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July 22, 2014

N.Y. young professionals take voice to Hill

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ALBANY, N.Y. (7/22/14)--For the second straight year, the Credit Union Association of New York will include members of the its Young Professional Commission in visits with lawmakers on Capitol Hill.
The inclusion of the 35-and-under credit union group is part of the association's role in mentoring the credit union leaders of tomorrow, Mike Lanotte, CUANY senior vice president/general counsel, told News Now . "We believe that it's our obligation to foster the growth of the next generation of credit union leaders and the core offerings of the Credit Union Association of New York."

"We recognize this group should be part of these events, and we're happy to provide the venue for them to do that," Lanotte added. "Over the course of the last few years, since the Young Professional Commission came into existence, this group has been part of the association's governmental affairs conference, and CUNA Governmental Affairs Conference and the advocacy efforts associated with those events, so we thought they should be part of this event as well."
After arriving at Credit Union House early Monday afternoon, the advocates, joined by Lanotte and Alison Barna, CUANY vice president of member services and foundation, were briefed by staff from CUANY and Credit Union National Assocation on pressing legislative topics. Following the briefing, the group had visits scheduled with Sens. Charles Schumer (D) and Kirsten Gillibrand (D), both of New York.
Today, the group also has visits scheduled with Paul Tonko (D), Louise Slaughter (D), Brian Higgins (D), Bill Owens (D), Richard Hanna (R), Daniel Maffei (D),  Chris Gibson (R), Chris Collins (R) and Tom Reed (R), all of New York.
The advocates include:
  • Kayla Barber, Dannemora FCU, Plattsburgh, with $141 million in assets;
  • Angela Hitchcock, Sidney FCU, with $385 million in assets;
  • Meghan McGee-Pelkey, UFirst FCU, Plattsburgh, with $57 million in assets;
  • Cristina Morrissiey, AmeriCU CU, Rome, with $1.2 billion in assets;
  • Jennifer Preston, Reliant Community FCU, Sodus, with $376 million in assets;
  • David Roy, Buffalo Metropolitan FCU, with $90 million in assets; and
  • Brittney Wensley, Sunmark FCU, Latham, with $404 million in assets.
Among the topics the group will address with lawmakers are data security, patent reform, exam fairness, member business lending, supplemental capital and Regulation D.

Other states participating in Hike the Hill visits this spring and summer include Michigan, Minnesota, Maine, Missouri, New Mexico, Arkansas, Oklahoma, Texas, North Carolina, South Carolina,  Nebraska, Ohio, Iowa,  Oregon, Washington, California, Nevada, Alabama, Florida, Wisconsin, Georgia, Kentucky, Montana, Massachusetts, New Hampshire and Rhode Island. ReadMore

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Consumers stashing cash in checking accounts: Moebs

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LOS ANGELES (7/22/14)--U.S. consumers are keeping their cash in checking accounts at a higher rate than at any time in the last quarter-century, according to report from the bank consulting firm Moebs Services Inc. ( Los Angeles Times July 17).

The Moebs report found that the average checking account balance across the country was $4,436 at the end of 2013, more than double the average seen over the last 25 years.

When the economy was booming prior to the recession in 2008, checking accounts had dropped to an average of about $788, according to Moebs.

"When times get difficult, the consumer sits things out and checking balances get larger, normally upward (of) $3,000 or a bit beyond," the study said ( Los Angeles Times ).

For credit unions, share draft accounts also have seen increases of late. In May, share draft accounts made up 14.2% of a credit union's savings portfolio, a 0.7% year-over-year increase and nearly a 4% jump since 2008, according to the Credit Union National Association's June credit union estimates report.

This trend may reflect that consumers and credit union members are still wary of the economy and of their own finances.

"If the economy is doing well as measured by low unemployment and moderate-to-low inflation and prices, then the average balance in the consumer's checking account falls to about $1,400," the report said ( The Washington Post July 18). "If the economy really heats up, then, in 2007 for example, the balance can fall below $1,000 since household revenue is doing well and need for liquidity is just a paycheck or two away."

While consumers may be holding onto cash to stave off overdraft fees or to meet minimum balance requirements, Moebs believes consumers are actually stockpiling cash to build up an emergency fund in case of future difficult financial times.

"They're saying, 'Let's be cautious; let's not use all of the money,'" Greg McBride, chief financial analyst, told The Washington Post . ReadMore

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Worldwide CU growth: Nearly 57K CUs now serve 208M members

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MADISON, Wis. (7/22/14)--By the end of 2013, nearly 57,000 credit unions served about 208 million members across 103 different countries worldwide, according to numbers released by the World Council of Credit Unions this week in its 2013 Statistical Report.

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The report tracks membership and financial data for credit unions and financial cooperatives throughout the world.  

The largest change from 2012 was the jump in membership growth, which climbed by more than 7 million members. The regions that posted the strongest growth in membership were Asia, Latin America and Europe.

Worldwide assets in 2013 came in at $1.7 trillion, according to the report, with savings topping $1.4 trillion, loans $1.1 trillion and reserves $171 billion.

"Large, small, emerging and mature systems, regardless of their differences, all reported the same top challenges: increased regulatory burden, payments innovation, young adult membership growth and small credit union sustainability," wrote World Council President/CEO Brian Branch and Chair Grzegorz Bierecki in their annual report.

In response, World Council continued its work building a global community full of opportunities to share effective strategies and lessons that tackle these global challenges, the pair wrote.

Those efforts included:
  • For regulatory burden, helping defend credit unions in front of international standard-setting bodies;
  • For payment innovations, assisting credit unions incorporate shared-mobile technology platforms;
  • For young membership growth, conducting workshops, webinars and educational sessions to develop and share best practices for credit unions to effectively reach younger generations; and
  • For small credit union sustainability, helping develop collaborative solutions for credit unions such as procuring shared back-office systems and payments platforms.
The Credit Union National Association is preparing to welcome the 100 millionth U.S. credit union membership this summer.  In fact, credit union members can join in the spirit of fun and show "what 100 million looks like" by sending selfies of themselves and corresponding credit union stories to, as part of a campaign to highlight the industry milestone. (See the resource link.) ReadMore

Retailers' suit against Visa, MasterCard allowed to proceed

NEW YORK (7/22/14)--U.S. District Judge John Gleeson declined to dismiss lawsuits filed by retailers against Visa and MasterCard last week. The lawsuits have been brought against the two credit card companies after retailers accused them of fixing the interchange fees charged to merchants for each transaction using a credit card.

Target, Amazon and WalMart are among the retailers that opted out of an approximately $5.7 billion settlement in December. The settlement, approved by Gleeson, also involved Visa and MasterCard and retailers nationwide that made similar allegations.

"This is the first step in the case for the retailers that have opted out of the settlement, but is not the last," said Eric Richard, executive vice president and general counsel for the Credit Union National Association. "The decision means that the retailer's pleadings were sufficient that Judge Gleeson felt bound by procedural rules to send the case to its next stage."

The retailers who opted out of the settlement in December said it was not adequate and that it offered meaningless reforms that would not help them control the costs of accepting credit cards, according to a report by Reuters . Many of those retailers have filed their own lawsuits. ReadMore

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NCUA chair affirms likely areas of change for RBC rule

ALEXANDRIA, Va. (7/22/14)--With three Listening Sessions on the books, the National Credit Union Administration affirmed Monday that its next steps will include incorporating comments from the more 400 participants who attended. The agency's risk-based capital (RBC) proposal was the primary topic of discussion at the sessions, held in Los Angeles, Chicago and Alexandria, Va., but examinations,  and the role of small credit unions were also addressed.
"As always, at this year's Listening Sessions there was spirited discussion on many topics, including the proposed risk-based capital rule," said NCUA Chair Debbie Matz said. "This dialogue is what makes these events so valuable. It's an opportunity for regulators and credit unions to talk frankly, face-to-face, about policy and examination issues and exchange ideas for constructive solutions. We all have the same goals: safety and soundness, prudent lending and effective regulation."
In its press release following the last Listening Session, the NCUA reported that "only 3% of credit unions would experience a change in Prompt Corrective Action status" under the proposal.  CUNA has expressed concern that several hundred credit unions would find themselves uncomfortably close to PCA thresholds, and would collectively need to raise between $3 billion and $4.5 billion in additional capital to restore previous margins above those thresholds.  
Matz said the "many valid questions and concerns" received at the sessions will be added to the more-than 2,000 comment letters received when the agency considers changes to its RBC proposal.
"We are listening carefully, and I anticipate the agency will make appropriate changes," she said. "For starters, we plan to lower the risk weights on investments, mortgages, member business loans, credit union service organizations and corporates, as well as extend the implementation period."
Matz said the NCUA will review the best way to address material interest rate risk in the Prompt Corrective Action framework as the Federal Credit Union Act requires, while evaluating whether more emphasis should be placed on the supervisory process rather than on risk weights in the final rule.
The proposed 18-month implementation period was among the major concerns with the proposal raised by the Credit Union National Association, as well as many of the credit unions and organizations that submitted comment.
Extending the implementation period will allow affected credit unions enough time to adjust operational plans and balance sheets, while giving the NCUA time to update the Call Report system and train field examiners.
According to the NCUA, the final rule will make clear that only the NCUA board, not any individual credit union examiner, can make a determination about whether a specific credit union needs to hold more capital.
"CUNA is pleased that these changes, which we have strongly advocated, are in progress," interim President/CEO Bill Hampel noted.  He commended the agency for holding the sessions and for agreeing to make these importance changes.  He added that CUNA continues to be concerned that the agency has not adequately explained the need for a higher RBC requirement for well-capitalized credit unions than that applied to adequately capitalized credit unions.  
"The risk level of well-capitalized credit unions does not justify the proposed higher requirement.  CUNA will continue to seek ways to work with NCUA to address this very significant concern,",he said.
The Federal Credit Union Act requires NCUA to maintain a "comparable" risk-based capital system to the federal banking agencies, which updated their risk-based capital rules in 2013. The Government Accountability Office and NCUA's Inspector General also have recommended that NCUA's rule be updated.
"I am confident that NCUA will produce a sensible final rule that meets the requirements of the Federal Credit Union Act and not disadvantage credit unions in the market," Matz said.
Audio recordings of each session are expected to be available soon on the NCUA's website. ReadMore

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House Fin. Serv. Committee to examine 4 years of Dodd-Frank

WASHINGTON (7/22/14)--The House Financial Services Committee will conduct a hearing Wednesday to examine specific provisions and the cumulative impact of the Dodd-Frank Act. Signed into law by on July 21, 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act was a response to the financial crisis that began in 2008.

The Dodd-Frank Act created approximately 35 new rules that affect credit unions, according to the Credit Union National Association's analysis. Throughout the legislative process, CUNA worked to minimize the legislation's regulatory burden on credit unions, reminding lawmakers that credit unions did not cause the problems that the Dodd-Frank Act was intended to address.

The hearing, titled "Assessing the Impact of the Dodd-Frank Act Four Years Later," will explore such provisions as the Volcker Rule, Orderly Liquidation Authority and consumer financial protection.

The following witnesses will speak at the hearing:
  • Dale Wilson, chairman and president/CEO, First State Bank of San Diego;

  • Anthony Carfang, partner, Treasury Strategies Inc.;

  • Paul Kupiec, resident scholar, American Enterprise Institute; and

  • Thomas Deas, vice president/treasurer, FMC Corp., on behalf of the Coalition for Derivatives End-Users.
The hearing will start at 10 a.m. (ET) Wednesday in the Rayburn House Office Building.

The House Financial Services Committee also released a 97-page report Monday examining the impact Dodd-Frank Act. Use the resource link below to access the report. ReadMore
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