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CURRENT Newsletter | 17 October 2013

Oct 17, 2013 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

Marketing News

Security/Fraud Prevention

Technology News

Headline News

Sen. Warner's Office Requests Info on CUs' Assistance to Government Employees

Thank you for responding to our call to share your assistance programs for members affected by the government shutdown and sequestration! Thanks to the help of Belvoir Federal Credit Union, Justice Federal Credit Union, Northwest Federal Credit Union and Police Federal Credit Union, we were able to share credit unions' good works with Sen. Mark Warner, who requested the information.

This was a golden opportunity to showcase the "Credit Union Difference," and we appreciate your assistance, especially appropriate as we celebrate International Credit Union Day! Keep up the good work!

[related: Cheney Hails CU Support For Federal Workers]
[related: Furloughed Employees Turning to Credit Unions]

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CUs Around the Globe 'Unite For Good' on ICU Day

Today is the big day, where credit unions and their members around the world celebrate the 66th annual International Credit Union Day with the theme, "Credit Unions Unite for Good," and promote awareness of the "Credit Union Difference." "International Credit Union Day is a great opportunity to celebrate everything that makes credit unions different," said Credit Union National Association President/CEO Bill Cheney.

"This year's theme is 'Credit Unions Unite For Good,' reminding us of all the excellent work that credit unions do for members and their communities."

[read more]

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CU Award Winners Provide Shining Examples

Four credit unions, including two from Virginia, received Credit Union National Association Community Credit Union of the Year Awards last Thursday, recognizing community credit unions that best exemplify the principles of the credit union movement while serving as a positive influence in the field of service.

Both winners among credit unions with more than $250 million in assets hail from Virginia: First place: Freedom First CU, Salem, Va.; and Honorable mention: BayPort CU, Newport News, Va.

[read more]

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Virginians Among System's Rock Stars!

For the past several months, Credit Union Magazine subscribers have taken the time to nominate their colleagues for "rock star" recognition. Forty-eight rock stars were selected based on their passion and drive to put bright ideas into action and champion the credit union ideal of “People Helping People.” We're thrilled to recognize our Virginia rock stars – Helen Estes, Cherry Hedges and Paul Phillips! http://www.creditunionmagazine.com/rockstar

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Virginia Women's Conference Slated for Oct. 26 in Richmond; League Among Sponsors

A reminder that on Oct. 26 at the Richmond Marriott there will be a conference to help women manage their lives and aspirations. The conference is hosted  by Sen. Warner, and this year your League is a co-sponsor. In the morning, there will be a panel discussion on financial issues, and a credit union representative will be speaking on the topic of mortgages.

[learn more]
[connect on Facebook]

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Government Shutdown Ends; Debt Ceiling Raised

Congress Wednesday passed a bill to fund the government through Jan. 15, 2014 and raise the debt ceiling until Feb. 7. This ends the government shutdown, with offices re-opening today.

The Washington Post reports that the deal averts catastrophe, but leaves the U.S. economy open to new threats, given its accompanying "kick-the-can-down-the-road" deadlines.
More big picture coverage is here: Wall Street Journal, New York Times, Financial Times.

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Budget Deal Opens Door to Tax, Entitlement Changes

The deal struck Wednesday in Washington could make it easier for lawmakers to make big changes to tax policy, spending and entitlement programs. We've been telling you for months through the 'Don't Tax My CU' campaign that tax reform is on the horizon, with the possibility of proposals being released next month, so continue to mobilize members, volunteer officials and staff in fight to preserve our tax exemption.

By the way, we've recorded just over 18,000 contacts with our Congressional delegation with the Don't Tax My Credit Union message!

> Here's a look at what is in this week's accord, what didn't make the cut and what's coming down the pipeline. This deal is an important way forward for big policy changes.

[read more]

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[related: What Debt Crisis? Rally to Resume]
[related: Shutdown a $24 Billion Hit to Economy]
[related: U.S. Crisis is Over - for Now]
[related: 4 Reasons the Deal is Not So Sreat]
[related: Mortgage Rates React to Debt Deal]

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Tidewater Chapter Plays Host to Local Lawmakers; Celebrates $22,141 Donation to Local Children's Hospital

Tidewater Chapter credit unions played host to local lawmakers last Thursday during its annual Legislative Night, with members of the Virginia General Assembly praising the good works of credit unions and thanking them for their service to Virginia's working families.

More than 60 people, including lawmakers, were on hand as the Chapter presented a check for $22,141 to Children's Hospital of the King's Daughters (CHKD), a Children's Miracle Network Hospital in Norfolk. The funds were raised through a Sept. 19 Chapter-sponsored golf tournament, and through the generous support of the Miracle Match Program through CO-OP Financial Services, which contributed $10,000 to the fundraising effort.

[read more]

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Roanoke Hosts Legislators at Chapter Meeting

About 40 credit union members heard area lawmakers praise credit unions and urge them to stay in contact during the Roanoke Valley Chapter’s annual legislators’ night. Sen. John Edwards and Dels. Greg Habeeb, Charles Poindexter, and Onzlee Ware spoke at the event. Sen. Bill Stanley also dropped by, but had to leave before dinner on a work-related matter. Stanley is a member of the Commerce and Labor Committee and a past patron of credit union legislation.

[read more]

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News About Credit Unions

NCUA: ‘Millionaire U’ Ruling Jeopardizes All Purchase And Assumptions

NCUA told a federal appeals panel a lower court ruling invalidating provisions of its purchase and assumption agreement with Security Service Federal Credit Union in the 2007 failure of New Horizons Community Federal Credit Union could threaten all assisted-merger deals past and future if allowed to stand.

“This is no small threat,” wrote NCUA in an amicus brief filed last week with the U.S. Court of Appeals for the 10th Circuit. “Since 2007 over 124 credit unions have failed and the majority of those failures were resolved by use of purchase and assumption agreements using language that is the same as, or similar to, the [Security Service] Agreement.”

Horizons Community FCU was a $300-million Denver failure acquired by $7-billion Security Service as part of the “Millionaire University” scandal that claimed three separate credit unions, including Norlarco Credit Union and Huron River Area Federal Credit Union. Borrowers in the scheme were promised 14% per year returns from a TV pitchman if they invested in speculative Florida real estate, with the Midwestern credit unions putting up most of the loans.

In dismissing the case, the judge ruled that a 2007 P&A deal Security Service signed with NCUA to acquire the remnants of New Horizons did not give the Texas credit union giant authority to pursue the failed credit union’s legal claims, including defaulted loans, and that authority continues to reside with NCUA. (Credit Union Journal, Oct. 16)

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Free Filene Report on Mergers of Equals

Credit Union Times and Filene Research Institute have launched a new program that provides Times' readers with exclusive access to Filene research. Our first installment, available now, is a report on mergers of equals. Credit Union Times will offer exclusive access to new Filene research approximately twice a month. Topics on tap include human resources, Gen Y and payments.

[read more]

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Compliance/Regulatory Affairs News

CUNA Preps CUs For Oct. 28 Remittance Rule Reckoning

As the Oct. 28 effective date for new remittance transfer regulations approaches, the Credit Union National Association is reminding credit unions of how the coming regulatory changes could impact their daily business, and how they can prepare for the changes.

Under the final Consumer Financial Protection Bureau rule, remittance transfer providers are required to provide prepayment and receipt disclosures to the consumer sender that include the exchange rate, certain fees and taxes associated with a transfer, and the amount of money that will be received on the other end of the transfer.

Remittance transfer providers will also be required to investigate disputes and correct errors.

[read more]

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CUNA Mutual Urging Credit Unions to Prepare for HOEPA Changes

CUNA Mutual Group has been working to prepare credit union executives for the latest round of changed regulations under the Home Ownership and Equity Protection Act of 1994. Questions involving preparedness and other issues stemming from the law's latest regulatory changes were the focal point of an Oct. 16 webinar the insurer hosted.

Working under the title, “Avoiding HOEPA: Navigating the New Scope & Triggers,” more than 100 online participants learned the ins and outs of the new law from Lauren Capitini, regulatory compliance manager, and Maureen Clark, regulatory compliance consultant, for CUNA Mutual’s LOANLINER division.

Whether a credit union makes HOEPA loans or not is its own business decision, the pair stressed, but every credit union should be aware of what qualifies as a HOEPA loan and train staff to watch for triggers that could drive a loan into this category.

[read more]

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Financial Services/Marketplace News

Making the Checking Relationship Profitable Again

About 40 percent of consumer checking accounts are so “shallow” that they don’t generate enough income (net interest income and fees) to cover the estimated annual costs to maintain and service the account. Plus, this 40 percent only contributes 2.7 percent of all checking-related revenue and 1.4 percent of total relationship dollars.

So at a time when financial institutions, especially community ones, need more core profitability from their retail products and services than ever before, what has to be done to deepen the relationship of checking accounts?

[read more]
[related: Bankrate Checking Survey: Fees At Record High]

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Member Confidence Continues Driving Car Loan Growth

A combination of improved sentiment among members and consumers and less-aggressive financing incentives from manufacturers continue to help credit unions grow their vehicle loan portfolios. According to CUNA Mutual Group’s October Credit Union Trends Report, at $197 billion, credit union-held member vehicle loans were up 19% from their low point in March 2011 and were up 10.8% during the past 12 months.

[read more]

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Consumers More Glum Than They've Been in 9  Months, Thanks to DC

U.S. consumer sentiment deteriorated in October to its weakest in nine months as the first federal government shutdown in 17 years undermined Americans' outlook on the economy, a survey released on Friday showed.  The Thomson Reuters/University of Michigan's preliminary reading on the overall index on consumer sentiment fell to 75.2 in October, down from 77.5 in September. This was the lowest figure since January.

[read more]

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Consumer Loan Demand Weakens with Fewer Home Purchases: Fed

Lenders continued to face headwinds in the third quarter as consumer loan demand weakened slightly in some parts of the country while others saw a small boost, according to a Federal Reserve Board report released Wednesday.

"Financial conditions were little changed on balance from the prior reporting period," the Fed's quarterly economic survey known as the Beige Book said. "Overall loan growth remained modest in most districts." Bankers across the 12 Fed districts reported that mortgage lending by consumers was mixed, with several noting a decline in home loans because of higher mortgage rates and lower refinancing activity. (American Banker Online, Oct. 17)
[related: Five Housing Trends for Fall 2013]

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Paying with Cash Costs Americans $200 Billion a Year

Electronic payments – by phone, card and computer – continue to gain market share. And yet, millions of Americans choose to use cash. Some have no alternative; they don’t have a checking account. Some value the privacy they get with cash transactions or the psychological sense of security knowing that cash is always accepted. For some families, cash is cheaper than using credit and helps them control spending.

But there is a cost to using cash – in both time and money – that’s not always taken into account. Those costs include fees to use a check-cashing service, withdraw from a non-network ATM fee or access wages loaded onto a payroll card. A new study by Tufts University, The Cost of Cash in the United States, puts that price tag at about $200 billion a year.

[read more]
[related: 5 Things You Don’t Know Because You Weren’t at Money2020]

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Education & Networking Opportunities

Front Line Fraud Conference Oct. 30; Early Bird Registration Discount Available

Join us Oct. 30 for the not-to-be-missed Front Line Fraud Conference. This full-day conference covers key issues such as protecting the passwords that provide access to your systems; spotting false IDs, counterfeiting and scams; fraud reporting procedures; and much more. Our facilitator is Barry Thompson, security and compliance guru for bankersonline.com.

Location: DoubleTree Hotel (Richmond Airport). Early bird registration of $164 through Oct. 18; $189 thereafter.

[download the registration packet] (pdf, 979kb)

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Free Workshop on Supervisory Committee Responsibilities Set for Oct. 25

1st Advantage Federal Credit Union is sponsoring a free one-hour workshop on supervisory committee responsibilities on Oct. 25, beginning at 4 p.m. Seating is limited. Register  by contacting Criston Kudlacik at 757.886.3315 or CKudlacik@1stAdvantage.org. Meeting will be held at 1st Advantage's Kiln Creek Branch (110 Cybernetics Way, Yorktown 23693).

[learn more]

Fiserv EFT Users Meeting Nov. 7

Join us Nov. 7 in Richmond for the Fiserv EFT Users Meeting. Location: Doubletree – Richmond Airport Hotel. Topics will include Fraud Prevention, UChoose Rewards, and an EMV Update. [learn more and register]

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Video Highlights NCUA Training Available for Small, Low-Income Credit Unions

The National Credit Union Administration (NCUA) today released a new video highlighting the training programs available to small and low-income credit unions. These courses, developed and led by the staff in NCUA’s Office of Small Credit Union Initiatives (OSCUI), are designed to strengthen these critical financial institutions so they can better serve their members and communities.

[read more]

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News From Credit Unions

Justice Federal Credit Union Provides Nearly $8 Million in Special Assistance Furlough Loans Since Beginning of Shutdown

Employees of the Department of Justice and the Department of Homeland Security turned to Justice Federal Credit Union (Justice FCU) to get them through the uncertain financial times brought about by the government shutdown. Since the shutdown began on Oct. 1, Justice FCU has received well over 1,500 Special Assistance Furlough Loan applications from furloughed federal employees totaling nearly $8 million. 

[read more]

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Marketing News

They May Be Underbanked, But They're Highly Networked

A remarkable 68 million Americans today lack full access to traditional financial services, such as a bank account or credit card, or choose not to use them. Interestingly, though, these financially underserved individuals are far from disconnected. They are actually more active users of mobile phones and social media than the population at large. (American Banker Online, Oct. 15)

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Security/Fraud Prevention

FIs, Regulators Work to Prevent Elder Financial Abuse

Regulators and bankers seem to be on the same page in the area of elderly financial abuse. Identifying and reporting such abuse is likely to become a bigger issue as more baby boomers retire. Regulators are issuing guidance, and state lawmakers are passing laws, to tackle the issue.

Rather than fretting about extra work, financial institutions are applauding those efforts. In September, eight federal agencies, including the National Credit Union Administration and the Consumer Financial Protection Bureau, released guidance stating that financial institutions could report suspected abuse to authorities without violating privacy provisions in the Gramm-Leach-Bliley Act. The law typically requires financial institutions to notify clients before sharing nonpublic information with third parties.

The CFPB took the lead on releasing the guidance after banks and credit unions said it was unclear whether Gramm-Leach-Bliley barred them from reporting suspected abuse, says Nora Dowd Eisenhower, the CFPB's assistant director for the Office of Older Americans. "Many banks and credit unions do report elder abuse and that is something we want to applaud them for," Eisenhower says. (American Banker Online, Oct. 16)
[related: Elder Financial Abuse-How CUs Can Protect Members] (Credit Union Journal; subscription may be required)

> Your League proudly participated in a forthcoming video by AARP, designed to educate credit union and bank staffers on the importance of recognizing possible elder financial abuse and the procedures for reporting suspected abuse!

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Technology News

Verizon Aiming to Become Keeper of Consumers' Digital Identities

Verizon on Tuesday announced upgrades to its Universal Identity Services and expansion of the service to Europe. It's a step toward an ambitious goal: Verizon would like to be the steward of consumers' online identity, the gateway to every site with which a consumer engages.

"We want to be the world's largest identity provider," says Tracy Hulver, chief identity strategist at Verizon Enterprise Solutions. "We want to credential as much of the world's population as we can. That information associated with you needs to stay with you at all times."

The telecom company hopes to sell this idea first to large consumer-serving organizations, then begin approaching consumers to make them direct identity service customers. The challenge of protecting consumers' online data and identities as they share a growing body of personal information on a plethora of websites and social media networks is being hotly debated lately as new revelations continue to emerge about the NSA's access to consumer phone calls, emails and internet activity.

The Pew Research Center recently asked consumers if they think it is possible for someone to use the internet completely anonymously, so that none of their online activities can be easily traced back to them. A mere 37% said they thought this was possible; 59% said it was not possible. (American Banker Online, Oct. 15)

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