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News Now: March 4, 2015

MBL bill a common-sense boost to economic recovery, Nussle tells lawmakers

WASHINGTON (3/4/15)--A bill that would allow credit unions to increase their member business lending (MBL) will be a boost to the economy, CUNA President/CEO Jim Nussle said Tuesday.

In a letter to Reps. Ed Royce (R-Calif.) and Gregory Meeks (D-N.Y.), Nussle thanked the legislators for introducing  the bill Monday,

"Credit unions understand that in order for the economy to fully recover, small businesses need access to credit, which will help their businesses grow," Nussle wrote. "Credit unions have capital to lend, a history of prudent and safe small business lending, and a mission to help provide access to credit to their members--including their small business-owning members. They just need Congress to enact your legislation."

Credit unions are currently limited to member business lending up to 12.25% of assets, but if the bill is passed, it could raise the cap to 27.5% of assets for credit unions that meet certain conditions.

"Today, many credit unions are rapidly approaching the cap while others choose not to engage in business lending because of the cap," Nussle wrote. "If the cap is not increased, the ability of many business-lending credit unions to help small businesses will be jeopardized."

CUNA estimates that if the bill is enacted, it would allow credit unions to lend an additional $16 billion to small businesses in the first year, helping to create more than 150,000 new jobs.

The bill, identical to a CUNA-supported bill introduced in the last Congress, would amend the Federal Credit Union Act. Currently, credit unions are prohibited from member business lending exceeding 12.5% of assets, or 1.75 times the actual net worth of the credit union.

Credit unions could lend up to 27.5% of assets if: outstanding member business loans have been at or above 80% of the 12.25% cap for the last year; it is considered well-capitalized; it has had an MBL program for at least five years; and it receives permission from the National Credit Union Administration.

CU Effect: St. Louis Community collaborates to save homes with FHLB grant

CU System
ST. LOUIS (3/4/15)--Anne may have had a roof over her head, but for some time that roof scarcely provided the Ferguson, Mo., resident any comfort.

Click to view larger image Thanks to an FHLB grant, Wanda was able to receive much-needed repairs to her home, including a new thermostat. (St. Louis Community CU Photo)
The plumbing was shot and the house was so cold in the winter that Anne, who's elderly and disabled, slept with a heating pad and a space heater to stay warm at night.

It was only because of a grant procured by St. Louis Community CU--a Community Development Financial Institution (CDFI) and a low-income designated credit union--that Anne was able to make the repairs she needed to make her home safe and livable again.

"This house, at 3 in the morning, would be so cold," Anne said. "At 3 this morning, it was heaven."

The grant program, one of several affordable housing-related programs offered by St. Louis Community, is made possible through a partnership with the Community Action Agency of St. Louis County (CAASTLC), a local low-income intervention services organization.

In 2013, St. Louis Community received a $300,000 affordable housing grant from the Federal Home Loan Bank (FHLB) of Des Moines, allowing CAASTLC to repair and weatherize homes for low-income homeowners.

The grant funding helped pay for repairs and weatherization, which includes insulation for heating and cooling, on 39 homes, with an average of about $8,000 to $9,000 spent on each home.

"Some of these individuals faced dangerous and unsafe conditions," Dorothy Bell, St. Louis Community senior vice president/chief marketing officer, told News Now in an email. "Thanks to the funding, they were able to remain in their homes with dignity."

The assistance doesn't stop with the repairs, however.

Those who receive home repairs or weatherization also are given one-on-one education sessions on living safe, healthy lives in their updated homes.

Called the Healthy Homes curriculum, the program provides recipients education on how to maintain a healthy indoor air environment. Program leaders say the education, combined with the repairs and weatherization, help break the cycle of poor health and poor quality of life.

"People's ability to stay in their homes and stay healthy is the real impact," said Jim Trout, CAASTLC associate director for weatherization. "Lower utility bills are the icing."

The upgrades the Community Action Agency of St. Louis County made to Anne's home keep her warm at night, unlike her house before the repairs. (St. Louis Community CU Photo)
This combination also recently helped Wanda, a Jennings, Mo., resident whose home was in such disrepair that CAASTLC couldn't weatherize it until additional repairs were made.

Wanda's furnace was inoperable, her plumbing leaked, mold had taken hold of the basement, appliances had stopped working and the home had become so inhabitable that she began staying with friends. Conditions were exacerbated after Wanda had to spend a month in the hospital after a bad fall.

But the funds provided by St. Louis Community enabled CAASTLC to completely renovate Wanda's home, and now it's clean, dry and livable. Wanda also received a new high-efficiency furnace with a programmable thermostat, a new electrical service panel and new plumbing.

"It was like giving a baby a rattle," she said. "I was so distracted because of my fall, but then I started thinking, 'I'm getting a new furnace.' That's pretty awesome."

The educational component also played a huge role for Wanda, as homes in poor condition can lead to health issues--such as respiratory problems--because of animal droppings or mold.

As a CDFI, St. Louis Community CU actively partners with social services agencies and its clients as part of its overall giveback to the community.

(This is part of a continuing News Now's new series, "The CU Effect," which gives readers a fresh and in-depth look at how credit unions make a difference in the world every day. Look for the next installment March 18.)

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CUNA writes to support QM, NCUA study bills

WASHINGTON (3/4/15)--CUNA has sent letters in support of two recently introduced pieces of legislation that help serve the credit union community. CUNA President/CEO Jim Nussle wrote Tuesday to Rep. Andy Barr (R-Ky.) in support of his Portfolio Lending and Mortgage Access Act (H.R. 1210) and to Rep. Mick Mulvaney (R-S.C.) in support of the National Credit Union Administration Budget Transparency Act (H.R. 1176). 

Barr's bill, which has CUNA's strong support, would allow residential mortgages held in portfolio by the original creditor to be deemed "qualified mortgages" (QMs) under the Consumer Financial Protection Bureau's (CFPB) mortgage lending rules.

QMs are a category of loans that are considered more stable, since lenders must have made good faith efforts to determine a borrower's ability to repay, and the absence of certain loan features that can be harmful.

"Treating loans that financial institutions hold on their balance sheets in this manner is appropriate because the lender retains all of the risk involved with these mortgages and is subject to significant safety and soundness supervision from its prudential regulator," Nussle wrote. "This will help credit unions, many of which are primarily portfolio lenders, continue to provide mortgage credit to their members."

Nussle also wrote to support Mulvaney's bill, which was introduced last week. The bill would direct the U.S. Government Accountability Office (GAO) to study the NCUA's budgeting process and identify ways the agency can increase the transparency of the process within 18 months of the bill's enactment.

The study will also determine the availability of line-by-line budget data for the National Credit Union Share Insurance Fund, Central Liquidity Facility and Temporary Corporate Credit Union Stabilization Fund.

"CUNA has consistently advocated for NCUA to be more transparent with their budget process for many years because credit unions fund the agency and the National Credit Union Share Insurance Fund," Nussle wrote. "One way to bring transparency and accountability to the NCUA budget process would be to require the NCUA Board to conduct an annual public hearing on the agency's budget ... conducting such a hearing would represent a very modest burden on the agency and the Board--a handful of hours simply to listen to those whom they regulate--but it would be very meaningful to the credit unions that are responsible for funding the activities of the agency."

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Circuit court restores NCUA RMBS suit vs. Barclays

DENVER (3/4/15)--The U.S. Court of Appeals for the Tenth Circuit has restored a National Credit Union Administration lawsuit that had charged Barclays Capital Inc. with misrepresenting the quality of more than $550 million in residential mortgage-backed securities (RMBS) sold to corporate credit unions.

"These cases are extremely important to credit unions, and this is another positive step forward," said Robin Cook, CUNA senior director of advocacy and counsel for special projects.  He added, "NCUA so far has recovered more than $1.75 billion from the big banks, a huge achievement that has helped reduce corporate stabilization assessments on credit unions."
The court order overturns a 2013 ruling by U.S. District Judge John W. Lungstrum in Wichita, Kan., that dismissed the NCUA's claims on the grounds they were time-barred and NCUA hadn't filed its case in time.  NCUA, however, entered into an agreement with Barclays that would have extended the time it had to file these cases. 
In the 10th Circuit ruling filed Tuesday, the court, in part, ruled "Barclays expressly promised not to raise the statute of limitations defense if doing so would require inclusion of time periods that the parties agreed to exclude, and we hold Barclays to that promise."
The cases will now proceed to discovery.

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NCUA announces March 25 FOM webinar

ALEXANDRIA, Va. (3/4/15)--Credit unions looking at altering their fields of membership (FOM) can tune into a webinar just announced by the National Credit Union Administration for March 25.

The free webinar will feature NCUA staff discussing ways reaching out to underserved communities can be incorporated into a credit union's strategic plan.

Vanessa Lowe, economic development specialist, NCUA's Office of Small Credit Union Initiatives; Ynette Gibbs, CEO, Newrizons FCU, Hoquiam, Wash.; and staff from NCUA's Office of Consumer Protection will lead the webinar.

Topics include using data to maximize membership growth and a review of the FOM Internet application.

Online registration is now open. The webinar is scheduled to begin at 2 p.m. (ET) March 25 and is scheduled to run for 90 minutes.

According to the NCUA, a closed captioned version of the webinar will be posted online within three weeks of the event.

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Two-thirds of fraud victims received data breach notifications: Javelin

CU System
SAN FRANCISCO (3/4/15)--Fraudsters stole $16 billion from 12.7 million consumers in 2014, equaling one new identity fraud victim every two seconds, according to a recent study by Javelin Strategy and Research.

Click to view larger image Click for larger view
Part of the problem may be that consumers aren't taking the threat of data breaches seriously enough, as the 2015 Identity Fraud Study also found that two-thirds of victims last year previously had received notices about a data breach.

"Despite the headlines, the occurrence of identity fraud hasn't changed much over the past year, and it is still a significant problem," said Al Pascual, Javelin Strategy and Research director of fraud and security.

While some steps to combat that problem have been taken, Pascual said "we must remain vigilant. The criminals will continue to find new ways to commit fraud, so taking advantage of available technology and services to protect against, detect and resolve identity fraud is a must for all individuals and corporations."

The study, which polled 58,800 respondents, found that the number of fraudulent accounts opened, or new account fraud, dropped in 2014. The number of victims of identity fraud also fell by 3% to 13.1 million from 12.7 million the prior year.

But given the amount of data stolen last year, consumers aren't nearly out of the woods, Pascual said.

"We don't want people to get a false impression," he said. "There is still a ton of personal information, a ton of card data out there."

CUNA continues to urge lawmakers to pass legislation that would ramp up data security requirements for merchants, which aren't held to the same very strict standards that financial institutions are required to uphold. 

Awareness hinders consumers' switch to CUs, says BancVue

CU System
AUSTIN, Texas (3/4/15)--Consumers love the local flavor that credit unions provide, but lack of awareness and some misplaced perceptions may be preventing many of them from making the switch to community-based financial institutions.
If all things were equal, two out of three U.S. adults (66%) would rather bank at credit unions or community banks than one of the big national banks--yet only 23% of consumers who are not currently banking at a credit union or community said they are at least somewhat likely to switch in 2015, according to a new study.
The 2015 Consumer Banking Insights Study--commissioned by BancVue on behalf of nearly 300 community financial institutions (CFIs)--found that a lack of products (11%) and awareness (11%) are two reasons consumers cite for not using a CFI as their primary institution. More than 1,000 U.S. adults were surveyed online.
According to the study, for 71% of U.S. adults, features such as free checking, ATM fee refunds and access to the latest banking products are more important when it comes to choosing a financial institution. Fully 31% of megabank customers said they want to use a local credit union or community bank but feel that those institutions lack the products they need.
However, according to a recent survey by Bankrate .com, nearly three-quarters of credit unions (72%) offer free checking, compared with only 38% of the largest banks in the United States ( News Now Feb. 27).
Also, 97% of credit unions responding to CUNA's 2014 Technology Spending Survey offer online banking, and just over 40% of members who have checking accounts are signed up for online banking ( News Now May 28, 2014). Credit unions have been quick off the block in offering mobile banking with 60% of respondents offering the service.
Lack of awareness is also a hurdle. For example, 34% of consumers who don't have an account with a credit union or small bank said they don't use a local financial institution because they haven't thought about it (30%) or are unaware of their options (11%), suggesting a major need for stronger outreach and marketing efforts on the part of community financial institutions.

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Still time to register for today's joint NCUA-SBA webinar

ALEXANDRIA, Va. (3/4/15)--Today's joint National Credit Union Administration and U.S. Small Business Administration (SBA) webinar on "Balancing Member Business Loan Portfolios with SBA Guarantees" starts at 2 p.m. (ET). Those interested in tuning in can register right up to the start time.
The webinar is the first initiative launched under the agencies' new partnership announced Feb. 6 when the NCUA and SBA leaders signed a memorandum of understanding intended to help small businesses connect with local credit unions to get better access to capital.
The 90-minute webinar will be moderated by Dominic Carullo, an economic development specialist with NCUA's Office of Small Credit Union Initiatives. SBA Administrator Maria Contreras-Sweet and NCUA Chair Debbie Matz will provide opening remarks, and speakers will include:
  • Ann Marie Mehlum, associate administrator, SBA's Office of Capital Markets;
  • William Myers, director, NCUA's Office of Small Credit Union Initiatives; and,
  • Vincent Vieten, member business lending (MBL) program officer, NCUA's Office of Examination and Insurance.
The panel will discuss what programs SBA offers to small business, how these loan programs can enhance a credit union's MBL program, and the requirements for setting up and managing an SBA-loan program.
The webinar will be archived online approximately three weeks following the live event.

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