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Bank Transfer Day momentum sure to continue CUNA says

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WASHINGTON (11/7/11)—The official Bank Transfer Day came and went on Saturday, and by now the dust has settled and tallies have been taken of how many consumers switched from being bank customers to credit union members on the day that was so much ballyhooed in advance.

But regardless of the numbers of new accounts or increased deposits generated by "the Day," the real story for credit unions is the lasting benefits that the event has fostered.

Increased awareness of credit unions and the credit union difference is clearly one of the big benefits.

Just as big banks were experiencing what might seem like insurmountable reputational damage--when announcements of new fees were coupled with consumers' residual resentment of bailouts--credit unions were highlighted in media across the country as an important resource for consumers looking for a better way to do their banking business.

Scores of stories nationwide highlighted that credit unions are not-for-profit and owned by their members, compared to banks that have a responsibility to provide a good return to their shareholders.

More consumers than ever before heard the message that credit unions generally offer higher rates on savings, lower rates on loans, and lower fees than the megabanks.

"This gives credit unions an incredibly strong new foundation from which to launch future branding campaigns," Mark Wolff, Credit Union National Association (CUNA) senior vice president of communications, observed Saturday.

As USA Today put it "credit unions view raising fees as a last resort." Or as The Los Angeles Times noted, "Credit unions…are set up for such hands-on service at a low cost. Owned by members who are linked by jobs or geography, their core focus is on

consumer accounts, although some these days are doing more small-business lending." And these two represent dozens of such articles feature by national media.

Myth-busting is another forward-going benefit delivered by the media attention.

The extensive interviews with consumers helped identify for credit unions where confusion points exist, so going forward from Bank Transfer Day credit unions will know where they have to strengthen their message.

Membership rules were questioned, and CUNA, state leagues, and credit unions got extensive opportunity to note that with a quick visit to sites like CUNA's Smarterchoice.org, almost anyone can find a credit union to join.

When convenience was challenged, CUNA and credit unions explained how credit unions don't compete with each other as banks do and work together to benefit all members.

CO-OP Financial Services and FSCC (Financial Service Centers Cooperative Inc.)  informed media  in separate campaigns that convenience is not an issue for many credit unions. 

CO-OP Financial Services, manager of CO-OP Network, a nationwide network of 28,000 ATMs for members of 3,000 participating credit unions,  for instance launched an information campaign in mid-October that was viewed by more than 500 editors and appeared on numerous sites, including Finance.Yahoo.com, Marketwatch,

Investor and Optimum Online  as of the end of the month. At the same time, FSCC explained the convenience of shared branching networks.

Another example of myth debunking was called just that: AOL's DailyFinance.com, in an article entitled "5 Credit Union Myths Debunked."

Written by The Motley Fool columnist Matt Cropp, it acknowledged the public outcry on fees and the fact that "normally low-profile credit unions have been receiving a great deal of attention as an alternative to the big banks." This piece, and others like it, help to clear up five  misconceptions about credit unions. Instead it reported that:

•        Many credit unions have community charters and are easy to join (readers were referred to aSmarterChoice.org to locate a credit union);

•       Credit unions offer a full range of competitive products and services;

•       Credit unions through ATMs and shared service centers offer nationwide convenience;

•       Savings at credit unions are safe and sound and backed by the government; and

•       Members buy a share and "own" the credit union.

And what about the influx of deposit?

CUNA Chief Economist Bill Hampel said Bank Transfer Day could drive the credit union system over $1 trillion in total assets.

But  Hampel emphasized that the true impact of Bank Transfer Day may not be seen at first.

"The real story," he said, "is not asset growth, but membership growth and the new, mostly young members that credit unions

have now gained."

Attracting younger members has been a topic of concern for years among credit unions, but Bank Transfer Day—which reached well in  excess of 600,000 through its Facebook page alone—was in large part speaking directly to the younger adult crowd.

Around 650,000 new members transferred a total of $4.5 billion in funds into new credit union savings accounts in the month leading  up to Bank Transfer Day. An estimated 80% of credit unions saw their membership increase in October.

Since Sept. 29, California-based credit unions have seen the biggest gains, bringing in an estimated 90,000 new members and $624 million in new deposits. Texas credit unions also saw a large surge in new deposits, gaining $326 million in new deposits from 47,000 new  members. In total, 21 of 50 states and the District of Columbia have seen membership increases of 10,000 or more in the past month.

One of Bank Transfer Day's longest lasting legacies will unfold, Hampel said, as those new members relate their positive credit union experiences to their friends and families, creating even more new members, he added.

For more about Bank Transfer Day, see related article: CUs were prepared for Bank Transfer Day--and the future.

Fed releases Reg D reserve information

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WASHINGTON (10/31/11)—The Federal Reserve Board last week announced the annual indexing of the reserve requirement exemption amount and of the low reserve tranche for 2012.

Starting on Dec. 5, the amount of total reservable liabilities for depository institutions that are subject to a 0% reserve requirement in 2012 will be set at $11.5 million. The Regulation D amendment also set the amount of net transaction accounts at each depository institution that is subject to a 3% reserve requirement in 2012 at $71.0 million.

These amounts are used in the calculation of reserve requirements of depository institutions.

The Fed release also reports the annual indexing of the nonexempt deposit cutoff level and the reduced reporting limit that will be used to determine deposit reporting panels in 2012.

The Credit Union National Association (CUNA) is also currently seeking credit union comment on a separate Reg D proposal that is intended to simplify the administration of reserve requirements. The proposal would create a common two-week maintenance period for all depository institutions, create a penalty-free band around reserve balance requirements in place of carryover and routine penalty waivers, discontinue as-of adjustments related to deposit revisions, replace all other as-of adjustments with direct compensation, and eliminate the contractual clearing balance program. CUNA is accepting comment on this proposal until Nov. 23.

For the full Fed release and the CUNA comment call, use the resource links.

Market issues drop average mortgage rates

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WASHINGTON (10/31/11)--Average rates on 30- and 15-year fixed rate mortgages fell last week amid concerns over the European debt market, Freddie Mac reported.

Thirty-year mortgages averaged 4% during the week ended Nov. 3. The average rate stood at 4.1% during the previous week, and 4.24% this time last year. Fifteen-year mortgages fell to 3.31%, ending a two-week stretch during which they held at 3.38%. Those types of mortgages averaged 3.63% this time last year.

Freddie Mac Chief Economist Frank Nothaft said the U.S. economy continued a gradual recovery, but added that market concerns over the European debt market drew investors to U.S. Treasury securities, lowering bond yields and mortgage rates.

Five-year and one-year Treasury indexed hybrid adjustable-rate mortgages (ARMs) also fell last week, averaging 2.96% and 2.88%, respectively. Five-year ARMs average 3.08% last week, and one-year ARMs averaged 2.9%.

For the full release, use the resource link.

Inside Washington (11/04/2011)

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  • WASHINGTON (11/7/11)--Holly Petraeus, who leads the Consumer Financial Protection Bureau division charged with protecting military servicemembers, testified at a Senate Banking Committee hearing last week that her work is being hampered by the lack of a director at the bureau's top. Because there is no director, the CFPB cannot yet by law supervise payday lenders, private student loan companies and other non-bank lenders to prevent potential abusive practices toward the military and their families. (American Banker Nov. 4) Forty-four Republican senators have publicly vowed to block White House nominee Richard Cordray, or another nominee, to head the CFPB unless the Obama administration replaces the CFPB director spot with a five-member commission and gives federal financial regulators more veto power over the bureau's decision. Also at the hearing, Retired Navy Admiral Steve Abbot, who is president of the Navy-Marine Corps Relief Society, a non-profit charity that serves active-duty and retired members of the military, said the 2007 Military Lending Act has worked to help protect servicemembers from some abusive practices,  but added that new predatory lending practices have arisen which continue to victimize his group's  clients. …
  • WASHINGTON (11/7/11)--Senate Banking Committee Chairman Tim Johnson (D-S.D.) announced plans to investigate executive bonuses at Fannie Mae and Freddie Mac after reports circulated that 10 executives at the two government-sponsored enterprises were expecting to receive more than $12 million in perks.  (American Banker Nov. 4) The Federal Housing Finance Agency is conservator of Freddie and Fannie, and Johnson said he would call on the agency's director to testify.  The senator said his committee, the U.S. Congress and taxpayers need to be confident that controls are in place and that conservator is upholding its responsibilities. Sen. Richard Shelby (R-Ala.), who is the ranking Republican on the panel, suggested officials at the Treasury Department should also testify. …