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April 18, 2014

CUNA, NAFCU jointly repeat urging for RBC comment extension

Washington
WASHINGTON (4/18/14)--Joining forces, the Credit Union National Association and National Association of Federal Credit Unions Thursday urged a 90-day extension for the comment period for the National Credit Union Administration's risk-based capital plan (RBC), set to elapse on May 28.
 
Both organizations previously asked for just such an extension back in February, and it was denied by the agency. 
 
"We simply do not believe that the comment period provides sufficient time for a number of credit unions to analyze the proposal's impact on their individual operations and prepare their responses,"  CUNA President/CEO Bill Cheney and NAFCU President/CEO Dan Berger wrote to the NCUA board members.
 
"Given the health of the credit union system, we do not see the need to rush this rule and believe more time for comments will also benefit the agency through the production of well-reasoned letters," the credit unions leaders argued.
 
The joint letter called the RBC plan the "most significant proposed rulemaking that credit unions will face this year and likely for years to come." It noted that credit unions already are struggling, in some cases, to meet an onslaught of new regulatory requirements this year, and need additional time to provide the NCUA with substantive comments on the RBC plan that reflect their particular situations.
 
CUNA strongly supports risk-based capital for credit unions, but warns that the NCUA's current proposal is not the approach to take. CUNA analysis shows that, as written, the NCUA plan could force credit unions to hold as much as $7.3 billion in additional capital.
 
As described in the Federal Register, the NCUA proposal would revise the risk-weights for many of the NCUA's current asset classifications, require higher minimum levels of capital for federally insured natural-person credit unions with concentrations of assets in real estate loans, member business loans (MBLs) or higher levels of delinquent loans; and set forth the process for the NCUA to require an individual federally insured natural-person credit union to hold higher levels of risk-based capital to address unique supervisory concerns raised by NCUA.
 
It would apply to credit unions with $50 million or more in assets. ReadMore

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Stress testing for large CUs, common bond proposal on next NCUA agenda

Washington

ALEXANDRIA, Va. (4/18/24)--A final stress testing rule for large credit unions will lead the agenda when the National Credit Union Administration holds its April open meeting next Thursday.

Under a proposed version of the stress test regulation released last year, federally insured credit unions with assets exceeding $10 billion would be required to develop and maintain capital plans, and undergo annual stress tests.

The stress test requirements, drafted by the agency's Office of National Examinations and Supervision, would require impacted credit unions to conduct specific capital analyses to evaluate how changes in variables, parameters and inputs used by credit unions in their capital plans could affect their capital. Credit unions would also need to test how interest rate shocks of at least plus or minus 300 basis points would affect their net economic value.

"While we acknowledged the utility of stress testing, we did not feel a new rule was necessary or that NCUA had substantiated the need for it," Credit Union National Association Deputy General Counsel Mary Dunn said.

CUNA offered recommendations that would help improve the proposal, including:

  • Stress test results should not be disclosed publicly;
  • Sanctions should not apply if planning or test benchmarks are not met; and
  • Rejection of a credit unions' capital plan should only occur under a formal process.

Other items on the agenda include:

  • A new proposal that would address requirements for multi-group credit unions to add associational groups;
  • A board briefing on a proposed interagency policy statement addressing joint diversity standards for regulated entities;
  • A board briefing on a proposed interagency rule on loans in areas having special flood hazards;
  • The quarterly National Credit Union Share Insurance Fund report;
  • A final rule on the electronic filing of financial reports; and
  • A final rule on liquidity and contingency funding plans.

The Thursday open meeting is scheduled to begin at 10 a.m. (ET).

Two federal credit union act requests are on the closed board meeting agenda.

For the full NCUA agenda, use the resource link.

ReadMore

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Ky. latest state to enact data breach protection

CU System
WASHINGTON (4/18/14)--As the Credit Union National Association continues to work on data security issues at the federal level, states are making progress with laws to protect and inform consumers about data security.
 
Last week, Kentucky Gov. Steve Beshear signed H.B. 232 into law, making Kentucky the 47th state to enact data breach notification legislation. With Beshear's signature, there are only three states left--Alabama, New Mexico and South Dakota--that do not have laws requiring companies to inform consumers about data breaches.
 
Under Kentucky's new law, companies that conduct business in the state and maintain consumer data of state residents are required to disclose data breaches involving the unauthorized acquisition of residents' unencrypted computerized data. Companies are required to disclose the breach in the "most expedient time possible" and "without unreasonable delay." Additionally, companies are required to notify consumer reporting agencies and credit bureaus if the breach affects more than 1,000 individuals.
 
Iowa Gov. Terry Branstad recently signed S.F. 2259 into law, which amended the state's Personal Information Security Breach Protection statute (JD Supra April 17). It requires written notice be provided to the Iowa Attorney General's office regarding a breach of security affecting 500 or more Iowa residents no later than five business days after notice of the breach. It also expands the term "breach of security" to include unauthorized acquisition of personal information "maintained by a person in any medium, including on paper, that was transferred by the person to that medium from computerized form."
 
A dozen more states have pending legislation that would amend and enhance existing state laws regarding security breaches.
 
During its recent Government Relations Rally, the California Credit Union League focused on the Consumer Data Breach Protection Act (See Wednesday's News Now: Card, member protection headline Calif. league rally.) A.B. 1710 has similar notification and retailer liability provisions to Iowa and Kentucky's newly enacted laws, but it adds mandatory credit monitoring services for those affected and civil penalties of up to $500 per violation or $3,000 for a willful or reckless violation (National Law Review April 17).
 
The Credit Union National Association found that credit unions incurred $30.6 million in costs directly related to last year's Target data security breach--not including fraud costs--and is pressing federal lawmakers to address data security relative to merchants, who are not held to the same standards of security as credit union and other financial institutions.
 
One of the reasons why the pre-trial activities for the Target class action lawsuits have been consolidated in Minnesota is because of state statutes that prohibit merchants or businesses from retaining magnetic-strip information captured during a transaction, require reimbursement to financial institutions for reissuing cards, and communicate "in the most expedient time possible and without unreasonable delay" if a breach occurs. ReadMore

New video provides NCUA answers to CUs' RBC questions

Washington
ALEXANDRIA, Va. (4/18/14)--A two-part, 20-minute video has been released by the National Credit Union Administration, one that is intended to help federally insured credit unions with questions about the agency's proposed risk-based capital rule.

The new NCUA resource for credit unions is free and available on its YouTube channel (see resource link).

"NCUA's risk-based capital proposal is complex, but its overall purpose is simple," NCUA Chairman Debbie Matz said in a release. The video, she said, clears up "misinformation," explains why the agency believes the rule is necessary, and how it would affect credit unions. It also, she added, helps credit unions understand how and why the NCUA's proposal differs from the Federal Deposit Insurance Corp.'s rule and Basel III.

Comments on the RBC plan are due to the agency by May 28.  The Credit Union National Association and the National Association of Federal Credit Unions continue to urge a 90-day extension to the comment deadline.  (See related story: CUNA, NAFCU jointly repeat urging for RBC comment extension.)

CUNA has extensive resources for credit unions regarding the RBC plan.  Use the resource link. ReadMore

Mercer: Ohio CUs need to be tougher to sell a powerful idea

CU System

COLUMBUS, Ohio (4/18/14)--While Ohio credit unions are doing an "amazing" job in serving their memberships, they must market better to sell their "beautiful, powerful idea," Ohio Credit Union League President Paul Mercer told the annual Invest 48 audience last week.
 
Mercer noted that Ohio credit unions had gained less than 2% market share in the state in 19 years, to 7.6% in 2013 from 5.9% in 1994 (eLumination April 16). "That's not good enough," Mercer said. The cooperative credit union model is an ideal fit for consumers, communities and small businesses, he noted. "You are places where people do matter more than money, and when people understand that, we will win more market share," he added.
 
A briefing with State Rep. Lou Terhar (R-Cincinnati), co-sponsor of House Bill 221, which would give credit unions authority to serve as public depositories and access loan programs through the Ohio Treasurer's office, was attended by more than 80 credit union representatives. In subsequent meetings with legislators, credit union officials urged lawmakers to support the legislation. Many legislators said they supported credit unions and would vote for the bill. Others expressed reservations, which provides league staff an opportunity to follow up.
 
Ohio Department of Commerce Director Andre Porter outlined three major concerns for credit unions to navigate in today's economic environment. First, credit unions must continue to plan and manage the risk associated with their changing loan portfolios. Porter also encouraged credit unions to find more ways to participate in today's digital age. He also said that succession planning is critical to keeping the industry strong in the long term. As a regulator, Porter pledged that his department is "here to help with these challenges."
 
Changes to the OCUL's board structure and code of regulations were approved by affiliated credit unions at the league's annual meeting. Thirty-three percent of eligible credit unions voted, and 95% favored the changes, which take effect Jan. 1. The key changes included:

  • A decrease in the size of the league board to nine directors, with a seat dedicated to small ($0-$50 million in assets), medium ($50 million to $250 million), and large ($250 million or more) categories and the others elected at-large;
     
  • "Interlocking" seats reduced to maximize the number of credit union leaders engaged in league leadership;
     
  • Officers streamlined to three positions--chair, vice chair and secretary/treasurer;
     
  • Uniform director eligibility requirements and customized qualifications;
     
  • League board empowered to direct the governance and oversight of the organization and its affiliates;
     
  • Committee structure designed to foster effectiveness and expand engagement opportunities; and
     
  • Board Succession Planning Committee leveraged to proactively monitor representational interests and recruit high-quality candidates.
ReadMore

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Carolina CUs, armed with membership numbers, call on lawmakers

Washington
WASHINGTON (4/18/14)--"Preparation is key to effective visits with legislators," Carolinas Credit Union League Director of Government Relations Billy Boylston said this week, highlighting how the Credit Union National Association's Project Zip Code (PZC) helped advocates from Palmetto Citizens FCU, Columbia, S.C., prepare for their visits to the nearby South Carolina State House.

The $602 million-asset credit union provided a summary document that includes membership data by legislative district taken from PZC documentation. "Palmetto Citizens has done a great job preparing and presenting information, and it shows in legislators' responses," Boylston added (In the Loop April 17).

Credit unions can also use PZC to better track their membership and to plan future ATM and branching expansion. Project Zip Code protects the privacy of credit union members, as only membership totals per legislative district and county, and not information on individual members, are transmitted from credit unions to the PZC database.

The number of credit union members matched to their respective legislative districts and counties by CUNA's PZC software has reached another milestone: 82.7 million members. Around 700,000 of these matches have been made in the month-plus since the 2014 CUNA Governmental Affairs Conference.

The PZC version 14.0 software was introduced during this year's GAC.

The software, and the data gleaned from it, can give credit union supporters a great advantage as they work to advocate for credit unions and their members. The data will be vital as this fall's election season comes into full swing.

PZC data allows CUNA, the leagues and credit unions to show elected officials how many credit union members are among their constituents with very clear numbers. "The more credit unions that participate in Project Zip Code, the more accurate these membership counts will be," said Kristen Prather, CUNA grassroots manager and day-to-day PZC manager.

For more Project Zip Code information, use the resource link. ReadMore

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As threats grow, Mich. league work for members' data safety gets spotlight

Washington
WASHINGTON (4/16/14)--Even with the U.S. Congress out of session until April 28, credit unions are keeping the focus on what must be done to improve the country's data security.

The Michigan Credit Union League's efforts in support of consumer data security gained coverage on MiBiz.com , with the league suggesting that the Consumer Financial Protection Bureau supervise retailer consumer data protection practices and how those retailers investigate consumer data theft.

"We think retailers should have skin in the game, and they ought to be responsible and have a vested interest in protecting customers' information," MCUL Chief Operating Officer Ken Ross told MiBiz.com . While credit unions and banks are subject to strict security requirements, retailers are not held to the same standards. If one part of the larger puzzle doesn't fit correctly, there can be serious downstream implications, he told MiBiz .

The retailers, Ross argued, must make security a priority, as credit unions and others do.

A data breach at Target stores last year resulted in the theft of 40 million debit and credit cards, and encrypted PIN data, and the names, mail and email addresses, and phone numbers of up to 70 million individuals. Credit unions incurred more than $30 million in losses as a result of the breach.

While a recent Newtek Business Services survey showed that 67% of business owners polled were not concerned about credit card security at their businesses, data breaches and other methods of online theft are becoming all too common. (See March 7 News Now : Survey says majority of business owners unconcerned about card security.)

Around 20% of Americans have been affected by a data breach, a January Pew Research Center report showed. According to the Pew report:
  • 18% of online adults have had their Social Security Number, credit card, bank account or other important information stolen; and
  • 21% of online adults have seen their email or social networking accounts compromised.
For the MCUL story and more on the data breach report, use the resource links. ReadMore

CFPB extends remittance rule shield

Washington
WASHINGTON (4/16/14)--The Consumer Financial Protection Bureau is proposing a five-year extension to an exception that minimizes for some credit unions and other financial institutions certain information reporting requirements of its international remittance transfer rule.

The proposal will be available for comments for thirty days from the date it is published in the Federal Register . The agency is also proposing several clarifications and technical corrections to the final rule and commentary.

Under the CFPB rule, international remittance transfer providers are generally required to give prepayment and receipt disclosures to the consumer-sender that include the exchange rate, certain fees and taxes associated with a transfer, and the amount of money that will be received on the other end of the transfer.

Remittance transfer providers will also be required to investigate disputes and correct errors. The rule has been in effect since Oct. 28.

The bureau in a release noted that the Dodd-Frank Wall Street Reform Act explicitly allows federally insured financial institutions, like banks and credit unions, to estimate third-party fees and exchange rates when providing remittance transfers to their accountholders for which they cannot determine exact amounts until July 21, 2015. Insured institutions can only use this exception when they cannot determine the exact amounts for reasons beyond their control.

This exception would continue until July 21, 2020, if the proposal is adopted. The CFPB said it moved to extend the exception when institutions reported that current market conditions would make it impossible to know the exact fees and exchange rates associated with a minority of their remittance transfers.

"Without the exemption, these insured institutions report that they would be unable to send some transfers to certain parts of the world that they currently serve," the CFPB noted.

The Credit Union National Association has repeatedly called on the CFPB to use the full authority granted to it in the Dodd-Frank Act to exempt credit unions from the international remittance transfer rule and other regulations.

"When the remittance rule was finalized, several credit unions stopped offering the service to their members," CUNA President/CEO Bill Cheney wrote in a February letter to Congress. ReadMore

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'Overwhelming' response to N.J. CUs' 'trust' billboard

CU System

HIGHTSTOWN, N.J. (4/16/14)--The New Jersey Credit Union League reported an "overwhelming" response to a recent billboard campaign that supported the "Banking You Can Trust" credit union awareness website.  

 
A New Jersey Credit Union League billboard campaign displayed the $47,589,899 dollar figure that New Jersey credit unions saved New Jersey residents in 2013 and a unique URL tracked back to the Banking You Can Trust site with an explanation of the number. The campaign helped attract a record 6,000 unique visitors and more than 11,000 page views to the Banking You Can Trust website in the first quarter (New Jersey Credit Union League photo)

The "Banking You Can Trust" website attracted a record 6,000 unique visitors and more than 11,000 page views in the first quarter. More than 56% of the traffic can be attributed back to a secretive billboard campaign the league ran through its Banking You Can Trust advertising program.
 
The billboard campaign was simple, displaying just the $47,589,899 figure that New Jersey credit unions saved New Jersey residents in 2013 and a unique URL, www.whyitsimportant.com. The URL tracked back to the "Banking You Can Trust" site with an explanation of the number.
 
During the process of understanding the billboard, 24.5% of visitors searched for a credit union during their visit to the site. Visitors through the campaign also spent significantly longer on the site, over four minutes, compared with visitors from all other advertising outlets.
 
"We kept the billboard campaign a secret so we could analyze the impact and success of the campaign without too many credit union folks visiting the site upon launch," said Candice Nigro, the league's director of marketing and communications ( Daily Exchange April 15). "The campaign began running over Super Bowl weekend and will continue through 2014, but we will change the message throughout."
 
April numbers are already looking strong for the campaign with almost 60% of visitors coming from the billboards.

 

ReadMore

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CUNA site safe from Heartbleed security flaw

CU System
MADISON, Wis. (4/16/14)--The Credit Union National Association's information technology team assures that CUNA's customer-facing websites are not impacted by the Heartbleed security issue that has been reported in News Now and the general press.
 
CUNA Vice President of IT Tom Nohelty said Tuesday that CUNA is applying all Heartbleed patches to applicable systems, even to environments not currently using the Open Secure Socket Layer (OpenSSL) technology at issue with the Heartbleed "bug."
 
"This extra measure will prevent any future problems if we choose to implement OpenSSL at a later time," Nohelty explained.
 
The Heartbleed threat is a flaw in the OpenSSL technology that is used to establish secure links between servers and users. Although CUNA and many credit unions have been able to assure their web users in the face of the security threat, Heartbleed has reportedly exposed millions of usernames, passwords and other information.
 
In general, Nohelty said, CUNA would recommend that all users of its website change their passwords on a routine basis to protect themselves and their personal data as these kinds of security issues will continue to present themselves. ReadMore

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Card, member protection headline Calif. league rally

CU System
SACRAMENTO, Calif. (4/16/14)--The collective voice of California credit unions was heard loud and clear in Sacramento April 7-8, as industry leaders from throughout the state took part in the California Credit Union League's (CCUL) 2014 Government Relations Rally.

More than 75 participants traveled to the state capitol to meet and build relationships with the state's lawmakers ( In the News April 15).

Among other issues, card security and consumer protection headlined discussions between industry leaders and legislators during the event, as, of course, problems with data breaches persist.

"It's important for the credit union industry to come together and be a stronger voice for consumers," said Donna Bland, CEO, The Golden 1 CU, Sacramento, with $8.2 billion in assets. "I would hope that today's issue regarding card security would be common ground for all financial institutions. It's not a political issue, it's about consumer protection."

Several bills, including those concerned with the 2015 Europay-Mastercard-Visa (EMV) chip deadline for card issuers and retailers; personal privacy protection; tax credits; and the California Department of Business Oversight (DBO) loan payments, also received considerable attention.

"If we don't show up, we could face the unintended consequences of bad legislation," said John Cassidy, CEO, Sierra Central CU, Yuba City, with $671 million in assets. "Our capacity of communicating our message to legislators has never been better, but it needs to continue to grow. Engaging with lawmakers is the way to accomplish this."

"It's crucial you are here and tell your story," added Jan Owen, California Department of Business Oversight commissioner, before the event kicked off ( In the News April 14).

Deputy Commissioner of Credit Unions Erick Orellana, in a session co-hosted with Owen, spoke about the financial health of state-licensed credit unions.

While the state-licensed credit unions carry a bit more risk than the average California credit union, Orellana said, they continue to be stable and strong. Financial data keeps improving as well, he said. ReadMore

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Have Bankziety? Minn. league prescribes a cure

CU System
ST. PAUL, Minn. (4/16/14)--Wedding season is around the corner, and if your wallet has the wedding bell blues, it may need a visit to the Minnesota Credit Union Network's (MnCUN) Bankziety website.
 
The average wedding budget skirted a record-high $30,000 in 2013, according to wedding website TheKnot.com , which surveyed 13,000 brides and grooms married last year, and MnCUN's consumer education website has tips for this year's newlyweds in waiting.
 
Bankziety's "wedding planning woes" section offers tips to get off on the right foot while walking down the aisle:
  • Make a list of short- and long-term needs and wants. Is there a new car or house in the future? Set a savings goal to cover a down payment.
  • Build an emergency fund, pronto.
  • Develop and stick to a budget that includes financial goals. Make sure to revisit it to reassess the goals' status.
Consumers can check their symptoms of house-buying headaches, baby budget blues and retirement restlessness--all of which can be cured with a helpful credit union that Bankziety can help locate.
 
MnCUN's website defines Bankziety as "uneasiness, distress or mental apprehension, usually over an impending interaction with a bank; anticipated financial stress; concern over banking fees and rates."
 
The refreshed site, which was launched two years ago, also features stories from members who have been "cured" of using banks.
 
"Today's uncertain economic times have left many consumers confused about who they can trust when it comes to their money, but Minnesota credit unions have the cure for their Bankziety," said league president/CEO Mark Cummins. ReadMore

Mobile payments to jump 40% globally: Juniper

CU System
HAMPSHIRE, U.K. (4/16/14)--The value of payments completed through mobile devices worldwide will reach around $507 billion this year, a rise of nearly 40% year-over-year, according to a new report from Juniper Research.
 
The growth will be driven by purchases of physical goods, according to the report, "Mobile Payment Strategies: Remote, Contactless and Money Transfer 2014-2018." Average transaction sizes made with tablets are already exceeding those via desktop PCs in many markets. While spending on smartphones is increasing sharply, their primary function in retail lies search-and-discovery devices, with the final purchase being made on the tablet.
 
Meanwhile, the scale of digital transactions received a boost through mobile ticketing applications, with metro and transit authorities in Europe and North America that have already deployed services experiencing high levels of adoption.
 
However, the report observed that progress in contactless mobile payments had been slow, with few commercial launches. Nevertheless, it argued that the prognosis for the medium term was brighter, following the emergence of cloud-based solutions which offer the opportunity for reduced time to market for near-field communication solutions. ReadMore

CUNA compliance audios are back and even better

Washington
WASHINGTON (4/16/14)--Back by popular demand, Credit Union National Association compliance staff are posting new audio updates on the hottest compliance topics.

The new audio posts are broken into smaller chunks, down from their former 60 to 90 minutes, and will be posted more frequently than before when they were offered on a quarterly basis. The new format allows users to pick and choose the topics they listen to.
 
"We have heard from many in the credit union system over the past year requesting that CUNA's compliance staff bring back the quarterly 'Pressing Issues' conference calls, and we are really happy to do that," CUNA Federal Compliance Counsel Colleen Kelly said.

"However," she added, "many have also told us that as the unprecedented deluge of regulations continues, they rarely have 90 minutes to spare to participate on a scheduled conference call. So, in response, we are rolling out a new format."

The first editions of CUNA's newly formatted audio conference cover:
  • Mortgage lending;
  • The latest National Credit Union Administration developments;
  • The Bank Secrecy Act and the U.S. Treasury Department's Office of Foreign Assets Control; and
  • Other federal regulatory issues.
Printable handouts will also be provided as part of the CUNA programs. Short recordings on other topics will be posted in the coming months.

For the new CUNA resource, use the links (members only). ReadMore
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