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News Now: October 17, 2014

ICU Day celebrations highlight strength of movement

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MADISON, Wis. (10/17/14)--Credit unions across the United States on Thursday opened their doors, reached out to their communities and pulled out the stops in celebration of the 68th annual International Credit Union Day--this year with the theme "Local Service. Global Good."

The day, celebrated by credit unions throughout the world on the third Thursday of October annually, provided local credit unions an opportunity to raise awareness of the credit union movement and to show their members appreciation for their role.

To read the captions that correspond with the tweeted photos in the Storify slideshow, hover the mouse of the photo.

Many credit unions participated in the "Shop for Miracles" campaign throughout the day, a benefit for Children's Miracle Network Hospitals where credit unions pledged to donate a pre-determined amount of money every time a member used their debit or credit cards.

Other credit unions, such as Grow Financial FCU, Tampa, Fla., with $1.9 billion in assets, sent staffers out into their communities to volunteer at various organizations. 

In New York, the Credit Union Association of New York's Young Professionals Commission hosted a series of cash mobs throughout the Empire State, where hordes of people gathered and made purchases at local businesses.

Kansas credit unions cased their communities to surprise individuals with cash prizes, gift cards and free gas, among other treats, through their "Make a Difference" events.

Credit unions in Kansas gave away a total of $30,500 during the day, according to the Kansas Credit Union Association.

In the social media realm, as of 4:30 p.m. CT Thursday, #ICUDay generated more than a tweet each minute during the day (754 tweets and as many retweets)--with a potential reach of 1.8 million followers, according to Joanne Sepich, director of consumer education at the Credit Union National Association.

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League presidents raise voices for data breach protection

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MADISON, Wis. (10/17/14)--Credit union leaders continue to shape the narrative surrounding the data breach issue through both media and political channels. That narrative has begun to include work between credit union and bank organizations to coordinate joint messages about concerns regarding inconsistent data security standards for merchants.
Supporting the Credit Union National Association's efforts on Capitol Hill, the Ohio Credit Union League is joining forces with the Ohio Bankers League (OBL) to press Ohio's congressional delegation to hold merchants accountable for customer data protection lapses ( eLumination Oct. 16).
A joint letter from Ohio league President/CEO Paul Mercer and OBL President Mike Adelman will be sent next week to House Financial Services Committee members Rep. Joyce Beatty (D-Columbus) and Rep. Steve Stivers (R-Ohio), and Senate Banking Committee member Sherrod Brown (D-Ohio).
The letter will ask for immediate steps to create equal data protection standards for all involved in the payments process, accountability for merchants that fail to protect customer data, and recovery of financial loss among institutions impacted by merchant negligence. The letter will be copied to all of Ohio's members of Congress.
The New Jersey Credit Union League (NJCUL) has also taken the lead and reached out to the New Jersey Bankers Association to support data-security bills pending committee action in the state Assembly and Senate, Greg Michlig, NJCUL president/CEO, told News Now Thursday.
"We are hopeful they will join the fight," Michlig said.
The legislation, spearheaded by Assembly Speaker Vincent Prieto (D-Seacaucus), would prohibit the retention of magnetic-strip data and require that the entity responsible for a breach reimburse card issuers for any expenses resulting from the beach such as reissuing cards or fraud-loss costs.
On a national level, in addition to participating in CUNA's nationwide call-to-action, the New Jersey league is reaching out to its delegation, with a particular focus on Senate Banking Committee member Robert Menendez (D-N.J.) and House Financial Services member Rep. Scott Garrett (R-N.J.).
"We've also briefed the major candidates in the three open-seat House races to ensure they know our position well in advance of their possible election," Michlig told News Now .
Credit unions also continue to press their case through the opinion pages of local publications.
The Columbus Dispatch published a letter to the editor on the data breach issue from Ohio's Mercer in its Oct. 10 issue. "Why are so many breaches happening?" Mercer wrote. "One reason is that data-security standards are inconsistent across the country. Financial institutions, including credit unions, are subject to high data-protection standards by law, while merchants are not subject to any federal standards."
In a letter to the editor that appeared in the Oct. 8 edition of the Litchfield County Times , Jill Nowacki, president/CEO of the Credit Union League of Connecticut, wrote that until merchants are held accountable for the damages that breaches cause, credit unions will have little confidence that they will properly secure their systems.
"Congress has a role to play in addressing the issue of merchant data breaches by making sure all of the participants are playing by the same set of data security rules," Nowacki wrote. "Merchants who hold consumer data and allow that data to be breached, need to be responsible for the costs incurred by others."

Most important to the debate is the impact on consumers--the member-owners of credit unions, wrote Michael Duffy, president/CEO of Financial Center CU, Stockton, Calif., with $380 million in assets.

"Every time one of these breaches occurs, the consumer loses faith in the system," Duffy wrote in the Oct. 14 issue of the The Record . "While credit unions, like mine, work continuously to secure the data of our members, merchants are not required by the same laws to encrypt consumers' information."
Credit unions, along with other financial institutions, have been subject to stringent standards on data security since the enactment of the Gramm-Leach-Bliley Act in 1999, wrote John Bratsakis, president/CEO of the Maryland-D.C. Credit Union Association, in a guest opinion that appeared in the Oct. 9 edition of the Baltimore Business Journal .
"However, the retailers serving hundreds of millions of consumers daily are not held to these same high standards," Bratsakis added. "Unfortunately, as a result of lax, ineffective data management and storage procedures, these retailers are often victims of data breaches with the ultimate victims being their customers."
When consumers are victimized, credit unions have stepped up to help them, Mark Cummins, president/CEO of the Minnesota Credit Union Network, wrote in an Oct. 5 Duluth News Tribune column.
"We know what to do because we've had to do it all too often," Cummins wrote. "To name just a few of these steps, we notify our members, make a determination about reissuing debit and credit cards, increase call center staff and set up account monitoring. These actions are not without cost, and the impact of a single merchant data breach, let alone several over the course of just months or even weeks, means these costs add up quickly. For not-for-profit credit unions operating on already thin margins, these costs make a significant difference in the bottom line."

State, national leaders celebrate ICU Day

WASHINGTON (10/17/14)--Tributes to the ideal of not for profit financial institutions could be heard around the world Thursday as part of International Credit Union (ICU) Day.

Celebrated on the third Thursday of October since 1948, ICU Day is a chance for the credit union community to show that credit unions are consumers' best financial partner, in the words of Credit Union National Association President/CEO Jim Nussle.

"This summer and fall we've been honored to mark the 100 million credit union memberships milestone here in the United
Click to view larger image Source: World Council of Credit Unions
States," Nussle said in his first ICU Day greeting to state credit union leagues.

"The growth of credit union memberships in America, as well as around the globe, are indications of the burgeoning popularity of our cooperative, not-for-profit financial institutions."

Around the world there are 57,000 credit unions in 103 countries with a common mission to financially empower 208 million members, according to the World Council of Credit Unions. (See related stories: ICU Day celebrations highlight strength of a movement; Royal treatment only part of global praise for CUs.)

Gigi Hyland, executive director of the National Credit Union Foundation, said this year's theme of "Local Service. Global Good." has significance for credit unions around the world.

"Local service can mean so many things for credit unions," she said in Credit Union Magazine . "It includes affordable, appropriate financial products and services for members. It includes community leadership, collaboration, stewardship and charitable giving. It includes educating members and communities about financial issues."

Politicians across the country took the time to honor the credit union system as well. For instance, the governors of Iowa, Minnesota, West Virginia, Texas, Oklahoma and Arkansas all proclaimed Thursday as Credit Union Day in their states.

According to the National Credit Union Administration, there were just over 9,000 credit unions in the United States with 3.7 million members and total assets of about $700 million on the first ICU Day in 1948.

"The American credit union system is marked by growth, service and stability," said NCUA Chair Debbie Matz in a statement marking the day. "It's changing with the times and finding new ways to provide affordable financial services while still keeping true to the original ideal of non-profit member ownership."

CUNA's Nussle also said that along with the growth in the credit union system comes a commitment.

"We remain committed, as part of that growth, in achieving our vision for the movement--that Americans choose credit unions as their best financial partner," he said. "Together, I am sure we can."

Use the resource link below to access Hyland's article in Credit Union Magazine .

Royal treatment only part of global praise for CUs

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MADISON, Wis. (10/17/14)--The importance that credit unions play in the international financial environment was highlighted across the globe on Thursday--International Credit Union (ICU) Day.
World Council of Credit Unions President/CEO Brian Branch noted three reasons why the world needs credit unions:
  • Financial inclusion that includes services for the underserved, unserved and most vulnerable;
  • Competition that keeps pressure on other financial institutions, resulting higher interest earnings on savings and lower interest rates and fees on loans for all consumers; and
  • Innovation that comes from the closeness to their members and the cooperative model.
Today 57,000 credit unions serve 208 million members in more than 100 countries. In Ireland, credit unions serve 75% of the country's population, and 2.5 million members are part of the largest nonbanking financial system in Poland.

Camilla, the Duchess of Cornwall, marked ICU Day with a reception at Clarence House where she told the audience, "I believe credit unions can change the way we talk and think about savings and loans. They can encourage those who have the means to save, and bring in from the cold those vulnerable people who struggle to qualify for loans."
Click to view larger image During an International Credit Union Day reception at Clarence House in London, Camilla, the Duchess of Cornwall, said, "I do believe credit unions could be a real force for change in the financial landscape and are truly a cause worth championing a real force for change in the financial landscape." (Clarence House Photo)
"We greatly appreciate the support she continues to give to the movement," said Mark Lyonette, chief executive of the Association of British Credit Unions Ltd. "Credit unions are attracting support from a number of high profile backers as more and more people recognize the valuable service they can offer to people from all walks of life."
The duchess became one of the United Kingdom's more than 1.1 million credit union members last year.
On Thursday, Ontario Minister of Finance Charles Sousa announced that the ministry will begin reviewing the Credit Unions and Caisses Populaires Act 1994. The review takes place every five years and seeks to strengthen the regulatory framework, protect consumers, and enable credit unions and caisses populaires to continue to meet the needs of their members, the ministry noted.
"These institutions are an essential part of our province's economic fabric," Sousa said in the announcement, which included a nod to ICU Day. Ontario's credit unions and caisses populaires have almost 1.6 million members.
In Australia, the Finance Sector Union noted the work of the roughly 8,000 Australians who work to provide service to the country's more than 4 million members. (See related stories: ICU Day celebrations highlight strength of a movement; State, national leaders celebrate ICU Day.)

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Rep. Marino concerned about interest-rate risk in RBC proposal

WASHINGTON (10/17/14)--As the National Credit Union Administration prepares to issue a revised risk-based capital proposal for comment, at least one lawmaker said he is interested in seeing the final rule.

Rep. Tom Marino (R-Pa.), in a letter sent to the NCUA Thursday, applauded the agency's decision to hold another comment period.

"I recognize the NCUA has undertaken an appropriate action to further improve the proposed framework and allow additional input regarding the risk-based capital rule, which if poorly drafted would adversely affect well-governed credit unions," he wrote.

But Marino said he has concerns about the proposal, most notably with the interest-rate risk portion of the plan. He urged the NCUA to conduct further research into its effects, including the use of "legislative history as well as supporting data."

Marino was one of the 324 representatives who signed a letter with concerns about the original proposal in May. A total of 334 representatives and 27 senators wrote in with concerns, as well as roughly 2,000 other commenters from the credit union community.

Matz announced in late September that the rule would be revised, and that there would be a second comment period. She anticipated that the amended proposed rule could be issued before the end of the year.

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Payment Security Task Force focuses on EMV implementation

WASHINGTON (10/17/14)--Credit Union National Association Deputy General Counsel Mary Dunn said it is encouraging to see the collaborative efforts, as discussed during a steering committee call of the Payments Security Task Force (PST)  this week, to address EMV implementation, testing and certification issues that merchants and acquirers have encountered.
She added, however, that it must be a very high priority for the PST to remain also focused on the longer-term roadmap for securing payments across all entities.
CUNA is a member of the steering committee and participates in its monthly calls.
EMV cards, which are already common in Canada, Europe and Asia, rely on microchip technology that is more secure than the magnetic strip technology that most of today's cards employ.

As security breaches--like the massive compromises through Home Depot and Target--make both consumers and financial institutions more wary of existing fraud prevention technology, credit unions have begun issuing more cards equipped with the EMV technology standard to their members.
CUNA strongly agrees that such innovations as an important step in boosting card security.  However, CUNA has warned that credit unions will continue to be exposed to significant potential breach costs for quite some time until these new technologies are widely adopted.
The PST also discussed on the Wednesday call additional security solutions such as tokenization and encryption. While EMV addresses the physical point of sale, in tokenization the traditional account number would be replaced with a unique digital payment code, providing an additional layer of security.
Eric Richard, CUNA general counsel/executive vice president for regulatory affairs, represents CUNA on the PST steering committee, which includes senior staff from Visa, MasterCard, financial institutions and merchants.
Use the resource links to read recent related News Now stories.

Corporate CU proposed rule on Oct. NCUA meeting agenda

ALEXANDRIA, Va. (10/17/14)--The National Credit Union Association released the agenda for the Oct. 23 board meeting, which includes two proposed rules and an update on the National Credit Union Share Insurance Fund.

The first proposal is an interagency proposed rule that covers part 760 of the NCUA's rules and regulations. That section deals with loans in areas having special flood hazards. The section was listed on the agency's regulatory review for this year.

The second proposed rule will address corporate credit unions, which are covered in part 704 of the NCUA's rules and regulations.

The other item is the quarterly update on the share insurance fund.

The meeting is scheduled to begin at 10 a.m. (ET) Oct. 23 at the NCUA's Alexandria, Va., headquarters. A recording of the meeting will be made available several weeks later.

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500 FIs commit to Apple Pay, says CEO Cook

CUPERTINO, Calif. (10/17/14)--With commitments from 500 financial institutions, Apple said Thursday that Apple Pay, its much-discussed electronic wallet, will become available to U.S. consumers on Monday.
Through ApplePay, iPhone 6 and iPhone 6 Plus use Touch ID for purchases in stores and within apps. Touch ID authorizes purchases using the device owner's fingerprint, which is also used to access the device. Users of the just-announced iPad Air 2 and iPad mini 3 will be able to use Touch ID on their devices for Apple Pay within apps. The new service will be enabled by a free software update to iOS 8.
Apple Pay is designed to protect the user's personal information. It doesn't collect any transaction information that can be tied back to a user, and payment transactions are between the user, the merchant and the user's bank. Apple doesn't collect purchase history. Actual card numbers are not stored on the device, instead, a unique device account number is created, encrypted and stored in the secure element of the device.
Apple Pay supports credit and debit cards from the three major payment networks: American Express, MasterCard and Visa.
CO-OP Financial Services is in active negotiations with Visa and MasterCard to bring the lowest aggregated issuer fees to credit unions ( News Now Sept. 11). Brookfield, Wis.-based Fiserv has said that all Fiserv-processed debit and credit issuers have tokenization capabilities--the security measure used by Apple Pay--available to them through the Visa Token Service and MasterCard Digital Enablement Service.

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