News Now Archive

Published on January 2, 2013.

Interchange issues impacting small issuers, Wash. Post reports

WASHINGTON (1/2/13)--In an article that extensively quotes Credit Union National Association (CUNA) Chief Economist Bill Hampel, the Washington Post reported that credit unions and other small issuers are reporting reduced debit card processing revenues as a result of recent interchange regulation changes.

The Federal Reserve Board's final rule implementing interchange changes caps debit interchange fees for issuers with more than $10 billion in assets 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, but CUNA has repeatedly warned that the exemption will not insulate credit unions and other small issues and they will be adversely impacted by the big-issuers' interchange cap.

The Washington Post item directly questions the recent claims of a December Federal Trade Commission (FTC) report (News Now, Dec. 31) that small issuers have been unharmed by the interchange regulations. The Post story noted that credit unions and community banks have called the FTC report premature, and have said the results of the FTC survey do not reflect the true impact that interchange regulations have had on smaller institutions. The story also noted that small financial institutions have had to consider, in some cases, charging new fees to cardholders to offset revenue losses created by the interchange changes.

CUNA's Hampel in the Post story pointed out that  the interchange provision "that could really start to lower interchange revenues for smaller institutions took effect in April, and in the only full quarter since then, the third quarter of 2012, we saw the first-ever decline in interchange revenue for credit unions.

"We are concerned about whether that was a one-time downward shift or the first of several quarters of decline," he added.

CUNA Deputy General Counsel Mary Dunn last week took issue with the FTC's interchange claims, and CUNA is planning to outline concerns regarding the FTC's report in an upcoming letter to the agency.

Dunn said all aspects of the interchange cap law must continue to be monitored and assured credit unions that CUNA's work on these issues will continue. (See Dec. 31 News Now story: Small issuer concerns remain despite FTC interchange report: CUNA)

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CFPB mortgage rules among early 2013 actions: CUNA

WASHINGTON (1/2/13)--Many mortgage regulations that the Federal Reserve and the Consumer Financial Protection Bureau (CFPB) have proposed over the last two years are scheduled to be finalized in early 2013, setting up a busy year for both regulators and the regulated, the Credit Union National Association (CUNA) notes.

Among the biggest items on the CFPB's docket are ability-to-repay/qualified mortgage regulations, which will need to be finalized by Jan. 21. Under the Dodd-Frank Wall Street Reform Act, no creditor may make a residential mortgage loan unless the creditor makes a reasonable and good faith determination based on verified and documented information that, at the time the loan is consummated, the consumer has a reasonable ability to repay the loan. If the loan is a qualified mortgage, the creditor may presume that the ability to repay test has been met.

This rule has the ability to reshape the mortgage industry in the years to come, and many have argued that this is the most important rule under consideration by the CFPB at present, CUNA has noted.

Other items that are scheduled to be finalized by Jan. 21 include:

New escrow disclosure and waiver requirements are also expected to be finalized by the CFPB early this year. A final version of integrated Truth in Lending Act/Real Estate Settlement and Procedures Act disclosures, and accompanying rules, should be finalized by mid-2013, CUNA adds.

CUNA continues to meet with the CFPB and urge improvements in all of these proposals and will keep credit unions posted as the new rules are issued, CUNA Deputy General Counsel Mary Dunn said.

For more on these CFPB changes, use the resource link. A more comprehensive look at what regulatory changes credit unions can look out for in 2013 will be released in the coming days.
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2013 HMDA threshold set by CFPB

WASHINGTON (1/2/13)--Credit unions and other financial institutions with total assets of less than $42 million as of Dec. 31, 2012 will not need to collect and report Home Mortgage Disclosure Act (HMDA) data in 2013, the Consumer Financial Protection Bureau (CFPB) said last week.

Under HMDA in 2013, financial institutions with total assets of more than $42 million that have home or branch offices in defined metropolitan statistical areas must collect certain mortgage loan data and report it to federal regulators. The HMDA reporting threshold stood at $41 million in 2012.

Credit Union National Association (CUNA) staff have emphasized that a credit union's exemption from collecting HMDA data in 2013 does not affect its responsibility to report the data it is required to collect during 2012.

The Federal Financial Institutions Examination Council (FFIEC) has also posted information on its 2013 HMDA and Community Reinvestment Act data entry software. For that information, use the resource link.

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Convicted embezzler banned from FI work by NCUA

ALEXANDRIA, Va. (1/2/13)--Giovanna Liranzo, a former employee of McCoy FCU in Orlando, Fla., has been banned by the National Credit Union Administration (NCUA) from any future work at a federally insured financial institution.
 
The NCUA said Liranzo was convicted of embezzlement and misapplication of credit union funds and was sentenced to 15 months in prison, three years supervised release and ordered to pay restitution in the amount of $161,125.03.
 
To view this and earlier NCUA enforcement orders, readers can use the resource link below or visit NCUA's Office of General Counsel between 9 a.m. and 4 p.m. (ET) Monday through Friday. Paper copies may be ordered by mail from NCUA, 1775 Duke St., Alexandria, VA 22314-3428.
 
The agency also makes available links to the enforcement actions of other federal regulators against other institutions or their affiliated parties, which can be accessed via the second link below.
 
Violation of a prohibition order is a felony offense punishable by imprisonment and a fine of up to $1 million.

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Inside Washington

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2012: CUs' year in review

MADISON, Wis. (1/2/13)--History will note 2012 as the International Year of the Cooperatives. Credit unions took advantage of that by reminding anyone they could about their cooperative structure, collaborative nature, member orientation and people-helping-people philosophy.

As a result, 2012 was a milestone year in terms of new members, assets, and more.  As 2013 opens, more people than ever know what a credit union is and have chosen credit unions as their financial service provider.
 
Credit unions benefited from a range of efforts that shone spotlights on the good work they do. Their continued growth, their low or no fees and better rates, their assistance to people struggling to get businesses started in a tough economy, their push to get Congress to raise member business lending rates, and advocacy on behalf of the consumer on the interchange fees all led to a year of positive press that re-emphasized the credit union difference.
 
Here are a few milestones and other highlights of the year.

Later this week, watch for other News Now stories marking the year's change, including News Now's Top 20 stories of 2012, a review of banking technological trends,  the top legislative and regulatory issues and what credit unions can expect for 2013.
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The new year starts with 101 insights from Filene

MADISON, Wis. (1/2/13)--A new report, "101 Things: Credit Union Insights from the Filene Research Institute," offers "easy-to-digest" highlights from 12 months of Filene reports--an easy way for credit unions to begin the new year armed with strategic insight.
 
Among the highlights from each of the nine areas covered in the report:

To download the report, use the link.
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Michigan CU Foundation made a difference in 2012

LANSING, Mich. (1/2/13)--The Michigan Credit Union Foundation (MCUF) last year provided $90,000 in support to Michigan credit unions through scholarships for employee educational development and grants for community outreach projects.
 
Donors to the foundation in 2012 included 73 credit unions, 10 chapters, 10 credit union business partners and the Michigan Credit Union League (MCUL) (Michigan Monitor Dec. 17).
 
MCUF assisted 100 credit unions and 249 credit union employees with grants and scholarships in 2012.
 
A new option will allow 2013 donations to be made along with payment of MCUL membership dues, the league said.

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Strategic plans: Focus on your goals for 2013

MADISON, Wis. (1/2/13)--The calendar has flipped to a new year. Credit unions have spent hours and dollars preparing their strategic plans, but daily tasks and to-do lists are likely distracting credit unions from their plan. In 2013, credit unions will need to stay focused on those plans to make sure their plan works.
 
Mark Arnold of the Louisiana-based On the Mark Strategies offered four tips to assist credit unions in meeting their strategic planning goals for the new year. At least two leagues--Texas and Delaware--have noted his tips in their newsletters (Lone Star Leaguer Dec. 21 and Together Dec. 31).
 
His advice:

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New era in expense management: CFO Council paper

MADISON, Wis. (1/2/13)--The role of the chief financial officer (CFO) has evolved from bean counter to communicator and collaborator, according to a new CUNA CFO Council white paper.
 
"A New Era in Expense Management" is based on information gathered from credit union CFOs, other financial executives and consultants. The white paper delves into expense management practices, which go beyond budgeting to encompass strategic planning, process improvement and revenue generation. In the paper, credit union leaders stress that expense management should focus on adding value to operations.
 
While traditional accounting is still essential, the CFO's greatest contributions typically result from monitoring and measuring financial performance, the paper said. Rather than focusing solely on cost, the CFO and other senior members of the finance team examine whether the credit union is using effective, efficient operations to serve members and generate revenue. This effort requires the CFO to become a strong communicator who collaborates with all departments to share ideas and streamline operations.
 
CFOs rely on data and analysis to monitor expenses, identify trends and compare their credit unions' spending to peers' spending. Expense ratios, efficiency ratios and benchmarking can provide perspective and give the CFO an objective measurement of appropriate expense levels, said the council paper. CFOs are also an integral part of credit unions' ongoing efforts to manage risk and improve operations.
 
Throughout the white paper, CFOs and consultants share their strategies for managing expenses, creating a culture of continuous improvement and pursuing new opportunities to attract members and enhance revenue. As economic conditions improve, these experts say credit unions will be tempted to relax their focus on expense management. Instead, they recommend that credit unions create a "new normal" marked by the use of analysis to determine whether expenses are justified based on their ability to generate revenue or enhance operations.

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CU System briefs

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FOMC sets 2013 meeting schedule

WASHINGTON (1/2/13)--The Federal Open Market Committee (FOMC)--the monetary policymaking body of the Federal Reserve--has set its 2013 calendar.
 
The FOMC will meet on these dates:

The March, June, September and December meetings will be associated with the Fed's Summary of Economic Projections and a press conference by the chairman, said the Fed's website.
 
The FOMC is the body responsible for setting the fed funds targeted interest rates and for taking measures, such as its recent string of quantitative easing measures involving buying back bonds, to adjust to the nation's economic conditions.
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Market News

MADISON, Wis. (1/2/13)

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News of the Competition

News of the Competition
 
MADISON, Wis. (1/2/13)

 
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Claim saver's tax credit for 2012

WASHINGTON (1/2/13)--If you're a low- or moderate-income worker saving for retirement in a 401(k), an individual retirement account (IRA) , or similar workplace retirement program, you could be eligible to claim a special tax credit of as much as $1,000 for individuals and $2,000 for married couples  (U.S. News & World Report Dec. 20).
 
You can claim this credit in addition to any other tax savings you get for your retirement account contributions.
 
Here are the rules to claim this credit on your 2012 tax return:

Note that you can't take the 2012 credit if you were enrolled as a full-time student during the calendar year or if someone else will claim you a dependent.
 
The saver's credit is highest for retirement savers with the lowest incomes. The credit ranges between 10% and 50% of retirement contributions, with the highest percentage going to savers with the lowest incomes.
 
If you were unaware of this credit, first introduced as a temporary provision in 2002 and made permanent in 2006, you're not alone: Only one of four workers has heard about it.
 
You have until April 15 to make qualifying contributions to a new or existing IRA and get the saver's credit on your 2012 tax return. Follow the instructions on IRS form 8880 to figure the saver's credit correctly and claim it.
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DocuTech participates in CFPB initiative

IDAHO FALLS, Idaho (1/2/13)--DocuTech Corp., an Idaho Falls, Idaho-based mortgage document compliance services provider, is leading a response from lenders to the Consumer Financial Protection Bureau's (CFPB) recently announced Project Catalyst, which seeks to involve mortgage executives in testing new disclosure forms.
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The CFPB has been working on new mortgage disclosure forms, which outline the expected closing costs and terms of the mortgage for consumers, for the past 18 months. As part of this initiative, the bureau's goal is to encourage credit unions, banks and other financial services companies to propose and conduct trial disclosure programs.
 
DocuTech is leading a group of lenders in testing different formats to provide feedback to the CFPB.
 
"The CFPB recognizes that what seems like a good idea in theory often hits unexpected obstacles when put into full production," said Scott K. Stucky, DocuTech chief operating officer. "We are in a unique position to help lenders not only evaluate the disclosures from a content perspective, but to also test ease of implementation and the impact to operations."

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