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July 29, 2014

CUNA supports House panel markup of CU relief bills

WASHINGTON (7/29/14)--The House Financial Services Committee is voting a series of bills today, two of which are strongly supported by the Credit Union National Association for the regulatory relief they would provide credit unions.  Those bills are  the Regulation D Study Act (H.R. 3240) and the Access to Affordable Mortgages Act of 2014 (H.R. 5148).

CUNA also strongly backs a possible amendment to The Community Bank Mortgage Servicing Asset Capital Requirements Study Act (H.R. 4042), which also will be voted on today. That bill would direct the federal banking agencies to conduct a study of appropriate capital mortgage requirements for mortgage servicing assets.

The amendment to that bill would require the National Credit Union Administration to similarly "stop and study" a provision of its proposed risk-based capital plan that would assign a 250% risk weight for mortgage servicing rights (MSR).

CUNA testified before the House Financial Services subcommittee on financial institutions and consumer credit last week that the MSR weight would be both "punitive and unnecessary" and should be reduced to 100%. That would place it at a level similar to what is required of small banks in Basel III requirements.

If the amendment is adopted today it would result in a delay in the implementation of the NCUA's RBC final rule until "an appropriate period of time "after the agency's study is completed.

Also in its testimony last week and in its letter of support sent Monday, CUNA strongly backed the Regulation D Study Act, which directs the Government Accountability Office to study the impact of the Federal Reserve Board's monetary reserve requirements.

Reg D limits the number of automatic withdrawals from a member's share account to six transactions per month and CUNA warns that this can cause consumers to overdraft if their checking account falls below $0 and the six transactions already have been made for the month.

CUNA supports an increase in the transaction cap, or for it to be eliminated altogether

CUNA also provided testimony on three discussion drafts, most notably the Access to Affordable Mortgages Act, which amends the Truth in Lending Act to exempt higher-risk mortgages from property appraisal requirements as long as the loan is held on portfolio for at least three years. In its support letter Monday, CUNA said the exemption would both provide regulatory relief for credit unions and other mortgage lenders, as well as increase access to mortgage credit for borrowers purchasing lower-cost dwellings costing $250,000 or less.

"The bill would allow credit unions that offer mortgage loans secured by covered properties to serve their middle- to lower-income members better," CUNA wrote. The letter went to House Financial Services Committee Chair Jeb Hensarling (R-Texas) and the committee's ranking Democrat, Rep. Maxine Waters of California.

For more on what is happening this week in Congress, see "This week in Congress: CUNA-backed bills to see House floor votes." ReadMore

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SAFE Act, cybersecurity bill to see House floor votes

WASHINGTON (7/29/14)--Several matters of interest are on the schedule this week before members of teh U.S. Congress leave for their August recess.

Two Credit Union National Association-supported bills will he heard on the House floor this week. The SAFE Act Confidentiality and Privilege Enhancement Act (H.R. 4626) would amend the SAFE Mortgaging Licensing Act of 2008 to allow state and federal regulatory officials with financial oversight authority access to any information given to the Nationwide Mortgage Licensing System and Registry without loss of privilege or confidentiality protections.

Currently the bill only allows officials with mortgage oversight authority to access the database.

The National Cybersecurity and Critical Infrastructure Protection Act of 2014 (H.R. 3696) would amend 2002's Homeland Security Act to require the Secretary of Homeland Security to conduct cybersecurity activities, including shared situational awareness among federal entities.

Both bills are expected to be heard on the House floor this week under suspension of the rules.

Today, the House Financial Services Committee will being markup of a series of regulatory bills, including two that have strong support from the Credit Union National Association. CUNA has testified in favor of the Regulation D Study Act (H.R. 3240) and the Access to Affordable Mortgages Act of 2014 (H.R. 5148), and plans to send a letter of support to the committee this week. (See related story:  CUNA supports House panel markup of CU relief bill.)

On Wednesday, the House Ways and Means subcommittee on select revenue measures will conduct a hearing to on dynamic analysis of the discussion draft of the Tax Reform Act of 2014, which was released in February. The hearing will begin at 10 a.m. (ET).

On Thursday, the  Senate Banking Committee full committee hearing, titled "Financial Products for Students: Issues and Challenges." Witnesses will include representatives from education policy groups, financial aid administrators and financial institution trade organizations. The hearing is scheduled to being at 10 a.m. (ET). ReadMore

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Pew Trusts: Prize-linked savings gaining nationwide momentum

CU System
PHILADELPHIA (7/29/14)--Prize-linked savings (PLS) accounts, an idea invented and incubated by credit unions to encourage members to save money, continue to gather steam nationally.
Nine states have passed laws that allow credit unions to operate programs that incentivize members to put away money by offering opportunities to win cash when they save, according to The Pew Charitable Trusts, which recently featured the growing popularity of the product on its news page  Stateline.
The article noted that savings rates in the United States are low: In March 2014 the aggregate personal savings rate, defined as the ratio of total savings to after-tax income, was only 3.8%. And a 2013 survey found 27% of all Americans had no emergency savings, while another 23% had some but could not cover three months of living expenses. Low-income families struggle the hardest to accrue savings.
With as little as $25, a credit union member can open an account and enter a drawing for monthly and annual grand-cash prizes. The beauty is that those who aren't lucky enough to win still benefit from having started an interest-generating savings account, advocates say.
"Most of the things we do in the Legislature are so abstract, and it's hard to see the benefits," Sen. Amanda McGill (D-Neb.) told  Stateline . "But this really gets people happy and engaged, and they are saving."
Credit unions have played an integral role in developing PLS programs as part of the movement's ongoing effort to help members enhance financial literacy, save money and improve spending and debt management habits ( News Now  July 19).
With the help of their state leagues, Nebraska, Michigan, North Carolina, Washington, Connecticut, Indiana, Maine, Maryland and Rhode Island have passed laws to allow credit unions to offer PLS accounts. New York only awaits the signature of Gov. Andrew Cuomo to pass its own law, which was approved by the state's Legislature earlier this year.
Since 2009, thousands have won prizes worth anywhere between a $15 monthly payout to a $100,000 grand prize, which was handed out in Michigan in 2012.
Currently, federal law prohibits banks from offering prize-linked savings promotions, the Pew article points out.  However, it added, U.S. Sen. Jerry Moran (R-Kan.) and Rep. Tom Cotton (R-Ark.) have proposed the American Savings Promotion Act that would amend banking laws to allow banks to offer prizes to savers.
To read the full Pew Charitable Trusts article, use the link. ReadMore

Sen. Toomey seeks NCUA justifications for higher RBC requirement

ALEXANDRIA, Va. (7/29/14)--Sens. Patrick Toomey (R-Pa.), Mike Johanns (R-Neb.) and Deb Fischer (R-Neb.) have written to the National Credit Union Administration, asking for justification for the agency's risk-based capital proposal.

Toomey, the ranking member of the Senate Banking subcommittee on financial institutions and consumer protection, said the matter is of great interest to him given its "potential impact on credit unions, their members and the communities they serve." He is also a member of the Joint Economic Committee and the Senate Finance Committee.

"I would be concerned with any proposal that exceeds the authority of the board and imposes undue regulatory burden on credit unions and potentially hampers access to credit in local economies," he wrote.

Among several requests, Toomey asks the agency where the statutory authority for the proposal comes from. He cited a section of the Federal Credit Union Act that limits the NCUA board's authority to impose risk-based capital requirements on well-capitalized credit unions.

He also requested information as to why the NCUA claims authority to impose individual capital requirements, saying that while the Federal Deposit Insurance Corp. has that authority, it is not given in the Federal Credit Union Act.

Toomey also expresses concern about adding capital requirements to institutions rather than relying on a case-by-case basis.

"Regulation of concentration and interest rate risk is generally a matter that is supervised on a case-by-case basis as part of credit unions' examinations," he wrote. "Please explain why the board believed that regulating concentration and interest rate risk through new capital requirements is better than relying on NCUA examiners to monitor concentration risk of individual credit unions."

Johanns and Fischer, in a joint letter sent Monday, also expressed concerns that the rule is too stringent, and urged the NCUA to take into account the more than 2,000 comments sent when making a final decision.

"Commuity financial institutions are the lifeblood of our small towns and our small businesses," they wrote. "The new proposed risk weights may be unduly burdensome on credit unions that have high concentrations of business and agricultural lending."

NCUA Chair Debbie Matz said last week that the agency would re-examine several aspects of the plan, in response to comments received. This includes reducing the risk weights on investments, mortgages, member business loans, credit union service organizations and corporate credit unions, as well as additional time for implementation. ReadMore

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Pending home sales witness first drop in 4 months

WASHINGTON (7/29/14)--For the first time in four months pending-home sales have stepped back, dropping 1.1% in June, according to data released by the National Association of Realtors Monday.

The Northeast and South bore the brunt of declines, which were somewhat offset nationally by modest gains in pending sales in the Midwest and West. Overall, the national index sits 7.3% lower than levels seen this time last year ( July 28).

The pullback is consistent with recent weaknesses in other housing indicators, such as new-home sales and mortgage purchase applications, according to Brent Campbell, Moody's analyst ( ).

"The bounce-back from weather-related weakness in the spring provided some lift earlier in the year, but many potential homebuyers have yet to regain confidence lost during the depths of the recent housing crisis," Campbell said.

By region, pending-home sales fell in the Northeast by 2.9% and in the South by 2.4%. The Midwest posted a 1.1% gain and the West recorded a 0.2% uptick.

Across all regions, however, pending home sales are down on a year-over-year basis, with the West nearly 17% behind last year's pace. ReadMore

NCUA gives examiners FinCEN guidance for marijuana biz

WASHINGTON (7/29/14)--The Washington Department of Financial Institutions has offered information to credit unions in that state that wish to provide financial services to marijuana-based businesses. Washington voted in 2012 to legalize the sale or marijuana and related products to individuals over the age of 21 for recreational purposes. The state began issuing licenses to those businesses this month, and 20 other states have legalized some form of medical or recreational marijuana-related activity.

In a letter to the Washington DFI last week, Larry Fazio, director of the NCUA's Office of Examination Insurance, said the agency has provided the U.S. Treasury Department's Financial Crimes Enforcement Network (FinCEN) guidance to agency examiners, who are responsible for determining the compliance of financial institutions that provide service to marijuana-related businesses.

"Credit unions have been struggling with what we consider to be overreaching due diligence requirements in FinCEN's guidance for marijuana-related businesses," said Colleen Kelly, senior assistant general counsel for federal compliance for the Credit Union National Association.

"We have been hoping NCUA would provide definitive guidance to credit unions to relieve these ongoing due diligence concerns. I'm afraid this letter doesn't do it. CUNA will continue to encourage NCUA to provide additional compliance assistance for servicing these businesses."

FinCEN's guidance notes that U.S. Department of Justice Attorneys and law enforcement will devote enforcement resources to businesses that are distributing marijuana to minors, criminal enterprises, states where it is not legal, as well as several other scenarios.

In addition, the guidance warns financial institutions serving marijuana-related businesses to conduct due diligence by:
  • Verifying with the appropriate state authorities whether the business is duly licensed and registered;

  • Reviewing the license application (and related documentation) submitted by the business for obtaining a state license to operate its marijuana-related business;

  • Requesting from state licensing and enforcement authorities available information about the business and related parties

  • Developing an understanding of the normal and expected activity for the business, including the types of products to be sold and the type of customers to be served (e.g., medical versus recreational customers);

  • Ongoing monitoring of publicly available sources for adverse information about the business and related parties;

  • Ongoing monitoring for suspicious activity, including for any of the red flags described in the guidance; and

  • Refreshing information obtained as part of customer due diligence on a periodic basis and commensurate with the risk.
Financial institutions who suspect illicit activity are required to file a suspicious activity report (SAR). This obligation is unaffected by any state law legalizing marijuana-related activity, according to FinCEN's guidance.

Use the resource link below for more information.


Weidler leads Western CUNA Management School graduates

CU System
CLAREMONT, Calif. (7/29/14)--Matthew Weidler of Evangelical Christian CU in Brea, Calif., just became the sixth student in the history of Western CUNA Management School to graduate with highest honors. He was one of 89 students who graduated from the school on July 25.
Click to view larger image Matthew Weidler of Evangelical Christian CU in Brea, Calif., with Western CUNA Management School Board Trustee Chair Shruti Miyashiro, is just the sixth person in the history of WCMS to graduate with highest honors. He earned high honors on the three examinations taken over the three-year period as well as on each of his two projects. (California and Nevada Credit Union Leagues photo)
Weidler earned high honors on the three examinations taken over a three-year period, as well as on each of his two projects. Evangelical Christian CU has $1 billion in assets.
Five students graduated with high honors while seven graduated with honors. Students accepted their diplomas at a ceremony held July 24 at Pomona College.
Students graduating with high honors were:
  • Christopher Curry, Hawaii
  • Sharee Dickey, Utah;
  • Dohnia Dorman, New Mexico;
  • Tina Estes, California; and
  • Missy Key, Utah.
Honors students this year included:
  • Ethan Bambock, Washington;
  • Joy Deonna Grimes, California;
  • Ryan Kane, California;
  • Lynda Joy Mahoney, New Mexico;
  • Molly Roberts; California;
  • Jennifer Krystal Trejo, California; and
  • Teresa Ward, California.
Over a three-year period, students have five opportunities to earn academic honors. Honors and high honors are awarded to the highest achievers on the examinations taken by all students at the end of each school year.  Students may also earn honors and high honors for the analysis of each of their two projects. 
In addition, senior student Marci Gannon of Washington won the Charles M. Clark Memorial Award, which goes to the graduate who best represents high moral character, leadership, credit union dedication and academic achievement. The winner is nominated by his or her class and Gannon's peers said of she deserved the award for "being enthusiastic, a great leader, and motivator."
WCMS 2003 graduate Jon Hernandez, CEO of both CalCom FCU, Torrance, Calif., with $64 million in assets, and  Mattel FCU, El Segundo, with $31 million in assets, received this year's James D. Likens Alumni Recognition Award for significant achievement in the credit union field since graduating from the school.
Christopher Curry won the Rick Craig Prize for Excellence in Project II. This award recognizes excellence in a student's second-year project.
According to its time-honored tradition of giving back to WCMS, the graduating class presented WCMS President Jim Likens with fundraising checks totaling $101,796--$17,795 from a class auction event by the three classes, and $100,001 raised over the past three years by the class, representing the largest class gift in WCMS history.
Rudy Hanley, who recently retired as CEO of SchoolsFirst FCU, Santa Ana, Calif., with $10 billion in assets, served as the commencement speaker. He spoke passionately about the credit union movement. "We're a movement not an industry," he said. "An industry is about numbers ... about dollars. A movement is about people."
He challenged the graduates to remember it's about the members, and to use their newly earned skills and knowledge to improve the quality of members' lives. He believed all of them would be up to the challenge.
"You are a great example for us; you inspire us," he said.
WCMS serves credit unions in the 13 western states of Alaska, Arizona, California, Colorado, Hawaii, Idaho, Nevada, New Mexico, Montana, Oregon, Utah, Washington, and Wyoming. It is sponsored by the Alaska Credit Union League, California Credit Union League, Credit Union Association of New Mexico, Hawaii Credit Union League, Idaho Credit Union League, Montana Credit Union Network, Mountain West Credit Union Association, Nevada Credit Union League, Northwest Credit Union Association, and Utah Credit Union Association, in cooperation with Pomona College in Claremont, Calif. ReadMore

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Allegacy FCU heart health program saves $150K in employee costs

CU System
WINSTON SALEM, N.C. (7/29/14)--An investment into the health of its employees has allowed Allegacy FCU, Winston Salem, N.C., to shave $150,000 off of its heart-related health care costs over the past five years.

Spurred by the desire to help employees make healthier choices, and to rein in swelling health insurance costs, in 2009 the $1.1 billion-asset credit union launched AllHealth: a comprehensive program that educates and coaches employees on how to live a healthier lifestyle ( Triad Business Journal July 25).

Since implementation, the credit union has seen a 47% return on investment through declines in absenteeism and increases in productivity.

The program incorporates screenings that measure blood pressure, cholesterol and glucose levels, while Allegacy's partner in the program, Novant Health, makes available a wellness coach who meets with employees on a regular basis to offer exercise, diet and fitness invites.

Further, the credit union sends out a weekly newsletter and hosts "lunch and learn" sessions as part of the educational component of the program, which can be crucial to its success, Garrick Throckmorton, Allegacy human resources manager for organizational development, told Triad Business Journal.

"Consistent education is the key to allowing someone to understand the change in lifestyle they need," Throckmorton said. "We ensure they are connecting back to the wellness coach on-site to be able to get the resources they need that are customized to their situation."

One employee told Triad Business Journal she lost 50 pounds through the program and reduced her blood pressure medication from three prescriptions to one.

"I've been battling high blood pressure for years," said Berlinda Little, a loan officer for Allegacy. "I knew I needed to do something to prevent it and control it."

The program, which enjoys a 96% employee participation rate, recently earned Allegacy the designation of 'Best in Class' by Triad Business Journal in its 'Healthiest Employers' awards program. ReadMore

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