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CURRENT Newsletter | 12 June 2014

Jun 12, 2014 by Lewis Wood

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

Headline News

News About Credit Unions

Compliance/Regulatory Affairs News

Financial Services/Marketplace News

Education & Networking Opportunities

News From Credit Unions

Chapter News

Security/Fraud Prevention

Technology News

Headline News

Cantor a 'CU Friend' During 13 Years on Hill

Credit unions will lose a friend on Capitol Hill with Rep. Eric Cantor's Republican primary loss Tuesday. "Rep. Cantor has been a friend to the Commonwealth's credit unions stretching back to his service in the Virginia General Assembly," said David Miles, senior vice president of the Virginia Credit Union League.

"The Congressman's campaigns have always been able to count on the dedicated support of credit union volunteers. We were surprised by the results of the primary, but now look forward to meeting with the Republican and Democratic candidates for the 7th District seat to educate them about credit unions and our issues."

Credit Union National Association Executive Vice President of Government Affairs John Magill noted: "Cantor had a veritable open-door policy for credit unions and our issues during his 13 years in the House. He addressed CUNA's Governmental Affairs Conference in 2009, 2010, 2013 and again this year and often noted credit unions' important role in helping their communities."

Cantor said he will step down as Majority Leader on July 31, but jockeying for his position has already begun. A handful of prominent lawmakers have been named as possible contenders for the No. 2 spot in the House, including Majority Whip Kevin McCarthy, R-Calif., Rep. Pete Sessions, R-Texas, and Rep. Jeb Hensarling, R-Texas, chairman of the House Financial Services Committee.

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CU, League Reps in Estonia; Participating in Regional Credit Union Meetings

A delegation of credit union representatives from Virginia is spending the week in Estonia as part of the Virginia League's partnership with the Estonian Union of Credit Cooperatives. League President Rick Pillow is leading the delegation, which has had the opportunity to participate in an EUCC meeting and a board meeting of the software company that is linking Estonia's small, but growing system of credit cooperatives to the central banking system in Eastern Europe.

"As cooperatives, we see it as a duty to ensure the credit union movement grows and prospers, and Virginia's credit union system is proud to partner with the World Council of Credit Unions in helping reestablish cooperative financial institutions in Estonia," said League President Rick Pillow.

The delegation, which includes representatives of BayPort Credit Union, Northwest Federal Credit Union and UVA Community Credit Union, also participated in a regional credit union meeting in Tallinn, Estonian that drew representatives from Lithuania, Latvia, Poland, Moldova and Macedonia. Key topics during the two-day conference included the regulatory environment for Eastern European credit unions and payment systems.

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News About Credit Unions

Federation Project Could Involve Core System For Small CUs

The National Federation of Community Development Credit Unions is in the midst of a long-term project to help small credit unions reduce expenses around core banking systems and find efficiencies though collaboration. Blake Myers, a Federation consultant working with CUs $250 million and below, told Credit Union Journal the Federation received grant funding in the last year from both the Citi Foundation and the Ford Foundation to explore core banking and technology solutions at credit unions.

"Rather than looking specifically at individual core issues, the strategy we've taken since last fall is to begin to think about technology as a platform and the strategic expertise of the Federation," he said.

Myers added that technology is almost always the second-largest expense a credit union has — staffing is the biggest expense, he said — but while consumers' technology costs are on a long-term decline, core banking technology costs are increasing.

Within the next month, said Myers, the Federation plans to issue a report and analysis from a survey it conducted last year examining what credit unions look for in their core systems, along with system use and satisfaction, what direction they plan to go with their current core systems, what an ideal system would entail and more. (Credit Union Journal, June 7)

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Theme, Artwork Unveiled for 2014 ICU Day

The theme in the U.S. for ICU Day 2014 will be "Local Service. Global Good.™"This theme capitalizes on the "people helping people" philosophy. ICU Day will be held on Oct. 16, 2014, and will highlight how credit unions are helping to change the world, one community at a time, through local service for the global good.

[LEARN MORE]

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Register Now for Fall 2014 Development Education (DE) Training

There are now only a few spots left for credit union professionals as registration winds down for the Fall 2014 Credit Union Development Education (DE) training class taking place Sept. 10-17 in Madison, Wis. Attendees of the National Credit Union Foundation’s (NCUF) six-day total immersion experience will learn about credit unions’ social responsibility and domestic and international development through interactive education and professional networking.

Registration and more information can be found on the NCUF website by clicking the “Register for the September 2014 DE Training” button on the homepage or anywhere on the website under “Foundation Programs>Development Education>Register for the September 2014 DE Training” at the top of every page. 

[LEARN MORE]

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Compliance/Regulatory Affairs News

After Record 2,052 Comments, NCUA's Next Steps on RBC Plan

The National Credit Union Administration's risk-based capital proposal received a record 2,052 comment letters by the May 28 deadline, surpassing the previous record of 1,300 received in 1995 on proposal that set all rules for federally insured corporate credit unions. The agency said all RBC letters will be posted to its website.

Next up for the NCUA is a series of listening sessions starting June 26 in Los Angeles. This will be followed by one in Chicago on July 10 and one at the NCUA headquarters in Alexandria, Va., on July 17. Each session will run from 1 to 4 p.m. local time. Register now, however, since space is limited. Less than 20 slots remain for the Alexandria event (as of June 9). 

[READ MORE]

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June 30 is Deadline to Amend CUSO Agreements

Federally-insured credit unions have until June 30 to amend their agreements with their CUSOs to incorporate new language required under the NCUA CUSO rule amendments of last year. Specifically, you need to ensure that your agreements include an assurance by the CUSO that it will provide NCUA and appropriate state regulators with basic profile information (and other information if they engage in certain complex or high risk activities).

Read Letter to Credit Union 2013-13 letter here: http://www.ncua.gov/Resources/Pages/LCU2013-13.aspx

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Financial Services/Marketplace News

Banks Reimagine Checking Accounts — Without the Checks

Providing access to online and mobile banking while eliminating checks, something younger clients care less about, is likely to attract Millennials, says Dan Geller, executive vice president and Market Rates Insight. Banks are trying to reach this segment and fend off advances from nontraditional players, such as Walmart Stores.

"In one generation, the baby boomers will diminish dramatically and ... Millennials will be the most significant group of customers," Geller says. "If banks lose them, they will lose the entire next generation of customers. The idea is to attract Millennials with free or almost free services and with basic digital transactions with the hope they evolve into more profitable customers."

Community banks will likely be hesitant to offer such accounts, some industry experts says. Banks with less than $10 billion of assets escaped cuts to interchange revenue from the Durbin Amendment so those institutions have less motivation to drastically alter their checking products.

Also, if community banks begin placing the same requirements or restrictions on checking accounts as bigger banks, customers may decide to bank with a larger institution that has more convenience with expansive branch and ATM networks. (American Banker Online, June 12)

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Millennials 'Overwhelmed' by Debt

Four-in-10 millennials say they are "overwhelmed" by their debt -- nearly double the number of baby boomers who feel that way, according to a Wells Fargo survey of more than 1,600 millennials between 22 and 33 years old, and 1,500 baby boomers between 49 and 59 years old.

To try to get out from underneath it, 47%said they spend at least half of their monthly paychecks on paying off their debts. On average, respondents put the biggest chunk of their income toward paying credit card bills, followed by mortgage debt, student loan debt, auto debt and medical debt. But even as they struggle financially -- with more than half living paycheck to paycheck -- many are making sure to at least tuck a little money away for savings.

[READ MORE]

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Why Mortgage Down Payment Requirement Is So Hard to Relax

A down payment remains a high hurdle for consumers seeking mortgages. Lowering that hurdle increasingly seems in line with shared industry and regulatory goals-assuming borrowers don't default. And there's the rub. Fannie Mae and Freddie Mac, the government-sponsored enterprises that dominate the market, now almost always require 5% down, even with private mortgage insurance. While private insurers will support down payments as low as 3%, the GSEs' regulator sounds wary of letting Fannie and Freddie lean more on these carriers.

The Federal Housing Administration allows as little as 3.5% equity, but its premiums are becoming more expensive for borrowers. On top of everything else, the industry remains concerned about the accuracy of the data used to make loan decisions, particularly appraisals, since valuation errors can make defaults especially costly on a low down payment loan. (American Banker Online, June 12)

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Underused VA Mortgage Program Makes Inroads as FHA Costs Rise

Of the 16.4 million active-duty service members and military veterans with mortgages, less than 12% have a loan guaranteed by the Department of Veterans Affairs. Some blame this low participation rate on a lack of promotion for the VA home loan program, which was created in 1944.

Many loan officers don't even ask potential clients if they are veterans. And many veterans don't know enough about the program to ask for a VA loan. Others blame lenders and real estate agents who have preferred the loan products guaranteed or purchased by Fannie Mae, Freddie Mac and Federal Housing Administration.

But things are looking up for VA lending as specialists in the product redouble their efforts to get the word out and other low-down-payment products grow more expensive. A sharp increase in Federal Housing Administration mortgage insurance premiums is making VA more competitive, according to Megan Booth, senior policy representative at the National Association of Realtors. (American Banker Online, June 12)

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CFPB Targets Mobile Usage

The CFPB is seeking information about the ways consumers are using mobile financial services to manage their finances and access products. The CFPB’s specific areas of interest include access for the underserved, customer service, real-time money management and data breaches.

“The Bureau is seeking information on what kind of information companies are collecting on consumers, whether it is being disclosed to consumers, and how that information is being used for low-income consumers in particular. The Bureau is also examining whether data breaches are more common on mobile devices as compared to traditional computers,” said the CFPB request for information.

The CFPB is also looking to assess the potential impact of mobile technologies on the availability and location of bank branches. In addition, the bureau is seeking information on potential consumer protection issues related to the use of mobile technology for financial services by “economically vulnerable consumers.”

[READ MORE]

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Education & Networking Opportunities

Register Now for Fall 2014 Development Education (DE) Training

There are now only a few spots left for credit union professionals as registration winds down for the Fall 2014 Credit Union Development Education (DE) training class taking place Sept. 10-17 in Madison, Wis.

Attendees of the National Credit Union Foundation’s (NCUF) six-day total immersion experience will learn about credit unions’ social responsibility and domestic and international development through interactive education and professional networking.

Registration and more information can be found on the NCUF website by clicking the “Register for the September 2014 DE Training” button on the homepage or anywhere on the website under “Foundation Programs>Development Education>Register for the September 2014 DE Training” at the top of every page. 

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Registration Now Open for July's NYIB Conference

Registration is now open for this year's National Youth Involvement Board (NYIB) Conference, set for July 30-Aug. 1 in Grand Rapids, Michigan. Keynote speaker Ted Beck, president/CEO of the National Endowment for Financial Education, will discuss successes in financial education and the importance of teacher training.
[National Youth Involvement Board website]

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Young Professionals Network Hosting June 25 Event in NoVA...and You're Invited!

Calling all NoVA-area young credit union professionals (age 35 and under)! You are invited to the Virginia Credit Union League’s Young Professionals Networking Mixer on June 25 at Uncle Julio’s in Woodbridge, Va. Come network with other young professionals from local credit unions, play some games, enjoy food and drinks, and grab some info about Virginia’s Young Professional Network (YPN)!

RSVP by visiting www.vacul.org/YPN or contacting your League’s Bethany Scott at bscott@vacul.org or 434.237.9628.

[DOWNLOAD INFORMATION FLYER]

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News From Credit Unions

Belvoir Federal Employees Raise Funds to Donate 48 Financial Themed Books to Fort Belvoir Elementary School

Belvoir Federal Credit Union employees raised funds to purchase 48 financial themed books which were donated to the Fort Belvoir Elementary School on Fort Belvoir, Virginia. Belvoir Federal hosted “Dress Down Thursdays” where employees could donate money to dress casual at work on Thursdays throughout April, a month recognized as Financial Literacy month.

The employee’s donations exceeded $330.

[READ MORE]

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NSWC Federal Credit Union Hires CU System Veteran Bruce Six as CEO

NSWC Federal Credit Union, based in Dahlgren, Virginia, serving the Naval Support Facility Dahlgren Navy base and select employee groups (SEGs) throughout King George County and the greater Fredericksburg, has hired a new Chief Executive Officer.

Effective May 27, Bruce Six has been named the CEO for the credit union. Bruce is a seasoned credit union executive with 24 years of experience in both natural-person and corporate credit unions.

[READ MORE]

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Credit Union Financial Literacy Coordinator Receives Scholarship

Fort Lee Federal Credit Union is proud to announce that Jimia Jones, Financial Literacy Coordinator, was chosen as the 2014 National Youth Involvement Board Southern Regional Scholarship recipient.

Jones began her career in the credit union industry in 2013. In less than six months, she has reached over 500 students within Fort Lee Federal Credit Union’s membership area. Jones is actively involved with the Credit Unions Care Foundation Financial Education Committee and the Virginia Finance Alliance.

[READ MORE]

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Chapter News

Tidewater Chapter Meets June 26

Join the Tidewater Chapter June 26 for a program on fidelity bond coverage for directors and officers. Location: Greenbrier Country Club (1301 Volvo Parkway, Chesapeake, 23320).

Time: 6 p.m. social and 6:30 p.m. dinner and meeting. Make your reservations early! To RSVP contact Ginnie Riddle by email at VRiddle@bayportcu.org or by phone at 757.873.4047. Deadline is June 20.

[LEARN MORE]

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Security/Fraud Prevention

CUs Not Converting Cards to EMV as Fast as Bigger Players: Study

By the end of 2015, 70% of U.S. credit cards and 41% of U.S. debit cards will be EMV enabled, and chip and signature will be preferred by issuers out of the gate, according to a recent survey. The big banks, which control a huge percentage of U.S. cards, will be responsible for much of the movement, reports Aite Group, which conducted the study in April and May. But credit unions and community banks are not likely to convert as quickly.

"I have talked with a lot of credit unions recently, and I think less than half of all CUs will convert to EMV by the [October 2015] liability shift deadline," said Julie Conroy, research director for retail banking at Aite. "Credit unions are all over the map. Some realize the exposure and don't want to get hammered with fraud costs while others hope fraud is just a problem for the big financial institutions."

Aite's study found that the EMV-enabled card issuance process will ramp up in the fourth quarter of 2014. (Credit Union Journal, June 11)

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Technology News

Banks Lay Plans to Build Fingerprint Technology into Mobile Apps

The day is fast approaching when iPhone users can access their mobile banking accounts with the press of a finger. Apple announced last week that it is making its fingerprint scanning technology, Touch ID, available to banks, retailers and any other companies that develop apps for its hand-held devices.

That means bank app developers can now work with Apple to create apps that let a customer log into an account using a fingerprint instead of a user name and password. Or, if security is a bigger concern than ease of use, bank app developers could layer a fingerprint check on top of a user name and password. (American Banker Online, June 10)

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