Archive Links

Consumer Archive
CU System Archive
Market Archive
Products Archive
Washington Archive

News Now

News Now: March 30, 2015

Senate budget amendment would establish reg. relief fund

WASHINGTON (3/30/15)--An amendment to the U.S. Senate budget resolution passed last week would establish a deficit-neutral reserve fund to address disproportionate regulatory burdens on credit unions and community banks.

Proposed by Sen. Kelly Ayotte (R-N.H.), the amendment allows for one or more bills, joint resolutions, amendments, amendments between the houses, motions or conference reports that would alleviate regulatory burden.

Both chambers of the U.S. Congress passed budget resolutions last week, and CUNA continues to analyze the budget resolutions for anything that could potentially affect credit unions.

Another amendment to the Senate resolution would end "too big to fail" bailouts of banks with $500 billion in assets or more.

A number of other issues of note to credit unions were addressed in the Senate's "vote-a-rama" which stretched to Friday morning but weren't adopted. 

The Senate passed its budget resolution by a vote of 52-46.

The House budget resolution consisted of six different budget plans; a budget developed by the House Budget Committee, and consideration of five other budgets. A version of the budget that mirrored the House Budget Committee offering with an additional $2 billion in defense spending passed by a 228-199 vote.

The next step in the budget process is a conference committee between the House and Senate to work through details of both resolutions and come out with a common budget that will be sent to both houses for final passage.

The Senate and House will be in recess for the next two weeks for a spring district work session.

Other Resources

Data breach expenses barely negligible in retailers' financials

CU System
NEW YORK (3/30/15)--A review of top merchants' financial statements found that the cost of data security breaches--while devastating to credit unions and consumers--barely makes a dent in their annual revenues.
Benjamin Dean, a fellow for Internet governance and cybersecurity at Columbia University's School of International and Public Affairs, examined 10-K reports filed by Sony, Target and Home Depot with the U.S. Securities and Exchange Commission.
Among his findings:
  • Target's 2013 breach affected 40 million credit and debit cards and 70 million personal information records. It reported the gross expenses were $252 million. Once the insurance reimbursements and tax deductions were accounted for, the net losses totaled $105 million--equivalent to 0.1% of 2014 sales;
  • In 2014, Home Depot had a breach that affected 56 million credit and debit card numbers and 53 million email addresses. The home improvement retailer incurred net expenses of $28 million after an insurance reimbursement of $15 million. Those expenses are less than 0.01% of Home Depot's 2014 sales; and
  • Sony reported the November 2014 hack into its computer systems--which exposed Social Security numbers and personal emails--would cost $44 million. However, estimates now put the impact at $15 million in investigation and remediation costs. These losses represent 0.9%-2% of Sony's total projected sales for 2014.
"It therefore does not make economic sense for companies like Home Depot to make large investments in information security. As a result, they do not," Dean wrote. "The insurance pay-outs and tax deductible breach-related expenses weaken the incentives even more."
Dean also cited CUNA's research that found the Home Depot breach cost credit unions $60 million.
Dean's article was picked up by FORTUNE , CBS MoneyWatch and The Wall Street Journal .
Target's announcement that it settled a consumer class-action lawsuit for $10 million does not mean financial institutions are being recompensed. The settlement only covers payments to consumers for damages they can prove.
"Credit unions continue to protect their members as a result of merchant data breaches--and there's no end in sight. It's high time for merchants to be held to the same standards as financial institutions to ensure all consumers' private information is protected," CUNA President/CEO Jim Nussle said after Target settled a $10 million consumer class-action lawsuit ( News Now March 20).
CUNA also signed on to a letter to Congress from financial services associations that suggested merchants look toward innovative security instead of increased usage of chip-and-PIN EMV cards--status quo security that does not protect consumer data ( News Now March 24).

Other Resources

Cyber info-sharing bill passes committee

WASHINGTON (3/30/15)--A bill intended to increase the sharing of information on cyberthreats was passed by the U.S. House Permanent Select Committee on Intelligence last week.

The Protecting Cyber Networks Act (H.R. 1560) permits only voluntary sharing by the private sector of cyberthreat indicators only for cybersecurity purposes.

The bill also:
  • Prohibits the government from forcing private sector entities to provide information;
  • Requires companies to remove personal information before information is shared, and the federal agency receiving cyberthreat indicators to perform a second check for personal information before sharing it with other relevant federal agencies;
  • Limits the private-to-private sharing to only cyberthreat indicators and defensive measures to combat a threat;
  • Imposes strict restrictions on the use, retention and searching of any data voluntarily shared by the private sector with the government;
  • Does not shield a company from willful misconduct in the course of sharing cyberthreat indicators but provides liability protections for companies that share in good faith;
  • Permits individuals to sue the federal government for intentional privacy violations in federal court; and
  • Requires a detailed biennial inspectors general report of appropriate federal entities of the government's receipt, use and dissemination of cyberthreat indicators. The Privacy and Civil Liberties Oversight Board (a bipartisan agency within the executive branch) must also submit a biennial report on the privacy and civil liberties impact of the act.
A similar bill was passed by the Senate Intelligence Committee last month.

Other Resources

Ga. CU parity bill awaits signature from governor

CU System
DULUTH, Ga. (3/30/15)--The Georgia Senate passed a bill supported by the Georgia Credit Union Affiliates (GCUA) earlier this month that would introduce parity between state-chartered and federally chartered credit unions. The bill now only awaits the signature of Gov. Nathan Deal.

"Putting state-chartered institutions on the same level playing field as federal institutions in this state will create a positive environment for those operating in Georgia," said Rep. Bruce Williamson (R-Monroe), who introduced the bill, HB 184.

Williamson, who noted GCUA for its support in helping to pass the bill, also said that HB 184 would help strengthen state-chartered credit unions and make Georgia a better place for business.

Since the bill was introduced in February, GCUA has acted as a resource for legislators to consult with on the proposed legislation.

In addition to adding parity for state-chartered credit unions, HB 184 would also outline how a bank could convert to a credit union; require out-of-state credit unions operating in Georgia to have federal insurance; and provide the Department of Banking and Finance the ability to conserve a troubled credit union.

Further, the bill would require that comprehensive audits of credit unions be performed by licensed, independent accountants or firms; set a minimum standard of conduct for directors by outlining impermissible actions; and provide credit unions the ability to pay the required amount to join the credit union on the members' behalf if they so choose.

Other Resources

Nussle visits America's CU Museum

CU System
MANCHESTER, N.H. (3/30/15)--CUNA President/CEO Nussle returned to the roots of the credit union movement recently, visiting America's Credit Union Museum in Manchester, N.H., where the first credit union in the United States was housed.

Click to view larger image Jim Nussle, CUNA president/CEO, immerses himself in credit union history with Ron Covey, board member, America's Credit Union Museum, and president/CEO, St. Mary's Bank CU, Manchester, N.H., during a recent visit to America's Credit Union Museum. (America's Credit Union Museum Photo)
The museum's exhibits showcase the myriad ways credit unions have improved the lives of Americans across the country over the last century.

Its mission is to continue to share the history of credit unions for future generations through its one-of-a-kind experience that connects visitors to the cooperative philosophy of credit unions.

"It was an honor to see America's Credit Union Museum first hand and experience the storied history of the credit union movement," Nussle said. "I'm proud of the work credit unions have been doing for Americans for 100 years and look forward to what the next century holds."

Nussle also visited the building next door to the museum that will host the future CUNA Research Center. The space will accommodate a virtual "library" that will allow credit unions, consumers, the media, regulators and others to explore the colorful history of credit unions.

CUNA recently pledged $1 million to the museum's Legacy Capital Campaign that will help ensure the institution preserves the rich history of the credit union system for future generations.

The three-year campaign has a fundraising goal of $3.3 million that will be used to build out the new research center, create additional exhibit space and renovate portions of the existing building.

Other Resources

IRS to offer April 8 webinar on UBIT

WASHINGTON (3/30/15)--The IRS has announced an April 8 webinar on unrelated business income tax (UBIT) and tax-exempt organizations.
The webinar, offered by the IRS's Tax Exemption & Government Entities Division, will provide information on:
  • UBIT;
  • Three parts test;
  • Common types of activities;
  • Exceptions and exclusions;
  • Principal form used to report; and,
  • IRS resources.
Presenters for the 2 p.m. (ET) session will be Steve Farson , tax law specialist, IRS Office of Exempt Organizations , and Al Page , tax law specialist, IRS Office of Exempt Organizations.

Those interested in participating can sign up here .

Also related to UBIT, the IRS issued a "new" memo to replace its 2014 memo on the same subject, but the new memo makes no changes in its listing of what products and services offered by state-chartered credit unions trigger UBIT. See the related item in Inside Washington.

Other Resources


News Now LiveWire
Consumer spending is slumping #Market #Economy
5 hours ago
April is #NationalFinancialLiteracyMonth & @TheNCUA Chair Matz urges #creditunions to help members learn to manage/protect their finances.
6 hours ago
Fed. FI regulators' statmnts on compromised credentials/destructive malware #cybersecurity
8 hours ago
Home prices rising faster than wages: @RealtyTrac #NewsNow #Market
9 hours ago
.@Nussle dropped by the @ACUMuseum recently. Read about his visit
10 hours ago