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News Now: August 29, 2014

Home-state visits connect lawmakers, CU members

CU System

MADISON, Wis. (8/29/14)--Credit unions reported several productive home-state visits with lawmakers this week.
 

Meeting with lawmakers while they are in their districts is a critical part of the Credit Union National Association's advocacy strategy, Ryan Donovan, CUNA senior vice president of legislative affairs, told News Now .

"It reinforces the local presence credit unions have in virtually every community in the country, and frankly, some of our more productive meetings with representatives and senators take place back home because members have more time to meet with their constituents and understand their concerns," Donovan said.
 
On Tuesday, the Carolinas Credit Union League's Western Chapter hosted an event featuring Rep. Mark Meadows (R-N.C.) in Asheville, N.C., attended by more than 80 credit union representatives ( In the Loop Aug. 29)
 

 
Click to view larger image U.S. Rep. Mark Meadows (R-N.C.) greets members of the Carolinas Credit Union League's Western Chapter on Tuesday. (Carolinas Credit Union League Photo)

"Your members trust you--and having someone you can trust when making important financial decisions is important," Meadows told attendees.
 
Currently serving his first term in the U.S. House of Representatives, Meadows reiterated his support for the credit union tax exemption and shared his concerns about the overregulation credit unions are facing as a result of the passage of the Dodd-Frank Act.
 
"Many of our credit unions that have been to Washington, D.C., or met individually with Congressman Meadows over the past year have come to appreciate his strong support for credit unions," said Dan Schline, league senior vice president of association services. "Tonight was important because a wider group of western North Carolina credit unions got to hear firsthand about that support."
 

 
Click to view larger image Patti Seymore, vice president at SC Telco FCU, Greenville, S.C., and U.S. Rep. Jeff Duncan (R-S.C.) (Carolinas Credit Union League Photo)

In addition to signing a joint letter from members of the House of Representatives to National Credit Union Administration Chair Debbie Matz in June, Meadows authored his own letter this month expressing concerns about the agency's risk-based capital proposal.
 
U.S. Rep. Jeff Duncan's (R-S.C.) fourth annual Faith and Freedom BBQ drew more than 1,100 attendees Monday. Special guests included Gov. Nikki Haley, Sen. Marco Rubio (R-Fla.), Sen. Lindsey Graham (R-S.C.) and South Carolina Attorney General Alan Wilson. Credit union advocates from the 3rd District attended a private reception prior to the event and were able to meet with elected officials to discuss credit union issues.
 

 
Click to view larger image U.S. Rep. Joe Wilson (R-S.C.) speaks with credit union advocates from the Carolinas Credit Union League's Columbia Chapter. (Carolinas Credit Union League Photo)

The Carolinas Credit Union League, along with the Columbia Chapter of Credit Unions, hosted longtime credit union supporter Rep. Joe Wilson (R-S.C.) on Tuesday in Columbia, S.C., for a BBQ "Meet and Greet." Credit union members throughout the midlands had the opportunity to speak with Wilson and his staff, in addition to celebrating credit unions' national 100 million memberships milestone.

U.S. Rep. Sam Graves (R-Mo.) reaffirmed his support for maintaining the credit union tax status when he met with Missouri credit union leaders this week, the Missouri Credit Union Association reported.  The meeting took place Monday at CommunityAmerica CU's North Oak Trafficway branch in Kansas City, Mo.  During the meeting, credit union leaders stressed the importance of the credit union tax status when discussing the possibility of tax reform in the next Congress.
 
Graves, who had served as chairman of the House Small Business Committee, asked about the impact of data breaches on credit unions.
 
In addition to the league and Lenexa, Kan.-based $1.9 billion-asset CommunityAmerica CU, participants in the meeting included Edison CU, Kansas City, Mo., with $29 million in assets; and United Consumers CU, Independence, Mo., with $123 million in assets.

 
Missouri credit union leaders met with U.S. Rep. Sam Graves (R-Mo.) this week. From left: Jay Neathery, executive vice president, United Consumers CU, Independence, Mo.; Rick Schier, vice president of sales and service, CommunityAmerica CU, Lenexa, Kan.; Ron Miller, president, Edison CU, Kansas City; Graves; Dennis Pierce, president/CEO, and Pat Yokley,  chief operating officer, CommunityAmerica CU; Don Cohenour, president/CEO, Missouri Credit Union Association; and Chris McCreary, president, United Consumers CU. (Missouri Credit Union Association Photo)

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8 CU advisory members, senior leaders named by CFPB

Washington
WASHINGTON (8/29/14)--The Consumer Financial Protection Bureau (CFPB) has announced new members of the Credit Union Advisory Council (CUAC), as well as new senior leaders and other advisory board members. The CUAC advises the CFPB on regulating consumer financial products or services, specifically to share the unique perspectives of credit unions.

The bureau supervises credit unions and other depository institutions with more than $10 billion in assets. It does not have authority over those credit unions with less than $10 billion in assets, other than limited authority conveyed by a section of the Dodd-Frank Act.

The members of the CUAC are:
  • Robert Falk, president/CEO, Purdue FCU, West Lafayette, Ind., with $823 million in assets;
  • Jason Lee, executive vice president/chief financial officer, Orion FCU, Memphis, Tenn., with $545 million in assets;
  • Robin Loftus, chief operating officer, Heartland CU, Springfield, Ill., with $243 million in assets;
  • James McDaniel, president/CEO, Heritage Trust FCU, Charleston, S.C., with $487 million in assets;
  • Robin Romano, CEO, MariSol FCU, Phoenix, with $33 million in assets;
  • Ronald Scott, president/CEO, Appalachian Community FCU, Gray, Tenn., with $171 million in assets;
  • David Seely, president/CEO, Kirtland FCU, Albuquerque, N.M., with $674 million in assets; and
  • John Winne, president/CEO, Boston Firefighters CU, Dorchester, Mass., with $193 million in assets.
New members to the council will serve two-year terms.

The bureau also named the following new senior leaders:
  • Patricia McClung, assistant director for mortgage markets. McClung worked at the Federal Housing Administration as a senior housing policy adviser and, since January, has been acting director of program development in single-family housing, with responsibility for the home mortgage insurance, valuation and program support divisions;

  • Janneke Ratcliffe, assistant director for financial education. Ratcliffe has served as executive director at the Center for Community Capital at the University of North Carolina at Chapel Hill since 2005; and

  • Will Wade-Gery, assistant director for card and payments markets. Wade-Gery has been serving in the same position as the acting assistant director since January. Prior to being named acting assistant director, he was senior counselor on the card and payments markets team.

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Branch contact still important, says CU satisfaction index

CU System
ANN ARBOR, Mich. (8/29/14)--The importance of branches to members continues to see-saw, according to the CFI Group's latest Credit Union Satisfaction Index (CUSI). Potential members see them as a key reason to join a credit union. Current members appreciate the way they are treated at their branch but are looking for new channels such as mobile for service.
 
Click to view larger image CFI Group Graphic
In the second installment of its CUSI, CFI Group found that the branch experience continues to be highly rated at 92--"a reflection of members' ongoing delight with the way they are treated."
 
At 31%, branch convenience remains a high point for why a member chooses a credit union. Once part of the fold, the member shifts focus to other satisfaction factors such as mobile access or new products.
 
"As our lives are becoming increasingly technology-centric, it is only natural for members to desire access to their accounts remotely," said Terry Redding, CFI Group vice president of sales and marketing. "Even though the vast majority of members are using online and mobile banking, members still want the convenience of a nearby branch, exceptional service and the ability to access their accounts in-person if they choose to do so."
 
Expanding the ATM branch experience may fill members' needs. The report notes that there is a genuine appetite for ATM services such as paying credit card bills (38%), making a loan payment (30%), purchasing a CD (29%) and opening an account (28%).
 
Members' desire for online and mobile services continues to grow across all age ranges, which designers need to take into account. The report noted, "Applications that work well for eagle-eyed and text-savvy young people may not have the same appeal to their perhaps 'fatter-fingered' and glasses-wearing parents."
 
The CUSI model looks at six satisfaction drivers: products and services, information and communications, branch staff, branch convenience, rates and fees, and online and mobile banking.
 
Overall member satisfaction is strong at 86--a decline from 90 in the 2013 inaugural report--but banks ticked up one point to 80 from 79 in CFI's Bank Satisfaction Barometer report.

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Wal-Mart to issue EMV MasterCards within next few weeks

Washington
BENTONVILLE, Ark. (8/29/14)--Wal-Mart announced holders of its branded MasterCard will be receiving new cards with EMV (Europay-Visa-MasterCard) chips embedded within the next few weeks.

The announcement comes two weeks after the Payments Security Task Force (PST), an organization made up of more than a dozen companies and organizations, announced that 575 million EMV cards will be issued by the end of 2015 ( News Now Aug. 14).

EMV, which stands for the companies that developed the technology, is a new global standard that would replace the magnetic strip on cards with an embedded chip. Instead of swiping, customers insert the cards into compatible point-of-sale terminals.

The chip-embedded cards are considered more secure against fraud since authentication provided by the use of a PIN and cryptographic algorithms are more difficult to duplicate.

The Credit Union National Association is a member of the PST, and Eric Richard, CUNA general counsel/executive vice president for regulatory affairs, said that EMV cards are picking up momentum within the financial industry.

Richard also said that there is still a question about whether the merchant community will be prepared to make the full-time change, as well as a need for all stakeholders to continue working on security strategies to combat data breaches.

In October 2015, organizations deploying EMV cards will be protected from financial liability from card-present counterfeit fraud losses.

Guy Chiarello, president of First Data, a global payment processing firm, said his company is encouraging institutions to launch EMV plans as soon as possible before the October 2015 deadline.

"Issuing EMV now will benefit consumers by making the most secure payment card available sooner, while reducing fraud losses and enhancing payments system security for all," he said.

The EMV Migration Forum has estimated that approximately 100 million EMV cards, approximately 9% of the card base, will be issued by the end of 2014. Javelin Strategy and Research estimates that 52% of point-of-sale terminals will be EMV-enabled by the end of 2015.

Wal-Mart currently has EMV terminals in more than 4,600 stores already, including all Sam's Club locations. According to a statement, terminals in the remaining U.S. stores will be activated by the end of this year.

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Next major financial shock will come from cyberattack, says IOSCO head

Washington
WASHINGTON (8/29/14)--Cybercrime is a "sleeper issue" with the potential for huge impact on markets, says Greg Medcraft, chairman of the board of the International Organisation of Securities Commissions (IOSCO), according to a report this Monday in the Financial Times .

Medcraft predicted that the next major financial shock will come from cyberspace, following attacks on large players in the financial marketplace.

According to the Financial Times , Medcraft believes there needs to be consistency around the world when it comes to identifying and mitigating cyberthreats. This would include a global "toolbox" that would identify risk-management standards for detecting and responding to cyberattacks.

JPMorganChase, and at least four other banks, were struck by coordinated attacks by hackers earlier this month, according to a report from The New York Times . The article states that hackers siphoned "gigabytes of data, including checking and savings account information, in what security experts described as a sophisticated cyberattack."

A report from Bloomberg cites unnamed sources that say Russian hackers likely perpetrated the attacks, and that authorities are investigating whether recent attacks on major European banks using a similar vulnerability could be linked. The Bloomberg report cites experts who contend the attacks, which "plowed through layers of elaborate security to steal the data," appear "far beyond the capability of ordinary criminal hackers."

Businesses have been the target of attacks as well. Last week the U.S. Secret Service issued a bulletin about malware known as "Backoff" that has been associated with several point-of-sale data breaches. The bulletin estimated that more than 1,000 businesses are affected with the malware, which accesses a businesses' administrator account remotely to exfiltrate consumer payment data.

According to the Secret Service, Backoff was not recognized by antivirus software until this month, but bas been detected as far back as October 2013. This means that even computers with the latest antivirus updates and security patches did not recognize Backoff as malicious.

A recent Ponemon Institute study of data breaches showed that that average financial cost to victims of a data breach averages $157 per consumer, when the breach is a result of malicious criminal intent. For companies that are hit with such attacks, the average cost is $3.5 million ( News Now Aug. 21).

And as Charles Lybrand, an information security analyst with TraceSecurity, points out, for any target of a cyberattack financial losses are just the beginning of the damage. There are reputational losses, a possible loss of business, and other costs, such as reimbursement and legal fees. TraceSecurity is a CUNA Strategic Services alliance provider.

U.S. financial regulators, as well as the Congress, are grappling with policy issues involving cybersecurity.  There is apparent agreement that the cost and effort required to prevent an attack is lower, and seems more manageable, than the cost and effort to react to one. Beyond that, there is much debate.

However, financial regulators are working to give resources and guidance to financial institutions. For instance, in March the National Credit Union Administration launched a new resource for credit unions--a webpage that provides links to cybersecurity and data security resources. (Use the resource link.)

The Credit Union National Association is pressing federal lawmakers to address data security relative to merchants, who are not held to the same standards of security as credit union and other financial institutions. CUNA is a strong proponent that all payments system participants must be held to comparable levels of federal data security requirements; those responsible for the data breach should be responsible for the costs of helping consumers; and those responsible should ensure consumers know where their information was breached.

Use the resource links below for more information.

World Council encourages charity focus for ICU Day

CU System
MADISON, Wis. (8/29/14)--International Credit Union (ICU) Day's theme of "Local Service. Global Good." gives credit unions a chance to make a difference for the charity of their choice, noted the World Council of Credit Unions.
 
With that in mind, the World Council is encouraging fundraising this year. Each country will be asked to report charitable donations leading up to and throughout ICU Day, which is Oct. 16.
 
The World Council will capture the results and share a global report on credit union fundraising efforts at the community, national and international levels.
 
It suggests a number of campaigns, including:
  • Fundraising events with social media coverage;
  • In-branch coin drives;
  • Corporate matching and office fundraising challenges;
  • Credit union interchange fees for all card transactions;
  • Add-on donation options for members to make through debit/card transactions; or
  • Crowdfunding websites.
In the United States, Credit Unions for Kids will hold Shop for Miracles, a one-day fundraising program to support local Children's Miracle Network Hospitals. Each time members use their credit union-issued credit or debit card on Oct. 16, participating credit unions will donate a pre-determined amount to their local children's hospital.
 
The World Council also encourages credit unions to engage with members on Facebook and Twitter with the #ICUDay hashtag.

CUNA closed for Labor Day, No News Now

CU System
WASHINGTON and MADISON, Wis. (8/29/14)--The Washington, D.C., and Madison, Wis., offices of the Credit Union National Association will be closed Monday in observance of Labor Day.
 
There will be no Monday edition of News Now . News Now will resume regular publication on Tuesday.

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