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Who's buying? CUNA-CFA survey results suggest 3%-3.5% bump in holiday spending

Washington
WASHINGTON (11/25/14)--More consumers say they plan to spend less money in 2014 compared with 2013, according to a survey conducted by the Credit Union National Association and the Consumer Federation of America (CFA).  However, such good intentions don't always translate into thrifty actions. This is the 15th year the two organizations have conducted the annual holiday spending survey, which interviewed 1,009 adults by phone from Oct. 30 to Nov. 2.

CUNA Vice President of Economics and Statistics Mike Schenk and CFA Executive Director Stephen Brobeck held a press conference Monday morning to discuss the results. A number of media outlets were in attendance, including CNBC, ABC Radio, Voice of America and American Banker.
Click to view larger imageA breakdown of how consumers plan to spend this holiday, according to a CUNA-CFA survey.

"Top-line results from an economic perspective are encouraging, and holiday spending almost certainly will increase this year," said Schenk.

"However, elements of our survey underscore the fact many consumers continue to reflect significant concerns about their personal finances--most especially in the realm of weak income gains.

"Because of this we expect the increase in holiday spending this season to be modest."

Schenk said the projected increase in spending this holiday season will be approximately 3% to 3.5%, adding that the survey responses don't always correlate with an increase or decrease in spending.

"What consumers say they'll do doesn't always correspond to what they actually do. Over time, consumers generally say they'll reduce spending rather than increase spending, often by a wide margin. For most, it's almost instinctive not to plan to overindulge," he said.

"However, actual holiday spending almost never decreases. In fact, in every year of our survey, there's been only one period where holiday spending declined, that was 2008 in the teeth of the recession," he added.

According to the results, 10% of consumers said they would spend more, compared with 13% in 2013. Approximately 33% said they would spend less, compared with 32% in 2013. In 2008, 55% said they planned to spend less.

Cautious financial attitudes may have helped credit union growth over the past year. Credit union membership, which recently passed the 100 million memberships mark, grew by approximately 3% last year, compared with an approximate 1% growth in population.
Click to view larger imageThe CUNA-CFA survey showed that households making less than $25,000 a year reported a lower income increase than households making more than $100,000. This chart reflects changes in household incomes overall. 

"Credit union memberships are growing at a rate roughly three times the rate of population growth. The reason for that is, as not-for-profit cooperatives, we return our earnings to our members, which means essentially, credit union members get a better deal," Schenk said.

"Consumers are engaged, but they are undoubtedly, experiencing some difficulties, and part of the answer to those difficulties is shopping around for the best value proposition. More and more they're finding that value at credit unions," he added.

Brobeck agreed, saying, "It's quite clear that low- and moderate-income consumers can get a better deal at credit unions."

According to the survey results, nearly twice as many of those with low incomes (37%), than of those with high incomes (19%), said they would spend less money this year than last.

RBC revisions expected Jan. 15: 90-day comment period likely to follow

Washington
ALEXANDRIA, Va. (11/25/14 )--Jan. 15 is the likely date that the National Credit Union Administration will take up a new risk-based capital (RBC) proposal for discussion. NCUA Chair Debbie Matz late Friday announced that she will ask the agency board to consider a revised RBC plan at that time--and said a 90-day public comment period would likely follow.

Credit Union National Association President/CEO Jim Nussle responded immediately to the announcement: "We appreciate that the NCUA intends to support a 90-day comment period, which is consistent with how we thought this process would work. CUNA looks forward to seeing the details of the revised rule when it is proposed. We plan to be an active participant in what we hope will be an open process that will fully examine the effect the revised proposal will have on credit unions."

Responding to an inquiry by CUNA after the chair's announcement, NCUA Vice Chair Rick Metsger said he supports Matz's position. He stated that with the arrival of the holiday season, he and his senior policy advisor want to make sure all have an time to evaluate the "voluminous material" associated with a new plan.

He said that putting the RBC discussion on the January meeting agenda, rather than December as some were anticipating, "allows all three board members two months to evaluate the final proposal and make suggested changes before it is presented."

The third NCUA board member, J. Mark McWatters, was sworn into his post at NCUA in late August. He also has voiced support for a 90-day comment period. He told CUNA that he will carefully review and analyze the revised proposed risk-based capital rule once he receives it. 

Earlier this month he outlined his areas of focus for revised RBC plan.

"We asked the chairman to allow us to present this in January and she totally understood, agreed, and moved forward," Metsger told CUNA. Matz had indicated in a Nov. 19 letter to Sens. Debbie Stabenow (D-Mich.) and Thad Cochran (R-Miss.) that a revised risk-based capital plan could be issued by the NCUA "before the end of 2014." Her letter to the senators responded to the lawmakers' concerns that a new plan keep in mind any potential effects on agricultural lending. (News Now Nov. 24)

In making the timing announcement Friday, Matz said, "During the six months since the comment period closed on the original proposed rule, we've taken the time to carefully review and methodically evaluate the many thoughtful comments received from stakeholders.

"We've also considered the input received during three Listening Sessions across the U.S. this summer. We're getting closer to issuing the revised proposed rule, which I now anticipate will be presented in January 2015--one year since the original proposed rule.

"To provide the public ample time to review this important safety and soundness rulemaking, I intend to support a 90-day comment period," she added.

CUNA has strongly advocated for a reasonable comment period of at least 60 days, given the amount of structural changes that had been mentioned by NCUA, including longer implementation period and revised risk weights for mortgages, investments, member business loans, credit union service organizations and corporate credit unions.

More than 2,000 comments were received from credit unions, members of the U.S. Congress and other stakeholders during the proposal's original comment period.

(Editor's note: This article is reprinted from the Nov. 24 issue of News Now.)

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Huffington announced for CUNA GAC: Senate will be in session

Washington
WASHINGTON (11/25/14)--Entrepreneur Arianna Huffington will speak at the Credit Union National Association's 2015 Governmental Affairs Conference (GAC), scheduled for March 8-12 in Washington, D.C.

The Senate will also be in session during the GAC, according to the 2015 schedule released by incoming Senate Majority Leader Sen. Mitch McConnell last week.

"Efforts to reach out to Congress during the GAC will be strong, despite the release last week by the House majority leader of a schedule showing the House out of session during the conference," said CUNA President/CEO Jim Nussle. "The Senate will be in session during those dates, and key House and Senate staff members will certainly be on the Hill. Our meetings with these professionals have traditionally been very valuable."

Huffington is the co-founder and current editor-in-chief of The Huffington Post. She has written more than a dozen books, and her latest debuted at No. 1 on The New York Times bestseller list. She also heads a public interest group dedicated to alternative-fuel cars, is a board member for the Center for Public Integrity and ran as an independent candidate for governor of California in 2003.

Huffington was named to the TIME 100 in 2011, Vanity Fair's 2011 Powers That Be list; Fast Company's list of the 100 Most Creative People in Business; Financial Times' 50 Faces That Shaped the Decade, Newsweek's Top 10 Thought Leaders of the Decade, and Forbes' Most Influential Women in the Media (2012) and The World's 100 Most Powerful Women (2012 and 2013).

Last week it was announced that Stanley McChrystal, retired U.S. Army general and former commander of U.S. and international forces in Afghanistan, would also speak at the conference.

"There is plenty going on at the GAC, and I hope to see a large portion of the credit union community join us to take part in the full range of activities and advocacy on behalf of credit unions," Nussle said.

More than 4,000 credit union stakeholders are expected to attend the conference, which will be held at the Walter E. Washington Convention Center. Registration for the GAC is currently open.

(Editor's note: This article is reprinted from the Nov. 24 issue of News Now.)

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Tips for prudent holiday spending offered by CUNA, CFA

Washington
WASHINGTON (11/25/14)--While the Credit Union National Association and Consumer Federation of America (CFA) annual holiday spending survey results released Monday showed that more Americans plan to spend less this holiday season than last year, in reality it isn't always the case that actions reflect intentions.

Mike Schenk, CUNA vice president of economics and statistics, said that only once in 15 years of the survey--in 2008 to be exact--did consumers cut back on holiday spending from the previous years--despite consumers' annual vows to themselves to cut back. (See related story: Who's buying? CUNA-CFA survey results suggest 3% to 3.5% bump in holiday spending.)
Click to view larger imageCUNA Vice President of Economics and Statistics Mike Schenk and CFA Executive Director Stephen Brobeck give consumer tips on avoiding debt for the holiday season. (CUNA Photo)

With that in mind--and with Black Friday looming--Schenk and CFA Executive Director Stephen Brobeck presented several tips for spending prudently and avoiding too much debt this holiday season:
  • Decide now how much you can afford to spend and stay within that budget. Staying within budget will be much easier if you make a price list of all gifts and other holiday items you plan to purchase. Even if it's a more general rather than detailed list, it will help you avoid overspending and impulse buys;

  • Make sure your list includes not only gift or gift recipients, but also all projects and activities that make up your holiday. It's easy to overlook extra expenses for holiday food, party clothes, holiday decor and postage. Examine each item and ask yourself, "Does it earn its place in our celebration?" You might discover how much you're doing just out of habit or perceived expectation;

  • You can easily save more than 10% on most items, sometimes considerably more, by comparing prices at different stores. The Internet and smartphones have made comparison shopping much easier. When shopping online, shop wisely. Be sure you are purchasing from a secure site and review emailed statements for accuracy as you receive them;

  • Start sooner rather than later because when you delay, you pay. At the last minute, you have to settle for something, and it might cost more than you wanted or planned to pay. After Christmas is a good time to shop for next year's presents. You can find some great bargains right after the holidays. Starting early also gives you more time to find the "right" gift and avoid impulsive decisions, which too often leave you unhappy with your purchase;

  • Use a lower-interest credit card (you'll often find lower rates on credit union cards) and pay off this debt as soon as possible early next year. Don't borrow more than you can repay in several months. Remember that credit card debt is relatively expensive, and if you only make the required minimum monthly payment, you may never pay off the debt; and

  • Ask your credit union or bank to automatically transfer funds into a savings of Christmas or holiday club account each month. They provide a practical way to save small amounts over time and the discipline of saving reinforces your good budget intentions. Find credit unions you're eligible to join at ASmarterChoice.org.

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Conforming loan limits to remain at $417K in 2015, says FHFA

Washington
WASHINGTON (11/25/14)--Maximum conforming loan limits for mortgages acquired by Fannie Mae and Freddie Mac will remain unchanged in most of the country, the agency announced Monday. The limit will be $417,000 for one-unit properties.

The limits are established under the terms of the Housing and Economic Recovery Act (HERA) and are calculated each year. HERA sets maximum loan limits as a function of median home values. 

Loan limits will rise in 46 counties because those counties experienced increases in local home values. Although other counties experienced home value increases in 2014, after other elements of the HERA formula were accounted for the local-area limits were left unchanged, according to FHFA.

The Credit Union National Association urged FHFA Director Mel Watt not to reduce the loan limits.

A list of the 2015 maximum conforming loan limits for all counties and county-equivalent areas in the country has been posted to the agency's website.

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FHFA strategic plan reflects FHLB program priorities for 2015-2019

Washington
WASHINGTON (11/25/14)--Priorities for regulation of the Federal Home Loan Bank (FHLB) program highlight the Federal Housing Finance Agency's (FHFA) strategic plan from 2015 to 2019, which was released last week.

The FHFA has regulatory oversight over the FHLB program, as well as government-sponsored enterprises Fannie Mae and Freddie Mac.

In addition to ensuring the safety and soundness of the entities it regulates, and maintaining the ongoing conservatorship of the enterprises, the FHFA has an obligation to ensure "liquidity, stability and access in housing finance," according to statute.

In the full report, the agency lays out a number of strategies to accomplish the goal over the next several years, which include:
  • Ensure that FHL Banks can continue to provide advances in a safe and sound manner by examining operations, internal controls and strategic assumptions, as well as evaluating whether there are impediments to providing liquidity to members through normal or stressed markets and during expansion and contraction cycles;

  • Assessing trends in the availability of mortgage credit by monitoring access to mortgage credit using data reported by the regulated entities, data from third-party sources and discussions with industry sources, and using the data to inform potential policy initiatives;

  • Expecting the enterprises to maintain a multifamily liquidity presence in all geographic areas and through all market cycles with a focus on the affordable segment of the market. FHFA will not count certain activities--such as affordable rental housing, buildings with 50 or fewer units and manufactured rental housing communities--toward the multifamily business production cap;

  • Working with other federal regulators through its participation on the Financial Stability Oversight Council, the Financial Stability Oversight Board, the Federal Housing Finance Oversight Board, and other interagency initiatives to identify and address foreign and domestic risks, to coordinate supervision efforts consistent with each agency's respective examination and supervision responsibilities; and

  • Developing and actively promoting home retention and loss mitigation programs such as loan modification and refinancing programs in order to help reduce the number of defaults and foreclosures by allowing eligible borrowers to realize more favorable rates or terms on their mortgages.
The Credit Union National Association submitted a comment letter on the agency's strategic plan in September, asking the FHFA to avoid using safety and soundness concerns to justify additional regulatory burden.

The FHFA first requested input on its strategic plan in August, and has posted a database of the feedback it received.

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Mortgages, prepaid cards, payday loans highlight CFPB rulemaking agenda

Washington
WASHINGTON (11/25/14)--A semiannual update of the Consumer Financial Protection Bureau's rulemaking agenda has been published by the agency. Federal agencies are required by the Regulatory Flexibility Act to publish regulatory agendas twice a year.

The CFPB's complete Fall 2014 rulemaking agenda includes all rulemaking actions in the pre-rule, proposed rule, final rule, long-term actions and completed actions stages.

Current highlights of the agenda are:
  • Mortgages: In late October, the bureau issued a proposed rule that will provide for technical corrections, allow for certain language related to construction loans to be added to the Loan Estimate form and to propose extending a same-day redisclosure requirement for floating interest rates that are locked after the Loan Estimate is first provided;

  • Prepaid cards: A proposal issued earlier this month would create consumer protections for prepaid financial products. It would give consumers a number of Regulation E protections, such as getting disclosures about fees before they acquire a prepaid card and error resolution rights. Their liability would also be capped for unauthorized use of their prepaid card under certain conditions;

  • Payday loans: The bureau is considering what rules may be appropriate for addressing the use of short-term, high-cost credit products, as well as associated consumer protection concerns. It is considering whether rules governing these products are warranted under CFPB authorities, and if so, what types of rules would be appropriate. Rulemaking might include disclosures or address acts or practices in connection with these products;

  • Debt collection: The CFPB is considering whether rules governing the collection of debts are warranted and if so, what types of rules would be appropriate. Rulemaking might include disclosures or address acts or practices in connection with debt collection activities. The bureau is developing a survey to obtain information from consumers about their experiences with debt collectors and is engaged in qualitative testing to determine what information would be useful for consumers; and

  • Privacy disclosures: A final rule released in October 2014 provides that financial institutions that restrict their information sharing practices and meet other requirements may post their annual privacy notices to customers under the Gramm-Leach-Bliley Act online, rather than delivering them individually.
"We're continuing research, analysis and outreach on a number of other consumer financial services markets, and will update our next semiannual agenda to reflect the results of further prioritization and planning," wrote Kelly Cochran, acting assistant director for mortgage markets in a post on the CFPB's blog.

Also notable, any action regarding overdraft protection plans and related services is just in the initial pre-rule stage, and therefore a proposal is not imminent.

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Inside Washington (11/25/14)

Washington
  • WASHINGTON (11/25/14)--The Federal Reserve is preparing to unveil new restrictions to make it more difficult for big banks to get involved in commodities markets, according to The New York Times. The article cites remarks made late last week by Fed Governor Daniel Tarullo to a Senate subcommittee. Tarullo said the Fed will likely issue a formal notice of a proposed rule that could require banks to hold more capital to protect against commodities losses, as well as restrict banks from some types of commodities operations that are currently allowed. The rules are expected in the first quarter of 2015 ...

  • WASHINGTON (11/25/14)--An organization representing the corporate loan market filed a lawsuit against the Securities and Exchange Commission (SEC) and Federal Reserve in the U.S. Court of Appeals in Washington, according to Bloomberg (Nov. 24). The Loan Syndications and Trading Association (LSTA) said that the SEC and the Fed did not have the authority to mandate collateralized loan obligation managers to hold at least 5% of their deals. "The agencies did not fulfill their legal responsibilities when finalizing the rule," said LSTA Executive Director Bram Smith in a statement ...

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