News Now Archive

Published on March 8, 2013.

NEW: Privacy Notice Bill Could See House Vote Next Week

WASHINGTON (3/8/13, UPDATED: 12:45 p.m. ET)--H.R. 749, the Eliminate Privacy Notice Confusion Act, is scheduled for a full U.S. House Tuesday. The House just announced that the item is on its suspension calendar for that day.

The Credit Union National Association supports the bill, which would eliminate repetitive privacy notices by eliminating a requirement that the notices be sent annually. Under the terms of the bill, privacy notices would only to be sent when the privacy policy of a financial institution has changed.

Reps. Blaine Luetkemeyer (R-Mo.) and Brad Sherman (D-Calif.) introduced H.R. 749 earlier this year, and the bill has 48 cosponsors. The bill is identical to legislation that unanimously passed the House before the 112th Congress adjourned. The Senate, however, did not act on the bill in time.

Under current rules, credit unions alone have sent an estimated one billion annual privacy notifications to members since 2001, CUNA estimates. CUNA President/CEO Bill Cheney in a letter to lawmakers noted a survey that shows fewer than one-quarter of consumers read the privacy notifications they receive, and over three-quarters of consumers would be more likely to read them if they were only sent when the financial institution changed its policy.

"This suggests that the public policy goal of privacy notifications would be better achieved if the notices had more meaning to consumers." H.R. 749 achieves this end, Cheney wrote.

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New Credit Rating, CFPB Info Featured In CUNA Pressing Issues Call

WASHINGTON (3/8/13)--A trio of pending Consumer Financial Protection Bureau mortgage regulations and new National Credit Union Administration credit rating rules were among the items addressed at the Credit Union National Association's Thursday "Pressing Regulatory and Compliance Issues Audio Conference."

The audio conference was free to affiliated credit unions and was attended by 812 callers.

During the call, CUNA compliance staff reviewed three mortgage lending requirements that will become effective June 1:

CUNA staff also discussed the new NCUA rules, required by the Dodd-Frank Act, that remove all references to credit ratings from the agency's regulations and substitute a new standard of creditworthiness of securities. Effective June 11, NCUA is establishing for federal credit unions in Section 703 a new standard of "investment grade," which is an evaluation that "the issuer of a security has an adequate capacity to meet the financial commitments under the security." This, in essence, means the risk of default by the obligor is low, Senior Vice President for Compliance Kathy Thompson explained.

The NCUA regulation lists eight factors that a federal credit union can use for its evaluation, including "external risk assessments." Credit unions should understand that although NCUA can't reference credit ratings in its regulations, there is nothing that prohibits credit unions from using credit ratings as an element of their required analysis, Thompson said.

According to Thompson, the NCUA believes that about 750 federal credit unions will need "to develop or augment" their systems to evaluate creditworthiness of their investments. Although NCUA's Section 703 on investments doesn't apply to state-chartered credit unions, any investment held by a state-chartered credit union that isn't permissible for a federal credit union may require a special reserve, she noted. Any state-chartered credit unions with investments that rely on credit ratings will need to review NCUA's regulation to see if they need to change their analysis standards to avoid special reserving, Thompson added.

She said the NCUA is imposing new concentration limits on three permissible investments because of concerns about possible increased risks. Federal credit unions holding European financial options contracts, mortgage note repurchase transactions, and municipal securities need to review the restrictions, Thompson suggested. For instance, she said under the current investment regulation, a federal credit union can hold municipal securities that have one of four highest credit ratings without limit. Under the new regulation, the NCUA will limit a federal credit union's aggregate holdings of municipals to no more than 75% of its net worth. CUNA is discussing with NCUA what credit unions that have holdings which exceed the new limits are expected to do to comply.

The NCUA has said credit unions can expect additional information this spring, which will further explain the regulatory requirements, such as factors that can be used to evaluate "investment grade" creditworthiness, and what examiners will be looking for regarding compliance, Thompson noted.

CUNA staff during the audio conference urged credit unions to submit their questions about the new regulation to cucomply@cuna.com. CUNA will pass on these questions to the NCUA, and the questions may be addressed in upcoming NCUA guidance.

An update on the Financial Accounting Standards Board's proposed accounting standards for credit losses on financial instruments was also provided. CUNA has released a comment call on that issue, and comments are due to CUNA by April 8 and to FASB by April 30.

Thursday's session was the first of four related audio conferences CUNA is offering during the year. CUNA recommends that registrants attend all four to ensure a complete first-hand view of the latest regulatory and compliance issues, first-hand. An archived version of the session will be posted.

Other topics addressed by CUNA regulatory, compliance and legislative experts included:
Topics for the spring, summer and fall offerings will be announced as those programs are finalized. Those sessions are scheduled for June 4, Sept. 5 and Dec. 5.

Part 2 of this article, on regulatory advocacy issues and what CUNA is doing to address regulatory relief, will be in Monday's News Now.
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Fixed Assets, Community Charter On NCUA March Agenda

WASHINGTON (3/8/13)--A proposed rule addressing federal credit union ownership of fixed assets and a community charter conversion request are all that will be addressed during another brief National Credit Union Administration open board meeting March 14.

Credit union fixed asset regulations (Sec. 701.36) were one of many items on the agency's regulatory review schedule, which was released last year. The agency last addressed Sec. 701.36 in May of 2012, when the agency approved the elimination of the Reg Flex designation program.

The community charter conversion request that will be heard at the meeting was filed by Cinfed FCU, Cincinnati, Ohio. Cinfed requested a community charter change in 2007, but that bid was denied by regional NCUA regulators. The agency upheld the regional office decision following a Cinfed appeal.

This month's NCUA open meeting is scheduled to begin at 10 a.m. ET on March 14.

The NCUA's closed session, which will follow the open meeting, will feature three items. Those items are:

For the full NCUA agenda, use the resource link.
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FIs Reminded Of FinCEN April E-filing Deadline

VIENNA, Va. (3/8/13)--The Financial Crimes Enforcement Network (FinCEN) sent out a reminder Thursday that credit unions and all other financial institutions and entities that must file Bank Secrecy Act (BSA) have an April 1 e-filing deadline approaching.
 
Last February, FinCEN issued a final notice requiring the electronic filing of most BSA reports by July 1, 2012.
 
That action specifically required submission of Suspicious Activity Reports, Currency Transaction Reports, Registration of Money Services Business, and Designation of Exempt Person Reports.
 
FinCEN yesterday said financial institutions are reminded that they must begin using the new FinCEN reports, which are available only electronically through the BSA E-Filing System, the first of  April. Use the resource link for more.

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Severe Weather Week Focused On Preparedness

MADISON, Wis. (3/8/13)--Several state credit union leagues are taking steps to help credit unions prepare for tornados and severe weather this spring. This week is National Severe Weather Week, and April is National Tornado Preparedness Month.
 
"The Texas Credit Union League has a Disaster Preparation section on its league website, which is not specific to just tornados but for any type of disaster," Linda Webb-Manon, TCUL vice president of public relations and communications, told News Now.
 
In that section, TCUL provides a 21-page Disaster Planning Guide that credit unions can use to create their own continuity plans. The guide includes a planning process, plan development, awareness, preparation, mitigation response, recovery, an emergency plan checklist, a credit union disaster preparedness operations checklist, an emergency contact list, and a list of state and national resources.
 
The TCUL website section also features an American Red Cross disaster supplies kit, three Federal Emergency Management Association guides, brochures on how to deal with hurricanes, and several links to other resources.
 
The Southeastern League of Credit Unions--which represents Florida and Alabama credit unions--works with its member credit unions to make sure they are prepared for any type of disaster or threat, Mike Bridges, league vice president of marketing and communications, told News Now.  
 
"We have two Disaster Recovery Conferences, one in Alabama and one in Florida, to help our credit unions prepare for an impending disaster and to make sure they have the most up-to-date information for their disaster recovery plan," Bridges explained. "The league has an 800 number available for credit unions to use to record a message for their employees in case of a major disaster. This phone line helps to keep the lines of communication open when a credit union sustains major damage or an extended power outage, especially in this cellphone age.
 
"The league recently acquired a mobile branch from Pen Air FCU [Pensacola. Fla.]," he added. "This mobile branch, which has been dispatched to two Alabama credit unions following tornados, allows credit unions to continue offering services to members even though one of its locations is not functional."
 
The Southeastern league also administers many planning sessions for credit unions. The planning session covers disaster recovery and the need for a plan. That allows credit unions to stay compliant with their plan and to revisit it yearly to ensure it's optimal, Bridges said.  
 
Tropical Financial CU, based in Miramar, Fla., with $547 million in assets, as part of its disaster recovery/business continuity plan program, has written procedures for action to be taken prior to, during and after hurricanes, tornadoes and/or high wind events, along with other types of disasters or events, Alfredo Goenaga, vice president administration for Tropical Financial, told News Now.
 
"Additionally, individual business units have their own emergency contact listings along with specific instructions on evacuation and areas to meet at in the event of an emergency situation," Goenaga added. "After hours communication is available through our employee hotline, for general communication, and through more specific channels for key personnel. I am also a member of the Emergency Operations Center for Dade County. This gives us an on-site presence with the Office of Emergency Management prior to, during, or after any crisis." 
 
The Kansas Credit Union Association monitors weather conditions and responds to credit union needs on an individual basis, Susan Dyer, KCUA communications director, told News Now.  "Because the majority of Kansas is rural, we are lucky in that past tornadoes seemed to have missed our credit unions, for the most part," she added.
 
The Credit Union National Association has resources for credit unions to deal with severe weather damage and other disasters, including a severe weather webinar on Wednesday. See the links below.

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Defense CU Council Marks Golden Anniversary

WASHINGTON (3/8/13)--For credit unions nationwide serving members of the military and their families, February marked the golden anniversary of the Defense Credit Union Council. DCUC is a niche membership association representing the interests of credit unions operating on military installations worldwide.
 
"Back in the 1960s, credit unions serving the military came to the realization that their needs and challenges were unique when compared to their counterparts outside of the military gate," explained Roland "Arty" Arteaga, DCUC president/CEO.
 
"Defense credit unions served a very mobile membership while others, a fixed-membership, defined by their special employment groups. Also, since defense credit unions were operating on Department of Defense military installations, they were subject to DOD policies governing those installations," Arteaga said.
 
To kick-off the year-long observance, council board members gathered at The Mayflower Hotel in Washington, D.C., while attending DCUC's Defense Issues 2013 Roundtable session. The Mayflower hosted the council's first national conference, where its organizational structure and by-laws were unveiled and ratified by attending military credit unions.
 
Formed in 1963 as a separate and distinct trade association, DCUC remains faithful to its core mission, serving as the primary liaison to the Pentagon for credit unions operating on military bases worldwide. Arteaga noted the importance of establishing a niche trade association dedicated exclusively to the needs of military-affiliated credit unions, and one sanctioned to act as their liaison to the Pentagon. "They needed that liaison," he said.
 
A pivotal accomplishment of DCUC was succeeding in getting the Department of Defense (DOD) to develop a regulation for credit unions, providing logistical support from DOD, for operating on military bases.
 
The golden anniversary observance will include special events during the months leading up to the association's annual conference in August at the Greenbrier in West Virginia.
 
Festivities will continue in April with DCUC's sponsorship of the Credit Union Cherry Blossom's 10-mile sister race for troops deployed overseas. The race is slated to be held in Kuwait on April 7, the same day it takes place in the nation's capital. Proceeds will help fund the Children's Miracle Network.
 
The year also will include supporting a number of charities and several subcouncil meetings.

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Gentile Gives Savings Tips In FOXBusiness

WASHINGTON (3/8/13)--FOXBusiness turned to the Credit Union National Association to provide tips to consumers in an article Thursday on re-evaluating or creating a savings plan.
 
Paul Gentile, CUNA executive vice president, strategic communications and engagement, gave this advice in the article, "How to Create a Successful Savings Plan":

To read the entire article, use the link.
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HGTV Star, Lake Michigan CU Offer Home Makeover Sweepstakes

GRAND RAPIDS, Mich. (3/8/13)--Lake Michigan CU has landed Home and Garden TV host Carter Oosterhouse as its spokesman. The credit union is featuring Oosterhouse in a $25,000 home makeover sweepstakes.
 
Oosterhouse, the host of the new HGTV network show "Million Dollar Rooms," is a native of Traverse City, Mich., and a member of the Grand Rapids, Mich.-based credit union.
 
The sweepstakes runs through April 30. A drawing will be May 17. The winner will receive $25,000 in cash for renovations and design advice from Oosterhouse.
 
Oosterhouse has a friend who works in Lake Michigan CU's mortgage department, Don Bratt, director of marketing for the $3 billion credit union, told News Now.  Lake Michigan CU President/CEO Sandy Jelinski is a fan of Oosterhouse, who has hosted several shows about home renovation and design, and is known for his community outreach work, Bratt said.
 
In addition to his production company, Oosterhouse runs a nonprofit that builds and develops community parks and playground to promote fitness among youth.
 
"Sandy thought Carter would be the perfect person to communicate the values of our credit union to the community," Bratt said.
 
The credit union will feature Oosterhouse on radio, TV, outdoor and print advertising and through social media and mailings. Oosterhouse's image also is featured prominently in the credit union's branches. "Cardboard displays in branches are very popular," Bratt said.
 
Oosterhouse provides a blend of both celebrity and local appeal, he added.
 
"His appeal stretches beyond our membership," Bratt said. "People who were not members have inquired about the sweepstakes. That's an opportunity for us to extend our value proposition."

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Nominations Due Monday For WOCCU Distinguished Service Award

Click to view larger imageAt the 2012 World Credit Union Conference in Gdańsk, Poland, World Council of Credit Union's Chair Manuel Rabines (left) presented the Distinguished Service Award to Barry Jolette, a former regulator, World Council chair and president/ CEO of San Mateo CU, Redwood City, Calif.  (Photo provided by the World Council of Credit Unions)
MADISON, Wis. (3/8/13)--Monday is the deadline to nominate individuals and organizations for the World Council of Credit Unions' (WOCCU) Distinguished Service Award (DSA), the credit union industry's top honor.

Awards will be presented at the World Credit Union Conference in Ottawa, Canada, July 14–17.

The DSA honors individuals and organizations that have made significant contributions to the international credit union movement and who have furthered World Council's vision of "building a global community."

Individual recipients may be WOCCU member organization officers, directors or  representatives; international credit union pioneers; field technicians; or individuals whose actions have  benefitted global credit union development.

Institutional recipients may be organizations or agencies that have provided financial or technical assistance to develop international credit union movements and their service infrastructures over an extended period.

Nominations must be from a WOCCU member organization.

To download a nomination form and see a list of past winners, use the link.
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Reality Fair At GAC An Eye-opener For Teens

MADISON, Wis. (3/8/13)--A financial Reality Fair held in conjunction with the Credit Union National Association's Governmental Affairs Conference (GAC) last week provided an "eye-opening" experience for Washington D.C. teens.
 

Click to view larger imageLast week, the National Credit Union Foundation held a financial reality fair in conjunction with the Credit Union National Association Governmental Affairs Conference in Washington, D.C. Pictured, volunteer Lisa Totaro talks to teens at the transportation booth. (Photo provided by National Credit Union Foundation)
So said Tanya Thomson, art teacher at Washington Metropolitan High School, one of the three schools that participated in the event, organized by the National Credit Union Foundation.
 
A reality fair is an interactive financial literacy tool for high school students.
 
"It feels like the students learned a semester's worth of meaningful material in just two hours at the Reality Fair," said Landon Southerly, Math Teacher at Capital City Public Charter School.
 
The fair was held at the Rayburn House Office Building on Feb. 27. In addition to Washington Metropolitan and Capital City, students from Luke Charles Moore Academy participated in the event.
 
Many others, including members of Congress and GAC attendees en route to visits with their congressional representatives, stopped by to observe the fair,.
 
"We encourage even more credit unions and leagues to hold their own Reality Fairs across the country, said Lois Kitsch, NCUF national program director. "An estimated 10,000 students attended a fair in 2012 and that number is expected to grow substantially in 2013."
 
The GAC event was sponsored by NCUF with support and expertise from:
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Three Hurt When Car Crashes Into N.Y. CU

GRAND ISLAND, N.Y. (3/8/13)--Three people were injured Thursday morning when a car plowed through the entrance of Grand Island (N.Y.)  FCU and into a teller counter before it came to rest fully inside the building.
 
The impact pinned a member and an employee inside the building for some time, said Grand Island Fire Co. Chief Kevin Coch (WIVB.com and WGRZ.com March 7). They and the driver of the car were taken to the hospital, and their injuries are not serious. The employee and driver had leg injuries.
 
Two elderly women were inside the car, and the driver could not recall exactly what happened, said the fire department spokesman.  The incident occurred around 9 a.m. ET.
 
Since the car went perfectly through the front door of the building, crews at the site said the building didn't suffer structural damage beyond the front door and the counter.
 
The credit union closed and is still closed today. According to a notice on the $12.8 million asset credit union's website, "The office will be closed Thursday and Friday… due to damage to our building. Check back over the weekend for updates. The hope is that Monday, March 11th, will see us back in business. Thank you for your understanding."

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CU System Briefs

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Consumer Credit Jumps Most In Five Months, Up At CUs

WASHINGTON (3/8/13)--The nation's consumers borrowed more than expected during January, increasing their debt by a 7% annual rate, or $16.15 billion, to more than $2.795 trillion, said the Federal Reserve in its Consumer Credit report released Thursday. Credit unions also saw borrowing increase--by $2.1 billion--to $245.7 billion.
 
Economists surveyed by Bloomberg had forecast a median $14.7 billion gain in January (Bloomberg via MoneyNews.com March 7). That hike in borrowing means consumers took out more auto and student loans, and increased their credit card debt. The report does not cover mortgage loans or home equity lines of credit.
 
The report indicates that many consumers continued to replace cars that are aging or that were damaged during October's Hurricane Sandy, even as paychecks were hit by the end in January of the payroll tax break, said Dow Jones Newswires (FOXBusiness.com March 7).
 
The $2,795.3 trillion borrowed compares with $2,779.2 trillion borrowed in December and $2.665 trillion in first quarter 2012.  Credit unions saw members borrow $245.7 billion in January, a $2.1 billion increase from $243.6 billion in December. Members took out $223 billion in loans from credit unions during first quarter 2012, said the Fed's report.
 
Revolving credit, or credit card debt, for January totaled $850.9 billion, or an increase of $1 billion from December. A year earlier, consumers borrowed $849 billion. Credit union members charged or borrowed $39.4 billion, roughly $5 million more than in December from their credit unions. In first quarter last year, they had borrowed $36.4 billion.
 
Nonrevolving credit, which centers on auto lending and student loans, increased 10% annually, to  more than $1.944 trillion in January. That is up from $1.928 trillion in December and $1.816 trillion in first quarter 2012. January was the third consecutive month that nonrevolving credit has risen by at least 9%, according to Dow Jones.
 
Auto loans and student loans taken out at credit unions totaled $206.3 billion, a $1.5 billion increase from December's $204.8 billion. That compares with $186.6 billion they borrowed from credit unions during first quarter 2012.

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ID Fraud Claims 12.6 Million Victims In 2012

NEW YORK (3/5/13)--Identity fraudsters made off with $21 billion from 12.6 million victims in 2012. Overall, slightly more than one of 20 consumers, 5.26%, learned they were victims last year (NBC News Feb. 20).
 
Javelin Strategy and Research's 2013 Identity Fraud Report released in February identified a 50% increase in the incidence of new account fraud, where the thief uses your personal information to fraudulently open new credit cards or loans in your name. Despite that dramatic increase, the study's author reported that simple credit card fraud still accounts for roughly two-thirds of all identity fraud.
 
Data breaches are especially troublesome. Almost one out of four consumers who received a data breach notification last year became a fraud victim. If you received a notice that your Social Security number was compromised by a data breach, you were five times more likely than other consumers to be a victim of identity fraud, and 14 times more likely to become a victim of new-account fraud.
 
Tablet owners are 80% more likely than all other consumers to become fraud victims, which researchers attributed to tablet users being younger and less risk-averse than older consumers.
 
How do crooks obtain your information? Still most common are traditional methods such as stolen wallets and "familiar frauds" where the victim knows the perpetrator who has access to statements or other legal documents.
 
What's your best defense?

For more information, read "Tax ID Theft: One Million Fraudulent Returns Expected" in the Home & Family Finance Resource Center.
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Coopera, CUNA Offer Free Hispanic Outreach Webinars

DES MOINES, Iowa (3/8/13)--Strategic partners Coopera and the Credit Union National Association are offering two free one-hour Hispanic growth-focused webinars, including one on Wednesday.
 
CUNA and Coopera, a Hispanic market solutions company with a focus on credit unions nationwide, are providing the webinars to credit unions interested in expanding Hispanic membership to support growth goals.
 
"When it comes to attracting members from the Hispanic community, one-size-fits-all financial products and services don't work," said Miriam De Dios, CEO of Coopera.
 
"It is unrealistic for credit unions to expect the Hispanic community to conform to their traditional products and services--it's got to be the other way around," she said. "This market's cultural and linguistic nuances dictate a tailored approach. The goal of these webinars is to provide attendees with the information their credit unions need to develop programs that build longer-term relationships with this crucial demographic."
 
The first webinar, "Three Ways to Create an Inclusive Culture to Serve Hispanics," has been archived, and is available through Aug. 20. Use the link.
 
In the webinar, presenters from Coopera and CUNA offer three strategies for inclusive Hispanic membership growth:

The second webinar, "Four Key Non-Traditional IDs You Can Accept to Open New Accounts, will be held at 2 p.m. CT on Wednesday. The webinar will offer information on accepting individual taxpayer identification numbers, cédulas, matriculas and voter registration cards, and the compliance required to accept these forms of identification. To register, use the link.
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Fiserv Offers SpotPay Enrollment Site For Small Biz

BROOKFIELD, Wis. (3/8/13)--Fiserv, a global provider of financial services technology solutions, announced a new website for small businesses to learn more about and enroll in SpotPay, its recently launched mobile card reader and remote check-deposit solution.
 
SpotPay helps financial institutions offer their small business account holders an anywhere, anytime mobile solution to accept both card and check payments from a smart phone with the SpotPay reader.
 
Small businesses that enroll on the website will automatically be matched to their participating financial institution. The financial institution will receive all the benefits of the enrollment, including co-branding and incentives.
 
SpotPay from Fiserv is available to financial institutions that are part of the ACCEL/Exchange payments network. Using SpotPay, merchants are able to swipe credit, debit and prepaid cards with their mobile device to accept payments. Merchants can deposit checks using a mobile remote deposit capture feature that allows users to take a picture of the front and back of a check and deposit the item electronically.
 
Credit unions offer a number of services to members with small business, including accounts and member business loans.
 
Credit unions, the leagues and the Credit Union National Association are urging Congress to help credit unions make even more business loans by raising their member business lending cap to 27.5% of assets, up from 12.25%. Doing so would help boost the economy by generating $14.5 billion in new loans and 158,000 new jobs, says CUNA, with no cost to taxpayers. Raising the MBL cap is one of CUNA's top priorities for 2013.

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