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Housing health reflects more consumer confidence CUNA

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WASHINGTON (8/27/12)--Recent signs of recovery in the housing market bode well for credit unions and the economy in general, and indicate that consumers are generally more confident and willing to spend, Credit Union National Association (CUNA) senior economist Mike Schenk said last week.

The U.S. Department of Commerce this month reported that home starts in July increased by 21.5% and new home permits increased by 29.5% when compared to July 2011 numbers. Acting U.S. Commerce Secretary Rebecca Blank said the July 2012 numbers "show improvements for both the single- and multi-family housing sectors," and added that new home permits are at their highest level since 2008. She also noted that home prices and builder sentiment have improved nationwide.

The National Association of Realtors (NAR) last week reported that July sales of existing single-family homes, townhomes, condominiums and co-ops increased by 10.4% when compared to last year's numbers. The NAR said record low interest rates, combined with steadily increasing home rental rates, are helping to unleash pent-up homebuying demand. "However, the market is constrained by unnecessarily tight lending standards and shrinking inventory supplies, so housing could easily be much stronger without these abnormal frictions," NAR Chief Economist Lawrence Yun said.

Schenk noted that these year-over-year home sale increases follow a depressed 2011 home market, when government budget issues loomed large. However, today's economy is in a slightly better place today, he added.

He noted that credit unions are originating mortgages at high levels, but these new loans aren't significantly boosting overall loan growth, or interest income, at credit unions. "Interest rate risk concerns loom large, and credit unions don't want to be caught with huge unhedged portfolios of long-term fixed rate loans when market interest rates begin rising," he said.

Credit unions are benefitting from the home sale increases when they sell their mortgage loans on to the secondary market, Schenk said. They may also stand to benefit from the multiplier effect of home sales. Members are purchasing and taking out loans for a variety of home-related durable goods, including carpet, appliances, and other goods.

A recovering housing market may also create longer-term benefits for credit unions, CUNA Chief Economist Bill Hampel said. "The stronger the recovery in the housing market, the better the outlook for moderation in future National Credit Union Administration (NCUA) corporate stabilization assessments. The stronger the housing recovery, the lower the future losses on the legacy assets," he added.

"The recent strengthening in the housing market is probably not yet firm enough to cause major revisions in the loss estimates, but things are moving in the right direction. If the recovery in the housing market continues and strengthens, we're likely to see downward revisions in the legacy asset loss estimates," he said.

The NCUA this year charged credit unions a 2012 Temporary Corporate Credit Union Stabilization Fund (TCCUSF) assessment of 9.5 basis points (bp) of their insured shares as of June 30, and payment is required by Oct. 9.

Credit unions can expect between $1.9 billion and $5.2 billion in remaining assessments, and this total would be paid off between 2013 and 2021, according to the NCUA. Assuming the $3.6 billion mid-point of NCUA's published remaining assessment range, Hampel said credit unions would pay off the remaining costs in about four years at assessment rates similar to this year's. Three years of ten bp assessments, and an eight bp assessment in the fourth year, would cover the remaining corporate stabilization costs, he added.

2012 sees its first new FCU charter

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ALEXANDRIA, Va. (8/27/12)--Internet Archive FCU, a New Brunswick, N.J., low-income designated community credit union, became the first new federal credit union of 2012 after the National Credit Union Administration (NCUA) approved its charter Friday.

The credit union is scheduled to open in October and will offer regular share accounts, share secured loans and signature loans to members. The credit union also plans to add auto loans, share certificates, share drafts, debit cards, ATM cards, online banking, bill payment services and shared branching in the first year of operation. The credit union will also offer remittance transfers to Mexico through Directo a México, a Federal Reserve/Banco de México payment system.

The credit union will draw members from individuals living, working, worshiping, attending school, or participating in associations headquartered in New Brunswick and Highland Park, N.J. Individuals participating in programs to alleviate poverty or distress in that locale will also be eligible to become members, the NCUA said.

Incorporated and unincorporated organizations located in or maintaining a facility in the approved area, and organizations of such persons, will also be permitted to offer membership in the credit union, the NCUA added.

The credit union is sponsored by Internet Archive, a nonprofit organization funded in part by the Kahle/Austin Foundation. Internet Archive hosts a growing online library at

NCUA Chairman Debbie Matz said the agency's Office of Small Credit Union Initiatives will offer assistance to the new credit union as it grows.

New Jersey Credit Union League President/CEO Paul Gentile said the league "has worked side by side with the organizers for the last few years, and quickly learned they were serious about not just charting a new federal credit union, but also about helping serve the low-income people in their field of membership." The league will "continue to provide assistance and help this credit union move forward," he added.

Internet Archive FCU is the second new credit union to be chartered in New Jersey over the past four years. The agency chartered one new federal credit union last year, Stepping Stones FCU of Wilmington, Delaware.

For the full NCUA release, use the resource link.

Assessments FSOC report highlight NCUA iYouTubei update

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ALEXANDRIA, Va. (8/27/12)--The Financial Stability Oversight Committee's (FSOC) 2012 annual report and how National Credit Union Administration (NCUA) stabilization fund assessments compare with Federal Deposit Insurance Corporation assessments are addressed in the NCUA's latest YouTube economic briefings.

The NCUA has previously presented the briefing as a single video, but this month decided to split the content into three separate sections.

NCUA Chief Economist John Worth also covers recent developments in the housing markets and employment sector, and emerging economic risks, in the videos.

The three videos is the latest in a series of YouTube videos to inform the public and credit unions about general economic and credit union specific developments.

The videos can also be viewed on the NCUA's YouTube page by using the resource link below.

Storm warning NCUA urges preparedness for Isaac

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ALEXANDRIA, Va. (8/27/12)--National Credit Union Administration (NCUA) Chairman Debbie Matz on Friday reminded Gulf Coast credit unions to "take prudent precautions" as Tropical Storm Isaac approached the Gulf of Mexico and Florida.

"Credit unions operating and people living in the Gulf Coast region know they need to prepare for serious storms," Matz said. She noted that the NCUA continues to protect deposits at federally insured credit unions during sunny days and after bad storms.

The agency in a release said it is prepared to activate emergency response plans, if needed, and will take steps to assist credit unions in maintaining normal operations or, in the event of a disruption, to restore those services as quickly as possible.

Portions of the storm hit the FLorida Keys and southern Florida on Sunday, and the storm could  enter the Gulf of Mexico, and strengthen, Monday. The storm could again make landfall anywhere between the Florida panhandle and Louisiana this week.

Tropical storm-like conditions were expected in the Tampa, Fla.-area, and the start of this year's Republican National Convention. Today's convention activities have been cancelled as a precaution.

News Now will cover the latest credit union and political news from the convention. Look for updates on Twitter too.

Inside Washington (08/24/2012)

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  • WASHINGTON (8/27/12)--The Federal Deposit Insurance Corp. (FDIC) will partner with Securities Investor Protection Corp. (SIPC)--a non-government agency--in winding down systematically important firms in the wake of the financial crisis. FDIC and the Securities and Exchange Commission are working on a proposal under which SIPC will serve as a trustee for liquidating broker-dealer subsidiaries of firms in receivership. SIPC has expertise in transferring a large number of customer brokerage accounts from giant failing financial firms to new acquirers. But SIPC must also work closely with FDIC to prevent large failures from damaging the economy, said Anita Ryan, general counsel for eSecLending, a securities financing company …

CUNA leagues plan to blanket RNC to advocate for CUs Start day postponed

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TAMPA, Fla. (8/27/12)--Credit union representatives, including staff from the Credit Union National Association and the state credit union leagues, will raise the profile of credit unions and credit union issues during this week's Republican National Convention that starts here this week.  Originally scheduled to kick off today, approachin storm Isaac changed the long-made plans.

Over the weekend, eyes and ears were fixed on weather reports and predictions of how approaching storm Isaac was going to affect Florida after it passed Haiti. While Isaac had an impact on some travel arrangements, the convention activities seemed to be proceeding as planned, but then there was one notable exception. Breaking a long-standing convention tradition, Republicans on Saturday announced they would hold their "roll call of states" to choose Mitt Romney as their presidential nominee today--the first day of the convention--rather than in the middle of the week. Later in the day, GOP officials concelled the first day of activities.

Click to view larger image The shovels may have been called ceremonial, but their blades were sharp and strong earlier this year at a groundbreaking ceremony at All Children's Hospital. Shown (L to R): Brendan Garrison; Beth Reinhard of National Journal; Patrick La Pine, president/CEO, League of Southeastern Credit Unions; Cynthia Scott-Butler; Rep. C.W. Bill Young (R-Fla.); Riley Christian; Mike Mercer, CUNA chair and president /CEO, Georgia Credit Union League & Affiliates; Dr. Jonathan Ellen, Interim president/CEO of All Children's; St. Petersburg Mayor Bill Foster; and Caden Riley. (CUNA Photo)
However the schedule unfolds, this year's credit union participation in the national political conventions follows a long tradition, started in 1988, of keeping credit unions and the credit union philosophy of "people helping people" in the national spotlight.

Trey Hawkins, CUNA vice president of political affairs, says CUNA participation in the national conventions is "an opportunity to continue to develop our political brand."  Hawkins adds, "The conventions are an opportunity to talk to and communicate with all of the policy and media and political elites in one place. That's an opportunity we want to take on behalf of credit unions."

Among the highlights of credit union involvement, CUNA, the League of Southeastern Credit Unions, the National Journal Group will honor the 2012 Republican National Convention, among others, with a "leave behind" project, which has retrofitted an existing playground at All Children's Hospital in nearby St. Petersburg with special play equipment for ill and injured children.

The renovated playground for young patients was made possible through funds raised with the help of credit unions.

Also during the convention, CUNA is a sponsor of the National Journal's Convention Daily Briefings, which will feature party newsmakers in both Tampa and Charlotte.

The on-site events, at both convention locations, plan to feature moderators such as Ron Brownstein, a two-time finalist for the Pulitzer Prize for his coverage of presidential campaigns and National Journal Group's editorial director, Chuck Todd, the chief White House correspondent for NBC News, Good Morning America co-host George Stephanopoulos, and NBC correspondent Chelsea Clinton, as well as speakers and panelists such as Rep. Nancy Pelosi (D-Calif.) and former Republican senator from Mississippi Trent Lott.

On Wednesday, CUNA and state credit union leagues, and credit unions will host an event to honor all delegates attending the convention. The gathering will feature a bit of local Tampa flavor, literally and figuratively, with local artists, sangria and tapas, and world-famous Tampa cigars from Arturo Fuente Jr., who owns the 100-year-old Tampa Sweetheart Cigars company and is a member of GTE Financial's Supervisory Committee.

This, and a similar event at the DNC in Charlotte, will draw convention dignitaries to a credit union-sponsored event to highlight credit unions, their philosophy, and issues.

Watch CUNA's News Now and its Twitter-fed updates on NewsNowLiveWire for up-to-the-minute coverage of credit union involvement at the two national political conventions this week and next.