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Registration opens for two upcoming FLEC events

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WASHINGTON (1/22/14)--Registration has opened for two upcoming Financial Literacy and Education Commission (FLEC) events, both scheduled for February.

As part of America Saves Week, the FLEC is holding a field hearing on improving employee financial capability through workplace financial education in Atlanta from 1 to 3:30 p.m. (ET) Feb. 25.
 
The hearing will share the commission's work with the public on promising practices for delivering financial education in the workplace; existing opportunities, challenges and barriers to delivery of financial education in the workplace; and strategies for engaging employees around financial education in the workplace.
 
The session will be webcast through a link to be made public at a later date, or interested parties can use the first resource link below to register to attend in person.
 
On Feb. 12, the FLEC will hold its next public meeting, which will focus the commission's study on ways the federal government can work with the private sector and state, local and tribal governments to promote savings and build the financial capability of young Americans.

The meeting is scheduled for 9-11:30 a.m. (ET) and registration is open until Feb. 5 or until capacity has been met (use resource link).

The FLEC is comprised of representatives from the National Credit Union Administration, the U.S. Treasury Department, the U.S. Department of Education, the White House, and 18 other governmental groups. It's currently chaired by U.S. Secretary of Treasury Jacob Lew, and Consumer Financial Protection Bureau Director Richard Cordray is the vice chairman.

Last year, a FLEC field hearing on youth and post-secondary financial education, organized by the CFPB, featured Lois Kitsch, national REAL Solutions program director at the National Credit Union Foundation, and Jennifer Block, who represented Royal CU, based in Eau Claire, Wis.

The credit union duo helped provide insight on opportunities and best practices for using experiential learning to help youth increase financial capability and to augment financial education lessons taught in the classroom. 

Kitsch spoke primarily on NCUF's work with Reality Fairs, which are interactive financial literacy tools for high school students that have proven successful for many credit unions and state leagues. Twenty-six states offer students Reality Fair programs--14 of which can be tied directly to REAL Solutions.

The FLEC  was established under the Fair and Accurate Credit Transactions Act of 2003 and is charged with creating a national strategy on financial education.

Target breach to cost CUs estimated $25M-$30M, CUNA study shows

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WASHINGTON (1/22/14)--Credit unions have already incurred costs estimated to be in the range of $25 million to $30 million in costs as a result of the Target stores data security breach, a Credit Union National Association survey has shown.

And, CUNA President/CEO Bill Cheney said, the actual costs could exceed this estimate of $25 million to $30 million in the coming weeks if greater fraud losses are incurred or those that have reported already add additional costs to their reported totals.

The results of the CUNA survey show that, on average, the Target breach has cost credit unions about $5.10 per card affected by the security lapse. These costs most likely do not include any fraud losses, which are likely to occur later. Additionally, the cost/card figure is an average across all affected cards, not just cards that have been reissued.

"Contrary to what some may think, these expenses will not be reimbursed to credit unions and their members by Target or other retailers," Cheney said. "Rather, credit unions must solely cover these costs of card program administration, including in these circumstances of reacting to a merchant data breach. And, because of credit unions' cooperative structure, the costs of such breaches are ultimately borne entirely by credit union members," he added. (See related story: "CUs 'left holding the bag' in breaches, Adams writes Stabenow.")

"Credit unions responding to the survey report having almost 18 million debit cards outstanding, and just less than 1.5 million credit cards outstanding. These totals represent roughly a third of the estimated number of debit cards outstanding at all credit unions, and somewhat more than that of estimated outstanding credit cards," CUNA Chief Economist Bill Hampel noted.

The CUNA survey asked credit unions afffected by the Target data breach to outline the costs and burdens they have seen as a result. The breach resulted in the theft of 40 million debit and credit cards, and encrypted PIN data, and the names, mail and email addresses, and phone numbers of up to 70 million individuals.

The data will help inform CUNA conversations with lawmakers, regulators, the media and others. There is no deadline for credit unions to respond to the survey, and credit unions that have not yet responded are encouraged to do so. Credit unions that have responded can also update their totals if new costs are incurred.

Jan. 27 is BSAAG nomination deadline

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WASHINGTON (1/22/14)--Nominations for membership on the Financial Crimes Enforcement Network's (FinCEN) Bank Secrecy Act Advisory Group (BSAAG) must be received by FinCEN by Jan. 27, the Credit Union National Association reminds interested credit unions.
 
BSAAG membership is open to credit unions, and all financial institutions, and trade groups. New members will be selected for three-year terms.

CUNA is currently a member with a term that extends into early 2015. Houston FCU, Sugar Land, Texas, was selected last year as a BSAAG member.

"We encourage credit unions with extensive BSA and anti-money laundering experience to apply if they have the resources to be able to participate in meetings, calls, and working groups," said Deputy General Counsel Mary Dunn in CUNA's reminder.
 
BSAAG, which ultimately makes BSA policy recommendations to the U.S. Treasury Secretary, is chaired by the FinCEN director. It was created by the 1992 Annunzio-Wylie Anti-Money Laundering Act.
 
Applications may be mailed to Liaison Division, Financial Crimes Enforcement Network, P.O. Box 39, Vienna, VA 22183 or e-mailed to BSAAG@fincen.gov.

Cheney goes live on radio to emphasize data breach costs to CUs

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WASHINGTON (1/22/14)--Credit unions and their members--not the retailers--will end up paying the costs for data security breaches such as those recently at Target and Neiman Marcus, Credit Union National Association President/CEO Bill Cheney emphasized Tuesday during a live appearance on a nationally broadcast Bloomberg Radio program.

Appearing on "The Hays Advantage" with host Kathleen Hays, the credit union leader told the national radio audience that, contrary to popular understanding, the expenses for reissuing cards are not and will not be reimbursed by Target. Rather, he noted, merchants are rarely held accountable for reimbursing financial institutions for the cost that the data breach has burdened them with and, in the case of credit unions, burdened their members. 

Cheney noted that last week in Target's own admission of the breach, no commitment was made to avoid leaving card issuers, such as credit unions, responsible for costs of dealing with the breach. He added that merchants must be held accountable for these security breakdowns. 

Cheney added that CUNA and credit unions are asking the U.S. Congress to address the lack of retailer accountability, and are supportive of legislation to replace various state-based data protection laws with one single, federal standard.

NCUA posts 2014 regulation review list

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ALEXANDRIA, Va. (1/22/14)--In its annual announcement identifying the list of regulations it will review during the year, the National Credit Union Administration (NCUA) said among those to be studied this year are rules governing records preservation, loans in areas having special flood hazards, Bank Secrecy Act compliance, and tort claims against the government.

Use the resource link for the complete list of rules.

Credit Union National Association Deputy General Counsel Mary Dunn said Tuesday that there aren't any major rules on the NCUA's 2014 list--none that would likely be on anyone's list of key regulatory relief items.

"However, we will be reviewing them with an eye toward improvements and will be encouraging credit unions to let us know what they think. We also will be looking at related rules that create burdens for credit unions to urge improvements there as well," Dunn added.

Each year, the NCUA reviews one-third of its regulations and the agency chairman, Debbie Matz, says the effort is a key part of her Regulatory Modernization Initiative.  She said that initiative is committed to "modifying, streamlining, refining or repealing rules that are not required by statute" and such changes that would not jeopardize safety and soundness of the industry.

Credit unions and other public stakeholders may now submit comments about the rules under review. The NCUA must receive comments by Aug. 4 through email, at OGCMail@NCUA.gov, or standard mail at: Regulatory Review 2014, Office of General Counsel, NCUA, 1775 Duke St., Alexandria, VA 22314-3428.

2014 CUNA campaign schools kick off election year

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WASHINGTON (1/22/14)--As another election year begins, the Credit Union National Association is again teaming with state credit union leagues to prepare local legislators-to-be through its campaign schools.

Six campaign schools are currently on the schedule for the year.

The first of these was held Tuesday in Missoula, Mont., and sessions have also been scheduled for today in Helena and Thursday in Billings. This is the seventh time that campaign schools have been held in that state. The Montana campaign schools will be co-hosted by CUNA, the Montana Credit Union Network, the National Rural Electric Cooperative Association, the Montana Electric Cooperatives' Association, Montana Chamber of Commerce and the Montana Association of Realtors.

Montana State House member Jesse O'Hara (R) and Lewis and Clark County Sheriff Leo Dutton (D) both praised the help that the schools gave to their respective campaigns in a Jan. 8 Helena Independent Record piece. "I learned what I could do and what I couldn't do--and what I needed to do. I came away with an education, and I felt confident in my ability to run an effective campaign after I intended," Dutton told the Independent Record.

Three campaign schools are being co-hosted by CUNA, the Carolinas Credit Union League and the NRECA. The North Carolina-based schools will be held in Rocky Mount on Jan. 28, Fayetteville on Jan. 29 and Hickory on Jan. 30.

This is the third time a series of campaign school events has been held in the state. The first campaign schools, held in 2010, bore significant fruit for the credit union movement when a campaign school attendee, current U.S. Rep. Renee Elmers (R), went on to defeat incumbent Bob Ethridge (D) to win that state's second district.

Topics covered during CUNA's campaign schools include campaign management, fundraising, message development, and get-out-the-vote planning. Past campaign schools have created many other success stories, as dozens of graduates have run for a broad swath of positions, from justice of the peace, to state representative, to mayor. Potential state House members, school board officials and county commissioners are among those taking part in this week's class sessions.

CUNA's Vice President of Political Affairs Trey Hawkins said the main goal of the campaign schools "is to give first-time candidates the know-how to run for office, raise money and develop campaign plans." Hawkins said the schools also show the candidates that credit unions are sophisticated when it comes to politics and elections. "The campaign schools create terrific relationships with lawmakers who may one day run for higher office," he said.

What could come next in interchange case: CUNA

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WASHINGTON (1/22/14)--As Credit Union National Association General Counsel Eric Richard noted last week, the discussion by a trio of judges Friday in the ongoing debit interchange fee cap case presented many positives for credit unions. However, Richard reminds credit unions there are a range of possibilities for how the court could proceed.

The U.S. Court of Appeals for the District of Columbia Circuit heard oral arguments from CUNA, the Federal Reserve and a merchants coalition in the case known as NACS, et al. v. Board of Governors of the Federal Reserve System.

Comments by the judges at that time raised real questions about whether they will fall in line with a lower court ruling that sought to overturn the Federal Reserve's debit interchange fee cap regulations. However, their possible action options include:
  • Reversing the case and sending it back to U.S. District Court Judge Richard Leon for further consideration;
  • Forcing the Federal Reserve to revisit the interchange cap rule; or
  • Affirming Leon's July decision that struck down the rule.
Judges David Tatel, Harry Edwards and Stephen Williams last week seemed to indicate they would take a close look at Leon's decision to strike down the Fed's interchange rules. (That ruling was stayed pending appeal.)

This closer look could potentially result in more costs being taken into account in the setting of interchange fees than Judge Leon's decision would allow, Richard said.

The case was brought by a merchants coalition in 2012, seeking to overturn the Fed's debit interchange fee cap regulations. The judges last week heard oral arguments from the Fed, a coalition of financial services groups, including CUNA, and merchants. (See Tuesday NewsNow story: Appeals court to closely examine lower court interchange ruling.)

The appeals court will rule on the case before its term ends in August, and a decision could come as soon as this spring.

'Vishing' scam uses NCUA name to con targets

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ALEXANDRIA, Va. (1/22/14)--The National Credit Union Administration released a warning  to consumers Tuesday telling them to beware of a "vishing" scheme that uses the agency's name in phone calls that attempt to get personal financial information from the targeted person.

The warning states that several credit union members have been contacted by an automated phone call claiming to be from the NCUA and notifying consumers their debit cards have been compromised. The call then asks the receiver to follow prompts, which request personal information, including sensitive financial data and personal identification information.

In the NCUA's own "vishing" alert issued in 2008, the agency explained the scam like this: As with phishing which uses electronic contacts, in vishing attacks crooks claim to be with legitimate financial institutions or other entities. They ask consumers to verify or re-submit personal information such as bank account and credit card numbers, Social Security numbers, passwords and personal identification numbers.

That NCUA fraud alert explained that vishing scam's use of social engineering and Voice over Internet Protocol (VoIP) technology exploits the public's trust in landline telephone services. The victim is often unaware that VoIP allows for caller ID spoofing thus providing anonymity for the criminal caller, the alert noted.

The NCUA said vishing is attractive to criminals because VoIP service is fairly inexpensive, especially for long distance, making it cheap to make fake calls. Also, because its Web-based, criminals can use software programs to create phony automated customer call center service lines. The NCUA advised that, for their protections, consumers should be highly suspicious when receiving messages via telephone, email, or otherwise--directing them to call and provide personal, confidential, and/or account-related information.

In its Wednesday notice, the agency asked that anyone contacted by this recent scheme immediately contact the NCUA's Consumer Assistance Center Hotline at 800-755-1030 or by email at phishing@ncua.gov to report the scam. Operators answer calls Monday through Friday between 8 a.m. and 5 p.m. (ET).

The agency stated: "NCUA neither seeks personal information from consumers over the telephone nor handles day-to-day maintenance of member account information. NCUA works with law enforcement agencies, including the FBI, to protect consumers from frauds of this nature.  NCUA urges consumers to never verify or release personal financial information to unknown callers."

Bagumbayan CU closes: Great Lake CU assumes shares

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ALEXANDRIA, Va. (1/22/14) --The National Credit Union Administration Tuesday, in its role as conservator, announced the liquidation of Bagumbayan CU of Chicago. It is the first federally insured credit union liquidated in 2014.
 
Last December, the NCUA and the Illinois Department of Financial and Professional Regulation assumed control of service and operations at Bagumbayan CU, and that action followed an October order that the credit union cease-and-desist allowing unapproved officials to attend board meetings or perform managerial and operational functions, and that it resolve recordkeeping issues and Bank Secrecy Act violations, and correct other issues.

Great Lakes CU of North Chicago, Ill., immediately assumed Bagumbayan's members and deposits Tuesday. Great Lakes is a federally insured, state-chartered credit union that serves more than 54,000 members and has assets of more than $626 million, according to the NCUA.

Great Lakes has been operating Bagumbayan under a management agreement with NCUA since Bagumbayan was placed into conservatorship.

NCUA, with approval from the Illinois Department of Financial and Professional Regulation, made the decision to liquidate Bagumbayan CU and discontinue its operations to protect the credit union from continued financial deterioration.

At the time of liquidation and subsequent purchase and assumption by Great Lakes, Bagumbayan CU served 44 members and had assets of $55,140, according to the NCUA. It was chartered in 1964, and provided limited financial services to members of the Bagumbayan community in Chicago.