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July 24, 2014

Matz alerts CUs: Some relief is coming down the pike

Washington
ALEXANDRIA, Va. (7/24/14)--The National Credit Union Administration is planning to unveil three regulatory relief proposals in upcoming open board meetings. They will include plans to eliminate the 5% cap on a credit union's fixed assets, to modernize the member business lending (MBL) rule, and to update appraisal provisions, NCUA Chair Debbie Matz said Wednesday.

In fact, Matz said one day before the agency is expected to release its July meeting agenda, the fixed-asset plan will be on the July 31 agenda.  The proposal is intended to streamline the rules that implement the Federal Credit Union Act provisions governing the process for federal credit unions to occupy land or buildings.

"Our intent is to allow federal credit unions to manage their own fixed-asset purchases without having to seek permission or waivers from NCUA," Matz said. "When federal credit unions want to update facilities, upgrade technology or make other purchases that have no impact on safety and soundness, NCUA should not micro-manage individual business decisions."

Also on the radar for this year: a look by the NCUA board to determine how it might give greater flexibility to credit unions offering MBLs.

"At my Listening Sessions, we heard from credit union officials with innovative ideas to modernize the member business lending regulation in order to serve more small businesses," Matz said, adding, "We are working to incorporate new ideas while keeping in place appropriate safety and soundness measures."

She said look for changes to be proposed later this year.

The NCUA supports legislation that would increase the MBL cap.  The Credit Union National Association maintains that there also are steps the regulator could take to aid credit unions approaching the MBL cap of 12.25% of assets.

The agency is planning to review all aspects of the rule, including the waiver process--the federal rules that exempt certain loans from the MBL cap.

CUNA has supported these changes and urged they be addressed. Among other changes CUNA advocates: Updating Federal Credit Union Act definitions that provide exemptions from the MBL cap for credit unions that have a history of primarily making MBLs to their members; expanding provisions addressing MBL loans made for the financing of one- to four-family dwellings; and removing limitations that are not required by the statute.

Matz also said the NCUA is scheduled to update the advertising rule for federal credit unions. She added that staff is studying the latest innovations in technology, including social media, to incorporate into the new proposal.

"CUNA welcomes these changes," said Deputy General Counsel Mary Dunn Wednesday. "We have repeatedly urged the NCUA to do more to lessen the regulatory burden on all credit unions.

"We have specifically raised these and many other issues with Chairman Matz and others at the agency, and we look forward to learning more details on NCUA's efforts concerning regulatory relief for credit unions."

Matz made her remarks at the National Association of Federal Credit Unions' annual conference currently being held in Las Vegas. ReadMore

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Frank: CFPB examination threshold should be raised above $10B

Washington
WASHINGTON (7/24/14)--Former Democratic Rep. Barney Frank said he supports raising the threshold for examination by the Consumer Financial Protection Bureau to financial institutions above the current $10 billion-in-assets cutoff.

Frank, a former House Financial Services Committee chairman and co-drafter of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, said this while testifying Wednesday before that panel at a hearing examining the four years since the passage of the Dodd-Frank Act.

The Credit Union National Association advocated the same position before the committee in a regulatory relief hearing last week. The higher exemption would be important to credit unions and community banks. For those with assets below the threshold, examination for compliance with consumer financial  protection laws would remain with their prudential regulator, rather than with the Consumer Financial Protection Bureau.  For credit unions that is the National Credit Union Administration.

The former congressman from Massachusetts did not propose any specific asset level for a higher exemption, stating that any number is "arbitrary."

The role of credit unions and other community financial institutions came up several times over the course of the hearing:
  •  Rep. Gregory Meeks (D-N.Y.) said the act has given credit unions and community banks a "foundation to build upon," and that these institutions are starting to lend more, but more carefully since the act was passed;
  •  Rep. Sean Duffy (R-Wis.) said that instead of ending "too big to fail," the act has helped larger institutions and hurt credit unions and other small institutions because families and businesses are finding it harder to access credit under the weight of excessive regulations;
  •  Rep. Dennis Ross (R-Fla.) said credit unions in his district have had a more difficult time doing residential mortgages with new regulations; and
  •  Rep. Randy Hultgren (R-Ill.) said credit unions are among the industries he counts as being disproportionally affected by Dodd-Frank, but that the parts relating to them can be fixed.
ReadMore

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Suspected Goodwill breach, mobile threat keeps members on toes

CU System
MADISON, Wis. (7/24/14)--Goodwill Industries International apparently is the latest retailer to have fallen victim to a data breach, and with this news, it's likely no surprise that a third of global consumers don't trust retailers to protect their personal and financial data.
 
The company learned last week that an investigation was under way regarding theft of payment card numbers at select U.S. store locations, Goodwill said on its website, but cybersecurity expert Brian Krebs reported that a fraud pattern has appeared in at least 21 states ( KrebsonSecurity.com July 21).
 
Add Goodwill to breaches at Target, Neiman Marcus, Sally Beauty Supply, Michaels and P.F. Chang's, and negative consumer sentiment toward retailers is not surprising.
 
ACI Worldwide and Aite Group recently released the second part of a study on financial fraud that found 58% of global consumers think financial institutions do a better job of protecting their data than retailers, restaurants, large chain stores, government agencies or law enforcement.
 
Meanwhile, the ubiquity of mobile devices is making them a target of malware. Last month, the Trojan-type malware Svpeng made its appearance in mobile banking applications. It checks for banking apps on a user's phone, then locks it down, in effect holding it hostage until the user coughs up money on a prepaid card.
 
Security experts at FireEye recently uncovered HijackRAT--a triple threat of banking credential theft, remote access takeover and the destruction of anti-virus applications on Android devices.
 
Mobile phone users tend to value convenience over security, giving credit unions an opportunity to educate them about good mobile financial habits such as not using public Wi-Fi to access banking accounts and using authorized apps only from the credit union or financial institution ( Pittsburgh Tribune-Review June 28).
 
Regardless of where the fraud began, it's how it's handled that makes the most impression on consumers, ACI and Aite found. Twenty-three percent of respondents left their financial institutions because of how their fraud cases were handled. ReadMore

USDA recognizes Royal CU's $5M rural mortgage lending effort

CU System
STEVENS POINT, Wis. (7/24/14)--Royal CU, Eau Claire, Wis., with $1.4 billion in assets, is the recipient of the 2013 Platinum Million Dollar Lender Award by U.S. Department of Agriculture Rural Development State Director Stan Gruszynski.

The annual award is presented to lenders that have partnered with and made significant contributions to supporting rural residents in Wisconsin who are looking to become homeowners through the USDA Guaranteed Rural Housing (GRH) program.

"As a result of the Guaranteed Rural Housing program, we have been able to help many more members accomplish the dream of homeownership," said Matt Gerber, Royal CU vice president of mortgage loan sales. "This particular program is one of the only remaining no-down-payment programs offered in the industry."

In 2013, Royal leveraged more than $5 million of GRH program funds to help finance home purchases for families of moderate income in Wisconsin. Nearly 4,000 families across the Badger State bought homes last year thanks to the GRH loan program.

Loans secured through the program are financed by participating lenders and guaranteed by USDA Rural Development. The loan amount is limited to the applicant's ability to pay off the mortgage.

Eligible areas include rural regions or communities under 20,000 in population.

The past few years have been challenging for homebuyers in rural areas of Wisconsin, Gruszynski said, adding: "Working with our lending partners across the state, we've made a difference to those rural families prepared to realize the responsibility and benefits of owning a home." ReadMore

Sens. Shelby, Begich: RBC proposal is solution in search of problem

Washington
ALEXANDRIA, Va. (7/24/14)--Calling the National Credit Union Administration's risk-based capital proposal a solution in search of a problem, Sens. Richard Shelby (R-Ala.) and Mark Begich (D-Alaska) weighed in with letters to the agency.

Shelby, the past chair of the Senate Banking Committee, said the proposal would require Alabama credit unions to raise capital levels by approximately $129 million to remain well-capitalized, "with potentially no beneficial upside."

He also raised concerns that the proposal may exceed the authority granted by Congress in the Federal Credit Union Act, because the act only gives authority to the NCUA to establish a risk-based standard to weigh risk in circumstances where the net worth ratio does not provide adequate protection.

"The proposed rule, however, would impose a risk-based standard to be deemed well-capitalized, which is arguably beyond the scope of the Federal Credit Union Act," Shelby wrote.

Both senators noted that credit unions, along with the National Share Insurance Fund, performed properly during the financial crisis. Begich, in his letter, said credit unions "demonstrated remarkable strength and durability" during the financial crisis, and he praised credit unions for avoiding "the same risky practices as large banks," which allowed them to avoid the need for taxpayer assistance.

"Particularly in markets underserved by traditional financial institutions, as in Alaska, credit unions stepped in and filled the void that was left as credit from other institutions dried up," he wrote. "And they did so effectively and responsibly under current and existing regulations.

The letter goes on to request that the NCUA take into account the "overwhelming feedback" on its risk-based capital proposal as to not unfairly burden credit unions.

Begich, who was first elected in 2008, has been a vocal proponent for credit unions, advocating for credit unions to keep their tax status, and vowing to "twist arms" of other members of Congress to raise the member business loan cap to 27.5% of assets from the current $12.25%. ReadMore

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Small businesses get networking night with US FCU

CU System
BURNSVILLE, Minn. (7/24/14)--To gain the trust of the business communities they seek to serve, credit unions must build true partnerships with potential members. US FCU, Burnsville, Minn., with $970 million in assets, will take a big step toward doing that when it hosts a business open house and social media seminar Aug. 12.
 
The credit union has partnered with the local Better Business Bureau local social media consultant KS95/Hubbard Interactive and other local resources to provide small business owners and prospective small business owners with information and networking strategies for running their businesses.
 
One of those resources is Open to Business, a partnership among local cities and developers that provides one-on-one business counseling to current and prospective entrepreneurs and possible access to the Metropolitan Consortium of Community Developers small business loan fund.
 
"One of the things we see is that business owners are really good at what they know, and that's their actual business, but when it comes to the other side of running a business, like back office needs and handling money, that's not their strength," Reyna Staats, US FCU senior business development specialist, told News Now . "This is a way for us to show how we can help them out and what resources they have available to them."
 
The open house is also a way for the credit union to spread the word about its services, Staats said. "A lot of people still don't know that credit unions have business accounts and have business loans," she said. "We want to the community to know that US FCU can serve your business needs as well."
 
Actually, US FCU views itself as more than a provider of business services, Staatz told News Now . "Half my job is to educate, and find what truly is the best fit financially for the businesses we serve. Education is very important to everything we do for both our personal and business account members." ReadMore

Newspaper's shreditorial lauds CU's no-greed, good deed

CU System
PLATTSBURGH, N.Y. (7/24/14)--Shred events--during which local businesses volunteer to run confidential documents through a shredder for the general public--don't capture many headlines. But the Plattsburgh, N.Y., Press-Republican dedicated resources and editorial space in its July 22 edition to emphasize the "good deed" Dannemora FCU offered its local community in sponsoring its seventh annual Shred Fest.
 
"If you don't understand how valuable this service is, think back to the many cases that have been talked or written about in which identities and crucial personal information have been pirated, so unscrupulous people could cash in on it: numbers on bank accounts or credit cards, for instance," the Press-Republican reminded its readers.

"Once secured by dishonest people, those numbers could be exploited for large sums of money, loss of reputation, illegal documents or other outcomes bound to do damage. Shredding is now a way of life for the savvy," it continued.
 
And, the paper reminded readers, the occasion "did double duty as a public benefit." The $141 million-asset, Plattsburgh, N.Y.-based credit union asked "shredders" to bring nonperishable food items for Plattsburgh Interfaith Food Shelf.
 
The paper noted that Ticonderoga (N.Y.) FCU, with $91 million in assets, recently held its first Shred Fest, which produced more than 5,600 pounds of shredded paper and brought in more than $440 in food to be split among three area food pantries.
 
"The credit unions have provided a service that is truly important in this era of identity theft, and the number of people who showed up at the Plattsburgh event last Saturday prove how much the service is valued," the editorial concluded. "An institution that derives its name from the credit it distributes has earned a little for itself." ReadMore

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