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Filed on September 30, 2009, published the first business day after.
- NCUA Town Hall includes alt capital, corporate CUs
- Compliance: What an accelerated CARD ACT date would mean
- CUNA: CFPA legislation could create redundant rules for CUs
- House committee okays data breach bill
- Non-profits need health care incentives: CUNA
- SBA extends GO Loan program
- 2008 mortgage trend info available
- Inside Washington
- CU savings ‘surprisingly’ down, loans up
- Bankrate: Banks charging record fees
- GTE FCU cuts nearly 5% of staff
- WOCCU monitoring disasters overseas
- Economy sparks more CUs in mortgages, FHA programs
- Survey: How FIs can help consumers through economy
- SW Corp. keynoter Feldstein: Expect double dip recession
- Rosenthal honored for community economic development
- CU System briefs
- Market News
- News of the Competition
- New BillShrink service recommends ‘best’ FIs to consumers
NCUA Town Hall includes alt capital, corporate CUs
WASHINGTON (10/1/09)—National Credit Union Administration (NCUA) Chairman Deborah Matz Wednesday stated that the agency is conducting a "post mortem" on what contributed to the problems in the corporate credit unions, including NCUA's role.
The chairman made her remarks before an NCUA Town Hall meeting here, one
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| CUNA's Dan Mica, left, and Mary Dunn, right, pose with NCUA Chairman Deborah Matz, who gave attendees substantial insight into the NCUA's future rulemaking and examination agenda. (CUNA Photo) |
Matz said the priority now, though is to "get through the crisis" period. She also stated that the agency is adding more personnel and providing additional training to staff. "We are getting to where we should have been and need to be to effectively examine credit unions," she said.
She added the agency is going back to a 12-month examination cycles because the 18 month cycle has not served the system well.
The town hall meeting was attended by 180 other credit union representatives, among them Credit Union National Association President/CEO Dan Mica and other CUNA officials.
Matz acknowledged that 2010 and perhaps 2011 could still be difficult years for natural person credit unions, and said that the NCUA's examiners are currently scrutinizing credit unions' call reports. Many of the issues found by the examiners relate to loan participations and a general failure to conduct proper due diligence.
NCUA board member Michael Fryzel, Office of Corporate Credit Union Director Scott Hunt, General Counsel Bob Fenner, and NCUA Deputy Executive Director Larry Fazio were also in attendance, and the NCUA officials discussed the financial condition of the corporate credit unions and NCUA's ongoing implementation of its efforts to address problems within the corporate system.
While the NCUA has not yet released its comprehensive plan for corporate credit union governance, the NCUA representatives previewed some elements of the proposal. Key elements will include proposed new capital standards that call for a 4% leverage ratio, which will include retained earnings and paid-in capital from members.
The proposal will also address over concentration of risks in mortgage-related securities and other asset-backed securities, and will also propose limits on the weighted life of assets, perhaps two years. The proposal will also recommend yearly disclosures of the total compensation packages of all senior staff members, and will prohibit so-called "golden parachutes."
The proposal is expected to be issued for comment in November.
During questions from the audience, CUNA Board Member Tom Dorety, of Suncoast Schools FCU in Tampa, Fla., raised the issue of the need for alternative capital for a number of credit unions. Matz said that she was open to a reasonable proposal that would allow cedi unions to have additional sources of capital.
Board member Gig Hyland noted that a that a comprehensive white paper on allowing credit unions to raise alternative capital could be presented to the NCUA board before its previously expected deadline of December of 2009. Hyland is heading an NCUA resource group that is developing an alternative capital proposal to send to COngress.
The NCUA will hold its final Town Hall meeting in San Diego, Calif. on Oct. 5.
Compliance: What an accelerated CARD ACT date would mean
WASHINGTON (10/1/09)—Credit unions, faced with the specter of a bill that would accelerate the effective date of the Credit Card Accountability, Responsibility and Disclosure (CARD) Act, have been seeking guidance on what should be done now to prepare for the possibility, said Kathy Thompson, Credit Union National Association senior vice president for compliance.
Credit unions are worried, Thompson said Wednesday, about how they could possibly comply with the CARD Act if Congress were to pass legislation introduced last week to change the effective date to Dec. 1 of this year, rather than the Feb. 22, 2010 deadline in the law enacted last May.
"We've received calls from credit unions asking what they should be doing right now if the effective date were accelerated by almost three months," reports Thompson.
"It's something we have taken a close look at and CUNA has concluded that it would be virtually impossible for card issuers to comply with all the changes required by the new law in a matter of 60 days.
"Data processing changes are still being developed and need to be tested, and implementing Regulation Z changes were just proposed two days ago. The Regulation E amendments required by the CARD Act to impose restrictions on gift cards haven't even been proposed. Many steps need to be taken before being able to comply with the new law in any orderly fashion."
Key members of the U.S. Congress have expressed concerns about large banks rushing to make changes in the terms and conditions of their credit cards prior to the February date. Last week, Rep. Carolyn Maloney (D-N.Y.) introduced H.R. 3639, the "Expedited CARD Reform for Consumers Act of 2009," a vehicle to move up the effective date.
"I was surprised to see a quote from a supporter of a December 1 effective date saying that such a change would only affect large financial institutions because ‘small financial institutions don't issue credit cards.'
"Half of the nation's credit unions issue credit cards. Accelerating the effective date could raise even greater compliance concerns for credit unions because they don't run their own credit card operations and therefore can't simply pour more resources into their programs to comply on short notice. They rely upon third-party vendors to provide necessary support, and these vendors are working diligently to comply by the early 2010 effective date," noted Thompson.
She advised credit unions to focus on the 800-page proposed credit card regulation and explanatory materials released by the Federal Reserve Board this week, rather than trying to anticipate potential compliance problems if the effective date were moved to December.
"Right now, we urge the 4,000 credit unions with credit card programs to provide CUNA with input on the practical problems you see with the Fed's credit card proposal," Thompson urged. Once the Fed formally issues its proposal, there is only a 30-day turn around for comments, so October is the time to focus on what additional guidance is needed from the Fed.
Also credit unions should be considering what changes may be needed in their credit card programs to address issues raised in the credit card law, such as fixed versus variable rate cards, credit for members under 21 years of age, and over-the-limit transactions, to be ready for the CARD law's implementation, noted Thompson.
Thompson reminded credit unions that not only the controversial 21-day mailing requirements but also the 45-day change-in-terms notice requirements have already gone into effect.
"And one other provision in the new credit card law – although it doesn't actually go into effect until next summer – requires credit unions to start tracking any interest rate increases they make in members' credit card accounts since January 1, 2009 due to market conditions or a member's risk profile," warned Thompson. Starting August 22, 2010, the credit union will have to review these accounts at least every six months to assess whether a reduction in the interest rate is warranted."
Thompson emphasized that if a bill to accelerate the effective date begins to gain traction in Congress, CUNA and the leagues will meet with lawmakers and their staff to explain the regulatory burden and potential liability to credit unions.
Even if Congress doesn't take action to move up the effective date of the credit card law, it will be closely watching what is happening. The Fed is required to deliver to Congress next May a study on creditors' practices in raising interest rates or reducing credit limits since 2007, and to report every other year on the impact of the new credit card law has on consumers.
CUNA: CFPA legislation could create redundant rules for CUs
WASHINGTON (10/1/09)--The Credit Union National Association (CUNA) in a Wednesday letter noted that while legislation that would create the proposed Consumer Financial Protection Agency (CFPA) takes "several steps in the right direction," credit unions remain concerned that the duplicative and redundant regulations that could potentially face credit unions have not been addressed.
The letter, which was sent to members of the House Committee on Financial Services and submitted and was added to the record of a hearing held on Wednesday, sought assurance that the additional credit union concerns over the examination and enforcement authorities that could be conveyed to the CFPA. However, CUNA stated, the CFPA should be given "back-up examination powers" over regulated depository institutions, and the CFPA examiners could also be used to examine financial institutions "on a random, backup basis."
Some of the additional protections sought by CUNA include clarification that the Chairman of the National Credit Union Administration will be given a seat on the CFPA Oversight Board and directing the CFPA Director to take into account disclosure requirements under other laws in order to enhance consumer compliance and reduce regulatory burden.
The discussion draft, which was the subject of a Wednesday Financial Services Committee hearing, also seeks to ensure that the CFPA does not create additional fees or assessments for financial institutions.
Protections for depositor data and the treatment of state consumer protection law would be given "serious consideration" as the Committee continues its debate and mark-up of the legislation.
For the full CUNA letter, use the resource link.
House committee okays data breach bill
WASHINGTON (10/1/09)—The House Energy and Commerce Committee Wednesday passed the Data Accountability and Trust Act (H.R. 2221) by voice vote.
The bill would require businesses to notify affected customers when outside parties gain access to sensitive information due to a security breach.
The Credit Union National Association (CUNA) has called the bill "well-intentioned," but has expressed concerns to lawmakers that its does not adequately address the notification issue.
In a letter to the committee, CUNA President/CEO Dan Mica said pointed out that the entities that have experienced data breaches in recent years do not typically have the necessary contact information to reach the individuals whose accounts may have been compromised. However, he added, the financial institutions of affected accountholders certainly do.
Mica said CUNA backs language to state that breach notification would to be done by the financial institutions of the affected accountholders at the expense of the entity that has lost the data.
"Credit unions currently do this at their own expense for members when they are notified of breaches by the merchant or card associations. They have the contact information, but should be compensated for the expense caused by the data breach," Mica wrote.
He added, "Further, we would encourage you to include language that permits the financial institutions to disclose the source of the breach or loss to affected accountholders.
"Without being able to disclose the source, credit unions are exposed to reputation risk—the loss of confidence in the credit union by the members—in addition to actual monetary costs."
Non-profits need health care incentives: CUNA
WASHINGTON (10/1/09)--While it supports health care assistance for small employers, the Credit Union National Association (CUNA) said Wednesday that the same standards should also apply to non-profit employers, including federal- and state-chartered credit unions, that seek the same benefits for their employees.
CUNA made its remarks in a letter to Senate Finance Committee members Max Baucus (D-Mont.) and Charles Grassley (R-Iowa) which addressed a modified version of the America's Healthy Future Act of 2009 which provides tax credits to help small employers cover the cost of purchasing health insurance for their employees. As written, an amendment to the bill that was offered by Sens. Kerry, Snowe, Schumer, Lincoln and Cantwell would extend these same benefits to non-profits, but only to those that are organized under Section 501(c)(3) of Internal Revenue Service Code.
While positive, this would still exclude 27 types of non-profits that are organized under Section 501(c) of the IRS code.
In closing, CUNA President/CEO Dan Mica asked for "employer parity and basic fairness" to "prevail" by allowing the bill's incentives to apply to "all small employers."
SBA extends GO Loan program
WASHINGTON (10/1/09)--The Small Business Administration (SBA) this week announced that it is extending its Gulf Opportunity Pilot Loan Program (GO Loans) for a further year, extending them until September 30, 2010.
The SBA began its GO Loan program in November of 2005 to provide financing on an emergency basis to small businesses in areas affected by Hurricanes Katrina and Rita.
According to an SBA release, the GO Loan program, which provides 85 percent guarantees for eligible lenders, resulted in 301 loans for a total of $25.2 million in funds during 2008. The SBA also reported that the demand for GO loans "increased significantly" during 2009. The maximum loan amount is currently $150,000.
The full notice detailing the extension of the GO loan program can be found in the most recent edition of the Federal Register.
2008 mortgage trend info available
WASHINGTON (10/1/09)—Data on mortgage lending transactions by credit unions, banks and thrifts throughout the United States in 2008 is now available through the Federal Financial Institutions Examination Council (FFIEC).
The number of reporting institutions fell to 8,388, about 3% less than the 8,610 covered by the Home Mortgage Disclosure Act (HMDA) the year before. The drop was attributed primarily to a relatively large decline in the number of independent mortgage companies.
The FFIEC is comprised of the National Credit Union Administration, Federal Reserve Board, Federal Deposit Insurance Corp., Office of the Comptroller of the Currency and Office of Thrift Supervision.
The Credit Union National Association (CUNA) is currently analyzing the just-released mortgage lending data, particularly credit union information, and will report any significant trends.
In general terms, an FFIEC release noted that the 2008 HMDA data reflect ongoing difficulties in the housing and mortgage markets, with decreases in the both the number of reporting institutions and the number of loans written. The total number of originated loans of all types reported fell about 3.3 million, or 31%, from 2007.
However, the story does not stop there. While the number of reported first-lien conventional loans fell sharply from 2007 to 2008, first-lien loans backed by Federal Housing Authority (FHA) insurance increased dramatically, the FFIEC noted. In fact, FHA loans rose 169% in 2008 and the FHA's share of such loans expanded to 19.5% in 2008, up from 5.5% the year prior.
First-lien loans backed by Veterans Administration (VA) guarantees also increased markedly. The number of VA-guaranteed loans in 2008 increased by 48 percent over the number in 2007. The VA market share increased from 1.5%in 2007 to 2.9% in 2008.
The incidence of higher-priced lending declined in 2008, but racial disparity remained. The FFIEC reported that among all HMDA-reported loans, about 12% were higher-priced, down significantly from the historic high point of about 29% in 2006 and 18%t in 2007.
However, the 2008 HMDA data, similar to the data from earlier years, indicate that black and Hispanic white borrowers were more likely, and Asian borrowers less likely, to obtain higher-priced loans than were non-Hispanic white borrowers.
Mike Schenk, CUNA vice president of economics and statistics, noted it will take time to cull the enormous HMDA database. However, he said CUNA expects the numbers to show that credit unions, compared to other lenders, continue to be more likely to approve mortgage loan applications, and that their relatively high approval rates will continue to stand out across the income spectrum and in all key ethnic groupings.
Schenk said the FFEIC numbers also historically have shown credit unions to be much less likely to saddle consumers with high-cost loans and that credit unions remain true to their mission: compared to other lenders, credit unions reported a larger share of the total mortgage lending to low/moderate income consumers.
"My expectation is that, at a minimum, the new numbers will show a continuation of these impressive credit union results," Schenk said Thursday.
He anticipated the FFEIC data will reflect that credit unions have remained active, responsible lenders during the ongoing housing downturn, which has caused many other lenders to significantly tighten underwriting standards and substantially curtail or completely abandon the mortgage market.
"Credit unions were not contributors to the subprime mess, and have remained active, responsible lenders - the FFIEC data should reflect this fact," the CUNA economist said.
Inside Washington
- WASHINGTON (10/1/09)--Senate Banking Committee Chairman Christopher Dodd (D-Conn.) is drafting a bill for a single financial regulator, despite opposition from community bankers and the House. Dodd's bill would consolidate all regulation for financial institutuins into one, except credit unions (American Banker Sept. 30). "I want to make it clear that this does not relate to credit unions. Before I get calls from around the country, I wanted to make that point. Credit unions: You are O.K.," Dodd said during a hearing Tuesday. Dodd's proposal goes further than the Obama administration's plan to consolidate regulation. Obama would merge the Office of the Comptroller of the Currency and the Office of Thrift Supervision. Dodd's plan would strip authority from the Federal Reserve Board and Federal Deposit Insurance Corp. Though community bankers have voiced opposition to Dodd's plan because they fear it would hurt the dual banking system, several said they support it. A consolidated regulator is critical to improving the financial system, according to Sen. Mark Warner (D-Va.). A single banking regulator could eliminate "arbitrage" and preserve the dual banking system without harming community banks, he said. Having too many regulators leads to unnecessary regulatory burden, added Eugene Ludwig, former comptroller. Several Government Accountability Office (GAO) reports also make the case for a single regulator. Regulatory consolidation could decrease fragmentation in the system and improve regulatory independence, said Richard Hillman, managing director of financial markets and community investment for the GAO ...
- WASHINGTON (10/1/09)--The insolvency of the Deposit Insurance Fund (DIF) will likely span years--until 2012, according to Federal Deposit Insurance Corp. (FDIC) Chairman Sheila Bair. DIF--the FDIC's reserve--was significantly depleted this year because of 95 bank failures. But a DIF negative balance doesn't mean the agency will "run out of money," Bair told reporters Tuesday (American Banker Sept. 30). The FDIC is planning to raise $45 billion by requiring banks to pre-pay their premium assessments until 2012. Under that plan, the DIF will reach its minimum balance in 2017. The DIF has always been expected to have at least $1.15 (1.15%) reserved for each $100 of insured deposits, but the ratio has been pushed much lower. For instance, on June 30, the reserve ratio was 0.22% ...
CU savings ‘surprisingly’ down, loans up
MADISON, Wis. (10/1/09)--Credit union savings balances unexpectedly declined in August, while loans grew slightly, according to a Credit Union National Association (CUNA) economist's analysis of CUNA's monthly sample of credit unions.
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Credit union savings balances declined 0.5% in August, but grew 8.3% to $755.1 billion during the first eight months of 2009.
In August, money market accounts led savings growth with a 1.4% increase, followed by individual retirement accounts (1.2%). One-year share certificates declined 0.7%, while regular shares and share drafts declined 1.6% and 2.1%, respectively.
"Credit union savings balances fell a surprisingly large 0.5% in August, reversing the surge in savings balances seen this year," Steve Rick, CUNA senior economist, told News Now. "We typically see a seasonal savings decline of 0.46% in August as members withdraw funds for vacations and back-to-school shopping. But we had been seeing a strong underlying trend of monthly growth in savings of around 0.8%.
"Year-to-date credit union savings balances are up 8.3%, compared to a 5.8% gain for the similar period last year," he added. "Given the savings pace so far, credit unions could end up posting a 10% increase in savings balances this year, the fastest pace since the 11.3% posted in 2002."
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Credit union loans outstanding increased 0.7% to $590.5 billion during August and 1.7% during the first eight months of 2009, down from a 5.1% increase during the same period in 2008.
During the month, credit card loans led loan growth, rising 1.6%, followed by unsecured personal loans (1.4%) and home equity loans (1.3%). New-auto loans, used-auto loans, and other loans each increased 0.7%, while fixed-rate and adjustable-rate mortgages increased 0.6%. Other mortgages decreased 0.8%.
"Loan balances grew a modest 0.7% in August, slower than the 1% pace set last August," Rick said. "Credit union members are still hesitant to take on new credit due to worries of possible job losses. The government's ‘Cash for Clunkers' program did reverse a nine-month slide in new-auto lending.
"Credit unions posted a 0.73% increase in new-auto loan balances in August, up from no growth last August," he added. "The program probably pulled forward new-auto demand, so we expect a sharp drop in new-auto lending for the next few months."
The movement's overall capital-to-asset ratio increased to 9.9% in August. The total dollar amount of capital is $89 billion.
Credit union 60-plus-day delinquencies remained constant from July 2009 to August 2009 at 1.7%.
"The credit union movement's capital-to-asset ratio climbed back over 9.9% in August, up from its recent low of 9.4% in May, but below the 11% set last August," Rick said. "Delinquent loans now stand at 1.72% of total loans outstanding as rising unemployment and falling home prices increase both default and collateral risk."
The loan-to-savings ratio increased slightly to 78.2% in August 2009. The liquidity ratio--the ratio of surplus funds maturing in less than one year to borrowings plus other liabilities--decreased slightly to 19%.
Bankrate: Banks charging record fees
NEW YORK (10/1/09)--Banks fees for bounced checks, ATM use and checking account service charges hit record highs in August, according to a Bankrate.com study released Wednesday.
Bounced-check fees averaged $29.58 for the first bounced check, an increase of 2.1% from 2005 (ABCNews and USA TODAY Sept. 30).
Roughly 26% of banks surveyed use a tiered pricing system to impose progressively higher fees for multiple overdrafts in a 12-month period. The average cost for the second, third, and fourth bounced checks rose to nearly $34 each.
Charges for an interest-bearing checking account were up nearly 3.5% from 2004 data-- to a record $12.55 per month, said Bankrate(USA TODAY). Last year the cost was $11.97 or 5% less. The average minimum-opening balance requirement increased to $473.12 from $376.75.
ATM fees also rose. In 2009, the average fee to use another bank's ATM was $3.54, up 16% from 2004 and 7% since 1999, when the average fee was $1.12. This includes the fee charged at the ATM as well as that charged by the consumer's bank.
Consumers also paid more for online banking. Online checking accounts that earn interest have a higher average minimum balance--$681.50--than traditional banks but they offer better yields, lower balance requirements and lower monthly fees, said Bankrate.
Bounced-check fees at online banks increased to $29.78 and the average ATM surcharge increased to $1.88.
GTE FCU cuts nearly 5% of staff
TAMPA, Fla. (10/1/09)--Due to a struggling economy, GTE FCU laid off about 5% of its employees at its Tampa, Fla., headquarters on Friday.
The credit union had roughly 600 employees. The board looked at several scenarios when assessing the layoffs--including the "human factor" and net worth, Doug Richardson, GTE FCU senior vice president of marketing, told News Now. Employees who were laid off received severance packages based on their years of service.
The credit union is not planning any future layoffs, unless area unemployment rates significantly increase. Currently, the unemployment rate in the Tampa area is at 10%.
"We made loans to people who had jobs and now they've lost their jobs," Richardson said.
GTE FCU also closed eight branches Sept. 15. The branches were located in Portland, Maine; Baton Rouge, La.; New Orleans; and north Florida. The credit union alerted members prior to the closings that they could still receive service through GTE's telephone center, shared branching and CO-OP network ATMs.
"We did the best we could," Richardson said.
The closings allow the credit union to focus more on the Tampa area--where 75% of members are located, he added.
Although GTE FCU is being careful with its funds given the tough economy, it is still putting a lot of time and energy into its U22 savings and debit account program, which was launched this year and targets 12- to 22-year old members. As of this week, the program has 1,600 accounts with 56% brand-new accounts, Richardson said.
The credit union has offered some incentives, such as meeting Tampa Bay Rays baseball player Evan Longoria, and is looking to further promote U22 at an upcoming music festival.
WOCCU monitoring disasters overseas
MADISON, Wis. (10/1/09)--The World Council of Credit Unions (WOCCU) has not received any reports from the field about credit unions in several nations and territories hard-hit by earthquakes, tsunamis and Typhoon Ketsana along the Pacific Rim Tuesday and Wednesday.
The countries, some of which have areas of widespread damage and climbing death tolls, are:
- Sumatra, an Indonesian island hit by an 7.6 earthquake, killing at least 75 people and trapping thousands. Padang, a city of 900,000 people, is on one of the most active fault lines where the Indo-Australia tectonic plate grinds against the Eurasia plate (Reuters Sept. 30);
- The Samoa Islands--Samoa and American Samoa--hit by a tsunami with four waves, each 15 to 20 feet high. The death toll stood at 119 people, with dozens more missing. The tsunami caused a tsunami advisory along the West Coast of the United States, but the impact was uneventful(The New York Times and Los Angeles Times (Oct. 1).
- Tonga, south of the Samoas--Six people were confirmed dead and four were missing.
- Vietnam, hit by Typhoon Ketsana, confirmed at least 41 deaths from flash floods and mudslides. Hardest hit were the provinces of Quang Nam, Thu Tien Hue and Quang Tri, with four other provinces also affected, said the government.
- Cambodia, hit by the typhoon, has 11 confirmed dead.
- Philippines, hit by Typhoon Ketsana, confirmed at least 246 deaths and 2.3 million people with flooded homes. More storms were heading toward the Philippines Wednesday.
According to WOCCU's 2008 Statistical Report, Vietnam has 1,015 credit unions, and Indonesia has 950. Any credit unions in Sumatra are counted in the Indonesia total. Figures for Samoan Islands were not available, said WOCCU spokesman Michael Muckian. Cambodia has 80 credit unions, Tonga has 63, and the Philippines, 1,278.
None have reported damages so far.
Economy sparks more CUs in mortgages, FHA programs
MADISON, Wis. (10/1/09)--Credit unions are playing an increasing role in the lending arena--particularly mortgage lending.
As qualification standards tighten and private mortgage insurance (PMI) becomes harder to obtain, lenders are turning to Federal Housing Administration (FHA) programs to meet demand, explained Linda Clampitt, senior vice president of CU Members Mortgage.
Clampitt added that CU Members Mortgage processed 111 FHA loans ($15.6 million) in 2007. However, that number jumped to 851 loans ($129 million) in 2008, and 1,341 loans ($198.5 million) to date in 2009.
"FHA loans offer a valuable option for originators because it is one of the most flexible mortgage products available during these difficult economic times," Clampitt said. "We've added 142 credit unions this fiscal year to our list of FHA sponsored agents, and seven additional credit unions are in process right now--that's more than double what we had last year.
"FHA programs offer low down-payment options for the credit qualified at reasonable costs," she added. "And because an FHA loan insures the lender against loss, this type of loan typically has an interest rate that is among the best in the market."
In previous years, there were so many conventional products available that many credit unions did not work FHA programs extensively, Clampitt said. Also, until last year, credit unions saw success by offering other loan options. But the sweeping changes in the mortgage industry have changed the lending environment completely.
The challenge now facing many credit unions is having a strong compliance department to help navigate regulatory changes accurately and having the technology to respond to demand and the expense to manage both, Clampitt said.
Credit unions originated 38.8% more first-lien mortgages in second quarter of 2009 compared to the same time in 2008, according to Callahan & Associates' First Look Program market research. Credit unions surveyed reported originating a combined $30.7 billion in mortgages during the quarter, up 16.1% from the first quarter of 2009.
Growth in credit union lending comes at a time when credit availability for consumers remains a key issue. Consumers are looking for help and value, and they are finding both at credit unions nationwide, the company said.
Survey: How FIs can help consumers through economy
BROOKFIELD, Wis. (10/1/09)--Credit unions can help their members survive a tough economy by providing more robust online functionalities--such as same-day bill pay, free budgeting tools and alerts to avoid service fees, says a new survey.
Fiserv, a financial services technology provider based in Brookfield, Wis., asked consumers how their financial activities have been impacted by the recession and how financial institutions can help them gain a greater sense of control of their finances. The survey, "Coping with the Crisis," was conducted by Forrester Consulting on behalf of Fiserv. It questioned 1,002 online adults in the U.S. The survey updates a previous study conducted by Fiserv in October 2008.
About 91% of consumers who use online banking said it is critical for managing finances. Because of the recession, 32% of online banking users said they are accessing their accounts more often--an increase from 28% in October 2008. Roughly 74% said they are paying more attention to their finances than in previous years, compared with 71% last October.
Thirty-eight percent of consumers said they wanted their financial institutions to send them alerts to avoid service fees. About 33% indicated they wanted same-day bill payments, 31% wanted free budgeting tools, and another 31% said they wanted reminders when their online bills are due.
The survey also asked consumers what functionalities would help them control their finances the most. Some of the suggestions included:
- Being able to pay bills the same day they are due (64%);
- Alerting consumers to issues they need to pay attention to, such as due dates or a low balance (56%); and
- The ability to manage all accounts from one site (53%).
More than one-third of consumers surveyed noted that personal financial help from their financial institution also would help them feel in control of their finances.
SW Corp. keynoter Feldstein: Expect double dip recession
DALLAS (10/1/09)--Although recent data has brought hopeful signs to the economy, credit unions can expect a recovery that will be difficult to sustain, according to Harvard University Professor of Economics Martin Feldstein.
Feldstein will be a speaker at Southwest Corporate FCU's 32nd annual Economic Forum Oct. 27-28 in Dallas. Credit Union National Association (CUNA) Chief Economist Bill Hampel and others will also speak at the forum.
"This recovery is very different from a normal business cycle, so results cannot be interpreted like a normal business cycle," Feldstein said. "Recent economic improvements have been driven by fiscal stimulus and special programs. Consequently, I think this recovery will run out of steam next year, and we'll see 'double dip' recession."
His presentation at the forum will explore the reasons why he believes the recent economic upswings are only temporary.
Feldstein is a member of President Barack Obama's Economic Recovery Advisory Board. He previously was a member of President George W. Bush's Foreign Intelligence Advisory Board and was President Ronald Reagan's chief economic adviser. He also served for nearly 30 years as president/CEO of the National Bureau of Economic Research, a private, nonprofit research organization specializing in the American economy.
To solidify the current economic recovery, said Feldstein, the Obama administration must deal with two hurdles: bank balance sheets and downward pressure on real estate prices that comes from the foreclosure process. "The administration recognizes the problems but doesn't have policies to deal with them effectively. That's going to increase risk going forward," he said.
He indicated that the real estate market's woes may not be over. "About one-third of existing home sales today are the result of defaults and foreclosures. I don't think we've seen the end of declining home values," he said. "And commercial real estate may be the next big disaster. Banks are not going to be willing to roll over loans to commercial investors, so defaults are likely to increase."
The Federal Reserve will face challenges in trying to keep a lid on inflation, Feldstein said. "The Fed has played a non-traditional role over the past year--issuing credit--and the effect has been to put a lot of extra cash in the bank. The question is: 'Are there going to be problems with inflation in undoing that?'"
He acknowledged recent positive indicators in industrial manufacturing and housing, but suggested that the consequences of a fiscal deficit that is 5% of the gross domestic product will be a slowing of economic growth and a rise in inflationary risk.
"The fiscal deficit is much bigger and much worse than any we've seen," Feldstein said.
In addition to Feldstein and CUNA's Hampel, other speakers will include financial experts Marci Rossell, former economist at the Dallas Federal Reserve and former chief economist at CNBC; William Ford, former president of the Federal Reserve Bank of Atlanta and former American Bankers Association chief economist; Gigi Hyland, National Credit Union Administration board member; Charles Idol, Southwest Corporate consultant and credit union industry economist; and Phil Gramm, former U.S. senator from Texas.
Early bird registration will end Tuesday.
Rosenthal honored for community economic development
WASHINGTON (10/1/09)--Clifford Rosenthal, president/CEO of the National Federation of Community Development Credit Unions, will be honored by the Insight Center for Community Economic Development in Washington, D.C., Nov. 12, for his commitment to community economic development.
The center, formerly known as the National Economic Development and Law Center, is honoring individuals who have played important roles in improving the lives of low-income and working families. The center and federation have been longtime partners to help those in poverty, the low-income and working families.
The federation represents more than 200 community development credit unions, which provide credit, savings, transaction services and education to more than one million residents of low-income urban and rural communities.
CU System briefs
- MILFORD, Conn. (10/1/09)--A man robbing Sikorsky Financial CU in Stratford, Conn., Tuesday morning threatened to shoot the tellers and members during the incident (Connecticut Post Sept. 30). The man wearing a dark hoodie pulled over his head entered the $605.2 million asset credit union, yelling and screaming. He vaulted over the counter, ordered four tellers and four customers to "get down" on the floor, and threatened to shoot everyone, said police. He grabbed money from cash drawers, jumped over the counter again and ran toward a donut shot. No weapon was displayed and no one was injured ...
- HARRISBURG, Pa. (10/1/09)--Angelique Pattillo has joined the
Pennsylvania Credit Union Association (PCUA) as a compliance and operations officer. She has 14 years of credit union experience in positions from teller to branch manager at Members 1st CU, Mechanicsburg, and Patriot FCU, Chambersburg. In her new position, Pattillo will assist credit unions with compliance questions on PCUA's toll-free hotline and e-mail, and provide Compliance Cavalry services in the central part of the state (Life is a Highway Sept. 30) ...
- TEMPE, Ariz. (10/1/09)--Tempe Schools CU today will launch its first Health Education Loan Program (HELP), which focuses on reduced interest rates on auto loans, credit cards, mortgage loans, and loan consolidation with fiscal checkups and special loan experts. The HELP Program was inspired by Statewide FCU, Flowood, Miss., which piloted a similar program called Credit Emergency Room. This month the Tempe Schools CU staff will wear scrubs and be identified with name badges and area of expertise. Special LOANcologists will help consolidate loans. The AUTOstesiologists and CARdiovascular Surgeons will assist with reducing rates on auto loans. The HOMEotology Specialist and OrthoHELOC Technologist will provide a no-cost mortgage analysis and waive appraisal fees if the loan is refinanced with the credit union. And VISAcular Specialists will assist with credit cards ...
Market News
MADISON, Wis. (10/1/09)
- The U.S. gross domestic product (GDP)--which calculates the country's economic output--shrank 0.7% in the second quarter, with the worst national recession since the 1930s easing more than anticipated, according to Commerce Department figures released Thursday. The report likely indicates the recession ended this summer, which paves the way for the economy to grow throughout the end of 2009, analysts said. The 0.7% second-quarter rate is a revision from earlier estimates of a 1% contraction and the best performance in more than a year. For the first quarter of the year, GDP contracted at a 6.4% annual rate. The federal government's $787 billion stimulus package--which included a first-time home buyer tax credit and "Cash for Clunkers" vehicle rebates--appear to have boosted the economy, analysts said. However, Federal Reserve policymakers are among those worried that consumer spending gains will not last because of rising unemployment and stagnating incomes (Bloomberg.com and The New York Times Sept. 30) ...
- Foreclosures on U.S. homes jumped about 17% in the second quarter, despite the federal government's implementation of a wide-ranging program to help borrowers save their homes, reported the Office of Thrift Supervision (OTS) and the Office of the Comptroller of the Currency (OCC). Second-quarter completed foreclosures tallied 106,007--compared with 90,696 in the first quarter. Under the federal Making Homes Affordable plan, lenders were paid to lower a borrower's monthly payments. Since its March inception, the program has helped nearly 400,000 borrowers, according to government data. By November, the Obama administration said it hopes to complete another 500,000 loan modifications. However, even as the program gets up to speed, rising unemployment continues to hinder foreclosure prevention efforts, analysts said. More than 50% of homeowners who had their mortgage loans modified in the first half of 2009 had missed at least two months of payments a year later, said OTS and OCC--although results were better for those who saw their monthly payments reduced substantially (The Washington Post and The New York Times Sept. 30) ...
- For the week ending Sept. 25, the Mortgage Bankers Association's (MBA) market composites dropped because contract rates barely edged downward. The market index declined 2.8% from the previous week, propelled mainly by a steep drop in the purchase index--reversing the previous week's gains, analysts said. The refinance index declined 0.8% from the prior week. In a signal that demand for mortgage credit remains weak, the purchase index is still below year-ago levels--despite a steady recovery in the past months, analysts added (Moody's Economy.com Sept. 30) ...
- The Institute for Supply Management-Chicago index--a measure of U.S. business activity--unexpectedly shrank in September to 46.1 from 50, as support from the federal "Cash for Clunkers" vehicle rebate program fades. The declining index indicates companies likely will limit production and spending, analysts said. Spending gains and near-record excess capacity sparked almost solely by government stimulus programs will likely keep companies from increasing production on assembly lines. With federal assistance abating, the manufacturing recovery may be uneven, they added. While the September decline is discouraging, the index still averaged 46.5 in the third quarter, compared with 38.3 in the second quarter, analysts said (Bloomberg.com and Moody's Economy.com Sept. 30) ...
News of the Competition
MADISON, Wis. (10/1/09)
- CIT Group Inc. shares nosedived Wednesday in the midst of reported efforts by the commercial lender to avoid bankruptcy. The efforts include creating an exchange that would reduce its debt and offer its bondholders an equity stake in the firm. CIT is one of the largest U.S. lenders to small and midsize businesses. Its shares dropped 85 cents, or 38.6%, to $1.35 in Wednesday morning trading. The company is preparing an exchange offer that would cut as much as 40% of its more than $30 billion in outstanding debt, said The Wall Street Journal, citing anonymous sources. The exchange reportedly would give CIT's bondholders control of the company and eliminate common stockholders (The New York Times Sept. 30) ...
- Bank of America Corp. (BofA) said Wednesday it is selling one of its units to Ameriprise Financial. BofA will sell the long-term asset management business of Columbia Mutual--its mutual fund arm--for roughly $1 billion. Some analysts' previous estimates of Columbia's worth were in the $2.5 billion to $3.5 billion range. The sale is expected to close by spring. The unit that Ameriprise will acquire has about $165 billion in assets under management as of June 30, BofA said (DealBook Sept. 30) ...
- General Motors closed a large truck plant this week, signaling that the appeal of pickup trucks to U.S consumers is quickly diminishing, analysts said. Sales of pickups dropped steeply in 2009--exceeding the decline in overall vehicle sales, which are at their lowest point in the past 25 years. In 2004, auto companies sold nearly 2.5 million pickups in the U.S. This year, truck sales will reach only about one million, analysts said. The sales downturn places new pressure on automakers--which for years made significant profits on truck sales, analysts added. In a separate matter, Toyota said Tuesday it is recalling 3.8 million vehicles because faulty floor mats could cause the accelerator pedal to become stuck and cause accidents. Toyota and federal officials are telling owners to remove the driver's side mat while the automaker works on a solution (The New York Times Sept. 30) ...
New BillShrink service recommends ‘best’ FIs to consumers
REDWOOD CITY, Calif. (10/1/09)--BillShrink, a free online service that gives personalized money-saving recommendations to consumers to help them shrink their expenses, now includes a search service that recommends financial institutions, including credit unions, so consumers can reach their savings goals.
BillShrink aims to help consumers collectively find $1 billion in savings by the end of the year by "simplifying the complex pricing structures to show what the true cost of ownership means for their wallets," the company said.
Consumers can search for savings opportunities on credit cards and find financial institutions by entering their addresses or zip codes in search fields on the website, www.billshrink.com. They can select the types of financial institutions they want to be matched with--from credit unions to large banks. They also can search, based on the products they're seeking--such as share certificates or savings accounts.
BillShrink tracks interest rates on accounts and share certificates. It also maps out ATMs that are close to consumer's home or work to help them avoid surcharges, the company said in a release.
Several credit unions and organizations offer search tools to match consumers with local credit unions and ATMs. The Credit Union National Association offers a credit union locator (use the link), and CO-OP Financial Services offers an ATM locator so credit union members can find surcharge-free ATMs. The CO-OP network provides access to more than 28,000 surcharge-free ATMs nationwide.
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