OKLAHOMA CITY, Okla.  (5/22/13)--Three credit unions in Moore, Okla., saw different outcomes when Monday's EF5 tornado swept through with 200 mile-per-hour winds that leveled thousands of homes and businesses in an area as much as two miles wide and 17 miles long.
 
"The good news is there is no loss of life or injury to credit union staff and there is minimal property damage to credit unions," said Gary Jones, president/CEO of the Credit Union Association of Oklahoma.  "But a lot of people are hurting, and credit union employees are among them.
 
"There are some stories of near misses, and credit union employees have lost their home and property. We are responding to help," Jones told News Now.
 
At least 26 credit union employees in the Oklahoma City area may have been affected by severe damage or loss of homes and automobiles, according to tallies of two of the credit unions in Moore--Tinker FCU and  Oklahoma Educators CU.
 
Jones noted that staff and members at Tinker FCU's branch took shelter in the credit union's vault and survived the event while the tornado destroyed the branch around them. (See related story and photo:  Tinker FCU Branch Destroyed, Assisting Staff and Members.) The branch is closed indefinitely.
 
The tornado packed winds between 200 and 210 mph, making it in the strongest category of tornadoes measured under the Enhanced Fujita Scale assigned by the National Weather Service. It killed at least 24 people, including nine children, and injured more than 230 as of late Tuesday afternoon (CNN.com and USA TODAY May 21).
 
Oklahoma Educators CU President Cindy White was on her way Tuesday afternoon to assess any damage to the credit union's Moore branch, which was closed at the time the tornado hit.
 
"We know our facility is not leveled, not like Tinker FCU down the street, but we have not been allowed into the area yet," she told News Now. "Our employees there report that the building is still standing, and it is locked." One staffer's home was directly impacted by the tornado.
 
The third credit union with a branch in Moore, WEOKIE CU, said that branch and the Express Branch South were closed Tuesday due to power outages, Moore's Credit Union Service Center, a shared-branch, also was reportedly closed.
 
WEOKIE  said it will provide no-interest and no-payment loan options to assist members through the crisis. "The WEOKIE family is saddened by the loss of lives and destruction resulting from the May 20 tornadoes," said a message on its website. "We are grateful for the remarkable survival stories, including our colleagues at Tinker FCU," it said.
 
CUNA Mutual Group told News Now Tuesday that its Property and Casualty Claims Disaster Team had been in contact with CUAO and the credit unions in the Oklahoma City area. As of late Monday afternoon, the only credit union reporting damage was Tinker FCU's branch in Moore, said Phil Tschudy, CUNA Mutual media relations manager. "Fortunately, no one was injured there."
 
 CUNA Mutual is "making arrangements to get adjusters to the area as soon as authorities allow. However, that may not happen until later today or early Wednesday," he said Tuesday. "Any policyholder credit union that has sustained damage should contact our disaster claims line at 800-637-2676," Tschudy said. "It is staffed 24/7."
 
The Oklahoma Credit Union Foundation is mobilizing to put in place the ability to respond to the needs of credit union. "Our foundation and board will be meeting this afternoon to go over a proposal on how to deploy assistance," Jones told News Now on Tuesday.
 
The Texas Credit Union Foundation said it is working directly with the Oklahoma foundation and is accepting online donations to the Oklahoma Tornado Relief Fund, as well as assisting Oklahoma in its disaster relief grant process (LoneStar Leaguer May 21).
 
"We have had incredible amounts of outreach from around the nation from credit unions who have told us they want to help. It is humbling," Jones said, adding CUAO has received a number of e-mails and phone calls.  "We are still evaluating what is needed."
 
"Please convey our incredible gratitude for all the prayers and offers of help," CUAO's Jones told News Now," he said. "We're prepared to get through this."

WASHINGTON (5/22/13)--Qualified mortgage rules must be changed to ensure credit unions will be able to meet their members' borrowing needs in a way that minimizes risk and default, Credit Union National Association President/CEO Bill Cheney wrote in a letter submitted to the U.S. Congress on Tuesday.

The letter was submitted to House Financial Services financial institutions and consumer credit subcommittee chair Shelley Moore Capito (R-W.Va.) ahead of a hearing entitled: "Qualified Mortgages: Examining the Impact of the Ability to Repay Rule." Consumer Financial Protection Bureau Assistant Director for Mortgage Markets Peter Carroll and Assistant Director for Regulations Kelly Cochran testified at the hearing.

To help improve the regulation for credit unions, Cheney in his letter suggested expanding the ceiling on the debt to income ratio beyond the current 43% limit: "Credit unions often write mortgage loans for members that have a 45% debt-to-income ratio...Even so, our mortgage losses remain very low," he said.

Members of the subcommittee echoed some other concerns raised in CUNA's letter. There was broad consensus on both sides of the aisle that community based financial institutions should not be harmed by the "ability to repay" rule as currently written. Specifically, members raised concerns about the 3% cap on points and fees and asked questions about the debt-to-income ratio established in the rule. The cap could potentially harm those that participate in relationship banking, they said.

"As the loan amount decreases, certain fees cannot decrease alongside of it--some fees are fixed and are not dependent upon the size of the loan," Cheney wrote in the letter. "Therefore, the smaller the loan amount, the easier it is for fees to constitute a higher percentage of the total loan. This is especially true as the fees are currently defined as including loan originator compensation, and affiliate and non-affiliate fees."

Members of the subcommittee also discussed how this rule would interface with existing regulations. In his letter, Cheney also raised this point: "Examiners may be critical of credit unions and assess their CAMEL ratings accordingly if credit unions do not make mortgages that meet the qualified mortgage standards. We believe credit unions should retain the flexibility they currently have to either hold a loan in portfolio or sell it on the second mortgage market based on the needs of the credit union to manage its assets and obligations," the CUNA leader added.

For the full letter, use the resource link.

WASHINGTON (5/22/13)--"The current potential threat of the taxation on credit unions is the highest it has ever been in my 20 years that I have been involved in the movement," longtime member of Congress and former Credit Union National Association CEO Dan Mica wrote in a CUinsight.com piece.

While some in the U.S. Congress have promised that the credit union tax exemption will remain unchanged when current tax reform discussions are complete, credit unions must not rest on their laurels, Mica said. Sitting back, feeling secure and doing nothing in this crucial time "is the surest way to guarantee taxation of credit unions," he noted. "Make no mistake about it; there will be tax increases in the future. The government is gasping for revenue."

In his 15 years as head of CUNA and his 20 years in the credit union movement, Mica was instrumental in ensuring that credit unions won many key battles, including:

• The Credit Union Membership Access Act (H.R. 1151), which granted credit unions power to serve multiple groups; and

• A 2005 credit union tax status fight that ended when then-House Ways and Means Committee Chairman Bill Thomas (R-Calif.) said he had no plans for legislation that would add federal income tax to credit unions, regardless of their size or the diversity of their service offerings.

To prevent credit unions from being taxed this time around, CUNA and its affiliated state credit union leagues have launched a large-scale, nationwide grassroots-mobilization campaign urging America's 96 million credit union members to deliver a united message to the U.S. Congress: Don't tax my credit union!

"Every single day the bankers are pressing for taxation of credit unions. Every single day until the issue has been resolved in our favor all those who believe in the credit union movement should be shouting, "Do not tax my credit union!" Mica wrote.

"On the other hand, if you want to destroy the credit union movement. Do nothing," he said.

A legislative briefing on the tax situation facing credit unions and valuable information on the tools CUNA and state leagues are providing to help credit unions join the tax status fight will both be covered in today's National Webinar on the Credit Union Tax Status.

For the full CUinsight.com column and more on the free CUNA webinar, use the resource links.

OKLAHOMA CITY, Okla. (5/22/13)--

Only the safe deposit box vault of Tinker FCU's Moore, Okla., branch was left standing in the aftermath of an EF4-scale tornado that hit the area near Oklahoma City. Fourteen staffers and eight members were inside the vault and escaped with no injuries. (Photo provided by Tinker FCU)

For nearly two dozen staff and members of Tinker FCU's branch in Moore, Okla., Monday afternoon had its moment of reckoning. A half-mile wide tornado bore down on the branch and they took cover in the credit union's safe deposit box vault. After it was over, they were safe and sound, and the only thing left standing was the vault.
 
"The branch is destroyed," said Matthew Stratton, senior vice president of marketing at Tinker FCU. "But the staff and members were safe inside the safe deposit box vault." He noted that 14 employees and eight to 10 members had sought shelter in the vault, "and everyone survived, with no injuries."
 
After the tornado ended, the building's debris blocked the vault door from opening, but first responders--who arrived within minutes--helped the employees and members get out. Because new storms were on the way, the group took cover a second time in a basement across the street until family members arrived, Stratton said.
 
The credit union had someone stay on site to keep the credit union's vault secure until 10 p.m. Monday, when the cash in the vault was removed and the safe deposit boxes were secured.
 
A second branch, the Northeast Oklahoma City branch, is also closed until power can be restored.
 
Tinker FCU's human resources department is now gathering information for assisting employees directly impacted by the tornado.
 
"All staff  have been accounted for, and they're OK," Stratton said. However, about 25 employees have some damage to their homes, and four employees' homes were destroyed.
 
"We've set up an account for donations and financial assistance, but have not yet set up a mechanism for donating property or things," Stratton said. The TFCU Employee Relief Fund, account No. 8599883, is set up to receive funds mailed to:
 
Tinker FCU
 P.O. Box 45750
Tinker Air Force Base, OK 73145-0750
 
He noted that the Oklahoma Credit Union Foundation is also developing assistance for credit union employees and the American Red Cross is already on the scene.
 
"We've secured the safe deposit box vault and the branch's computer system is secure," Stratton said. "The branch's system doesn't hold any information. Its computers are more a connection conduit into the core system, which is located elsewhere. Members don't have to worry about their confidential information being housed in a damaged computer."
 
In addition to securing the cash and vault, ensuring employees are well, Tinker FCU is also offering members a disaster relief loan program. However, he noted that the credit union typically works one-on-one with members through any crisis. "This is just a bigger version."
 
(See related stories in today's News Now, "Oklahoma League On Tornado: 'We're Prepared To Get Through This,'" and "NCUA Activates Disaster Relief For Oklahoma.")

WASHINGTON (5/22/13)--In the wake of this week's tornadoes, the National Credit Union Administration has activated its disaster relief policy to aid impacted credit unions and their members.

Under the NCUA disaster relief policy, the agency will, where necessary:

• Encourage credit unions to make loans with special terms and reduced documentation to affected members;

• Reschedule routine examinations of affected credit unions if necessary; and

• Guarantee lines of credit for credit unions through the National Credit Union Share Insurance Fund.

The NCUA also encouraged credit unions to exercise prudent efforts to alter terms on existing loans for affected members, including:

• Extending the terms of loan repayments;

• Restructuring a borrower's debt obligations; and

• Easing credit terms for new loans to certain borrowers, consistent with prudent practices.

Institutions in need of assistance in dealing with members affected by this disaster should contact NCUA's Region IV office in Austin, Texas, at 512-342-5600.

Members needing emergency assistance related to the tornados and severe weather should call NCUA's toll-free consumer assistance hotline at 800-755-1030 and press the appropriate option. Operators will answer calls Monday through Friday between 8 a.m. and 5 p.m. EDT, the agency said.

Federal credit unions may also provide emergency financial services for non-members and aid other credit unions by providing services.

For the full NCUA release, use the resource link.

WASHINGTON (5/22/13)--Low-income credit unions can now apply for a total of $1.18 million in grants to help support their financial literacy, product development, collaboration, staff and board member training, office relocation and computer modernization efforts, the National Credit Union Administration said on Tuesday.

Eligible credit unions may apply for as much as $24,000 in funding. Grant applications can be filed between June 17 and July 12, and grantees will be announced at the end of August, the agency said. Eligible credit unions may file a single application for all funding initiatives, the NCUA added.

NCUA Chairman Debbie Matz encouraged eligible credit unions to apply. "These grants provide critical assistance to low-income designated credit unions so they can better meet the evolving financial needs of their members," she added.

The grant money was appropriated by Congress through the Community Development Revolving Loan Fund. NCUA's Office of Small Credit Union Initiatives administers that fund.

The NCUA has scheduled a "Multi-Initiative Grant Webinar" for today at 2 p.m. ET.

For the full NCUA release, and to register for the webinar, use the resource link.

U.S. Rep. Gary Peters (D-Mich.) speaks at the Michigan Credit Union League & Affiliates Annual Convention and Exposition. Peters told why he backs raising credit unions' business lending cap and thanked them for their efforts to provide affordable auto financing during the financial crisis.

DETROIT (5/22/13)--Credit unions should have the authority to make more loans to small businesses, said U.S. Rep. Gary Peters (D-Mich.), who noted credit unions' auto lending during the darkest days of the financial crisis, at the Michigan Credit Union League & Affiliates Annual Convention and exposition.

"Credit unions should be able to make those loans. We need to raise that cap," Peters said (Michigan Monitor May 21).

Peters is one of the original co-sponsors of this year's version of the bill that would raise the cap on member business lending.

U.S. Sen. Mark Udall's (D-Colo.) Small Business Lending Enhancement Act (S. 968), introduced in the Senate on Thursday, would increase the credit union member business lending cap to 27.5% of assets, from the current 12.25% (News Now May 17). Doing so would generate $13 billion in new loans and create 140,000 jobs, the Credit Union National Association said.

Peters thanked credit unions and the credit union industry for maintaining affordable financing for new-car purchases during the bleakest days for the auto industry in 2009, while banks stood on the sidelines.

Entrepreneur Josh Linker speaks about fostering creativity on the job at the Michigan Credit Union League & Affiliates Annual Convention and Exposition.  (Photos provided by the Michigan Credit Union League).

"The credit unions said, 'We will lend for cars,'" Peters said, speaking at MCUL & Affiliates Annual Convention and Exposition. "You stepped up when your country needed you and you made those loans"

Peters also thanked the Michigan credit union community for its endorsement of him for U.S. Senate.

In other events at the convention, entrepreneur Josh Linker encouraged credit union leaders to embrace new ideas rather than stifle creativity.

Fresh thinking should be encouraged, he said, even if it leads to mistakes. "Mistakes are not failure," Linkner said. "Mistakes are the portals to discovery."

ATLANTA (5/22/13)--Student loans increased nearly 27%, to $11.7 billion in February from $9.2 billion in February 2012, according to Equifax's most recent National Consumer Credit Trends Report.

That reaffirms the results of the Credit Union National Association's Student Borrowing Survey, which found that student debt is increasing, with half of high school seniors having no idea what college will cost or how debt works and indicating many lack basic financial knowledge. CUNA surveyed 846 teens age 17-18 last month.

"Student borrowing continues to increase rapidly, and well beyond just tuition increases as more and more people are attending colleges and professional training," said Equifax Chief Economist Amy Crews Cutts.

"In the past, some students might have relied on their parents who would have funded tuition payments using home equity lines of credit, but the small volume of home equity lending that is occurring today, at a little over $12 billion, is not sufficient to cover those costs."

Overall, new credit generated during January-February 2013 was $141 billion--the highest balance for that time period in five-years--and an increase of more than 33% over recession lows of $94 billion originated during January-February 2010.

New credit balance changes year-to-date in February 2013 versus February 2012 were:

• Home equity lines of credit increased nearly 16%, to $12.4 billion from $10.7 billion; and

• Auto loans rose more than 13%, to $69.6 billion from $61.5 billion.

"The rise in auto loans is reflecting the strong demand for new cars and light trucks, which increased almost 9% over the same time a year ago," Cutts said.

"On a year-to-date basis through February, auto loan origination activity this year is the strongest it has been for banks since Equifax began tracking this information in 2006, totaling $35.6 billion, and the second strongest showing for non-bank auto financing companies at $34 billion. Consumers are tired of their old, patched-up cars and demand is really starting to pick up.

"At the same time, there is a slight increase in the willingness of lenders to finance car purchases for consumers with less than perfect credit," she added.

Other highlights from the most recent data include:

Student Loans:

• The total new credit balances for February, year-over-year 2012-2013, nearly 29%--to $5.1 billion from $4 billion.

Auto Loans:

• The total number of new loans increased nearly 9%, from 3.2 million in February 2012, to 3.5 million in February 2013, the highest in more than seven years.

• By source, bank-funded auto loans increased more than 12% from February 2012 to February 2013--to $17.4 billion from $15.4 billion, while auto finance company-funded loans increased less than 3%, to $17.9 billion from $17.4 billion. 

Home Equity Revolving:

• The total number of new loans year-to-date in February 2013, are 130,200, a year-over-year increase of more than 11%.

• Year-over-year, the total balance of new credit increased more than 11%, to $6.3 billion in February 2013 from $5.6 billion the year before.