WASHINGTON (12/30/08)—The National Credit Union Administration (NCUA) has released the guidance and questionnaire the agency's field staff uses to assist in evaluation of loan participation programs.
The overall theme of the agency's release is that credit unions must apply the same principles to loan participations that they apply to evaluating, selecting and monitoring third-party relationships.
The NCUA has previously expressed concern regarding loan participation arrangements and it has been expected that the federal regulator would issue more direction to help credit unions avoid pitfalls.
The agency reported that outstanding loan participations more than doubled between 2003 and 2008, increasing 262% in that period compared to a 149% increase in total loans.
What's more, the NCUA said annualized total dollars of loan participations charged off in 2008 were twice 2006 levels, resulting in the charge-off ratio increasing from 0.41% in 2006 to 0.64% in 2008. The charge-off ratio for total loans increased from 0.46% in 2006 to 0.75% in 2008.
Loan participation delinquency was 1.10% in 2006 and 2.27% in 2008. Total loan delinquency was 0.68% in 2006 and 1.13% in 2008.
The NCUA maintains that loan participation programs have their place. In his Letter to Federal Credit Unions, with guidance attached, NCUA Chairman Michael Fryzel said that properly managed loan participation programs can be beneficial to both selling and buying credit unions.
A credit union selling loan participations may gain a mechanism to manage interest rate, liquidity, and credit risks as well as an enhanced ability to serve members. The purchasing credit unions may benefit from balance sheet diversification and increased revenue.
However, the chairman reminded that there are potential risks and advised that a credit union should perform a comprehensive risk assessment before beginning loan participation activities. Due diligence, he said, is a key factor in assuring risks are identified and mitigated.
The guidance and questionnaire (http://www.ncua.gov/news/express/xfiles/SupervisoryLetter_Final.pdf) regarding evaluating loan participation programs sets our 11 pages of direction and resources to assist credit unions in setting up successful programs. It describes practices examiners will find in a well-run loan participation program involving any type of loans, including automobiles, residential mortgages, and member business loans.
The NCUA, for instance, recommends that a credit union deciding to engage in or develop a loan participation program start out small, gain experience, and build from that foundation.
"A loan participation is a third-party relationship between a seller and a buyer, and as with any third-party relationship, the benefits of loan participations are accompanied by a variety of potential risks. Management should complete a risk assessment and perform due diligence prior to entering the third-party arrangement," the guidance said.
This guidance describes practices examiners will find in a well-run loan participation program involving any type of loans, including automobiles, residential mortgages, and member business loans.
December 19, 2008
CUSO powers expanded by NCUA
WASHINGTON (12/19/08)—Credit Union Service Organizations (CUSOs) will now have authority under a new rule to offer two new categories of activities to credit unions: credit card loan origination and payroll processing services.
The rule, adopted Thursday by the National Credit Union Administration (NCUA), also adds new permissible activities within existing categories and expands the scope of certain services to include persons eligible for credit union membership.
New permissible activities under the board's action are related to the routine daily operations of credit unions and include:
Real estate settlement services;
Employee leasing and support;
Purchase of non-performing loans;
Business counseling and related services for credit union business member; and
Referral and processing of loan applications for members turned down by the credit union.
The changes will go into affect 30 days after the regulation is published in the Federal Register, and publication is likely to occur within the next week or so.
Regarding the expansion of certain services to individuals within a field of membership who are not members of the credit union, the NCUA said allowing this authority for CUSOs reflects provisions in the Financial Services Regulatory Relief Act of 2006, which granted similar authority to credit unions.
The NCUA modified a provision in its original proposal that would have given the agency access to the books and records of CUSOs that are owned by federally insured, state-chartered credit unions (FISCUs).
The final rule adopts a procedure whereby a state credit union regulator can request an exemption for FISCUs in that state under certain conditions.
An exemption may be granted if the state regulator has full rights of access to relevant books and records of the CUSO under state law and is willing and able to provide NCUA with equal access, and access must be available to the NCUA on its own timetable.
Get more information on the NCUA's new CUSO rule here.
CUNA Annual Survey to be sent to CUs
MADISON, Wis. (12/19/08)--The Credit Union National Association (CUNA) Annual Survey will be mailed out to all U.S. credit unions at the start of January.
This year CUNA has added a special question on back office services that should enable it to help credit unions to find more sources for the services.
The survey is used to track new trends in credit union service offerings not covered by the National Credit Union Administration 5300 Call Report.
"It is our only source of information on the number of groups in credit union fields of membership," said Marc Shafroth, CUNA director of data and statistics. "This year we have added a section to help us answer the frequently asked question: How many members join credit unions each year and how many leave? From the 5300, we only know the net gain."
The survey allows CUNA to answer questions from the public, government agencies and elected officials. It can be completed on the Web.
"The time required to complete the survey should be under 15 minutes," Shafroth said. "We hope that you will be able to spare this time and this way help the movement collect the information it needs to prosper."
If you have any questions about the survey please contact Marc Shafroth at 608-231-4182 or firstname.lastname@example.org.
December 16 , 2008
NCUA Webcast Details CU HARP, CU SIP
December 16, 2008, Alexandria, Va. – NCUA Chairman Michael E. Fryzel introduced a 1 ½ hour audio webcast that attracted over 1,400 participants today, detailing the Credit Union Homeowners Affordability Relief Program (CU HARP) and Credit Union System Investment Program (CU SIP) introduced last week. The webcast was jointly sponsored by CUNA and NAFCU, and was held at NCUA offices in Alexandria.
“These important programs represent NCUA efforts to utilize the tools given to us by Congress to work proactively with the industry and enable you and your members to weather the financial storms affecting our Nation’s markets,” stated Chairman Fryzel. “This is the latest in a series of constructive approaches by the credit union trade associations as we continue our efforts to devise workable, pragmatic solutions to the problems confronting us.”
J. Owen Cole, NCUA Director of the Office of Capital Market and Planning and President of the Central Liquidity Facility (CLF) and Steve Sherrod, Director of the Division of Capital Market and Vice President of the CLF, the principal staff architects of CU HARP and CU SIP programs described program details and answered callers’ questions.
CU HARP is a two-year, $2 billion program intended to assist homeowners who are facing delinquency, default, or foreclosure on their mortgages, especially in the face of diminished home prices. Under CU HARP, participating creditworthy credit unions would borrow from the CLF, and receive as much as an additional 100-basis point spread over the cost of borrowing if they modify at-risk mortgages, primarily by lowering interest rates and corresponding monthly payments. Under CU SIP, participating creditworthy credit unions would borrow from the CLF and invest the proceeds in participating corporate credit unions. Credit unions participating in this program receive a spread of 25 basis points.
WASHINGTON (12/9/08)—The U.S. Congress returned to Washington Monday to begin a second lame duck session, with focus primarily on consideration of legislation to bailout automobile manufacturers.
CUNA Vice President for Legislative Affairs Ryan Donovan said that the association will be monitoring the development of this legislation closely.
"Everyone's expectation is that the bailout bill will be carefully negotiated between Congress and the Bush administration, and very limited in scope," Donovan said.
And in fact, The New York Times and other media outlets reported late in the day that an agreement between the White House and Congressional Democrats moved forward.
The tentative plan would call for a taxpayer-financed rescue with an administration-appointed overseer with expertise in areas such as economic stabilization, financial aid to commerce and industry, financial restructuring, energy efficiency and environmental protection.
It is expected that when Congress adjourns this week—most likely with an automaker package hammered out--it will remain out of session until Jan. 6 when congressmen and senators will be sworn into office for the 111th Congress.
The federal lawmakers may be quite busy even before the Jan. 20 swearing in of Barack Obama as the 44th President. The House calendar currently features at least 10 days slated for votes. A January calendar has not yet been released by Senate leadership. As reported earlier, there is a House Financial Services Committee hearing scheduled this Wednesday on oversight concerns regarding the U.S. Treasury Department's implementation of the Troubled Asset.
December 3 , 2008
CU loans and savings both up in October
MADISON, Wis. (12/3/08)--The U.S. entered a recession in December 2007 that continues to this day, the National Bureau of Economic Research reported Monday. So far this year, credit union members have responded to the recession as expected by increasing their savings balances, said Steve Rick, Credit Union National Association (CUNA) senior economist.
October's statistics show that with payday falling on the last day of the month, credit union savings balances increased 1.5% to $695 billion from $685 billion in September, according to the CUNA monthly sample of credit unions.
Share balances increased 6.6% during the first 10 months of 2008. Share drafts increased 7.2% while one-year certificates grew 1.5%, and individual retirement accounts rose 1.2%. Regular share and money market accounts declined 0.3% and 0.03%, respectively.
"During the first 10 months of 2008, credit union savings balances rose 6.6%, faster than the 3.7% reported for the similar period in 2007," Rick said. "Regular share balances rose 5% so far this year, up from a 5.2% drop for the similar period in 2007. Recessionary fears are encouraging members to increase their 'precautionary' regular share balances," he told CUNA’s News Now.
Money market account balances rose 13.5% for the period, up from 8.9% for the similar period last year, he added. "Low market interest rates are encouraging members to increase their 'speculative' money market account balances," Rick said. "Members are placing their investment funds in liquid money market accounts rather than illiquid low-rate share certificates.
"Members are speculating that market interest rates are nearing their bottom and will move investment funds back to certificates of deposit once interest rates head back up," Rick said. "With this recession expected to last for another six to 12 months, credit unions should expect both regular share and money market account growth to increase in 2009, while share certificate balances to actually decline."
Credit union loans outstanding increased 0.5% in October from September, and 6.6% over the first 10 months of 2008, compared with increases of 0.7% and 5.6% during the same period last year.
Home equity loans led loan growth with a 1.4% increase, followed by a 1.1% rise in adjustable-rate mortgages, a 0.6% increase in used-auto loans, and a 0.4% increase in fixed-rate first mortgages. Unsecured personal loans declined 1.2%, followed by a 0.3% decline in new-auto loans, and 0.2% decline in credit card loans.
Fixed-rate first mortgages and adjustable-rate mortgages had the highest year-to-date increases, rising 15.4% and 11.8%, respectively.
With savings growth outpacing loan growth, the loan-to-savings ratio decreased to 83.4% in October from 84.3% in September.
The liquidity ratio--the ratio of surplus funds maturing in less than one year to borrowings plus other liabilities--grew to 15.7% in October from 14.7% in September.
Credit unions' 60-plus-day delinquencies remained constant at 1.1%.
The movement's overall capital-to-asset ratio remains at 11%, with the total dollar amount capital at $90 billion, according to CUNA's sample.
December 2 , 2008
Marquis to become NCUA executive director
ALEXANDRIA, Va. (12/2/08)--The National Credit Union Administration (NCUA) Board today selected Examination and Insurance Director David M. Marquis to assume the role of NCUA executive director upon departure of J. Leonard Skiles, who will retire at year-end 2008.
Marquis has served as director of the Office of Examination and Insurance since 1994, where he is responsible for the sound operation of the National Credit Union Share Insurance Fund, and oversees the examination and supervision program for federal and federally insured credit unions.
Marquis began his NCUA career with NCUA as an examiner in Baltimore in 1978. He holds a degree in accounting from Lowell University in Lowell, Mass.
Skiles will leave the agency after a 38 year NCUA career that began as a staff attorney in the General Counsel's Office in 1973. He was appointed NCUA executive director in February 2001.
November 25 , 2008
European CUs expect U.S. economic crisis ripple
BUCHAREST, Romania (11/25/08)--Current economic challenges facing the U.S. were topics of frequent discussion at World Council of Credit Unions' (WOCCU) European Credit Union Technical Congress last week in Bucharest, Romania.
Presenters at the week-long congress offered strategies to strengthen credit union movements and help individual institutions better face the anticipated ripple effect of the growing U.S. economic crisis.
"These are challenging but promising times for credit unions," Brian Branch, WOCCU's executive vice president and chief operating officer, told nearly 150 delegates from 10 countries attending. Attendees included officials of the Romanian government and the Central Bank of Romania.
"People will be looking more and more to credit unions to help them face their economic challenges during this turbulent period," Branch added.
Delegates from Ireland, Lithuania, Macedonia, Moldova, Poland, Romania, Russia, Ukraine, the U.S. and Uzbekistan attended educational sessions designed to help European credit unions continue growing and serving members as the U.S. economic crisis travels east.
The economic ripples are expected to gather strength and pose greater challenges to European credit unions throughout 2009 and into 2010, according to local reports.
"We're here to cooperate and support each other's work," said Grzegorz Bierecki, president of the National Association of Cooperative Savings and Credit Unions, Poland's credit union trade group, and treasurer for WOCCU's board. "This is very important for us in Eastern Europe."
Educational sessions focused on financial management, credit union building, delinquency control, interest-rate setting and marketing. Seminars also stressed the importance of lobbying and developing model credit union law, policies and bylaws, and the proper role and authority of board members. Educational sessions were simultaneously presented in English, Polish, Romanian and Russian.
The European Credit Union Technical Congress, co-sponsored by the Central Federation of Romanian Credit Unions, was the final of four sessions presented this year by WOCCU. Previous technical congresses were held in Guatemala, Fiji and The Gambia.
November 18 , 2008
Dialogue part of Nov. 19 Dan Mica webinar
WASHINGTON (11/18/08)--The challenges presented to credit unions as a result of the financial crisis will be addressed in a special live nationwide webinar featuring Credit Union National Association (CUNA) President/CEO Dan Mica, Thursday at 2 p.m. ET.
The medium will allow credit unions to correspond directly with Mica during the event.
The Internet-based video conference--open to all CUNA-affiliated credit unions at no charge--will focus on the financial crisis and how credit unions can leverage their "white hat image" to help minimize the impact of the crisis on credit union members, as well as the nation itself.
"We are developing a vision for how credit unions can work for their members and the nation, through the Congress and the regulatory agencies, to help them through these difficult times," Mica said.
"The Congress will have a 'working majority,' meaning that if they decide to do something quickly, they can move very fast. We are going to need to be ready to act in any number of ways."
Affiliated credit unions can hear directly from Dan Mica about the Nov. 19 webinar by clicking here.
November 7 , 2008
WOCCU asks G-20 to recognize CUs' stability
MADISON, Wis. (11/7/08)--Credit unions and financial cooperatives worldwide have been islands of relative safety in a struggling global economy, and the World Council of Credit Unions (WOCCU) wants attendees at the Group of 20 (G-20) Global Financial Summit to acknowledge that fact and act appropriately to stem the current crisis.
President Bush will host a meeting of the G-20, an organization of major industrial and emerging-market countries, in Washington, D.C., Nov. 15 to further financial reform negotiations among world leaders.
WOCCU made its voice heard last week by submitting a letter to the finance ministers of participating countries, asking that the strength and safety credit unions and financial cooperatives provide their members be acknowledged. It also asked that cooperatives not be included in inappropriate legislation or regulations that may restrict the practices that give member-owned institutions their strength and capability to serve.
In his letter, Pete Crear, WOCCU president/CEO, requested that three distinct steps be taken during the summit:
Any future financial rescue packages implemented at global or national levels must be unbiased against cooperative financial institutions relative to the commercial banking sector;
Cooperative financial institutions must be recognized in any pronouncements emanating from the summit as secure, locally owned financial institutions that have presented safe and sound financial alternatives during the current crisis; and
Future regulations or legislation that may result from this crisis clearly recognize that cooperative financial institutions have not been the source of these problems, have been significantly less affected by the economic fallout, and should not be punished by inclusion in a series of new rules designed to correct a problem they have not caused.
"We believe strongly that cooperative financial institutions must be consulted prior to any regulatory actions that may affect them and we urge you to make this step a permanent part of your protocols," Crear wrote.
Established in the wake of the emerging markets financial crisis of the late 1990s, the G-20 is an informal forum that promotes open and constructive discussion between industrial and emerging-market countries on key issues related to global economic stability.
The G-20 includes Argentina, Australia, Brazil, Canada, China, France, Germany, Great Britain, India, Indonesia, Italy, Japan, Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, the U.S. and the European Union.
November 5 , 2008
CUNA looks forward to CU work under Obama
WASHINGTON (11/5/08)—The Credit Union National Association (CUNA) has good relationships with leaders from both political parties and welcomes the election of President-elect Barack Obama as an opportunity to continue to work for progress on credit union legislative priorities, said CUNA senior vice president of legislative affairs, John Magill, late Tuesday night.
Although the Obama campaign declined to become giddy over polls leading up to the election that indicated its candidate would be victorious, it had been widely predicted that the Democratic senator from Illinois would become the country's next president.
Magill said of the election results, "Credit unions serve and represent the interests of their member-owners—the every-day Americans who are this country's voters. CUNA, in working to help credit unions better serve their members, maintains good working relationships with political leaders from both parties."
He added, "We look forward to working with President-elect Obama on credit union legislative priorities, such as freeing up credit through increased member business lending authority and by establishing a risk-based capital system for credit unions."
Inauguration day is more than two months away-- Jan. 20. However, Congressional lawmakers will not be silent until that time. Both the House and Senate have announced intentions to return for a lame duck session the week of Nov. 17—and perhaps another such session in December.
Congress is expected to investigate possible further measures for shoring up the nation's troubled economy and stabilize capital markets. Also an energy bill, defense authorization bill and a continuing resolution to fund the government are pending before Congress.
CUNA's Magill has said that a lame duck session is a good development for credit unions.
"The Senate is where CUBTRRA now sits," Magill said, referring to the Credit Union, Bank and Thrift Regulatory Relief Act (H.R. 6312), approved by voice vote in the House on June 24.
"A so-called lame duck session in the Senate, after yesterday's elections, will give us another opportunity—another shot at getting the regulatory improvements through the Senate this year." The bill provides about a dozen improvements for credit unions.
"Clearly there is precious little legislative time left on the 2008 clock. However, CUNA continues to work in Congress at every opportunity to advance legislation to provide regulatory relief for credit unions. It's a long shot for this year—but still a shot," Magill said.
October 31, 2008
September CU loans up, savings down
MADISON, Wis. (10/31/08)--Credit unions maintained a strong level of real estate lending in September, along with increased year-to-date loan growth compared with last year's pace. However, flagging consumer confidence and fears of a prolonged recession likely will result in weak consumer lending in the fourth quarter, said a Credit Union National Association (CUNA) economist.
Credit union loans outstanding increased 0.8% in September and 6.2% over the first nine months of 2008, compared with 4.9% during the same period last year, according to the CUNA monthly sample of credit unions.
Home equity loans led growth (2.5%), followed by adjustable-rate mortgages (2.2%), fixed-rate first mortgages (1.1%), used-auto loans (0.9%), unsecured personal loans (0.5%) and new-auto loans (0.4%).
Fixed-rate first mortgages and adjustable-rate mortgages had the highest year-to-date increases, 15.1% and 11.8%, respectively.
"Credit unions continued to do well in real estate lending during the month of September," Steve Rick, CUNA senior economist, told CUNA's News Now. Fixed-rate first mortgage loan balances rose 1.1% in September and 3% for the third quarter. Year-to-date total loan growth came in at 6.2%, up from last year's 4.8% pace, Rick said.
"Falling consumer confidence and expectations of a deep and prolonged recession will keep consumer lending weak in the fourth quarter," he added. "However, with banks tightening their mortgage loan underwriting standards, credit union real estate lending will continue to dominate credit union loan portfolio growth."
Though credit union savings balances declined 0.9%, to $685 billion in September from $691 billion in August, they rose 5.1% for the first nine months of 2008.
With loan growth increasing and savings growth decreasing, the loan-to-savings ratio increased to 84.3% in September from 83% in August.
The liquidity ratio--the ratio of surplus funds maturing in less than one year to borrowings plus other liabilities--decreased to 14.6% from 15.5% in August.
Credit unions' 60-plus-day delinquencies increased slightly to 1.1% from 1% in August.
The movement's overall capital-to-asset ratio remains at 11%, with the total dollar amount of capital at $90 billion.
"The Bureau of Economic Analysis reported economic growth of negative 0.3% in the third quarter," Rick said. "Consumer spending fell 3.1% on a seasonally adjusted annual rate." Spending on durable goods--furniture, appliances, autos--fell by 14.1%.
Credit union new-auto and credit card lending reflected the spending slowdown. Credit card balances rose only 2.3% in the third quarter, down from last year's third-quarter pace of 4.7%. New auto loans rose 0.5% versus last year's third-quarter pace of 1%, Rick added.
October 24, 2008
NCUSIF sign rule offers flexibility
WASHINGTON (10/24/08)—What may credit unions do with their standard official share insurance signs that boldly display the temporarily outdated $100,000 insurance maximum? The National Credit Union Administration (NCUA) recently ruled that they can leave them alone, replace them with newer signs available through the agency, or even place a new $250,000 ceiling sticker on the existing sign.
In an Oct. 15 Federal Register document, the NCUA noted that this new interim final rule recognizes that requiring credit unions to replace the current sign with a revised sign would be an expensive and burdensome process—particularly in light of the fact that the revision is temporary—effective from Oct. 3, 2008 to Dec. 31, 2009.
To balance the burden with the need and desire to inform members that they have increased share insurance protection, the NCUA said it designed its rule to provide insured credit unions with maximum flexibility.
The rule became effective Oct. 22.
For credit unions choosing not to change or alter the official sign, the NCUA said they would not face a penalty and can inform members about the temporary increase in account insurance through additional signage. For example, the NCUA noted the credit union could post a lobby sign or a notice on its Web sites for the period of the increase.
The NCUA seeks comment on the interim rule for 60 days.
October 24, 2008
New Fed rate on excess reserve balances
WASHINGTON (10/24/08)—Effective yesterday, the Federal Reserve Board adopted a revised formula to determine the interest rate it will pay on credit unions' and other depository institutions' excess reserve balances.
The Fed determined that a narrower spread between the target funds rate and the rate on excess balances would help encourage trading in the funds market at rates closer to the target rate.
Therefore, the Fed issued a new formula that sets the rate on excess balances equal to the lowest Federal Open Market Committee (FOMC) target rate in effect during the reserve maintenance period less 35 basis points.
Prior to the change, the rate had been set as the lowest federal funds rate target established by the FOMC in effect during the reserve maintenance period minus 75 basis points.
The Fed announced just two weeks ago that it would begin to pay interest on depository institutions' required and excess reserve balances effective Oct. 9.
The Financial Services Regulatory Relief Act of 2006 gave the Fed authority starting in 2011 to lower reserves to zero and/or to pay interest--not to exceed other short-term rates--on the reserve balances actually maintained. The new Emergency Economic Stabilization Act gave the Fed that authority starting now. The authority is being implemented through changes to the Fed's Regulation D.
Reserve balances are balances held to satisfy depository institutions' reserve requirements and excess balances are those held in excess of required reserving balances and clearing balances.
October 6, 2008
$250K NCUSIF coverage effective immediately
WASHINGTON (10/6/08)--Friday's passage of the Emergency Economic Stabilization Act of 2008 will require the National Credit Union Administration (NCUA) to immediately increase share insurance protection to $250,000 on all types of accounts until Dec. 31, 2009.
President George W. Bush signed the economic rescue package just hours after it was passed by the House 263-171. The Senate approved the bill on Wednesday.
The NCUA said it is reviewing all share insurance coverage materials included on the Internet Share Insurance Tool Kit, such as the "Your Insured Funds" brochure and print advertisement, to make needed revisions. Revised documents reflecting $250,000 coverage will be posted to the NCUA website as soon as possible, according to the agency.
The overall rescue bill—intended to shore up the nation's economy in light of such factors as the current mortgage crisis and wildly fluctuating activity on Wall Street—would allocate up to $700 billion to the U.S. Treasury Department to buy up mortgage-backed securities whose values have dropped or become hard to sell.
The package gives the government an ownership share in the companies that participate in the program, an element that was missing from earlier rescue drafts. This provision makes it so taxpayers could benefit from any increased value in the securities created by the government's support.
After the bill became law, CUNA President/CEO Dan Mica said, "Credit unions had no hand in creating the root cause of the problem this bill aims to fix. Without question, however, they and their members like so many others are collateral damage of the economic hardship that has resulted.
"In that sense, Congress had to act to avert any additional damage to the nation's economy and inject confidence in our financial system. Along those lines, credit unions appreciate the fact that the bill reflects our priority of raising the level of federal deposit insurance at credit unions (through National Credit Union Share Insurance (NCUSIF) coverage) to $250,000, giving credit unions parity with the same increase for banks and the FDIC.
"This action sends a vital message to credit union members and consumers that their federally-insured deposits in credit unions remain safe."
October 3, 2008
August CU loans up 1%, savings up 3.2%
MADISON, Wis. (10/3/08)--Credit union lending remained strong in August and the overall credit union loan delinquency rate remained historically low, indicating the credit crisis is having a marginal effect on credit unions' credit quality.
Credit union loans outstanding increased 1% in August, and 5.4% over the first eight months of 2008, according to the Credit Union National Association (CUNA) monthly sample of credit unions.
Other loans (2.6%) led growth, followed by adjustable rate mortgages (1.6%), home equity loans (1.4%), credit cards (1.2%), fixed-rate mortgages, and used-auto loans (1%). Fixed-rate mortgages had the largest rise since December, increasing 13.9%, while new-auto loans decreased 5.8% during the same period.
"Credit union lending remained robust in the month of August as total loan balances outstanding rose 1.1% or 8.4% on a seasonally adjusted annual rate," Steve Rick, CUNA senior economist, told CUNA’s News Now. "With other financial institutions tightening their loan underwriting standards, credit unions are picking up market share, especially in the real estate lending area.
"Fixed-rate first mortgage balances increased 1.1% in August, slightly lower than adjustable-rate first mortgage balance increase of 1.6%," he continued.
"More and more credit unions are holding onto their mortgages rather than selling them into the secondary market. In the first half of 2008, only 24.5% of originated mortgages were sold into the secondary market, down from 27.6% in the first half of 2007," he said.
Credit union savings balances remained at $691 billion in August, but have risen 5.9% year-to-date.
Share drafts led savings growth, rising 3.2% in August. Money market accounts (0.3%) and individual retirement accounts (0.2%) increased, while one-year certificates declined 1%.
With loan growth outpacing savings growth, the loan-to-savings ratio increased to 83% from 82.1% in July. The liquidity ratio--the ratio of surplus funds maturing in less than one year to borrowings plus other liabilities--remained at 15.5% in August.
Regarding asset quality, credit unions' 60-plus-day delinquencies remained at 1% in August and for all of 2008 so far.
"The credit crisis is having only a marginal effect on credit unions' credit quality," Rick said. "The overall credit union loan delinquency rate barely climbed to over 1% in August, even though it is up from 0.73% during August 2007. The current delinquency rate is low by any historical measure and is quite manageable for credit unions."
The movement's overall capital-to-asset ratio remains at 11%, with the total dollar amount of capital at $90 billion.
October 2, 2008
Senate passes rescue with deposit insurance boost
WASHINGTON (10/2/08)—The U.S. Senate voted 74-25 last night to approve a multi-billion dollar financial rescue package that included a temporary increase in federal share and deposit insurance coverage.
The $700-billion rescue plan is expected to be taken up by the U.S. House Friday and, if passed, quickly sent to the President's desk for his signature transforming the bill to public law.
Under the deposit insurance provisions, the current $100,000 limit on share and deposit accounts would be raised for one year to $250,000.
The Credit Union National Association (CUNA) supported that increase and sent letters to President George W. Bush, Treasury Secretary Henry Paulson and members of Congress Monday urging them to make sure to include credit unions in any plans for increased deposit insurance coverage.
CUNA President/CEO Dan Mica said of the Senate's vote, "It is important to America's credit unions that they have parity with banks in any increase in federal deposit insurance coverage. We are pleased to see this goal achieved in the Senate's financial rescue legislation."
Mica added that another CUNA goal has been to ensure credit unions have access, if needed, to the legislation's relief measures for troubled assets.
"By providing this access, the Senate legislation is careful not to place credit unions at a disadvantage. CUNA will continue to press for similar treatment in the House as it resumes its consideration of this legislation," Mica said.
The overall rescue bill—intended to shore up the nation's economy in light of such factors as the current mortgage crisis and wildly fluctuating activity on Wall Street—would allocate up to $700 billion to the U.S. Treasury Department to buy up mortgage-backed securities whose values have dropped or become hard to sell.
The package gives the government an ownership share in the companies that participate in the program, an element that was missing from earlier rescue drafts. This provision makes it so taxpayers could benefit from any increased value in the securities created by the government's support.
September 30, 2008
Credit union deposits are federally insured
Click below for a video of Credit Union National Association (CUNA) President/CEO Dan Mica explaining federal savings insurance at credit unions, as well as the strength and soundness of credit unions.
The video, featuring Mica, is aimed at explaining to the public--in simple, understandable terms--the fact that credit unions have federal savings insurance, providing coverage of at least $100,000--and are backed by the full faith and credit of the U.S. government.
To make a donation to credit union survivors of Hurricane Ike, visit CUaid.coop.
September 15, 2008
Carolinas credit unions can help through CUAid
The National Credit Union Foundation (NCUF) and the Texas Credit Union Foundation have activated the online disaster relief system, CUAid, to raise money for credit union people affected by Hurricane Ike.
Credit union supporters in every state can donate through a secured website that accepts credit cards and wire transfers.
"We are encouraging credit union leaders all across the county to use CUAid.coop as a channel to collect donations from their employees, volunteers, and members," said NCUF Deputy Director Steve Bosack. "We plan to work with the state credit union foundation to distribute money efficiently to those who need it in the affected areas."
The Texas foundation has a two-phase support system, beginning with emergency grants of up to $500 to assist affected credit union employees with their immediate needs. The second phase will provide support for credit union employees with unmet needs after other relief has been exhausted.
All donations via CUAid.coop will go toward grants as well. Donations are forwarded in their entirety to credit union organizations in affected areas through NCUF, which is tax-exempt under Section 501(c)(3) of the U.S. Internal Revenue Code.
COLUMBIA, S.C. (8/28/08)--Credit unions had unprecedented impact in the classroom in 2007-08, reaching 374,099 students in 11,245 total presentations, according to statistics collected by the National Youth Involvement Board (NYIB).
Those totals are gains of 29.4% in number of students and 14.6% in number of presentations over 2006-07 statistics (289,072 students in 9,812 classes). Increases over five years average 9% annually.
In logging the data, NYIB's network of credit union professionals far exceeded what the NYIB Executive Committee considered a stretch goal of 300,000 students reached.
"What we saw this year appears to be the result of larger class sizes," suggested NYIB Chairman Brandon Pugh, "particularly since just three more presenters than last year reported activity. "Optimistically, it's showing that credit union volunteers are progressing, having more classes and more students in each."
It is also the reason the NYIB Executive Committee will consider another lofty goal for the coming year, Pugh said.
"Chairman (John) Faries encouraged us to set the 'stretch' goal last year, believing there is plenty of activity going unreported. This year's numbers represent an outstanding impact by credit union people, but they still suggest there's more room for even bigger numbers," Pugh added.
For the second consecutive year, Marsha Lunden of Desert Schools CU, Phoenix, conducted the most classroom presentations--416. Erin Hodson of Kern Schools FCU, Bakersfield, Calif., reached the most students--22,619--in the 2007-08 reporting year.
The NYIB "Top Classroom Presenter"--the person with the greatest percentage increase in classroom presentations over the previous year--was Juli Lewis of Suncoast Schools FCU, Tampa, Fla. During the 2007-08 reporting year, Lewis made 325% more presentations than in 2006-07.
Likewise, "Most Students Reached" went to Jeff Williams of Educational Employees CU, Fresno, Calif., who reached 796.9% more students in 2007-08 than in 2006-07.
NYIB is a volunteer organization of credit union professionals devoted to financial education and youth-oriented services. It is the only organization collecting classroom presentation data.
Visitors to NYIB's website (www.nyib.org) can create a "MyNYIB" profile for access to the classroom reporting feature, a searchable document sharing feature, and the ability to upload their own news stories. Membership in NYIB is voluntary and site features are at no cost to the network.
The Credit Union National Association is tracking credit unions' adult financial education efforts. To record your adult educational sessions, go to cunapfi.org and click on "Report what you're doing."
August 21, 2008
NCUA: CU member, saving growth 'consistent'
ALEXANDRIA, Va. (8/21/08)—Federal credit union assets, loans, shares and membership showed consistent growth through the first sixth months of 2008, the National Credit Union Administration (NCUA) reported Wednesday.
The NCUA, which based its assessment on call report data submitted by the nation's 7,972 federally insured credit unions, said membership grew to nearly 88 million during that period.
Also, bucking the recent trend, savings growth outpaced lending in the first six months of the year: Savings grew a significant 7%, lending grew 3.7 %, and assets increased 6.5 % from January through June.
"Although current mortgage and credit markets continue to cause fluctuations in the financial sector, the overall fiscal condition of federally insured credit unions remains stable," said NCUA Chairman Michael E. Fryzel in a release.
He added that first mortgage real estate loans grew by 10.1%, "illustrating that credit unions continue to meet their members' mortgage loan needs."
Details of major balance sheet categories included:
Assets increased 6.5% to $802.5 billion from $753.4 billion;
Loans increased 3.7% to $546.4 billion from $526.9 billion;
Investments increased 17.3% to $167.0 billion from $142.5 billion;
The 7% increase brought shares to $676.9 billion from $632.4 billion;
Net worth increased 5.62% to $88.6 billion from $86.1 billion; and
Membership increased 1.3% to 87.9 million members.
The NCUA also reported that the loan-to-share ratio was 80.72%. With the exception of declines in new automobile and other unsecured loans and lines of credit, all major loan categories grew. In addition to a 10.1% increase in first mortgage real estate loans, which represent $198.1 billion, other types of real estate loans reported 1.7% growth to $92.8 billion, used automobile loans grew 3.3% to $92.0 billion, unsecured credit card loans grew 1.5% to $30.6 billion, and all other loans/lines of credit grew to $25.6 billion.
Major share accounts grew across the board in the first six months of 2008. Money market shares showed the greatest expansion with a 13.9% increase to $126.6 billion, share certificates grew 2.9% to $222.3 billion, while IRA/KEOGH accounts grew 7% to $60.9 billion. Share drafts grew 6.2% to $75.3 billion and regular shares grew 8% to $182.7 billion.
The loan delinquency ratio increased 4 basis points, up from .93% to .97%, and the net charge-off ratio increased from 0.51% to 0.71% during the first six months of 2008.
The return-on-average assets ratio declined from 0.64 percent to 0.52 percent primarily due to increased funds set aside for loan and lease losses. With savings growth outpacing loan growth in 2008, the loan-to-share ratio declined to 80.72% from the year-end level of 83.32%.
Education bill with CUNA-sought changes signed into law
WASHINGTON (8/19/08)—President George W. Bush last week signed the Higher Education Opportunity Act into law. The new law includes two changes sought by the Credit Union National Association (CUNA) during the legislative process.
The act reauthorizes the Higher Education Act of 1965 for the first time since 1998. The 2008 package made significant amendments to the original law, which governs federal higher education programs, including financial assistance for students.
As different versions of the bill made their way through the House and Senate in July and early August, CUNA worked with Capitol Hill legislative staffers to ensure two changes were included before final passage by both houses of Congress.
The new act requires lenders and colleges to adopt strict codes of conduct for their student lending programs. A concern was expressed that the bill, as originally passed by the House, may have prevented university-sponsored credit unions from using the name of their educational institution in marketing the lender's private educational loans.
CUNA sought and received language that should provide credit unions that are named for a university sufficient latitude to market their student loans-- provided that they do not imply that the loan is made by the university and not the financial institution.
Also, CUNA won for credit unions an exemption to a 50% rule that the act granted national and state-chartered banks. Specifically, the bill imposes a 50% limitation stating that an eligible lender cannot have as its primary credit function the making or holding of federal student loans.
Under the House-approved version of the bill, Federal Family Education Loan Program (FFELP) loans may not represent more than 50% of a lender's consumer credit loan portfolio, including home mortgages.
The bill provided an exemption for national banks with assets under $1 billion and CUNA secured that exemption for credit unions.
August 8, 2008
Two phish sites spoofing CSS no longer in play
MADISON, Wis. (8/8/08)--The Credit Union National Association (CUNA) has shut down two websites that purported to offer a new service through CUNA Strategic Services. The sites were promoted in a phishing e-mail that aimed to gather information for possible identity theft.
Both sites were closed Thursday morning, said Kevin Knope, director of Web Services. More than 100 recipients received the e-mail phishing message and the response rate was high, he said. CUNA has issued a fraud alert.
"This phish has a new twist in that it's the first phish to use the look of CUNA Strategic Services' website," Knope told News Now.
The phishing e-mail targeted AOL users and came from domestic internet service providers in Texas and Georgia, said Knope.
The phish noted that "Credit Union National Association is one of the largest credit union groups in America. In partnership with state credit union leagues, CUNA provides many services to credit unions, including representation, information, public relations, continuing professional education, and business development."
It claimed the newest service added at CUNA on Aug. 1 is "Your Credit Union Rewards You," for credit union members. "Daily 10 random credit union account holders are e-mailed to take the 300$ reward. Completing the application forms on our website takes only 5 minutes," the fake site says.
Neither CUNA nor CUNA Strategic Services offers such a program. CUNA warned recipients not to respond to the sites.
CUNA does not maintain any type of customer/member financial information. No financial institution would request personal identification information over the phone via an e-mail solicitation.
"If you did respond to this e-mail, you should contact your financial institution directly using the phone number provided by that institution," said CUNA.
August 6, 2008
NCUA shuts Port Trust FCU
ALEXANDRIA, Va. (8/6/08)--The National Credit Union Administration (NCUA) said yesterday it placed the Port Trust FCU of Charleston, S.C. into liquidation.
NCUA in a release said it made the decision to liquidate the credit union and discontinue its independent operations after determining that "the credit union is insolvent" and had "no prospects for restoring viable operations."
At the time of liquidation, the credit union served 260 members and had assets of approximately $460,915.
NCUA chartered Port Trust FCU in 2006 to serve persons who live, work, worship, attend school in, and businesses and other legal entities located in a community within Charleston and North Charleston, S.C.
NCUA will issue checks to individuals holding verified share accounts in the credit union within one week.
Pugh elected as new NYIB chairman
COLUMBIA, S.C. (8/6/08)--The National Youth Involvement Board (NYIB) re-elected two regional coordinators, confirmed a new coordinator, and elected the chairman of the NYIB Executive Committee during the annual meeting in Las Vegas July 31.
Brandon Pugh, director of communications and public relations at the South Carolina Credit Union League, will chair the NYIB for 2008-09. He succeeds John Faries, Credit Union Development Educator, and vice president of accounting and marketing at Space Age FCU, Aurora, Colo.
NYIB regional coordinators elected to two years terms include:
Incumbent Rebecca Isaacs, business development director, Credit Union Association of New Mexico, South West regional coordinator;
Joni Herrmann, public relations officer, Neighbors FCU, Baton Rouge, La., South Central regional coordinator; and
Incumbent Pugh, South East regional coordinator.
Continuing the second year of their terms are:
Karen Smith, director of outreach services, Montana Credit Unions for Community Development, Helena, Mont., North West regional coordinator;
Pamela Swope, marketing manager, FinancialEdge Community CU, Bay City, Mich., North Central regional coordinator; and
Mary Ann Demczak, financial counselor, Clearview FCU, Moon Township, Pa., North East regional coordinator.
Afterward, the executive committee elected as officers:
Swope, vice chairman;
Isaacs, treasurer; and
Herrmann, media manager.
The group will reconvene Sept. 27-30 for its annual planning session.
August 5, 2008
Carolinas foundation donates $60,000 to Victory Junction
GREENSBORO, N.C. (8/5/08)--The Carolinas Credit Union Foundation (CCUF) recently donated $60,000 to the Victory Junction Gang Camp in Randleman, N.C., a camp for children with chronic medical conditions or serious illnesses.
Rising fuel prices have made it more difficult for families traveling long distances to drop their children off at the camp. During a recent field trip to the camp, State Credit Union Foundation Network leaders suggested that the CCUF donate gas cards or contribute to help campers' families pay for the trip.
The foundation provided $50 gas cards to all 1,200 campers' families attending camp this summer. CCUF also provided an additional $1,500 to help with group travel to and from airports and drop off locations.
"[CCUF Executive Director] John Slack and his team at the CCUF continue to be proactive in their support of Victory Junction," said camp president Dean Kessel. "Their gracious donation of over $60,000 in purchase cards will provide much needed assistance with the increased transportation costs facing families of our campers this summer."
The foundation has partnered with the camp since 2002. Victory Junction was created by NASCAR driver Kyle Petty and his wife Pattie in memory of their son Adam, who also was a NASCAR driver. Adam was killed in an accident in 2000.
July 25, 2008
Share insurance video available from CUNA
How safe is your money? Hear a top federal official explain how savings in a credit union are fully insured by a U.S. Government Agency in a video posted today to CUNA's website.
In the presentation, NCUA Board Vice Chairman Rodney Hood explains in clear and familiar terms how credit union savings are insured – “just like the FDIC does for banks” – by the NCUA. Vice Chairman Hood made the comments last spring during an appearance on “Home and Family Finance Radio,” presented by America’s Credit Unions.
WASHINGTON (7/15/08)—The Federal Reserve Board Monday approved a final rule for home mortgage lending practices.
The rule is intended to better protect consumers and facilitate responsible lending, while keeping credit available to qualified borrowers.
The rule prohibits unfair, abusive or deceptive home mortgage lending practices and restricts certain other mortgage practices. It establishes advertising standards and requires certain mortgage disclosures to be given to consumers earlier in a transaction.
By amending its Regulation Z, which implements Truth-in-Lending provisions adopted under the Home Ownership and Equity Protection Act (HOEPA), the Fed adds four key protections for a newly defined category of "higher-priced mortgage loans" secured by a consumer's principal dwelling.
A Fed announcement said the plan largely follows a proposal released by the board in December 2007, with enhancements that address ensuing public comments, consumer testing, and further analysis.
Jeffrey Bloch, senior assistant general counsel for the Credit Union National Association (CUNA), said, however, that there have been changes to the original plan. One change of note involves the agency's threshold for determining what is a "higher-priced" mortgage loan.
The Fed will be using a threshold based on mortgage loans, instead of based on U.S. Treasury securities. More specifically, the threshold will be based on an "average prime offer rate" that is published by Freddie Mac.
"As mentioned in our comment letter in response to this proposal, we were concerned that the proposed threshold based on Treasury securities may have covered some portion of the prime loan market, which is not what the Fed intended," Bloch said Monday.
He added, "We were also concerned that using Treasury securities, especially when they are volatile, may result in situations in which a loan may or may not be covered, depending on the Treasury rates at the time the loan is made.
"In the final rule, the Fed recognized these concerns, and we believe that the change in the thresholds should alleviate these concerns."
The four protections adopted for the newly defined category of higher-priced mortgage loans will:
Prohibit a lender from making a loan without regard to borrowers' ability to repay the loan from income and assets other than the home's value. A lender complies, in part, by assessing repayment ability based on the highest scheduled payment in the first seven years of the loan. To show that a lender violated this prohibition, a borrower does not need to demonstrate that it is part of a "pattern or practice;"
Require creditors to verify the income and assets they rely upon to determine repayment ability;
Ban any prepayment penalty if the payment can change in the initial four years. For other higher-priced loans, a prepayment penalty period cannot last for more than two years. This rule is substantially more restrictive than originally proposed; and
Require creditors to establish escrow accounts for property taxes and homeowner's insurance for all first-lien mortgage loans.
The Fed will also be issuing a separate proposal to revise the definition of "higher-priced mortgage loan" under Regulation C, the Home Mortgage Disclosure Act (HMDA) so it is consistent with the definition in this rule.
Under HMDA, lenders are required to report additional price information for these types of loans.
Credit unions and others will have an opportunity to comment further on this change and CUNA will issue a Comment Call on this shortly.
July 8, 2008
Time tight, hope alive for reg relief
WASHINGTON —Ryan Donovan, vice president of legislative affairs for the Credit Union National Association (CUNA), said Monday there is reason to be hopeful that regulatory relief legislation for credit unions will make it through the Senate this session, but warned that it is far from a sure thing.
"I've said it before—the congressional calendar is not our friend this year," Donovan said. However, he added that through CUNA's work on behalf of regulatory relief legislation in the Senate, he believes such a bill could move in the Senate this year despite time constraints.
The logical vehicle, he noted, is the House-passed Credit Union, Bank and Thrift Regulatory Relief Act (CUBTRRA, H.R. 6312). That bill passed the House by voice vote and was referred to the Senate on June 25.
Donovan noted that CUBTRRA holds a number of substantive elements that will serve credit union members well, especially provisions that ease field of membership and member business lending (MBL) restrictions in underserved areas.
"We expect both the Senate and the House to be in session this week and the next three weeks before recessing from Aug. 1 to Sept. 8," Donovan said. "When the Congress returns in September, they are scheduled to be in session until September 26th."
"As always, these dates are subject to change and often do," Donovan said, and added, " The point is: time is short for legislative action."
WASHINGTON (6/27/08)--The U.S. Senate today confirmed Michael Fryzel to replace JoAnn Johnson on the NCUA board.
President George W. Bush said he would name Fryzel chairman of the three-seat board.
CUNA President/CEO Dan Mica congratulated Fryzel after the Senate vote.
"With his background in credit union law and regulation, he has a number of tools to draw upon during his tenure with the agency," said Mica. "We look forward to working with him to keep credit unions safe, strong and essential to their members."
Fryzel was with the Illinois Department of Financial Institutions from 1977 to 1989 and headed the agency from 1982 to 1989. Upon leaving that position, Fryzel founded his private law practice, the Law Offices of Michael Fryzel, which specializes in financial regulatory and real estate law.
At his nomination hearing before the committee early this month, Fryzel said his priority as a federal regulator would be oversight of the safety and soundness of credit unions. He said consumers not only place their money in credit unions, they also place their trust.
June 25 , 2008
CU reg relief bill sails through full House
WASHINGTON (6/25/08)--The full House of Representatives last night passed a comprehensive financial regulatory relief bill which eases field of membership and member business lending (MBL) restrictions in underserved areas for credit unions.
The bill, known as the Credit Union, Bank and Thrift Regulatory Relief Act (CUBTRRA, H.R. 6312), passed by a voice vote after it was placed on the House Suspension Calendar. Such action is reserved only for non-controversial legislation.
CUNA President/CEO Dan Mica thanked U.S. Reps. Paul Kanjorski (D-Pa.), Ed Royce (R-Calif.), Financial Services Committee Chairman Barney Frank (D-Mass.) and Ranking Member Spencer Bachus (R-Ala.) for "working with us to attain regulatory relief for the nation's credit unions."
"This measure holds a number of substantive elements that will serve our members well," said Mica this evening. "Now it is on to the Senate to ask for its consideration of the package."
As its name suggests, the bill contains measures that would benefit credit unions, as well as banks and thrifts. Among provisions for credit unions, the bill proposes to:
Allow all federal credit unions to apply to serve underserved areas, reversing the effect of a banker lawsuit that has prevented community and single-sponsor credit unions from reaching out to underserved areas;
Provide increased MBL ability by exempting MBLs made in underserved areas from a statutory 12.25%-of-assets cap; CUNA estimates more than 40% of the nation's census tracts are located in underserved areas;
Grandfather previously approved underserved fields of membership for credit unions;
Allow short-term payday loan alternatives within a credit union's field of membership;
Raise the current investment limit in credit union service organizations (CUSOs) and to 3% of unimpaired capital and surplus, up from 1%;
Enhance the 2006 regulatory relief provisions that allowed the National Credit Union Administration (NCUA) to increase the 12-year maturity limit on non-real estate secured loans to 15 years, Section 104 would further permit the agency to issue regulations providing for loan terms exceeding 15 years for specific types of loans;
Give the NCUA greater flexibility to respond to market conditions; and
Clarify existing law that permits credit unions to participate in loan programs secured by the insurance, guarantees, or commitments of State or Federal governments, such as the Small Business Administration's 504 program.
H.R. 6312 was introduced just last week by Reps. Kanjorski, Royce, and Dennis Moore (D-Kan.) and was backed by Chairman Frank.
Just as the credit union provision of the newly introduced legislation were based on the Credit Union Regulatory Relief Act (CURRA), the bank and thrift provisions also were based on a currently pending bill, the Bank and Thrift Regulatory Relief Act of 2008 (H.R. 5841), introduced in April.
Bank and Thrift Provisions
For commercial banks, the House bill proposes to allow the payment of interest on business checking accounts. For thrifts, CUBTRRA would remove the current caps on auto and business lending.
Left behind from that bill, however, were sections that would have allowed banks and thrifts to reorganize more easily as LLC or Subchapter S entities.
Some provisions benefit credit unions, as well as banks and thrifts. One example is the proposed change in Gramm-Leach-Bliley privacy notification requirements, according to CUNA Legislative Affairs Vice President Ryan Donovan.
Under this bill, financial institutions would not be required to send annual privacy notifications under certain circumstances if it has not changed its policies and practices with respect to disclosing nonpublic personal information since its last disclosure.
The bill faces a tougher road in the Senate, according to Donovan.
"The Senate just is not as far along in the process as was the House, but we will continue to make our case there," the CUNA lobbyist said.
Both the House and Senate adjourn at the end of this week for a July 4 District Work Period and will return to session the week of July 7.
Despite the positive development, Mica emphasized CUNA was not finished in seeking more flexibility for credit unions in serving their members.
"We will continue to push for risk-based capital through reform of prompt corrective action (PCA) requirements," he said. "And we strongly believe credit unions should have the power to offer more business loans to their members."
The CUNA leader said the association would pursue----both in this Congress and the next--provisions contained in the Credit Union Regulatory Improvements Act (CURIA, H.R. 1537), which propose a higher cap on member business lending, as well as prompt corrective action reform.
After the vote, NCUA Chairman JoAnn Johnson encouraged the Senate to build upon the solid start made by the House and consider "reasonable and important enhancements such as reform of the system of Prompt Corrective Action coupled with the institution of a Risk-Based Capital regime."
She also urged the Senate to "increase consumer protections for credit union members during their consideration of a proposal to convert to another type of financial institution, and the modernization of credit union merger procedures covered by the Clayton Act."
June 20 , 2008
New relief bill based on CURRA introduced in House
WASHINGTON (6/20/08)--A bill that would allow all federal credit unions to apply to serve underserved areas and exempt member business loans (MBLs) made in underserved areas from a statutory cap moved to the legislative fast track Thursday night.
The new bill, H.R., 6312, the Credit Union, Bank and Thrift Regulatory Relief Act of 2008, would also grandfather previously approved underserved fields of membership for credit unions.
The measure is based on provisions of the Credit Union Regulatory Relief Act (CURRA, H.R. 5519)combined with some provisions of a banking relief bill.
The new legislation--introduced by Reps. Paul E. Kanjorski (D-Pa.), Dennis Moore (D-Kan.), and Edward Royce (R-Calif.)--is expected to be placed on the House Suspension Calendar for a vote, perhaps as early as next week. The measure then could be considered by the Senate.
"We have worked hard throughout the 110th Congress to identify how credit unions and financial institutions of all types can better serve their members and customers, and this bill represents a real consensus on these matters," said Rep. Kanjorski.
"This legislation, among other things, will allow credit unions of all types to expand into underserved areas and support community development. It also will allow interest to be paid on business checking accounts, a change for which I have long advocated," Kanjorski said.
"During this time of economic uncertainty, we need to take action in Washington not only to help those individuals who live and work in underserved areas, but also the businesses that create jobs. Both of these provisions will help to achieve that goal. I look forward to moving this legislation quickly on the House floor," Kanjorski added.
The bill received the support of key Financial Services Committee Ranking Member Spencer Bachus (R-Ala.) and Chairman Barney Frank (D-Mass.).
Frank said, "I appreciate the hard work and bipartisan cooperation of Reps. Kanjorski, Moore and Royce on this important legislation, as well as the constructive engagement of both the banking and credit union industries. This bill will advance financial institutions' ability to serve their consumers, and I look forward passage by the House very soon."
Bachus said the legislation "is an example of a bipartisan effort to remove unnecessary regulatory burdens on our financial institutions. Increasing our regulatory efficiencies will allow banks and credit unions to devote additional resources to better serve their customers."
Moore noted that "reducing regulatory burdens on businesses and consumers is simply the right thing to do. I'm pleased that this bipartisan package, which will do much to keep our financial services and business communities competitive in the global market, includes provisions that I have long advocated to reduce the burden on our small banks and thrifts. And, the bipartisan support for this bill shows just how important it is that Congress pass meaningful regulatory relief legislation soon."
Royce said the bill's introduction "is a major step toward achieving our ultimate objective: providing significant regulatory relief for our financial institutions. This bill gives both credit unions and banks greater flexibility in their day to day operations, thereby allowing them to better serve their customers."
Family Trust FCU, South Carolina FCU recognized for diversity initiatives
COLUMBIA, S.C. – The South Carolina Credit Union League (SCCUL) presented its first Laura M. Fleming Diversity Awards to Family Trust Federal Credit Union and South Carolina Federal Credit Union during the SCCUL & Affiliates Annual Meeting on April 19, 2008.
The Laura M. Fleming Award was introduced this year by the League’s Diversity Committee, acknowledging a similar statewide effort by the South Carolina Chamber of Commerce and South Carolina Diversity Council. Named in memory of one of the Palmetto State’s extraordinary credit union leaders and an original member of the Diversity Committee, the award recognizes South Carolina credit unions or organizations that exemplify diversity in the workplace.
“Between them, these two credit unions embody the complex nature of diversity as it relates to financial services,” SCCUL President and CEO Garry L. Parks commented. “Family Trust has taken particular interest in recognizing South Carolinians’ diverse needs and conditions, while SC Federal has emphasized the value in having an organization that reflects and identifies with the citizens it serves.”
Family Trust Federal Credit Union, winner among credit unions with $500 million or less in assets, initiated a highly successful payday loan alternative program to assist those in lower socioeconomic situations. Family Trust also partnered with the United Way to host a poverty simulation program in York County at the credit union’s training facility, increasing diversity awareness and cultural sensitivity both within the membership and the community.
Among credit unions with more than $500 million in assets, South Carolina Federal Credit Union was recognized for its efforts in promoting diversity through a cross-cultural job fair, specifically designed to attract a diverse talent pool and create a pipeline of candidates to consider for future employment. More than 55 SC Federal employees were involved in coordinating the career fair, and over 600 job-seekers from surrounding communities attended and met with hiring managers from various departments within the credit union.
SC credit unions elect League board
COLUMBIA, SC (4/23/08)—Palmetto State credit unions have elected four new directors and four incumbents to the South Carolina Credit Union League (SCCUL) Board of Directors. Election results were announced at the April 19 business session of the SCCUL & Affiliates 2008 Annual Meeting in Myrtle Beach, SC.
New to the 2008-2009 SCCUL board of directors are Melynda Ciochetti, president and CEO of Santee Cooper CU (Moncks Corner); Scott Conley, CEO of May Plant Credit Union (Lugoff); Jerry Miller, president and CEO of Carolina Trust Federal Credit Union (Myrtle Beach); and Patti Seymore, vice president of administration at SC Telco Federal Credit Union (Greenville).
Re-elected incumbents are: Bill Love, president and CEO of MTC Federal Credit Union (Greenville); Linda Weatherford, vice president at SPC Cooperative CU (Hartsville); Scott Woods, president and CEO of SC Federal Credit Union (N. Charleston); and Ray Partain, chairman of the board for Anderson Federal Credit Union (Anderson).
The executive committee remains the same as it was in 2007: Love, chairman; Weatherford, first vice chairman; Woods, second vice chairman; Faye Crocker, secretary (Greater Abbeville Federal Credit Union – Abbeville); and Ed Templeton, treasurer (president and CEO of SRP Federal Credit Union – North Augusta). Former Chairman of the Board Lee C. Gardner, Jr., president and CEO of Family Trust Federal Credit Union (Rock Hill), remains an ex officio member of the executive committee, as is SCCUL President and CEO Garry L. Parks.
Of eighty-three League-member credit unions, fifty-one sent ballots to independent accounting firm Cantey, Tiller, Pierce, & Green, LLP of Camden.
April 2, 2008
Hill covered with CUNA's Treasury blueprint letters
WASHINGTON (4/1/08)—As part of comprehensive actions to alert federal policy- and lawmakers of concerns about the U.S. Treasury's blueprint for regulatory restructuring, Credit Union National Association (CUNA) President Dan Mica Monday sent a letter to every member of Congress.
Mica expressed credit unions' grave concerns regarding the Treasury plan that ultimately would phase out the National Credit Union Administration (NCUA) and place banks and credit unions under one regulator's oversight, as well as merge various charters into a single charter type.
"The strategy regarding credit unions reveals Treasury's apparent total disregard for the uniquely democratic and consumer-owned structure of credit unions and the pocket book benefits from better rates and services their consumer/members are provided," Mica said in the letter sent to each House and Senate member.
He underscored the fact that credit unions have not contributed to the current housing and credit problems the nation is experiencing. Yet the Treasury proposal, he said, "would eliminate one of the few sectors of the financial services industry that has consistently acted in the best interest of consumers."
Mica urged the country's lawmakers to "make a strong statement regarding the important role that credit unions play in helping America's consumers through these difficult economic times by quickly enacting H.R. 1537." He was referring to the Credit Union Regulatory Improvements Act, know as CURIA.
CURIA would provide for a risk-based capital system, raise the ceiling on credit union loans to members for business purposes, and clarify that all federally insured credit unions are eligible to add underserved areas to their field of membership.
The Treasury's strategy regarding credit unions, Mica said, serves to reveal the department's "apparent total disregard for the uniquely democratic and consumer-owned structure of credit unions and the pocket book benefits from better rates and services their consumer/members are provided."
In a related story, NCUA Chairman JoAnn Johnson said in a statement that the Treasury's plan "raises important issues about the optimal structure for governmental oversight of U.S. financial markets.
She said that while the NCUA agrees with safety and soundness objectives, "we have significant concerns that the many consumer benefits of the credit union system would be threatened by any restructuring proposal that may blur the credit union charter and that eliminates the separate regulatory and insurance function for federally insured credit unions."
The NCUA will conduct a detailed review of the Treasury report, Johnson said.
WASHINGTON (3/10/08)—Reps. Joe Wilson (R-S.C.) and Bill Pascrell (D-N.J.) added their official support to the Credit Union Regulatory Improvements Act (CURIA, H.R. 1537) just as the four-day Credit Union National Association Governmental Affairs Conference—complete with grassroots Hill visits--ended. The addition of the two names brings the total of official CURIA supporters in the House to 147.
Credit union representatives from both South Carolina and New Jersey were among the hundreds flooding Capitol Hill to garner support for CURIA and other credit union issues. Also, it was at the CUNA GAC that Sen. Mary Landrieu unveiled her plan to introduce a Senate version or CURIA.
The general visibility of the cornerstone credit union legislation was acutely heightened last week, between Landrieu's announcement, the credit union Hill visits, and a comprehensive House Financial Services Committee hearing on credit union regulatory relief issues, which highlighted CURIA.
Please call, email or write Rep. Wilson to thank him for his support of credit unions through this important legislation. Contact information can be found at http://joewilson.house.gov/.
A fundraising lunch for Rep. Wilson is scheduled for March 25, 2008 at the Capital City Club in Columbia.
March 4 , 2008
Video reports from the CUNA GAC
WASHINGTON (3/4/08)--The Michigan Credit Union League (MCUL) is producing daily video reports from the 2008 Credit Union National Association (CUNA) Governmental Affairs Conference (GAC) in Washington D.C.
Mike Bridges, MCUL director of public affairs, will file video reports daily. The reports will focus on the general sessions, the speakers and Capitol Hill visits. Views also will also see some of the flavor of the conference, according to Bridges.
WASHINGTON (3/4/08)—Reps. Barney Frank (D-Mass.), Paul Kanjorski (D-Pa.) and Ed Royce (R-Calif.) introduced a new credit union bill Monday, one which would offer regulatory relief in 12 areas but does not go as far as the Credit Union Regulatory Improvements Act (CURIA, H.R. 1537).
The bill was introduced just four days before a scheduled House Financial Services Committee hearing CURIA. Frank is chairman of that committee and Kanjorski heads that panel's subcommittee on capital markets.
Although it touches on many areas of CURIA, the new bill (H.R. 5519) does not contain language to increase the credit union member business lending ceiling or to transform prompt corrective action into a more risk-based system. H.R. 5519 is entitled the Credit Union Regulatory Relief Act (CURRA) of 2008.
Credit Union National Association (CUNA) President/CEO Dan Mica said Monday, "We commend and thank Chairman Frank and Reps. Kanjorski and Royce for taking this bold step aimed at reducing the regulatory burden on credit unions. This timely legislation will get us a long way toward credit union goals--but not all the way: More needs to be done."
"Easing restrictions on business lending and providing more flexibility for credit unions in net worth requirements remain key goals for us. We will continue to urge Congress to consider CURIA, and will continue to seek co-sponsors for this important legislation," Mica said from CUNA's Governmental Affairs Conference (GAC) here.
As of Monday evening, CURIA carried 145 official supporters in the House.
The new CURRA bill would:
Permit the purchase of investment grade securities by federal credit unions;
Increase the investment limit in credit union service organizations;
Exclude from the member business lending cap any loans to nonprofit religious organizations;
Allow the National Credit Union Administration (NCUA) to establish longer maturities for certain credit union loans;
Give the NCUA greater flexibility in responding to market conditions;
Permit, under certain circumstances, a federal credit union converting to a community charter to continue to serve groups outside the community;
Enable credit union participation in the Small Business Administration's 504 programs;
Permit federal credit union to add service to underserved areas regardless of original field of membership;
Permit federal credit unions to provide for short-term payday loan alternatives for nonmembers within a the credit union ' s field of membership;
Permit a federal credit union to expel a member for cause, and to institute term limits for board members if it so chooses;
Encourage small business development in underserved urban and rural communities by providing for the exclusion of member business loans made in underserved areas from the business lending cap ; and
Provide an exemption from pre-merger notification of the Clayton Act.
Reps. Frank, Kanjorski and Royce are each scheduled to address the record 4,500 credit union representatives attending CUNA's GAC this week.
February 25 , 2008
National Savings Week has begun
WASHINGTON (2/25/08)--America Saves Week kicked off Sunday, with organizations--including the Credit Union National Association (CUNA) and credit unions--encouraging people across the nation to save and build wealth, not debt.
This year's focus is encouraging people to save through automatic transfers into a savings account. Learn more at http://www.americasaves.org/.
The week is also designated MilitarySaves Week. Many installation credit unions and banks will offer reduced minimum deposits for savings accounts and have special offers to help service members make short- and long-range savings plans, according to the Department of Defense (US Fed News Feb. 20).
A recent survey by Thrift Savings Plan found that of nearly 20,000 uniformed and civilian federal employees, less than 21% of active duty service members are saving for retirement. They cited lack of funds as the key reason for not contributing to a savings or retirement account.
Of course, credit unions aren't tied to promoting savings just one week a year. Next week, March 3-7 is National Consumer Protection Week, according to the National Credit Union Administration, and some credit unions will urge savings at that week's events. The Ohio Credit Union League is partnering with the state and other organizations to host financial education events throughout the state (eLumination Newsletter Feb. 13).
But this week might be a good time for credit unions to start preparing for the National Youth Saving Challenge, when credit unions encourage youth to make deposits at their credit union. The challenge, sponsored by CUNA, occurs during National Credit Union Youth Week, April 20-26. It's a free program that helps credit unions build strong relationships with youth and their families. Get more details at http://finlit.cuna.org/saving_challenge.html.
February 4 , 2008
CUs on the Tube: Victory Junction Gang touts CUs
GREENSBORO, N.C. (2/4/08)--The Carolinas Credit Union Foundation was recently recognized by the Victory Junction Gang Camp for its support of the camp, which serves chronically ill children.
A video shows scenes of the camp, including activities from NASCAR Week in 2007. The foundation provided funding so children with Spina Bifida could attend the camp free. Volunteers from the foundation also helped staff the camp during sponsorship week (Weekly Update Jan. 29).
Credit unions also are commended for their five-year commitment to the camp, which is located in Randleman, N.C. The camp's founders, Kyle and Patti Petty, who created the camp in memory of their late son Adam, thanked credit unions for their support.
In order to encourage all credit unions to submit applications, the South Carolina Credit Union League Diversity Council has extended the deadline for nominations for the Excellence in Diversity Award to Friday, February 1.
Across South Carolina, credit union staff and volunteers are making significant contributions to moving the credit union movement forward in diversity initiatives. Take this opportunity to nominate your credit union or another organization that you feel has been a leader in effectively promoting diversity.
As of Jan. 1, STAR, MERIT, VAP, and VLP certificate program study material and exam orders previously handled by SCCUL are now handled by CUNA’s Center for Professional Development (CPD). Applicable certificates and pins will be sent directly to credit unions from CUNA Center for Professional Development (CPD), as will billing for book orders. Please follow these guidelines:
Place STAR, MERIT, and VAP/VLP material orders through CUNA Customer Service at 800-356-8010, extension 3. Call this same number with questions on invoices or for returning purchases.
For help with questions on such subjects as exams and certificate processing, call CUNA CPD at 800-356-9655, ext. 4072.
For general information on certificate programs, call CUNA CPD (#2) or contact SCCUL’s Director of Conferences and Training Barbara Lehew-Bickley (email@example.com) at 800-235-4290, ext. 419.