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News Now: July 14, 2014

Ala. CUs join nationwide 'Bank on' campaign for unbanked

CU System
MOBILE, Ala. (7/14/14)--Four Alabama credit unions have joined a national campaign to help consumers become more financially independent.
In south Alabama, the Bank On initiative includes more than 20 credit unions and banks that offer financial services at lower costs to the community ( July 11).
Among the Alabama credit unions participating in the program:
  • Army Aviation Center FCU, Daleville, with $1.1 billion in assets;
  • Azalea City CU, Mobile, with $19 million in assets;
  • McIntosh (Ala.) Chemical FCU, with $22 million in assets; and
  • New Horizons CU, Mobile, with $208 million in assets.
Individuals who have had accounts closed because of past financial troubles or bounced checks more than six months ago may be eligible for the program. Participating financial institutions offer free checking and/or second chance accounts.
Since the first Bank On program was launched in San Francisco in 2006, this model of financial access has been refined, replicated and identified as a leading strategy for state and local officials across the United States to bring unbanked and underbanked consumers into the financial mainstream.
Bank On programs negotiate with credit unions and banks in local communities to reduce barriers to banking and increase access to the financial mainstream. Typically led by local government or state public officials, Bank On programs are voluntary, public/private partnerships between local or state government, financial institutions and community-based organizations that provide low-income, un- and underbanked people with free or low-cost starter or second-chance bank accounts and access to financial education.
Bank On Oregon is also sending a "shout out" for support from local financial institutions. "We need the participation of credit unions to make this effort a success," David Tatman, administrator of the Division of Finance and Corporate Securities, a division of the Oregon Department of Consumer and Business Services, told the Northwest Credit Union Association ( Anthem July 11). "We want to ensure there are a variety of safe and affordable products available on the Bank On Oregon website to fit the needs of Oregonians."

Credit unions from Dubuque, Iowa, Baton Rouge, La., California and Idaho are among the many that are participating in the Bank On program.

Other Resources

Cleveland Fed: CDFIs successful in boosting low-income area lending

CLEVELAND (7/14/14)--The Community Development Financial Institution (CDFI) Fund is successfully increasing lending in low-income areas, according to a study by the Federal Reserve Bank of Cleveland.

Assessing returns on government projects spending can be difficult, the report states, because of "double bottom lines" found in many programs. These projects are not solely concerned with profits, but also with a socially oriented goal, such as strengthening the economy of a community or improving economic opportunities for a disadvantaged group.

Established by the Riegle Community Development and Regulatory Improvement Act of 1994, the CDFI Fund awards grants to CDFIs operating in low-income areas. Awards are intended to strengthen the institutions and increase the amount of lending to borrowers in those areas. In 2013, the fund awarded more than $172 million to CDFIs.

Credit unions make up 177 of the 811 CDFIs active at the end of 2013, according to a CDFI Fund annual report released earlier this month. According to U.S Treasury Department data, credit unions that receive awards lend more than their similarly sized counterparts over the three years following the award.

"Additionally, CDFIs' net worth ratio is positively correlated with receiving an award. This means that CDFI Fund awards go toward recapitalizing credit unions as well," the report reads. "This will allow credit unions to continue to make loans in the future because credit unions require a 7% capital-to-asset ratio to be able to expand their loan portfolio. On average, credit unions have capital ratios near 10% to 11%, but CDFIs hover around 8% or 9%."

The report goes on to say that the CDFI program seems to work because the awards are direct enough to increase lending in the areas that need it the most. The guidelines that define CDFIs prevent money from being allocated to areas that aren't in need.

"CDFI Fund is increasing lending in low-income areas, thus achieving one of the goals Congress set for it. This is, however, only one part of the double bottom line," the report reads. "But since the technical assistance and financial assistance programs are small, it is difficult to tease out their effects on aggregate employment, incomes, or other indicators of the economic viability of the community, which would reflect the other half of the double bottom line."

Use the resource link below for the full report.

CU's new HQ: High-tech, high-touch, no corner office

CU System
BRIGHTON, Mich. (7/14/14)--Anyone who walks through the doors of Lake Trust CU's new headquarters once it opens next year may mistake their surroundings for the offices of Facebook or Google.

But while the $1.6 billion-asset, Brighton, Mich.-based credit union is sticking to financial services--as opposed to social networks or search engines--the organization hopes the unique, open workspace environment it has incorporated into the design will stir up the same type of innovation and collaboration that's often found in Silicon Valley.  

"(It's) the kind of organization that we are; we strongly believe in innovation and collaboration, and all of those things truly benefit our members," Danielle Brehmer, Lake Trust vice president of strategic innovation, marketing and public affairs, told News Now . "Having this really open environment, where not even the CEO has an office, we can integrate the different lines of business."

That's right: David Snodgrass, Lake Trust president/CEO, will sit at a work station in the middle of all other employees.

"I don't have an office," Snodgrass told the Lansing State Journal last week.

Brehmer told News Now that Lake Trust staff toured offices like Facebook and Google, as well as local businesses in Michigan, to flesh out the design for the new headquarters.

The building will replace the credit union's current Lansing and Plymouth facilities that are aging and expensive to maintain. The new headquarters also will enable Lake Trust to better serve its expanded field of membership after the 2010 merger of NuUnion CU and Detroit Edison CU.

In addition to open work spaces, the resultant $30 million building will house 350 employees and include a fitness center, cafeteria, walking trail on the perimeter of the property and community rooms.

The 100,000-square-foot facility also will be LEED certified, meaning it will meet the most current sustainable building design standards.

"You can't call yourself innovative if you're not thinking about sustainability and long-term impacts," Brehmer told News Now . "Look at the way of the world, that's who consumers are today."

The building is expected to be completed by October 2015.

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Bill to fight patent 'trolls' passes House subcommittee

WASHINGTON (7/14/14)--The House subcommittee on commerce, manufacturing and trade voted 13-6 Thursday to advance a bill designed to combat abusive patent demand letters. The Targeting Rogue and Opaque Letters (TROL) Act of 2014 would crack down on unfair or deceptive practices in connection with the assertion of a U.S. patent.

The bill would prevent the following:
  • The sending of communications where the sender falsely represents that they have the right to enforce the patent, a civil action has been filed against the recipient for a violation, a civil action has been filed against other recipients, legal action will be taken, the sender is the exclusive licensee of the patent or an investigation into infringement of the patent has occurred;

  • A sender seeking compensation for an unenforceable patent claim, activities undertaken by the recipient after the patent has expired or authorized activity regarding the patent by the recipient; and

  • The sender failing to provide the identity of the person asserting the right to the patent, the patent that is alleged to have been infringed upon, an identification of the alleged patent infringement or contact information for a person making the infringement claims.
Violations of the bill would be enforced by the Federal Trade Commission (FTC), under its powers to enforce rules against unfair or deceptive acts or practices.

The Credit Union National Association has been a longtime advocate of meaningful patent reform and submitted a joint letter with other trade associations representing more than 14,000 financial institutions Thursday in support of some of the provisions the TROL Act.

"Financial institutions of every size have been targeted by Patent Assertion Entities, often referred to as patent trolls, who in most cases assert patents of dubious quality through vaguely worded demand letters or intentionally vague complaints," the letter reads. "Indeed, patent trolls' recent focus on credit unions and community banks threatens to pose additional, unwarranted costs on lenders and the communities they serve."

The letter also praised the bill for clarifying the FTC's authority to fight these deceptive practices while not infringing upon the rights of legitimate patent holders to assert their rights.

The bill will now be sent to the full House Energy and Commerce Committee.

Other Resources

Mortgage lending jumps 32% in second quarter

LOS ANGELES (7/14/14)--After months of sluggish activity, mortgage lending is starting to gain steam, according to numbers reported by Inside Mortgage Finance this week ( Los Angeles Times July 10).

Roughly $310 billion in mortgages were logged in the second quarter, about a 32% jump from the first quarter, according to the trade magazine.

With refinancing activity slowing in recent months, consumers finally appear to be taking advantage of rising, but still historically low interest rates and easing price inflation, Inside Mortgage Chief Executive Guy Cecala told the Los Angeles Times.

"We're not looking at a housing boom by historical standards," Cecala said. "But I think we're looking at a more sustainable housing market where more people are buying homes to live in, not just for investment purposes."

Climbing interest rates in 2013 pinned down the market through the end of last year, and unusually harsh winter weather in the beginning of 2014 plugged up the market as well, but as mortgage interest rates have paused and as inventory has steadily risen, mortgages have become more feasible for homebuyers, analysts say.

"I think people who had been hesitating about buying a home started feeling some incentives to move forward," Rick Sharga, executive vice president, told the Los Angeles times .

CUNA makes NCUA L.A. Listening Session audio available

WASHINGTON (7/14/14)--The Credit Union National Association has made available a full audio recording of the National Credit Union Administration's June 26 Listening Session held in Los Angeles, as well as key audio clips of that session.  The audios have been posted to CUNA's website.
The primary focus of the session was the NCUA's risk-based capital plan, with a lively back-and-forth dialogue between participants and NCUA representatives ( News Now June 27).
About midway through the session NCUA Chair Debbie Matz made it clear that "everything is on the table" regarding possible changes to the RBC plan proposed in January.  While she said the agency is not required to put a revised version of the proposal out for a separate comment period--beyond the one that concluded May 28--she also said very clearly that there is "no rush" to the finish line on this rule.
A second Listening Session occurred in Chicago July 10, and a third is scheduled for Thursday in Alexandria, Va. CUNA will post audios for those sessions also.

Use the resoure link to access the audio.
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