government sponsored enterprises subcommittee hearing to examine equity market structure and review the objectives and outcomes of Regulation National Market System adopted by the Securities and Exchange Commission in 2005.
The hearing schedule is tentative. All hearings are scheduled to be held in Room 2128 of the Rayburn House Office Building.

'Listening sessions' on CU capital changes announced by NCUA

 Permanent link
WASHINGTON (2/21/14)--The recent risk-based capital proposal and other credit union issues will be open for discussion when the National Credit Union Administration holds three listening sessions this summer. Credit Union National Association President/CEO Bill Cheney on Thursday encouraged NCUA to consider all risk-based capital comments made at the sessions as part of the official administrative record.

Earlier this month, the Credit Union National Association wrote NCUA, encouraging the agency to hold a hearing on the risk based capital proposal. "While any NCUA initiative could be raised by credit unions attending the sessions, the meetings will certainly provide a very important opportunity for credit unions to express their views on the proposal directly to the agency and to hear the responses of their peers," CUNA President/CEO Bill Cheney said in a Thursday letter to the agency.

"We believe the agency, credit unions, and the rulemaking process will benefit from this approach and that all parties will have additional incentives to be prepared with facts and data to support their views," Cheney said.

The sessions, which will be hosted by NCUA Chairman Debbie Matz, are scheduled to be held:
  • June 26 in San Francisco;
  • July 10 in Chicago; and
  • July 17 in the Washington, D.C. area.
All of the three-hour sessions are scheduled to begin at 9 a.m.

Matz noted that previous listening sessions led to regulatory relief and streamlined examination reports. "We are looking forward to another productive series of face-to-face meetings with credit union officials and stakeholders," she added.

Registration for the listening sessions is free. To register, use the resource link.

NCUA reports improving CU financials, proposes voluntary closing rule

 Permanent link
ALEXANDRIA, Va. (2/21/14)--The recent trend of positive financial results for the credit union system continued this week, with the National Credit Union Administration reporting continued declines in the number of CAMEL code 3, 4 and 5 credit unions.

NCUA CFO Mary Ann Woodson released the results during Thursday's February open board meeting.

The NCUA in its quarterly report on the status of the National Credit Union Share Insurance Fund said there are currently 307 CAMEL 4 and 5 credit unions, which represent 1.40% of insured shares, or approximately $12.1 billion. NCUA staff also noted that there are 1,480 CAMEL 3 credit unions, which represent 11.19% of insured shares, or $96.9 billion. Combined, insured shares in CAMEL 3, 4, and 5 credit unions represent approximately 12.6% of total insured shares.

According to the NCUA, the amount of assets in CAMEL code 3, 4 and 5 credit unions have decreased 40.5% since reaching a high in September 2010. "The continuation of these positive trends and other factors contributed to a net decrease of $191.8 million, or 46.5 percent, in the Share Insurance Fund's reserve for insurance losses during 2013," the agency added.

The total number of credit union failures also declined last year, falling to 17 from the 2012 total of 22.

"Protecting the Share Insurance Fund is NCUA's top priority, and the 2013 year-end results reflect the agency's prudent management and effective approach to regulation," NCUA Chairman Debbie Matz said. "The metrics continue trending in the right direction. Liquidations and assisted mergers fell sharply, with a substantial drop in actual losses to the fund."

The agency today also proposed a rule on the voluntary liquidations of federal credit unions.

The proposed rule would:
  • Permit liquidating federal credit unions to publish required creditor notices in electronic media or newspapers of general circulation;
  • Increase the asset size threshold for requiring multiple creditor notices, by exempting federal credit unions with less than $1 million in assets from the publication requirement, and exempting federal credit unions with less than $50 million in assets from the multiple publication requirement;
  • Specify that preliminary partial distributions to members must not exceed insured account balances;
  • Specify when liquidating federal credit unions must determine member share balances for distribution purposes; and
  • Permit liquidating federal credit unions to distribute member share payouts either by wire or other electronic means, or by mail or personal delivery.
Matz said the changes are intended to modernize the rule and factor in credit union growth since 1993, which was when the rule was last updated.

CUNA attends White House patent reform meeting

 Permanent link
WASHINGTON (2/21/14)--The White House gathered stakeholders together Thursday to discuss patent law reforms--including addressing the plague of patent "trolls"--and the Credit Union National Association attended. 

The White House event focused on the administration's efforts to strengthen the patent system to ensure it encourages innovation, drives investment, and spurs job creation.

U.S. Secretary of Commerce Penny Pritzker, Director of the National Economic Council and Assistant to the President for Economic Policy Gene Sperling, Assistant to the President and U.S. Chief Technology Officer Todd Park, and Deputy Director of the U.S. Patent and Trademark Office (PTO) Michelle Lee were all on hand for the discussion. 

At the event, the PTO unveiled a website to help consumers and businesses who receive demand letters understand their rights and get answers to common questions. 

The online toolkit includes details about specific patents and patent suits. It also includes information and links to services and websites that can help credit unions understand the risks and benefits of litigation or settlement, and pick their best course of action. Credit unions that have recently received a demand letter can find resources to help respond at uspto.gov/patentlitigation. 

CUNA and the state credit union associations have been active on every level urging lawmakers and the Obama administration that patent reform is needed. 

In particular, CUNA and the leagues support legislation to help curb unfair and deceptive patent demand letters and frivolous patent litigation. In these schemes, so-called "patent trolls" use low-quality patents to extract settlements from credit unions and other targets, thereby abusing the country's patent system. 

CUNA supports a number of legislative proposals currently being considered on both state and federal levels.
 
CUNA Assistant General Counsel for Special Projects Robin Cook, who attended the White House meeting on CUNA's behalf, also was highlighted in a Feb. 20 post on Inside Counsel, discussing patent troll issues.
 
The article noted that CUNA is "striving to bring attention to this problem and let credit unions know what they can do to fight back." 

It went on to quote Cook: "Credit unions, coffee shops and other small entities get demand letters or get sued and they don't know how to react. They are not well equipped to deal with the case. They might not have an in-house lawyer or a patent expert available." For this reason, the article said, the demand letters sent by trolls act as a form of extortion, and credit unions often don't know how to make heads or tails of these letters.

CU risk-based capital comments will get boost from CUNA tool

 Permanent link
WASHINGTON (2/21/14)--Is your credit union, like many others, concerned by the National Credit Union Administration's risk-based capital proposal? The Credit Union National Association has developed a new tool, the Risk Based Capital Action Center, which will allow CUNA members to directly write NCUA in a quick and efficient way and submit their comments electronically with the click of a mouse.

The page, hosted at www.cuna.org/riskbasedcapital, provides background information on the rule and highlights CUNA's initial concerns about the rule.

"We think that comment letters on this proposal will make a real difference, and so it is very important that we generate as many as possible," CUNA President/CEO Bill Cheney said.

As CUNA General Counsel Eric Richard noted, "the tool helps credit unions craft their letters through a series of responses to fill-in-the-blank questions. Users are not required to address all of the questions, just the ones on which they would like to comment."

Users can also comment on other topics presented by the proposal that are not addressed by the questions.

The proposal would restructure NCUA's current prompt corrective action regulation to include calculation of a capital-to-risk-assets ratio, analogous to Basel III for community banks. The risk weights would be substantially different, and the proposal would impose higher capital requirements for credit unions with higher concentrations of assets in real estate loans, member business loans, longer term investments and some other assets.

The proposal would apply to credit unions with assets of more than $50 million.

CUNA estimates that the rule, if made final and implemented, would lead to credit unions needing to hold as much as $7.3 billion in additional capital.

Although a final rule is not likely to go into effect until 2016 or later, CUNA Deputy General Counsel Mary Dunn said credit unions need to consider the proposal and its impact on their operations and submit their comments to the NCUA, state credit union leagues and CUNA.

For the CUNA tool and more on the proposed rule, use the resource link.

Wall Street Journal carries CUNA compliance concerns in cannabis piece

 Permanent link
WASHINGTON (2/21/14)--Working with now-legal marijuana dispensaries could be a big compliance headache for credit unions and other financial institutions, and, in some cases, just too difficult to do, Credit Union National Association Federal Compliance Counsel Colleen Kelly said in a Wall Street Journal piece.

The Journal article highlighted some of the unique challenges already faced by financial institutions that have worked with marijuana dispensaries in states where the product is now legal.

For instance, as part of customer/member due diligence rules, a financial institution may have to decide whether a business relationship with a marijuana-related business triggers a "Cole Memo" priority.

The article explains that last August Deputy Attorney General James Cole issued a memo identifying eight priorities for marijuana businesses, such as preventing distribution to minors, diversion of marijuana from states where it is legal to states where it is not, among others.

"If a credit union has a business account for a restaurant or bar, the credit union doesn't have responsibility for making sure minors don't drink or customers don't drive drunk," Kelly told the Journal, highlighting that the marijuana businesses may bring compliance challenges not before seen by financial institutions.

Kelly also pointed out in a recent CUNA CompBlog posting that financial institutions that work with these businesses should be aware of three new types of suspicious activity reports ("Marijuana Limited" SAR, "Marijuana Priority" SAR and "Marijuana Termination" SAR), as well as the seven specific customer due diligence requirements, such as verifying with the state whether the business is duly licensed and registered.

The piece also highlighted Verity CU, Seattle, Wash., which provided 15 checking and savings accounts for medical marijuana businesses in that state in 2012. The credit union stepped out of that business early last year after state authorities said Bank Secrecy Act reports would need to be filed, as marijuana sales were still federally prohibited.

Aside from the regulatory burdens and other potential consequences, Verity CEO John Zmolek said there is one more issue: The smell.

The cash from marijuana businesses reeks, he said. "When we got the cash in we really couldn't do anything with it. We couldn't turn around and give it to any of our other members. It really smelled a lot, like marijuana. Not every customer wants to have marijuana-smelling cash," he told the Journal.

Camp says tax discussion draft will be out next week

 Permanent link
WASHINGTON (2/20/14)--House Ways and Means Committee Chairman Dave Camp (R-Mich.), in a memo to Republican committee members,  said he plans to release draft reforms to the U.S. tax code the week of Feb. 24 (Bloomberg BNA, Politico Feb. 19).
 
The Credit Union National Association will have 4,300 credit union advocates hitting Washington, D.C., for its Governmental Affairs Conference (GAC) starting Feb. 23 and Executive Vice President John Magill said earlier this week that the timing of having thousands of credit union advocates available for Capitol Hill meetings could not be any better with the expectation of the release of Camp's discussion draft for tax reforms (News Now Feb. 19).
 
It was almost exactly a year ago, in fact,  that House Speaker John Boehner (R-Ohio) used the CUNA 2013 GAC as the platform to discuss reform of the country's tax code.
 
In response to news of the Camp memo Wednesday, CUNA President/CEO Bill Cheney said, "For the past nine months, CUNA, the state credit union leagues, and credit unions have been contacting members of Congress and urging them 'Don't Tax My Credit Union.' After more than 1.3 million contacts with lawmakers through that campaign, we're hopeful that our advocacy message got through."
 
Cheney added, "Regardless of what is contained for credit unions, if anything, in Chairman Camp's plan next week, we will continue to defend the credit union tax exemption--because it's all about our structure as not-for-profit, cooperative financial institutions that exist to provide service to their members."
 
According to Bloomberg BNA, the Camp memo said now is the time to pursue a tax overhaul in the interest of boosting the economy. 
 
The article noted that if Camp sticks to his earlier outlines of draft reforms, his new legislation would cut back tax credits and deductions in pursuit of a lower tax rate.

St. Francis CU shuttered by NCUA

 Permanent link
ALEXANDRIA, Va. (2/20/14)--Central Minnesota CU, Melrose, Minn., has assumed the members, assets, shares and loans of St. Francis Campus CU after that Little Falls, Minn. credit union was liquidated last week.

The National Credit Union Administration announced the credit union closure last week.

St. Francis Campus CU was liquidated after the Minnesota Department of Commerce determined it was insolvent with no prospect for restoring viable operations on its own.

Central Minnesota CU CEO Rick Odenthal told the St. Cloud Times that an investigation by the NCUA, MDC, Little Falls Police Department and the Federal Bureau of Investigation uncovered irregularities at the credit union.

St. Francis Campus CU, which was chartered in 1963 to serve employees of the St. Francis Campus, their relatives and employees of the credit union, served 3,400 members and held $51 million in assets when it was shuttered.

St. Francis Campus Credit Union is the second federally insured credit union liquidation in 2014.

Former St. Francis Campus members will become Central Minnesota CU members, and they will experience no interruption in services. Their accounts will remain federally insured by the National Credit Union Share Insurance Fund up to $250,000, the NCUA said.

Central Minnesota CU is a federally insured, state-chartered credit union with 52,000 members and $759 million in assets.

NEW: CU financials continue positive trend, NCUA reports

 Permanent link
ALEXANDRIA, Va. (2/20/14, UPDATED: 2:25 P.M. ET)--The recent trend of positive financial results for the credit union system continued today, with the National Credit Union Administration reporting continued declines in the number of CAMEL code 3, 4 and 5 credit unions.

The NCUA in its quarterly report on the status of the National Credit Union Share Insurance Fund said there are currently 307 CAMEL 4 and 5 credit unions, which represent 1.40% of insured shares, or approximately $12.1 billion. NCUA staff also noted that there are 1,480 CAMEL 3 credit unions, which represent 11.19% of insured shares, or $96.9 billion. Combined, insured shares in CAMEL 3, 4, and 5 credit unions represent approximately 12.6% of total insured shares.

According to the NCUA, the amount of assets in CAMEL code 3, 4 and 5 credit unions have decreased 40.5% since reaching a high in September 2010. "The continuation of these positive trends and other factors contributed to a net decrease of $191.8 million, or 46.5 percent, in the Share Insurance Fund's reserve for insurance losses during 2013," the agency added.

The total number of credit union failures also declined last year, falling to 17 from the 2012 total of 22.

"Protecting the Share Insurance Fund is NCUA's top priority, and the 2013 year-end results reflect the agency's prudent management and effective approach to regulation," NCUA Chairman Debbie Matz said. "The metrics continue trending in the right direction. Liquidations and assisted mergers fell sharply, with a substantial drop in actual losses to the fund."

Change is coming, CFPB's Antonakes warns mortgage servicers

 Permanent link
WASHINGTON (2/20/14)--Quick action will be taken against mortgage servicers that fail to properly notify homeowners when their loans are sold to other parties, or otherwise fail to follow new servicing regulations, Consumer Financial Protection Bureau Deputy Director Steve Antonakes said Wednesday.

Antonakes' remarks were made before the Mortgage Bankers Association's national mortgage servicing conference.

The CFPB has said it will not punish good-faith efforts to comply with new mortgage servicing rules. However, Antonakes warned that this leeway will only extend so far. "A good faith effort...does not mean servicers have the freedom to harm consumers," he said. The regulator said new servicers will need to honor existing loan modifications, whether they are trial or permanent modifications. So-called "shell games" will not be tolerated, he added.

"Affected credit unions are working hard to comply with CFPB rules and we are not aware of credit union servicers trying to dodge their legal requirements under the CFPB's servicing rule," Credit Union National Association Deputy General Counsel Mary Dunn said. "We have sought clarification from the CFPB that credit unions are not particular targets," she added.

Antonakes did not mention credit union mortgage servicing in his remarks.

New CFPB mortgage servicing rules, which went into effect on Jan. 10, require servicers to:
  • Maintain accurate records;
  • Give troubled borrowers direct and ongoing access to servicing personnel;
  • Promptly credit payments; and
  • Correct errors on request.
The rules also include new, stronger protections for struggling homeowners, including those facing foreclosure.

Overall, Antonakes said, he is "deeply disappointed by the lack of progress the mortgage servicing industry has made" in dealing with many market issues. "Too many customers continue to receive erratic and unacceptable treatment" from mortgage servicers, he added.

A New York Times DealBook blog post reported that homeowners are again starting to have issues with their servicers, with some consumers reporting specialty mortgage servicers levying incorrect fees, fast-tracking paperwork and wrongfully evicting some mortgageholders. Certain servicers are slow to upgrade their infrastructure, leading to unimpressive results, while others may be processing troubled mortgages quickly to collect their fees, DealBook reported.

"Our nation's mortgage servicers manage a debt portfolio of nearly $10 trillion for millions of American homeowners. This kind of continued sloppiness is difficult to comprehend and not acceptable. It is time for the paper chase to end," Antonakes said.

CUNA urges Congress to change housing finance, data security laws

 Permanent link
WASHINGTON (2/20/14)--Congressional leadership is needed to ensure action is taken on housing finance reform and merchant data breaches, the Credit Union National Association said in Wednesday separate letters to House and Senate leaders.

The letters were sent to House Financial Services Committee Chairman Rep. Jeb Hensarling (R-Texas), Ranking Committee Member Maxine Waters (D-Calif.), Senate Banking Committee Chairman Tim Johnson (D-S.D.) and Ranking Committee Member Michael Crapo (R-Idaho).

CUNA President/CEO Bill Cheney in the letter said CUNA is pleased by the progress that was made on housing issues in 2013. "With the economy in a fragile recovery and the housing market rebounding, now is the time for Congress to address changes to the housing finance system," Cheney added.

The CUNA CEO thanked the legislators for allowing CUNA to present credit union views on the issue, and said "it is critical that credit unions have equitable access to a functioning, well-regulated secondary market" once the reform process is complete.

"Equally important, new legislation should preserve the government guarantee of mortgages sold into the secondary market so that small lenders may continue to offer mortgage products with predictable payments, like the 30-year fixed rate mortgage," Cheney added.

U.S. Housing and Urban Development Secretary Shaun Donovan last week said Senate housing finance market reforms could be introduced soon.

Cheney also called on the Financial Services Committee to hold hearings on the recent Target data breach that cost credit unions an estimated $30.6 million. Data breach hearings have been held at the subcommittee level, and the full committee discussed the issue with federal regulators on Feb. 6. "We strongly encourage you to hold additional hearings on this matter, and call witnesses from the credit union system that can describe how these breaches affect credit unions and the members they serve," Cheney wrote.

He also said Congress must address inconsistent rules that require credit unions and other financial institutions to follow high security standards while exempting merchants.

"While we welcome the discussion, the pursuit and the deployment of new technology in the payment system, we are very skeptical that a solution to merchant data breaches can be achieved without first requiring all participants to follow similar data security standards. 

Further, until and unless merchants are held accountable for the damages that breaches to their systems cause financial institutions and consumers, we have little confidence that they will be incentivized to properly secure their systems," Cheney said.

For both letters to Congress, use the resource links.

Key House CU supporters join still-growing GAC lineup

 Permanent link
WASHINGTON (2/20/14)--With the launch of its 2014 Governmental Affairs Conference just days away, the Credit Union National Association continues to add new voices to an already exceptional list of scheduled speakers. Reps. Sander Levin (D-Mich.)--the ranking member of the tax-policy oversight House Ways and Means Committee, Bruce Braley (D-Iowa) and John Larson (D-Conn.) are now also signed up to speak next week.
 
Levin said last year at the GAC that is "committed" to a tax code that "ensures important policies, like the credit union tax exemption, continue to serve the best interest of the American taxpayer." Levin said he has long supported credit unions and the critical role they play in communities across the country.
 
"Throughout the financial crisis, credit unions increased lending because of their cooperative membership structure--providing a needed lifeline to individuals and small businesses that other lenders and financial institutions could not," Levin added.
 
Larson, who is a credit union member, has told the Credit Union League of Connecticut he can "speak of first hand of the value that credit unions bring especially during difficult times, and the unique nature of the charter agreement." Larson also encouraged credit unions to remain vigilant as tax reform debates progress. Educating new legislators who may not be familiar with credit union ideals, structure and tradition of service excellence is of particular importance, Larson said.

Braley has made public remarks in support of another credit union priority, increasing the member business lending cap. The three-term House member last year told attendees at the Iowa Credit Union League's annual Legislative and Regulatory Conference last year that he believes in the value of MBLs and thinks there should be enough room for all parties involved. "To me, there should be plenty of room at the table for lenders doing commercial and business lending," he said.
 
More than 4,300 people are expected to attend this year's GAC, which will feature 230 companies represented in 360 exhibit hall booths.
 
The conference will be held Feb. 23-27 at the Walter E. Washington Convention Center.
 
For more on the GAC and its power-packed lineup of speakers, use the resource link.

CUNA seeks CU input for GAO on IRS, tax refunds

 Permanent link
WASHINGTON (2/19/14)--Credit unions that provide tax refunds and/or work with the U.S. Internal Revenue Service on issues like identity theft can provide much-needed information through a new Credit Union National Association survey. The U.S. Government Accountability Office--the investigative arm of the U.S. Congress--has specifically asked CUNA for details on the tax topics.

The CUNA survey asks:
  • Does your credit union currently provide tax refund loans?
  • Does your credit union work with the IRS on suspected identity theft fraud issues, including with their External Leads program to return questionable tax refunds?
  • Do you have any recommendations on how the IRS could further combat identity fraud with financial institutions?
There is a fairly short turn-around time for the CUNA request. Survey results will be accepted until Feb. 24.

Responses also will be used to enhance CUNA advocacy efforts on tax-related topics.

For the CUNA survey, use the resource link.

Positive CU work with students noted in CFPB blog

 Permanent link
WASHINGTON (2/19/14)--The efforts of a Madison, Wis, credit union to develop long-term member relationships by offering low-cost financial products to students was cited in a recent Consumer Financial Protection Bureau blog post as an example of the right way to do things.

The CFPB post also linked to that credit union's letter to the bureau, in which UW CU noted that more than 85% of accounts opened by University of Wisconsin students remained open after those accountholders graduated.

The credit union offers checking accounts, debit/ATM cards, savings accounts, online and mobile services, free credit scores, low-cost reserve lines of credit and financial education resources to students and other members. 

UW CU said its strategies and business practices "demonstrate the positive contribution to student success that is possible in a partnership with a campus-based financial institution." Improving the financial well-being of student members is within the core mission of UW CU, the credit union added.

The credit union's positive work with students was noted in a broader post about the practices of some institutions that offer accounts to students.

The CFPB post also discussed the  "potentially risky practice of not readily disclosing arrangements with colleges and universities to market bank accounts, prepaid cards, debit cards, and other financial products to students."

Examples of these agreements highlighted in the blog post include:
  • Agreements in which a financial institution offers a licensing fee in order to use a school's logo to market its financial products;
  • Agreements that provide bonus payments based on whether students sign up for a financial institution's student checking account marketed on campus; and
  • Agreements in which some colleges receive discounted--or even completely free--financial services in exchange for allowing a provider to market products to students.
For the full CFPB blog post, use the resource link.

NCUA receives clean audits for permanent funds(1)

 Permanent link
ALEXANDRIA, Va. (2/19/14)--The National Credit Union Administration announced Tuesday that its four permanent funds received clean audits for 2013.

The audits, which were performed by KPMG LLP, cover the National Credit Union Share Insurance Fund, the NCUA's Operating Fund, the Central Liquidity Facility and the Community Development Revolving Loan Fund. The NCUSIF totaled $11.6 billion as of Dec. 31, 2013.

"The clean opinions from our independent auditors after their audits of the financial statements for the four permanent funds again demonstrate the diligence with which these funds are managed," NCUA Chairman Debbie Matz said.

"By making the complete financial reports public, we are living up to our commitments to provide transparency to credit unions and their members," she added.

A quarterly report on the NCUSIF will be released at Thursday's NCUA open board meeting.

An auditor opinion on 2013 Temporary Corporate Credit Union Stabilization Fund financial statements should be released in March, the agency said. That fund earned a clean audit opinion for 2012.

Rep. Holt, CU tax-status supporter, to retire this year

 Permanent link
WASHINGTON (2/19/14)--Credit union tax-status supporter Rep. Rush Holt (D-N.J.) will not run for reelection this year.

The congressman, who has held his seat since 1999, said he made his decision to retire from the U.S. House for both personal and professional reasons. The legislator entered his name in a Senate special election primary last year. That Senate seat was eventually won by fellow Democrat Cory Booker (D-N.J.).

Holt last year spoke in favor of the continuation of the federal tax exemption for the nation's credit unions.

"He always has and will continue to support the credit union tax exemption because credit unions provide needed and valued services in our local communities," his staff said in a response to a New Jersey Credit Union League survey.

CUNA urges regulatory hearing on risk-based capital plan

 Permanent link
WASHINGTON (2/18/14)--Public hearings on the National Credit Union Administration's risk-based capital proposal have been called for by the Credit Union National Association, as the association urged the regulator to address credit unions' "deep-seated concerns" in an interactive setting.  

In a letter  to NCUA board members, CUNA President/CEO Bill Cheney wrote that hearings would produce an official record of discussions between credit unions and NCUA leadership that, in addition to comment letters, the NCUA board could rely upon to determine the best path for proceeding on the rule.

The CUNA leader noted to the federal regulators that CUNA is "dissecting the agency's stated legal basis for the proposal," and reviewing a January 2012 Government Accountability Office report on the NCUA's use of Prompt Corrective Action.  

In addition, Cheney wrote that CUNA is thoroughly assessing the impact and costs of the proposed risk-based capital rule to the credit union system. CUNA is comparing the NCUA plan to key provisions of Basel III, the global, regulatory standard that will be implemented for banks through March 31, 2018, on capital adequacy, stress testing and market liquidity risks.

"We are objectively considering the extent to which a number of key changes to the proposal would result in an improved outcome for credit unions and minimize any detrimental impact that the proposal would otherwise impose," Cheney said in the letter sent Feb. 14.

CUNA continues to urge credit unions to find out as much as possible about the proposal and to send a comment to NCUA  within the 90-day comment period provided. (The due date for comments will be set once the proposal is printed in the Federal Register,  which has not occurred as of this writing. Watch CUNA's News Now for updates.)   

CUNA estimates that the risk-based capital proposal carries with it a multi-billion dollar price tag for credit unions--perhaps prompting as much as $7.3 billion in more capital to retain current margins.

What is most concerning about the impact, Cheney points out, is that it would occur despite the fact the current system showed its strength by withstanding the worst financial crisis in 80 years.

GAO report notes CUs charge lower fees

 Permanent link
WASHINGTON (2/18/14)--Credit unions generally charge lower rates and fees for their card services than do other financial institutions that offer such products to college students, a new U.S. Government Accountability Office study has found.

The study--"College Debit Cards: Actions Needed to Address ATM Access, Student Choice, and Transparency"--reviewed information on fees for similar checking accounts from large national banks and credit unions. The credit union information was drawn from the Credit Union National Association's 2013-2014 Fees Report. CUNA was also interviewed by GAO for the report.

The GAO study found at least 852 schools, representing 11% of U.S. colleges and universities, had agreements to provide debit or prepaid card services to their students as of July 2013. Most of these agreements offered students the ability to receive federal student aid and other payments on a card, the GAO said.

The GAO found that "fees charged by college card providers generally were comparable with those for similar products provided by banks, although some college card fees were slightly higher than those of credit unions."

And, according to the report on college card providers, some college providers went significantly outside the bounds of regular fees: two large providers charged a fee for card purchases using a personal identification number rather than a signature. Mainstream debit cards typically do not charge this fee, the GAO said.

One card provider, Higher One, settled Federal Deposit Insurance Corp. allegations that unfair and deceptive practices by the firm resulted in consumers paying higher fees. That settlement was reached in 2012.

Concerns noted in the GAO report include a lack of clear standards for what constitutes "convenient access" to surcharge-free ATMs or bank branches for students receiving federal student aid payments.

Increased transparency for college card agreements could help ensure that the terms are fair and reasonable for students, and the agreements are free from conflicts of interest, the report added. "Schools may have incentives to influence student choice because some receive payments from card providers based on the number of card accounts or transactions, leading some consumer advocates to question whether schools always act in their students' best interests," the report said.

CUNA regulatory staff said the GAO study could lead to future policy changes by financial regulators.

For the full GAO report, use the resource link.

CUs may want to give marijuana businesses a pass

 Permanent link
WASHINGTON (2/18/14)--New federal guidelines allow credit unions and others to provide financial services to marijuana dispensaries. However, this newfound leniency does not come without compliance burdens, the Credit Union National Association says in a new CompBlog post.

Colorado and Washington recently approved the legal sale of the drug from state-regulated dispensaries. The U.S. Treasury, Financial Crimes Enforcement Network and U.S. Deputy Attorney General James Cole have all commented on the issues in recent weeks, telling financial institutions that they may accept accounts from legal dispensaries.

However, CUNA said, "until Congress changes the federal law so that marijuana-related businesses are no longer illegal at the federal level, credit unions may be taking a great risk providing financial services to these businesses."

The compliance burdens could also be stifling for those that decide to take on dispensary accounts.

Financial institutions that work with these businesses should be aware of three new types of suspicious activity reports ("Marijuana Limited" SAR, "Marijuana Priority" SAR and "Marijuana Termination" SAR), as well as seven specific customer due diligence requirements, such as verifying with the state whether the business is duly licensed and registered.

Further, credit unions that work with dispensaries may need to determine whether or not marijuana from a given dispensary is:
  • Being used by a minor;
  • Being used by an individual who will get behind the wheel of a car; or
  • Being transferred across state lines.
"Not only does this compliance burden appear insurmountable, but also overreaching," CUNA said.

For more on the potential compliance and legal risks credit unions could face, use the resource link.

CU advocates to flood D.C. as Camp readies tax reform report

 Permanent link
WASHINGTON (2/18/14)--House Ways and Means Committee Chairman Dave Camp (R-Mich.) plans to release his much-anticipated and much-delayed plan to overhaul the tax code soon, according to news media reports that are circulating.
 
"The timing of  4,300 credit union advocates hitting Washington, D.C., for our Governmental Affairs Conference starting Feb. 23 could not be any better," said Credit Union National Association Executive Vice President John Magill.
 
CUNA, the state credit union associations, credit unions and credit union members have vehemently been advocating on behalf of the credit union tax status in anticipation of the tax code reform draft.
 
"Credit unions and their members will be well served by having thousands of their advocates available for Capitol Hill visits during GAC to drive home their 'Don't Tax My Credit Union' message just as been the tax report is being wrapped up," Magill noted. "Credit unions have worked hard to make sure that lawmakers on all levels truly understand that a new tax on credit unions would be a tax on the 99 million Americans that are their members."

Voluntary liquidations, share insurance report on NCUA Feb. agenda

 Permanent link
ALEXANDRIA, Va. (2/14/14)--There are only two items on the National Credit Union Administration's agenda for its Feb. 20 meeting. Top among the two would be the agency's quarterly report on the status of the National Credit Union Share Insurance Fund. The other is a proposed rule on voluntary liquidations of federal credit unions.

Part 710 of NCUA regulations, Voluntary Liquidations, was on the list of rules the agency reviewed in 2012. Each year, the NCUA reviews one-third of its regulations to identify any rule or provision that it deems "outmoded, ineffective, insufficient, or excessively burdensome."

The meeting is scheduled to begin at 10 a.m. (ET). Watch News Now for coverage.

For the full agenda, use the resource link.

CUs' community work is star of new NCUA video

 Permanent link
ALEXANDRIA, Va. (2/14/14)--The positive community work of a trio of credit unions is featured in a new National Credit Union Administration video.

The agency's "Small Credit Unions + Service = Success" video profiles how Desert Communities FCU, Needles, Calif., Community Promise FCU, Kalamazoo, Mich., and Northern Eagle FCU, Tower, Minn., identified their respective communities' financial needs and stepped up to help.

"Small credit unions are so important to their members and their communities," and these credit unions exemplify the credit union mission, NCUA Chairman Debbie Matz said.

NEW: CUNA urges regulatory hearing on risk-based capital plan

 Permanent link

WASHINGTON (2/14/14, UPDATED 2:28 p.m. ET)--Public hearings on the National Credit Union Administration's risk-based capital proposal have been called for by the Credit Union National Association, as the association urged the regulator to address credit unions' "deep-seated concerns" in an interactive setting.   

In a letter today to NCUA board members, CUNA President/CEO Bill Cheney wrote that hearings would produce an official record of discussions between credit unions and NCUA leadership that, in addition to comment letters, the NCUA board could rely upon to determine the best path for proceeding on the rule.

​The CUNA leader noted to the federal regulators that CUNA is "dissecting the agency's stated legal basis for the proposal," and reviewing a January 2012 Government Accountability Office report on the NCUA's use of Prompt Corrective Action.  

In addition, Cheney wrote that CUNA is thoroughly assessing the impact and costs of the proposed risk-based capital rule to the credit union system. CUNA is comparing the NCUA plan to key provisions of Basel III, the global, regulatory standard that will be implemented for banks through March 31, 2018 on capital adequacy, stress testing and market liquidity risks. 

"We are objectively considering the extent to which a number of key changes to the proposal would result in an improved outcome for credit unions and minimize any detrimental impact that the proposal would otherwise impose," Cheney said. 

CUNA continues to urge credit unions to find out as much as possible about the proposal and to send a comment to NCUA  within the 90-day comment period provided. (The due date for comments will be set once the proposal is printed in the Federal Register,  which has not occurred as of this writing. Watch CUNA'sNews Now  for updates.)   

CUNA estimates that the risk-based capital proposal carries with it a multi-billion dollar price tag for credit unions--perhaps prompting as much as $7.3 billion in more capital to retain current margins. 

What is most concerning about the impact, Cheney points out, is that it would occur despite the fact the current system showed its strength by withstanding the worst financial crisis in 80 years.  

Calif. congressman Gary Miller will not seek re-election

 Permanent link
WASHINGTON (2/14/14)--House Financial Services Committee Vice Chairman Gary Miller (R-Calif.) has announced he will not seek re-election this year.

Miller is a 15-year House veteran who currently represents the state's 31st Congressional District. That district is located in the greater Los Angeles area.

A frequent credit union supporter, Miller last summer introduced the Regulatory Relief for Credit Unions Act of 2013 (H.R. 2572). That bill would enhance some National Credit Union Administration authorities, improve capital standards for credit unions, and require regulators to perform a cost-benefit analysis of rules, past and present.

When the bill was introduced, the Credit Union National Association and credit unions thanked Miller for acting on their great need for regulatory relief so fewer resources are diverted from their true business of serving their members. Miller included CUNA in the development of his legislation.​

Miller also supported 2011 legislation that would have delayed Dodd-Frank interchange provisions and required regulators to study the impact of interchange rule changes.

CUNA social media prowess recognized in American Banker

 Permanent link
WASHINGTON (2/14/14)--American Banker Thursday highlighted the Credit Union National Association's recent Grassroots Innovation Award win for online efforts that "successfully harnessed the forces of social media behind its anti-tax message."

Using the J.P. Morgan social media fiasco as a counterpoint to CUNA's success,  the article noted the credit union campaign "spurred roughly 13,200 messages (including 7,000 sent directly to lawmakers) posted to Twitter with the #Don'tTaxMyCU hashtag over those two days."

While J.P. Morgan's attempts to reach out to the public through social media were hijacked by angry customers, CUNA's " Don't' Tax" efforts succeeded because grassroots credit union supporters genuinely believe in their credit unions, CUNA Vice President of Political Affairs Trey Hawkins told the Banker.

Overall, since the "Don't Tax My Credit Union" campaign began in May 2013, it has garnered more than 1.3 million direct messages to the U.S. Congress.

For the full Banker article and more on CUNA's Don't Tax My Credit Union efforts, use the resource link.

The Grassroots Innovation Awards are given out annually at the Public Affairs Council's National Grassroots Conference in Florida. The awards recognize the nation's best grassroots programs and campaigns in the categories of Corporate Innovation, Association Innovation and Social Media Innovation.

"We owe much of our success to the dedication of credit union members, who willingly engage in advocating for their credit unions," Richard Gose, CUNA senior vice president of political affairs,  acknowledged in the article.

NEW: CU advocates to flood D.C. as Camp readies tax reform report

 Permanent link
WASHINGTON (2/14/14, UPDATED 3:15 p.m. ET)--House Ways and Means Committee Chairman Dave Camp (R-Mich.) plans to release his much-anticipated and much-delayed plan to overhaul the tax code soon, according to news media reports that are circulating.
 
"The timing of  4,300 credit union advocates hitting Washington, D.C. for our Governmental Affairs Conference starting Feb. 23 could not be any better," says Credit Union National Association Executive Vice President John Magill.
 
CUNA, the state credit union associations, credit unions and credit union members have vehemently been advocating on behalf of the credit union tax status in anticipation of the tax code reform draft.
 
"Credit unions and their members will be well served by having thousands of their advocates available for Capitol Hill visits during GAC to drive home their "Don't Tax My Credit Union" message just as been the tax report is being wrapped up," Magill notes. "Credit unions have worked hard to make sure that lawmakers on all levels truly understand that a new tax on credit unions would be a tax on the 99 million Americans that are their members."​

CFPB, NCUA talk CU issues in online town hall

 Permanent link
ALEXANDRIA, Va. (2/13/14)--Concerned credit unions should weigh in on the National Credit Union Administration's risk-based capital proposal and be assured the agency takes comments letters "very seriously," said federal regulator Debbie Matz.  She made her remarks during an online event Wednesday with Consumer Financial Protection Bureau Director Richard Cordray and NCUA and CFPB staff members.

Matz went on to say that the NCUA "oftentimes will change a final rule from the proposed version to reflect" public comments received.

Another item both regulators addressed was potential regulatory responses to recent data breaches.

Discussing consumer card safety is a healthy debate, CFPB Director Richard Cordray noted.

NCUA Chairman Debbie Matz said data breaches are a statutory issue, and the U.S. Congress is likely considering action. NCUA does not have the authority to create new data security standards, she said

CFPB staff said data breaches are an area of interest for the agency, but what can be done by individual agencies depends on their jurisdiction. The bureau does not have any immediate plans for its own new data security regulations. However, Credit Union National Associatin President/CEO Bill Cheney has raised this issue with Cordray and CUNA is following up on this with the bureau and other agencies. The Michigan Credit Union League also wrote to Director Cordray on this issue earlier this week. .

On another topic, the CFPB said it is looking at overdraft protection issues, but also recognizes that the overdraft product is a great service for some. The bureau is doing analytical work and likely will not issue regulations on it this year.

Credit union call report data will be examined as the CFPB considers remittance rule changes, including an adjustment to the exemption level for credit unions. The agency is also considering whether it should extend the ability of international remittance transfer providers to use estimates in their disclosures.

In addition, CFPB staff also stressed that the agency's current data collection practices do not put consumers at risk.

Cordray during the town hall encouraged credit unions to continue writing mortgages according to their current underwriting standards and to make non-Qualified Mortgage loans when they think it is appropriate. "We have confidence in your model, you should have confidence in your model," he told credit unions.

The bureau's qualified mortgage rule is not much of an issue for responsible lenders with few foreclosures, Cordray claimed.

Previously CFPB Director Corday has said the agency would look at possible changes to some of its CFPB's mortgage rules; staff on the call said the CFPB is not contemplating revisions to its mortgage loan originator regulations.

CFPB staff  indicated the agency is studying payday lending and deposit advance products and there are a number of concerns that have been identified.

A question was asked as to when NCUA would expect total compliance with the CFPB's Qualified Mortgage/Ability to Repay rule. NCUA's Director of Examination and Insurance Larry Fazio responded that the agency would take into consideration a credit union's good faith compliance efforts to comply with the rule, with respect to the examination findings and ratings assigned to credit unions as part of the examination process.

Non-compliance with CFPB regulations can result in fines, and can adversely impact a credit union's CAMEL rating, Matz said.

She also noted that even with all the trade press and a letter from NCUA, 500 credit unions filed call reports late for this past quarter. They will all receive warning letters this quarter. However, there will be no letters next quarter--late filers will receive civil money penalties, she advised.

The NCUA on Wednesday also said it will not know if credit unions can be given Temporary Corporate Credit Union Stabilization Fund rebates until 2021. NCUA Guaranteed Note investors will need to be paid off, and U.S. Treasury borrowings taken out by the agency will need to be repaid, before that can be determined.​ (See News Now story: No TCCUSF assessment this year, nor likely going forward.)

Updated CUNA projections show high CU cost of Target breach

 Permanent link

WASHINGTON (2/13/14)--With updated projections on the cost of the Target stores data breach, the Credit Union National Association estimates that credit unions have thus far incurred costs of $30.6 million, and reissued around 4.6 million credit and debit cards.

However, CUNA again emphasized that future fraud losses associated with the breach likely will greatly add to the total.

"Although Target is ultimately responsible for this data breach, credit unions must solely cover these costs of their card program administration," CUNA President/CEO Bill Cheney said. "It's time for retailers like Target to step up and accept their fair share of the costs associated with these types of data breaches."

The CUNA leader added, "Credit unions are owned by their members, and because of that cooperative structure, the costs of these types of breaches fall directly to credit union members.

"Congress should act to stop this cycle, and hold merchants accountable."

Nearly all of the more-than 1,100 credit unions that responded to the survey offer debit and/or credit cards to their members, and 94% of respondents had been notified by their processor or network that some of their members' cards had been affected by the breach.

The Target breach has cost credit unions on average about $5.68 per card affected by the security lapse. Other expenses have come from administrative costs.

Some credit unions have had to increase staffing and add overtime shifts as a result of the data breach. Smaller credit unions typically must pay more to replace cards, according to CUNA's Cheney.

"Unlike trillion-dollar banks, with their economies of scale, smaller credit unions face a more expensive proposition in replacing their cards--but still they must cover those costs alone," Cheney said.

No TCCUSF assessment this year, nor likely going forward

 Permanent link
WASHINGTON (2/13/14)--Credit Union National Association President/CEO Bill Cheney called it "welcome news for credit unions" when the National Credit Union Administration confirmed Wednesday that there would be no Temporary Corporate Credit Union Stabilization Fund (TCCUSF) assessment charged in 2014.
 
"As CUNA has argued since last summer, the need for continued assessments has been unnecessary for some time. With the improved performance of the NCUA's legacy assets, we are glad that the NCUA agrees that stabilization fund assessments should end after the 2013 payment," Cheney remarked.
 
The agency also went so far to say that credit unions are much less likely to be charged another TCCUSF assessment going forward.

These are outcomes CUNA has been pushing for with NCUA.
 
The agency said the positive TCCUSF news is the result of a $1.4 billion settlement with JP Morgan and the continued improvement in the performance of the legacy assets underlying the NCUA Guaranteed Notes program.
 
"Our legal team is diligently pursuing our claims against the Wall Street securities firms who sold faulty securities to five corporate credit unions, causing them to fail and triggering a crisis in the system," NCUA Chair Debbie Matz said in a release. "That hard work is paying off, and we will continue our efforts to hold accountable those who helped precipitate the crisis."
 
Credit unions have paid $4.8 billion in TCCUSF assessments since the fund was established. The projected net remaining assessments over the life of the TCCUSF, based on estimates from the second quarter of 2013, now range from -$1.9 billion to -$0.4 billion.
 
CUNA Chief Economist Bill Hampel said future TCCUSF rebates are now very likely.​
 
For more on the TCCUSF announcement, use the resource link.

Senate mortgage refinancing reforms could come soon, according to HUD chief

 Permanent link

WASHINGTON (2/13/14)--There is bipartisan will to move forward with housing finance market reforms, and a U.S. Senate reform bill could be introduced in the coming weeks, U.S. Housing and Urban Development Secretary Shaun Donovan said Wednesday.

Donovan made his remarks at a "Morning Money" event hosted by Politico. Both Democrats and Republicans recognize that housing finance reform could be more difficult to achieve if it does not happen this year, Donovan observed.

Both parties support maintaining the 30-year mortgage. Donovan said legislators must remember that the Federal Housing Administration is a critical part of the overall housing system.

"We have learned that there are flexibilities that can help FHA operate in a crisis, and that should be on Congress's agenda as well," Donovan said.

He added that HUD and Obama administration regulatory partners are working through policy issues daily as the reform process moves forward. Each regulator brings his or her own expertise to the table in "one of the best team efforts" he says he has seen in government.?

New NIST cybersecurity framework contains CUNA suggested changes

 Permanent link
WASHINGTON (2/13/14)--The National Institute of Standards and Technology's (NIST) final "critical infrastructure" cybersecurity framework, released Wednesday, contains several improvements advocated by the Credit Union National Association. For instance, NIST dropped the proposed Appendix B, which potentially would have required a prescriptive set of steps regarding privacy and civil liberties.

CUNA had urged NIST to recognize that existing, robust data security requirements and standards already apply to financial institutions.

The framework was released as part of President Barack Obama's executive order on "critical infrastructure" cybersecurity. This voluntary framework is intended to improve U.S. cybersecurity among all critical sectors, including financial services, and should complement existing standards and rules.

NIST said in a release that the framework consists of three parts:
  • The framework core, which is a set of cybersecurity activities, outcomes, and informative references that are common across critical infrastructure sectors;;
  • The framework profile, which will help organizations align their cybersecurity activities with its business requirements, risk tolerances, and resources; and
  • The framework implementation tiers, which provide a mechanism for organizations to view and understand the characteristics of their approach to managing cybersecurity risk.
"The framework enables organizations--regardless of size, degree of cybersecurity risk, or cybersecurity sophistication--to apply the principles and best practices of risk management to improving the security and resilience of critical infrastructure," NIST said.

NIST said its framework will be updated and improved as industry provides feedback on implementation. 

CUNA is reviewing the final framework, and commended NIST on Wednesday for taking positive steps by engaging with the financial sector.

CUNA also urged NIST and other government entities to address cybersecurity issues and to coordinate closely with all financial regulators, including the National Credit Union Administration, to ensure the framework is consistent with, and does not expand the scope of, existing rules and regulations for credit unions.

NEW: NCUA confirms: No TCCUSF assessment in '14--and less likely after

 Permanent link
WASHINGTON (2/12/14, UPDATED: 2:55 P.M. ET)--There will be no Temporary Corporate Credit Union Stabilization Fund (TCCUSF) assessment charged in 2014, the National Credit Union Administration has confirmed. And, credit unions are much less likely to be charged another TCCUSF assessment going forward.

These are outcomes that the Credit Union National Association has been pushing with NCUA.
 
The agency said the positive TCCUSF news is the result of a $1.4 billion settlement with JP Morgan and the continued improvement in the performance of the legacy assets underlying the NCUA Guaranteed Notes program.
 
Credit unions have paid $4.8 billion in TCCUSF assessments since the fund was established. The projected net remaining assessments over the life of the TCCUSF, based on estimates from the second quarter of 2013, now range from -$0.2 billion to $1.6 billion.

CUNA announces star-studded media panel at the GAC

 Permanent link

WASHINGTON (2/12/14)--The Credit Union National Association has just announced a new feature for this year's Governmental Affairs Conference (GAC). The program will include a new media panel session featuring accomplished journalists who will discuss in-depth how credit unions can better communicate their message to the media.

The session is scheduled for Feb. 24 at 2:25 p.m. (ET).

The panel, to be moderated by former Washington, D.C. anchorman Paul Berry,  showcases Fox News' Tucker Carlson, the Washington Post's Ylan Mui, and Politico's Lauren French.

Carlson is currently the co-host of "FOX & Friends Weekend," as well as the editor-in-chief of The Daily Caller.
 
Mui is a Washington Post reporter and CNBC contributor covering the Federal Reserve and the economy. She has spent more than a decade at the Post and has written on topics ranging from subprime lending, consumer finance, to retail issues and education.
 
Lauren French is a tax reporter for POLITICO Pro and author of Morning Tax--a daily tip sheet focused on tax policy news on Capitol Hill, lobbying and the Internal Revenue Service.

The discussion will cover news of the day, the political climate, the role of the media, and how credit unions can improve interactions with news outlets to better convey the credit union difference. A question-and-answer period with the audience will follow the presentation.

The media panel adds to CUNA's power-backed list of distinguished speakers at the GAC, including former British Prime Minister Tony Blair and former U.S. Secretary of State Madeleine Albright.

The conference--credit unions' largest and most important of the year--is expected to draw more than 4,000 credit union supporters from across the country.  It will be held Feb. 23-27 at the Walter E. Washington Convention Center here.

User the resource link for more information on the stellar program.

CompBlog provides many CU tips on prepping data breach response

 Permanent link
WASHINGTON (2/12/14)--Is your credit union preparing for the increasing threat posed by data breaches? In the event of a breach, notifying members is always a good first step, the Credit Union National Association's CompBlog noted in the latest CompBlog Wrap-Up.

Part 748 of National Credit Union Administration regulations only require credit unions to notify regulators and affected members after a breach involving member information systems maintained by a credit union or its contracted service providers. So, a merchant breach would not trigger a Part 748 member notification, CUNA explained.

"Nevertheless, notifying affected members is still a good idea, both to protect the member and the credit union from fraudulent card usage," CUNA said.

Many credit unions have alerted their members through mail and e-mail following the Target data breach, posted information on their websites and educated members on the steps they can take to protect themselves. CUNA emphasized that these efforts are still ongoing.

There are 46 states that have their own data breach notification laws, and state leagues will have information on any specific actions that are required by state law, the blog post added. (For a state law list compiled by the National Conference of State Legislatures, use the resource link.)

CUNA Mutual Group has also released a series of tips to help credit unions mitigate the risks posed by data breaches. Tips include:
  • Educating cardholders regarding phishing fraud (i.e., not responding to phone calls or e-mail/text messages requesting ac-count information), reporting fraudulent transactions to the credit union and placing fraud alerts on credit reports;
  • Reviewing the card associations alerts daily and taking action when necessary;
  • Evaluating compromised card numbers to determine if there will be increased fraud exposure;
  • Blocking and reissuing affected cards, or accelerating card expiration dates on active cards;
  • Making sure that all fraud associated with an event has been reported to the card associations and to the credit union's insurance company; and
  • Working with a fraud monitoring system vendor to create rules and strategies to help prevent future fraud on the com-promised card accounts.
For more compliance gems, use the resource link.

Patent reform priorities outlined by CUNA at Hill event

 Permanent link
WASHINGTON (2/12/14)--Patent reform is needed, and credit unions and others impacted by patent issues should continue to press the U.S. Congress for action, the Credit Union National Association's Robin Cook said at a Tuesday panel discussion on patent troll issues.

The event, which was hosted on Capitol Hill by the Main Street Patent Coalition, featured remarks from Sen. Orrin Hatch (R-Utah), academics and representatives from the restaurant, retail and hospitality industries.

"We support legislation that will help curb unfair and deceptive patent demand letters and frivolous patent litigation," Cook, CUNA assistant general counsel for special projects, said.
CUNA Assistant General Counsel for Special Projects Robin Cook (second from left) outlined credit union patent reform priorities during Tuesday's panel discussion. (CUNA Photo)


So-called "patent trolls" are using low-quality patents in an effort to extract settlements from credit unions, and are an abuse of the patent system, Cook said. Cook provided examples of how patent trolls have targeted credit unions, including one troll that has filed cases related to ATM patents against credit unions that do not own or operate ATMs.

Most credit unions do not have an in-house lawyer, and finding competent counsel to combat these cases can be a challenge, Cook said. Many trolls are aware that the cost of hiring a patent attorney is a deterrent to credit unions and others, and price their proposed licenses in such a way that they are sure to be lower than the cost of counsel to evaluate the demand.

"People are scared to fight," and credit unions and others have settled out of court to avoid the cost of these suits, he noted.

Hatch spoke in support of a bill he introduced, the Patent Litigation Integrity Act of 2013 (S. 1612). That bill would enable fee shifting in unsuccessful patent infringement lawsuits, and would enable the court to require a bond to be posted by a patent plaintiff in advance to ensure there is money available to cover the legal fees that might be awarded at the end of the case. This, Hatch said, is a change that would help to discourage patent assertion entities from filing frivolous lawsuits.

CUNA supports a number of proposals currently being considered in the Senate, including the demand letter components of the Patent Transparency and Improvements Act of 2013 (S. 1720), offered by Sens. Patrick Leahy (D-Vt.) and Mike Lee (R-Utah), along with Hatch's bill and the Patent Quality Improvement Act of 2013 (S. 866), offered by Sen. Charles Schumer (D-N.Y.).

Credit union priorities for patent law reform include:
  • More transparency in demand letters;
  • Clarification of Federal Trade Commission enforcement authority over unfair and deceptive demand letters;
  • A demand letter registry; and
  • Stronger end user protections.

Payment system changes must minimize costs, impact on CUs: CUNA to Fed

 Permanent link
WASHINGTON (2/12/14)--The Federal Reserve must minimize the costs and impact on credit unions, corporate credit unions, and other payment providers if earlier posting times for automated clearing house (ACH) debits and commercial checks are imposed, the Credit Union National Association said in a letter to the regulator.

CUNA on Tuesday released a pair of comment letters addressing the Fed's proposed changes to its Payment System Risk Policy (PSR), and related changes to Regulation J.

The proposed Fed PSR changes would move the posting of ACH debits, processed by the Fed banks' FedACH service overnight, up to 8:30 a.m. (ET) from 11 a.m. (ET) to align with the posting of ACH credits. The proposal would also move the posting time for receiving most commercial check credits for deposits and debits for presentments to 8:30 a.m. (ET) and establish two other posting times of 1 p.m. (ET) and 5:30 p.m. (ET), and make other related changes.

Providing additional information and resources, and granting credit unions and other payment providers adequate time to implement these proposed changes, are two ways the Fed could improve it proposal, CUNA Assistant General Counsel for Regulatory Research Dennis Tsang wrote.

These earlier posting times could result in credit unions and others having lower Fed Bank account balances, and could force them to incur additional daylight overdrafts and increased fees.

"To minimize the impact of the proposed changes, financial institutions would have to pledge additional collateral (if eligible for intraday credit), arrange for earlier funding, or hold higher balances in their Fed Bank accounts," Tsang wrote.

The earlier posting times could also disproportionately impact smaller financial institutions with less than $10 billion in assets. Such institutions are generally net receivers for ACH debits as receiving depository financial institutions, and are likely to have lower account balances due to earlier postings for commercial checks, Tsang said.

CUNA also commented on related changes to Regulation J in a separate letter. The Reg J proposal would require institutions receiving Fed Bank checks to make the proceeds of settlement for those checks available as soon as one half-hour after receiving the checks and by as early as 8:30 a.m. (ET). Currently, these requirements are as soon as one hour after receiving the checks and by as early as 9:30 a.m. (ET), respectively.

CUNA is concerned that these changes will force credit unions and others to increase their account balances to settle presented checks, Tsang said.

For both CUNA comment letters, use the resource links.

HMDA, FOIA are on CFPB consumer board meeting agenda

 Permanent link
WASHINGTON (2/12/14)--Home Mortgage Disclosure Act rulemaking will be one of the topics covered when the consumer experience in the credit reporting market is discussed at a Feb. 27 Consumer Financial Protection Bureau Consumer Advisory Board (CAB) meeting in Washington.

The meeting is scheduled to begin at 10 A.M. (ET) in the Constitution Center Auditorium.

Discussions on Freedom of Information Act training and ethics and general regulatory issues are also on the agenda.

CFPB Director Richard Cordray is scheduled to speak. The Consumer Advisory Board will also hear remarks from consumer groups, community and industry representatives, and members of the public, the CFPB added.

The CAB is comprised of 25 members with expertise in consumer protection, financial services, community development, fair lending, civil rights, and consumer financial products or services. Bill Bynum, CEO of Hope Enterprise Corp. and Hope Community CU, Jackson, Miss., is CAB vice president. Laura Castro de Cortes, vice president of alternative financial services for Centris FCU, Omaha, Neb., is also a CAB member.

Youth, workplace fin. ed. get FLEC Feb. spotlight

 Permanent link
WASHINGTON (2/12/14)--The Financial Literacy and Education Commission (FLEC) is holding two financial literacy policy discussions this month: an open meeting today on coordinated efforts to boost youth financial literacy and a field hearing Feb. 25 on improving employee financial capability through workplace financial education.
 
Todays' public meeting in Washington, D.C., scheduled to start at 9 a.m. (ET), will focus on ways that the federal government can work with the private sector and state, local, and tribal governments to promote savings and build the financial capability of young Americans. Credit Union National Association Assistant General Counsel Luke Martone is attending.
 
The Feb. 25 field hearing, part of America Saves Week, will share the commission's work on financial education in the workplace--but also provide FLEC members with information on existing best practices, existing opportunities, challenges and barriers, and strategies for engaging employees around financial education in the workplace.
 
The dialogue, to be held at the Sam Nunn Federal Building in Atlanta, will provide the commission insights into the important work occurring both in the Atlanta region and across the country. It is scheduled to start at 1 p.m. (ET).
 
The commission was established in 2003 under the Fair and Accurate Credit Transactions Act and is chaired by the secretary of the U.S. Treasury Department and the vice chair is the director of the Consumer Financial Protection Bureau. FLEC is comprised of the heads of 20 additional federal agencies, including the National Credit Union Administration.
 
The NCUA has reminded credit unions that the annual America Saves Week and Military Saves Week, Feb. 24-March 1, provides a good opportunity to further their efforts to educate their members and members' families about the importance of saving.

Yellen previews bank risk-based capital rules in first Fed hearing

 Permanent link
WASHINGTON (2/12/14)--Substantial progress has been made in restoring the economy to health and in strengthening the financial system, but there is still more to do, Federal Reserve Chair Janet Yellen said Tuesday.
 
"Too many Americans remain unemployed, inflation remains below our longer-run objective, and the work of making the financial system more robust has not yet been completed," she said in remarks delivered before the House Financial Services Committee. Yellen was delivering the Fed's semi-annual monetary policy report for the first time since becoming Fed chair earlier this month.
 
Yellen said the Fed will develop a risk-based capital surcharge proposal and a long-term debt requirement for U.S.-based, systemically important global banks. The Fed is also working to advance proposals on margins for noncleared derivatives, consistent with a new global framework, and are evaluating possible measures to address financial stability risks associated with short-term wholesale funding, she said.
 
The Fed board will continue to monitor for emerging risks, including watching carefully to see if the regulatory reforms work as intended, Yellen added.
 
She said the Fed's approach to monetary policy will not change in the near future.
 
For her full prepared remarks, use the resource link.

ACI's Pociask warns of peril in banks' call for CU taxation in Hill blog post

 Permanent link
WASHINGTON (2/11/14)--State lawmakers should not heed bank calls to eliminate the nonprofit status of credit unions, American Consumer Institute Center for Citizen Research President Steve Pociask said in a blog post published in The Hill this week.

Pociask in his post noted that some banks are asking state legislators to pass resolutions calling on the U.S. Congress to eliminate the nonprofit status of credit unions, "effectively imposing new taxes on the banks' smallest of rivals." Essentially, Pociask said, "'too big to fail' banks--those first to get in line for federal help and bailouts--are coming to a statehouse near you and pleading for government help to raise the cost of their ankle biter competitors." This ask, he said, "smacks of protectionism."

"If banks feel that credit unions have a competitive advantage, why don't banks simply become nonprofits or operate in a break-even fashion to avoid taxation? Furthermore, if banks chose to operate as a Subchapter S corporation, its investors and stockholders could avoid paying dividend taxes. The truth is that banks have chosen not to return its earnings to its customers, and that is its prerogative, but that activity is taxable by choice," he said.

Pociask contrasted credit unions' member-owned nonprofit structure with that of banks, which have private investors and stockholders, can make lavish payments to board members, pay dividends to stockholders and make profits that are taxable.

"Since credit unions plow its retained earnings back into its member-owned entities, there really are no real profits to tax. Instead, credit union members have their benefits taxed at their personal income tax rates. If credit unions are taxed upfront, as banks have suggested, the result would be double-taxation of credit union members," he wrote.

Further, taxing credit unions would harm consumers. Eliminating the nonprofit status of credit unions could cost consumers $16 for every $1 of taxes saved, he estimated.

"That would be a really bad deal for consumers, taxpayers and voters," Pociask wrote.

For the full column, use the resource link.

FASB excludes CUs from ' public business entity' definition

 Permanent link
WASHINGTON (2/11/14)--The Financial Accounting Standards Board (FASB) recently issued a final standard that defines the term "public business entity," and it excluded credit unions from that definition. That is notable for credit unions because the definition will be used by FASB and its Private Company Council (PCC) to specify the scope of future accounting guidance.
 
The Credit Union National Association and other stakeholders asked FASB to improve its definition of "public business entity" to clear up current inconsistencies and complexities caused by having multiple definitions.  The new definition will make it clearer which nonpublic entities potentially qualify for alternative financial accounting and reporting guidance.
 
CUNA has maintained that credit unions clearly are outside the definition of a "public business entity" and therefore should be eligible for alternatives under Generally Accepted Accounting Principles--or GAAP--that are established by the PCC.
 
However, CUNA Assistant General Counsel Luke Martone cautioned, credit unions should proceed with some caution.
 
"FASB has stated that, 'decisions about whether an entity may apply permitted differences within U.S. GAAP ultimately may be determined by regulators...and other creditors, or other financial statement users that may not accept financial statements that reflect accounting or reporting alternatives for private companies,'" Martone noted.
 
"So, the extent of any latitude afforded to credit unions will also involve the National Credit Union Administration and that could be problematic--although we will push them for as much flexibility as possible.
 
"We will be discussing this issue again with senior NCUA staff during meetings at the CUNA Governmental Affairs Conference this month and encouraging them to allow eligible private company alternatives," Martone said.

Fed Chair Yellen set for first report to Congress

 Permanent link
WASHINGTON (2/11/14)--This week, new Federal Reserve Chair Janet Yellen will report on monetary policy and the state of the U.S. economy for the first time since taking on board leadership early this month.

Yellen will appear before members of the U.S. Congress at two hearings: Today's House Financial Services Committee hearing titled "Monetary Policy and the State of the Economy," and a Thursday Senate Banking Committee hearing titled "Semiannual Monetary Policy Report to the Congress."

The House hearing will feature a second panel of academics. Yellen will be the sole speaker at the Senate hearing. Both monetary policy hearings are part of a series of regular semi-annual accountings to Congress.

Other hearings on this week's schedule include a Wednesday Senate Small Business and Entrepreneurship Committee hearing on Maria Contreras-Sweet's nomination to serve as administrator of the U.S. Small Business Administration.

The House this week will also consider debt ceiling legislation and the Consumer Financial Protection and Soundness Improvement Act (H.R. 3193). CUNA supports H.R. 3193 (See News Now story: CFPB restructure bill 'a step in right direction,' CUNA says).

No House votes will be held Thursday or Friday to accommodate the House Democratic Caucus retreat.

CUNA warns CFPB data collection could increase consumer exposure to ID theft

 Permanent link
WASHINGTON (2/11/14)--Consumer Financial Protection Bureau data collection practices could increase the risk of identity theft and fraud for consumers, the Credit Union National Association has warned.

Under the Dodd-Frank Act, the CFPB is permitted to gather information on organizations, their business conduct, markets, and activities of covered persons and service providers. This information is filed to the CFPB by financial institutions and other service providers. The CFPB has stressed that any personal information collected is stripped from the agency records.

CFPB Director Richard Cordray has said the data is used to examine overall trends, not individual transactions.

Lawmakers and others are concerned about the safety of this data, in light of the recent Target and Neiman Marcus data breaches. CUNA is also particularly concerned by the resulting obligations that these data collection efforts may create for credit unions. CUNA is continuing to voice its concerns in this area with the CFPB and lawmakers, and is preparing a letter to the CFPB on data security issues.

The CUNA concerns, noted in this week's Regulatory Advocacy Report , come as many in the U.S. Congress are taking a close look at consumer data security standards. Three data security hearings were held last week, and CUNA encouraged lawmakers to take a broad look at how consumer data is secured and the improvements that are necessary to prevent future breaches from taking place.

"Focusing on one payment method as the absolute answer to solving data security breaches is both shortsighted and distracts from the greater need of a federal data security framework for all entities," CUNA President/CEO Bill Cheney wrote in letters sent to select House and Senate committees last week.

Other topics tackled in this week's Report include:
  • CUNA's planned Governmental Affairs Conference session on the National Credit Union Administration's risk-based capital proposal;
  • CUNA comments on joint regulator diversity standards proposals;
  • Comments on the CFPB's mortgage closing process; and
  • The Federal Reserve Banks' payment system improvement update.
Use the resource link for this week's Regulatory Advocacy Report .

CFPB restructure bill 'a step in right direction,' CUNA says

 Permanent link
WASHINGTON (2/11/14)--A bill that would change the Consumer Financial Protection Bureau leadership structure and make some operational changes is s a step in the right direction, the Credit Union National Association said in a Monday letter to Congress.

The Consumer Financial Protection Safety and Soundness Improvement Act of 2013 (H.R. 3193) would help to assure credit unions--and other entities--already subject to considerable regulation are not unnecessarily burdened, CUNA President/CEO Bill Cheney said in a Monday letter to Speaker of the House John Boehner and House Democratic Leader Nancy Pelosi.

The letter was delivered to key lawmakers in anticipation of a vote this week on the bill.

"Credit unions remain among the most highly regulated entities in the financial services sector. While the CFPB has taken several steps to solicit feedback regarding the impact of its regulations on credit unions, the fact remains that regulatory burden has continued to increase in the two and a half years since the bureau" launched, Cheney wrote.

Cheney said credit unions are disappointed the CFPB has not used the full authority granted to it in the Dodd-Frank Act to exempt certain types of institutions from some regulations. "The CFPB's rules should target the abusers of consumers and encourage credit unions to provide services to their members, but that is not what has happened during the first few years of the CFPB's history," he wrote.

The CUNA CEO offered the remittance rule and mortgage rules as examples: "When the remittance rule was finalized, several credit unions stopped offering the service to their members. And we expect some credit unions to reduce credit availability to borrowers who may not qualify for qualified mortgages under the CFPB mortgage rules," he wrote.

"How exactly are consumers being better protected when the regulations promulgated by the CFPB reduce availability of and access to these financial services offered by not-for-profit cooperative credit unions?" Cheney asked.

H.R. 3193 would:
  • Restructure CFPB leadership from a single director to a five-member panel;
  • Authorize the Financial Stability Oversight Council to set aside any CFPB regulation that is found to be inconsistent with safe and sound operations of financial institutions;
  • Require the CFPB to take into consideration the impact of its rules on insured depository institutions;
  • Prohibit the CFPB from requesting, accessing, collecting, using, retaining or disclosing nonpublic personal information about a consumer, unless clearance has been granted; and
  • Make CFPB funding subject to the congressional appropriations process.
For the full CUNA letter, use the resource link.

CUNA offers real-life mortgage closing advice to CFPB

 Permanent link
WASHINGTON (2/10/14)--The Credit Union National Association detailed the common problems and issues faced by consumers at mortgage closings, common errors and changes that have occurred at closings and the resources borrowers use to define unfamiliar loan terms in a Friday letter to the Consumer Financial Protection Bureau.

The letter provided specific responses to questions raised by the CFPB. The bureau last year asked credit unions and other stakeholders for information regarding the mortgage closing process.

CUNA's responses were derived from surveys of credit union members, and in coordination with the CUNA Lending Council and CUNA's Consumer Protection Subcommittee.

CUNA Associate General Counsel Jared Ihrig in the letter said credit union members are often overwhelmed with the sheer amount of paperwork and disclosures they receive at closing. A typical closing package is over 100 pages, and contains 25 spots for consumer signatures, on average. "Most consumers cannot possibly read and understand everything they are signing...These notices and disclosures are so voluminous that the consumer and the closing process are often disadvantaged, rather than helped," Ihrig said.

The CUNA letter suggested that many of these closing documents could be consolidated.

Consumers continue to have difficulties understanding Truth in Lending disclosures, Good Faith Estimates and HUD-1 closing statements, Ihrig added.

While many borrowers feel helpless at closing, credit unions have suggested that clearly laid out, simplified financial information about the transaction would aid the borrowers and lenders. "Giving the member the closing documents in advance, without the final closing numbers, but including all non-critical but necessary disclosures to read ahead of time would be a positive change," CUNA wrote. Borrowers would also benefit from reviewing the note, the payment, loan amount and interest rate at the closing table, the letter added.

Some of the errors that occur at closing involve:
  • Prepaid interest calculations;
  • Payment calculations;
  • Property tax proration amounts;
  • Loan amounts;
  • Closing costs;
  • Property legal descriptions;
  • Missing documents;
  • Personal information for borrowers; and
  • Good faith estimates.
"These error possibilities aside, many credit unions experience very few errors at closing when there has been careful preparation of all documents and pre-closing auditing processes," Ihrig said.

For the full comment letter, use the resource link.

NCUA risk-based capital plan could cut CU capital buffers by billions: CUNA

 Permanent link
WASHINGTON (2/10/14)--The National Credit Union Administration's proposed risk-based capital rule could prove costly for many credit unions, forcing them to increase their capital levels by a net $7.3 billion to maintain their current margins above the proposed "well capitalized" thresholds.
 
Credit Union National Association Chief Economist Bill Hampel explains, "We looked at the 2,504 federally insured credit unions with more than $40 million in assets, and compared their current margins above being well capitalized to what they would be if the NCUA proposal were in effect.  Although the rule would only apply to credit unions with more than $50 million in assets, many--if not most--of the almost 300 credit unions with between $40 million and $50 million in assets will exceed the $50 level in just a few years."
 
About one-third, or 863, of these 2,504   credit unions would enjoy greater buffers above well-capitalized thresholds under the proposal, but the total increase among these credit unions would be only $63 million, Hampel says.  The remaining 1,641 credit unions with above $40 million in assets would see their cushions above well-capitalized thresholds shrink by a combined total of $7.4 billion if the proposal were in effect.
 
"Meanwhile, earnings at credit unions continue to be squeezed by low interest rates, downward pressure on other revenue streams, and moderate, but rising, loan growth," CUNA President/CEO Bill Cheney wrote in the most recent edition of The Cheney Report .
 
Specifically, the NCUA proposal would restructure the NCUA's current prompt corrective action regulation to include calculation of a capital-to-risk-assets ratio, analogous to Basel III for community banks, but with substantially higher risk weights.  The proposal would impose higher capital requirements for credit unions with higher concentrations of assets in real estate loans, member business loans, longer term investments and some other assets. The proposal would apply to credit unions with assets of more than $50 million. A final version of the proposal is not likely to go into effect until 2016 or later.
 
CUNA analysis of the proposal indicates that a number of credit unions would fall from being comfortably well capitalized under the current system to being merely well capitalized under the proposed system. Currently, 68% of credit unions with more than $50 million in assets maintain more than a two-percentage point buffer above being "well capitalized."

This total would fall to about 62% under the proposal, Cheney wrote. Almost 10% of credit unions would drop below "well capitalized" under the proposed rule, he added.
 
"Most credit unions desire to continue their long practice of being 'comfortably well capitalized,'" the CUNA leader wrote.
 
CUNA is also concerned by parts of the proposal that would grant the NCUA additional authority to impose even higher capital requirements on individual credit unions.
 
The agency has not adequately justified the need for this rule, and CUNA will push for a number of major changes in the proposal before it is made final, Cheney said.
 
"We will continue analyzing all aspects of the proposal, including the agency's legal authority for the proposal and how it compares with Basel III for community banks," he added.
 
CUNA's Governmental Affairs Conference the last week in February in Washington, D.C. will focus on the proposal.  For more information about GAC opportunities for credit unions to learn more about the proposal and air concerns, use the resource link below.

House vote expected this week on CFPB restructure bill

 Permanent link

WASHINGTON (2/10/14)--The U.S. House of Representatives will consider H.R. 3193 this week, a bill that would restructure the leadership of the Consumer Financial Protection Bureau from a single director to a five-member panel.  

The bill, called the Consumer Financial Protection Safety and Soundness Improvement Act, would also make some fundamental changes to the way the bureau operates.  For instance, it would authorize the Financial Stability Oversight Council to set aside any CFPB regulation that is found to be inconsistent with safe and sound operations of financial institutions. It also would require the CFPB to take into consideration the impact of its rules on insured depository institutions.  

The House Financial Services Committee approved the bill, along with five other CFPB-related ones, late last November.  However, even if the House passes the bill this week, its future in the Senate is considered to be very bleak.

Diversity standards cannot be one-size-fits all: CUNA to NCUA

 Permanent link
WASHINGTON (2/10/14)--Credit unions strongly support diversity in the workplace, but the Credit Union National Association is concerned about the one-size-fits-all approach of a proposed joint agency statement for assessing diversity policies and practices of financial institutions.

CUNA urged the rulemakers to clarify that the standards are not subject to enforcement and to limit their application to those institutions that are already reporting to the Equal Employment Opportunity Commission.

The proposed standards would encourage regulated entities to include diversity and inclusion considerations in both employment and contracting as an important part of their strategic plan.

The Dodd-Frank Act charged regulators with developing assessment standards regarding financial institutions' diversity policies, but did not authorize them to enforce them or subject institutions to additional supervision.

The NCUA, Federal Reserve, Consumer Financial Protection Bureau, Federal Deposit Insurance Corp., Office of the Comptroller of the Currency and the Securities and Exchange Commission developed the standards.

CUNA Deputy General Counsel Mary Dunn in the comment letter noted that while the U.S. Congress directed those agencies to develop standards for assessing diversity at the entities they regulate, it did not authorize the agencies to issue rules or enforce any new standards. An overall approach that does not result in new regulations, additional enforcement powers for regulators, or provide further support for private causes of action against covered entities is the only approach consistent with the intent and language of the Dodd-Frank Act, Dunn wrote.

The CUNA letter also urged the NCUA and other agencies to be cognizant of the regulatory burdens that smaller financial institutions such as credit unions face.

"We also urge the agencies to change and clarify the standards in a number of areas and to reflect in the standards the importance of developing a well-qualified workforce within the context of promoting diversity in the workplace," Dunn wrote.

For the full CUNA comment letter, use the resource link.

New HMDA data research panel, resources announced by CFPB

 Permanent link
WASHINGTON (2/8/14)--A new small business panel to help consider Home Mortgage Disclosure Act (HMDA) changes, and new resources to help users navigate publicly available HMDA data were announced by the Consumer Financial Protection Bureau on Friday.

Under HMDA, financial institutions with total assets of more than $43 million that have home or branch offices in defined metropolitan statistical areas must collect certain mortgage loan data and report it to federal regulators.

CFPB Director Richard Cordray on Friday said the bureau is seeking feedback on how the HMDA reporting process can be improved, and new requirements that would more accurately capture access to credit in the mortgage market.

A Small Business Regulatory Enforcement Fairness Act (SBREFA) panel has been assembled to consider these and other HMDA issues.

Potential HMDA reporting additions discussed by the panel will include:
  • Total points and fees, and rate spreads for all loans;
  • Riskier loan features including teaser rates, prepayment penalties, and non-amortizing features;
  • Lender information, including a unique identifier for the loan officer and the loan;
  • Property value and improved property location information;
  • Age and credit score;
  • Mandatory reporting of denial reasons;
  • Debt-to-income ratios;
  • Qualified mortgage status of loans; and
  • Combined loan-to-value ratio.
The first meeting of the SBREFA panel is scheduled for March, and an advance notice of proposed rulemaking on HMDA changes will likely be issued this year, Cordray said. Many of the proposed data points under consideration are required by the Dodd-Frank Act, but many are not. CUNA will raise this as a point of concern with the agency.

In 2012, 7,400 financial institutions provided data on 18.7 million applications and loans. According to the CFPB, data supplied includes:
  • The name of the lender;
     
  • The type and general location of the property;
     
  • The race, ethnicity, and sex of the applicant;
     
  • The loan amount; and
     
  • Whether the loan is for purchasing a home, refinancing an existing mortgage, or home improvement.
The CFPB has produced a new data tool that will help users examine HMDA information filed between 2007 and 2012. Users will be able to filter information by geographical location, loan characteristics, property type and more. They will also have the option of comparing refinances, home purchases and home improvement loans through summary tables, and can then download these tables and data in the format of their choice.

Users will be able to save and share their results on a website or through social media.

Use the resource link for more.

Morgan Stanley to pay $1.25B over 'faulty' mortgage bonds

 Permanent link
WASHINGTON (2/10/14)--Wall Street firm Morgan Stanley and the Federal Housing Finance Agency have reached a $1.25 billion settlement to resolve alleged violations of federal and state securities laws.

Under the terms of the settlement, $625 million, each, will be paid to Fannie Mae and Freddie Mac. The settlement follows a suit that alleged Morgan Stanley misled Fannie Mae and Freddie Mac by selling faulty private-label mortgage-backed securities between 2005 and 2007.

The FHFA has filed 17 similar lawsuits. This is the seventh of those suits to be settled.

The National Credit Union Administration in September also sued Morgan Stanley and eight other institutions over the sale of nearly $2.4 billion in mortgage-backed securities to Southwest and Members United corporate credit unions.

The agency has sued a number of Wall Street banks in similar cases. In November, JP Morgan agreed to pay the NCUA $1.4 billion in a settlement over mortgage-backed securities issued, underwrote and sold to now-defunct corporate credit unions in 2006 and 2007. The wholesale lenders collapsed in 2009 due, in part, to the faulty instruments.

Fed: Gov't should take 'big view' as payment system changes discussed

 Permanent link
WASHINGTON (2/7/14)--The government should take a "big view" of the payments system and ensure that consumer data is protected at each step of the process as new data security standards are considered, Federal Reserve Governor Daniel Tarullo said during a Thursday Senate Banking Committee hearing entitled "Oversight of Financial Stability and Data Security."

The Credit Union National Association made similar suggestions in letters sent for the record of three data security hearings this week.

Regulators and legislators need to think in terms of consumers who use a credit card, Tarullo stressed in his testimony. The weakest link in the security chain is where criminals will direct their attention, and more broad, general data security standards are needed, he emphasized. Tarullo said uniform disclosure standards are also needed.

Comptroller of the Currency Thomas Curry, also a witness, agreed that it may be necessary to impose legal and other requirements to ensure that consumers are notified after a data breach has occurred at a retailer.

Federal Deposit Insurance Corp. Chairman Martin Gruenberg said the data security practices of those in the non-banking sector need the most attention from regulators. Sen. Robert Menendez (D-N.J.) suggested a common data security standard across industries is needed.

U.S. Treasury Secretary for Domestic Finance Mary Miller, Securities and Exchange Commission Chair Mary Jo White and Commodity Futures Trading Commission Acting Chairman Mark Wetien also testified during the hearing.

CUNA this week encouraged members of Congress to take a broad look at how consumer data is secured and the improvements that are necessary to prevent future breaches from taking place.

"Focusing on one payment method as the absolute answer to solving data security breaches is both shortsighted and distracts from the greater need of a federal data security framework for all entities," CUNA President/CEO Bill Cheney wrote.

For more on the letters, use the resource link.

Baucus confirmed as ambassador to China

 Permanent link
WASHINGTON (2/7/14)--Sen. Max Baucus (D-Mont.) was confirmed to serve as the next U.S. ambassador to China by a 96-0 Thursday Senate vote.

Baucus, who has been a Senate member since 1978, was scheduled to retire after the 2014 mid-term elections.

It is widely expected that Sen. Ron Wyden (D-Ore.) will replace Baucus as chairman of the tax-writing Senate Finance Committee.

Baucus's departure from the committee will change little for credit unions, which must still make sure that lawmakers on all levels truly understand that a new tax on credit unions would be a tax on their 97 million members, Credit Union National Association Senior Vice President of Legislative Affairs Ryan Donovan said.

"The circumstances that have made tax reform necessary continue to exist, and we expect Congress to continue to try to make progress on tax reform," Donovan added.

CUNA continues to encourage credit unions and their members to use CUNA and state credit union league resources, social media sites including Facebook, and micro-video site Vine, to tell their legislators, "Don't Tax My Credit Union."

For more on the "Don't Tax My Credit Union" efforts, use the resource link.

HUD updates its foreclosure brochure

 Permanent link
WASHINGTON (2/7/14)--There is a new Department of Housing and Urban Development (HUD) foreclosure brochure and all Federal Housing Administration-approved mortgagees must use it starting Feb. 10.
 
HUD requires FHA-approved mortgage lenders to send a cover letter with the brochure to delinquent borrowers with an FHA-approved mortgages no earlier than the 32nd day of delinquency, but no later than the 60th day.
 
The new brochure is entitled "Save Your House: Tips to Avoid Foreclosure" and it replaces
 the previously published "How to Avoid Foreclosure."
 
HUD issued Mortgagee Letter 2014-1 to announce the updated brochure and review its proper use.  For instance, the letter notes that the cover letter sent with the brochure must include:
 
  • Highly visible information about the availability of language access services offered by the servicer for mortgagors with limited English proficiency (this information must be provided, at a minimum, in Spanish and must include an advisement to seek translation or other language assistance);
  • The following information related to the mortgage loan: the number of late payments;  the total amount of any late charges incurred; the month of each late payment (e.g., June, July); and, the original due date of each late payment;
  • The servicer's mailing address and specific contact information of any assigned personnel;
  • A request for the mortgagor's current financial information;
  • Toll-free telephone numbers for mortgagors needing to contact the servicer's loss mitigation/ customer assistance personnel; and,
  • The toll-free telephone number for mortgagors seeking information on HUD-approved housing counseling agencies, (800) 569-4287, along with the toll-free Federal Information Relay Service number of (800) 877-8339 for mortgagors who may need a Telecommunication Device for the Deaf (TDD) to call the housing counseling line.
Use the resource link to access the complete HUD letter.

Rep. McCarthy, Sen. Corker, and CFPB's Antonakes join 2014 GAC lineup

 Permanent link
WASHINGTON (2/7/14)--Three more high-profile Washington luminaries have been added to the growing Credit Union National Association 2014 Governmental Affairs Conference lineup: House Majority Whip Kevin McCarthy (R-Calif.), Sen. Bob Corker (R-Tenn.) and Consumer Financial Protection Bureau Deputy Director Steve Antonakes.

McCarthy is serving his fourth term in the House of Representatives, and remains a member of the House Financial Services Committee.

At last year's GAC, the legislator praised credit unions for helping him start his business, and promised to work hard to provide regulatory relief for the industry. McCarthy, who once owned a delicatessen in Bakersfield, Calif., told 2013 GAC attendees he would fight the growth of regulations that prevent credit unions from doing what they need to do, such as making more business loans.

Corker is a member of the Senate Banking Committee and has served in the Senate since 2007.

The senator has recently been an active member of housing finance reform efforts, introducing the Housing Finance Reform and Taxpayer Protection Act (S. 1217). That bill would wind down government-sponsored enterprises Fannie Mae and Freddie Mac and replace them with a new mortgage guarantor.

Steve Antonakes has served as CFPB deputy director since September 2013. He is also associate director for supervision, enforcement, and fair lending at the CFPB. As deputy director, Antonakes has led the CFPB's supervision, enforcement, and fair lending teams.

Antonakes first joined the CFPB in November 2010, taking on the role of assistant director of large bank supervision. The Credit Union National Association has met with Antonakes on credit union topics, and the CFPB official has said that credit unions did not cause the financial crisis. He has also noted that credit unions served as a source of strength for their members during the economic recovery.

The 2014 GAC, set for Feb. 23 through 27 in Washington, D.C., is the credit union movement's premiere political event. The GAC gathers more than 4,000 credit union decision-makers in the nation's capital to hear from influential leaders and guide the credit union movement in building and maintaining America's trust.

To register for the 2014 GAC, use the resource link.

Baucus confirmation for ambassador to China expected today

 Permanent link
WASHINGTON (2/6/14)--President Barack Obama's nominee to serve as the next U.S. ambassador to China, Sen. Max Baucus (D-Mont.), is expected to be confirmed today by the U.S. Senate.
 
Baucus is chairman of the tax-writing Senate Finance Committee.  He has held his Senate seat since 1978 and was scheduled to retire after the 2014 mid-term elections.
 
"Chairman Baucus has been central to recent tax reform efforts, but, as I have noted before, tax reform isn't about one person," Credit Union National Association Senior Vice President of Legislative Affairs Ryan Donovan reminds credit unions. "The circumstances that have made tax reform necessary continue to exist, and we expect Congress to continue to try to make progress on tax reform."
 
Donovan added that Baucus' departure from the national tax debate will have no diminishing effect on bank attacks on the credit union tax status. "To the contrary, the banks will be winding up to pitch even harder to new players."
 
"Credit unions must make sure that lawmakers on all levels truly understand that a new tax on credit unions would be a tax on their 97 million members," Donovan said. CUNA continues to encourage credit unions and their members to use CUNA and state credit union league resources, social media sites including Facebook, and micro-video site Vine, to tell their legislators, "Don't Tax My Credit Union."
 
See the resource link.

Cheney in HuffPo enlists backers in 'patent troll' fight

 Permanent link
WASHINGTON (2/6/14)--"Patent trolls" may sound like fictional phantasms, but they present a dangerous reality to credit unions and their members, adding to the costs of providing financial services--and shouldn't be taken lightly, Credit Union National Association President/CEO Bill Cheney writes in a Huffington Post piece.

The so-called "trolls" use low-quality patents to try to extract settlements from credit unions and others and are an abuse of the patent system, CUNA has said. Credit unions have been sued for the use of certain ATM technologies, check imaging applications and check cashing applications, and providing members with mobile transactions through their smartphones.

"The more I heard about what patent trolls do, and how they bedevil small financial institutions--including credit unions--the more I became convinced that something had to be done to stop them, and right away," Cheney wrote.

The CUNA CEO noted that efforts to address this issue are under way in the U.S. Congress. "And the faster the action to stop or slow down the trolls, the better--to ensure that consumers, including credit union members, don't lose access to convenient services, or even their favorite small financial institutions," he said.

CUNA backs legislation that would curb abusive patent litigation by removing some of the financial incentives sought by firms that assert low-quality patents.
"If you are a member of a credit union, a customer at another small financial institution, or an owner of a small business, I hope you will contact your senator and let them know you are behind efforts to combat the tactics of the trolls," he wrote.

"When these reforms are successfully adopted--and, with your help, they will be--perhaps the next time any of us hear mention of 'trolls,' it will be about the latest character in the 'Hobbit' film, and not a character attempting to extort money from your local credit union or other small financial institutions," Cheney wrote.

For the full Huffington Post piece, use the resource link.

Cybersecurity bill moves on to House: CUNA, others urge privacy/protection balance

 Permanent link
WASHINGTON (2/6/14)--Congress must ensure that the National Cybersecurity and Critical Infrastructure Protection Act (H.R. 3696) "provides the appropriate balance to protect privacy, while allowing financial institutions to evaluate information for cybersecurity threats," the Credit Union National Association said in a letter sent to the House Committee on Homeland Security this week.

The letter was sent ahead of a Wednesday markup session on H.R. 3696. The bill was passed unanimously by the committee on Wednesday, and now moves on to the full U.S. House.

H.R. 3696 would:
  • Strengthen existing mechanisms such as the Financial Services Sector Coordinating Council and the Financial Services Information Sharing and Analysis Center that help identify threats, respond to cyber incidents and coordinate with government partners;
  • Improve the provisioning of security clearances for those involved in cybersecurity information sharing; and
  • Expand the existing Support Anti-Terrorism by Fostering Effective Technologies (SAFETY) Act to provide important legal liability protections for providers and users of certified cybersecurity technology in the event of a qualified cybersecurity incident.
The bill "recognizes the necessary partnership between the private and public sectors required to better protect our Nation's cybersecurity infrastructure," CUNA and cosigners said in the letter.

They recommended targeting Section 205 of the bill to ensure financial institutions can continue to perform the necessary efforts to protect consumers and the nation from cybersecurity threats.

The letter noted that the financial services industry has taken major steps to address cybersecurity threats, continues to invest in infrastructure, has improved coordination among institutions of all sizes, and is continually enhancing government partnerships.

The letter was cosigned by the American Bankers Association, The Clearing House, Financial Services-Information Sharing and Analysis Center, Financial Services Roundtable, Independent Community Bankers Association, Investment Company Institute, NACHA-The Electronic Payments Association, National Association of Federal Credit Unions and Securities Industry and Financial Markets Association.

As Congress continues data breach scrutiny, CUNA, partners correct merchant distortions

 Permanent link
WASHINGTON (2/6/14)--Saying "it's time to stop the blame game and be part of the solution," the Credit Union National Association and partner financial services associations corrected some distortions circulated by merchants in a Wednesday communication to members of the U.S. Congress.

The memo was sent to Capitol Hill as the House Energy and Commerce manufacturing and trade subcommittee held a hearing titled "Protecting Consumer Information: Can Data Breaches Be Prevented?"

The hearing is one of three this week on data security.

While Target and Neiman Marcus have recently accepted their share of responsibility for recent breaches, and have pledged to work with law enforcement and Congress to improve the situation, other merchants have not followed suit. Some in the retail industry have made, and continue to make, several misleading and counterproductive statements about the breaches and the position of credit unions and banks across the country, CUNA and its partners wrote.
 
The letter cited Identity Theft Resource Center research which found that 77% of breaches in 2013 occurred at healthcare facilities and businesses, including retailers. "That's compared to just 4% at financial institutions," the letter noted.
 
The joint trade group letter also noted:
  • The recent breaches all involve intrusions into the computer networks of various companies. These compromises have nothing to do with card technology (e.g., "chip and PIN") and everything to do with holes in internal firewalls at these companies that criminals are exploiting; and
  • It is the nation's banks and credit unions that initially make consumers whole, often receiving minimal reimbursement for their efforts.
"Certain retail groups cannot be allowed to divert attention and duck their responsibility for protecting the sensitive personal information of consumers by always claiming that 'it's someone else's fault,'" the letter said. "In fact, it is all of our responsibility to fight an elusive criminal element."

The letter, which was cosigned by the American Bankers Association, Consumer Bankers Association, The Financial Services Roundtable, Independent Community Bankers Association and the National Association of Federal Credit Unions, received coverage in Politico.

The joint letter is one of many ways CUNA and others have advocated for financial services and consumer interests amid a slew of data security and cybersecurity hearings.

Several other data security hearings have been scheduled for this week, including a Wednesday House Energy and Commerce manufacturing and trade subcommittee hearing titled "Protecting Consumer Information: Can Data Breaches Be Prevented?"

A Senate Banking Committee hearing titled "Oversight of Financial Stability and Data Security" is also on the schedule today. Several federal banking regulators will testify, but the National Credit Union Administration is not on the list of regulators invited to testify.

CUNA in a letter submitted for the record of today's hearing noted that Congress should take a broad look at how consumer data is secured and the improvements that are necessary to prevent future breaches from taking place. Similar sentiments have been expressed in letters sent to Monday and Tuesday congressional hearings on data security issues.

CUNA unveils new Hill visit materials to prep GAC attendees

 Permanent link
WASHINGTON (2/5/14)--The 2014 Credit Union National Association Governmental Affairs Conference is just three weeks away, and CUNA legislative staff have assembled a wealth of new materials to make sure credit union supporters are prepped for their Capitol Hill visits.

One new offering for this year's conference attendees is a half-hour legislative briefing webcast that provides a walk-through of the major issues CUNA will ask participants to discuss in their meetings on Capitol Hill.

CUNA has also prepared digital versions of briefing materials that will be handed out at the GAC. Available briefing materials include:
  • A Legislative Briefing Document that compiles one-page documents on key issues like preserving the credit union tax status, merchant data breaches, reducing regulatory burden, housing finance reform and charter enhancements such as capital reform and member business lending. These documents are designed to be leave-behinds in Congressional offices;
  • Ninety-second talking point documents that cover the major message points on each of the above issues;
  • A step-by-step guide on how to bring up these issues during meetings with members of Congress;
  • A list of 2014 credit union legislative priorities;
  • A high level overview of the credit union system that can be left behind in congressional offices; and
  • A list of reminders about how to conduct and what to expect during Congressional office visits.
CUNA also maintains dedicated web pages with information on each legislative priority, including letters or testimony CUNA has submitted on the topics, relevant articles and other material.

To access these resources, use the CUNA congressional visit material page.

Senators call for faster breach notification from merchants

 Permanent link
WASHINGTON (2/5/14)--"American consumers deserve to know when their private information has been compromised and what a business is doing in response to a cyberattack," Sen. Patrick Leahy (D-Vt.) said during a Tuesday Senate Judiciary Committee hearing.

The hearing follows recent data breaches at Target and Neiman Marcus. Target CFO John Mulligan and Neiman Marcus Group Chief Information Officer Michael Kingston were among those that testified during the hearing, "Privacy in the Digital Age: Preventing Data Breaches and Combating Cybercrime."

After an attack, "time is of the essence for law enforcement seeking to catch the perpetrator, and also for consumers who want to protect themselves against further exposure," Leahy added.

Leahy, who chairs the committee, early this year introduced the Personal Data Privacy and Security Act, which would establish consumer data security standards for companies, and require them to notify consumers when a data breach has occurred.

Merchants and financial services industry will need to move together collectively as data security issues are addressed and the payment system is upgraded, Mulligan told legislators. He said his firm is working closely with federal investigators to catch data breach perpetrators.

While Mulligan advocated for the adoption of chip and PIN technology by card providers and merchants alike, another witness, Symantec Corporation Senior Vice President of Security Product and Services Fran Rosch, said chip and PIN is not a panacea but is a step in the right direction.

Sen. Diane Feinstein (D-Calif.) noted that she introduced a data breach notification bill as early as 2003, but said the bill did not make progress. Companies strongly fought the bill, she said. Any data security bill that moves forward in the U.S. Congress must contain data breach notification provisions for customers, Feinstein said.

The Credit Union National Association has called on legislators to ensure that consumers know where their information was breached. CUNA has also urged legislators to follow two other basic principles as they consider data security fixes:
  • All participants in the payments system should be responsible and be held to comparable levels of data security requirements; and
  • Those responsible for the data breach should be responsible for the costs of helping consumers.
These points were raised in letters sent for the record of data security hearings held this week.

For more of CUNA's data security comments to legislators, use the resource link.

HUD secretary promotes $5B housing trust fund plan

 Permanent link
WASHINGTON (2/5/14)--U.S. Housing and Urban Development Secretary Shaun Donovan called for $5 billion to be dedicated to affordable housing production per year, and discussed other housing finance reform goals, in remarks made before the National Association of Hispanic Real Estate Professionals 2014 Housing Policy and Hispanic Lending Conference.

Donovan said Tuesday that the $5 billion in funds should be earmarked for HUD's Housing Trust Fund and the Capital Magnet Fund.

The Housing Trust Fund complements existing federal, state and local efforts to increase and preserve the supply of decent, safe, and sanitary affordable housing for extremely low- and very low-income households, including homeless families, according to HUD. The Capital Magnet Fund is used by the U.S. Treasury's Community Development Financial Institutions Fund to provide grants to CDFIs and qualified nonprofit housing organizations.

Overall, Donovan said "housing can be an area of common ground," and called on "all parties to finally make reform a reality."

He highlighted three pillars that the Obama administration has identified as vital to any housing finance reforms. They are:
  • Maintaining consumer access to 30-year fixed rate mortgages, and giving smaller lenders the same access to the capital markets as the big banks;
  • Private capital should be at the center of the system; and
  • Creating an explicit, defined role for the government.
"Let's keep up the pressure to put housing finance reform at the top of the legislative agenda," he said.

The Credit Union National Association continues to advocate for credit unions as housing reform moves forward. CUNA has repeatedly said that credit unions appreciate the need to reform the current housing finance system, but any reforms must not hinder the ability of credit unions to meet their members' housing finance needs in a member-friendly cooperative way. CUNA has also said that the transition from the current system to any new housing finance system must be reasonable and orderly, and the transition deadline needs to be flexible.

Other CUNA suggestions for a future mortgage market include:
  • There must be a neutral third party in the secondary market, with its sole role as a conduit to the secondary market;
  • The secondary market must be open to lenders of all sizes on an equitable basis; and
  • The new housing finance system should emphasize consumer education and counseling as a means to ensure that borrowers receive appropriate mortgage loans.

NCUA sets Feb. 19 field of membership webinar

 Permanent link
ALEXANDRIA, Va. (2/5/14)--Looking to expand your federal credit union's charter, or change charters? The National Credit Union Administration will discuss field of membership strategies for federal credit unions during a Feb. 19 webinar.

The webinar, which is set to begin at 2 p.m. (ET), will inform participants on:
  • When charter expansions make sense strategically;
  • The advantages of each type of federal charter;
  • Policy requirements for various expansion options; and
  • Where to find additional information.
The webinar will be hosted by NCUA Office of Small Credit Union Initiatives Economic Development Specialist Dominic Carullo and NCUA Office of Consumer Protection Consumer Access Analysts Ruth Siragusa and Jason Schultz.

Participants may submit questions in advance at WebinarQuestions@ncua.gov. The subject line of the email should read, "Field of Membership Webinar." Participants with technical questions about accessing the webinar may email audience.support@on24.com.

To register, use the resource link.

Senate-approved Farm Bill contains CU changes

 Permanent link
WASHINGTON (2/5/14)--The Federal Agriculture Reform and Risk Management Act of 2013 (H.R. 2642), which repeals term limits in the U.S. Department of Agriculture Farm Service Agency (FSA) Guaranteed Loan Programs and crop insurance, was passed by the U.S. Senate on Tuesday by a 68 to 32 vote.

President Barack Obama is expected to sign the bill into law.

The Farm Bill changes above will impact some credit union practices, the Credit Union National Association has noted. (See Feb. 4 News Now story: CUNA watches UDSA loan developments in Farm Bill.)

Credit unions participate in U.S. Department of Agriculture guaranteed farm loans, and the Farm Bill contains language that would repeal borrower term limits in the program. Under the program, some types of loans are repaid within 7 years, and the terms of others cannot exceed 40 years.

Without the repeal, thousands of farmers and ranchers would be forced out of the program, potentially making it more difficult for them to secure credit in the future.

The bill also creates a new crop insurance program that guarantees that the revenue of participating farmers and ranchers will not fall below 86% from the previous year. This type of insurance is not affordable or easily available on the open market, so the government insurance is important to credit unions, as it protects the underlying assets that collateralize some loans made to agricultural businesses.

Registration still open for Feb. 14 NCUA-CFPB town hall webinar

 Permanent link
ALEXANDRIA, Va. (2/5/14)--Registration is still open for a Feb. 12 town hall webinar that will give credit unions direct access to National Credit Union Administration Chairman Debbie Matz and Consumer Financial Protection Bureau Director Richard Cordray.

The free webinar "will be a great opportunity for credit unions to talk with their regulators and get answers to important questions," Matz said.

The 3 p.m. (ET) webinar will feature a broad discussion of federal financial consumer protection regulations, including the CFPB's new mortgage regulations.

Use the resource link below for registration information. During the webinar, participants will be able to type in questions about any topic relating to the credit union industry or the work of CFPB.

Participants may also submit questions to the agency in advance of the session at WebinarQuestions@ncua.gov. The subject line of the email should read "NCUA-CFPB Town Hall."

Target breach hit 10% of all FIs' cards, CUNA and partners tell Senate committee

 Permanent link
WASHINGTON (2/4/14)--The Target data breach has affected 10% of the credit and debit card customers of every credit union and bank in the country, the Credit Union National Association and other financial services representatives said in a Monday letter to the U.S. Senate.

The letter was submitted for the record of a hearing conducted Monday by the Senate Banking subcommittee on national security and international trade and finance entitled "Safeguarding Consumers' Financial Data."

"The financial services industry stands ready to assist policymakers in ensuring that robust security requirements apply to all participants in the payments system," CUNA and the cosigners said.

"Our payments system is made up of a wide variety of players: financial institutions, card networks, retailers, processors, and new entrants. Protecting this eco-system is a shared responsibility of all parties involved and all must invest the necessary resources to combat increasingly sophisticated breach threats to the payments system," the letter added.

One hearing witness, Federal Trade Commission Bureau of Consumer Protection Director Jessica Rich, told the assembled senators that the FTC supports federal standards for data security and breach notification. She highlighted that there are state standards and yet no federal standard.

Subcommittee member Robert Menedez (D-N.J.) asked the assembled panelists if they could have a flexible standard like chip and PIN that could evolve when that technology was outdated. However,  legislators also noted that Chip and PIN won't solve all financial data security issues, and said there should be more standards and technology adopted to address broader issues.

CUNA in the letter again urged legislators to follow three basic principles as they consider data security fixes:
  • All participants in the payments system should be responsible and be held to comparable levels of data security requirements;
  • Those responsible for the data breach should be responsible for the costs of helping consumers; and
  • Consumers should know where their information was breached.
The letter was cosigned by the American Bankers Association, The Clearing House, Consumer Bankers Association, Financial Services Information Sharing and Analysis Center, The Financial Services Roundtable, Independent Community Bankers of America and the National Association of Federal Credit Unions.

These principles were highlighted in a CUNA letter submitted for the record of Monday's hearing, and CUNA will provide similar statements as hearings are held later this week. The other data security hearings are:
  • A Tuesday Senate Judiciary Committee hearing entitled "Privacy in the Digital Age: Preventing Data Breaches and Combating Cybercrime.";
  • A Wednesday House Energy and Commerce manufacturing and trade subcommittee entitled "Protecting Consumer Information: Can Data Breaches Be Prevented?"; and
  • A Thursday Senate Banking Committee hearing entitled "Oversight of Financial Stability and Data Security." Several federal banking regulators will testify, but the National Credit Union Administration is not on the list of regulators invited to testify.

CUs must not fall under CFPB debt collection regs, CUNA urges

 Permanent link
WASHINGTON (2/4/14)--The Credit Union National Association is encouraging credit unions and state leagues to provide their comments on a 162-question debt collection advance notice of proposed rulemaking (ANPR) released by the Consumer Financial Protection Bureau.

Credit unions that collect their own debts have never been subject to the Fair Debt Collection Protection Act (FDCPA), but credit unions that collect debts for others--and credit union service organizations that offer debt collection services--are subject to the FDCPA. The Dodd-Frank Act authorized the CFPB to create rules prohibiting "unfair, deceptive, or abusive" acts or practices (UDAAPs). To implement regulations, the CFPB is proposing to rely not only on its FDCPA and UDAAP authority, but also on its more general Dodd-Frank rulemaking authority.

"The CFPB does not currently have authorization to regulate credit unions in the debt collection area, but CUNA is concerned that the CFPB's far-reaching authority could eventually sweep credit unions under the purview of future rules and regulations," CUNA Deputy General Counsel Mary Dunn said.

The CFPB ANPR:
  • Provides an overview of debt collection, consumer protection problems in debt collection, and government authority and activities to address these problems;
  • Requests information on transfer of and access to information upon sale of debts;
  • Seeks information regarding validation notices, disputes, and investigations;
  • Requests information about certain collector communications;
  • Asks for information about unfair, deceptive, and abusive acts and practices;
  • Addresses issues relating to collection of debts beyond the statute of limitations;
  • Requests information about debt collection litigation;
  • Raises questions about exemptions under federal law for state debt collection systems under the FDCPA; and
  • Solicits information concerning recordkeeping, monitoring, and compliance.
CUNA has requested that credit unions and leagues send their comments by Feb. 14.

The CUNA request for comment, and much more, is discussed in this week's CUNA Regulatory Advocacy Report. For the full Report, use the resource link.

New NCUA booklet gives member share insurance details

 Permanent link
ALEXANDRIA, Va. (2/4/14)--Insurance coverage for the many types of member accounts offered at credit unions is outlined in the latest edition of the National Credit Union Administration's Your Insured Funds booklet.

Click to view larger image Click for larger view
"It's important that credit union members understand what their federal insurance coverage is for the various types of accounts offered at our nation's credit unions," NCUA Consumer Protection Director Gail Laster said. "Using the information in this updated booklet, consumers will be able to make better decisions about their money and learn more about how their checking, share, trust and retirement accounts are insured," she added.

The agency in a release reminded that the National Credit Union Share Insurance Fund insures member accounts up to $250,000. "No member of a federally insured credit union has ever lost a penny of shares insured by NCUA," the NCUA said.

Printed and pdf versions of the booklet are available. The NCUA in the booklet said credit union members can contact their federally insured credit unions or the agency's Office of Consumer Protection for further share insurance coverage details about situations not addressed in the booklet.

For the booklet, use the resource link.

CUNA watches UDSA loan developments in Farm Bill

 Permanent link
WASHINGTON (2/4/14)--The Senate is expected to vote on the Federal Agriculture Reform and Risk Management Act of 2013 (H.R. 2642) this week, and the Credit Union National Association is watching the bill's progress as potential changes to U.S. Department of Agriculture Farm Service Agency (FSA) Guaranteed Loan Programs and crop insurance could impact credit unions.

H.R. 2642 was passed by the U.S. House by a 251-166 vote last week.

Credit unions participate in USDA guaranteed farm loans, and the House version of the Farm Bill contains language that would repeal borrower term limits in the program. According to the USDA, FSA guaranteed loans provide credit unions and other lenders with a guarantee of up to 95% of the loss of principal and interest on a loan. The government provides about $12 billion in credit through the program.

Farmers and ranchers apply to an agricultural lender, which then arranges for the guarantee. The FSA guarantee permits lenders to make agricultural credit available to farmers who do not meet the lender's normal underwriting criteria, and a certain number of the loans are targeted to beginning farmers and ranchers and minority applicants.

The guaranteed loans can be used for both Farm Ownership and Farm Operating purposes. Repayment terms vary according to the type of loan made, the collateral securing the loan, and the producer's ability to repay.

Under the program, some types of loans are repaid within 7 years, and the terms of others cannot exceed 40 years.

If these terms are not eliminated, thousands of farmers and ranchers could be forced out of the program, potentially making it more difficult for them to secure credit in the future.

The House version of the Farm Bill also eliminates almost $5 billion a year in direct payments to farmers whether they farm their land or not. Under the bill, farmers and ranchers in the new crop insurance program would be guaranteed that their revenue doesn't fall below 86% from the previous year, protecting farmers and ranchers from crop yield variations and commodity price fluctuations.

Crop insurance is important for credit union loans to farmers and ranchers for the same reason that flood insurance is important for credit union loans to properties in flood-prone areas. Both programs protect the underlying assets that collateralize the loans. Both types of insurance are not always affordable or even available in the private market, making the two programs vital to credit unions and their members, according to CUNA.

Financial improvement continues for Keys FCU

 Permanent link
ALEXANDRIA, Va. (2/3/14)--The financial condition of Keys FCU of Key West, Fla. continues to improve, with that credit union reporting a 37 basis point net worth ratio increase in 2013, the National Credit Union Administration said Friday.

The credit union's net worth ratio at the end of the year was 4.07%.

Keys FCU, which voluntarily entered NCUA conservatorship in 2009, also reported $307,672 in net income and $120.5 million in total assets at the end of 2013.

"Keys' restructuring efforts continued in 2013 to provide members greater access to services and products like mobile banking and credit cards," NCUA Region III Director and Agent for the Conservator Myra Toeppe said. "We are encouraged by the credit union's steady progress," she added.

The credit union was chartered in 1940 and operates in Florida's Middle and Lower Keys. Membership is open to individuals and their family members who live, work, worship or attend school in Monroe County, the municipal boundary of the Florida Keys.

Two other conserved credit unions reported financial improvements within the past week: Texans CU, Richardson, Texas, reported an increased net worth ratio, expanding loans and the shedding of distressed assets in 2013; and AEA FCU, Yuma, Ariz., reported net worth ratio and net income increases in 2013.

Senate Banking, House Ways and Means members join GAC speaker lineup

 Permanent link
WASHINGTON (2/3/14)--Three key committee members have signed on to the power-packed list of guests set to speak at this year's Credit Union National Association Governmental Affairs Conference in Washington, D.C.

One confirmed speaker is Sen. Jon Tester (D- Mont.). Tester is a member of the Senate Banking Committee and has worked closely with CUNA, the Montana Credit Union Network and Montana credit unions to address interchange issues and other credit union concerns. Tester in October also noted that the ability of small community-based institutions to provide consumers with competitive pricing and product offerings depends significantly on their ability to access the secondary mortgage market.

The two-term Senator also successfully defended his seat in the 2012 elections with the help of credit unions, CUNA and the league.

House Ways and Means Committee members Rep. Patrick Tiberi (R-Ohio) and Rep. Linda Sanchez (D-Calif.) will also speak at this year's GAC.

Also recently signing on to speak at the nation's biggest gathering of credit union leaders from Feb. 23 to 27 are:
  • Sen. Mark Udall (D-Colo.), a strong supporter of increased credit union business lending authority;
  • Rep. Ed Royce (R-Calif.), a longtime credit union supporter, and sponsor of credit union business lending legislation and measures to relieve the credit union regulatory burden;
  • Rep. Denny Heck (D-Wash.), a former credit union official and current member of the House Financial Services Committee; and
  • House Oversight and Government Reform Committee Chairman Rep. Darrell Issa (R-Calif.).
The CUNA GAC is being held at the Walter E. Washington Convention Center; it annually draws up to 4,000 credit union leaders and supporters. Use the resource link for more details and to register.

CUNA tells Congress: Data security's very framework must be addressed

 Permanent link
WASHINGTON (2/3/14)--Congress should take a broad look at how consumer data is secured and the improvements that are necessary to prevent future breaches from taking place, the Credit Union National Association said in a letter submitted for the record of a Senate Banking Committee data security hearing scheduled this week.

The hearing, entitled "Safeguarding Consumers' Financial Data," follows last year's Target data breach. That breach resulted in the theft of 40 million debit and credit cards, and encrypted PIN data, and the names, mail and email addresses, and phone numbers of up to 70 million individuals. Credit unions have already incurred costs estimated to be in the range of $25 million to $30 million as a result of the Target stores data security breach, according to a CUNA survey.

In a letter sent today to Senate Banking national security and international trade and finance subcommittee Chairman Mark Warner (D-Va.) and Ranking Subcommittee Member Mark Kirk (R-Ill.), CUNA President/CEO Bill Cheney encouraged Congress to take a holistic approach to addressing data security issues.

"Focusing on one payment method as the absolute answer to solving data security breaches is both shortsighted and distracts from the greater need of a federal data security framework for all entities," he wrote.

"Data breaches occur, in part, because merchants are not required to adhere to the same statutory data security standards that credit unions and other financial institutions must follow, and merchants are rarely held accountable for the costs others incur as a result of the breaches. All participants in the payment process have a shared responsibility to protect consumer data, but the law and the incentive structure today allows merchants to abdicate that responsibility, making consumers vulnerable," Cheney said.

He noted the many steps credit unions have taken since the breach to protect their members, and said some credit unions also face reputational damage due to the breach.

Cheney in the letter said credit unions support three basic principles for data security fixes:
  • All participants in the payments system should be responsible and be held to comparable levels of data security requirements;
  • Those responsible for the data breach should be responsible for the costs of helping consumers; and
  • Consumers should know where their information was breached.
"Consumers need transparency and knowledge to understand where their data has been put at risk," Cheney added.

Similar points will be raised in separate letters to the House Energy and Commerce subcommittee on commerce, manufacturing, and trade and the Senate Judiciary Committee. Those groups have set their own data security hearings for this week. (See Jan. 31 News Now: House, Senate add data security hearings to next week's agenda.)

Cheney Report highlights CU concerns on risk-based capital

 Permanent link
WASHINGTON (2/3/14)--This week's edition of The Cheney Report underscores that the Credit Union National Association ontinues to analyze proposed risk-based capital regulations, and details some early issues CUNA has found in the National Credit Union Administration's proposal.

Among the areas of concern:
  • Lack of necessity: The impressive way that credit unions came through recent "great recession"--especially compared to other financial institutions--indicates that credit union capital requirements were more than sufficient;
  • Loan concentration measures: The high risk-weights on high concentrations of loans (such as those for business loans) are excessive. In our view, if a credit union has a high amount of business loans in its portfolio, why should the credit union's portfolio be deemed twice as risky as a credit union that has a small amount of business loans?;
  • Treatment of interest-rate risk: IRR cannot be based only on the assets, but has to be considered in terms of matching up to long-term deposits--which is not picked up in the system; and
  • Individual capital requirement: Even if a credit union's risk-based capital ratio is well above the industry average of 10.5 percent, an examiner could--under certain circumstances--assign a higher net worth ratio.
CUNA is working with the CUNA Examination and Supervision Subcommittee, as well as with individual Leagues and the CUNA Lending Council to gather more information and insights, Cheney notes in the Report.

Credit union comments on the proposal will be needed, Cheney adds.

For the full Cheney Report, use the resource link.

NCUA bans five from future CU work

 Permanent link
ALEXANDRIA, Va. (2/3/14)--Guilty pleas to larceny and fraud are just two of the reasons that the National Credit Union Administration issued prohibition orders against five former credit union employees.

The NCUA orders involve the following individuals:
  • Jade Carnahan, a former Rivergate FCU, Portland, Ore., employee who pleaded guilty to bank larceny charges. Carnahan was sentenced to 18 months in prison, three years of supervised release and ordered to pay restitution in the amount of $408,062.38;
  • Michael Ross Franco, a former My Community FCU, Midland, Texas, employee who pleaded guilty to conspiracy to commit bank fraud. Franco was sentenced to 18 months in prison, five years of supervised release and ordered to pay more than $4.1 million in restitution;
  • Yolanda Marie Gonzales, a former Westerra CU, Denver, Colo., employee who pleaded guilty to theft charges. Gonzales was sentenced to seven years in an intensive supervision program, two years of work release and ordered to pay restitution in the amount of $79,198;
  • Nichole Moore, a former North Memorial FCU, Robbinsdale, Minn., employee who pleaded guilty to theft charges. Moore was sentenced to 120 days in prison, seven years of supervised probation and ordered to pay $141,635.69; and
  • Janine Shepard, a former Greylock FCU, Pittsfield, Mass., employee who pleaded guilty to larceny charges and making false entries into corporate books. Shepard was sentenced to three years in prison.
Violation of a prohibition order is a felony offense punishable by imprisonment and a fine of up to $1 million.

Use the resource link to access all NCUA enforcement orders.

New Fed Chair Yellen sworn in today

 Permanent link
WASHINGTON (2/3/14)--Janet Yellen is scheduled to be sworn in as Federal Reserve Board Chair this morning.

Yellen is the first woman to hold this position and has served as Fed vice chairman since Oct. 4, 2010.

Her term in charge of the Fed is scheduled to end on Jan. 30, 2018.

Yellen in testimony before a Senate Banking Committee nomination hearing held last year gave hints as to how she would run the Fed. The Fed should continue to limit regulatory burdens for small financial institutions, taking into account their distinct role and contributions, she said.

The Fed could also work to level the playing field between large, too-big-to-fail institutions and smaller institutions, she added. Yellen in later remarks also said the Fed needs a model for supervision of smaller institutions that's different and less onerous.

She said she would also work to address the regulatory compliance burdens faced by institutions that pose no systemic risk. Overall, Yellen said she is "committed to using the Fed's supervisory and regulatory role to reduce the threat of another financial crisis." Capital and liquidity rules and strong supervision are important tools for addressing the problem of financial institutions that are regarded as too big to fail, she said.

She also pledged to make the Fed a more open and transparent institution during her tenure.