WASHINGTON (3/17/14)--Enactment of the Credit Union Residential Loan Parity Act (H.R. 4226) would enable credit unions to better meet the needs of their members and also would contribute to the availability of affordable rental housing, Credit Union National Association President/CEO Bill Cheney wrote in a letter of support for the newly introduced bill.
The bill, introduced late last week by Reps. Ed Royce (R-Calif.) and Jared Huffman (D-Calif.), would amend the Federal Credit Union Act to exclude from the 12.25%-of-assets member business lending cap any credit union residential loans made for the purchase of a one- to four-unit, non-owner-occupied residential dwelling.
The amendment would address an existing disparity in the treatment of those loans made by banks as compared to those made by credit unions.
"Enactment of this legislation would not only correct this disparity but it would also enable credit unions to provide additional credit to borrowers seeking to purchase residential units, including low-income rental units," Cheney wrote. He noted that CUNA looks forward to working with the bill's sponsor to see its enactment.
WASHINGTON (3/17/14)--Voting 55-0, the House Financial Services Committee passed a bill Friday to broaden credit unions' ability to apply for Federal Home Loan Bank membership.
The bill is strongly supported by the Credit Union National Association to put the country's privately insured credit unions on the same footing as their federally insured counterparts where it comes to membership in the Federal Home Loan Bank system.
The bill was one of three passed over two days, all strongly supported by CUNA, the state credit union leagues and credit unions across the country, that--when they become law--will potentially provide significant relief for credit unions from their regulatory burden.
Together with National Flood Insurance Program reforms passed Thursday by the Senate and a bill to make changes to the operating structure of the Consumer Financial Protection Bureau also approved Friday morning by House Financial Services--CUNA says the bills will help credit unions by cutting costs, increasing their voice in the regulatory process, and giving credit unions more flexibility to fund mortgage lending. (See related story: CFPB restructure bill moves through committee.)
In a markup session Thursday for the FHLB bill, House Financial Services Committee Chairman Jeb Hensarling said approval of the bill (H.R. 3584) would correct a "drafting oversight" that occurred years ago.
The new bill, introduced by Rep. Steve Stivers' (R-Ohio), amends the Federal Home Loan Bank Act to authorize privately insured credit unions to become members of an FHLB.
CUNA urged committee leaders in a letter Wednesday to vote in favor of the Stivers' bill.
CUNA noted that the bill would create no additional risk of loss to any FHLB or to taxpayers. In the Thursday committee markup session Stivers underscored that there is only $11 billion total in privately insured credit union assets. And Rep. Joyce Beatty (D-Ohio), a bill co-sponsor, noted that the bill only affects credit unions in nine states, and they represent less than 2% of all credit unions in the U.S.
The bill states that a privately insured credit union will be considered to have met the eligibility criteria for Federal Home Loan Bank membership if, six months after its application date, the state supervisor has failed to act upon the application.
If H.R. 3584 is approved by the full House, it would then move to the Senate for consideration.
WASHINGTON (3/17/14)--Legislation that would grant credit unions and other lenders greater input into rural-area designations made by the Consumer Financial Protection Bureau has moved on to the full U.S. House after it was approved by the financial services committee late last week.
Rep. Andy Barr's (R-Ky.) H.R. 2672 would direct the CFPB to establish an application process determining whether a county should be designated as a rural area if the CFPB has not designated it as one.
The rural county designations determined by regulators can impact the types of products credit unions may offer their members in those areas.
"From our point of view, any time credit unions can gain an additional opportunity to provide input and inspire the process, we should do so," Credit Union National Association President/CEO Bill Cheney said last week.
Barr's bill was one of two pieces of credit union-related regulatory relief legislation that were sent to the U.S. House floor Thursday. (See related story: FHLB membership bill, others, could bring some CU relief: CUNA.)
WASHINGTON (3/17/14)--There is still time to register for this week's webinar on the National Credit Union Administration's risk-based capital proposal, the Credit Union National Association reminds.
The hour-long, free webinar, entitled "NCUA's Risk-based Capital Rule: Can it be fixed?" is scheduled to begin at 3 p.m. (CT).
The webinar will explore the key aspects of the proposal, highlight its financial impact on credit union operations, and outline the top legal issue.
CUNA President/CEO Bill Cheney will be joined at the webinar by CUNA Chief Economist Bill Hampel and Deputy General Counsel Mary Dunn. Participants also will have the chance to hear directly from credit union CEOs about their perspectives on the proposed rule. A short question-and-answer session is planned to end the information session.
"We'll also bring everyone up to date on our latest efforts aimed at the proposal--and recommend actions credit unions can take on their own to voice their concerns, in their own words," Cheney says.
Registration is limited to 500. A recording of the webinar will be available on the CUNA website 24 hours after the live event.
The risk-based capital proposal would restructure NCUA's current prompt corrective action regulation to include calculation of a capital-to-risk-assets ratio, analogous to Basel III for community banks. The risk weights would be substantially different, and the proposal would impose higher capital requirements for credit unions with higher concentrations of assets in real estate loans, member business loans, longer term investments and some other assets.
The proposal would apply to credit unions with assets of more than $50 million.
In addition to the webinar, CUNA is offering a complete catalog of reference tools to help credit unions determine if and how they will be impacted by the NCUA proposal, and take action by sending comment letters to the agency.
To register for the webinar and access more CUNA risk-based capitol content, use the resource link.
WASHINGTON (3/17/14)--Legislation that would curb patent troll abuses will be discussed during a March 27 Senate Judiciary Committee executive business meeting, the committee chairman, Sen. Pat Leahy (D-Vt.), announced last week.
Leahy last year introduced the
Patent Transparency and Improvements Act of 2013
(S. 1720), which would aid credit unions and other businesses that have been targeted by patent trolls.
"Members of the Senate Judiciary Committee have been working on meaningful, targeted legislation to combat patent abuses in our system. As chairman of the Committee, I am committed to ensuring we move forward with meaningful legislation this spring," Leahy wrote in a statement released last week.
Other Senate bills that would address patent troll issues include the Patent Litigation Integrity Act of 2013 (S. 1612) and the Patent Quality Improvement Act of 2013 (S. 866), offered by Sen. Charles Schumer (D-N.Y.).
Credit union priorities for patent law reform include:
More transparency in demand letters;
Clarification of Federal Trade Commission enforcement authority over unfair and deceptive demand letters;
A demand letter registry; and
Stronger end user protections.
Use the resource link to read a Credit Union Natoinal Association joint trade association letter to lawmakers in support of patent legislation.
ONTARIO, Calif. (3/17/14)--California and Nevada credit unions may want to focus on real estate lending--particularly home equity lines of credit (HELOCs)--given the positive outlook for housing, according to the chief economist for the California and Nevada Credit Union Leagues.
HELOCs and home equity loans is a stand-out sector, Dwight Johnston said, adding, "With the dramatic improvement in home prices in California and Nevada, the pool of eligible borrowers has increased exponentially. If jobs and wages continue rising, homeowners are more likely to borrow against their homes for improvement" (
In the News
He cautioned, "This won't be similar to the boom days. Credit unions will have much more conservative loan-to-value maximums, but the growth potential is there."
HELOCs now make up only 12% of all credit union loans in California and Nevada, down from the 2006 level of 17.28% and 40% less than their peak of more than $35 million in 2008.
Nationally, home equity loans stood at 6.3% of all loans as of January, according to data from the Credit Union National Association, down slightly from 6.6% a year prior and 6.7% in 2012.
Johnston noted that the small step upward in the last quarter of 2013 "could be just the beginning." Compared with the peak number of 550,000, HELOCs came in at 48,000 in 2013. That in itself was a 48% increase from 2012, according to DataQuick.
"There is room to grow," Johnston said. For every mortgage loan a credit union made on a home purchase from 2008 or 2009 until early 2013, that credit union has a member who likely holds a significant amount of equity built in. "That's a great pool to tap into," he said.
Auto lending is solid but will roughly be equivalent to its 2013 level, Johnston said. Wage gains should lead to greater demand for credit cards and personal loans.
"I would also expect to see greater demand for personal loans," Johnston said. "This is borne out by a surge in person-to-person loans on various websites--loans that should be going to credit unions. But credit unions seem to have lost interest in the 'old-fashioned' loans. This might be the time to get reacquainted."
DOVER, Del. (3/17/14)--Legislation has been introduced into the Delaware General Assembly that, while appearing to be consumer-friendly, has the potential to have unintended consequences that could negatively affect Delaware's credit unions, the Delaware Credit Union League said.
Delaware House Bill 230, the "Family Financial Protection Act," is designed to combat abuses in consumer debt collection that have risen from the growth of the debt-buying industry, robo-signing in debt collection and collection of stale debts.
"Delaware's credit unions are all about helping families, and have a long history and track record which supports this claim," said Pat Mahaney, Delaware league president (
March 14). "Credit unions have opened a lot of doors for Delawareans--car doors, home doors and school doors."
The proposals included in legislation were taken from a model statute first published by the National Consumer Law Center.
The proposal, if adopted, would severely limit debt collection activities and increase the exemptions to protect debtors' assets, virtually eliminating a creditor's ability to collect unsecured debt, such as credit cards, the league said.
The increased hurdles to collect debts, coupled with the shrinking of available assets for recovery, could suppress consumer lending, the league said. Large segments of the population, including seniors, students, first-time home buyers and subprime borrowers, could find credit more difficult to secure. Some member businesses could also find funding more difficult to secure.
Ultimately, consumers will pay the price of increased operating costs as credit availability tightens in response to the limited possibility of recovering "bad" loans, the league said.
The league is working with Credit Union National Association counsel and local counsel to ensure the legislation protects the interests of state credit unions.
MADISON, Wis. (3/17/14)--To achieve lasting success, credit union marketers and business developers must be more than good. They need to be "rock star" good, business performance expert Ryan Estis told CUNA Marketing & Business Development Council Conference attendees last week in Orlando, Fla.
"When the world changes around us, we must change with it," Estis said. "A lot of what got us here today won't get us where we're going."
Marketing executives must be prepared keep in step with the pace of change, business performance expert Ryan Estis told CUNA Marketing & Business Development Council Conference attendees last week in Orlando, Fla. (CUNA photo)
Rock star marketers, Estis said, do three things consistently well:
1. Collaborate. "Success today is a team sport," he said, adding that collaboration builds high-trust, high-value organizations. Successful collaboration requires marketers and business developers to "master the art of active listening," Estis said, which involves asking insightful questions. "Without collaboration, people miss out on opportunities to build connections." The goal, he says is to "first understand, then be understood."
Serve as change agents by being open-minded, sharing best practices with others, embracing continuous learning--and learning to be uncomfortable. "When you're uncomfortable, that means you're growing and getting better," Estis said. "Ask yourself: 'Am I learning and getting a little better every day?'"
He advised conference attendees to become change agents by implementing and executing three new ideas in the next 30 days. "Use this moment to decide where you're going and take action."
Champion the organization's culture by connecting with its purpose and aligning their actions with its values. Doing so--and not doing so--has a direct impact on an organization's performance. "Culture is a catalyst," Estis says, "for either growth and success or a barrier to achieve goals."
The Mayo Clinic is one organization where employees truly embrace the culture, which boils down to seven words: The needs of the patient come first.
WASHINGTON (3/17/14)--The Federal Deposit Insurance Corp. has taken action against 16 of the world's biggest banks, alleging they manipulated the London interbank offered rate (LIBOR), several outlets reported last week.
Bank of America, Merrill Lynch, Barclays, Citigroup, Credit Suisse, Deutsche Bank, HSBC, JPMorgan Chase and Bear Stearns Capital Markets are among the institutions reportedly named in the suit, which was filed in the Southern District of New York. The British Banking Association is also named in the suit. The suit references actions taken between 2007 and 2011.
The FDIC is seeking an unspecified amount of damages, according to several reports.
LIBOR is used by financial institutions to set interest rates on a variety of financial products, including mortgages, student loans and credit cards. LIBOR for the U.S. dollar is based on information provided by 18 global financial institutions, including several U.S. banks.
British bank Barclays PLC in 2012 admitted that some of its employees between 2005 and 2009 conspired with employees of other financial firms to manipulate LIBOR and the Euro Interbank Offered Rate to support their own financial positions. The firm has been fined by the U.S. Department of Justice, the U.S. Commodity Futures Trading Commission, and the United Kingdom's Financial Services Authority.
More than 40 suits alleging LIBOR manipulation have been filed, including a 2013 suit by the National Credit Union Administration. The agency filed suit in federal district court in Kansas against 13 international banks, alleging violations of federal and state anti-trust laws through LIBOR manipulation. The NCUA said this alleged manipulation resulted in a loss of income from investments and other assets held by five failed corporate credit unions: U.S. Central, WesCorp, Members United, Southwest and Constitution.
The NCUA claims the defendants in today's action individually and collectively gave false interest rate information through the LIBOR rate-setting process "to benefit their investments that were tied to LIBOR, to reduce their borrowing costs, to deceive the marketplace as to the true state of their creditworthiness, and to deprive investors of the interest rate payments to which they were entitled."
The false information created the impression the defendant banks were borrowing money at a lower interest rate than they were actually paying, the NCUA said.