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Hiring Increases Reflect CU Confidence, Says CUNA

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WASHINGTON (3/26/13)--The total number of credit union employees increased by 2.8% in 2012, the largest credit union employment increase reported since the Great Recession began in 2007. This uptick in staffing numbers "means that credit union leadership is more positive about the future of the economy and their credit unions," Credit Union National Association Chief Economist Bill Hampel said.

The 2012 growth brought the total number of credit union employees nationwide to 265,201. The number of full-time and part-time employees on credit union payrolls increased by 3.1% and 1.3%, respectively, in 2012, CUNA reported. There were 257,872, credit union employees in 2011, according to CUNA.

This credit union employment level increase follows several years of flat staffing numbers following the 2007 economic crisis, which included declines in full-time employee totals in 2009 and 2010. Net interest margin declined, provisions for loan losses skyrocketed, and costs related to corporate stabilization increased during those years, and "credit unions were doing everything they could to protect their capital and their bottom line, including postponing hiring and cutting back discretionary expenses as much as they could," Hampel said.

CUNA gathered the results from an analysis of the National Credit Union Administration's 2012 year-end call report data. The numbers cover credit union in all 50 states, include federally insured credit unions, privately insured credit unions and credit unions in Puerto Rico.

CU MBL Questions Answered In Regulatory Advocacy Report

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WASHINGTON (3/26/13)--The Credit Union National Association continues to receive questions following the February release of member business lending (MBL) waiver clarifications, and CUNA addresses some of those questions for its members in the latest edition of the Regulatory Advocacy Report.

To answer the credit union queries, CUNA consulted the National Credit Union Administration's supervisory letter on MBLs. In the report, CUNA details the basics of the MBL waiver process, including:

  • How to request an MBL waiver;
  • What information should be included in a waiver request;
  • How those waiver requests are evaluated; and
  • How waivers for loan participations are obtained.
"CUNA has urged the agency to allow waivers as much as possible absent safety and soundness concerns," Deputy General Counsel Mary Dunn said on Monday.

Issues impacting the banking sector are also addressed, as the Regulatory Advocacy Report discusses final guidance on leveraged lending from the Federal Reserve Board, the Office of the Comp­troller of the Currency, and the Federal Deposit Insur­ance Corporation. A U.S. Government Accountability Office report on community bank failures is also examined in the report.

Other topics covered this week include:

  • Consumer Financial Protection Bureau (CFPB) Regulation E amendments;
  • An NCUA Office of Inspector General report on the failure of Telesis Community Credit Union;
  • The U.S. Treasury Financial Crimes Enforcement Network's work on customer due diligence issues;
  • Washington discussions regarding mortgage market reforms; and
  • CFPB indirect lending oversight developments.
Employees or volunteers of CUNA/state credit union league-affiliated credit unions can sign up to receive the Regulatory Advocacy Report using the link below. The publication is archived on cuna.org.

CUNA: FFIEC Social Media Guidance Must Not Stifle Innovation

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WASHINGTON (3/26/13)--Developing social media guidance should not add additional burdens that could stifle credit union innovation and cause undue hardships. Instead, it should offer a framework to make the implementation of social media programs easier for financial institutions, the Credit Union National Association said in a comment letter to the Federal Financial Institutions Examination Council (FFIEC).

Social media has the potential to improve market efficiency by more broadly distributing information to users of financial services, and, "as social media matures, more financial institutions will use them to interact with members and customers," CUNA Deputy General Counsel Mary Dunn wrote. CUNA encourages any media platform that makes communication with members more effective and efficient, she added.

The CUNA comment letter addresses FFIEC proposed guidance, released in January, on how consumer protection and compliance laws, regulations, and policies could be applied to the use of online social media platforms by credit unions and other financial institutions. Poor due diligence, oversight, or control of social media platforms can create increased risks for financial institutions and their members or customers, and the guidance outlines expectations for managing those risks.

Credit unions and other financial institutions are moving more of their main marketing efforts toward social media and other online channels, according to a 2013 State of Bank & Credit Union Marketing study by The Financial Brand, a website for financial services marketers. The study found that seven in 10 bank and credit union marketers said online advertising and social media would be the most important outreach platforms in 2013.

Credit union respondents to a separate Financial Brand survey said their twitter accounts averaged about 400 followers, and added, on average, about 100 new followers in 2012.

CUNA is active on the social media front, informing consumers on how they can find a credit union to call their own through aSmarterChoice.org. Social media outreach is also a key component of CUNA's Tax Toolkit, which helps credit unions inform their members on the importance of the credit union tax status, and what this tax status means for them financially.

Insight from CUNA experts is also delivered through CUNA's official blog site, CUNAVerse. NewsNow Live Wire (@NewsNowLiveWire) uses 140 characters at a time to transmit breaking credit union news, and interesting articles from outside sources, to the masses through microblogging site Twitter. CUNA also maintains Facebook pages for member business lending and other advocacy efforts, Credit Union House, among other things.

For the CUNA comment letter, and more on aSmarterChoice.org, CUNA's Tax Toolkit and other CUNA social media efforts, use the resource links.

Reports Say Johnson Won't Seek Re-election

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WASHINGTON (3/26/13)--Sen. Tim Johnson (D-S.D.) is expected to announce later today that he will not seek re-election and will retire when his term ends in 2014. Johnson is the chairman of the Senate Banking Committee, as well as a member of that chamber's Appropriations Committee, Energy and Resources Committee, and Indian Affairs Committee.

Johnson is 66 and has served in the Senate for more than 15 years. Johnson is expected to make his announcement at a press conference he has called for 4 p.m. (ET) at the University of South Dakota, his alma mater.

Credit Loss Proposal Covered In FASB FAQ Doc

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WASHINGTON (3/26/13)--In a new frequently asked questions (FAQ) document, the Financial Accounting Standards Board seeks to tackle common questions regarding its proposed accounting standards update on financial instrument credit losses.

The FAQ document addresses common questions posed by stakeholders about the credit loss accounting exposure draft, which is scheduled to remain open for public comment until April 30.

The document is divided into three sections: Project objectives, measuring expected credit losses, and other alternatives considered.

Questions addressed in the FAQ include:

  • What is FASB's objective as it relates to the recognition of credit losses and interest income;
  • Why does FASB believe that the effective interest rate is the best rate for recognizing interest income;
  • What is the allowance for expected credit losses under FASB's proposed model; and
  • Why didn't FASB propose a model that delays recognition of all expected credit losses until there has been a significant deterioration in the credit quality of the asset.
FASB's proposed model would utilize a single "expected loss" measurement for the recognition of credit losses. This would replace the multiple existing impairment models in U.S. generally accepted accounting principles (GAAP) that primarily use an "incurred loss" approach. Under the proposal, a credit union would estimate the cash flows that it does not expect to collect, using all available information, including historical experience and forecasts about the future. The proposed approach--referred to as the current expected credit loss model--considers more forward-looking information than is currently permitted under U.S. generally accepted accounting principles.

CUNA is developing a comment letter on this issue and will circulate that letter in the coming weeks.

FASB in a release said it will discuss feedback it receives on the credit loss issue this summer with the International Accounting Standards Board, which also has a proposal pending on this issue.

For the FAQ, use the resource link.