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CURRENT Newsletter | 30 January 2014

Jan 30, 2014 by Lewis Wood

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

Headline News

Governmental Affairs News

Financial Services/Marketplace News

Chapter News

Security/Fraud Prevention

News About The Competition

Technology News

Headline News

Growing Lineup of Lawmakers to Attend Congressional Luncheon

We will once again have a full lineup at our luncheon on Capitol Hill on Feb. 26. Those lawmakers planning to attend are our U.S. Senators, Mark Warner and Tim Kaine, as well as the following representatives: Connolly, Forbes, Hurt, Rigell, Wittman and Wolf. Please join us and let our federal delegation know who much your credit union means to you! To register for the luncheon, click here!

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Southside Chapter Credit Unions Tout CU Difference at General Assembly

Fort Lee and People’s Advantage credit unions swept through the General Assembly Building last Thursday visiting their lawmakers or legislative aides. The morning started with visiting Del. Rosalyn Dance in her committee meeting room before the panel started business, thanking her for her past support. Next up was House Majority Leader Kirk Cox. Representatives from the credit unions updated Cox on how they are helping their members and their communities.

For instance, Peoples Advantage Federal Credit Union CEO Audrey Bollinger said her credit union is seeing the largest growth in membership in 20 years “because we are serving the person that the banks don’t want to serve. That’s our niche.” One way People’s Advantage serves that niche is by offering short-term loans that require only proof of employment as a way to provide an alternative to payday lenders. Fort Lee CEO Patsy Stuard said her credit union offers small loan opportunities for Black Friday and summer.

Membership is all that is needed to obtain the $500 loan, which needs to be repaid over six months. She said their “Black Friday” loan offering had members in line out their door.

[read more]

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League Reps Attend Event for Freshmen Lawmakers

League President Rick Pillow and Senior Vice President David Miles attended dinner recently hosted by our lobbying team at Hunton & Williams and featuring a handful of lawmakers. Attending the dinner were Del. Scott Surovell and freshmen House Dels. Marcus Simon, Sam Rasoul, Michael Futrell and Monty Mason. The League representatives also ran across Del. Rob Krupicka and Del. Rich Anderson at dinner.

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House Subcommittee Holds Hearing on SOL Reform; League Monitoring Proposed Changes to Financial Lit Provisions

An overhaul of the state’s Standards of Learning is among the top legislative issues in this year’s General Assembly and your League is closely following the debate, including a recent subcommittee hearing in the House of Delegates. League Senior Vice President David Miles attended the subcommittee hearing on Tuesday.

The SOLs include financial literacy requirements that we feel are especially important in helping young people prepare for the real world. It’s too early to tell what will ultimately come of this debate – likely fewer tests for students, notes the Daily Press article below. There are a dizzying number of proposals being floated, so we’ll continue to monitor the issue.
[Daily Press article]

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Long-Time CU Champion Huyke Urrutia Passes Away

Huyke Urrutia was a credit union champion in every sense of the word. A past winner of the League’s James P. Kirsch Lifetime Achievement Award, Huyke passed away Jan. 16 at the age of 92. He was especially active in legislative affairs, leading efforts at his own credit union (BayPort) and at the Chapter and state levels during his 50-plus-year involvement in credit unions.

He was a fixture at our annual Congressional Luncheon, and never missed the opportunity to share the “Credit Union Difference” with a lawmaker. He was also one of kindest people you could ever hope to meet. Our prayers go out to his family and friends.
[view Huyke’s obituary here].

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Focus on Data Breaches Offers New Opportunity to Educate Public, Lawmakers

The Target breach and other recent security lapses (Neiman Marcus, Michaels, etc.) have been the subject of much discussion among credit unions over the last several weeks. And, during the coming days, there is likely to be even more discussion generated. There are at least two hearings in Congress on the issue of data security next week: The first in the Senate Banking Committee (Monday, Feb. 3 at 3 p.m.), and the other in the House Energy and Commerce Committee (Wednesday, Feb. 5 at 9:30 a.m.).

These hearings have the potential to generate media interest. CUNA has provided talking points to help you field media inquiries. Find them here.

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Obama's MyRA Retirement Plan Draws Criticism

President Obama's announcement of a new retirement plan for low- to middle-income Americans in his State of the Union address drew scorn from advisors who say many big questions remain to be answered. Several also suggested the program's name — MyRA — was clunky and potentially confusing.

The very fact that the name is similar to another retirement planning program — the IRA — may indicate that it is redundant, and may ultimately fail to gain adoption for that and a host of other reasons. The MyRA program is mainly aimed at Americans making less than $191,000 a year who do not have access to 401(k) plans. The government plan would automatically draw specified sums of money out of workers' paychecks, an integral feature of 401(k) plans. The value of MyRA accounts would compound at low rates, probably slightly more than 3% at most or, at the low end, a bit more than 1%.

But they would never lose their value thanks to their government backing. Account holders could also withdraw their funds at any time, without incurring a tax penalty, a feature unavailable in both 401(k) and IRA plans. Once the accounts reach $15,000 in value, they must be rolled into IRAs. On the other, some bankers were also noting the new product could mean new income for financial institutions. (American Banker Online, Jan. 29)
[related: For the POTUS, Housing Doesn't Make the Cut]

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Aid Our Advocacy Mission: Report Your Micro-Lending Initiatives

Credit unions: We're again collecting your micro-loan data through our Reality Check survey. We're asking you to report information on loans you've made of $3,000 or less, excluding credit cards, for Calendar Year 2013.

Please give us a hand and provide this data, which we use to support our advocacy efforts!

Report your aggregate micro-loan data at this web address (short seven-question survey!): Online Survey

> 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)

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Governmental Affairs News

100% for VACUPAC

Congratulations to Richmond Richmond Fire Department Credit Union, which has 100% pin-level participation (at least $25 contribution) from Board, committee members, and staff in the Virginia Credit Union Political Action Committee. VACUPAC is our state-level political action committee that helps us protect credit unions and promote credit union charter enhancements. Learn more about VACUPAC here.

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Financial Services/Marketplace News

Credit Card Penalty Fees Fell 48% in Four Years: Study

Penalty fees collected from credit card users plunged by nearly 50% between 2009 and 2013, according to new research by an industry consultant. The card industry collected $12 billion in penalty fees last year, down from $22.9 billion in 2009, the consulting firm R.K. Hammer said in a report released Monday.

Its explanation for the 48% decline: the implementation of the Card Act, a law passed by Congress that places new restrictions on the ability of card issuers to charge penalty fees. The law was passed in 2009, mostly took effect in 2010 and, in each year since, penalty fees have fallen, according to the data. Penalty fees include fees for late payments, for exceeding one's credit limit, and for not having sufficient funds to pay one's monthly bill. (American Banker Online, Jan. 27)

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Why Mortgage Rates Aren't Higher ... Yet

Mortgage rates will rise in 2014. At least that was what just about every housing analyst said at the end of 2013 and in fact is still saying. The thinking was that a combination of new mortgage regulations and a pullback in bond-buying by the Federal Reserve would be the rocket fuel to lift rates off near-historic lows.

The Fed announced Wednesday it would extend the so-called taper and cut its bond-buying by another $10 billion, to $65 billion. And yet for the past month, rates have not really moved. If anything, they've moved slightly lower from their year-end level and now hover just above 4.50 percent for the 30-year fixed. That has some scratching their heads about where rates will move as we head into the usually busy spring housing market.

"The simple answer is that the rate hike due to the Fed's tapering really took effect last May/June—despite the fact that the tapering didn't begin until December," said Guy Cecala, editor-in-chief of Inside Mortgage Finance. "There was no need to hike rates further."

Cecala points out, that from the standpoint of the mortgage market, the Federal Reserve is still buying as big a share—and perhaps bigger—of new agency mortgage-backed securities production as it was six months ago. That is because overall mortgage production is down. The rate jump at the start of last summer ended the refinance boom, and purchase originations are sluggish, as sales slow and all-cash buyers reign.

[read more]

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Jobless Claims Post Surprise Jump as Fourth Quarter Growth Falls Short

The number of Americans filing new claims for unemployment benefits rose more than expected last week, but the underlying trend suggested the labor market continued to heal. Initial claims for state unemployment benefits increased 19,000 to a seasonally adjusted 348,000, the Labor Department said on Thursday. Claims for the prior week were revised to show 3,000 more applications received than previously reported. [read more]

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Chapter News

NoVA Chapter Meets Feb. 13

Drs. Marisa Randazzo and Jeff Pollard will offer a presentation on "Handling and De-Escalating Threatening Behavior in the Workplace" at the NoVA Chapter's Feb. 13 meeting. Dr. Randazzo is a managing partner of SIGMA and an international expert on threat assessment, targeted violence and violence prevention. Dr. Pollard is the senior consulting psychologist  with SIGMA and is a board-certified psychologist.

Time: 5:30 p.m. networking; 6 p.m. meeting; 6:30 p.m. dinner and 7:30 p.m. program.

Please RSVP to Judy Pollard (PollardJ@jfcu.org) by Feb. 1,  if you plan to attend.

[learn more here]

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Tidewater Chapter Schedules Feb. 13 Meeting

Dr. Quentin Kidd, of Christopher Newport University, will be the featured guest speaker at the Tidewater Chapter’s Feb. 13 meeting. Dr. Kidd will discuss Virginia’s changing political landscape and voting demographics. He’ll also spotlight some of the key issues facing the state and the Virginia General Assembly. Location: Greenbrier Country Club (1301 Volvo Parkway, Chesapeake). Time: 6 p.m. social; 6:30 p.m. dinner and meeting.

[Learn more]

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Tidewater Chapter to Host March 15 Workshop

All credit unions are invited to attend the Tidewater Chapter's March 15 Workshop in Norfolk. On tap are education sessions covering subprime lending, the NCUA's IT exam basics, teaching personal finance to young people, an update on EMV and the evolving world of payments, board member duties, and much more.

Location: Old Dominion University campus.

Time: Registration begins at 2 p.m.; dinner and door prizes will wrap up about 7:30 p.m.

Educational Investment: $75 per person until Feb. 28; $85 thereafter.

[Download the brochure here]
[Vendors/Business Partners: Be a Part of This Exciting Event! Learn more here

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Security/Fraud Prevention

Sunsetting of Windows XP Raises ATM Security Concerns

In April, when Microsoft drops support for the XP operating system used by most ATMs, the sky won't fall on ATM owners and operators. But those that haven't upgraded should be taking other security steps, industry experts warn. ATMs that run Windows XP will inevitably be a more attractive target to hackers who realize Microsoft is no longer pushing out security patches. And in all likelihood, patches will not be issued for software that runs on XP, either.

"It's like being on the Titanic, but instead of not knowing that the iceberg is around the corner, we do know the iceberg is there," says Terence Devereux, a senior advisor for business line banking at Wincor Nixdorf. The ATM Industry Association pegs the worldwide ATM population at about 2.6 million, with 425,000 to 450,000 ATMs in the U.S. Between 90 and 95 percent of the world's ATMs run on Windows systems, and most of those are Windows XP. (American Banker Online, Jan. 27)

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News About The Competition

Number of 'Optimistic' Small-Bank CEOs Doubles: Survey

Community bank leaders entered 2014 with a rosy view of their companies' prospects, according to a new survey from Abound Resources. A majority (61%) of community bank CEOs said they were optimistic or very optimistic about the year ahead, according to the survey of top executives from 111 banks with under $10 billion of assets. That's a big jump from last year, when just 28% of CEOs had a positive outlook.

Community bankers are feeling more upbeat because they turned profits in 2013's less-than-ideal conditions, according to Abound Resources President Brad Smith. Nearly half (49%) of small-bank CEOs cited expanding their banks' online presence and improving their small-business market share as top growth priorities. " (American Banker Online, Jan. 27)

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Technology News

Apple’s Next Big Thing Could Be Allowing You to Easily Pay for Stuff

In the wake of the Target and other big data breaches, retailers and banks are making the case that we need more secure purchase methods. But since they can’t agree on who’s going to pay for all the associated costs, consumers are pretty much stuck with the antiquated system we’ve got for the time being.

Could Apple come to the rescue? Apple CEO Tim Cook hinted at the possibility when he said mobile payments were an idea that “intrigued” the company. 

“You can tell by looking at the demographics of our customers and the amount of commerce that goes through iOS devices…that it’s a big opportunity on the platform,” he told investors on the company’s quarterly earnings call this week.

Analysts impatient for Apple’s Next Big Thing are salivating at the idea that Cupertino could upend the nearly $3 trillion consumer card business the same way it did with music and mobile phones.

[read more]

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