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News Now: August 28, 2014

New NCUA board member McWatters outlines action priorities

Washington
ALEXANDRIA, Va. (8/28/14)--J. Mark McWatters, one day after being sworn in as the newest National Credit Union Administration board member, has announced his top priorities for his term at the agency. In a statement, he named regulatory relief, transparency, accountability, supporting low-income credit union members and promoting greater industry diversity as among items high on his list.
J. Mark McWatters, the newest NCUA board member, is shown here at his Senate confirmation hearing. (CUNA Photo)

"In discharging my duties, I will always welcome advice and counsel from the broader credit union industry, as well as from the management and members of individual credit unions," McWatters said.

"I assure you that I will thoughtfully and respectfully consider your perspectives as I independently analyze the issues presented. While we may differ from time to time in our analysis and conclusions regarding the structure and scope of specific regulatory and administrative actions, I assure you that your voice will be heard and considered."

McWatters said his initial focus as a member of the NCUA board would be in five areas:
  • Providing regulatory relief for credit unions;

  • Incorporating a robust, objective, transparent and fully accountable cost-benefit analysis into NCUA's rulemaking and vetting process;

  • Recognizing the critical role and expanding the scope and financial viability of low-income credit unions within the financial services industry;

  • Enhancing the availability of affordable and readily understandable financial services to credit union members who are economically challenged; and

  • Promoting the role of women and persons of color within the credit union industry.
"Paying close attention to these and other critical issues affecting the credit union industry and providing a fresh, transparent and fully accountable approach toward NCUA's internal and external operations reflects my commitment to ensuring the safety and soundness of the credit union industry and protecting the Share Insurance Fund from losses while allowing credit unions to best serve their members and conduct their affairs through their exercise of prudent, fair-minded and autonomous business judgment," McWatters said.

Credit Union National Association interim President/CEO Bill Hampel said Tuesday that the association looks forward to meeting with McWatters once he is settled to discuss the agency's risk-based capital proposal, examination concerns, the need for regulatory relief and the agency's budget. Regulatory relief for credit unions is among CUNA's top priorities.

The NCUA has a full-time, three-member board appointed by the president and confirmed by the Senate. No more than two board members can be from the same political party, and each member serves a staggered six-year term.  The NCUA chair is Debbie Matz, and the vice chair is Richard Metsger.

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Kresge grants support unbanked efforts by CUs, social agencies

CU System
ST. LOUIS (8/28/14)--Three credit unions are wrapping up their first year of financial capability partnerships with human services agencies made possible through a $530,000 grant from the Financial Capability Partnership Initiative.  
 
The initiative, managed by the National Federation of Community Development Credit Unions and the Center for Financial Services Innovation, promotes healthy financial alternatives for low-income individuals and families. Support for FCPI is provided by the Kresge Foundation.

"Problems faced by vulnerable populations require a variety of interventions. We believe the Financial Capability Partnership Initiative will help people become more integrated into the financial system and provide the tools to help them become self-sufficient," said Kimberlee Cornett, managing director of Kresge's Social Investment Practice.
 
St. Louis Community CU, with $245 million in assets, works with Kingdom House, an agency that provides social services in St. Louis, to make financial education and affordable financial products available to the agency's clients.
 
The credit union operates mini-branches in Kingdom House and in other social service agencies, making it convenient for clients to receive one-on-one financial counseling and learn about banking services. Kingdom House social workers include financial assessments in their annual client interviews, and one is trained as a personal finance specialist.
 
St. Louis Community CU's presence helps fill a gap in a neighborhood that is considered a financial institution "desert," said Scott Walker, Kingdom House executive director.
 
In Chicago, the Community Builders and South Side Community FCU, with $3 million in assets assists income-earning residents of a Work First Community Housing property with direct financial coaching and access to responsible financial products.
 
In San Francisco, Self-Help FCU, based on Raleigh, N.C., with $560 million in assets, works with the Mission SF Community Financial Center to offer financial coaching and credit union products to low-income 18- to 24-year-olds who are part of a skills-development program that includes college credit and corporate internships.
 
The Center for Financial Services Innovation and the federation have also provided support to credit unions and social service agencies in Cleveland; Durham, N.C.; New Orleans; and San Antonio.

Gallego wins Ariz. primary with help from CUs

Washington
WASHINGTON (8/28/14)--Ruben Gallego, Marine veteran and credit union-supported candidate in Arizona's 7th Congressional District, emerged victorious in Tuesday's Democratic primary.

The district is classified by Roll Call as a safe for Democrats, meaning Gallego will likely be its new congressman, replacing the retiring Rep. Ed Pastor (D).

Gallego, who resigned his position as a state representative to run for the U.S. Congress, received 48.14% of the vote, while his closest competitor, Mary Rose Wilcox, took 36.4% of the vote. Starting out, Wilcox was considered the better-known of the two candidates.

Neither of the other two candidates in the Democratic primary took more than 8% of the vote.

The Mountain West Credit Union Association (MWCUA) endorsed Gallego, with MWCUA Vice President of Political Affairs Austin De Bey telling News Now Monday that Gallego was a "strong advocate and supporter of credit unions" while a state representative, and saying Gallego would continue to be so while serving in Congress.

Five credit unions participated in a partisan communication campaign that included nine mailers that went to almost 20,000 households with credit union members.

"The communication campaign made credit unions a significant player in an election in which only 24,097 voters turned out, and which Gallego won by only 2,838 votes," said Trey Hawkins, vice president for political affairs for the Credit Union National Association.

Libertarian Joe Cobb will face Gallego in November. There was no Republican in the 7th District primary Tuesday, but 876 write-in votes were cast.

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Ga. members lend voices to 100M membership video

CU System
DULUTH, Ga. (8/28/14)--The Georgia Credit Union Affiliates highlighted the credit union movement's 100 million memberships milestone recently by recording interviews with members of Georgia United CU who described in their own words what consumers like best about credit unions.
 
The $981 million-asset credit union in Duluth was the impromptu stage for GCUA's Jason Golden, who asked members, "What's the one thing you love the most about your credit union?"
 
Auto loans, member service, shared branching, low rates and convenience, the members responded.
 


One member even shared his experience of improving his financial standing. "They gave me a lot of good advice on how to help my credit and build my credit. I'm looking really good credit-wise because of them," he said.
 
"It's a little more hometown, and a little more personal," another said. "I think they are just a little bit more about the individual."
 
The video is only part of GCUA's celebration of the movement's milestone. On Monday, the league will select the winner of its Facebook selfie contest. Contestants shared a photo of themselves on GCUA's creditYOUnion Facebook page with the #100MM hashtag for a chance to win $100.
 
GCUA also encouraged members to upload their photos to the national 100 million memberships site, americascreditunions.org.

Ed. Dept. adopts new SCRA procedures for FFEL lenders

Washington
WASHINGTON (8/28/14)--There are new procedures for Federal Family Education Loan (FFEL) lenders to determine if borrowers are eligible for benefits under the Servicemembers Civil Relief Act (SCRA), the U.S. Department of Education announced this week.

According to FFEL data, 17 credit unions are in the top 100 financial institutions holding FFEL loans. Those 17 credit unions had outstanding FFEL program balances of $1.562 billion as of Sept. 30, 2013.

Under the new procedures set by the Department of Education, FFEL lenders are now authorized and encouraged to use the Defense Manpower Data Center (DMDC) database to identify borrowers who are eligible for the interest-rate limitation provided military servicemembers under the SCRA and to grant that benefit. This identification can be made without a specific request from the borrower.

According to the Department of Education, it has been determined that the DMDC database provides "sufficient supporting documentation" of an individual's eligibility for the SCRA interest rate limitation.

Once a borrower's status and service dates have been confirmed using the DMDC, the loan servicer may use the information, but must retain that information in the borrower's file.  When the loan servicer applies the SCRA's interest rate limitation to a borrower's account, it must notify the borrower that the interest rate on the loan has been changed.

FFEL lenders that use the DMDC information to confirm a borrower status and maintain the supporting information will not be subject to any program liabilities if any information provided by the DMDC is found to be incorrect. The loan servicer does not need to confirm the information provided by the DMDC.

In a letter to FFEL lenders sent Wednesday, the Department of Education reminded them of two limitations on the application of the SCRA interest rate:
  • The SCRA applies only to loans taken out by a servicemember before the servicemember entered active-duty military service. It does not apply to loans taken out after the borrower's active-duty military service began; and

  • A consolidation loan made after the borrower has started active-duty military service is not eligible for benefits under the SCRA even if the underlying loans were taken out prior to the start of active-duty service.

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$5 coffee? Cash or card depends on age, says CreditCards.com

CU System
MADISON, Wis. (8/28/14)--Consumers, especially the younger generation, are using credit and debit cards for the smallest of purchases, such as cups of coffee and packs of chewing gum, according to a new survey by CreditCards.com.

About 1 in 3 consumers typically use a credit card or a debit card for in-person purchases of less than $5, according to a national telephone survey of 983 adult U.S. credit card holders. Roughly 11% prefer credit cards, 22% use debit cards, and 65% still pay with cash.

The penchant for plastic is stronger with the 18- to 29-year-old demographic. About 51% of consumers in that category prefer plastic to cash, the only age group to do so. A preference for cash becomes stronger in each advancing age bracket, until at age 65-plus, 82% prefer cash.

The younger consumers are, the more likely they are to reach for a card. Among consumers 49 years old and under, 52% prefer cash, and 46% prefer debit or credit cards. Among those 50 or older, 77% still prefer cash, with 21% reaching for debit cards or credit cards.

Those who graduated from or attended college are more comfortable than others using plastic for small purchases.

A combined 39% of those with college degrees prefer debit cards (21%) or credit cards (18%) over cash (59%). Only 16% of those who have not attended college usually use debit cards for purchases of less than $5, along with only 6% who prefer credit cards for that purpose.

Consumers with full-time jobs were more likely to use credit cards and debit cards for small purchases (42%) than those employed part time (34%) or than those who were unemployed (23%). People with children are more likely to use the cards for small purchases (41%) than those without children (30%).

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