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Targeting all 535 offices CUs launch Hill visits

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WASHINGTON (3/22/12)--Around 4,000 credit union representatives, with an advocacy strategy of visiting each of the 535 U.S. Senate and House offices, descended on Capitol Hill Wednesday during the Credit Union National Association's (CUNA) 2012 Governmental Affairs Conference (GAC).

Member business lending (MBL), supplemental capital, and an credit union regulatory burden are the top advocacy issues credit unions addressed with their lawmakers.

About 30 representatives from credit unions in Oregon and Washington piled into a congressional meeting room to thank newly elected Rep. Suzanne Bonamici (D-Ore.) for her support of increased member business lending (MBL) for credit unions. Bonamici touted an increased MBL cap  as part of her election platform, and signed on as a co-sponsor of House MBL legislation as her first act after she was sworn in.

Click to view larger imageRep. Suzanne Bonamici (D-Ore.), who received a standing ovation from the Northwest Credit Union Association-led credit union group, discussed her priorities for credit unions, and how she is handling her new job in the U.S. House, in a Wednesday meeting on Capitol Hill. (CUNA Photo)

Bonamici earlier this year defeated Republican opponent Rob Cornilles in a special election for Oregon First District U.S. House seat, garnering 53.8% of the total vote.

Scott Burgess, president/CEO of Rivermark Community CU, Beaverton, Ore., outlined the benefits of increasing the MBL cap, and Bonamici said increasing the cap is a "priority" for her.

"Increasing the cap truly makes a difference to small businesses," Bonamici said, adding that "small businesses are a huge part of the economy."

CUNA economists have estimated that increasing the cap would inject $13 billion in loans into the economy and create as many as 140,000 new jobs, with no cost to taxpayers.

South Carolina credit union advocates also met with their lawmakers. In a meeting with Sen. Lindsey Graham (R), South Carolina Credit Union League President/CEO Steve Fowler stressed that the average member business loan is about $219,000, an amount that most banks are not willing to lend.

South Carolina credit union representatives also noted that the 12.25% of assets lending cap is a barrier for many credit unions that want to enter the business lending market. The low cap can make the cost of setting up a program prohibitive.

The South Carolina representatives also met with Sen. Jim DeMint (R) and Reps. Jeff Duncan (R), Tim Scott (R), James Clyburn (D), Trey Gowdy (R), Mick Mulvaney (R) and Joe Wilson (R) during their time on Capitol Hill. 

Maine Sens. Olympia Snowe (R) and Susan Collins (R) and Reps. Michael Michaud (D) and Chellie Pingree (D) met with the Maine Credit Union League earlier in the week, and all four members of Congress, who are co-sponsors of House and Senate MBL cap increase legislation, reiterated their support for the bill.

They also praised credit unions for serving their members, and league President John Murphy thanked them for their continued support.

These credit union visits took place against the backdrop of 1,000 visiting bankers, who earlier in the week urged lawmakers to defeat MBL-cap-increase legislation and stifle other credit union priorities.

News Now will feature more coverage of credit union Hill visits in Friday's News Now.  A slideshow will be featured.

Consumers not seeing interchange savings Tester

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WASHINGTON (3/22/12)--Consumers have yet to see the promised savings that retailers claimed would result from the new debit card interchange rule, Sen. John Tester (D-Mont.) told attendees of the Credit Union National Association's (CUNA) 2012 Governmental Affairs Conference Wednesday.

Click for slide showSen. Jon Tester (D-Mont.) introduced legislation in 2011, along with Sen. Bob Corker (T-Tenn.), that would have delayed implementation of interchange legislation by two years. Shown here addressing a credit union crowd at the CUNA GAC Wednesday, Tester said credit unions do a better job at meeting consumers' needs than do big banks. (CUNA Photo)
Tester sponsored 2011 legislation to postpone implementation of the debit card interchange fee cap. The bill, which was defeated, was supported by CUNA.

"Now we certainly know that the goal of the original interchange amendment wasn't supposed to impact credit unions and community banks with assets of less than $10 billion in assets, but the facts suggest otherwise," Tester said.

The Federal Reserve Board's final rule implementing the interchange law capped large issuer debit interchange fees at 21 cents. An additional five basis points per transaction may be charged to cover fraud losses.

Tester said he receives e-mails from his constituents, who say they have not received the benefits of the new interchange rule.

"Can we say, 'I told you so,'" he said to his credit union audience.

Tester also cited the significance of the relationship between credit unions and small businesses, which he called "the backbone of America."

Citing a report from the National Federation of Independent Business, Tester said it indicated the majority of small businesses access financial services from community financial institutions.

"That's because you do a better job than the big guys in meeting their needs," Tester said.

The Montana senator repeatedly declared his commitment to serve the needs of rural Americans--and credit unions' role within that vision.

"You understand rural America and the many challenges that we face in the heart of this country," Tester said.

Frank leaving Congress not CUs

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WASHINGTON (3/22/12)--While Wednesday was Rep. Barney Frank's (D-Mass.) final Credit Union National Association (CUNA) Governmental Affairs Conference (GAC) appearance as a member of the U.S. Congress, he said it would not be his last work with credit unions.

Frank noted the important role that credit unions have played in this country, and said credit unions have been one of the most important finance industry forces influencing members of Congress due to their deep roots in every community nationwide.

Commenting on the landmark financial reform legislation that bears his name, the Dodd-Frank Wall Street Reform and Consumer Protection Act, Frank said: "If every financial institution had behaved the way credit unions do, I suppose I'd be a lot less famous, because there wouldn't have been a Dodd-Frank bill."

Due to that legislation, he said, unregulated financial institutions such as remittance providers, payday lenders, and other firms are now subject to the same regulations that credit unions follow, and many anti-consumer practices of large banks have been restricted.

Frank said he would feel the legislation has been successful if these changes help credit unions to expand the base of the people they serve.

Frank did oppose debit card interchange fee legislation that was ultimately added to the Dodd-Frank legislation, and noted that addressing interchange fees was irrelevant to the mission of his financial reform legislation and has not helped consumers.

He challenged retailers, who were the main proponents of the interchange fee cap, to show how the change has benefitted consumers.

CUNA GAC sessions wrapped up Wednesday, but the GAC effort continues today with additional visits by credit union representatives with their federal lawmakers on key credit union issues.

Hensarling names economy as top CU issue

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WASHINGTON (3/22/12)--Democracy is a participatory sport and "few participate like those in the credit union movement," Rep. Jeb Hensarling (R-Texas) said on Wednesday.

Hensarling thanked the credit union representatives attending the Credit Union National Association's 2012 Governmental Affairs Conference for having their voices heard in Washington, D.C., and noted credit unions' work to help families and businesses in his district.

He said the top issue for credit unions is the economy, and said that the economy still needs help to improve.

Bureaucratic red tape and tax issues are holding the economy back somewhat, Hensarling said, adding that he will be "on the forefront of fighting for reasonable regulations."

The true cost of excess regulations can come in the form of reduced credit, stifled innovation and product development, and a loss of economic freedom, Hensarling said.

One of his top priorities, he added, is to repeal the Federal Reserve's debit interchange rule, which caps debit interchange fees at 21 cents for issuers with assets of $10 billion or more.

Clyburn touts rural programs in GAC remarks

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WASHINGTON (3/22/12)--Credit unions live by the not-for-profit-but-for-people philosophy. U.S. Rep. James Clyburn (D-S.C.), noting this point Wednesday, urged attendees of the 2012 Credit Union National Association Governmental Affairs Conference to embrace two pieces of related legislation that seek to improve the lives of U.S citizens facing financial challenges.

Clyburn sponsored the Rural Energy Program Act, which seeks to nationalize a program established in South Carolina in which rural energy customers who upgraded their homes' energy efficiency repaid the cost on their monthly utility bills.

Clyburn's Rural Energy Program Act passed the U.S. House but not the Senate. Yet, he said, he has not given up hope on the bill.

"It is the kind of legislation that can do wonders back in your respective communities," he told the audience.

Clyburn also touted a "10-20-30" policy that would direct at least 10% of rural development spending to communities with 20% poverty rates for 30 years.

Clyburn said 474 U.S counties fall into the 10-20-30 category.

"During this recovery we must make sure we do not make the same mistakes that we made last time we were here," Clyburn said. "There are still communities that have not recovered from the Great Depression."

The No. 3 Democrat in the House, Clyburn has represented South Carolina's sixth congressional district since first being elected to the House in November 1992.

Royce Now is the time for CUs to push on MBLs

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WASHINGTON (3/22/12)--Rep. Ed Royce (R-Calif.), a lead sponsor of legislation that would increase the member business lending (MBL) cap to 27.5% of assets, told Credit Union National Association (CUNA) 2012 Governmental Affairs Conference (GAC) attendees "now is the time" to exert extra effort and get MBL legislation passed by the U.S. Congress.

Click for slide showRep. Ed Royce (R-Calif.) (shown here addressing CUNA's 2012 GAC Wednesday) is a lead sponsor of a House bill to raise the credit union member business lending cap and has underscored that the bill would help provide credit to the country's small businesses without increasing government borrowing. (CUNA Photo)
Royce's comments came just hours before about 4,000 credit unions, in town for the CUNA GAC, launched an effort to visit every one of the 535 House and Senate offices on Capitol Hill in support of the MBL bill and other credit union priorities.

With support from both sides of the aisle Royce's bill (H.R. 1418) has 123 co-sponsors. Similar legislation in the Senate (S. 509) is expected to come up for a vote in the coming weeks. Royce said Wednesday he would bring his bill to the House floor following that Senate vote.

Royce said Congress has a chance to put forward legislation that gives credit unions the opportunity to do what they do best: "loan within their own community."

The MBL bills would inject around $13 billion into the economy, creating as many as 140,000 new jobs, according to CUNA estimates.

Royce, a senior member of the House Financial Services Committee, cited in his GAC remarks that U.S. Small Business Administration statistics that show 80% of MBL loans would be to small businesses that have not been able to access to capital in the past.

"These are small businesses that would not get their loan without us passing this legislation," he said. The MBL cap increase legislation would give these businesses the ability to access capital and lines of credit to hire new employees, and expand their businesses, and "that is what is going to be essential to turning this economy around," Royce added.

Royce said he was proud of the work that credit unions have done to convince members of Congress they should sponsor H.R. 1418 and S. 509.

He told the credit union advocates meeting with their legislators this week to take the time to explain what makes credit unions unique, and urged them to continue their advocacy efforts in their home districts.

"People like their banks, but they love their credit unions, and the reason is the job that you do," Royce added.

Maloney urges patience on Dodd-Frank regulations

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WASHINGTON (3/22/12)--Give regulation resulting from the Dodd-Frank Wall Street Reform and Consumer Protection Act an opportunity to increase safety and soundness within the financial system, Rep. Carolyn Maloney (D-N.Y.) urged credit unions to during a speech at the 2012 Credit Union National Association Governmental Affairs Conference.

"I think most people in the industry feared Dodd-Frank," Maloney said Wednesday.  "I think that we have to give it a chance. I think it is going to function in a way that will make our markets function in a better way."  She added that, when the country's markets are healthy, credit unions can be very healthy.

Maloney emphasized that the Dodd-Frank Act was not intended to create an increased regulatory burden for credit unions.

"Dodd-Frank was not passed because of anything credit unions did," Maloney said of the landmark financial reform package spurred by the country's recent economic meltdown.  "If anything they were the stars during this crisis. It was the nonbanks, the over-the-counter derivatives that needed the attention."

Maloney did say there has been inconsistent application of examination standards by regulators since the financial crisis.

Maloney is a co-sponsor--along with Rep. Shelley Moore Capito (R-W.Va.), who addressed the GAC on Tuesday, and 122 other House colleagues--of the Financial Institutions Examination Fairness and Reform Act. The bill would give financial institutions the right to appeal regulatory exams to an independent ombudsman.

"I know the flexibility that regulators have wanted to build into their process has turned into real inconsistency," Maloney said. "And I have been hearing that financial institutions, including credit unions, have been reluctant to raise those concerns because of the powers that the regulators hold."

GAC sessions wrapped up Wednesday, but the GAC effort continues today with additional visits by credit union representatives with their federal lawmakers on key credit union issues.

Fryzel urges CUs to expand their reach

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WASHINGTON (3/22/12)--Credit unions should think big and set a goal of having every family have at least one account at a credit union, National Credit Union Administration (NCUA) board member Michael Fryzel said at Wednesday morning's session of the Credit Union National Association's Governmental Affairs Conference (GAC).

Click for slide showNCUA board member Michael Fryzel tells the CUNA GAC audience that they are the inheritors of credit unions' long tradition of people helping people. He adds, "But you are more than inheritors, you are now the engine itself." (CUNA Photo)
Credit unions should build on their success and the fact that they are the "preeminent example of how people can succeed by cooperating," Fryzel said.

He added that credit unions should expand their efforts to show that "self-help, not-for-profit, democratically run cooperatives are the best means of helping all Americans gain access to high quality, low-cost financial services."

"(If) you believe in your hearts--and I think you do--that not-for-profit, democratically run cooperatives are a model for championing the classic can-do work ethic and achievement that has distinguished America since its founding, then take the reins and lead the way,'' he challenged his credit union audience.

Fryzel, a board member since 2008 and a former NCUA chairman, credited the industry for succeeding during the recent financial crisis.

He noted that the industry repaired the problems caused by the failure of several large corporate credit unions and extended credit at a "record pace,'' while other financial institutions held back. Those successes, Fryzel said, were indicative of the industry's strength.

"You saw some very dark days and you said we have the best financial services system in the nation and we are not about to let it fail our members and the American people,'' he said.

GAC sessions wrapped up Wednesday, but the GAC effort continues today with additional visits by credit union representatives with their federal lawmakers on key credit union issues.

Johnson says CUs interests will be folded into housing reform

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WASHINGTON (3/22/12)--Senate Banking Committee Chairman Tim Johnson said any housing finance reform will keep the 30-year mortgage and include protections for the role of credit unions and community banks.

In a video address to the Credit Union National Association's (CUNA) Governmental Affairs Conference (GAC) Wednesday, he noted his committee has held several hearings on the reform subject and is still sorting out options for making changes in the housing finance system.

The South Dakota Democrat also noted that his panel had held a hearing on legislation to raise the cap on member business loans to 27.5% of assets, up from 12.25% of assets.  He didn't state a position but said discussion will continue on it. Last week, Senate Majority Leader Harry Reid (D-Nev.) promised that there would be a vote on the measure (S.509), which is sponsored by Sen. Mark Udall (D-Colo.)

Johnson also noted in his GAC video address that he had sent letters to the inspectors general of the National Credit Union Administration (NCUA) and other financial regulators requesting information on their examination processes which could form the basis for a discussion on the topic.

Legislation has been introduced in the U.S. House and Senate that would give financial institutions additional avenues of appeal of their examinations. CUNA has testified before a house subcommittee in favor of the Financial Institution Examination Fairness and Reform Act (H.R. 3461), calling it  "a firm step in the right direction toward ensuring the federal financial institution regulatory agencies conduct fair exams, which are consistent with the law and regulation and ensure safety and soundness."  West Virginia Credit Union League President/CEO Ken Watts was CUNA's witness.

Inside Washington (03/21/2012)

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  •  WASHINGTON (3/22/12)--If Sheila Bair were still heading the Federal Deposit Insurance Corp., as she did between 2006 and 2011, more banks would have failed their stress tests for being over-leveraged, according to a recent MarketWatch interview reported in the March 20 issue of American Banker.  Bair told her interviewer that the Federal Reserve Board should have put a heavier focus on limiting leverage as part of the stress tests of 19 large banks. She said the point of the tests was to take a dry run--see how these 19 would perform in a highly stressed environment. In a stressed situation, Bair said, the market cares only about a bank's leverage ratio--described in the article as the ratio that measures an institution's tangible common equity to total assets. The market just doesn't trust risk-adjusted capital, Bair observed. She called it ill-advised that the Fed drove its decision on dividends based on the institutions' risk-based ratios.  She said she did not think any capital distribution should be allowed that would let a bank's holding company--in a stressed time--hit a leveraged ratio below 4% …