Archive Links

Consumer Archive
CU System Archive
Market Archive
Products Archive
Washington Archive

Washington Archive

Washington

CUNA Contacts Fed For More Interchange Survey Info

 Permanent link
WASHINGTON (5/24/13)--While a new Federal Reserve survey claims the interchange fee cap exemption is working for small issuers, details about credit unions' experience in this area are not fully reflected and the Credit Union National Association is talking with the agency to find out more about the survey results, CUNA President/CEO Bill Cheney said Thursday.

CUNA continues to closely monitor the impact of the interchange cap and whether market forces appear to drive down the fees that the exemption for smaller institutions is intended to protect.

"These results are welcome in the short term for credit unions across the country, but we continue to have grave concerns about debit interchange income for credit unions over the longer term, and question whether these results will stand over time," Cheney said.

The information was gathered from survey responses from the payment card networks and 102 small depository institutions. CUNA has reached out to the Fed to clarify how many of these respondents were credit unions, since the number is not apparent from the information released.  The Fed had asked 1,000 small financial institutions to take part in the survey.

The Fed'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, and an extra penny may be charged by financial institutions that are in compliance with established fraud prevention standards. Most credit unions are exempt from the fee cap.

Information on network exclusivity provisions and compliance costs is also included in the Fed report.

For the full Fed release, use the resource link.

Economic Growth Continues, NCUA Economist Reports

 Permanent link
ALEXANDRIA, Va. (5/23/13)--The improving economy, and how it could impact interest rate risks faced by credit unions, are addressed by National Credit Union Administration Chief Economist John Worth in a new YouTube video.



The video is the latest in a series of YouTube videos to inform the public and credit unions about general economic and credit union specific developments.

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

NEW: NCUA Lifts Arrowhead Central CU Conservatorship

 Permanent link
ALEXANDRIA, Va. (UPDATED: 5/24/13, 12 p.m. ET)--Control of the once-conserved Arrowhead Central CU has been returned to its members, the National Credit Union Administration reported today.

Arrowhead is the first credit union since 2007 to emerge from conservatorship, the NCUA noted.

"This is a very positive step for Arrowhead Central and its members, and a positive sign of the continued improvements in the economy and the credit union system," Credit Union National Association President/CEO Bill Cheney said.

The NCUA took the 116,000 member, $755 million-in-assets credit union into conservatorship in June 2010. At that time, Arrowhead's net worth ratio had fallen to 3%.

"From day one, we were dedicated to restoring sound operations and safeguarding members' hard-earned money," NCUA Chairman Debbie Matz added.

The agency said NCUA staff, a new leadership team, and a 10-member advisory board worked together to strengthen Arrowhead's loan underwriting standards, control costs and restore net worth.

The credit union this week reported a net worth ratio of 10.5%, quarterly net income of $5.6 million, and membership of more than 116,000, the NCUA said.

For more, use the resource link.

House Approves Federal Student Loan Rate Flexibility

 Permanent link
WASHINGTON (5/24/13)--Legislation that would tie student loan interest rates to 10-year U.S. Treasury notes, and allow those student loan rates to reset each year, was passed by the U.S. House on Thursday.

The Smarter Solutions for Students Act (H.R. 1911) passed the House by a 221 to 198 vote.

According to a U.S. House release, H.R. 1911 would:

  • Calculate subsidized and unsubsidized Stafford loans using a formula based on the 10-year Treasury note plus 2.5%;
  • Calculate graduate and parent PLUS loans using a formula based on the 10-year Treasury note plus 4.5%;
  • Cap Stafford Loan interest rates at 8.5% and cap PLUS loans at 10.5%.
The bill will now move on to the Senate. The federal student loan rate is currently capped at 3.4%, and this limit will double to 6.8% on July 1 if Congress does not take action.

Other student loan fixes introduced in the House and Senate include:

  • The Student Loan Affordability Act (S. 953), which would cap federal student loan rates at 3.4% for another two years;
  • The Bank on Students Loan Fairness Act (S. 897), which would offer federal student loans at the same rates that are charged to banks through the Federal Reserve discount window. That rate is currently 0.75%; and
  • The Student Loan Fairness Act (H.R. 1330), which would cap federal student loan interest rates at 3.4% and also allow some borrowers to refinance their student loan debt to improve their rate.
Sen. Kirsten Gillibrand (D-N.Y.) this week also announced the Federal Student Loan Refinancing Act, which would enable federal student loan holders with interest rates above 4% to refinance those loans at a fixed rate of 4%.

The Credit Union National Association's first annual High School Student Borrowing Survey, released last month, found that nearly half of high school seniors don't know how much they will need for college costs. That lack of knowledge translates to a greater student-debt burden after college.

In a recent meeting with Consumer Financial Protection Bureau officials, CUNA said credit unions could do more to help debt-saddled grads if the maximum credit union student loan maturity of 15 years was increased. (Use the resource link for an April 23 News Now story: CFPB Seeks CU Help For Student Loan Issues.)

Electrical Workers #527 FCU Declared Insolvent

 Permanent link
ALEXANDRIA, Va. (5/24/13)--Electrical Workers #527 FCU of Texas City, Texas, with 527 members and assets of $622,857, was declared insolvent Thursday by the National Credit Union Administration, which liquidated the credit union upon determining it had no prospect of restoring viable operations.

The credit union was chartered in 1963 and served a number of select groups centered primarily on electrical workers in the Texas City area.

It is the seventh federally insured credit union liquidation in 2013.

Member deposits are federally insured by the National Credit Union Share Insurance Fund up to $250,000 and within a week the NCUA's Asset Management and Assistance Center will issue checks to individuals holding verified share accounts.