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CURRENT Newsletter | 27 June 2013

Jul 3, 2013 by Lewis Wood

News For and About Virginia's Credit Union System

June 27, 2013
  • Your comments and submissions are always welcomed. E-mail pr@vacul.org
Headline News
News About Credit Unions
Compliance/Regulatory Affairs News
Governmental Affairs News
Financial Services/Marketplace News
Education & Networking Opportunities
News From Credit Unions
Chapter News
Financial Education News
Marketing News
Security/Fraud Prevention
Technology News

Headline News

'Quit The Hit’ Video Garners More Than 1 Million Views! 

The latest results are in…The ‘QuitTheHit’ Social Media Campaign was designed to increase awareness of the benefits of credit unions and drive young consumers in Virginia to learn more about credit unions by visiting the website www.QuitTheHit.com.

The Campaign was a SUCCESS. We are excited to share the following results with you!

  • The YouTube video received 1.17 Million views!
  • More than 66,000 consumers visited QuitTheHit.com!
  • We reached 15.7 Million Twitter followers!
  • The Campaign doubled the percentage of consumers having lower rates and fees ‘top of mind’ when thinking of credit unions!
  • A greater percentage of consumers:
    • want to find out more about CUs
    • believe CUs offer better service and are more likely to join
    • CU awareness in Virginia was already very high at 78%, but this Campaign reduced the “fog” of uncertainty surrounding CUs and LESS consumers now say CUs are NOT a viable option!

Click here to discover more results and also learn about what’s next! (PDF)

> We certainly don't have to look far afield for an explanation of why consumers are interested in credit unions. However, you might be interested in the American Banker's recent survey on the reputations of America's biggest banks. Spoiler alert: they're deeply unpopular! Of interest, though, their customers don't despise them at the same level of non-customers. All that to say, banks will be in the reputation rebuilding mode for a long while yet, so there's a golden opportunity for us to continue to grow! [read more]

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Bank Tax Rhetoric Tired, But Threat's Real

Banks have ramped up their attacks on the credit union tax status, taking their credit union-bashing arguments to President Barack Obama and administration officials as members of the U.S. Congress are preparing to develop comprehensive tax reform legislation. The banks urged Obama to examine the credit union tax status in letters sent last week.

This latest attack serves as a clear message calling for continued vigilance and strong credit union advocacy in favor of the credit union tax status, Credit Union National Association Executive Vice President of Government Affairs John Magill noted Monday.

He added that the bank attacks will only add fire to the current fight by credit unions and their members to preserve the credit union tax status and the public-policy benefits it provides for all Americans.

CUNA on Monday also reiterated that the reasons for supporting and maintaining the credit union tax status are as valid today as when they were first established by the U.S. Congress in 1934. [read more]
[related: CUNA Refutes Banks' Tax Attacks In Hill, White House Letters]

> As of 2 p.m. Monday, members of Virginia-based credit unions have made more than 7,000 contacts with Virginia's Congressional delegation as part of the Don't Tax My Credit Union campaign. Kudos to all of the credit unions sounding the charge and getting members involved in protecting the "Credit Union Difference!" Keep up the good work!

> And so you know, our efforts are beginning to have an impact...Sen. Tim Kaine recently noted that his staff tracks hot-button constituent issues, and currently, maintaining credit unions' tax exemption is on that list! Let's keep up the momentum and push for 10,000 total contacts by next Monday!

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League Represents Credit Unions at Annual Democratic Retreat

League President Rick Pillow and Senior Vice President David Miles are representing Virginia’s credit unions at the annual retreat of Democratic state senators and delegates. Pillow reports that the League had good conversations on the links with Sen. Henry Marsh (Courts of Justice member), House Minority Leader David Toscano (Courts of Justice member), and Dels. James Lionel Spruill (Commerce and Labor member), Matthew James (General Laws Committee), and Luke Torian (General Laws Committee). Torian also attended a golf clinic hosted by the League.

The pair also dined with Del. Rosalyn Dance (General Laws Committee), who recently won her primary. She thanked the League for its support of her efforts to beat back her challenger. [read more]

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Senators Unveil Important First Step To GSE Reform

Tuesday's introduction of legislation that would wind down government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac and replace them with a new mortgage guarantor, the Federal Mortgage Insurance Corporation (FMIC), "is an important first step to creating a secondary mortgage market that focuses on ensuring access to all financial institutions in need a functioning mortgage market, including credit unions," Credit Union National Association President/CEO Bill Cheney said.

The bill, known as the Housing Finance Reform and Taxpayer Protection Act, was introduced by Sens. Bob Corker (R-Tenn.), Mark Warner (D-Va.), Mike Johanns (R-Neb.), Jon Tester (D-Mont.), Dean Heller (R-Nev.), Heidi Heitkamp (D-N.D.), Jerry Moran (R-Kan.) and Kay Hagan (D-N.C.). The winding down of Fannie and Freddie, and the Federal Housing Finance Agency, would be accomplished within five years of the bill's potential passage. GSE assets would be sold off, and their charters would be revoked once the FMIC is established. [read more]

[see full text of the bill and its summary]
[related: Rep. Waters' Panel On Housing Reform Includes CUNA's Hampel]

NOTE: Sen. Warner’s office had solicited input from Virginia’s credit unions on housing finance reform. We forwarded the comments of the one responding credit union to the senator’s staff. If credit unions have any thoughts on housing finance reform now that a bill is on the table, please let us know by dropping an email to ksherbin@vacul.org.

> In other news about Sen. Warner...he's been tapped to chair a transportation subcommittee. Senate leaders announced recently that Warner will chair the Subcommittee on Surface Transportation and Merchant Marine Infrastructure, Safety and Security. [read more]

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News About Credit Unions

Study Finds What Really Drives Satisfaction

A new study said it has identified the two largest drivers of improvements to member satisfaction: branch staff and online banking. CFI Group, a customer satisfaction technology and analytics firm, said the findings were part of its inaugural credit union industry study, the 2013 Credit Union Satisfaction Index (CUSI).

The study includes industry-focused insights and is using American Customer Satisfaction Index (ACSI) methodology, a patented scientific approach to consumer satisfaction measurement. Terry Redding, VP marketing and product development for CFI Group, told Credit Union Journal the study allows the firm to determine what is most important to credit union members via statistical analysis.

"Then, with modeling, we try to understand how movement in one driver will cause movement in satisfaction," he explained.

The CUSI research rates six drivers of satisfaction on a 0-100 point scale according to responses from 400 active CU members from across the U.S. Overall, credit unions score consistently high across the board, with drivers scoring in excess of 80 points. This data is consistent with CFI Group's own work in the credit union industry.

The company said credit unions score significantly higher than other industries, including retail banking. Redding said the drivers most likely to impact member satisfaction are branch staff, online banking, branch convenience, and information/communications, but the first two far outshone the latter pair. (Credit Union Journal, June 24)

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DOMA Decision's Impact on Finances for Married Same-Sex Couples

The U.S. Supreme Court's ruling that struck down the federal Defense of Marriage Act, or DOMA, will give married same-sex couples access to the same tax breaks, health coverage and retirement benefits as married heterosexual couples. The decision will only affect couples in 13 states and the District of Columbia, where marriage of same-sex couples is legal. Kiplinger's and Bankrate.com offer an overview of the ruling's impact, which may aid you in answering members' questions. 

[read more from Kiplingers] 
[read more from Bankrate.com]

> And from the Washington Post: James Parrish, executive director of the pro-gay-rights group Equality Virginia, said that for same-sex couples in Virginia, who were married in states that permit such unions, “access to those federal marital protections is less clear and will require some work.” That’s because some federal benefits are based on where a couple’s marriage ceremony occurred and others are based on their residency. [read more]
[related: What DOMA Repeal Means for Obamacare]

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Compliance/Regulatory Affairs News

Loan Participation Rule Goes Into Effect July 25

July 25 is the effective date of the National Credit Union Administration's final rule on loan participations, which implemented a number of improvements sought by the Credit Union National Association. CUNA President/CEO Bill Cheney welcomed the agency's changes to its original plan and said it gave credit unions a "much more workable framework" to utilize loan participations.

The NCUA last week approved the final rule and set a limit on loans from one originator of 100% of a credit union's net worth. This is up from the proposed 25% of net worth cap. Also very significant, the federal regulator approved an expanded waiver process for the single-originator limit and limits to one borrower. [read more]

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Concentration Risks, Examinations Highlighted in NCUA OIG Letter

There are currently 19 recommendations by the National Credit Union Administration  Office of Inspector General (OIG) that are open and unimplemented and, according to the OIG,  the top three in importance concern issues regarding concentration risks and examination procedures. The NCUA OIG identified the unimplemented or partially unimplemented recommendations in response to a June 17 inquiry by Rep. Darrell Issa (R-Calif.), who heads the House Oversight and Government Reform Committee. [read more]

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CUNA: FASB Framework Must Recognize CU Structure

The Credit Union National Association supports the efforts of the Financial Accounting Standards Board (FASB) to recognize "that there are material differences between private companies and public companies and that reporting requirements should reflect those distinctions, at least in some instances," in its proposed private company decision-making framework.

However, in a Friday comment letter to the standard setter, CUNA Assistant General Counsel Luke Martone said the uniqueness of the credit union structure should be recognized as FASB develops a decision-making framework that will guide the Private Company Council (PCC) as it determines whether exceptions to U.S. Generally Accepted Accounting Principles--or GAAP--for credit unions and other private entities are appropriate. The framework should also help identify opportunities for reducing the complexity and costs associated with preparing financial statements in accordance with U.S. GAAP. [read more]

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Lenders' Anti-Discrimination Efforts Lagging, CFPB's Cordray Says

Lenders are falling short in efforts to prevent discrimination in areas outside housing, the head of the U.S. Consumer Financial Protection Bureau told members of Congress. "We have found frequent instances where lenders had robust fair lending compliance programs for mortgage lending but weak or non-existent fair-lending compliance programs for other types of consumer lending," CFPB Director Richard Cordray wrote in a June 20 letter to Representative Terri Sewell, an Alabama Democrat.

Sewell and 12 other Democrats on the House Financial Services Committee wrote to Cordray on May 28 to request information about a directive from the agency on discrimination in auto lending. On March 22, the agency said that banks could be sued by the CFPB if they fund discriminatory vehicle loans made by auto dealers, a practice it said runs afoul of the 1974 Equal Credit Opportunity Act.

The fact that the improper decisions may be made by dealers — who are exempt from oversight by the consumer bureau — doesn't absolve banks of responsibility for racial disparities that result, the agency said. (American Banker Online, June 24)

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NCUA Nomination Could Move Quickly

Former Oregon State Sen. Rick Metsger's (D) nomination to become a member of the National Credit Union Administration board could progress quickly after his nomination hearing by the Senate Banking Committee this week. Metsger's nomination will be discussed before the committee on June 27.

Credit Union National Association Senior Vice President of Legislative Affairs Ryan Donovan said there is an interest in the Senate to hold confirmation votes on non-controversial nominations such as Metsger's in July. Metsger, who would fill the vacant NCUA board seat created when former member Gigi Hyland exited last year, served as Oregon state senator from 1999 to 2011, where he chaired the Oregon Senate committee that heard all financial institution legislation.

He was a member of the board of directors at Portland Teachers CU from 1993 to 2001 and has also been a board member of Financial Beginnings, a nonprofit focused on increasing students' financial literacy. [read more]

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Governmental Affairs News

Student Loan Rates Likely to Double With No Congressional Agreement in Sight

With immigration center stage and a bipartisan agreement to stave off the student loan interest rate hike nowhere in sight, principal negotiators on both sides conceded Tuesday that rates will likely double on July 1 and will need to be fixed retroactively.

[read more]

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Financial Services/Marketplace News

U.S. Economy Looks Weaker, as GDP Data is Revised

The U.S. economy suddenly looks weaker, after the government revised its data for the first quarter. Gross domestic product -- the broadest measure of economic activity -- rose at a mere 1.8% annual pace between January and March, marking a sharp downward revision from the 2.4% pace reported by the Commerce Department last month. It's common for the government to revise its GDP figures several times, but economists weren't expecting such a dramatic change from the third estimate. [read more]

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Why the Fed Might Hike Rates Sooner Than You Think

The Federal Reserve doesn't really care about the unemployment rate -- at least not as much as it appears on the surface. As it begins searching for an exit strategy from its $85 billion a month bond-buying program, and the accompanying zero-interest-rate policy, the Fed has said it is looking for a 6.5 percent unemployment rate and 2.5 percent inflation rate. What the central bank really worries about, though, is tangible job growth.

"While a higher fed funds rate is still a long way off based on the FOMC's latest forecasts, the recent [unemployment] claims readings, if sustained, strongly suggest the Fed's first hike in interest rates could come as early as next summer -- we are forecasting early 2015," Joe LaVorgna, chief U.S. economist at Deutsche Bank, said. [read more]

[related: Interest Rate Spike Emerges as a Concern for the Fed]

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Consumer Confidence Soars in June

Consumers aren't hitting the panic button despite Wall Street's downdraft the past few weeks over how soon the Federal Reserve plans to pull back on its massive bond buying program. Consumer confidence is at a five-year high. It has risen three straight months, reaching 81.4 in June on a 100-point scale set in 1985. [read more]

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Home Prices Jump 12%

The rise in home prices continued to accelerate in April, but a jump in mortgage rates could soon put the brakes on prices. The S&P/Case-Shiller home price index was up 12.1% in April, compared to a year ago, in the 20 top real estate markets across the nation. That was the biggest annual jump in prices in seven years. Prices climbed 2.5% from March, posting the biggest one-month rise in the 12-year history of the index. [read more]

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Loan Applications Decline as Mortgage Interest Rates Skyrocket

Mortgage applications fell 3% last week as mortgage rates rose on fears of less Fed intervention in the mortgage-bond market. The average contract interest rate for a 30-year, fixed-rate mortgage with a conforming loan balance shot up to 4.46% from 4.17% a week earlier: the highest it's been since August 2011, the Mortgage Bankers Association reported. For the same week ending June 21, refinance applications dipped 5% even as purchase applications edged up by 2%. The shift in the nation's refi activity accompanied a sharp rise in mortgage rates. [read more]

[related: Trulia: Surging Mortgage Rates Won't Hurt Housing]
[related: Second-Home Sales Shift to Generation X]

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Car-Loan Delinquencies Edge Up as Subprime Lending Rises

Auto-loan delinquency rates inched up in the first quarter, due largely to an increase in subprime loan balances, according to a new report. The percentage of loans 60 or more days past due ticked up to 0.88% in the first quarter of 2013, according to a report from the credit agency TransUnion. That's up from 0.82% in the first quarter of last year, but down from 1.00% in the fourth quarter of 2012. A rise in the delinquency rate of subprime borrowers was the main driver of the year-over-year increase. (American Banker Online, June 26)

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Americans Love to Spend, Lousy at Saving

Americans are good at spending but lousy at saving, according to a new report on Americans' finances. A report out Monday from Bankrate.com finds only 24% of Americans have enough savings to cover at least six months' expenses and only 50% have less than three months' expenses saved up. Most alarmingly, 27% of Americans have no emergency savings at all. [read more]

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Biggest Cause of Personal Bankruptcy: Medical Bills

Rising medical bills are expected to push 1.7 million American households into bankruptcy this year--making health expenses the single biggest cause of such filings, outpacing bankruptcies due to credit-card bills or unpaid mortgages, according to new data. Even having health insurance doesn't shield consumers against financial hardships.

NerdWallet Health, a division of the price-comparison website, analyzed data from the U.S. Census, Centers for Disease Control, the federal court system and the Commonwealth Fund, a private foundation that promotes access, quality and efficiency in the health-care system. "Medical bills can completely overwhelm a family when illness strikes,” NerdWallet Health Vice President Christina LaMontagne said in a statement. She added that 25 million people hesitate to take their medications to control medical costs. [read more]

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Education & Networking Opportunities

Southeast Regional Directors' Conference July 14-17

Join your peers from credit union boards across the Southeast in beautiful Charleston, South Carolina July 14-17, for two-and-a-half days of education designed specifically for credit union directors. Sessions include a pre-conference workshop on fiduciary responsibility, with general sessions on recruitment, retention and revitalization for boards, strategic thinking, CEO/board relations, risk oversight, leadership and an economic update. [learn more]

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Upcoming Webinars

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News From Credit Unions

UVA CU's DeTuncq Re-Elected to Mid-Atlantic Corporate Board

At its annual meeting held June 20, Mid-Atlantic Corporate Federal Credit Union announced the election results of its board of directors. Returning to the board to serve new three-year terms are Alison DeTuncq, president/CEO of University of Virginia Community Credit Union in Charlottesville, Va.; Brian J. Vittek, president/CEO of Destinations Credit Union in Baltimore, Md.; and David B. Whitehead, president/CEO of Merck Sharp & Dohme Federal Credit Union in Chalfont, Pa. [read more]

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Credit Union Miracle Day Elects New Leader

The national charity group, Credit Union Miracle Day (CUMD), elected its new leadership team recently. Theresa Mann, President/CEO of The Partnership FCU, Arlington, VA, takes the helm as Chairman. CUMD is a nonprofit collaboration of credit union organizations engaged in fundraising activities to benefit Children’s Miracle Network Hospitals (CMN Hospitals) and is the largest national credit union fundraising event for Credit Unions for Kids. [read more]

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Belvoir Federal’s COO Elected to CUALN Board of Directors

In June 2013, Belvoir Federal’s Chief Operations Officer (COO), Tisha Wallace, was nominated and elected to serve a three year term on the Credit Union Auto Loan Network (CUALN) Board of Directors in an advisory and governance role. [read more]

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Chapter News

Tidewater Chapter to Host July 26 Charity Golf Tournament

Join the Tidewater Chapter July 26 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. Fee 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, and your support is greatly appreciated! [learn more] (Word document, 930kb)

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Richmond Chapter to Host 19th Annual Susan J. Adams Memorial Golf Tournament to Benefit CMN Hospitals

The 19th Annual Susan J. Adams Memorial Golf Tournament tees off July 29 to benefit Children’s Miracle Network Hospitals. The Chapter has renamed this event to honor the hard work and dedication of the late Susan Adams, who coordinated this event for 18 years. She made this tournament a huge success, raising more than $200,000 during those 18 years! [learn more]

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Financial Education News

Survey of Military Members Shows Retirement Anxiety

Members of the military are increasingly worried about how they are going to make ends meet in retirement, according to a new report. A survey from the First Command Financial Behaviors Index showed that 68% of middle-class military families -- which includes senior non-commissioned officers and commissioned officers with incomes above $50,000 a year -- agree that today’s active military will not be able to retire as comfortably as prior generations. That was an increase of 11 percentage points from last year’s survey. [read more]

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Belvoir Federal’s COO Elected to CUALN Board of Directors

Belvoir Federal’s Chief Operations Officer Tisha Wallace has been elected to serve a three-year term on the Credit Union Auto Loan Network (CUALN) Board of Directors in an advisory and governance role.

The CUALN Board of Directors consists of nine senior executives from participating credit unions who meet quarterly to approve annual budgets and strategy, determine new product offerings, discuss the geography of CUALNs operation, and how to better serve credit union members. [read more]

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Credit Union Miracle Day Elects New Leader

The national charity group, Credit Union Miracle Day (CUMD), elected its new leadership team today. Theresa Mann, President/CEO of The Partnership Federal Credit Union, Arlington, Va., takes the helm as Chairman. CUMD is a nonprofit collaboration of credit union organizations engaged in fundraising activities to benefit Children’s Miracle Network Hospitals (CMN Hospitals) and is the largest national credit union fundraising event for Credit Unions for Kids. Immediate past Chairman, Juri Valdov, was lauded by the Board for his 12 years of outstanding volunteer leadership to the organization. Valdov, retired President/CEO of Northwest FCU, will continue to serve on the Board. [read more]

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Marketing News

10 Myths That Plague Credit Union Marketing Professionals

A white paper from CUNA dissects, dispels and demystifies 10 misunderstandings holding credit unions back. Once upon a time, credit union marketers wrote the monthly newsletter, organized the annual meeting, worked with a couple local charities and coordinated the occasional financial education promotion.

Times were simpler then...Today, credit union marketers must be masters of design, research, data analysis, product development, advertising media, digital channels, public relations and social media content. [read more]

CUNA Council members are eligible to receive complimentary copies of the entire 24-page white paper. The paper is available online in the white paper section of www.cunacouncils.org. Non-Council members may purchase white papers for $50 per copy.
> NOTE: The League's own Nicole Widell contributed to the report!

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Security/Fraud Prevention

Check Fraud, Mortgages Top SAR Filings

Check frauds and mortgage loan frauds are at the top of Suspicious Activity Reports (SARs) filed into the Bank Secrecy Act (BSA) database during 2012, but mortgage loan fraud dipped significantly, according to numbers released last month by the Financial Crimes Enforcement Network's (FinCEN). More than 1.582 million SARs were filed, an increase of 4% over 2011's reports, said FinCEN. [read more]

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Mobile Malware Threat Has Increased Six-Fold in Past Year: Study

The latest reason for banks to provide security for their mobile banking users: mobile malware attacks have increased more than six-fold in the past year, according to a recent survey from Juniper Networks. The network security company analyzed data from the 12 months that ended this March and found the total number of malicious apps has grown to 276,000.

Three quarters of that software is some type of SMS Trojan, says Troy Vennon, director of Juniper Networks' mobile threat center. This type of malware is typically embedded in a benign-looking smartphone app (think of an alarm clock app) and sends a text message in the background to a premium service (such as a ring tone) that then charges that person a fee. (American Banker Online, June 27)

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Technology News

First Data Survey: Smartphones Are Shaping Mobile Banking

If credit unions need more evidence about the importance of offering mobile banking, another study concludes that consumers want it all--in the palm of their hand. Consumers expect strikingly similar mobile and technology-powered experiences from financial institutions and businesses, and their expectations are fueled by skyrocketing smartphone use, according to a new study from Atlanta-based First Data. [read more]
[related: Study: Mobile Users Less Resistant To Service Fees]

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