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News Now

Full Issue: October 21, 2014

NEW: Fed. regulators approve final QRM rule

Washington
WASHINGTON (10/21/14 Updated 12:05 p.m.)--Federal regulators have approved a final qualified residential mortgage (QRM) rule, which requires investment banks to hold at least 5% of a loan's risk on their books when securitizing loans unless the loans meet the definition of a QRM. The rule also more closely aligns the definition of QRM with the Consumer Financial Protection Bureau's (CFPB) qualified mortgage (QM) definition, an alignment for which the Credit Union National Association strongly advocated.

"CUNA has advocated strongly for the important step of aligning the Qualified Residential Mortgage with the existing Qualified Mortgage definition," said Mary Dunn, CUNA's deputy general counsel and senior vice president. "Doing so encourages lenders to work with creditworthy borrowers to make home loans that will continue to drive the country and our economy forward."

Thomas Curry, Comptroller of the Currency, said the rule is an important milestone.

"The rule we are approving today will require lenders to retain some of the risk for the loans that go into securitized pools except for home mortgages that meet the standards necessary under the qualified residential mortgage, or QRM, exception," he said. "Under this rule, QRM is equivalent to QM, that is, the qualified mortgage rule approved by the Consumer Financial Protection Bureau."

Federal Housing Finance Agency (FHFA) Director Mel Watt called it "a major step forward" to providing certainty to the housing market.

"Aligning the qualified residential mortgage standard with the existing qualified mortgage definition also means more clarity for lenders and encourages safe and sound lending to creditworthy borrowers," he said.

CUNA supported aligning the definition of a QRM more closely with the definition of a QM in commenting on the proposal last year. However, CUNA does not support the 43% debt-to-income ratio a borrower must meet for a QM.

The rule also states that regulators will review the QRM standards in four years.

"By then, we should have enough experience with the standards to know whether they strike the right balance between long-term financial stability and the home-financing needs of American families, and we can adjust them if necessary," Curry said.

The joint rule was proposed by the Federal Reserve Board, Federal Deposit Insurance Corp., U.S. Department of Housing and Urban Development, FHFA, Office of the Comptroller of the Currency and the Securities and Exchange Commission.

Use the resource link below to access the complete rule.

Crapo: Bold reg. reforms could help small FIs survive

Washington
WASHINGTON (10/21/14)--Small financial institutions are disappearing from America's financial landscape due to "an ever-increasing regulatory burden," says Sen. Mike Crapo (R-Idaho). In a letter published in American Banker , Crapo, the ranking member of the Senate Banking Committee, lamented that small financial institutions are not failing, but voluntarily closing due to increased compliance costs.

"We have lost more than 3,000 small banks and more than one-half of credit unions since 1990," he wrote.

In a September Senate Banking Committee hearing, legislators expressed concern with the effects of over-regulation. Dennis Pierce, chair of the Credit Union National Association board, testified on behalf of CUNA, saying credit unions were under "regulatory assault."

"Congress and regulators ask a lot of small, not-for-profit, financial institutions when they tell them to comply with the same rules as JPMorgan, Bank of America and Citibank, because the cost of compliance is proportionately higher for smaller-sized credit unions than these behemoth institutions," Pierce said.

In his letter, Crapo called for "a frank discussion about what regulatory burdens mean for financial institutions and the communities they serve."

CUNA has expressed support for numerous regulatory relief bills in both houses of Congress in the past few months. These bills would do everything from simplifying privacy notifications to removing a limit on automated transfers from savings accounts.

From a regulatory perspective, CUNA has written to the National Credit Union Administration, the Consumer Financial Protection Bureau and the Federal Housing Finance Agency to urge proposed rules take into account the burdens that might be placed on small financial institutions.

"In light of the imperative need to reduce credit unions' regulatory obligations, we urge NCUA to add new or expand existing rules only if required to do so by law, or doing so is clearly warranted based on a compelling safety and soundness reason that can be satisfactorily addressed in no other manner," wrote CUNA Senior Vice President and Deputy General Counsel Mary Dunn in a letter to the NCUA in August.

Compliance burdens and costs are a growing concern for financial institutions. Last week one survey indicated that compliance costs were up 30% in the past year, and since January 2013, more U.S. financial institutions are reporting compliance concerns ( News Now Oct. 16).

These concerns include transferring staff from revenue-generating roles to managing increased risk and compliance requirements.

Use the resource links for more information.

FIs can post privacy notices online under new CFPB rule

Washington
WASHINGTON (10/21/14)--A rule allowing financial institutions that meet certain requirements to post annual privacy notices online has been finalized by the Consumer Financial Protection Bureau (CFPB).

The Gramm-Leach-Bliley Act (GLBA) requires financial institutions to send annual privacy notices to customers, describing whether and how it shares consumers' nonpublic personal information. If the institution does share this information, it must notify consumers of their right to opt out and inform them how to do so.

Under the CFPB's new rule, requirements that allow financial institutions to post privacy notice online include:
  • The financial institution does not share data in ways that would trigger consumers' opt-out rights;
     
  • Consumers are informed annually about the availability of the disclosures; and
     
  • A notice is included on a regular consumer communication, such as a monthly billing statement for a credit card, letting consumers know that the annual privacy notice is available online and in paper by request at a provided telephone number.
If an institution chooses not to use the new disclosure method, it will need to continue to deliver annual privacy notices to its customers using other delivery methods.

The new rule applies to all financial institutions within the CFPB's jurisdiction under the GLBA. Institutions that choose to rely on this new method of delivering privacy notices will be required to use the model disclosure form developed by federal regulatory agencies in 2009.

Use the resource link below to access the final rule. The rule is effective upon publication in the Federal Register.

CUNA Attorneys Conference: Where CUs stand on data breaches, RBC, legal cases

Washington
DANA POINT, Calif. (10/21/14)--Speaking to a packed house, Credit Union National Association Executive Vice President and General Counsel Eric Richard opened CUNA's Attorneys Conference with a update on some of the most pressing regulatory issues facing credit unions.

Of primary legal concern to financial regulators is a case the Supreme Court will hear in December. It involves the issuing of guidance versus regulations, which requires a public notice and comment period. The Washington, D.C., Federal Court of Appeals ruled that an agency cannot change its interpretation of a rule without engaging in notice-and-comment.

Richard called the case "one of the most important ones to watch for regulated industries such as credit unions." The decision could articulate a standard as to when a regulated entity is expected to follow guidance, which could have implications on the examination and supervision process.
Click to view larger image Credit Union National Association Executive Vice President and General Counsel Eric Richard (at podium) speaks to the audience at the CUNA Attorneys Conference Monday about the latest regulatory and legal issues facing credit unions. (CUNA Photo)

"If the Supreme Court upholds the D.C. court's decision, credit unions could have more opportunity to participate in the process, on the other hand, agencies might decide not to use guidance, for fear of locking themselves into a position," Richard said. "However, if the Supreme Court rejects the D.C. court, agencies will more confidently issue interpretations."

In his update on the National Credit Union Administration's risk-based capital proposal, Richard outlined CUNA's efforts over the past six months, which included meeting with stakeholders around the country, preparing a library of material to help credit unions see how they might be affected, speaking to members of Congress and helping to generate a record 2,056 comment letters on the proposal.

He also said the process has likely been a learning process for the NCUA and credit unions. Since the proposal deals with wide-ranging topics such as interest-rate risk, concentration risk, examiner power, capitalization requirements and more, Richard said the agency might be better served breaking those down into individual proposals.

"In the future, we encourage the agency to tackle areas of concern one at a time, rather than putting out a single huge proposal," he said. "It causes less heartburn to the industry and ultimately it is in the agency's interest to take things in small bites."

Other lessons learned during the risk-based capital proposal process include:
  • The 2,056 letters have been distilled to about 50 individual issues the agency is considering;

  • The unprecedented credit union reaction to the rule "must have made a huge impression on NCUA board members," and that it is just as important that those efforts be continued during the second comment period; and

  • A negotiated rulemaking or Advance Notice of Proposed Rulemaking could have involved stakeholders at an earlier stage, making sure credit union voices were heard.
Data breaches are another topic that has filled the headlines recently, with a significant cost coming to credit unions and other financial institutions. According to CUNA's survey on the Target data breach, it cost credit unions roughly $30 million to re-issue credit and debit cards, as well as other costs.

Richard said a layered approach to payment security is needed, with an ultimate goal of bringing merchants to the table to discuss ways to implement appropriate security standards.

"We feel like a national standard is appropriate here, rather than a patchwork of differing state laws and regulations, but we don't want Congress to set the standard, the technology develops too quickly," he said. "We'd also like merchants to be required to reimburse credit unions for the costs they incur as a result of data breaches."

Other points he made include:
  • While litigation is not a "silver bullet," it is an important tool for credit unions. Some credit unions must serve as named plaintiffs if they want to sue. CUNA is working with plaintiffs firms and connecting credit unions and lawyers. A number of credit unions must serve as named plaintiffs if the industry wants to pursue class action;
     
  • For the Target breach, there are at least 30 cases directly related to financial institutions under way, with at least 10 credit unions serving as named plaintiffs. Target is trying to have the case dismissed, saying it does not owe a duty of care to financial institutions;
     
  • For the Home Depot breach, cases are just starting, including at least three involving credit unions; and
     
  • Visa and MasterCard also have procedures used to negotiate to create compensation funds for those affected.
Also during the Monday sessions at the conference was a presentation from NCUA Senior Associate General Counsel John Ianno and staff attorneys Sarah Chung and Pamela Yu. Watch News Now Wednesday for details.

Other sessions at this week's conference include "Social Media: Compliance Challenges and Opportunities for Credit Unions," presented today by CUNA Mutual Group's Ross Hansen, associate general counsel, and Jennifer Kraus, lead attorney; and "New Developments in the Bank Secrecy Act," presented by T. Wayne Hood, senior vice president/general counsel, ORNL FCU, Oak Ridge, Tenn., with $1.5 billion in assets. Wednesday features "ID Theft Response--How to Do It Right," presented by Christopher Gerety, general counsel, APCO Employees CU, Birmingham, Ala., with $2.4 billion in assets.

Other Resources

Candidates in Calif., Fla. get strong CU backing

Washington
WASHINGTON (10/21/14)--Credit union-friendly candidates in tight races in California and Florida are the latest to receive Credit Union National Association support this election season.

Click to view larger image Click for larger view
In California, CUNA and the California Credit Union League have started a partisan communication campaign in support of Rep. Ami Bera (D), who is running for re-election to represent California's 7th Ddistrict.

Bera, who is a medical doctor, served on the board of American River HealthPro CU, Rancho Cordova, Calif., which is now part of $.21 billion-asset SAFE CU, Folsom. He is a past associate dean of admissions for the University of California, Davis School of Medicine and chief medical officer for the County of Sacramento.

In October 2013, Bera was one of 11 representatives to sign a letter supporting credit unions' tax status.

"We're excited to engage on his behalf in this race, which is one of the closest in the country," said Trey Hawkins, CUNA's vice president of political affairs.

Click to view larger image Click for larger view
Bera is being challenged by Republican Doug Ose, who served as representative for California's 3rd District from 1999 to 2003. According to Roll Call , the district leans slightly Democratic, but it listed him just outside the "Top 10 Most Vulnerable House Members."

In Florida's 2nd District, incumbent Rep. Steve Southerland (R) is facing another close race against challenger Gwen Graham, a school administrator and daughter of Bob Graham, a former senator and governor.

The Credit Union Legislative Action Council has made a $176,000 independent expenditure for television advertisements between now and election day.

Southerland is another supporter of maintaining credit unions' tax status, and he signed a letter in May, along with 323 other representatives outlining concerns with the National Credit Union Administration's risk-based capital proposal.

Other Resources

Consumer Rates

Market

Informa Research Services, Inc.
Daily Rate Comparison

Informa Research Services, Inc.
Deposit Products Credit Unions Bank Average Difference
12 Month CD $10,000 0.47% 0.28% 0.19%
Personal Savings $1,000 0.21% 0.10% 0.11%
Personal Interest Checking $2,500 0.37% 0.15% 0.22%
NSF Fee $27.91 $32.04 $-4.13
Personal MMDA $2,500 0.17% 0.10% 0.07%
Business MMDA $2,500 0.17% 0.09% 0.08%

Consumer Loan Products Credit Unions Bank Average Difference
Unsecured Personal Loan - $5,000 - 4 Years 10.18% 10.28% -0.10%
New Auto Loan - 5 Years 2.61% 3.81% -1.20%
Used Auto Loan - 2 year Old - 4 Years 2.77% 4.00% -1.23%
HELOC - 80% LTV - $50,000 4.13% 4.41% -0.28%
HE Loan - 80% LTV - $50,000 - 15 Years 5.66% 5.93% -0.27%

Mortgage Loan Products Credit Unions Bank Average Difference
30 Year Fixed Conforming 3.95% 3.97% -0.02%
30 Year Fixed Jumbo 4.08% 3.95% 0.13%
5/1 Year ARM Conforming 2.91% 2.84% 0.07%

Credit Card Products Credit Unions Bank Average Difference
Platinum 8.89% 10.48% -1.59%
Annual Fee $25.00 $31.00 $-6.00
Maximum Late Fee $25.54 $33.42 $-7.88
Reward 10.03% 13.68% -3.65%
Annual Fee $26.71 $99.76 $-73.05
Maximum Late Fee $22.61 $33.60 $-10.99

Indirect Auto Loan Products Credit Unions Bank Average Difference
Indirect A Tier New Auto Loan - 5 Years 3.59% 3.75% -0.15%
Indirect B Tier New Auto Loan - 5 Years 5.32% 5.30% 0.02%
Indirect C Tier New Auto Loan - 5 Years 7.47% 6.77% 0.70%

Averages displayed are straight averages of all institutions within the Informa Research Services database for the selected region as of Monday, October 20, 2014. For detailed disclosures click here.

Other Resources

Business Rates

Market
Daily Financial Rates -- 2014-10-21

Financial Rates


Tuesday, October 21, 2014

03:55 AM CDT

TREASURY YIELD CURVE
(based on the $1 million market)

TermTue
10/21
Mon
10/20
Fri
10/17
Thu
10/16
Wed
10/15
1 month0.030.030.040.020.03
3 month0.020.020.030.020.02
6 month0.060.050.050.050.04
1 year0.100.110.100.100.09
2 year0.370.390.350.340.39
3 year0.760.790.750.730.80
5 year1.411.441.391.371.45
7 year1.851.881.821.801.88
10 year2.202.222.172.152.21
20 year2.682.702.662.642.68
30 year2.962.982.942.922.95

TREASURY BILLS

Results of the October 20, 2014 auction of short-term U.S. government bills, sold at a discount from face value in units of $10,000 to $ 1 million

TermLatest
Mon, 10/20
Week Ago
Tue, 10/14
13 weeks0.0200.010
26 weeks0.0500.040

PRIME RATE

3.25% Last changed December 16, 2008

FEDERAL FUNDS

TermTue
10/21
Mon
10/20
Fri
10/17
Thu
10/16
Wed
10/15
high0.3120.3120.3120.3120.312
low0.0700.0500.0600.0600.050
near closing bid0.0800.0700.0700.0600.070
offered0.1000.1000.0800.0800.090
effective rate20.1100.1000.1000.1000.100

FREDDIE MAC (Mortgage commitments, 30 days)

TermTue
10/21
Mon
10/20
Fri
10/17
Thu
10/16
Wed
10/15
30 year0.000.000.000.000.00

FANNIE MAE (Mortgage commitments, 30 days)

TermTue
10/21
Mon
10/20
Fri
10/17
Thu
10/16
Wed
10/15
30 year3.4833.4833.4493.3313.478

LIBOR

TermTue
10/21
Mon
10/20
Fri
10/17
Thu
10/16
Wed
10/15
1 month0.228000.228000.226000.227000.22600
3 month0.378000.378000.378000.376000.37800
6 month0.538000.538000.538000.536000.53800
1 year0.839000.839000.839000.837000.83900

COMMERCIAL PAPER (Financial, 90 days)

TermWeek ended
10/21
Week ended
10/15
90 days0.230.23

NA: Data not available at time of page generation (shown at top of page)

Sources:
Wall Street Journal
U.S. Dept. of the Treasury


All rates are from the previous business day unless otherwise noted.

Other Resources

Falling gas prices: Pros, cons for U.S. economy

Market
WASHINGTON (10/21/14)--U.S. consumers are re-holstering the gas pump with a little more coin left in their pockets recently, as the price of oil has dropped by about 20% since June, slipping to a three-year-low of $80 a barrel ( MarketWatch.com Oct. 20).

Those low oil prices have translated into sinking gas prices, which hit $3.29 a gallon in mid-October from a peak of $3.78 earlier this year.

Those cheaper gas prices, driven by a dearth of demand for oil from the struggling global marketplace, in addition to a swelling supply of American-born oil--a rate of production that could soon push the United States ahead of Saudi Arabia as the most prolific oil producer on the planet--also may translate into a healthier U.S. economy, according to some analysts.

At least in the short-term.

It's a boost for consumers, Jennifer Lee, senior economist at BMO Capital Markets, told MarketWatch. Gasoline prices also have a huge impact on consumer confidence, she said.

American households with two cars would save between $25 and $50 a month in fuel costs were these prices to hang on, leaving more cash for consumers to save or, perhaps more importantly for the economy, spend on other goods and services.

Further, cheaper gas prices may release inflationary pressure over the next six months, according to MarketWatch , which could trim the costs of products and services across the board, potentially a big help to consumers who have seen wage growth continually fall flat of late.

But after an initial boost, the long-term effects of cheap oil could prove costly.

Should U.S. exports falter because international demand for oil continues to evaporate, the U.S. economy may ultimately suffer a setback.

The reason? Because oil manufacturing and the energy industry in general has flourished recently, providing a boon for both hiring and overall U.S. growth.

Sustained lower prices could reverse those trends, as the expense of pulling cheap oil from the earth may strip away profitability, which could in turn have a negative impact on inflation market-wide.

The sliding cost of oil, it seems, has Federal Reserve board members paying attention.

St. Louis Fed President James Bullard has even gone public with his belief that the Fed may have to rethink phasing out quantitative easing later this month if inflation continues to weaken ( MarketWatch ).

While so far Bullard would appear to be in the minority in that regard, European leaders continue to grow more alarmed about the potential for a serious downward spiral in inflation, a development that could knock the U.S. economy back on its heels.

Other Resources

News of the Competition (10/21/14)

Market
  • NEW YORK (10/21/14)-- A number of global banks are now charging their big clients when they invest money in euros, The Wall Street Journal reported Friday, a move that could put a damper on those large customers' bottom lines. New policy from the European Central Bank that places negative interest rates on deposits--a new rule that aims to force banks to lend rather than hold money in the central bank--are likely fueling the changes in big-bank policies. Now, when a customer--likely an investment firm, such as a hedge fund or mutual-fund company--puts money into euro accounts, the big banks that have made the switch make them pay for it. Bank of New York Mellon Corp. began levying a 0.2% charge on euro deposits in recent weeks, according to The Wall Street Journal. JPMorgan Chase and Goldman Sachs reportedly have started charging their large customers as well...
     
  • NEW YORK (10/21/14)-- JPMorgan Chase has developed plans to construct a massive new headquarters in New York's Hudson Yards, a project estimated to cost the big bank about $6.5 billion, according to The New York Times (Oct. 17) The facilities, divided into separate 62- and 40-story towers, would contain as much space as two Empire State Buildings and house about 16,000 employees, reports have said. A potential holdup in construction could come during the negotiation of the development agreement, as the bank is asking the city for $1 billion in concessions in the form of a lower sales tax on construction materials, job-training grants and an underground passageway between the two buildings, which would require reworking the design of a new subway station. New York Mayor Bill de Blasio and his administration don't appear keen on the idea of subsidizing a large corporation, however. "There's no way the city would entertain a demand for a billion dollars in additional incentives," Alicia Glen, the city's deputy mayor for economic development told The New York Times ...

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Debit card use wanes due to security fears: TSYS report

CU System
COLUMBUS, Ga. (10/21/14)--Consumer fears about security are leading to a drop in debit-card use, according to a new report from TSYS.

Despite the drop, debit cards remain the most popular form of payment, according to the study. Forty-three percent of respondents preferred debit as their overall payment type, while 35% indicated their preferred payment type was credit. There are roughly 51 million debit cards and 15 million credit cards issued by credit unions.

Those percentages represent a decrease in respondents who preferred debit from TSYS' 2013 study, in which 49% indicated they preferred debit.

"Consumers, concerned about the security of their cards and payments, are both demanding and accepting of market changes," the study said. "Consumers have a heightened awareness of security, due to both the media and their own experiences. We found that consumers are interested in tools such as transaction authorization controls, instantly viewable transactions and text message alerts to help them protect their accounts."

Consumers are interested in new card security features, but are familiar with some features more than others, according to the study. About 48% of respondents said they have heard of chip cards, and 14% indicated that they have already received a card with a chip.

Tokenization is also gaining interest as a fraud- and risk-protection tool. The Credit Union National Association fully backs advancements in card data security technology, but until these take hold nationwide, CUNA's leaders say, credit unions and other financial institutions will still be at risk to suffer significant losses as a result of data breaches.
 
Meanwhile, only 47% of businesses expect to have their payment terminals updated with EMV chip technology by the end of next year, according to the Payments Security Task Force.
 
Although industry participants understand tokenization and how it will help to reduce payment risk, not as many consumers are familiar with the technology. Only 8% of respondents indicated they had heard of tokenization, and 16% said they would be willing to take the steps necessary to request a token.
 
The report also explored consumer sentiment toward mobile payments. "Fraud prevention and risk reduction tools are the most important features to consumers when they consider incorporating mobile into their payments process," the report said. "When asked about the use of smartphones in conducting different types of payment transactions, we saw that consumers were very interested in taking part in protecting their accounts by using mobile tools to monitor and track payments."
 
Use of rewards or offers continues to be the biggest controllable factor of influence on which card a consumer uses to pay. However, even with rewards, some consumers chose to use debit cards to closely manage their daily spend or budget, while other consumers use multiple cards and can be more easily influenced to change.

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Calif. CUs meet with CFPB advisor on HMDA proposal, more

CU System
SAN DIEGO, Calif. (10/21/14)--In a meeting with roughly 15 credit union leaders here, Jennifer Stockett of the Consumer Financial Protection Bureau (CFPB) said her agency might need to look more deeply into its Home Mortgage Disclosure Act (HMDA) proposal for a full understanding of the potential impact on small creditors.

The proposed rule is intended to improve information reported about the residential mortgage market by requiring more data fields in the reports. The Credit Union National Association and state credit union associations are concerned the plan would increase the burden on some credit unions and has asked for an exemption for credit unions and other community financial institutions.

Stockett, the CFPB's senior advisor for the office of financial institutions and business liaison, met with the credit union leaders at $1.8 billion-asset California Coast CU, San Diego. She requested the meeting as a follow-up to a successful initial meeting with the California and Nevada Credit Union Leagues in Washington, D.C., in September during the leagues' annual Hike the Hill event.

At the California meeting, the CFPB's senior advisor spoke about where the CFPB needs feedback from credit unions.

Specifically, Stockett said the bureau is looking for credit union comment on the following proposals:
  • Qualified mortgages, particularly in the areas of small creditor and rural definitions, disadvantages for self-employed borrowers and potential risks for credit unions offering nonqualified mortgages;

  • The Truth in Lending Act-Real Estate Settlement Procedures Act combined disclosures rule, particularly about whether third-party vendors will be ready for the Aug. 1, 2015, implementation date; and

  • HMDA, particularly the potential impact on small creditors, which Stockett said the bureau might need to delve more deeply into.
Credit unions still have time to comment on the HMDA proposal through PowerComment, which was created by the California and Nevada Credit Union Leagues, in partnership with the Credit Union National Association.

Use the resource link below to access PowerComment.

Other Resources

Will shoppers avoid data-breached retailers this holiday season?

CU System
AUSTIN, Texas (10/21/14)--Nervous over recent data breaches that have compromised tens of millions of pieces of personal and personal payment data in recent months, a poll has found that nearly half of credit and debit card users will be leery to shop this holiday season at those stores where attacks have occurred.

About 45% of respondents to the CreditCards.com survey, released Sunday, said they would either definitely or probably avoid one of their go-to stores when holiday shopping if that store was recently hacked.

Broken down, 16% said they definitely would not shop at a store that had been breached, and 29% said they would probably not shop there.  

Only one in eight respondents said they are actually more likely to shop with cards this year. The study, which randomly selected 865 U.S. consumers, was conducted in early October by Princeton Survey Research Associates International for the Austin, Texas-based CreditCards.com .

Consumers first react to a data breach with fear, but then they may become numb, David Just, professor of applied economics management and director of graduate studies at Cornell University in Ithaca, N.Y., told CreditCards.com . "I'm guessing a lot of people have the initial emotional reaction of, 'Wow, I don't want to shop there anymore if they're going to be that loose with the data.'"

The question then becomes, what does it take for a consumer to return?

That may hinge on what other options are available, according to Jeff Foresman, information security compliance lead at Rook Security in Indianapolis ( CreditCards.com ).

For retailers such as Target, where customers have other options for shopping, it may lead to the long-term loss of that consumer, Foresman said. However, if a building contractor has a business account with a retailer such as Home Depot, for example, he or she may not look somewhere else.

The Credit Union National Association continues to press national lawmakers to pass legislation that would require merchants to meet the same strict payment data security standards imposed upon financial institutions. Credit unions nationwide saw 4.6 million of their cards compromised as a result of the Target breach, leading to about $30.6 million in breach-related costs.

CUNA also is collecting information on the financial and operational impact the Home Depot breach has had on credit unions. Completed surveys from credit unions affected by that breach are due Friday.

For more information on the comprehensive campaign CUNA has put together to fight for tougher regulations on data security for merchants, visit StopTheDataBreaches.com.

Additional findings from the CreditCards.com survey include:
  • The wealthiest cardholding households are the least likely to stop patronizing recently breached stores, with only 31% of those in households earning $75,000 or more annually saying they would either definitely or probably shop elsewhere during the forthcoming shopping season;
     
  • Respondents with high levels of education are also less likely to spurn recently hacked stores, with 33% of college graduates citing they would either probably or definitely not shop at such stores, compared with 55% of those with a high school education or less; and
     
  • Forty-eight percent of cardholders said they are more likely to pay for purchases in cash this year, though that number falls the higher the income level of the household.

CEO invites members to 'Ask Charlotte'

CU System
ALEXANDRIA, Va. (10/21/14)--Back in the day, when a CEO wanted to get in touch with members, he or she had to step out into the lobby. While the lobby remains a great way to reach a certain segment of members, other segments are easier to find online.

Charlotte Cash, president/CEO of CommonWealth One FCU, Alexandria, Va., with $323 million in assets, is trying engage the latter segment with a series of quarterly videos on subjects of financial interest to members that will be featured on YouTube.

"When CommonWealth One was significantly smaller, former CEO Kathryn Coleman would sometimes meet with individual members to resolve various issues," she added. "Today, because the credit union has grown exponentially, I achieve that same effect by addressing topics of financial benefit to members through a quarterly video I record that's available on our website, cofcu.org."

Also, there's an "Ask Charlotte" link on CommonWealth One's homepage through which members can send her an email on any subject of concern.

"The emails come directly to me, and I read each and every one," she said. "Open communication is the best way to improve our service, and I welcome hearing from our members to help resolve their concerns."

And, she added, many of those comments are compliments on CommonWealth One's member service.

Other Resources

New league award honors Commitment to Cooperation

CU System
MARLBOROUGH, Mass. (10/21/14)--The Massachusetts, New Hampshire and Rhode Island credit union leagues have launched Commitment to Cooperation, a program to honor leaders who have dedicated significant years of service to their credit unions.
 
"We believe it is important to recognize these longtime leaders for their contributions to the system, as well as show our up-and-coming leaders what is possible with cooperation," leagues President/CEO Paul Gentile said in announcing the program (Daily CU Scan Oct. 15).
 
"At the annual convention and annually in our publications, we will publish the names of individuals as they achieve credit union service milestones," Gentile added. "We will also profile many of these leaders throughout the year in our various publications."
 
The program includes the collection and cataloguing of the names of individuals who have reached milestones in service.  To accomplish this, the league is asking member credit unions to send the names of individuals who have been volunteers or employees for more than 20 years. To facilitate this process, the .league has set up a website where that data can be entered.
 
To access the website, use the resource link.

Fiserv renews $250K benefactor commitment to Filene

CU System
MADISON, Wis. (10/21/14)--Fiserv Inc. has once again pledged to donate $250,000 to Filene Research Institute, based out of Madison, Wis., to help fund research and innovation efforts in the credit union industry.

As part of Filene's Chairman's Roundtable Benefactor program, Fiserv's commitment will assist Filene in conducting research that will help credit unions understand issues and form solutions to address many of the challenges facing the industry today, according to Mark Meyer, president/CEO of Filene, a consumer finance "think and do tank."

Fiserv first committed to the roundtable, membership of which costs organizations $250,000 and a three-year commitment, in 2006.

"Filene Research Institute provides powerful research and resources to the credit union industry that advance and strengthen the overall movement, and position credit unions to make a positive impact on the lives of their members," said Barb Lowman, vice president of credit union solutions for Fiserv. "Fiserv shares Filene's passion and mission to empower credit unions to 'Think. Do. Change.'"

Fiserv, based out of the Milwaukee area, is a financial services technology solutions firm.

As an example of how this type of funding will be used, Fiserv most recently supported a multiyear research program coordinated by Filene that led to a series of publications that offer analyses of financial behavior and financial capability across four demographics, including young adults, pre-retirees, women and Hispanics.

The research program was overseen by Annamaria Lusardi, professor and academic director at George Washington University's Global Financial Literacy Excellence Center.

$15K for cancer research raised by CU's Bras Across the River

CU System
JACKSON, Miss. (10/21/14)--Singing River FCU's fourth annual Bras Across the River event, which raised funds for breast cancer research, exceeded its fundraising goal by bringing in more than $15,000 and nearly 4,500 bras to decorate the Louisiana Highway 613 bridge over the Escatawpa River Oct. 11.
 
More than 4,500 bras--some brightly decorated--were donated to Singing River FCU's fourth annual Bras Across the Bridge fundraiser, which brought in more than $15,000 for breast cancer research. (Singing River FCU Photo)
The $196 million-asset credit union also welcomed more than 700 walkers--also a record--for the event produced in cooperation with the Jackson County Sheriff's Department and the Jackson County Board of Supervisors.

"We're actually getting more walkers and fewer bras," Trudi Mullins, Singing River FCU vice president of communications, told News Now . "Everybody wants to come out to support this cause."
 
While many of the bras hung from the 1.2-mile bridge, other brightly decorated ones were displayed at the nearby registration tents.
 
Singing River FCU pledged $1 for every bra donated and $5 for every new checking account opened at the credit union during September and October.
 
For the leader of the Moss Point, Miss.-based credit union, it's a personal mission.
 
"We have a 25-year cancer survivor here on our staff," President/CEO Jimmy Smith told WLOX-TV 13 (Oct. 11).  "My mother was diagnosed with breast cancer several years ago, as well. Most of us, to some degree, have been impacted by this terrible disease."

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CU System briefs (10/21/14)

CU System
  • ST. PAUL, Minn. (10/21/14)-- The Minnesota Credit Union Foundation awarded $7,500 financial education grants to three credit unions for this fall . Grantees are: Anoka Hennepin CU, Coon Rapids, with $143 million in assets, for its free youth checking account that includes a rewards program for participation in financial education seminars; Cook (Minn.) Area CU, with $28  million in assets, for expanding financial education in northern Minnesota by establishing a student-run credit union at a K-12 school in Virginia, Minn.; and Wakota FCU, South St. Paul, with $22 million in assets, for promoting wellness through food, fitness and finance ...
  • MADISON, Wis. (10/21/14)-- The spirit of International Credit Union (ICU) Day can be celebrated throughout the year with specialized promotional items from the Credit Union National Association , now at available at a discounted price . Suggestions included Halloween and other upcoming holidays to share tote bags, key tags, Post-It notes, pens and bags of chocolate-covered espresso beans ...
  • DENVER (10/21/14)-- U.S. District Judge John Kane ordered more than $1 million in fines to be paid by a Colorado man who ran a fake credit union in Colorado and the Virgin Islands . Stanley McDuffie --also known as Stan Roberson, Stan Roberson-Battle and Stanley B. Battle--must pay the U.S. Securities and Exchange Commission more than $532,000 and a civil penalty of the same amount ( The Denver Post Oct. 17). McDuffie allegedly raised the funds from investors who purchased certificates of deposit (CDs) from Her Majesty's CU , which was not insured or chartered by the Colorado Division of Financial Services nor the National Credit Union Administration. Kane ruled the CDs were unregistered and fraudulent securities and that McDuffie wrongly profited from their sale. McDuffie had pleaded not guilty to charges of obtaining money by false pretenses, conspiracy, embezzlement by fiduciaries and violating the territory's anti-racketeering statute in a court in Virgin Islands ( News Now July 17, 2013) ...

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Mobile payments: Avoid impulse buying

Consumer
NEW YORK (10/21/14)--At the dawn of a "frictionless payment" revolution, many consumer advocates are worrying these new technologies could lead to more people sliding further into debt. Already Americans struggle to control credit card debt.
 
One landmark 2001 study showed that people who pay with credit cards, in some situations, are likely to spend twice as much as they would have if they were paying with cash, in part because the pain of actually handing over hard-earned money for the item is delayed ( The New York Times Oct. 10).
 
Multiple studies since then have confirmed that credit cards encourage people to spend more than they would if they were paying with cash.
 
With the new Apple Pay system, iPhone owners won't even need to get out a credit card to buy something in the estimated 220,000 stores currently equipped to accept this payment method: Paying will be as simple as hovering their smartphone near contactless readers. If iPhone owners are shopping online or in an app, a single touch can buy anything they see.
 
Credit cards transformed the way consumers spend, and new mobile-payment platforms are poised to do the same. With phones being transformed into computers, GPS locators and now payment methods, companies will have unprecedented opportunities to encourage consumers to spend ( Slate Oct. 9).
 
These payment platforms make sense for companies like Apple and Amazon that are offering them, because it gives them access to reams of consumer spending data. But for consumers, they could encourage unprecedented levels of overspending by widening the gulf separating shoppers and the physical act of spending money.
 
If anything you see in real life or encounter online can be purchased in a split second, saying no will be harder than ever. So if you're excited about ditching your wallet and embracing a new smartphone-based payment platform, take precautions to avoid overspending:
  • Use technology . Exert impulse control with apps that help you stick to a budget and meet savings goals. Your credit union might offer its own money management app;
     
  • Check your balance . The reason paying with your phone is dangerous is because it takes the sting out of spending money, but a smartphone also makes seeing your balance easier than ever, too. Before making a purchase, take a second to log into your checking account and remind yourself that whatever you buy, you'll eventually have to pay for; and
     
  • Commit to a waiting period before any major purchase . Saving and delaying a purchase cannot only help you make a better decision, but it often results in a more satisfying experience.
For related information, read "Gotta Have It? Check Impulse Spending" in the Home & Family Finance Resource Center .

MasterCard, Zwipe partner for biometric contactless card

Products
LONDON (10/21/14)--MasterCard and biotmetrics technology firm Zwipe have partnered to launch a contactless payment card featuring an integrated fingerprint sensor.
 
The Zwipe MasterCard card includes an integrated biometric sensor and the Zwipe secure biometric authentication technology that holds the cardholder's biometric data. It contains an EMV-certified secure element and MasterCard's contactless application.
 
"Our belief is that we should be able to identify ourselves without having to use passwords or personal-identification numbers," said Ajay Bhalla, MasterCard president of enterprise security solutions. "Biometric authentication can help us achieve this. However, our challenge is to ensure the technology offers robust security, simplicity of use and convenience for the customer. Zwipe's first trial is a significant milestone, and its results are very encouraging."
 
Cardholder fingerprint data is stored directly on the card, not in an external database. After activation by a simple fingerprint scan, the Zwipe MasterCard card can be used to make contactless payments. The biometric authentication replaces the PIN entry, thus enabling cardholders to make payments of any amount, unlike other contactless payment cards on the market.
 
Zwipe is working on the next generation of its card that will be the same format as a standard card and designed to work with all payment terminals for release in 2015. This new card will harvest energy from the payment terminals without the need for a battery.

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