WASHINGTON (12/13/13)--Sens. Sherrod Brown (D-Ohio) and Rob Portman (R-Ohio) introduced bipartisan legislation Thursday intended to make it easier for privately insured credit unions to offer loans through the Federal Home Loan Bank (FHLB) system.
Currently, privately insured credit unions are unable to gain access to the FHLB system, which prevents them from receiving secured loans to make mortgage, small business, and other economic-development loans to their members.
Brown said that expanding the eligibility of the FHLB system to privately insured credit unions is long-overdue. "By providing these financial intuitions with the ability to join the federal home loan bank system, we help these community institutions keep more local dollars invested in local communities."
The legislation is supported by the Credit Union National Association and the Ohio Credit Union League.
Brown and Portman said their legislation would provide more than 150 privately insured credit unions in nine states--including their own--access to additional forms of liquidity through membership in the FHLB system. The current prohibition on these institutions' participation stems from a 1989 statutory change that expanded FHLB membership only to commercial banks and federally insured credit unions.
The FHLB system is comprised nationally of 12 banks and more than 8,000 member institutions.
ALEXANDRIA, Va. (12/13/13)--Credit unions will soon be permitted to invest in hybrid charitable and investment vehicles known as charitable donation accounts (CDAs) under a new regulation approved by the National Credit Union Administration on Thursday.
Specifically, the rule clarifies that federal credit unions are authorized to create and fund a CDA, a hybrid charitable and investment vehicle, as an activity incidental to the business for which the credit union is chartered, provided the account is primarily charitable in nature and meets other regulatory conditions to ensure safety and soundness.
"This innovative rule strikes the right balance to provide flexibility, but ensures that the majority of earnings received from the account will benefit charities and communities, rather than propping up a credit union's income statement," NCUA Chairman Debbie Matz said.
The rule includes a Credit Union National Association supported change that limits total investment in CDAs to 5% of the credit union's net worth for the duration of the account. The proposed version of this rule, released in September, set this limit at 3%.
A minimum of 51% of the total return from such an account would have to be distributed to one or more qualified charities. Distributions could be made to qualified charities no less frequently than every five years and when the account terminates.
CUNA Deputy General Counsel Mary Dunn noted that while the final rule made clear there is no requirement that a trust vehicle be used, if one is used the trustee must be regulated by the Office of the Comptroller of the Currency, the Securities and Exchange Commission, or other federal or state agency. "We will be talking more with NCUA about this," she said.
The final rule will become effective once it is published in the Federal Register
For more on the NCUA meeting, use the resource link.
WASHINGTON (12/13/13)--Noting that the fight for patent litigation reform and demand letter relief "is truly a Main Street issue," the Credit Union National Association urged Senate lawmakers to protect businesses of all sizes from the "smash and grab tactics" employed by patent trolls.
In a letter to the Senate Committee on Commerce, Science and Transportation, CUNA and its consigners applauded ongoing bipartisan efforts in the U.S. Congress to curb abusive patent litigation. The letter was sent to the committee's chairman, Sen. John Rockefeller (D-W.Va.), and its ranking member, Sen. John Thune (R-S.D.), as well as to the chairman of that panel's subcommittee on consumer protection, product safety, and insurance, Sen. Claire McCaskill (D-Mo.) and the subcommittee's ranking member Dean Heller (R-Nev.).
The Innovation Act of 2013 (H.R. 3309), which would remove some of the financial incentives sought by firms that assert low-quality patents in the hope of quick settlements, was approved by the U.S. House last week on a 325 to 91 vote. It has moved on to the Senate.
So-called "patent trolls" continue to use low-quality patents to try to extract settlements from credit unions and others. Credit unions have been sued for the use of certain ATM technologies, check imaging applications and check cashing applications, and providing members with mobile transactions through their smartphones.
CUNA and others in the letter noted that "vague and misleading pre-litigation demand letters are at the very center of the patent troll problem. Many, if not most claims begin and end with a demand letter as companies quickly pay undeserved "licensing fees," to simply make the patent troll go away."
MADISON, Wis. (12/13/13)--Allowing credit unions to accept public deposits increases choice in the marketplace, provides greater competition, and in many cases, provides better convenience for trustees of the public's money, according to a new report from the Filene Research Institute.
"Credit Unions and the People's Money: Estimating the Benefits of Allowing Credit Unions to Accept Public Deposits," explains why credit unions should be allowed to accept public deposits. With many differences in state laws, the report takes a national look at the consequences.
Among the report's findings:
- Credit unions routinely provide depositors and borrowers with substantially and sustainably more attractive interest rates than commercial banks.
- If the fraction of total public deposits in credit unions increased from its current low level (0.4%) to the fraction of total domestic deposits in credit unions (10%) over a 10-year period, public entities would receive an additional $1.8 billion in interest. Borrowers in local communities would pay $2.3 billion less in interest.
- There are many small communities in the U.S. that don't have commercial bank but but do have a credit union. For public entities in these communities, the ability to deposit funds in the local credit union is of significant value. Many communities are also low-income areas with economic challenges. Restricting credit unions from participating in the public deposit market puts the cost on those least able to afford it.
ALEXANDRIA, Va. (12/13/13)--The 2014 Temporary Corporate Credit Union Stabilization Fund Oversight Budget will be just over $4.5 million, the National Credit Union Administration said at Thursday's open board meeting.
Technical changes to an agency rule on the corporate credit union rating system were also approved during the meeting, and board members heard a briefing on an interagency supplemental rule on appraisals for higher-priced mortgage loans.
The $4,525,000 budget represents a decrease of 26% from the oversight budget approved for 2013.
Credit unions will not be billed for this budget, and NCUA Chairman Debbie Matz said the budget will not change the agency's projected assessment for 2014. There will be no change in staffing as a result of the budget.
The funds will be used to cover certain corporate system resolution costs, including external valuation experts, tax consultants, attorneys, financial specialists and accountants.
In other budget news, Credit Union National Association Deputy General Counsel Mary Dunn noted that the average annualized travel spent per full time employee was $21,473 in 2013. While this was not an enumerated agenda item, the agency provides this and other financial highlights pertaining to its operating fund at each board meeting, she noted.
The technical amendments, which were swiftly approved on Thursday, make amendments to NCUA's regulations to reflect a recent policy change: In September 2013, the NCUA board adopted a policy change that converted the rating system for corporate credit unions from Corporate Risk Information System (CRIS) to CAMEL. The agency will evaluate corporate credit unions under the CAMEL system starting on Jan. 1.
The supplemental final rule on appraisals for higher-priced mortgage loans finalizes, with revisions, certain exemptions proposed in July 2013. Specifically, the proposal exempts from higher-priced mortgage loan appraisal requirements transactions secured by existing manufactured homes and not land; certain streamlined refinancings; and transactions of $25,000 or less.
CUNA generally supported the proposal.
For the full interagency proposal and more on the NCUA board meeting, use the resource link.
FARMERS BRANCH, Texas (12/13/13)--Women, particularly younger ones who are entering the work force, need credit union services that adapt to their busy and ever-changing lives, according to two marketers from Cornerstone Credit Union League.
Lorraine Howard, vice president of marketing, Diamond Lakes FCU, Hot Springs, Ark., and Rochele Drake, vice president of marketing, Fort Worth (Texas) Community CU, offered advice on how to reach Millennial females (Leaguer
"Women, young women particularly, are holding the family wallet, paying the bills and contributing to the family bottom-line more and more," said Howard in the article. "Working with single mothers through the local community college has shown me, first hand, the determination young women have to get an education and pave the way for a better life for their family."
The $59 million-asset credit union focuses on mobile and Internet banking, electronic bill pay, and even person-to-person payments and transfers. Education loans for community college classes are important, as well as loans for a demographic that is currently on pace to match the wage level of men in the work force, Howard said.
Fort Worth Community CU engages women with its digital "spokesgal," Gabby.
"We know that women make 80% of all financial decisions; therefore, women are an essential demographic for our credit union," Drake said. "Women talk to one another. We share secrets and advice with one another. Gabby is that girlfriend who shares information."
Gabby's blog, GetYourWorthOn.com, has had about 30,000 visits. Gabby is meant to be engaging, not sales-focused. "She was never intended to push any particular product or service of the credit union," noted Drake.
Gabby has been so successful that the $813 million-asset credit union just launched "That's Spot On," aimed at Gen Y and defining the credit union difference.
HARRISBURG, Pa. (12/13/13)--
|Frank Serina, second from right, vice president of risk management and security services at Members 1st FCU, Mechanicsburg, Pa., represented credit unions Wednesday in testimony about combating financial abuse and exploitation of the elderly during a hearing of the Pennsylvania House Aging and Older Services Committee. (Photo provided by the Pennsylvania Credit Union Association)|
A credit union representing the Pennsylvania Credit Union Association and the state's credit unions told a state House committee Wednesday what credit unions are doing to combat financial exploitation of the elderly.
Testifying before the state House Aging and Older Adult Services Committee was Frank Serina, vice president of risk and security services of Members 1st FCU, Mechanicsburg, said PCUA (Life is a Highway
Among the areas he focused on were current credit union financial education efforts, training and reporting standards, and the concern about a training and reporting mandate. The committee is exploring legislation to battle the growing cases of elder abuse, neglect, exploitation and abandonment of older Pennsylvanians, said PCUA.
"In a collaborative effort, PCUA, Pennsylvania Bankers Association and Pennsylvania Association of Community Bankers are working with key policymakers to ensure that potential legislation does not increase regulatory burdens or costs for financial institutions to comply," said PCUA President/CEO Patrick Conway.
"Credit unions have been and continue to be trailblazers in financial education and targeting their efforts to protect their senior members. That's a story we're very proud to tell elected officials," Conway added.
Last month, the Credit Union National Association noted that credit unions from across the nation are working to combat financial elder abuse and exploitation. Their work includes training staff to identify and report abuse, instituting new programs to recognize irregular financial activity, and helping educate vulnerable members about avoiding fraud and theft (News Now
The National Credit Union Administration has encouraged credit unions to ensure that staff are trained about potential signs that might trigger a report of elder abuse or financial exploitation.
ALEXANDRIA, Va. (12/13/13)--The National Credit Union Administration and Illinois Department of Financial and Professional Regulation have assumed control of service and operations at Bagumbayan CU, Chicago.
Great Lakes CU, North Chicago, and the NCUA will manage the credit union as the NCUA works to resolve issues affecting the institution's safety and soundness. Normal member services will continue uninterrupted, the NCUA said.
Bagumbayan CU is the fifth federally insured credit union placed into conservatorship this year.
The conservatorship follows an October cease and desist order. In that order, the agency requested that the credit union not allow unapproved officials to attend board meetings or perform managerial and operational functions, resolve recordkeeping issues and Bank Secrecy Act violations, and correct other issues.
The NCUA said it has not made decisions about the long-term future of the credit union. Continued credit union service for the members, however, is a priority, the agency said.
Bagumbayan CU was chartered in 1964, has assets of $55,140 and currently serves 44 members, according to the credit union's most recent Call Report.