Archive Links

Consumer Archive
CU System Archive
Market Archive
Products Archive
Washington Archive

Washington Archive

Washington

CUNA: Bank Capital Changes Should Be Tied To CU Changes

 Permanent link
WASHINGTON (4/26/13)--The U.S. Congress should consider the capital concerns of credit unions as it discusses Basel III exemptions for small banks, Credit Union National Association President/CEO Bill Cheney urged in a Thursday letter to members of the U.S. House.

Basel III standards would require U.S. banks to hold common equity of 4.5% by 2015. In addition, banks would be required to hold a 2.5% conservation buffer, which would be gradually introduced by 2019, and increase Tier 1 levels from 4% to 6% by 2015.

Recent House legislation (H.R. 1693) would exempt community banks from the application of Basel III capital standards.

"To be clear: we would have very significant concerns if Congress were to exempt the small banks from the Basel III capital requirements and not at the same time address reforms to credit union capital requirements," the CUNA CEO said.

The CUNA letter encouraged legislators that support H.R. 1693 to also back the Capital Access for Small Businesses and Jobs Act (H.R. 719). The bill was introduce Feb. 14 by Reps. Pete King (R-N.Y.) and Brad Sherman (D-Calif.) and would allow well-capitalized credit unions to match a growing deposit base from a growing membership with capital from sources other than retained earnings--which currently is the only type of capital that counts at a credit union. The bill is substantially similar to last year's H.R. 3993, which had 45 co-sponsors.

Strong capital requirements are in the best interests of consumers and financial institutions, and reforms to financial institution capital standards should be done through a process that includes consideration of capital reform for credit unions as well as for community banks, Cheney noted.

CUNA: Fin Lit Bill Will Complement CU Efforts

 Permanent link
WASHINGTON (4/26/13)--Credit unions work hard to improve financial literacy in their communities, and Sen. Kay Hagan's (D-N.C.) new financial education bill will surely aid those efforts, the Credit Union National Association said Thursday.

During a financial literacy hearing Wednesday held by the Senate subcommittee which she chairs, Hagan announced she will soon re-introduce her 2012 legislation, the Financial Literacy for All Students Act.  (Use the resource link to read April 24 News Now story: Witness Highlights CU Fin Lit Efforts In Senate Hearing)

The bill, according to Hagan, would create incentive grants for states to incorporate financial literacy education into their elementary and secondary school curricula. Professional development would also be provided to help teachers better teach the topics. The senator introduced similar legislation in 2011.

Credit unions provide financial counseling to more than 1.5 million consumers each year, according to a National Credit Union Foundation report entitled "Credit Unions: Focused on Financial Capability across the Nation." Early-age financial literacy efforts are a key part of this counseling, as credit unions hold nearly 25,000 annual educational presentations for more than 600,000 students, the NCUF wrote.

On-campus credit union branches held more than $34 million in funds from 111,500 student members as of 2010. Nearly 5,000 student workers received on-the-job training experiences at those 1,400 in-school credit union branches.

In total, credit unions invested more than $140 million in financial literacy efforts in 2010.

CUNA and credit unions are celebrating April's Financial Literacy Month with special events to highlight the educational services they offer their members. CUNA's National Credit Union Youth Week this week focuses on teaching the benefits of saving and goal setting, and invites youth to open savings accounts at their credit union and make deposits throughout the year.

CUNA also conducts the National Youth Saving Challenge throughout April. That challenge rewards 10 savers with $100 cash prizes.

While Bank Payday Loans Scrutinized, CUNA Underscores CU Difference

 Permanent link
WASHINGTON (4/26/13)--As regulators unveiled plans Thursday to put bank payday and advance-deposit loan practices under increased scrutiny, the Credit Union National Association noted that there are pro-consumer credit union alternatives to predatory payday lending.

The proposed Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp. guidance aims to improve underwriting standards for these short-term loans, require banks to evaluate an applicant's ability to repay before they take out a loan, and create a mandatory one-month "cooling-off period" between loans. The OCC and FDIC will accept comments on their proposed guidance for 30 days after it is published in the Federal Register.

CUNA is reviewing the rule and will be filing a comment letter.

A March Center for Responsible Lending report condemned some big banks' payday lending practices, and found that payday loans offered by six large firms carried an average effective annual percentage rate (APR) of 225% to 300%. Credit unions across the country have implemented various programs in order to provide individuals in their communities an alternative to these and other high-priced products.

CUNA Director of Data & Statistics Marc Shafroth noted 8% of credit unions offer payday loan alternatives. 

The National Credit Union Administration's short-term, small amount loan program permits federal credit unions to charge an interest rate that is a maximum of 10 percentage points above the established usury ceiling at that time. For now, this amounts to an interest rate ceiling of 28%. Many of these products feature low fees, and credit unions also reach out to members that take out these loans to offer financial counseling and encourage them to take on more stable sources of financial services.

For more on the OCC and FDIC guidance, use the resource links.

The Consumer Financial Protection Bureau also plans to look into payday loan regulations. State and federal legislators are also acting to address payday loans. (Use the resource link to read April 24 News Now story: CFPB Payday Loan Study Warns Of Harmful Debt Cycle.)

NEW: CUNA Says Relief Bill Is 'Good First Step'

 Permanent link

WASHINGTON (UPDATED: 4/26/13, 10:30 a.m. ET)--Credit Union National Association President/CEO Bill Cheney today commended Rep. Blaine Luetkemeyer (R-Mo.) for introducing legislation that would address several regulatory burdens facing credit unions and community banks.

"This legislation is a good first step toward providing regulatory relief, but it can only be viewed as a first step," Cheney said Thursday night when the bill was introduced. "More will need to be done to address the cumulative effect of regulatory changes that continue to challenge credit unions."

In a letter of thanks to Luetkemeyer for taking this step, Cheney reminded, "It is not just one new law or revised regulation that challenges credit unions but the cumulative effect of regulatory changes," a phenomenon that has been "building for over a decade."

The Luetkemeyer bill, called the "Community Lending Enhancement and Regulatory Relief Act (CLEAR Relief Act)," would aid community-based financial institutions--both credit unions and community banks--by:

  • Providing regulatory relief in the mortgage area; and
  • Eliminating a requirement that privacy notices be sent on an annual basis.

The CLEAR Relief Act would also eliminate a requirement that financial institutions verify that automated clearing house payments are not a prohibited transaction, if the financial institutions originating the transaction has warranted that they have complied with Office of Foreign Assets Control regulations.

"Your legislation would address several regulatory burdens facing credit unions and community banks, and we commend you for seeking common ground on regulatory relief legislation. It is important to recognize, however, that much more needs to be done to address the crisis of creeping complexity, and we look forward to continuing to work with you to that end," Cheney concluded.

Capitol Hill Hosts Jump$tart, CUNA Fin Ed Day

 Permanent link
WASHINGTON (4/26/13)--The Jump$tart Coalition for Financial Literacy, the Credit Union National Association and other partners will educate members of the U.S. Congress and their staff on the many financial literacy projects of government, nonprofit and corporate organizations during today's Financial Literacy Day.

This is the 11th year that Jump$tart and partners have presented Financial Literacy Day on Capitol Hill. The event, which will be held in the Cannon House Office Building, will feature remarks from co-chairs Reps. Ruben Hinojosa (D-Texas) and Steven Stivers (R-Ohio).

CUNA staff will be on hand at the event to distribute financial literacy materials and promote aSmarterChoice.org, which provides a comprehensive credit union locator that includes every credit union in the U.S. Consumers can go on the site, answer a few simple questions about where they live, work or worship, and find credit unions nearby that they can join.

For more, use the links.

SBA 504, 7(a) Loan Simplifications Backed By CUNA

 Permanent link
WASHINGTON (4/26/13)--The Credit Union National Association supports a U.S. Small Business Administration (SBA) proposal that would ease the loan application process for small business owners, as well as increase access to certain SBA financing for certain business owners.  In a comment letter to the SBA, CUNA also noted that congressional action to increase the member business lending cap would also help small businesses.

The SBA proposal would "strip away regulatory restrictions that detract from the 504 Loan Program's core job creation mission as well as the 7(a) Loan Program's positive job creation impact on the American economy," the CUNA letter noted. The proposal would achieve this end, in part, by:

  • Eliminating a personal resources test from the regulations for both loan programs; and
  • Allowing SBA applicants more flexibility to use their loans to finance expenses.
"CUNA strongly supports efforts of federal agencies to eliminate unnecessary, outdated regulatory restrictions on credit unions," CUNA Senior Assistant General Counsel for Regulatory Advocacy Luke Martone wrote.

There were 347 credit unions with over 8,100 SBA loans outstanding, totaling $921 million in funds, at the end of 2012, he noted. The SBA-guaranteed portion of a 7(a) Loan is not counted against a credit union's business lending cap, but there are approximately 500 credit unions that are currently constrained by or actively managing their MBL cap.

CUNA in the comment letter urged the SBA to give facilitate credit union loans to small businesses by supporting legislation that would increase the 12.25%-of-assets MBL cap. The cap "restricts some credit unions from fulfilling the small business financing needs of their members," Martone wrote.

Increasing the MBL cap to 27.5%-of-assets, as proposed in the Credit Union Small Business Jobs Creation Act (H.R. 688), would permit credit unions to lend an additional $13 billion to small businesses, helping them create over 146,000 new jobs in the first year after enactment.

"This can be done at no cost to taxpayers and without increasing the size of government. Credit unions do not need taxpayer assistance to encourage them to do more business lending; credit unions only need authority from Congress," the CUNA letter noted.

For the full comment letter, use the resource link.