January 26, 2012
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Headline News
News About Credit Unions
Compliance/Regulatory Affairs
Governmental Affairs News
Financial Services/Marketplace News
- Financial Institutions Lost $3.6 Billion in Overdraft Revenue in 2011, Says Moebs
- Fed's Low-Rate Strategy May Come at a High Cost
- State of the Union: Obama Proposes New 'Fee' on Banks to Spur Refis
- Uptick in Card Loan Losses in View
- New Postage Rates in Effect
Education & Networking Opportunities
- Feb. 2 Webinar - Minor Accounts: Legal Ownership, Debit Cards & Access
- Feb. 8 Webinar - Regulation E Legal Update: How to Properly Handle ATM & Debit Card Claims
- Feb. 9 Webinar - Required Compliance Series: Regulatory Compliance for the Board & Senior Management
News From Credit Unions
Chapter News
Financial Education News
Community Involvement News
News About The Competition
Security/Fraud Prevention
Headline News
Credit Unions Stand Out at General Assembly in First of Credit Union Days!
Central Virginia, Hampton Roads, Piedmont, Southside and Tidewater credit union members, 90 strong, visited with their lawmakers and legislatives aides this week to kick off a round of Credit Union Days at the General Assembly.
Other groups at the General Assembly this week included AARP and the Virginia Medical Society, illustrating how important CU Day is and how credit unions must always maintain face-to-face relationships with our elected officials or else risk being overlooked in the sea of groups vying for attention.
This is a relatively quiet session for credit unions, since our twin bills on bylaw changes have passed out of committees and out of the House and Senate with unanimous votes. They will face another hurdle mid-session after Crossover Day when each chamber considers legislation passed by the other.
Since neither the state regulator overseeing credit unions nor the bankers are objecting to the credit union bills, we expect the legislation to gain approval again after Crossover.
Besides thanking lawmakers for voting yes on our bills, advocates mentioned our monitoring of foreclosure legislation to ensure it doesn't hamper credit unions' ability to help members, and our support of bills to prevent financial abuse of the elderly and disabled.
Advocates are also taking time to promote their service to members, such as payday loan alternatives, financial education presentations and resources for the community, and training credit union staff on identifying and reporting financial abuse of the elderly.
Examples of good news reported by credit union advocates include BayPort talking up its loans of $500 or less that have helped members break the cycle of payday loans, and ABNB flagging several instances of financial elder abuse. Langley came armed with an overview of all its services to members and the community, while Fort Lee and 1st Advantage credit union representatives detailed aid to members of the military and community service work.
Sen. Bill Stanley, patron of our credit union bill in the Senate (http://bit.ly/wIp20z) noted that his willingness to carry our bill stemmed from his deep respect for credit unions. “I’m reminded of being in a meeting with a bunch of bankers and the first thing out of their mouths was, ‘We know you’re a credit union guy, but would you mind looking at one of our bills.’ I took that as a pretty big compliment and I’m proud to be a ‘credit union guy,’” noted Stanley in his meeting with Martinsville and Danville credit union representatives.
Check out The Advocate -- our governmental affairs blog -- to catch up on all the news from this week's CU Day visits.
> The next "Credit Union Day" events are Jan. 31 for the Roanoke Valley and Southwestern Virginia chapters, and Feb. 1 for Richmond! Check with your Chapter legislative representatives for details!
Credit Unions Make a Difference for Members...And We Can Prove It!
We cannot thank you enough for your recent participation in our Reality Check/Micro-Loan Survey! Forty-three of our credit unions submitted data on their micro-loans ($3,000 or less at origination), a tremendous response to our first-time survey. As promised, we took your information, compiled other data detailing your impact on members and your communities, and pulled together an Impact Report.
We've been sharing that Impact Report with lawmakers during our Credit Union Day visits, also as promised! So thank you again for your response and we hope you'll download a copy of the Impact Report to share with your board members and staff. We plan to update this Impact Report quarterly so please continue to report your efforts.
We'll be issuing a call for your help on a new survey in the coming weeks, which will cover 4th Quarter 2011. Most of the data collected in the survey used to produce the Impact Report was 3rd Quarter 2011 information.
> Also, you'll notice in the Impact Report that we detailed the personal stories of members helped by their credit union. We'd love to spotlight the stories of your members, so please share!
Drop an e-mail to your League's Lewis Wood at lwood@vacul.org! Photos of the member(s) would be appreciated!!!
[download the Impact Report] (pdf, 590kb)
NCUA Seeks Comments on Proposed Changes to the Loan Participations Rule
NCUA has proposed to amend its loan participation regulations and relevant provisions in the eligible obligations rule and the rule governing the purchase of assets and assumption of liabilities. Due to many questions and confusion surrounding the loan participation rule, NCUA is attempting to improve understanding of the transactions covered under the rule, as well as the requirements for purchase and ongoing monitoring, and the applicability of related provisions.
The proposal also expands loan participation requirements to federally insured, state chartered credit unions. A number of credit unions have cited concerns with the proposal, especially for smaller and mid-sized credit unions. Comments are due Feb. 21.
[Click here for proposal and request for comment.]
[resource: Key provisions of the proposal]
[resource: CUNA Comparison of NCUA’s Proposal and Current Rule on Loan Participations and Related Rules]
[resource: informational audio post from Messick & Lauer law firm. Thanks to Nathalie Williams at PortAlliance Federal Credit Union for the link!]
Have You Heard? Crash Virginia is Here!
A credit union event "Crash" movement is taking place across the country, with young credit union professionals wanting to learn more about the system and to participate in major conferences generally attended by executives, board members and management.
Thanks to a generous sponsorship by CUNA Mutual Group, up to 12 credit union professionals will be chosen to receive free registration to the Virginia Credit Union League's Annual Meeting & Innovation Expo, held April 26-27, in Norfolk.
Crashers not only will participate in scheduled agenda items, but will also meet with industry thought leaders each day, to share ideas about the future of credit unions and how credit unions can meet the needs of their generation.
- Act now! The Crash is limited to 12 spots.
The deadline to apply is Friday, Feb. 17, so go online now to fill out your application! http://va.trust.coop/ - Who can apply? Any Virginia credit union professional under 35 (or 35-ish) who wants to attend is welcome to apply.
- Are there any costs to the participants? The registration fee is covered by the League. Crashers will need to provide their own transportation to Norfolk, pay for their hotel room ($109 per night), and purchase their dinner on Thursday evening.
For more information, contact Nicole Widell with the Virginia Credit Union League at nwidell@vacul.org or 800.768.3344, ext 604.
[related: League Annual Meeting 2012 Set for April 25-27; Register Now!]
League Plans Town Hall Meetings in 2012
Your League will host a series of Town Hall Meetings across the state in 2012 to inform credit unions about several new League initiatives, to review the League's strategic plan, to share the findings of our recent survey of CEOs, and to solicit your feedback and input. Six meetings are scheduled. There is no charge to attend.
- Feb. 22, 2012 – 10 a.m.
Tidewater Chapter
Beach Municipal Federal Credit Union - February 24, 2012 – 10 a.m.
Lynchburg/Piedmont/Central Virginia Chapters
League Office - February 29, 2012 – 10 a.m.
Hampton Roads Chapter
BayPort Credit Union - March 2, 2012 – noon
Roanoke/Southwestern Virginia Chapters
Freedom First Federal Credit Union - March 9, 2012 – 10 a.m.
NoVa Chapter
Northwest Federal Credit Union - March 12, 2012 – 10 a.m.
Richmond/Southside Chapters
Virginia Credit Union
News About Credit Unions
Think Tank Promotes MBLs as Credit Gap Fillers
Member business loans may be the answer for small businesses with fewer than 50 employees, which continue to be among the most vulnerable companies needing credit access. The Progressive Policy Institute, a Washington think tank, offered that assessment in a recent brief, “The Credit Gap: Easing the Squeeze on the Smallest Businesses.”
According to PPI, small businesses with fewer than 50 employees provide as much as 30% of all private sector employment. However, because of their small size, they are much less likely to benefit from government small business loan programs, and they are less likely to win loans from big commercial banks. [read more]
[related: CUNA says CUs Have an Answer to President's Call - MBLs]
[related: Obama Lays Out Aggressive Populist Economic Agenda]
[related: CUs are Not GSEs, CUNA Clarifies for Gingrich Campaign]
U.S. Central ACH Users Should Prep for Change: NCUA
The National Credit Union Administration (NCUA) has informed credit unions that the automated clearinghouse (ACH) services provided by the 18 corporates that work with U.S. Central Bridge Corporate Federal Credit Union will soon be transitioned from U.S. Central Bridge to other providers. [read more]
CO-OP, FSCC Complete Shared Branching Merger
CO-OP Financial Services has completed its merger with Financial Service Centers Cooperative, creating one nationwide shared branching operation for credit unions, the Rancho Cucamonga, Calif., CUSO announced Tuesday. The new network comprises more than 1,700 credit unions, 4,400 branch locations and 2,200 kiosks in 7-Eleven stores, the company said. [read more]
NCUA Confirms 2012 Operating Fee to Drop 0.9%
The National Credit Union Administration (NCUA) confirmed that the 2012 operating fee for natural person credit unions would be 0.9% lower than 2011's rate. The agency in its Letter to Credit Unions No. 12-FCU-01 said the growth of federal credit union assets and the slight overhead transfer rate increase led to the operating fee reduction.
The NCUA adjusts these amounts each year by the same percentage as the projected federal credit union asset growth in order to maintain the same relationship of the scale to the asset base. [read more]
[related: NCUA Operating Fee Calculator]
[related: NCUA Letter to Credit Unions on Operating Fee]
Compliance/Regulatory Affairs News
What’s Happening on the BSA Front?
The Credit Union National Association's Valerie Moss offers a BSA update via Credit Union Magazine. Her article highlights recent actions by the Financial Crimes Enforcement Network (FinCEN), which oversees compliance with BSA/AML (anti-money laundering). [read more]
Cordray Foresees Possible CFPB Limit on Rules for Smallest Banks
Consumer Financial Protection Bureau Director Richard Cordray said before a House subcommittee Tuesday that the agency will explore the possibility of excluding the smallest banks from some of its rules.
Republicans on the subcommittee pressed him on whether he would shape upcoming rules to keep already overburdened community banks from having to comply with regulations meant for larger firms responsible for the crisis. Cordray said one way the CFPB could do this is by setting minimum asset levels to which new rules would apply. [read more]
[related: Consumer Watchdog Targets Payday Loans]
Governmental Affairs News
League Congressional Luncheon March 21
It is imperative that credit unions tell our Washington representatives the good news about what we're doing to serve our members and ensure our voice is heard on legislation that impacts us.
You can do just that at our March 21 Congressional Luncheon in Washington, D.C., where the members of our Congressional delegation and their staffs are invited to dine with our credit union members.
[Register Online]
[Printer-Ready Registration Packet]
Financial Services/Marketplace News
Financial Institutions Lost $3.6 Billion in Overdraft Revenue in 2011, Says Moebs
Financial institutions lost billions of dollars in overdraft revenue last year, even as they passed on higher fees to consumers, according to a study by Moebs Services Inc. Overdraft revenue fell by $3.6 billion to $29.5 billion in 2011, while the median fee customers paid per overdraft rose a record $2.50 to $30 in the same time period, according to the analysis released last week.
Federal regulations have restricted institutions' ability to charge consumers for overdrawing checking accounts, unless the consumers "opt in" to programs that will cover their excess charges for a fee.
At the same time, banks have had to overhaul some of their checking and debit-card operations to comply with other federal regulations. Now banks are trying to make up some of the revenue they have lost by raising the prices for consumers who do elect for overdraft protection programs.
"Every banker we talked to said, 'We increased the price to reflect the increased cost of regulation on overdrafts,'" says Michael Moebs, chief executive of Moebs Services, whose firm spoke with over 100 bankers as part of the survey. But the number of overdrafts per household is also falling, offsetting the fee increases banks have been imposing.
In 2011 households averaged 6.7 overdrafts per year, down from 8.2 overdrafts in 2010 and 9.8 in 2009, according to Moebs' data. Moebs argues that community banks and credit unions are missing out on an opportunity to bring in more consumers by not lowering the fees they charge for overdrafts.
"If the banker would look at this from a price and a volume basis, I think what they will see is they could make more money here and service their customer better, at least those who frequently use overdrafts, if the banker would concentrate on volume and lower the price," he says. (American Banker Online, Jan. 26)
[related: How to Deal with Higher Bank Fees in 2012...Try a Credit Union]
[related: We Love our Debit Cards, but Not our Banks]
Fed's Low-Rate Strategy May Come at a High Cost
The federal funds rate has been near zero since late 2008 and on Wednesday federal policymakers said they plan to keep interest rates right where they are through 2014.
Keeping rates this low for that long will produce negative consequences. It's inevitable. What's a whole lot less certain is how policymakers plan to manage the downsides — or even how much attention they are paying to them.
"Everyone is so focused on jobs now and stimulating the economy," says Cam Fine, the president and CEO of the Independent Community Bankers of America. "At some point this becomes counterproductive. … I don't know when the tipping point is, but I think we are pretty close.
This essentially zero-interest-rate environment that the Fed is promoting is going to have a visible negative effect on this country." Some victims are already obvious — retirees, pension funds, savers — and the Federal Reserve must figure that trade-off is worth it. If low rates succeed in goosing the economy, then everyone wins. So what might be around the interest rate corner, particularly for financial institutions?
The squeeze on earnings from tighter margins is likely to feed cost-cutting, including layoffs and branch closings. "This extended low-rate environment is just hammering the hell out of community bankers, because they are margin bankers," Fine says. (American Banker Online, Jan. 26)
[related: Why Economists are Rooting for Inflation]
[related: Bernanke Has Been Anathema For Americans Trying To Save]
[related: Fed Will Keep Near Zero Rates through 2014]
State of the Union: Obama Proposes New 'Fee' on Banks to Spur Refis
President Obama announced Tuesday night a plan to collect fees from large banks to help fund greater loan refinancings for troubled borrowers. In his third State of the Union address, Obama also called for an expansion of Department of Justice investigations into misdeeds that led to the mortgage crisis and a new crackdown on financial fraud.
While details of his new proposals were few, and measures focused on the manufacturing sector and income tax reform attracted more attention, the speech still carried potential implications for the financial industry.
Perhaps most significant for banks, following up on a plan last year to spur refinancings for troubled borrowers through Fannie Mae and Freddie Mac, Obama said he would propose legislation to give "every responsible homeowner" the ability to take advantage of low interest rates. Although details of the new plan -- which he said could save a homeowner on average $3,000 a year -- were sketchy, Obama said it could be paid for through fees paid by banks. (American Banker Online, Jan. 25)
[related: Zandi: Obama’s Refi plan Will Help Lift Housing]
[related: US Mortgage Applications Retreated Last Week: MBA]
[related: Mortgage Applications Drop 5%]
[related: Has Obama's Housing Policy Failed?]
Uptick in Card Loan Losses in View
Releases of allowances for bad credit card loans continued to plump banks' bottom lines in recent earnings reports, but loss rates look set to bounce off record lows in the first quarter.
Chargeoff rates, or the annualized amount of debt written off as uncollectible as a percentage of outstanding receivables, fell in December from the previous month at four of the six largest issuers, according to disclosures filed on Tuesday. That improvement ran counter to the typical seasonal increase.
Meanwhile, the drop in delinquency percentages was in line with the seasonal pattern. Increases in delinquency percentages last fall portend higher writeoff rates early this year, however. Average loss rates in the first quarter look likely to register their first sequential increase in a year and a half at American Express Co., Bank of America Corp. and JPMorgan Chase & Co. That's based on the recent pace at which accounts 30 days to 60 days past due have translated into chargeoffs five months hence. (American Banker Online, Jan. 20)
New Postage Rates in Effect
Just about everybody--including credit unions--will pay more this year for mailing letters and packages through the U.S. Postal Service (USPS). New postage rates for mailing items took effect Sunday, with a single ounce letter increasing one cent to 45 cents, the first increase in this category since May 2009. [read more]
Education & Networking Opportunities
Feb. 2 Webinar - Minor Accounts: Legal Ownership, Debit Cards & Access
You won’t want to miss our Feb. 2 A-to-Z training on minor accounts. Join us to learn how to answer your adult members’ questions on opening accounts for kids, grandchildren, college, and other minor accounts. This program will review the basic legal ownerships you can offer for minor members and how to transition them into adult accounts and memberships. The dos and don’ts of account cards for minors will also be covered. [learn more]
Feb. 8 Webinar - Regulation E Legal Update: How to Properly Handle ATM & Debit Card Claims
Given the rapid changes in electronic transfers, financial institutions are confused as to when Reg E applies. Our Feb. 8 webinar will explain how to determine if Reg E applies and how to properly handle ATM and debit card claims under Reg E, including the investigation process, when provisional credit is mandated, determining the proper amount to reimburse the consumer, notices to the consumer, and the looming deadlines. [learn more]
Feb. 9 Webinar - Required Compliance Series: Regulatory Compliance for the Board & Senior Management
An effective compliance program begins at the top. Board and management training is key in a strong compliance program. It is vital that directors understand the various compliance areas that require their annual review and approval. This session will cover required training for BSA, fair lending, privacy, and red flags for identity theft. The board-specific high-risk areas will be addressed in layperson terms. [learn more]
News From Credit Unions
UVA Community Credit Union Sponsors Biz Kid$ on WVPT Public Television
UVA Community Credit Union is proud to bring Biz Kid$, a quality financial education television series to the Greater Charlottesville area each Saturday morning at 10 a.m. on WVPT public television.
Launched in January 2008, Biz Kid$: Helping Kids Make and Manage Money is a national financial education initiative to inform, educate, inspire, and motivate kids of all ages to learn about money, credit, taxes, business, and becoming young entrepreneurs. To keep young viewers (9-16 years age range) engaged, this series includes a fast-paced mix of direct education, sketch comedies, animation, and stories featuring real life young entrepreneurs. [read more]
NMA FCU To Open Hotel Branch
NMA Federal Credit Union said it plans to open a branch office on the first floor of the Cape Charles Blue Hotel by March 1. The credit union will be holding six sessions to introduce the credit union and its member services to the residents and business owners in Cape Charles and the surrounding area of Northampton County. [read more]
Chapter News
'Meet Your League Night' at the NoVa Chapter's Feb. 9 Meeting
We hope you will join us as at the 'Meet Your League Night' Feb. 9 as we discuss the League’s exciting new products and services! Virginia Credit Union League staff members Nathan Bowden, Michael Read, Karin Sherbin, Jeanne Sullivan and Nicole Widell will be on hand to share information on how you can take advantage of all your League has to offer.
Please note that as an added incentive, the League will pay the registration fee for one staff member and one board member from each NoVa credit union! Location: Marriott at Fair Oaks (11787 Lee Jackson Memorial Highway, Fairfax, 22033. Time: 5:30 p.m. networking; 6 p.m. meeting; 6:30 p.m. dinner; and 7:30 p.m. speaker. To RSVP, please send an e-mail before Feb. 6 to stackett@nwfcu.org. [read more]
Tidewater Chapter Meets Feb. 16
League President Rick Pillow will deliver a program titled, "Credit Union Philosophy: It's the Stuff Dreams Are Made Of," at the Tidewater Chapter's Feb. 16 Annual Meeting. Also on the agenda is the installation of chapter officers and thanks to its win the Virginia Credit Union Political Action Committee (VACUPAC) Chapter Challenge, the chapter will be able to auction off an iPad2 to one lucky VACUPAC donor.
Location: Greenbrier Country Club (1301 Volvo Parkway, Chesapeake, 23320). Time: 6 p.m. social; 6:30 p.m. dinner and meeting. Make your reservations early! RSVP to Ginnie Riddle at vriddle@memberstrustcu.org or phone 757.671.8874. Credit unions with assets of $5 million or less may send one representative at no cost. Cancellations accepted until noon, Feb. 14. Additional registration information online.
Financial Education News
Filene Partners With New Savings Rewards Program
The Filene Research Institute and SaveUp have joined forces and are looking for a few good credit unions. SaveUp, a new nationwide rewards program that encourages savings, has partnered with Filene to pilot a prize-linked savings program with 15 credit unions.
Aimed at the young adult market, SaveUp can be integrated into credit unions’ existing rewards programs or be part of an entirely new program. As a new start-up, SaveUp is looking to pilot its product with 15 credit unions for free over a six-month time period. [read more]
Community Involvement
Get Recognized for Your Good Works - Complete Our Community Involvement Survey
Each year, we gather data from credit unions to spotlight their community involvement activities and charitable giving. Please complete our brief survey no later than Friday, Feb. 10, so that your credit union's accomplishments can be included in the information we share with lawmakers and the media. Click here for the online version of the survey.
> Or, if you prefer, you can complete the print-based version of this survey. Click here for the downloadable survey. (pdf, 247kb). Please fax (434.239.8148) or e-mail (pr@vacul.org) the completed form back to us. Snail mail works, too...Send it to Virginia Credit Union League, Attn: Lewis Wood, PO Box 11469, Lynchburg, 24506.
> Questions about the survey can be directed to Lewis Wood at pr@vacul.org or 800.768.3344, ext. 629.
> Is anyone out there? Anyone? It pains us to report that we haven't received a single Community Involvement survey in three weeks time. Would you take just a few minutes today and report your good works? Thanks!
News About The Competition
Banks Boost Growth in Consumer Loan Niche
While Citigroup Inc. struggles to get rid of its consumer lending unit, some of its smaller competitors are cheerfully bulking up similar businesses. Banks including Wells Fargo & Co. and SunTrust Banks Inc. are expanding their non-credit card installment lending, finding a new avenue for growth in this relatively obscure corner of the consumer banking business.
Customers use these generally unsecured "personal" loans in lieu of home equity or card loans, to cover expenses like home repairs or medical bills.
This type of lending is helping some banks gain business from a broader customer base, including the riskier customers they abandoned during the worst of the financial crisis. Those customers still might not qualify for credit cards or mortgages, but banks are reaping the benefits of reaching out to them with alternative loans. [read more] (registration may be required)
Security/Fraud Prevention
Feds, State AGs to Track Military Financial Scams
The Consumer Financial Protection Bureau is teaming up with other federal and state agencies on a new database of financial companies that have been cited for abusing military members.
State attorneys general, U.S. attorneys and judge advocates from all five branches of the military will be able to search the database -- the first of its kind -- for information about completed civil and criminal legal actions against companies and individuals who repeatedly scam the military.
The Repeat Offenders Against Military, or ROAM, database was developed jointly by the CFPB, state AGs and the Department of Defense, the bureau said. (American Banker Online, Jan. 26)
Online Fraud Costs Rose in 2011, Visa Unit Says
The dollar volume of online fraud is going up, but actual incidents of fraud are decreasing, according to a report released Tuesday by CyberSource Corp., a unit of Visa Inc. Total online fraud was up 1%, to $3.4 billion, but the number of fraudulent transactions was down 3 basis points to 0.6% in 2011 compared to a year ago. The increase in fraud dollar volume, while small, was the first increase since 2008, the report said.
"The drop in the fraud rate is excellent news, but clearly we still have a long way to go in our war on fraud," says Andrew Naumann, senior business leader for fraud management solutions for CyberSource. Criminals have gotten a lot better at covering their tracks, Naumann says. And while merchants have become more sophisticated and more diligent about fighting fraud, it's harder to detect. (American Banker Online, Jan. 25)