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NEW: CUNA, league announce tool to drive home CU compliance concerns: GAC

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WASHINGTON (UPDATED: 12:45 P.M. ET, 2/24/14)--PowerComment, a new online regulatory advocacy resource that will help credit unions take their compliance concerns directly to regulators, was unveiled today at the Credit Union National Association's 2014 Governmental Affairs Conference.

CUNA and California and Nevada Credit Union Leagues partnered to develop the tool, which helps users efficiently generate and submit letters to regulatory agencies, including the National Credit Union Administration and Consumer Financial Protection Bureau. CUNA President/CEO Bill Cheney and CNCUL President Diana Dykstra announced the innovation this morning.

PowerComment also explains proposed rules and regulations issued by regulators, and helps individuals understand how those rules may affect their credit union. The website, which will be available exclusively to CUNA-affiliated credit unions, also provides a discussion board so that credit unions can discuss any questions or concerns with other members.

"Like it or not, regulation is a major part of today's credit union movement," CUNA General Counsel Eric Richard reminds. "We know credit unions feel like the onslaught of regulation in recent years is one of the greatest headwinds facing the future of our movement. And we know credit unions want to do what they can to help shape the regulations. PowerComment will help credit unions take action in the regulatory arena."

CUNA Deputy General Counsel Mary Dunn adds, "CUNA and the leagues are always committed to providing credit unions with the best technology to confront the challenges facing the movement.

"In the spirit of the cooperative movement, CUNA is pleased to partner with the California and Nevada Credit Union Leagues in this venture as we continue to look for ways to improve the regulatory environment for our credit union members."

PowerComment is currently being tested by seven credit union state leagues and is set to be available for all members later this year. Watch News Now for more developments on this issue.

Record crowd converges on D.C. for 2014 GAC

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WASHINGTON (2/24/14)--As the Credit Union National Association launches its 2014 Governmental Affairs Conference this morning, CUNA President/CEO Bill Cheney will call on a record number of 4,400 participants to keep up their vital grassroots advocacy efforts.

These efforts are more important than ever in the face of new and existing issues facing credit unions, such as the National Credit Union Administration's recent risk-based capital proposal and ongoing tax reform talks in the U.S. Congress.

Just before Cheney's remarks, the U.S. Marine Corps Band will begin proceedings with a patriotic opening and a stirring rendition of the national anthem.

Cheney will be followed on today's schedule by former United Kingdom Prime Minister Tony Blair, who will offer GAC attendees analysis of the world's most difficult and complex issues.

The CUNA Annual General Meeting is on this afternoon's agenda, and CUNA staff will also speak today: Legislative and political updates are set to be staged just before an interesting, interactive panel discussion on credit unions in the media.

During a media panel session, former Washington, D.C. anchorman and GAC emcee Paul Berry will ask Fox News' Tucker Carlson, the Washington Post's Ylan Mui, and Politico's Lauren French how credit unions can better communicate their message to the media.

Also during the 2014 GAC, credit union representatives from across the nation will hear presentations by high-profile, Washington, D.C., policymakers and get the latest information on top credit union issues.

Other highlighted speakers this week include House Majority Whip Kevin McCarthy (R-Calif.), Minority Whip Steny Hoyer (D-Md.), Sens. Bob Corker (R-Tenn.) and Mark Udall (D-Colo.), Jon Tester (D-Mont.), Rep. Darrell Issa (R-Calif.), Rep. James Clyburn (D-S.C.), Deputy Consumer Financial Protection Bureau Director Steve Antonakes and National Credit Union Administration Chair Debbie Matz.

Also sure to attract a lot of attention: CUNA's conference will feature important breakout sessions.  Even over the weekend, CUNA staff explored hot credit union topics in depth.  For instance, CUNA held a 90 minute session on the National Credit Union Administration's risk-based capital proposal (see related story: Risk-based capital concerns aired at CUNA GAC).

Other breakout sessions will explore how to navigate the current congressional gridlock, the upcoming midterm elections, new developments in cybersecurity and payments, how federal policies impact credit union lending, and many other sessions taken from the front pages of credit union news.

And thousands of credit union representatives flood Capitol Hill and regulatory offices to advocate for credit union issues, just as Rep. Dave Camp (R-Mich.) is expected to release his long-awaited tax reform plans.

Use the resource link below for more GAC information.

NCUA readies online resources for America, Military Saves Week

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ALEXANDRIA, Va. (2/21/14)--Noting that "an educated consumer is better prepared to make sound financial choices," National Credit Union Administration Chairman Debbie Matz encouraged credit unions to take part in a planned Twitter talk during America Saves Week and Military Saves Week.

America Saves Week and Military Saves Week begins today and runs until March 1. Matz in recent weeks has noted it provides credit unions with an excellent opportunity to educate their communities about the importance of saving.

The NCUA will be active online during the week, hosting a Feb. 26 Twitter chat at 11 a.m. ET. During the chat, NCUA Office of Consumer Protection Financial Literacy and Outreach Analyst Kenneth Worthey will highlight the NCUA's financial literacy resources and answer credit union and member financial literacy questions. The agency has encouraged Twitter users to follow the conversation and contribute using the #NCUAChat hashtag, and to submit questions early by emailing

The agency has also created a Virtual Campaign Headquarters page, and updated its site and the agency's financial literacy site, Pocket Cents, with new information about saving, borrowing and managing credit.

America Saves Week and Military Saves Week are national campaigns that unite government, nonprofit and corporate groups to encourage individuals and families to save and build personal wealth. American Saves Week is coordinated by American Saves and the American Savings Educational Council. Military Saves is part of the Defense Department's Financial Readiness Campaign and has been a partner with the department since 2003. Managed by the Consumer Federation of America, both programs encourage saving, reducing debt and building wealth.

"Teaching individuals how to build wealth is a core mission of the credit union system, and I strongly encourage credit unions to take part in various activities to remind their members of the importance of saving," Matz said.

During the week-long event, the NCUA encourages credit unions to partner with local savings campaigns and consumer organizations to offer motivational workshops and obtain posters, brochures and other resources.

For more, use the resource link.

HUD, Dodd-Frank see Financial Services Committee scrutiny this week

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WASHINGTON (2/24/14)--The U.S. Department of Housing and Urban Development and the Dodd-Frank Act will both be discussed at House Financial Services Committee hearings set for this week.

The HUD hearing will take place on Wednesday at 10 a.m. (ET). During that hearing, the oversight and investigations subcommittee will review a recent HUD Inspector General report addressing allegations of improper lobbying and obstruction at HUD.

Other hearings this week include:
  • A Wednesday 2 p.m. (ET) capital markets and government sponsored enterprises subcommittee hearing on the Dodd-Frank Act's impact on the asset-backed securities markets, and potential legislation dealing with the Volcker Rule's impact on collateralized loan obligations; and
  • A Friday 10 a.m. (ET) capital markets and government sponsored enterprises subcommittee hearing to examine equity market structure and review the objectives and outcomes of Regulation National Market System adopted by the Securities and Exchange Commission in 2005.
The hearing schedule is tentative. All hearings are scheduled to be held in Room 2128 of the Rayburn House Office Building.

Fryzel tells defense CUs: Face future by learning from past

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WASHINGTON (2/24/13)--National Credit Union Administration board member Michael Fryzel, addressing the "Defense Issues 2014" meeting hosted here Sunday by the Defense Credit Union Council, advised his credit union audience that the industry must learn from the past, but not be locked into the past, when facing challenges ahead.

"As credit unions and the entire financial service industry continue to change, we need to look forward," Fryzel said. "Use the past as a relevant guide, improve and sharpen your tools based on experience, but do not assume for a minute that future challenges will bear any resemblance to past problems.

"The Federalist Papers asked what I think is a critical question," Fryzel said. "Are we capable of establishing good government through reflection and choice, or are we destined to make decisions by accident and force? I sincerely hope it is the former path, illuminated by serious, smart thinking and reasonable application of experience and knowledge."

Also during his remarks, Fryzel praised DCUC member credit unions for serving those who serve in the nation's armed services, for helping expand the middle class, and for demonstrating the importance of cooperative credit unions to the country's economy.

Fryzel also detailed his agency's efforts that marked its response to the country's recent financial crisis and how the NCUA has "applied the tough lessons learned from the market meltdown" to current regulation and supervision. He reiterated his call for  "right-sizing" regulation.

As he first said in November to the more than 110 attendees at the American Association of Credit Union Leagues' (AACUL) 2013 winter meeting in Palm Beach, Fla., regulations should take "neither an overly stringent nor an overly permissive approach" as to rules--and he cited risk-based capital rules as needing the 'right-sizing' approach.

The DCUC's "Defense Issues 2014" was a full-day meeting held here in conjunction with the Credit Union National Association's Governmental Affairs Conference, which kicked off Sunday.

Use the resource link for the full text of Fryzel's remarks to the DCUC.

CUs detail risk-based capital rule concerns in GAC session

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WASHINGTON (2/24/14)--"CUNA supports a modern risk-based capital system for credit unions. Period," Credit Union National Association President/CEO Bill Cheney told an estimated 400 credit union leaders from across the country attending a Sunday 2014 Governmental Affairs Conference session on the new risk-based capital proposal. But, he declared, "What we don't support is layering additional capital requirements on top of our one-size-fits-all outdated system of prompt corrective action."

Click to view larger image A capacity crowd—estimated at 400 credit union representatives—packed the room Sunday during a special breakout session at CUNA's GAC on the National Credit Union Administration's proposed rule on risk-based capital. CUNA experts detailed the NCUA's plan and discussed its costs to credit unions, in terms of maintaining current net worth buffers. The audience was polled on such things as whether they could manage their risk-based ratio by adjusting asset composition, how long should credit union have to comply with a new rule, and much more. (CUNA photo)
The risk-based capital plan recently proposed by the National Credit Union Administration is flawed, and the best fix "would be to withdraw the proposal as written today and start over," Cheney said at the session.

As proposed, the 198-page, risk-based capital framework for credit unions would impose new requirements on credit unions with assets of $50 million and above. CUNA estimates that the rule, if made final and implemented, would push credit unions to hold as much as $7.3 billion in additional capital. (For more on the rule, use the resource link.)

The CUNA leader encouraged credit unions to take part in three NCUA "listening sessions" scheduled for this summer (News Now Feb. 21), where the risk-based capital proposal will be on the agenda. "They're there to listen to you," Cheney reminded. (See resource link for more information on the NCUA sessions.)​​

CUNA Chief Economist Bill Hampel told the packed crowd of credit union attendees that the proposed system would create a new requirement to be well capitalized that would call for more capital than the current risk-based requirement for capital adequacy. "This is where it would eat into your buffer," he said.

In an on-the-spot survey, session attendees detailed w​hat the rule would mean to their credit unions. The quick electronic survey showed:
  • 44% of session attendees believe their current capital cushion above PCA thresholds is "about right," and 33% said they have more than they need;
  • 26% said the NCUA proposal would reduce their capital cushion below what is needed;
  • More than 80% preferred the current risk-based PCA system; and
  • Most of the credit unions in attendance said they'd need 3-5 years to adjust to a new system.
"There will be strong incentives for credit unions not to make mortgages and member business loans, or to hold long-term investments as a result of the proposal," Hampel warned. "What the proposal would do by discouraging lending is put pressure on your bottom line, and induce credit unions to charge more fees to their members. The net result would likely not be what NCUA wants to see," he added.

CUNA Deputy General Counsel Mary Dunn, addressing the breakout session, said CUNA is working with others in the system to respond to the proposal. "The more united our voice on this the better off we will be," she said. CUNA is looking at potential changes, including the use of different risk weights. CUNA will also compare credit union loss weights by type of loan, and will compare credit union and bank loss rates as it continues analyzing the proposal.

And, the session leaders said, credit unions can start working on their own comment letters now. The majority of session attendees said they planned to draft a comment letter on the issue, and Hampel said credit unions have plenty of time to develop analytical, personalized comment letters.

Hampel also suggested that credit unions use CUNA's calculator tool and examine how factors such as increased numbers of second mortgages or other new products that are added to their books as the economy recovers could impact their risk-based capital numbers.

"There is a huge chance if we make cogent comments to NCUA that there will be changes in the final rule," he said.

These comment letters are part of an overall grassroots strategy that also incorporates a new resource, the risk-based capital action center.

For the CUNA tool and more on the proposed rule, use the resource link.

CUNA video: How to write a good risk-based capital comment letter

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WASHINGTON (2/24/14)--The Credit Union National Association is planning to tackle the issues presented by the proposed risk-based capital changes from all angles, and CUNA Deputy General Counsel Mary Dunn outlines how credit unions can help this effort by writing an effective comment letter on this issue in the latest Inside Exchange video.

The risk-based capital proposal, released at the January open board meeting, would restructure the agency's current prompt corrective action regulation to include calculation of a capital-to-risk-assets ratio, analogous to Basel III for community banks. The risk weights would be substantially different, and the proposal would impose higher capital requirements for credit unions with higher concentrations of assets in real estate loans, member business loans, longer term investments and some other assets.

The proposal would apply to credit unions with assets of more than $50 million.

CUNA has developed a new Risk-Based Capital Action Center tool to help credit unions file comment letters with the agency, and the NCUA will also touch on risk-based capital rules in a series of town hall meetings scheduled for the summer.

CUNA President/CEO Bill Cheney also discussed the need for credit union action on the proposal in this week's edition of The Cheney Report.

For the Inside Exchange video, and The Cheney Report, use the resource links.

NEW: Matz says merchants must be subject to same data security standards as CUs

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WASHINGTON (UPDATED: 2/24/14, 11 A.M. ET)--The data breach at Target is the story of a double standard "that is neither healthy nor fair," National Credit Union Administration Chairman Debbie Matz said today at the 2014 Governmental Affairs Conference. "While financial institutions are required by law to protect sensitive personal information, data protection standards for retailers are too often simply not adequate," Matz added.

The Credit Union National Association has made this same point in several recent letters to the U.S. Congress.
The NCUA leader identified cyber-security as one of the top priorities for the regulator and the credit union system going forward.

"A data breach--even if it's outside the financial system--can have enormous negative repercussions inside the financial system," Matz said. "No matter how far removed a given data breach is from your credit union, if it affects your members, you can pay dearly--both in terms of your reputation and your balance sheet."

Data breaches are not the only cyber-security risk, according to Matz.  Hackers have used passwords stolen from a credit union to access one of the larger credit bureaus, and cyber-terrorists are now targeting credit unions.

"When these attackers break through, websites crash. Members are unable to access their accounts. It can take hours to bring systems back online," she said. Hackers can infiltrate systems and compromise or destroy data, and could use a credit union as an entry point to gain access to payment systems and vendors.

Some also use front-end denial of service attacks to create a diversion while others break into a network through a back door. "Think about the damage they could do," Matz said.

Agency examiners will be looking to see how credit unions are implementing appropriate risk mitigation controls to better protect, detect, and recover from cyber-attacks. Vendor due diligence, strong password policies, proper patch management, employee training, and network monitoring are among the items credit unions will need to address or improve.

To prepare for potential attacks, credit unions can share cyber-security best practices  at league meetings and take part in national information-sharing forums.

The NCUA itself is also partnering with federal law enforcement, intelligence and financial agencies to improve its own cyber-security.

"NCUA needs to be ready. The credit union system needs to be ready. Working together, we will be ready," Matz said.