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NEW: Senators Intro 'Too Big' Bank Bill

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WASHINGTON (UPDATED: 4/24/13, 4:35 p.m. ET)--Sens. Sherrod Brown (D-Ohio) and David Vitter (R-La.) today introduced the Terminating Bailouts for Taxpayer Fairness Act (S. 798), which, in part, would impose stronger capital requirements on banks.

The bill would require the largest banks to maintain a capital ratio of at least 15%. Smaller banks would be subject to a lower threshold of between 8% and 9.5%.

Credit Union National Association Vice President of Legislative Affairs Ryan Donovan said that if lawmakers address community bank capital standards, that action should be paired with legislation to address credit union capital issues, particularly the ability of credit unions to accept supplemental forms of capital.

The Brown-Vitter bill, however, does contain some provisions that would apply to credit unions as well as banks.  For example, the privacy notification bill--which would eliminate repetitive privacy notices by eliminating a requirement that the notices be sent annually--has been included in this bill.   It also includes the part of the examination fairness bill, creating an examination ombudsman for all the federal financial institution regulators.

The Brown-Vitter bill would also provide some relief with respect to the definition of a qualified mortgage.  The legislation would also exempt financial institutions under $10 billion in assets from small business data collection requirements under the Equal Credit Opportunity Act.  

Proir to the bill's introduction, CUNA President/CEO Bill Cheney told The Hill newspaper in an interview that  "the people in the positions who made the decisions to bail out the big banks before would probably have to do the same thing today"  barring any changes to the law.  He added, "I think too big to fail still exists."

Cheney also told the publication that many rules out of regulatory agencies like the Consumer Financial Protection Bureau (CFPB) are unduly burdening credit unions instead of major banks and predatory lenders.

CUNA has presented a 35-point plan to Congress recommending regulatory relief measure for credit unions, which includes a proposal to permit credit unions accept supplemental forms of capital consistent with the cooperative principles.

CUNA Cites Broken Bank Promises In SBLF Letter

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WASHINGTON (4/24/13)--The Credit Union National Association Tuesday submitted  a letter for the record of a House panel hearing entitled "Broken Promises: The Small Business Lending Fund's Backdoor Bank Bailout," and charged that the SBLF was "a sweetheart deal to further assist banks that were aided in TARP."

CUNA President/CEO Bill Cheney, in the letter to the key members of the House Oversight and Government Reform Committee, which conducted the hearing, underscored that banks used the funds from the second government bailout to pay off costs tied to their first bailout, rather than using those funds for their intended purpose of lending to struggling small businesses.

The $30 billion SBLF program was established by the Small Business Jobs Act of 2010.

Banks and their national trade associations vigorously pushed for enactment of the SBLF, but those same supporters have yet to admit that the SBLF "has done little to stimulate bank lending to small business," Cheney noted.

The CUNA letter went on to note that legislation that could help credit unions do more to aid the economy is active in the U.S. House.

Rep. Ed Royce's (R-Calif.) bill, the Credit Union Small Business Jobs Creation Act (H.R. 688), would increase the member business lending (MBL) cap to 27.5% of assets, up from the current 12.25%.  CUNA estimates the change would help credit unions lend an additional $14.5 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 158,000 new jobs. Royce's MBL bill has 89 co-sponsors.

"We know the banks oppose H.R. 688; but considering how they have used the taxpayer-subsidized SBLF, their opposition to this legislation is a pretty good reason to support it," the letter said.

Credit union lending to small business owners increased by 45% during the financial crisis, while bank small business loans contracted 15% over that same time period, CUNA noted. This favorable comparison "should speak volumes of what small business should expect" if Congress allows credit unions to increase their lending support, the letter said.

"Credit unions were there for small businesses when the banks, with taxpayer backing, abandoned them; and if Congress permits it, credit unions will continue to be there for small businesses during the recovery."

For the full CUNA letter to Congress, and to read about a  recent Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) report that said the U.S. Treasury invested only $4 billion of the $30 billion in SBLF funds that were available, use the resource links.

CU Advantage Noted In Fox, HuffPo Coverage

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WASHINGTON (4/24/13)--A pair of key credit union concerns, member business lending (MBL) and student loans, and the Credit Union National Association's views on those issues, received prominent press coverage in two high-profile outlets on Tuesday: Fox Business and The Huffington Post.

In a story, CUNA Executive Vice President of Strategic Communications and Engagement Paul Gentile noted the help that credit unions could provide to a still-recovering economy if allowed greater MBL authority.

The Fox Business piece noted credit unions as one way small business owners can go "out-of-the-box" and obtain funds when banks turn them down. While banks are unwilling to do a lot of the loans needed today to stem the tough economic times, "credit unions do true small business loans," Gentile said in the piece. Banks are reluctant to make loans for less than $200,000. However, Gentile said, the average credit union business loan is right around that level: Credit union business loans average $217,000.

Most small business owners need the loans to cover smaller costs like equipment and inventory updates, Gentile told Fox Business. Others, he said, need the extra funds to keep their business running if consumer spending ebbs.

CUNA's recently released student lending survey also received coverage in a Huffington Post piece on student debt issues. That survey found that nearly half of high school seniors in the U.S. don't know how much money they will need for college.

The HuffPo story also includes other CUNA findings: 22% of those surveyed said they will owe between $11,000 and $50,000 when they graduate, and 15% expected debt of $10,000 or less. (Use the resource link to read April 17 News Now story: Survey: 50% Of High School Seniors Don't Know Student Loan Costs.)

While 70% of the CUNA survey respondents were confident they will receive a high-paying job upon graduating, the Huffington Post story painted a more complicated picture: Nearly 9% of recent college graduates are unemployed, and 18.3% are underemployed, according to an Economic Policy Institute survey cited in the same story.

For the Fox Business and Huffington Post items, use the resource links.

NCUA Webinar Gives Broad, Tailored Marketing Tips

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ALEXANDRIA, Va. (4/24/13)--The key role that member identification can play in credit union marketing efforts was one of the topics touched on in Tuesday's National Credit Union Administration webinar, "Driving the Bottom Line: Results through Marketing."

The webinar was hosted by the NCUA's Office of Small Credit Union Initiatives and featured broad and tailored advice on credit union marketing. Pennsylvania Credit Union Association Director of Credit Union Marketing Services Sandi Carangi and Gustavo Gruber, vice president of Coopera Consulting Inc., presented during the NCUA webinar.

Credit unions spend, on average, $281 on marketing to achieve a new member. Carangi said credit unions that are looking to market their services to new or existing members should clearly outline who they are marketing to, and what they hope to accomplish.

Credit unions with small or nonexistent marketing budgets can work with other credit unions, and attract free press coverage to help market their products, Carangi said. The value of social media in marketing depends on what a credit union is trying to accomplish, she warned. For example, she said social media can be a useful tool for credit unions that wish to promote financial education efforts or other local events and resources, but may not be the best way to market products or attract new members.

Overall, the most important step is to keep track of your marketing results, she said.

Some credit unions have moved aggressively to serve the Hispanic population, and are looking for ways to refine their approach, Gruber said in his portion of the presentation. Hispanics are the youngest, fastest growing and most underserved group in the country, and there isn't a credit union in the country today that isn't impacted by the growth of the Hispanic population. "If you aren't, you will be soon," he said.

Coopera, a consulting organization that helps credit unions reach Hispanic markets, has developed partnerships with state credit union leagues.

The presenters also noted Credit Union National Association tools as one of the resources that can help credit unions develop their marketing efforts.

CUNA: New CFPB Office Gives CUs Another Advocacy Route

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WASHINGTON (4/24/13)--The Consumer Financial Protection Bureau's (CFPB) new Office of Financial Institutions and Business Liaison will give the Credit Union National Association and credit unions another avenue to communicate their concerns with this key regulator, CUNA Deputy General Counsel Mary Dunn said Tuesday.

The CFPB announced creation of the new office Monday. The new division will connect the agency with financial institution trade associations, financial institutions, and businesses to enhance collaboration and communication as the CFPB continues its work to make markets more accessible and efficient for consumers.

CUNA already works closely with the CFPB and has met on behalf of credit unions on such top financial issues as qualified mortgage and ability-to-repay rule changes, remittance rules,  payday lending, and many financial services topics. The agency most recently reached out to CUNA and credit unions asking CUNA staff if credit unions could help ease students' loan-debt burdens by consolidating several student loans into fewer payments, and at better terms. (Use the resource link to read April 23 News Now story: CFPB Seeks CU Help For Student Loan Issues.)

Dan Smith has been selected to serve as the first assistant director for the new office. Smith previously served as the director for Industry and State Relations at Freddie Mac.

As it released details on the new office and its new leader, the CFPB also announced:

  • Catherine Galicia will serve as the CFPB's new assistant director for legislative affairs;
  • Lisa Konwinski will serve as the CFPB's deputy associate director for external affairs; and
  • CFPB Office of Older Americans Assistant Director Hubert "Skip" Humphrey will now serve as the bureau's senior liaison officer.
Also related to the CFPB, Director Richard Cordray presented the semiannual report detailing the last six months of agency activity to the Senate Banking Committee on Tuesday. Issues addressed in Cordray's testimony included:
  • Credit reporting company supervision;
  • Debt collector oversight; and
  • Private student loan debt.
The director was also scheduled to submit that same report on the House side. However, House Financial Services Committee Chairman Rep. Jeb Hensarling (R-Texas) said the committee cannot legally accept testimony from Cordray "until he is validly appointed as the bureau's director."

For the full CFPB releases, use the resource links.

Hagen Is New NCUA Inspector General

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ALEXANDRIA, Va. (4/24/13)--James Hagen will serve as the National Credit Union Administration's new Inspector General effective June 1, the agency announced on Tuesday.

Hagen will succeed the retiring William DeSarno.

NCUA Chair Debbie Matz said in a release that Hagen, who is the NCUA's deputy inspector general for audit, "is a dedicated and well-qualified public servant who will assume a very important role at NCUA." Hagen's "deep knowledge of financial services issues, background as an inspector general and familiarity with NCUA's operations make him ideally suited for this new role," she added.

Hagen has worked with the agency since 2005. He has also served in the inspector general's offices of the U.S. Postal Service, the Social Security Administration, and the Treasury Department, the NCUA said.

DeSarno will retire after 16 years with the NCUA, and more than 44 years of overall government service. NCUA board member Michael Fryzel said DeSarno "has handled a tough job in a fair, consistent and independent manner. His efforts to modernize and make the Inspector General's office more responsive and involved in improving the agency are well recognized."

Matz also hailed DeSarno's work during the financial crisis. "His accurate insights and careful analysis of complex issues will benefit NCUA and credit unions for many years to come," she said.

For the full NCUA release, use the resource link.

FAF Names Golden As Next FASB Chair

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NORWALK, Conn. (4/24/13)--The Financial Accounting Foundation (FAF) announced Tuesday that Russell G. Golden will be the its next chair of the Financial Accounting Standards Board (FASB), effective July 1. Golden will succeed current FASB Chair Leslie F. Seidman after her term ends on June 30.

Golden has served as a FASB member since September 2010 and before that he served for six years on the FASB staff. Before his time at FASB, Golden was a partner at Deloitte & Touche LLP. 

It is that background, said Jeffrey J. Diermeier, chair of the FAF board of trustees, that elevated Golden among "many highly qualified candidates."

"He will bring to his new position a deep understanding of technical accounting issues informed by a broad appreciation of the larger environment in which the FASB operates, which he developed during his years as both a staff member and as a board member," Diermeier said.  The FAF oversees FASB and its sister organization, the Governmental Accounting Standards Board.

Golden's initial term as FASB chairman will extend to June 30, 2017. At that time, he will be eligible to serve another term of three years, as FASB members are limited to serving a total of ten years on the board.

The Credit Union National Association, which advocates credit unions' interests with FASB on issues such as its credit loss reporting proposal, commended Golden's selection.

Sen Baucus To Retire In 2014

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WASHINGTON (4/24/13)--Senate Finance Committee Chairman Max Baucus (D-Mont.) on Tuesday said he will not seek re-election in 2014.

Baucus, who has served in the U.S. Senate since 1978, said "there is important work left to do" in his remaining time in the U.S. Congress. "Our country and [Montana] face enormous challenges--rising debt, a dysfunctional tax code, threats to our outdoor heritage, and the need for more good-paying jobs," he said.

As chair of the Senate's powerful tax-policy committee and leader of the Joint Committee on Taxation, Baucus is one of many currently working on a tax code revamp. Baucus has had many positive things to say about credit unions, Credit Union National Association Senior Vice President of Legislative Affairs Ryan Donovan noted earlier this year.

State-specific issues will also be a priority for the legislator in his remaining year-and-a-half in office. Baucus plans to officially announce his retirement in Helena, Mont. on Friday.