WASHINGTON (5/17/13)--Sen. Mark Udall's (D-Colo.) Small Business Lending Enhancement Act (S. 968), introduced on Thursday, "would allow credit unions with experience in business lending to continue to lend to their small business members, without increasing the size of government," Credit Union National Association President/CEO Bill Cheney said.

Udall's bill would increase the credit union member business lending (MBL) cap to 27.5% of assets, from the current 12.25%-of-assets level. Credit unions would need to be in good standing, and have a history of making business loans, to qualify for the cap increase. They would also need approval from the National Credit Union Administration.

The legislation tells credit unions that stood with their business-owning members during the recent Great Recession to "keep lending; keep serving the bakeries, the gas stations, the florists, and the carpenters; keep helping the restaurant owners, plumbers, realtors, independent grocers and shopkeepers," Cheney noted in a Thursday letter thanking Udall.

"The bill will not endanger the small banks in your community; the bill will not alter the nature or focus of credit unions; the bill is not inconsistent with the credit union mission or the purpose of their tax status. This legislation recognizes that credit unions are working in their communities to help small businesses, and it is important to enact even though the bank lobbyists oppose it," Cheney added.

CUNA estimates the MBL cap change would help credit unions lend an additional $13 billion to small businesses in just the first year after enactment. This money, which would be made available at no expense to taxpayers, would in turn help small businesses create around 140,000 new jobs.

"Credit unions have an important role to play, lending to startups and Main Street businesses alike. My bill helps to unleash their potential to ensure that job creators in Colorado and across the country have the capital they need to start a business or to grow," Udall said in a release.

Udall's bill currently has 14 co-sponsors: Sens. Mark Begich (D-Alaska), Barbara Boxer (D-Calif.), Sherrod Brown (D-Ohio), Susan Collins (R-Maine), Kirsten Gillibrand (D-N.Y.), Martin Heinrich (D-N.M.), Angus King (I-Maine), Pat Leahy (D-Pa.), Bill Nelson (D-Fla.), Rand Paul (R-Ky.), Jack Reed (D-R.I.), Bernie Sanders (I-Vt.), Charles Schumer (D-N.Y.) and Sheldon Whitehouse (D-R.I.).

Reps. Ed Royce (R-Calif.) and co-sponsor Carolyn McCarthy (D-N.Y.) released similar legislation early this year. That bill, H.R. 688, has 94 co-sponsors.

"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 act," Cheney said.

For CUNA's letter to Udall and more on the bill, use the resource links.

ALEXANDRIA, Va. (5/17/13)--A proposed rule that would allow eligible credit unions to engage in interest rate swaps and to purchase interest rate caps was released for public comment by the National Credit Union Administration on Thursday.

CUNA Deputy General Counsel Mary Dunn, left, and Executive Vice President of Strategic Communications and Engagement Paul Gentile speak with NCUA Chairman Debbie Matz, right, following Thursday's NCUA open board meeting. The NCUA said there are still questions about how the proposed derivatives rule would work, and the agency has asked credit unions for their thoughts on all aspects of the proposal. (CUNA Photo)

Approved credit unions would be permitted to use these simple derivatives to hedge against interest rate risks.

"Our initial take is that NCUA took a positive step to issue the proposal for comments to assess credit unions' views--a development we have been urging for months--although the devil is always in the details," Credit Union National Association Deputy General Counsel Mary Dunn said. "We will be reviewing it very carefully."

NCUA Chairman Debbie Matz and board member Michael Fryzel both stressed that the proposal is not cast in stone, and said they will welcome comments on all aspects of the proposal. The agency also released a question and answer document to help credit unions better understand the proposal. (Use the resource link.)

"Working with credit unions to manage interest-rate risk exposure is a top priority for NCUA," Matz said in a Thursday release. "The negative impact on balance sheets when rates rise, especially if they rise rapidly, will significantly reduce the earnings and net worth of exposed credit unions. NCUA urges credit unions to prepare for this event. After careful evaluation, the NCUA Board is proposing to allow eligible credit unions, which hold nearly 80 percent of industry assets, to purchase simple types of derivatives with certain safeguards to hedge interest-rate risk."

Under the terms of the NCUA proposal, only credit unions that have assets of more than $250 million, are well-managed, and have the appropriate expertise will be eligible to apply for an agency derivatives investment program. The NCUA estimated that 75 to 150 credit unions would apply for derivatives authority within the first two years of the program. The agency said it would need to add new resources to handle application processing and supervision if the program is approved.

The proposal would apply to federal credit unions and federally insured state-chartered credit unions that are permitted under state law to engage in derivatives and that meet NCUA's criteria.

Credit unions seeking derivatives authority would be required to submit an application for one of two levels of authority:

• Level I, which includes lower permissible transaction limits and involves a more streamlined application process with less restrictive requirements on experience, personnel and systems; and

• Level II, which would allow higher transaction limits, but would require an onsite evaluation, higher regulatory requirements, a higher application fee, and necessary personnel and systems to be in place.

The NCUA has developed separate eligibility requirements for each of these two levels. Level I application fees would start at $25,000, and Level II application fees would range from $75,000 to $125,000, depending on the complexity of the application.

These application fees would help the agency cover the costs of the program. NCUA staff estimate that the program would require six to 12 new examiners and would cost $6 million to $11 million to initiate. "Charging these types of application and participation fees is unprecedented, and we will be scrutinizing the proposal, the fee issues and the agency's cost estimates very carefully as we analyze the proposal," Dunn added.

The NCUA will accept comment for 60 days after the proposal is published in the Federal Register. A final rule could be released in the summer or fall, with an effective date of the end of the year or early next year, Dunn said.

For more on the proposal and the NCUA board meeting, use the resource link.

WASHINGTON (5/17/13)--National Credit Union Administration board nominee Rick Metsger's direct experience with credit unions, which came through his having served on an Oregon credit union's board, will serve him well if he is ultimately confirmed, Credit Union National Association President/CEO Bill Cheney said.

Metsger, a former Democratic state senator from Oregon, was officially nominated by the White House on Wednesday. If confirmed, he would fill the vacant seat on the three-member NCUA board. His nomination is subject to U.S. Senate confirmation.

Metsger's knowledge of the political process and banking issues is also a plus, Cheney added. "We look forward to working with the Senate as it considers the nomination and the process moves forward," he said.

NCUA Chairman Debbie Matz said Metsger, if confirmed, "will bring valuable perspectives" to the agency.

The nominee served as Oregon state senator from 1999 to 2011, and was Oregon Senate president pro-tempore from 2009 to 2011. He led an Oregon Senate committee that heard all financial institution legislation during his time in state government.

Metsger also served as a board member of Financial Beginnings, a nonprofit focused on increasing students' financial literacy, and Portland Teachers CU.

PLANO, Tex. (5/17/13)--Credit union CEOs are upbeat about economic conditions for their members, but are more downcast about the operating environment for their own institutions, according to the results of Catalyst Corporate FCU's First Quarter 2013 CEO Confidence Survey.
 
CEOs' confidence in their members' current and future  (six months from now) financial condition increased by 4.13 points and 1.17 points, respectively from the fourth quarter of 2012 survey levels. However, CEOs' confidence in their own institutions' financial condition--both current and future--dropped by 1.99 points and 0.18 points, respectively, from the previous quarter.
 
"Credit union executives see member finances improving as a result of declining unemployment, a protracted low interest rate environment and practically no inflation," said Brian Turner, Catalyst Strategic Solutions' director and chief strategist. "Although wages remain flat and job growth continues to be weak--keeping job security a concern--consumers have been branching out a little more with their spending, which certainly helps economic growth."
 
The overall Confidence Index in the most recent survey inched up by half a point over the fourth quarter. Similarly, CEO expectations for loan demand and share deposit growth saw relatively little movement from the previous report.
 
Tight marginal spreads between asset yields and cost of funds continue to challenge credit unions' net interest margins, Turner said. About 31% of total credit unions experienced loan growth in 2012, according to National Credit Union Administration data.
 
"That means the remaining 69% have elevated surplus cash and a greater reliance on investment portfolio income to replicate revenue streams--a difficult task to accomplish in this environment," Turner said. "With an outlook that reflects a continuation of the low-rate environment for two to three more years, CEOs don't see these challenges for their institutions going away anytime soon."

MADISON, Wis. (5/17/13)--Auto loan loyalty stems from more "high touch" factors, such as good member service, ease of contacting the lender and lender responsiveness, than from quantifiable factors, such as interest rates and down payment requirements, according to a new report from the Filene Research Institute.
 
Credit unions' relationship strengths play a large role in auto loan selection, while their historical pricing strength (at least in aggregate) seems to be less important, said the paper, "Predicting Members' Choice of Auto Lender: Borrowing from Credit Unions or Elsewhere?"
 
Members placing more importance on service were far more likely (by 41%) to choose a credit union for their auto loan. Similar increases in credit union share were found for ease of contacting the lender (40%) and lender responsiveness (38%).
 
Most members report being greatly satisfied with their credit union and being committed to credit unions in general. However, questions about those topics are not useful predictors of members' choice of an auto lender, the report said.
 
For instance, members who rate highly their credit union's prompt resolution of problems are only moderately more likely (by 13%) to choose credit unions for their auto loans. Members who report that they specifically seek out credit unions to serve their financial needs are barely more likely (by 5%) to choose credit unions for their auto loans than more "casual" members.
 
The research did not find a clear correlation between preferred communication channels and choosing a credit union for an auto loan. However, it did reveal a member preference for electronic information. The credit union website is the most preferred communication channel, followed by e-mail and then by credit union employees. The least preferred are branch brochures, and signage and social media.
 
"In short, credit unions should care about price, but not too much," the report said. "They should double down on electronic communication methods to advertise and originate loans. And they should remember that auto loan-loyalty stems from good member service and ease of contacting the credit union. Nurture those, and you'll do well."

ALEXANDRIA, Va. (5/17/13)--While a new derivatives investment proposal was the big ticket item on Thursday's National Credit Union Administration agenda, two other items were also discussed: A final rule making technical adjustments to credit union regulations, and a board briefing on a supplemental interagency proposed rule that covers appraisals for higher-priced mortgage loans.

The technical amendments to NCUA regulations reflect changes to agency organizational structure, remove duplicative language, make minor changes updating cross citations, and make minor changes that are statutorily required by the Dodd-Frank Act. The rule will take effect when it is published in the Federal Register.

The briefing item was a forthcoming interagency proposal that would amend the Truth in Lending, Regulation Z, interagency appraisals rule adopted in January. For certain mortgages, the appraisals rule requires creditors to obtain an appraisal that meets certain specified standards, provide applicants with a notification regarding the use of the appraisals and give applicants a copy of the written appraisals used.

Ahead of the January 2014 effective date of the appraisals rule, the federal financial regulatory agencies are jointly proposing exemptions from the rules for existing manufactured homes, certain refinancings and transactions of $25,000 or less.

CUNA will prepare a comment call on the interagency proposal once it is released.

For more on the NCUA board meeting, see today's News Now story, CUNA Will Closely Review NCUA Derivatives Proposal, and use the resource link.

NORMAN, Okla. (5/17/13)--The Cornerstone Credit Union League has appointed a transitional board of directors.
 
Member credit unions of the Arkansas Credit Union League, the Credit Union Association of Oklahoma and the Texas Credit Union League had voted to consolidate into the Cornerstone league, as of July 1.

The league's transitional board includes three directors from Arkansas, three from Oklahoma, and 12 from Texas. Some will serve one-year terms while others will serve two- and three-year terms, ensuring continuity on the board (LoneStar Leaguer May 16).

Arkansas directors are:

• Dwayne Ashcraft, Arkansas Superior FCU, Warren;
• Allen Brown, Mil-Way FCU, Texarkana; and
• Windy Campbell, Electric Cooperatives FCU, Little Rock.

Oklahoma directors are:

• Jason Boesch, Oklahoma RE&T Employees CU, Oklahoma City;
• Michael Kloiber, Tinker FCU, Oklahoma City; and
• Gina Wilson, Oklahoma Central CU, Tulsa.

Texas directors are:

• Jim Brisendine, Resource One CU, Dallas;
• James L. Boyd, Abilene Teachers FCU, Abilene;
• Z. Suzanne Chism, Texas Health Resources CU, Dallas;
• Nancy M. Croix Stroud, First Class American CU, Fort Worth;
• Kenny Harrington, MemberSource CU, Houston;
• Wayne Mansur, Texoma Community CU, Wichita Falls;
• Carol Murray, Express-News FCU, San Antonio;
• Robert Peterson, One Source FCU, El Paso;
• Paul A. Trylko, Amplify FCU, Austin;
• James S. Tuggle, Transtar FCU, Houston;
• JoBetsy Tyler, First Central CU, Waco; and
• Paul Withey, Texas Bay Area CU, Houston.

DUBLIN, Ohio (5/17/13)--Ohio's state budget bill is still being debated in the state's General Assembly, and so far it remains absent any major reforms that would impact credit unions' tax status, said the Ohio Credit Union League. However, the league said Wednesday, "until it passes, this could change at a moment's notice" (eLumination May 15).
 
"It is most likely that separate legislation will be introduced in the coming months that could change Ohio's tax code, especially considering the buzz by state legislators and administration officials about 'reform,' which suggests moderate tax implications at minimum," the league said.
 
Taxes are always on the top of the list for "reform" to make up lost revenue streams, said league General Counsel John Kozlowski.
 
In addition, entities such as the Ohio Chamber of Commerce are proposing that the state close tax exemptions to lessen the need for tax increases, the league reported.
 
Because of the fluid nature of the tax reform issues at the state and federal levels, the league said it is constantly monitoring lawmakers' discussions to protect credit union interests.
 
The league, like leagues in other states, have joined the Credit Union National Association in rallying 96 million credit union members to proactively advocate for preserving credit unions' tax exemption on the state and federal levels.  Preserving and defending the tax status is CUNA's and the leagues' No. 1 priority.
 
For more information, use the links.

WASHINGTON (5/17/13)--Wrestle your spending into submission and learn a no-excuses approach to landing a job with Home & Family Finance Radio this week.

In this episode, which you can listen to on the Internet, host Paul Berry, Washington, D.C., journalist and broadcaster, discusses these topics with special guests:

• "Get a Job--Now!" Dana Manciagli, author and career coach, Bellevue, Wash., shares job-searching advice from her new book "Cut the Crap, Get a Job! A New Job Search Process for a New Era."

• "Cut Spending, Enjoy Life." Kathryn Greiner, director of credit education for the University of Michigan CU, Ann Arbor, Mich., tells you how to control your spending without sacrificing the good things in life.

• "You Gotta Have It...But Do You Need It?" Susan Tiffany, certified credit union financial counselor and director of consumer periodicals, Credit Union National Association, Madison, Wis., offers advice about how to avoid impulse spending.

Home & Family Finance is a resource center for personal finance information at CUNA. The radio show is sponsored by CO-OP Network, the national credit union ATM network; Cabot Creamery Cooperative, maker of award-winning cheddar; and the Defense Credit Union Council and member credit unions, serving those who serve the country worldwide.
 
Home & Family Finance airs Sundays at 3 p.m. ET on the Radio America Network. The show also is carried on American Forces Radio Network. The one-hour program devoted to consumer finance issues is brought to you by America's credit unions and their 95 million members, and is presented by CO-OP Network.
 
CUNA and Radio America are podcasting Home & Family Finance through iTunes, Podcast Alley, Odeo, and other popular podcast library sites, as well as on Radio America and CUNA's websites.
 
For related information, read "April Financial Fitness Challenge--Gotta Have It? Check Impulse Spending" and "Do You Need a Financial Plan?" in the Home & Family Finance Resource Center.