ALEXANDRIA, Va. (4/20/15)--The National Credit Union Administration does not, and will not, participate in programs such as U.S. Department of Justice's (DOJ) Operation Choke Point, agency Chair Debbie Matz told a prominent legislator last week.
Matz wrote to Rep. Jeb Hensarling (R-Texas), chair of the House Financial Services Committee, in response his April 8 request about the NCUA's relationship with Operation Choke Point.
Operation Choke Point allows the Financial Fraud Enforcement Task Force to investigate whether financial institutions and payment processing companies are enabling fraudulent activity. Critics say it is being used to separate consumers from access to financial services.
Hensarling wrote to Matz requesting the NCUA to publicly disclaim any NCUA involvement in Operation Choke Point. According to Matz, the NCUA "has not and will not participate in Operation Choke Point or any other similar operation."
She cited DOJ testimony from a July 2014 House Judiciary Committee hearing on Operation Choke Point, in which the DOJ listed the regulators with which it communicated on Operation Choke Point. The NCUA was not listed.
Hensarling's second request was that the agency issue a letter to credit unions and a memo to employees clarifying the NCUA's Operation Choke Point policy. Per Matz's response, the agency issued its most recent anti-money laundering guidance in December 2014, acknowledging that money service businesses (a frequent Operation Choke Point target) provide necessary and valued financial services.
The NCUA also issued a memorandum to all field staff in August 2014 indicating the agency's policy is that a decision to open, close or decline an account or relationship is generally made by the individual credit union without the agency's involvement.
"The decision may be based on the credit union's particular business objectives, its evaluation of the risks associated with offering particular products or services and its capacity and systems to effectively manage those risks," Matz wrote, adding that going forward the NCUA will continue to ensure all materials and guidance clearly outline this policy.
WASHINGTON (4/20/15)--To best ensure monetary recovery from the September 2014 data breach at Home Depot is available to credit unions in all states, plaintiff lawyers are seeking at least one plaintiff from each state to be involved as a named plaintiff in the current class action lawsuit, Susan Parisi, chief counsel of CUNA, has noted. She emphasizes that credit unions still need to make their own decision about whether joining as a named plaintiff is right for them.
CUNA's participation does not mean credit union participation is not needed. Parties to the lawsuit must be identified and evaluated within the next two to three weeks to make the May 15 deadline for inclusion in the class action lawsuit.
There are multiple firms participating as counsel for the class. CUNA is using the firms below and credit unions interested in joining the lawsuit using those firms can contact:
CUNA has agreed to join credit unions and other financial institutions around the country as a plaintiff in a class action lawsuit against Home Depot that seeks recovery and injunctive relief associated with the retail giant's massive 2014 data breach. That breach resulted in credit unions bearing tens of millions of dollars in costs. Home Depot has acknowledged that 56 million credit and debit cards were compromised.
Class counsel is still actively seeking credit union plaintiffs from most states.
CUNA's participation does not mean credit union participation is not needed. Parties to the lawsuit must be identified and evaluated within the next two to three weeks to make the May 15 deadline for inclusion in the class action lawsuit.
Those credit unions who choose not to participate as named parties can still likely participate as class members. No immediate action is needed by credit unions not wishing to be named parties.
DENVER (4/20/15)--Input from credit union leaders is important for the National Credit Union Administration to be an effective regulator, NCUA board member J. Mark McWatters said Friday.
Speaking to Colorado and Wyoming credit union leaders at a Mountain West Credit Union Association event, McWatters said hearing from people involved in the day-to-day processes of the movement would help the NCUA assist credit unions going forward.
"Listening to the ideas and recommendations of individuals working within the credit union system on a daily basis provides me with invaluable insight on how I may help relieve their regulatory burden and provide greater transparency of the regulatory process at NCUA," McWatters said. "I have called for hearings on the NCUA budget and for the employment of advisory committees to provide the agency with a common-sense perspective of the credit union community."
McWatters also discussed areas he said are in need of regulatory relief, including member business lending, risk-based capital, supplemental capital, field-of-membership issues, examinations and appeals. He pledged to continue meeting with credit unions nationwide to achieve a more responsive, efficient and transparent agency.
According to the NCUA, the group also conducted an extended dialogue on the public safety and tax base erosion issues presented by not promptly bringing the cash proceeds generated from cannabis-related businesses into the financial system.
McWatters encouraged the NCUA to take the lead in working with the U.S. Justice Department, Treasury Department, Federal Reserve Board, Federal Deposit Insurance Corp. and Office of the Comptroller of the Currency in developing a workable solution to remove the cannabis cash from the streets and put it into the financial services system.
BRUSSELS (4/20/15)--The World Council of Credit Unions discussed regulatory burdens and financial inclusion on the world stage last week with the European Parliament Credit Union Interest Group. The group is a caucus for Members of the European Parliament (MEPs) who support credit unions.
At the meeting, MEPs and credit union leaders discussed how credit unions play an important role in promoting the financial inclusion of Europeans of modest means. At the same time, they are faced with expanding compliance burdens that take resources away from serving their members.
European credit unions are much smaller than European banks and generally engage in less risky financial activities. However, they are subject to many European Union (EU) directives and regulations designed primarily to address problems in the banking sector.
European Parliament Vice President Ryszard Czarnecki urged credit unions to continue this dialogue in order to prevent overregulation of credit unions at the European level and to help make it easier for credit unions to provide their members with loans, savings and other financial services at reasonable rates.
Credit union representatives shared specific examples with MEPs regarding their financial inclusion efforts and regulatory burden challenges in Estonia, Great Britain, Ireland, the Republic of Macedonia, Poland and Romania.
MEPs at the meeting said that they shared credit unions' concerns about the unintended consequences of regulation and excessive compliance burdens.
WASHINGTON (4/20/15)--Current guarantee fees charges by Fannie Mae and Freddie Mac are appropriate, according to a recently completed review by the Federal Housing Finance Agency (FHFA).
The agency also determines some modest adjustments to upfront guarantee fees are also appropriate.
CUNA was strongly opposed to any raising of the fees, otherwise known as g-fees, citing potential effects on lenders and consumers involved in the mortgage market.
As a result of the review, FHFA is directing Fannie Mae and Freddie Mac to eliminate the adverse market charge put in place in March 2008. That revenue will be replaced by targeted increases in guarantee fees to address various risk-based and access-to-credit considerations.
According to the FHFA, the changes to guarantee fees are roughly revenue neutral for Fannie and Freddie and will result in either little or no change for most borrowers.
The FHFA will continue to monitor guarantee fees closely and make adjustments as necessary. FHFA says g-fees are at appropriate levels, will continue to monitor.
WASHINGTON (4/20/15)--CUNA submitted its
Friday on the National Credit union Administration's revised risk-based capital plan (RBC2). While holding firm to the view that the rule is unnecessary and should be tabled, the letter offers a number of constructive suggestions to improve the rule since the agency appears determined to move forward.
"I've said it before. I will keep saying this. A risk-based capital rule is a solution in search of a problem. What's more, the current plan--though vastly improved from the original--is a solution that just won't work in search of a problem that just does not exist," CUNA President/CEO Jim Nussle said.
He added, "To the more than 1,200 of you that have already filed a comment letter, I thank you for participating in this important effort to improve the rule. For those who have not yet written, I encourage you to do so."
CUNA has created a
body of resources
to support credit unions' RBC
and has produced the video below describing key points of its 15-page comment letter.
Among the points made in the trade association's letter, Nussle emphasizes that the proposal, as well as other recent NCUA initiatives, goes way too far in treating credit unions like banks: It ignores the importance of the credit union difference as cooperative, not-for-profit, member-owned and directed institutions.
"There is a real danger," he warns, "that if you are regulated and supervised as banks, you will be forced to act more like banks, which would be a great disservice to your members."
Among other top points in Nussle's letter:
- CUNA holds hold firm to its view that NCUA does not have the legal authority to impose a two-tiered RBC system.
- The strong performance of credit unions and their federally backed share insurance fund during and after the financial crisis demonstrates there is no need for a major overhaul of NCUA capital requirements, and CUNA finds no evidence that had RBC2 been in place before the crisis that it would have reduced National Credit Union Share Insurance Fund losses in any noticeable way;
- CUNA therefore requests that the rule be withdrawn, but in the event the NCUA moves forward, the association urges a number of changes and further improvements;
- The new proposed capital adequacy provisions, beyond net worth and RBC ratio requirements, should be dropped;
- A number of the risk weights should be reduced;
- The identification of "complex" credit unions should be based on something more than simply asset size, and should include only credit unions of at least $500 million in assets;
- The conditions under which goodwill could be included in the RBC ratio should be expanded;
- The NCUA should minimize the burden on credit unions of expanding the Call Report for purposes of RBC2;
- The agency should allow credit unions to use supplemental capital in meeting RBC requirements;
- A separate interest-rate risk rule is NOT necessary; and,
- The implementation of RBC2 should be delayed until 2021, to coincide with expected refunds from the Corporate Stabilization Fund.
"We listened to our members in developing this
. We heard from CUNA's Governmental Affairs Committee and its Examination and Supervision Subcommittee, from members of CUNA's CFO Council, from many credit union CEOs and volunteers, and from leagues.
"Their input was vital in shaping our response and I urge the NCUA to consider our recommendations carefully," Nussle said.
WASHINGTON (4/20/15)--The National Credit Union Administration Budget Transparency Act (S. 924) would increase transparency and accountability at the agency, thereby strengthening its mission, CUNA believes.
CUNA President/CEO Jim Nussle wrote a
of support Friday to Sen. Dean Heller (R-Nev.) and Mark Warner (D-Va.), who
the bill last week.
The bill would amend the Federal Credit Union Act to require the NCUA to make a copy of its draft operating budget publicly available, and would also require the agency to provide notice of a public hearing, conduct the hearing and allow the public to submit comments on the budget.
"Credit union member resources are used to fund nearly all of NCUA's budget. It is not too much to ask for the members of the NCUA Board to conduct a hearing and listen to stakeholder feedback from those responsible for funding the activities of the agency," Nussle wrote. "We disagree with those who would suggest that a hearing on the agency's budget would result in 'regulatory capture.'"
Nussle added that, as former chair of the House Budget Committee, he is well aware that Congress regularly holds hearings on the federal budget and other activities to solicit stakeholder input, and that "this type of back and forth is an important part of our democratic process."
WASHINGTON (4/20/15)--For the second straight month in March the consumer price index (CPI) edged higher, but inflationary pressures have yet to gain real steam.
The CPI climbed 0.2% during the month, following up on February's 0.2% increase. On an annual basis, consumer prices are relatively unchanged.
"U.S. inflation is gradually moving in the right direction, but price pressures are tepid at best," said Ryan Sweet, Moody's analyst (
April 17). "Energy is no longer an enormous drag on the headline CPI, (and) rents are putting some upward pressure on the core index."
Rent prices climbed 0.3% in March, an acceleration from the 0.2% seen the prior month, while the rent of a primary residence rose 0.3% for the second straight month.
The energy CPI increased by 1.1% for the month, doubling up on the 1% gain seen in February, with energy commodities climbing 3.8% and gasoline prices jumping by 3.9%.
The gasoline CPI dropped by 18.7% in January.
"All told, the March CPI showed that the worst of disinflation has passed," Sweet said.
On an annual basis, CPI was down by 0.9% over the prior three months, an improvement from February's 3.9% decline and January's 5.1% setback.
- Used-car and truck prices increased by 1.2%, while new-car prices climbed by 0.2%;
- Food prices dropped by 0.2% during the month, reversing February's gains;
- Apparel prices increased by 0.5% in March; and
- Medical care service prices climbed by 0.4%.
Daily Financial Rates -- 2015-04-20
Monday, April 20, 2015
03:55 AM CDT
TREASURY YIELD CURVE
(based on the $1 million market)
Results of the April 13, 2015 auction of short-term U.S. government bills, sold at a discount from face value in units of $10,000 to $ 1 million
||Last changed December 16, 2008 |
|near closing bid||0.100||0.100||0.120||0.070||0.100|
FREDDIE MAC (Mortgage commitments, 30 days)
FANNIE MAE (Mortgage commitments, 30 days)
COMMERCIAL PAPER (Financial, 90 days)
: Data not available at time of page generation (shown at top of page)
Wall Street Journal
U.S. Dept. of the Treasury
All rates are from the previous business day unless otherwise noted.
NAPERVILLE, Ill. (4/20/15)--The Illinois Credit Union League (ICUL) and affiliated organizations announced the results of its board elections, which were held at the organization's 85th annual convention last week.
Pete Paulson, CEO, Corporate America FCU, Elgin, was re-elected as chair, and to a three-year term on the board as the Class D at-large director for District 3. Paulson will additionally serve as chairman of the ICUL Service Corp. (LSC).Alan Meyer, CEO, 1st MidAmerica CU, Bethalto, was re-elected as vice chairman and represents Class C director for District 1.
Sean Rathjen, CEO, Consumers Cooperative CU, Waukegan, was re-elected as secretary/treasurer and will serve as the Class C director for District 3. Additionally, he will serve as LSC vice chair.
In addition to Paulson, two other directors were re-elected to new three-year terms, including Kerry Fearn, CEO, Area Educational CU, Mattoon, who will serve as the Class B director in District 1; and Tim O'Donnell, CEO, Financial Plus CU, Ottawa, as the Class C director in District 2. In addition, Jose Garcia, CEO, Northwest Community CU, Morton Grove, is a new director on the board, and will serve as the Class A director for District 3.
The full ICUL board of directors includes:
- District 1, Class A: Kim Hocking, CEO, Kaskaskia Valley Community CU, Centralia; Class B: Fearn; Class C: Meyer; and Class D: Dennis Schaefer, CEO, SIU CU, Carbondale.
- District 2, Class A: Janet Francoeur, CEO, Riverside Community CU, Kankakee; Class B: Geri Burek, CEO, South Division CU, Evergreen Park; Class C: O'Donnell; and Class D: Carl Sorgatz, vice president, Great Lakes CU, Naperville.
- District 3, Class A: Garcia; Class B: Patrick Basler, CEO, First Financial CU, Chicago; Class C: Rathjen; and Class D: Paulson.
The ICU Foundation re-elected its officers to one-year terms. They included: Tom Pierce, CEO, Midwest Operating Engineers CU, Countryside, chair; Michael Lee, CEO, Kane County Teachers CU, Elgin, vice chair; and Tom Lex, CEO, Heartland CU, Springfield, secretary/treasurer. In addition, Ann Dubie, CEO NuMark CU, Joliet, was elected to serve a three-year term on the board.
SACRAMENTO, Calif. (4/20/15)--State-chartered credit unions in California have reported healthy net-worth ratios recently, and the trend has state regulators taking notice.
Jan Owen, California Department of Business Oversight commissioner, commended credit union leaders for the hard work they have invested in their institutions and members over the past year during the 2015 California Government Relations Rally. (California and Nevada Credit Union Leagues Photo)
Jan Owen, commissioner for the California Department of Business Oversight (DBO), said during her address at the California Credit Union League's 2015 Government Relations Rally last week that the average net-worth ratio at California's state-chartered credit unions was 11.2% in 2014 (
In the News
She also commended credit union leaders for their hard work.
"In an area of rapid evolution for financial services, the DBO is still focused on safety and soundness, as well as California's credit union strengths," Owen said.
Owen added that credit unions have made a lot of progress in a number of areas over the past four years, including in the state's average net-worth ratio, which climbed to 11.2% from 8.7% in 2010.
The commissioner also talked about interest-rate risk, and DBO's joint examinations with the National Credit Union Administration. Owen said she will meet with NCUA officials next month in an effort to improve communication within those joint exams.
MARLBOROUGH, Mass. (4/20/15)--Paul Gentile, president/CEO of the Cooperative Credit Union Association, has been named to the Massachusetts Task Force on Financial Literacy.
The task force, which was recently formed by state Treasurer Deb Goldberg, will bring together policymakers, educators, financial institutions, and advocates to examine the state of financial education in Massachusetts (
Under the direction of the Treasury's Office of Economic Empowerment, the task force will be responsible for launching a comprehensive research effort with the goal of developing recommendations on how to empower Massachusetts citizens with the resources they need to plan to budget their money, save for retirement, and better understand their impact of the economic decisions.
The key demographic groups studied will be K-12 students, college students and adults. The task force's final report will serve as an action plan for the State Treasurer and the Financial Literacy Trust Fund Board.
The task force will convene for six months and will file a final report with the State Treasurer no later than Nov. 1.
WASHINGTON (4/20/15)--The number of adults with access to financial services rose to 62% from 51% between 2011 and 2014, according to the World Bank's recently released Global Financial Inclusion database.
Financial inclusion is defined as having an account at a formal financial institution or through a mobile money provider. It also has been broadly recognized as critical in reducing poverty and achieving inclusive economic growth, the
Between 2011 and 2014, 700 million adults became account holders while the number of those without an account--the unbanked--dropped by 20% to 2 billion.
Account penetration, which increased by 13 percentage points, and technology are behind the growth. For instance, in sub-Saharan Africa, almost a third of account holders use financial services through mobile money accounts.
The World Council of Credit Unions and the E-Kenya Savings and Credit Cooperative Society (SACCO) deliver financial services to rural Kenya with mobile technology and the M-Pesa mobile money transfer network (
Respondents said poverty (59%) and distance to financial institutions (21%) were among the biggest barriers to becoming banked.
- Forty-two percent of women are unbanked compared with 35% of men;
- Half of the unbanked adults--1 billion worldwide--belong to the poorest 40% of households; and
- South Asia, East Asia and the Pacific are home to about half of the world's 2 billion unbanked adults.
WASHINGTON (4/20/15)--Financial institutions have stricter standards in underwriting mortgage loans than a decade ago, but mortgages are still attainable for many consumers, CUNA Chief Economist and Chief Policy Officer Bill Hampel told the
in a recent article.
"People typically underestimate the likelihood of getting a loan," Hampel said. "There's no question that it's harder today to get a loan than it was 12 years ago, but it's a little bit easier than it was three years ago."
One reason for the stricter requirements are the rules set by Fannie Mae and Freddie Mac for the conventional loans they buy and package for the secondary market, Hampel said.
"If a lender plans to sell their loan to Freddie Mac or Fannie Mae, then they have to meet their requirements, which are pretty uniform across all lenders," Hampel told the
. "If a loan goes bad at some point after it's been sold, then Freddie Mac and Fannie Mae can go back to the original documentation to look for a mistake. If any mistake has been made, the lender can be forced to buy back the loan."
That rule gives lenders reason to be more strict with their underwriting standards, Hampel said.
"The exception is that some lenders hold some or all of their loans in their own portfolio and don't sell them to investors," Hampel said. "In that case, the lenders have greater flexibility in making decisions about a loan approval because they are only answering to themselves."
As an example, Hampel said a loan might be approved for an applicant with a debt-to-income ratio that is a little high, such as 45%, but who has a high credit score and is making a down payment of 20% or 30%.
FARMERS BRANCH, Texas (4/20/15)--Forgetting school supplies is a thing of the past, thanks to the help of a team of students--working in partnership with FivePoint FCU--who recently won the Cornerstone Credit Union Foundation BizKid$ Entrepreneur Contest.
The product, called "The Pencil Pouch," which boasts a lavish inventory of school supplies, such as paper, erasers and pencils, was the brainchild of a team from Hamshire-Fannett Middle School, working in partnership with the Nederland, Texas-based credit union (
Tamra Basye, the teacher leading the team that won the contest, said they determined forgetting supplies was one of the most common problems students run into, which is how they came up with the idea.
But that's not the only thing they learned.
"The Cornerstone Credit Union Foundation BizKid$ Entrepreneur Contest gave my class the opportunity to learn about starting a business," Basye told
. "My students were given the chance to work hands-on in a business. The experiences they encountered throughout the business plan far exceeded any learning a textbook could offer."
FivePoint and Beacon FCU, La Porte, Texas, participated in this year's event, which was funded by a National Credit Union Foundation grant.
Each credit union worked with one local school, and picked three teachers each to work with for the contest. The best idea from each school was then selected and presented during a final competition.
"The Biz Kid$ program not only teaches them about preparing a business plan and starting and running a business, it also teaches them collaboration and confidence to believe in themselves and their dreams that anything is possible," said Mandy Clayton, FivePoint director of financial education.
ENGLEWOOD CLIFFS, N.J. (4/14/15)--While many Americans might feel confident in their ability to support themselves after they retire, thousands will reach the age of 65 without adequate financial preparation (CNBC
, April 2).
It's never too early--or too late--to focus on retirement savings. The Center for Retirement Research
at Boston College estimates that you need about 70% of preretirement income to maintain your lifestyle in retirement.
If you're in your 20s, the center advises that you start saving 10% of your pay annually and gradually increase that percentage over time.
If you start at age 45 and hope to retire at 65, the center estimates that you'll need to save 27% of your income each year. If you can put off retirement to age 70, that number drops to 10%.
For those who are starting even later, there are different ways to attain a worry-free retirement: work longer, start a small business, freelance, look for less-costly living situations and/or locations, and find ways to reduce other expenditures.
Here's another way of looking at it, from the National Foundation for Credit Counseling
Between the ages of 21 and 30, the cost of education is the major hurdle as the long process of student loan repayment begins. Focus on saving and debt management to keep financial stress out of the picture;
Between the ages of 30 and 45, home ownership allows you to build equity as you pay down your mortgage. In addition to building equity in your home, focus on growing your retirement savings; and
After the age of 45, increase contributions toward retirement savings while reducing budget expenses. Downsize your credit card debt as well.
To stay on track, seek advice from a credit union certified financial counselor or from counselors at the NFCC. For online tools, search "sharpen your financial focus" and "my retirement paycheck."
Follow the NFCC on Facebook and Twitter for daily tips during Retirement Planning Week, which runs through Friday.
For related information, read "Who Goes First? For Couples, Retirement is all About Timing" in the Home & Family Finance Resource Center
RANCHO CUCAMONGA, Calif. (4/20/15)--CO-OP Financial Services has signed an agreement to acquire Canadian payments provider Everlink Payment Services Inc.
Everlink is a subsidiary of Fidelity National Information Services Inc.
CO-OP does not currently hold shares in Everlink, based in Markham, Ontario. Upon closing, the Rancho Cucamonga, Calif.-based company will join minority-owner Celero Solutions of Calgary, Alberta, as the two shareholders of Everlink. Celero is a service corporation providing information technology solutions to credit unions and other financial services organizations across Canada.
"Everlink provides a broad range of payments solutions, including card issuance, fraud management, ATM managed services, point-of-sale and debit payment processing primarily for credit unions, which are similar businesses to that of CO-OP," said Stan Hollen, President/CEO of CO-OP.
Hollen noted that CO-OP currently has a limited presence in Canada. "The acquisition of an interest in Everlink enables us to expand our network to clients throughout North America," he added. "In fact, we see this investment as a foundation step to a comprehensive North America-wide network and processing solution for credit unions, making it even more convenient for members in both Canada and the U.S. to use ATMs and their debit cards."
There are roughly 700 credit unions and caisse poplulaires with more than 10 million members in Canada.