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CURRENT Newsletter | 1 August 2013

Aug 1, 2013 by Lewis Wood

News and Information for and About Virginia's Credit Union System

August 1, 2013

Headline News

News About Credit Unions 

Compliance/Regulatory Affairs News 

Governmental Affairs News

Financial Services/Marketplace News

News From Credit Unions

Chapter News

Technology News

Headline News

League's Jeanne Sullivan Has Passed Away

With deepest sadness, we regret to inform you of the loss of Jeanne Sullivan, who passed away suddenly yesterday afternoon. She was a dear friend to so many of us -- as warm and caring a person as one could ever hope to meet! Our thoughts and prayers are with her family and we will pass on additional details as we have them.

Her loss is truly a loss for the whole of the Virginia credit union family. And she loved her credit union family -- she was employed first by Virginia League Central Credit Union (now Beacon), and then the Virginia League's service corporation, for 35 years.

She was an invaluable resource for our credit unions, especially the smaller and mid-sized institutions with which she worked closest. At work, she "sweated the small stuff" – some might say she worried a bit too much about such things -- but we loved that about her, and the League and our credit unions are better for it.

As many have noted, she had a heart of gold, a true servant's heart, which really shone through in her work with the League's statewide Community Involvement Committee and her 16 years as a volunteer for the Make-A-Wish Foundation of Greater Virginia, a true calling given that she often met children facing life-threatening illnesses. In recent years, her volunteer service and involvement expanded to CMN Hospitals and the Muscular Dystrophy Association.

She also laughed -- a lot -- and encouraged those around her to do the same. She cared deeply about the people in her life and even people she just met. She had a ready smile and a positive, "we'll-see-it-through" attitude under the toughest of circumstances. She served as the truest example of a life well-lived: to care about people and what you do, to have a servant's heart, and to laugh.

"Jeanne will be greatly missed," said League President Rick Pillow. "She was a wonderful ambassador for the League, and she cared so passionately about people and was so conscientious about the work she did on behalf of our credit unions. She was cut from the same cloth as those credit union pioneers who believed so deeply in the movement and what we do, and that the heart of our movement is simply helping people." 

> Although the stories of the kids and families she met were often heartbreaking, Jeanne had a real passion for the Make-A-Wish Foundation. Please consider a donation in Jeanne's name to help the kids she helped for so many years. You can forward donations to the Credit Unions Care Foundation of Virginia, PO Box 11469, Lynchburg, VA 24506. Note that the donation is for the Make-A-Wish Foundation in Jeanne's honor. Checks/share drafts can be made out to the Credit Unions Care Foundation of Virginia.

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Rep. Rob Wittman Reaffirms Support for Credit Union Tax Exemption

Rep. Rob Wittman (R-1) once again pledged his support of the credit union tax exemption and promised a letter on qualified mortgages to the National Credit Union Administration (NCUA) when representatives from 1st Advantage Federal Credit Union and BayPort Credit Union met with him Monday in his district office. Wittman noted that as a 28-year member of a credit union, he understands full-well the benefits of the "Credit Union Difference."

“The current niche of credit unions and the tax exemption are reasonable. You are fulfilling a need and there is a value to the nation for continuing the tax exemption. I’ve seen the benefit first-hand.”

[read more]
> Contact the Congressman here and thank him for his support!
[related: Politico: Mixed Messages on Tax Reform Momentum]  
[related: Ways and Means' Levin, More Back CU Tax Status]

[related: House Intelligence Chair Backs CUs On Tax Status]
[related: Cheney To Obama - Include MBLs In Econ Aid Packages]
[related: The Hill - Senators Promised Half-Century of Secrecy for Taxation Feedback]

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League, Member CUs Host Representatives of Estonian Credit Cooperatives for Weeklong Internship

Continuing a five-year partnership, the Virginia Credit Union League recently hosted two representatives of Estonia's credit union system for a weeklong internship that included discussions on credit union regulation and operations. The Virginia Credit Union League and the Estonian Union of Credit Cooperatives (EUCC), a trade association now representing eight credit cooperatives (credit unions), signed a partnership agreement in 2008, through World Council of Credit Unions’ International Partnerships Program.

World Council is the international trade association and development agency for credit unions and its International Partnerships Program connects credit unions and trade associations from more than 20 countries, facilitating the exchange of ideas, best practices and technical expertise. As part of the partnership, delegates from Estonia have visited Virginia-based credit unions for a first-hand look at the operations, lending, marketing strategy and governance of U.S. credit unions and worked closely with the Virginia League on a number of key concerns, including technology, regulatory and legislative issues.

The League enlisted the aid of three credit unions – BayPort Credit Union, Fairfax County Federal Credit Union and UVA Community Credit Union – to provide educational opportunities on issues of interest to the Estonian visitors.

[read more]

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Court Rejects Fed Interchange Cap Rule; CUs Fear Impact

The U.S. District Court for the District of Columbia issued a decision yesterday striking down the Federal Reserve's price caps on debit interchange fees. U.S. District Court Judge Richard Leon said in his ruling that the Fed did not follow congressional intent when it implemented the cap and other changes imposed by what is known as the Durbin amendment.

Credit Union National Association General Counsel Eric Richard said, "This decision will have a potentially devastating impact on the ability of small debit card issuers, particularly credit unions, to continue offering this vital payments service to their members and customers. The decision, no doubt, will challenge credit unions to continue their debit card programs without incurring drastic cuts in revenue, or imposing additional fees on their members -- the last thing that credit unions want to do. Right now, the current debit interchange system remains the same.

However, the court has signaled it is going to consider the current system further in the weeks to come." [read more]
[related: CUNA: Court Interchange Ruling Could Devastate Small Issuers]
[related: What's Next After Interchange Cap Ruling? Aug. 14 Hearing Set]
[related: Durbin Decision Could Double Required Network Ties]
> A link to the 58-page decision can be found here.

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Regulatory Relief Bills Gain Momentum in Congress

Protests from community financial institutions about the burden and reach of regulation may finally be getting through to members of Congress. The list of bipartisan bills seeking to ease federal rules -- on everything from privacy notices to escrow requirements -- for small institutions keeps growing, offering the first real chance of passing legislation in seven years. Industry representatives say many of the bills -- which in most cases benefit both credit unions and community banks — are targeted enough that they have a shot at escaping prolonged controversy.

Observers said a final relief bill will have to be crafted in a way to win support from other sectors besides commercial banks, most notably credit unions. So far, credit unions say they support many provisions in the current crop of bills, which number 14. Credit union advocates also indicate they may be willing to support a regulatory relief package even if it lacks credit unions' No. 1 legislative priority: raising current federal limits on member business loans.

Rep. Gary Miller, R-Calif., has authored a separate relief package exclusively for credit unions that does not include the higher lending limits. (American Banker Online, July 31)

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Aid Our Advocacy Mission: Report Your Micro-Lending Initiatives

Credit unions: We are again collecting your micro-loan data through our Reality Check survey. Basically, we're asking you to report information on loans you've made of $3,000 or less, excluding credit cards. Lend us a hand and provide this data, which we use to support our advocacy efforts! Report your micro-loan data for the first six months of 2013 at this web address: Online Survey

Only aggregate data is used. We would also love to share your stories about members helped by your small loans. Photos of the members you've helped would also be appreciated! Email them to pr@vacul.org. We have a downloadable version of the survey as well! (PDF, 267kb)

We use this information to produce our Impact Report, the latest version of which we've been distributing to lawmakers!

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Help Us Improve Our Communication With Your Credit Union!

Your League wants to ensure we have up-to-date contact information for your employees who are responsible for various areas and departments within your credit union. We're working to establish email distribution lists based on certain areas of responsibility, like marketing, enabling us to disseminate relevant information to your credit union in a timely manner.

You will find a brief survey online here: http://www.surveymonkey.com/s/CU_Contact_2013, or download the print version here: http://www.vacul.org/Media/Files/Contact-Form-2013.

And thank you for aiding us in this endeavor!

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News About Credit Unions

Lack of CU Awareness Persists

Ninety-seven million consumers belong to credit unions—but nearly twice as many don’t. Given credit unions’ lower rates and fees and higher dividends than banks, this begs an important question: Why not? According to a new report from CUNA’s market research department, some nonmembers don’t realize they could join a credit union, while others don’t understand what credit unions are or how they differ from banks.

Credit unions have been trying to bridge this awareness gap for decades, according to the 2013-2014 CUNA Member and Nonmember Survey Results. The August edition of Credit Union Magazine details the survey findings in depth. [read more]

> The Virginia League and our credit unions created the Quit The Hit campaign to help us bridge the awareness gap here in Virginia. Our own research leading up to the launch of the Quit The Hit Campaign showed that an alarming 26% of our survey respondents did not think credit unions were a viable option.

Post-campaign, a much smaller percentage – 16% - said they didn't think credit unions were a viable option to serve as their financial services provider.
[learn more]
[related: ‘Quit The Hit’ Video Promoting Credit Unions in Virginia Tops 1 Million Views]
[related: Virginia League YouTube Video Hits 1.1 Million Views]
[related: CU Member Loyalty Rises At Banks' Expense]

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CU Member Loyalty Strengthened By Offering An Investment Program, Study Reveals

An investment relationship with a credit union increases member loyalty by more than 40 percent, which helps cement the overall member relationship and lock in additional years of revenue from credit union services, according to a white paper recently published by CUNA Brokerage Services, Inc. (CBSI).

[read more]

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CUNA: Derivatives Proposal, As Is, a Missed Opportunity For CUs

In a second comment letter on the National Credit Union Administration's derivatives proposal, the Credit Union National Association noted that the agency's plan, if left unchanged, would impose excessive requirements and high costs on participating credit unions, resulting in "a lost opportunity for credit unions to reduce risk in a similar manner allowed for banks. "This would place credit unions and the credit union system at a distinct disadvantage.

Moreover, it would deprive credit unions of an important tool to manage [interest rate risk (IRR)] and thereby contain costs for the National Credit Union Share Insurance Fund," CUNA Deputy General Counsel Mary Dunn wrote.

The NCUA derivatives proposal, released at the May open board meeting, would allow well-run federal credit unions to use simple derivatives to hedge against interest rate risks. The NCUA plan would allow only well-managed credit unions with $250 million or more in assets, and which have appropriate expertise, to apply for an agency derivatives investment program. Swaps and caps will be the only approved investments, and fees will be charged to cover costs related to application processing and supervision of the program.

[read more]

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World Council Issues First Islamic Finance Manual

World Council of Credit Unions has published the Islamic Finance Manual: Operating Policies and Procedures for Credit Unions, the first known guide to establishing Shariah-compliant credit unions in the developing world.

[read more]

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Fed's Monetary Policy Stays On Course

As expected, the Federal Reserve's policymakers stayed on course with its monetary policy yesterday, with no change in the 0.25% targeted funds interest rate and no announcement of a wind-down in its $85 billion-per-month bond assets purchase program. However, they noted the economy was expanding at a "modest" pace--a downgrade from the "moderate" pace last month.

The Federal Open Market Committee (FOMC), which met in its two day meeting Tuesday and Wednesday, said after the meeting that the increase in mortgage rates is a concern and that persistently low inflation was rising. [read more]

[related: Fed Policy Means Reduced Margin Compression For CUs]

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Hampel Lays Out 'Rebate' Impact Of Excessive Corporate CU Assessments

With the growing likelihood that corporate stabilization losses are largely paid for, the Credit Union National Association has called for the end of any further corporate stabilization assessments. According to CUNA Chief Economist Bill Hampel, assessments in excess of what is needed to cover losses would likely be rebated back to credit unions. That is both good and bad news. "While rebates in and of themselves are good, to the extent rebates occur, it means prior assessments were higher than they needed to be.

Rebates add to net income, but their existence means assessments previously subtracted from net income," Hampel said. "Understating Return on Assets for the next few years, and overstating it later would create incorrect signals about credit union performance," he added. CUNA has consistently questioned why the National Credit Union Administration covered all the corporate losses in a five-year period.

The agency had originally planned a 13-year lifespan for the Temporary Corporate Credit Union Stabilization Fund (TCCUSF), and following that plan would have minimized the high up-front cost to credit unions, Hampel said.

[read more]

[related: CUNA: Corporate Assessments Should End If Current Trends Continue]

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Compliance/Regulatory Affairs News

CU E-filing Could Be Required

A proposed rule that would require all federal credit unions to electronically file their financial, statistical and other reports was approved by the National Credit Union Administration last Thursday. If the rule is adopted, the reports would have to be filed using the agency's information system or other means specified by NCUA. Manual filing would no longer be an option, the NCUA said.

A computer with internet access, and an e-mail address, is all that would be needed to comply with this rule, the agency stressed.

[read more]

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Governmental Affairs News

CUNA Thanks Senate Commerce Committee For Cybersecurity Efforts

National cybersecurity efforts require the active participation of the government, business and every consumer, and the Cybersecurity Act of 2013 (S. 1353) "takes a significant step towards encouraging the participation of all, while providing the tools to defend against cyber threats," the Credit Union National Association said in a joint trades letter sent to the U.S. Congress this week.

The letter thanked Senate Committee on Commerce, Science and Transportation Chairman Jay Rockefeller (D-W. Va.) and Ranking Member John Thune (R-S.D.) for their leadership in forging the bipartisan S. 1353.

[read more]

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Financial Services/Marketplace News

U.S. Consumer Confidence Dips from 5-Year High

Americans’ confidence in the economy fell only slightly in July but stayed close to a 5 ½-year high. The report shows consumers remain upbeat about the outlook for job growth later this year.

[read more]

[related: U.S. Economy Pulls Through Federal Budget Issues]

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Rates Keep Mortgage Applicants Away for 7th Straight Week

Applications for U.S. home mortgages decreased last week with potential buyers shying away from the market as rates held steady just below their two-year highs.

The Mortgage Bankers Association said on Wednesday its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, declined 3.7 percent in the week ended July 26. It was the seventh week in a row the index has been lower.

[read more]

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Over a Million Are Denied Bank Accounts for Past Errors

Mistakes like a bounced check or a small overdraft have effectively blacklisted more than a million low-income Americans from the mainstream financial system for as long as seven years as a result of little-known private databases that are used by the nation's major banks. The problem is contributing to the growth of the roughly 10 million households in the United States that lack a banking account, a basic requirement of modern economic life.

Unlike traditional credit reporting databases, which provide portraits of outstanding debt and payment histories, these are records of transgressions in banking products.

[read more]

[related: Woman Wins $18.6 Million for Two-Year Battle Over Credit Report]

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Married Couples Disagree on Who Makes Family's Financial Decisions

It should come as no surprise that married couples often do not see eye-to-eye on personal finances. But a new survey reveals just how deeply spouses are split on their own roles as financial decision-makers in the family. Many married people either over-value their own power in making choices about money or under-value their spouse's contribution to the process, according to a new study by BMO Private Bank.

[read more]

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Who Isn’t Being Left Behind During the Economic Recovery?

While the economy has been in recovery mode for the past few years, many groups have been said to be “left behind” —essentially the entire middle class. Last week, the Washington Post reported that based on a range of indicators, including average earnings, inflation, gas prices, jobs created, and unemployment rates, the “evidence remains strong that the recovery has done little to boost the fortunes of people in the vast economic middle.”

The middle class encompasses quite a lot of people. But it’s not the only demographic that’s been categorized as largely “left behind” during the course of the economic recovery that supposedly started when the recession ended four years ago. There's a long list of other groups said to be not faring well as the economy rebounds ... perhaps presenting new opportunities for credit unions.

[read more]

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Understanding the Mobile Banking Consumer

In order to unlock the vast potential of mobile banking, credit unions and banks must better understand mobile banking preferences of current users while alleviating the fears and lack of understanding of non-users, writes Jim Marous on his banking blog. "Broadly speaking, while convenience is the primary benefit cited by mobile banking customers, security fears remain the number one barrier to mobile banking growth.

As opposed to a 'one-size-fits-all' approach, financial institutions should consider segmenting the mobile banking universe for improved resource allocation and to optimize customer acquisition, utilization, retention and differentiation." Mobile devices, including smartphones and tablets continue to transform the way consumers bank, budget, make payments and shop. In fact, having a mobile banking offering is now considered 'table stakes' to consumers when selecting a financial institution."

[read more]

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Mobile Banking Activity Continued to Grow in June

Banks continued to report increases in mobile banking usage in June, according to the latest Mobile Banking Intensity Index. The overall value of the index, 72.5, was roughly in line with the intense growth of last month's reading of 73.8. Almost all the 336 bankers who shared information about their mobile banking offerings and adoption for the month of June reported steady growth in the service, which for many is relatively new.

The overarching theme was fast adoption and growth with fluctuations and the occasional small hiccup. Mobile check deposit continues to be adopted quickly among these banks' customer bases: the index value for mobile deposit was 87 for June. In one component of the index value, 77% of respondents said the volume of activity of retail customers using mobile deposit was higher in June than in May.

Usage of mobile bill payment, while still growing, rose at a decelerated pace, with 49% of bankers saying activity volumes were higher in June than in May. Several bankers noted that they don't offer it yet. (American Banker Online, July 31)

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News From Credit Unions

Four Fairfax Public Schools Receive Partner Grants from NWFCU Foundation

Strong local schools make strong local communities, and Northwest Federal Credit Union Foundation continues to support both through its annual Fairfax County Public Schools Partner grants. This summer, the Foundation awarded $20,000 in total grants to its four business partnership schools.

The recipients include Louise Archer Elementary in Vienna, and three schools in Herndon: Dranesville Elementary, Rachel Carson Middle School and Herndon High School. The grants will be used for advancing school technologies and providing professional development opportunities for teachers and staff.

[read more]

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SW Telco FCU Members Approve Merger with Blue Eagle Credit Union

On Monday, July 29, 2013 members of Southwestern Telco Federal Credit Union (SW Telco FCU) held a special meeting to consider a merger proposition presented by their Board of Directors. At this meeting the SW Telco FCU membership voted in favor of merging into Blue Eagle Credit Union. SW Telco FCU is a small Roanoke credit union facing the mounting challenges of remaining competitive in today’s financial marketplace.

After much consideration, the SW Telco FCU Board of Directors felt it was in the best interest of their membership to seek a merger partner who could provide both the breadth of financial services demanded in the marketplace, as well as the personal financial relationship they currently enjoy as a small credit union. They decided Blue Eagle Credit Union was a perfect fit.

[read more]

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Belvoir Federal Supports AFCPE in Sending a Military Spouse to their Annual Symposium

Belvoir Federal Credit Union sponsored the Association for Financial Counseling and Planning Education (AFCPE®) Military Spouse Fellow Registration Scholarship Program. The AFCPE is an official partner of the Joining Forces initiative headed up by the First Lady Michelle Obama and Dr. Jill Biden. Joining Forces is a national initiative to mobilize all sectors of society to give service members and their families the opportunities and support they need to transition to civilian careers.

[read more]

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Langley Federal Credit Union Announces Sr. Vice President of Lending

Langley Federal Credit Union is pleased to announce Curtis Baker as Senior Vice President of Lending. Baker will develop and lead Langley’s overall Consumer and Business lending strategy.

[read more]

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Chapter News

Richmond Chapter Meets Aug. 20

Patrick Pillow, son of League President Rick Pillow, will be the featured guest speaker at the Richmond Chapter's Aug. 20 meeting.  You may have seen the heartwarming article in the Richmond Times Dispatch recently about him “Answering the Call.” Patrick will speak about the value of serving others. The Chapter will also celebrate Staff Appreciation Night!

[learn more]

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Roanoke Valley Chapter Plans Aug. 23 Golf Tournament to Benefit VACUPAC

Join the Roanoke Valley Chapter for a day on the links to benefit the Virginia Credit Union Political Action Committee (VACUPAC). Proceeds will help the chapter meet its 2013 VACUPAC goal and support the governmental affairs and advocacy mission of Virginia's credit union system.

Location: Hanging Rock Golf Club
Date: Friday, Aug. 23
Time: 8 a.m. registration; 9 a.m. shotgun start.
Lunch will be provided and follows play.

Registration fee is $75 per golfer and a number of sponsorship opportunities are available for credit unions and their business partners!
[Download the tourney packet for details] (pdf, 944kb)

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Tidewater Chapter to Host Sept. 19 Charity Golf Tournament

Note new date! Join the Tidewater Chapter Sept. 19 for its Inaugural Golf Challenge at Sewells Point Golf Course in Norfolk! Format will be four-man captain’s choice, with an entry fee of $125 per player. Cost includes a hot dog lunch, cart, range balls, green fees and cookout dinner.

Shotgun start at 1 p.m. Proceeds will benefit Children’s Miracle Network Hospitals. Sponsorships are also available, ranging from $250 to $1,000.

[learn more]

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Technology News

Banks Are Designing Branches To Look Like Apple Stores

The days when bank customers were greeted by a person in a conservative suit and then sent to wait in line to speak with a teller are quickly fading. Banks are ditching their stuffy interiors and replacing them with modern, Apple store-like features, all in the hopes of providing the banking experience 21st century consumers want. And from the looks of things, that means a lot of screens and little human interaction.

[read more

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Minnesota Credit Union to Open Teller-Free Branch

Lake State Credit Union in Minnesota next month will open a branch that will have no human tellers, only NCR video tellers. The machines will allow members to speak with live remote tellers to cash checks, make bill and loan payments, open accounts and initiate loans. The credit union aims to attract people born after 1964, according to the Duluth News Tribune. The ATMs will help the credit union save money over the longer term by avoiding staffing costs. (American Banker Online, July 31)

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