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March 31, 2015

CFPB should increase relief in 'rural' definition rule: CUNA

WASHINGTON (3/31/15)--The Consumer Financial Protection Bureau's (CFPB) proposal regarding rural and underserved areas is a positive step, but CUNA urged the agency to take further regulatory relief steps, in a comment letter filed Monday.

The CFPB in January proposed a broader definition of "small" credit union and bank, as well as an expanded designation for what comprises a "rural" area.  If finalized, the proposal would, in part, increase the number of financial institutions able to offer certain types of mortgages in rural and underserved areas by exempting more small creditors from the CFPB's tough new mortgage rules.

CUNA generally supports the proposal, calling the bureau's overall approach "positive and appreciated."
However, CUNA offered a number of changes to make the proposal more favorable toward credit unions and other small servicers.
This includes providing favorable regulatory relief to creditors that manage their lending programs, in addition to the thresholds of asset size and loans originated. This could be achieved by considering the default rates on covered loans, CUNA suggests.
CUNA also recommends the small creditor thresholds, which can exempt institutions from certain requirements under Regulation Z (which implements the Truth in Lending Act), be analyzed. The new threshold proposed by the CFPB would raise the thresholds to 2,000 loans originated in a year, up from 500.
"Raising the limit is commendable but we encourage the agency to provide impact analyses that demonstrate how communities, consumers and creditors would be affected if the limit were raised to 2,500, 3,000, 3,500 or 4,000 as well as the proposed threshold of 2,000 so that stakeholders and the agency would have more informed comments regarding what the new limit should be," the letter reads.
The CFPB's proposal would not raise the asset limit for small creditors, which is currently set at $2 billion. CUNA believes the number is arbitrary and too low, and urges the bureau to consider raising the threshold to $10 billion.
CUNA supports most other aspects of the proposal, including:
  • Adding a grace period to the annual asset limit and original limit to allow a creditor that exceeds those limits to operate as a small creditor for loan applications received before April 1 of the current calendar year;
  • Expanding the definition of "rural" to include a county that meets the current definition of a rural county or a census block that is not in an urban area as defined by the U.S. Census Bureau; and
  • The inclusion of safe harbor provisions for creditors related to the use of CFPB tools to determine whether a property is located in rural or underserved areas and to determine if a property is located in an urban area.

FFIEC: Ways to ID, mitigate cyberattacks that use malware

WASHINGTON (3/31/15)--Information on how financial institutions can identify and mitigate compromised user credentials and malware was released Monday by the U.S. Treasury's Federal Financial Institutions Examination Council (FFIEC).

According to the FFIEC, theft of credentials and the introduction of malware have often types of cyberattacks that have been increasing in severity and frequency over the past two years.
Compromised user credentials can be those of consumers, employees and third parties, and can be used to access secure systems or system credentials that could allow broader access.
The introduction of malware can come through downloading attachments, visiting compromised websites, connecting external devices such as USB drives or through the installation directly into a system by unauthorized parties with stolen credentials.
In accordance with FFIEC guidance, all financial institutions should:
  • Securely configure systems and services;
  • Review, update and test incident response and business continuity plans;
  • Conduct ongoing information security risk assessments;
  • Perform security monitoring, prevention and risk mitigation;
  • Protect against unauthorized access;
  • Implement and test controls around critical systems regularly;
  • Enhance information security awareness and training programs; and
  • Participate in industry information-sharing forums, such as the Financial Services Information Sharing and Analysis Center.
The FFIEC has also posted a number of resources online with information designed to strengthen user awareness of safe online practices.
According to the FFIEC, the statements released Monday do not contain new regulatory expectations--they are intended to alert financial institutions of specific risk mitigation tips.

Financial Fitness Day kicks off fin. lit. month

CU System
MADISON, Wis. (3/31/15)--Wednesday is Financial Fitness Day--and also the start of National Financial Literacy Month and National Credit Union Youth Month.
To celebrate Financial Fitness Day, the National Credit Union Foundation invites credit union organizations to participate in the daylong fundraising activities.

To participate in the event, which raises funds for the foundation and for state credit union foundations in order to support their respective financial literacy initiatives, credit union organizations could hold one or more of the following fundraisers:
  • A jeans or casual day for staff, where staffers donate money to wear casual clothing to work;
  • A bake sale for staff or members; and
  • A "Deduct or Donate a Buck" event, where credit unions ask their staff and members to consider making a voluntary donation as they complete their transactions, or deducting a certain amount of money from their checking or savings account.
Resources for the fundraisers can be found at . Donations made during the day will be split evenly between the foundation and state credit union foundations.

Responding to demand from credit unions for a month-long celebration, National Credit Union Youth Week grows into National Credit Union Youth Month in 2015. The month-long celebration extends the time in which credit unions can connect and convey to their members the importance of financial education at a young age.

The month's theme, "Wild About Saving," was chosen from ideas submitted by credit union staff nationwide.

Click to view larger image Trish Fuller, loan officer at Abbeville (S.C.) Community CU, is prepared for National Credit Union Youth Month's "Wild About Saving" theme. (Abbeville Community CU Photo)
Abbeville (S.C.) Community CU has already decorated its branch with inflatable jungle animals in celebration of the theme.
CUNA will also sponsor its annual National Youth Saving Challenge during April. The contest will reward 25 savers with $100 cash prizes. Last year, 8,844 new accounts were opened, and 94,466 young members deposited more than $20.5 million into savings accounts during the month-long challenge.

Redwood CU (RCU), Santa Rosa, Calif., will celebrate National Credit Union Youth Month with two contests to promote good saving habits for children and teenagers.

RCU members ages 13 through 17 are invited to submit a 150-word description of their current saving plan and goal. One winner from each Redwood branch will be picked to demonstrate sound saving principles. Each winner will receive a $50 deposit to his or her savings account. An overall winner will also have his or her submission published in RCU's Jr. Partner Post , a quarterly newsletter for RCU's teen members.

Members 12 or younger can participate in a coloring contest by downloading and completing a "What Are You Saving For?" coloring sheet featuring RCU's mascot Reddy the Redwood. Each coloring sheet features a word bubble where kids can write or draw what they are saving for, and one winner from each branch will have $50 deposited into his or her savings account.

The credit unions of the Cornerstone Credit Union League's Pineywoods Chapter are giving free movie tickets to each member who opens a new youth account in April ( Leaguer March 27).

Using images designed by CUNA specifically for National Credit Union Youth Month, the chapter developed a wrapper for Sunday's edition of the local newspaper.

As National Financial Literacy Month, April also provides credit unions with an opportunity to help their members understand that financial education is the first step toward financial independence.
The National Credit Union Administration plans to introduce new information resources, including a Financial Literacy Resources webpage and a video on understanding payday lending, during April.
"An educated consumer can make better choices to build financial security, and creating those educated consumers is an important part of NCUA's mission," NCUA Chair Debbie Matz said. "During Financial Literacy Month, we encourage credit unions to take advantage of NCUA's financial literacy resources and programing to help their members become more informed."
The agency will also host a webinar for credit unions, "Your Mission into Action: Developing Youth Financial Literacy and Savings Programs," April 22, beginning at 2 p.m. (ET.) On the same day, will moderate a financial literacy Twitter chat at 11 a.m. (ET).
NCUA will participate in the Financial Literacy Day event on Capitol Hill April 24 to educate lawmakers, congressional staffers, and the public about federally insured credit unions and the role of NCUA.

Recognizing National Financial Literacy Month, Justice FCU, Chantilly, Va., reminds its membership that it provides free access to money management and financial education services through ACCEL Members Financial Counseling.

Albuquerque biz journal highlights N.M.'s CU culture

CU System
ALBUQUERQUE, N.M. (3/31/15)--Readers of Albuquerque Business First may nearly be experts on all things credit union, as the business publication recently dedicated wide swaths of print space to illustrate the relative state of credit unions in New Mexico.  

The coverage included Q-and-A profiles with the heads of two credit unions in New Mexico: Robert Chavez, president/CEO, Sandia Laboratory FCU, Albuquerque, and Winona Nava, president/CEO, Guadalupe CU, Santa Fe.

A third story covered recent branding changes that have been unveiled by a number credit unions in the state. The story also discussed the different ways credit unions are positioning themselves to grab the attention of younger consumers in order to stay relevant.

"Millennials definitely factor into rebranding," Hilary Reed, executive committee member of CUNA's Marketing and Business Development Council, told Albuquerque Business First (March 27). They don't want to be associated with the old, stodgy reputation of banks, she added.

Other ways credit unions separate themselves from banks is by eliminating the term credit union from their names, such as Erie (Pa.) General Electric FCU, which now operates under the name Widget Financial.

"Credit unions are more widely known than they were before the recession," Reed said. "...The ones that I'm seeing rebrand are very edgy, and banks don't necessarily have the ability to do that."

In his Q-and-A, Chavez spoke about the day-to-day operations of a credit union president/CEO, why Sandia Laboratory FCU has had such success in the state, and the general differences between credit unions and banks.

"Within the first six months I was at this credit union, I remember sitting in a meeting with our CEO and (chief financial officer), and we were talking about giving up revenue off of our credit cards," Chavez told Albuquerque Business First . "You don't have those conversations in a bank."

Nava spoke about the growth Guadalupe CU has seen over the last 24 years under her leadership, and about how the credit union serves the underbanked as a community development financial institution.

"There are a large number of our members who are underserved by the traditional banking system," Nava said, adding, "We do have members who are living in the financial mainstream, but 65% of our members are living below the designated poverty line."

CUNA's Hampel reminds Operation Comment can help with RBC2 letters

WASHINGTON (3/31/15)--Bill Hampel, CUNA's chief policy officer, reminded credit unions on Monday that credit unions should let their thoughts and suggestions on the National Credit Union Administration's revised risk-based capital proposal (RBC2) be known. Less than a month remains before the April 27 comment deadline.

"It's very important for credit unions, now that they've had two months to consider the proposal, to weigh in with comment letters." Hampel said. "It is quite a bit improved from the first proposal, but we're not there yet."

CUNA posted a new RBC2 comment letter guide online last week. The guide includes the major areas credit unions should consider when commenting, CUNA's position on those issues and how to submit comment letters.

In addition to submitting comments through mail, fax, email, the NCUA's website and the federal eRulemaking portal, credit unions can use Power Comment , which will automatically format and send comment letters to the NCUA.

Lawmakers question CFPB on Aug. TILA-RESPA date

WASHINGTON (3/31/15)--Why have compliance disclosure reforms gone into effect during what is traditionally the busiest month for home closings?

That's the question two key lawmakers asked the Consumer Financial Protection Bureau (CFPB) Monday regarding the bureau's Truth in Lending Act-Real Estate Settlement Procedures Act (TILA-RESPA) integrated disclosures rule, which is scheduled to be implemented Aug. 1.

CUNA has urged the CFPB to allow a lengthy implementation period for the TILA-RESPA rule due to the complexity of the issue.

Rep. Blaine Luetkemeyer (R-Mo.), chair of the House Financial Services subcommittee on housing and insurance, and Rep. Randy Neugebauer (R-Texas), chair of the House Financial Services subcommittee on financial institutions on consumer credit, expressed their concerns about such a major change taking place during peak homebuying season.

The legislators said that, since many homebuyers look to move into new houses before the start of the school year, 10 of the 25 busiest days for existing home closings in 2014 were in August. Conversely, 19 of the slowest days for home closings in 2014 were in January or February.

"We strongly encourage you to make the Aug. 1, 2015 to Dec. 31, 2015 timeframe a 'hold harmless' period of restrained enforcement and liability," the legislators wrote. "This would allow all parties to better understand the changes associated with [TILA-RESPA] and help ensure consumer confidence and stability in the nation's housing market."

Strongest savers in middle class: Bankrate

CU System
NORTH PALM BEACH, Fla. (3/31/15)--The most ardent savers can be found in the U.S. middle class, according to a recent survey by the personal finance website .

One-fourth of middle-class households--earning between $50,000 and $75,000 annually--set aside more than 15% of their income, while only 17% of the highest earners put away more than 15%, the survey found.

By contrast, only 8% of the lowest earners in the survey saved more than 15%.

"Middle-class Americans (have) to do the saving, because nobody is going to do it for them," said Greg McBride, Bankrate's chief financial analyst. "They don't have the six-figure income to fall back on" for expenses such as household emergencies, long-term health care, education and retirement.

Millennials, on the other hand, have yet to get the picture on the importance of saving.

The survey found that people between 18 and 29 years old were the most likely to fail to save, with 37% saying they save 5% or less and 18% saying they save nothing at all.

"They don't see a correlation between where they are now and where they will be," Tiffany Aliche, independent budgeting expert, told .

It appears they should take a page from those in the middle class.

In addition to the households saving more than 15% of their incomes, roughly 35% of U.S. households considered middle class put away more than 10%, according to the survey, while only 19% of the highest-earning households save at that rate.

LCUL's Cochran: 'Old' CU benefits attract young, new members

CU System
HARAHAN, La. (3/31/15)--A new generation of Louisiana residents, inspired by "old school" services and pricing and the cooperative business model, are starting to discover the credit union difference, Louisiana Credit Union League President/CEO Anne Cochran wrote in a opinion editorial that appeared in the Lafourche Parish Daily Comet (March 27).

Millennials--consumers born between the early 1980s and early 2000s--are choosing credit unions because of the benefits and personal services offered," Cochran wrote. "Millennials are drawn to 'old' credit union features that now seem 'new': free checking, no minimum deposit accounts, fewer fees, better interest rates (in some cases nearly two percentage points lower than competitors) and personal service."

This growth among the younger generation was spurred by the positive response credit unions received coming out of the financial crisis, Cochran said.

"Many Americans saw credit unions as a safe haven in the financial services sector when credit unions continued to lend to consumers, homebuyers and small businesses while other lenders were unable or unwilling to do so," she wrote.

She cited statistics that say an overwhelming majority of credit unions offer free checking in comparison with banks.

As cooperatives, credit unions return their earnings, minus operating expenses, to their members through higher interest rates on deposits and lower loan rates.

This not-for-profit philosophy that reinvests earnings with a credit union's members generates an economic benefit of $8 billion to $10 billion each year for the U.S. economy, according to CUNA.

"These monies make it easier for families to buy a new home through lower interest rates or for a small business owner to expand and buy new equipment," Cochran wrote.

Louisiana residents are getting the message. State credit unions saw an 8% increase in loans in 2014.

CFPB Student Scorecard should focus on consumer benefits, CUNA says

WASHINGTON (3/31/15)--CUNA supports the Consumer Financial Protection Bureau's (CFPB) plan to create a Safe Student Account Scorecard as a tool for colleges and universities to ensure that financial product offerings marketed to their students are "superior to those generally available," the trade association said in a March 30 comment letter to the bureau.

However, CUNA also said that the proposal could be improved if it included transparency to the students regarding the decision the educational institution ultimately reaches.

CUNA believes that student access to that information will help ensure "the educational institutions are in fact basing their selection on what is in the students' best interests and not on other factors, such as financial incentives."

CUNA also urged the bureau to clarify that the optional scorecard would be intended to assist educational institutions in choosing partners, and that the scorecard will not establish any minimum standards. The letter also questioned whether the information addressed in the CFPB's draft scorecard could be better delivered through bureau guidance.

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