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February 25, 2010
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Headline News
- CUs Press Congressional Delegation for MBL Support
- Fresh Details Emerge on Dodd's Reform Bill
- Obama May Compromise on Consumer Agency to Pass Financial Regulation
- CUNA Task Force Calls for New Corporate Model
- "We're The Solution" … Annual Meeting 2010 Registration Now Open
- League-Drafted Bills Headed for Final Votes
- Complete Our Community Involvement Survey; Deadline Feb. 26
News About Credit Unions
Compliance & Regulatory Affairs
Governmental Affairs News
Financial Services/Marketplace News
Education & Networking Opportunities
- Webinar to Cover ALLL Basics for Directors
- March 10 Webinar Spotlights Trust Accounts
- NCUA Schedules March 11 Workshop in Richmond
- Audio Conference Set On New Capital Initiative for LICUs
- Southeast CUNA Management School Starts June 11
- Largest Conference for Credit Union HR, Training Execs Set for April
News From Credit Unions
Chapter News
League News
Financial Education News
Community Involvement News
Marketing News
News About The Competition
Headline News
CUs Press Congressional Delegation for MBL Support
Sen. Mark Warner (D-Va.) told credit union members Wednesday that he understands that credit unions want to raise the cap on member business lending. However, he apparently isn't ready to sign on to S.2919 -- which would raise the cap from 12.25% of total assets to 25% of total assets -- because he said, "We may not go as high as you want." The comments came at the League's Congressional Luncheon, attended by 110 credit union members.
Rep. Gerry Connolly (D-11) was roundly applauded for being the only Virginian to sign on to HR 3380, the House legislation that would raise the cap on member business lending to 25%. "If banks aren't willing to lend, it's pretty simple -- lift the cap for credit unions," he said.
[more here]
Fresh Details Emerge on Dodd's Reform Bill
Senate Banking Committee Chairman Chris Dodd's revised regulatory reform bill is likely to call for the creation of a powerful new agency with supervision of all holding companies and all federally chartered subsidiaries, according to sources familiar with the panel's negotiations.
While sources cautioned the details of the legislation are still in flux, a current draft of the bill would create the Financial Institutions Regulatory Administration -- essentially a combination of the Office of the Comptroller of the Currency, Office of Thrift Supervision, and the banking supervisory responsibilities of the Federal Reserve Board. While the Federal Deposit Insurance Corp. would continue to have oversight of state-chartered banks, and pick up the Fed's state member bank oversight, FIRA would supervise everything else, including all systemically important banks and nonbanks.
The draft bill would call for the creation of a systemic-risk council led by the Treasury Department that would identify and write rules for large financial companies. For months the conventional wisdom has been that the Fed would ultimately supervise the most systemically significant firms, as proposed by the Obama administration. But other than a seat on the systemic council, where its representative would serve as vice chairman, the Fed would have no direct oversight of any banking company under the bill.
The draft bill represents ongoing negotiations between Dodd and Sen. Bob Corker, R-Tenn., and its details were likely to be shared Wednesday evening at a meeting with the two lawmakers and Treasury Secretary Tim Geithner. Sources cautioned that the lawmakers continue to hash out specific details of the bill, and provisions could be changed as they negotiate with other parties. (American Banker Online, Feb. 25)
[related: Dodd: CUs are Good for America]
Obama May Compromise on Consumer Agency to Pass Financial Regulation
The Obama administration is no longer insisting on the creation of a stand-alone consumer protection agency as a central element of the plan to remake regulation of the financial system. In hopes of quick congressional approval of a reform bill, White House officials are opening the door to compromise with lawmakers concerned about creating a new bureaucracy, according to congressional and some administration sources.
President Obama's economic team is now open to housing the consumer regulator inside another agency, such as the Treasury Department, though they still prefer a stand-alone agency. In either case, they are insisting on a regulator with political autonomy and real teeth so it can effectively enforce rules designed to protect consumers of mortgages, credit cards and other financial products.
[more here]
CUNA Task Force Calls for New Corporate Model
The Credit Union National Association's (CUNA) Corporate Credit Union Task Force has weighed in on the status of the corporate credit union system and has proposed a series of dramatic changes to bolster the future viability of the corporate credit union system.
A key principle behind the work of the task force was holding the interests of natural person credit unions "above all other," and the task force report noted that risks related to the delivery of settlement, payment, and liquidity services must be well managed. Virginia Credit Union CEO Jane Watkins was a member of the task force.
[more here]
> The National Credit Union Administration (NCUA) has given a deadline of March 9, for submission of comments on its proposed changes to corporate credit union rules.
[more here] (pdf, 105kb)
"We're The Solution" … Annual Meeting 2010 Registration Now Open
Join us May 6-8 in Reston as we showcase your League and the role we strive to play in your success! This year’s Annual Meeting promises expanded education and networking opportunities, more special events and important keynote presentations, including National Credit Union Administration Chairman Debbie Matz.
[more here]
League-Drafted Bills Headed for Final Votes
The League drafted substitute version of House Bill 482 has passed the Senate Commerce and Labor Committee on a unanimous 15-to-0 vote. Its companion bill -- Senate Bill 440 – passed the House Commerce and Labor Committee yesterday on a 22-to-0 vote.
Virginia's credit unions succeeded in turning potentially disastrous legislation that would have allowed banks to buy up credit unions without adequate protections for members into a bill that provides state-chartered credit unions with parity for conversion to a mutual savings bank charter. The League provided the language for the substitute bills in both the Senate and House. The bills face a final floor vote.
[details on the bills here]
Complete Our Community Involvement Survey; Deadline Feb. 26
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. 26, so that your credit union's accomplishments can be included in our report and news release. 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 pdf (pdf, 291kb). Please fax (434.239.8148) or e-mail (pr@vacul.org) the completed form back to us.
> Questions about the survey can be directed to Lewis Wood at pr@vacul.org or 800.768.3344, ext. 629.
Thanks for helping us report the good works of Virginia's credit unions!
News About Credit Unions
Converts Sing Praises of Credit Unions
Consumers are finding credit unions a much better deal than big banks, notes an article on MSN Money. Whether it's better "customer" service, higher interest rates on checking and savings accounts, or the "unfair or deceptive" practices used by 100% of bank credit cards -- as delineated in an October 2009 Pew Charitable Trust study (.pdf file) – consumers are finding it easier to kick big banks to the curb in favor of credit unions. "Tired of chugging along like a cog in a corporate wheel?" asks the article. "Feeling a little credit-union curious? Read on for stories of people who've suffered the last straws and switched."
[more here]
CUs' Cards Featured in NY Times, CBS News, CNN
The advantages of credit union-issued credit cards were the subject of several national media-outlet reports Monday, including CBS News, The New York Times and CNNMoney.com. Ondine Irving is a credit card consultant who works with credit unions nationwide to develop a fair and ethical credit card program for consumers. Her work with First Community Federal Credit Union in Kalamazoo, Mich., was the subject of a report on Monday's CBS Evening News with Katie Couric.
[more here]
[related: CUs Touted in Wall Street Journal, CNN]
[related: Spring Yourself from Credit Card Traps]
[related: Banks and Card Issuers Find Clever Ways Around CARD Act Rules]
[related: Credit Card Reform is Mixed Blessing]
Law Protects Card Users, Causes Companies to Find Other Ways to Make Money
"I really counsel everybody: Pull out your statements," said Amy Wisilosky. The Vice President of Marketing at Virginia Beach Schools Federal Credit Union explains, "So many of us use Bill Pay, we don't always look at our statements every month, so we might not have been aware of some changes that have started taking place."
Monday, legislation went into effect that is meant to protect and educate credit card users. Included in those changes is something that may be a "shell shocker," as Wisilosky describes it. Along with your balances on statements, companies have to list how long it will take you to pay off your accounts if you only make the minimum payments each month.
[more here]
[related: Banks Apply Pressure to Keep Fees Rolling In]
Compliance/Regulatory Affairs News
Credit CARD Act Resources Now Available
Your League has released new resources covering compliance with the Credit CARD Act.
- Operations No. 261 S6 -This release details the provisions regarding receipt of payments, allocation of payments, and limitations on imposing finance charges. These provisions are effective Feb. 22, 2010.
[more here] - Operations No. 261 S7-This release details the provisions regarding Internet posting of credit card agreements; marketing to college students; and timely settlement of estates. The Internet posting of credit card agreements and timely settlement of estates provisions apply only to credit cards. The "marketing to college students" provision applies to all open-end loans. These provisions are effective Feb. 22, 2010.
[more here]
CUNA Compiles FAQ on CARD Act Queries
As promised, the Credit Union National Association (CUNA) on Friday posted a list of frequently asked questions (FAQ) related to the Credit Card Accountability, Responsibility and Disclosure (CARD) Act of 2009, which became fully effective Monday. The questions are culled from the many questions that were received after CUNA's recent audio conference calls, which took place on Feb. 2 and 11.
[more here]
Fed to Clarify Final Rules Under Regs E, DD
The Federal Reserve on Friday released a series of proposals that would clarify the portions of Regulation E, Electronic Fund Transfers, and Regulation DD, Truth in Savings, that address overdraft services. The proposals are meant to "provide further guidance regarding compliance with certain aspects of the final overdraft rules," with a particular emphasis on portions that prohibit financial institutions from "assessing overdraft fees without the consumer's affirmative consent."
[more here]
Regulators Reveal Hot Exam Topics for 2010
Staff from the National Credit Union Administration (NCUA) and two state-level financial regulators revealed some of the hottest exam topics that they will focus on this year--including indirect lending and risk concentration, which NCUA will soon provide guidance on in Letters to Credit Unions.
[more here]
Respa Rule Has Lenders Balking on Preapprovals
The new mortgage disclosure rule is upending the first step in the process of lending to homebuyers. Before shopping for a property, a prospective buyer typically gets a preapproval letter from a lender indicating how big a loan the person qualifies for. Real estate agents often ask for these letters so they can make sure the customer can afford the property before showing it. Before writing the letters, lenders like to see proof of income, such as a pay stub or tax return.
But under the Real Estate Settlement Procedures Act rule that took effect Jan. 1, lenders may not require such documents before giving the borrower a good-faith estimate of closing costs. Since lenders are now being held to those estimates, they want to hold off on issuing them as long as possible. So some lenders are reconsidering or backing away from preapprovals. Without them lenders could end up wasting time on loan applications that fall out. (American Banker Online, Feb. 24)
Governmental Affairs News
100% for VACUPAC
Many thanks to Freedom First Federal Credit Union, which has achieved 100% Board participation in the Virginia Credit Union Political Action Committee. VACUPAC enables credit unions to support the lawmakers and political candidates who support us! Learn more about VACUPAC by contacting your League's Karin Sherbin at 800.768.3344, ext. 626 or ksherbin@vacul.org.
Times Opposes SB 329, Bill to Raise Court Fees
What happens when a cash-starved state government takes almost any method of raising general revenue to fund core state services off the table? You get proposals like the one that recently passed the Senate for a massive increase of civil court filing fees to raise money for sheriff's departments. Filing a district court civil action would cost $75 instead of $27. And instead of paying between $60 and $160 for a civil action in circuit court, you'd pay between $500 and $1,000. (Your League is working with a coalition to oppose this bill.)
[more here]
Fed Chairman Bernanke Cool to MBL Hike for CUs
Federal Reserve Chairman Ben Bernanke yesterday refused to endorse an increase in member business loan limits for credit unions, despite bills in the House and Senate asking for the hike. The Fed Chairman's stance is important because the credit union lobby is hoping to get an endorsement from the Obama administration for the pending legislation. Bernanke on Wednesday told the House Financial Services Committee the current 12.25% of assets cap on member business loans, and other restrictions, were enacted in exchange for credit unions’ tax exemption.
“The banks would complain obviously that if credit unions are allowed to do everything banks can do, why are they tax favored? I think that's the trade-off Congress has to consider," Bernanke said in response to a question from Rep. Brad Sherman, a California Democrat who sponsored the MBL bill in the House. (Credit Union Journal, Feb. 25)
[related: Barr: Treasury Backs CU Help to Small Business]
[related: Udall 'Excited' about MBL Bill Potential]
[related: Frank: Progress on MBL Largely Depends On Senate]
[related: SBA's Mills: CUs Critical to Growing Businesses]
In Local Visit, Sen. Warner Asked about CU MBLs
During a recent address to the Culpeper County Chamber of Commerce, Sen. Mark Warner was asked by small businessman Dave Lochridge about allowing credit unions to loan at a higher level to small businesses, a prospect banks are lobbying against. “Talk about a hot issue,” Warner replied, saying he didn’t think the credit union lending threshold would go as high as 25 percent, like some have supported, but called it an issue the banking committee is considering. “You might see some action on it.”
[more here]
> It is crucial to follow up on member business lending with Warner since he is on the Banking Committee and we need Senate movement on its MBL cap bill, S.2919, in order to get the House version, H.R. 3380, out of committee. Please contact Sen. Warner yourself on S.2919, and have a small business owner do so also (even if it's to say the owner couldn't obtain a loan through the credit union because of the cap). If he won't come to us, we need to go to him. E-mail link is here: http://www.warner.senate.gov/public/index.cfm?p=Contact or fax him at 202.224.6295.
Schumer Wants to Include MBL Hike in Future Legislation This Year
Credit unions got a glimmer of hope last week when Sen. Charles Schumer (D-N.Y.) said he still would like to have legislation to lift the cap on member business lending. “I do hope to get that as part of a future jobs bill or as part of the [financial services] regulatory restructuring legislation,” Schumer said in response to a question from Credit Union Times during a conference call with reporters.
When asked why the legislation–which he has strongly backed–wasn’t included in the jobs bill that lawmakers are scheduled to take up next week, Schumer replied, “The bill is narrow and we wanted to keep it focused on provisions that have had bipartisan support.” (Credit Union Times, Feb. 19)
[related: The Lending Crunch: 'It is Very Hard to Survive']
[related: Small Biz Lending Stimulus Runs Dry -- Again]
13 Va. Legislators in Millionaire Club; Many Serve on Bank Boards
The General Assembly has 13 millionaires, according to Statements of Economic Interests that the legislators filed during the opening week of the session. The statements, compiled by the Virginia Public Access Project, show that 10 of the millionaires are Republicans, two are Democrats and one is an independent. There might be more than 13.
Also of interest, 14 of the legislators are paid directors or officers of banks. In the Senate they are John Watkins, R-Powhatan; Thomas K. Norment Jr., R-James City; William C. Wampler Jr., R-Bristol; and Mamie E. Locke, D-Hampton. And in the House they are Watkins M. Abbitt Jr., I-Appomattox; Dels. Lacey E. Putney, I-Bedford; John A. Cosgrove, R-Chesapeake; Riley E. Ingram, R-Hopewell; Matthew James, D-Portsmouth; James M. Shuler, D-Montgomery; Rosalyn R. Dance, D-Petersburg; Johnny S. Joannou, D-Portsmouth; S. Chris Jones, R-Suffolk; and Donald W. Merricks, R-Pittsylvania.
[more here]
Financial Services/Marketplace News
Consumer Confidence Flagging, Report Finds
Americans' confidence in the economy has suffered a sudden relapse, dimming hopes that they will start spending -- and spurring job growth -- any time soon. The Consumer Confidence Index figures released this week were much worse than analysts had expected and showed that Americans are morose about the job market and their economic prospects. That bodes ill for the sort of uptick in consumer spending that normally powers economic recovery, and it could raise pressure on the Obama administration and Congress to create jobs themselves.
[more here]
[more here: Latest Indicators Show Weakness in Economy Persists]
Early-Stage Delinquency Takes Unseasonable Dip
Could it really be the beginning of the end of the foreclosure crisis? Jay Brinkmann, the Mortgage Bankers Association's chief economist, said Friday that a dip in the share of homeowners who were 30 to 60 days behind on their mortgage payments in the fourth quarter was "a concrete sign that the end may be in sight." Normally, short-term mortgage delinquencies spike at the end of the year.
"With fewer new loans going bad, the pool of seriously delinquent loans and foreclosures will eventually begin to shrink," Brinkmann said. "It also gives us growing confidence that the size of the problem now is about as bad as it will get." Others were skeptical. Alan White, a professor at Valparaiso University School of Law, said that, though a drop in 30-day delinquencies is encouraging, he would want to see at least two to three quarters of significant declines before declaring a turn. "It's a positive sign, but I would not jump to the conclusion that we're out of the crisis yet," he said. (American Banker Online, Feb. 22)
[related: Report: Fewer People Falling Behind on Home Loans]
Nearly 25% of All Mortgages are Underwater
More bad news on the housing bust front: Nearly 25% of all mortgage borrowers were underwater, meaning they owe more on their loans than their homes are worth. First American CoreLogic, the research firm that monitors housing equity, reported Tuesday that 11.3 million homeowners -- or 24% of all homes with mortgages -- were underwater as of the end of 2009. That's up from 23% and 10.7 million borrowers three month earlier.
[more here]
[related: Mortgage Rates and Home Buyers: Make Your Move Sooner]
[related: Some Lenders take Persistent Steps to Save Mortgages]
[related: Refinancing Unavailable for Many Borrowers]
[related: 4.3m Mortgages Delinquent or in Foreclosure in Q409: MBA]
[related: FICO Finds More Borrowers Default on Mortgages Over Credit Cards]
How Big Is the Threat from Option ARMs?
Is the option adjustable-rate mortgage the next subprime disaster? For anyone who remembers that souring subprime loans kicked off the real estate meltdown, that's a scary thought. Recent analysis from Standard & Poor's (S&P) anticipates that a full 37.5% of such loans (dubbed option ARMs) that were written in 2007, at the height of lax lending, will eventually go bad.
The kicker is that most option ARMs undergo payment spikes after five years, which means the brunt of the impact has yet to be felt. That will change in late 2010, delivering another blow to the fragile housing market just as it begins to regain strength. How worried should we be? Perhaps very, according to a chart from a recent report by Amherst Securities.
[more here]
Cash-for-Clunkers Rebates Offered on New Appliances
Three dozen states, including Virginia, will launch programs in March and April to distribute almost $300 million in rebates to consumers buying energy-efficient appliances. The federally funded programs, similar to the cash-for-clunkers auto rebate program last year, are intended to improve energy efficiency and stimulate the economy. Rebates differ by state and appliance.
[more here]
[details about the Virginia program]
Education & Networking Opportunities
Webinar to Cover ALLL Basics for Directors
The ALLL is an elusive and ever-changing ratio and it’s important to get it right! The purpose of the ALLL (reserve) is to provide a cushion against net charge-offs to the loan portfolio, which is crucial in today’s economy. Our March 3 Webinar will present the Board’s responsibilities and guidance under the ALLL in layman's terms.
[more here]
March 10 Webinar Spotlights Trust Accounts
Handling formal trust accounts, like business accounts, is not difficult if you understand what they are designed to accomplish, who the players are, and the due diligence issues. Our March 10 Webinar is designed give you the information you need to confidently open formal trusts in share accounts.
[more here]
NCUA Schedules March 11 Workshop in Richmond
The National Credit Union Administration has scheduled a March 11 workshop in Richmond. Among the topics: Allowance for Loan Lease Losses (ALLL), Regulatory Hot Topics and Credit Union Strategies for Combating Predatory Lending. Registration information is available online.
> NCUA has expanded hotel room availability. Check with the host hotel for details on discounts if you're staying overnight.
Audio Conference Set On New Capital Initiative for LICUs
National Credit Union Administration (NCUA) Chairman Debbie Matz and National Federation of Community Development Credit Unions (Federation) President/CEO Cliff Rosenthal announced a joint Audio Conference on March 4 designed to provide low-income credit unions with specifics about the U.S. Treasury’s new Community Development Capital Initiative (CDCI) to encourage increased lending in low-income communities. No registration is required. The call-in number for the free, 60-minute audio conference is 877.293.6129. To access the conference, provide Conference ID Number: 58577856. Additional details about the initiative are available on CDFI Fund’s Web site - www.CDFIFund.gov.
Southeast CUNA Management School Starts June 11
Don't miss the premier learning opportunity in the Southeast to help today's credit union professionals become tomorrow's credit union leaders. Make plans to attend the Southeast CUNA Management School, June 11-18, in Athens, Georgia.
[more here] (pdf, 530kb)
> And to help with the cost of attending the Southeast CUNA Management School, your League will offer three $500 scholarships toward the full tuition.
[scholarship announcement] (Word document, 54kb)
[scholarship application] (Word document, 64kb)
Largest Conference for Credit Union HR, Training Execs Set for April
Registration and conference information is now available for the upcoming 16th annual CUNA HR/TD Council Conference. The largest credit union-specific conference for human resources and training and development executives is to be held April 11-14, in Orlando, Fla. at the JW Marriott Grande Lakes. More information on the conference is available on the council's Web site at www.cunahrtdcouncil.org by clicking on the “2010 Conference” link.
News From Credit Unions
CU Fundraiser Helps Local Children's Miracle Network Hospital
Belvoir Federal Credit Union hosted a fundraiser for the local Children’s Miracle Network hospital at its Woodbridge branch. On Friday, Feb. 12, staff members made generous donations of baked goods for resale to members who visited the branch. The “Sweets 4 Sweethearts” theme was a grand success, raising over $150 for the local Children’s Miracle Network and the Credit Union Cherry Blossom Run.
[more here]
BayPort Credit Union Elects New Chairman
The BayPort Credit Union Board of Directors elected Suzanne M. Beckstoffer as Chairman of the Board at its Feb. 17 Board of Directors reorganization meeting. She replaces Pamela J. Rowe, who stepped down from the chairmanship after 13 years of service. Pamela remains on the Board serving as first vice-chairman. Suzanne was elected to the BayPort Credit Union Board of Directors in 1992 and previously served as first vice-chairman.
[more here]
Chapter News
Mark Your Calendar … NoVa Chapter Meets March 11
Attorney, author, consultant and nationally recognized speaker David Reed will deliver a program on collection issues at the NoVa Chapter's upcoming March 11 meeting. Details to follow!
League News
League Board Seeks Nominations for Kirsch, Farley Awards
> Deadline for nominations is March 31!
Our Awards Nominating Committee is seeking prospective candidates for our annual awards. The Virginia Credit Union League Board will name the winners of the 2010 James P. Kirsch Lifetime Achievement Award and the Eugene H. Farley Jr. Award of Excellence at the Annual Meeting in Reston on May 7.
[more here]
> More about the 2010 League Annual Meeting
[annual meeting details]
[register for the 2010 League Annual Meeting]
Financial Education News
Entries Sought for League Financial Education Awards; Deadline March 19
Get recognized for your good works in delivering financial education! The 5th Annual Virginia Social Responsibility Awards program recognizes all National Youth Involvement Board (NYIB) classroom presenters and will present the following financial education-related awards: Financial Education Advocate of the Year, Visionary Award, Rookie of the Year Award, and Education Partner of the Year.
Winners will be honored at the Awards Celebration May 8 as part of the League's Annual Meeting. Deadline for submitting your entry is March 19!
[awards packet] (Word document, 339kb)
National Credit Union Youth Week April 18-24
Now is the time for credit unions to plan activities with staff and the community for a successful National Credit Union Youth Week, which will take place April 18-24, according to the Credit Union National Association (CUNA). This year's theme is "Get in the Savings Game." Credit unions can use the sports theme in lobby events, marketing and to support local sports teams of all ages while encouraging youth to save money.
[more here]
Community Involvement News
Martinsville DuPont CU Donates to Haiti Relief Effort; Foundation Accepting Donations Through March 19
Martinsville DuPont Credit Union has donated $500 to Haiti earthquake relief efforts through the Credit Unions Care Foundation of Virginia. The funds will support the work of the American Red Cross and its efforts to aid the people of Haiti. The Foundation will continue to accept credit union contributions to Haiti relief efforts through March. Click the link to learn more.
[more here]
[related: Total Collected for Haiti--$805,621]
Marketing News
Big Banks Look to Make Nice with Consumers
Don't look now, but big banks are on the prowl to win back customers. "Much like a cheating lover trying to make up for past transgressions, some of the nation's top lenders have attempted to make peace with consumers lately," notes an article from CNNMoney.
That's not to say big banks can't, or won't, be able to repair ties with disgruntled account holders or former customers that moved their money to the community bank down the street or a local credit union.
In fact, marketing experts said big banks might want to take a page from the ad campaign of Ally Bank. The online lender has managed to harvest billions of dollars worth of deposits since it was first launched in May 2009 by parent company GMAC -- even though GMAC has been bailed out more than once by the government. In their barrage of television, online and print advertisements, Ally successfully focused on a message of transparency. Marketing experts said that unless the nation's banks can deliver a similar tone of accountability and clarity, it will be hard to win back the trust of frustrated customers.
[more here]
Banks Need to Take Social Media Seriously - Datamonitor
Market analyst Datamonitor argues that financial services providers as a whole have been slow to recognize the necessity of communicating with their customers through online channels.
The banking industry has held onto the belief that social media is the domain of teenagers and university students, says Datamonitor, failing to understand that sites like Twitter have developed to become powerful marketing tools.
[more here]
News About The Competition
Troubled Banking Industry Sharply Reduced Lending in 2009
Lending by the banking industry fell by $587 billion, or 7.5 percent, in 2009, the largest annual decline since the 1940s, as the number of troubled financial institutions rose sharply, the Federal Deposit Insurance Corp. reported Tuesday.
FDIC Chairman Sheila C. Bair said that some small banks have reduced lending because of financial weakness, a problem the Obama administration aims to address with a proposal to pump $30 billion in new federal aid into community banks.
The FDIC considered 702 banks to be in some danger of failing as of the end of 2009, more than double the number at the beginning of the year. But Bair said that the vast majority of the lending decline was the result of cutbacks by the nation's largest banks, which have tightened qualification standards for borrowers and increased the proportion of money that they hold in reserve against unexpected losses.
[more here]
[related: List of ‘Problem’ Banks is Growing, FDIC Says]
Are Banks Really Refusing to Lend?
The attacks on bankers are shrill, and getting repetitive: Not only are their bonuses obscene, but they're holding back the recovery by "claiming that they can't lend more to small business," as President Obama put it in late January.
Bank of America is in its strongest capital position ever (thanks in part to timely assistance from the U.S. Treasury and the Fed's interest-lowering activities), but customers in its commercial lending division aren't biting. Loans outstanding dropped steadily all year while commercial deposits rose 24% to $133 billion, says Laura Whitley, the executive in charge of lending to businesses under $5 billion in sales. "As they cut their expenses, they've gotten more profitable, and they're using that cash first, instead of borrowing," Whitley says.
Even the Treasury's plan to lend $5 billion to parts suppliers against receivables from bankrupt Chrysler and General Motors resulted in only $413 million in loans and will be shut down in April. That doesn't bode well for the government's $30 billion plan to stimulate small-business lending, announced in February. But there are hints that loan demand will pick up soon.
[more here]
Technology News
Check This Out: Deposit Money by Taking a Photo
In the near future, you might not even have to visit a bank or an ATM to deposit a check. You'll simply snap a couple of photos of it with your cellphone. Applications to do just that are already available for Apple's iPhone and other gadgets from USAA, a company that provides insurance and banking mainly for military veterans. Chase, Bank of America and Citibank are among the banks planning to release similar applications this year.
[more here]
Survey Finds Mobile Banking Uptake
Nearly all American adults now own a cell phone and 17% of them bank on it, according to a new survey from the Mobile Marketing Association. The trade group said its latest monthly survey of 1,000 adult U.S. consumers, conducted in mid-January by Luth Research, found that 92% of them have cell phones and 19% of them use mobile banking, translating to 17% for the overall population. The MMA also said the latest results in its U.S. Consumer Briefing also found that interest levels suggest that mobile usage will grow to 22% within the next year. (Credit Union Times, Feb. 22)
Mobile Payments Expected to Rise, But Not in P-to-P
Mobile phones are expected to become an important e-commerce channel, but there is much less demand for person-to-person payments capabilities through handsets, according to two recent reports from Allied Business Intelligence Inc. The New York research firm predicts that consumers worldwide will spend about $119 billion annually on goods and services using their mobile phones by 2015, representing about 8% of the total e-commerce market. (American Banker Online, Feb. 24)