MBL Bill Introduced in Senate

UdallOn Tuesday, March 8th, Senator Mark Udall (D-CO) and 13 of his colleagues introduced the Small Business Lending Enhancement Act (S 509). CUNA and the credit union system strongly support this legislation and appreciate the leadership Senator Udall and his colleagues have demonstrated by introducing the bill. Udall sponsored an MBL-increase bill last year, but when Congress adjourned without having taken action on it, it became procedurally necessary to reintroduce the bill in the new 112th Congress.

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Washington, D.C. News

MBL Bill Introduced in Senate
Interchange: CUs Moved the Needle in D.C. Last Week
CFA Expresses Concern About Fed Interchange Proposal
Fed, FTC Plan Could Ease Credit Score Access
Cheney Testifies About Burdens on Small Institutions
Chambliss and Warner Lead Effort to Reduce Federal Deficit

State News

Bills Move as Crossover Day Approaches
Down to the Wire: What’s Finding New Life?
Banking Committees Buzzing With Activity
Bankruptcy Legislation
Are You a Lobbyist? Ask Again in a Week

Industry News

NCUA Reports CU Key Ratios Improved in 2010
CUNA and Other Major Financial Trades to Support Interchange Suit

Public Influence

The Durbin Amendment’s Effect on Credit Unions
CBS MoneyWatch: Best Way to Get Free Checking Is a CU
Poll: Consumers Still Cautious
CUNA's Youth Saving Challenge Grows to 139 CUs
Statewide News Coverage
CUs in the News

Consider This
Paying Attention

News of the Competition

CNN Money Reports: Banks Lowering Credit Card Rates in Response to CARD Act
Trust Issues with Bank Customers

 
March 11, 2011
 
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Washington, D.C. News
 

MBL Bill Introduced in Senate

Udall
Sen. Mark Udall addressing 2011 GAC participants on the MBL bill

On Tuesday, March 8th, Senator Mark Udall (D-CO) and 13 of his colleagues introduced the Small Business Lending Enhancement Act (S 509). CUNA and the credit union system strongly support this legislation and appreciate the leadership Senator Udall and his colleagues have demonstrated by introducing the bill. Udall sponsored an MBL-increase bill last year, but when Congress adjourned without having taken action on it, it became procedurally necessary to reintroduce the bill in the new 112th Congress.

In addition to Senator Udall, the original co-sponsors of this legislation include: Senators Olympia Snowe (R-Maine), Charles Schumer (D-N.Y.), Barbara Boxer (D-Calif.), Sherrod Brown (D-Ohio), Susan Collins (R-Maine), Al Franken (D-Minn.), Kirsten Gillibrand (D-N.Y.), Patrick Leahy (D-Vt.), Joseph Lieberman (I-Conn.), Bill Nelson (D-Fla.), Jack Reed (D-R.I.), Sheldon Whitehouse (D-R.I.), and Ron Wyden (D-Ore.). It is believed that several other senators, including those who have co-sponsored this legislation in the past, are interested in co-sponsoring this legislation soon. GCUA staff has been in contact with both Georgia senators and hope that soon they will add their names to the list of co-sponsors (see below to send a message to your senators on this issue).

This legislation is identical to the language drafted by the Treasury Department and endorsed last year by the Obama administration. Specifically, the legislation raises the member business lending cap to 27.5% of total assets for credit unions including those that are well capitalized; are at or above 80 percent of the current MBL cap for one year prior to applying for the higher cap; have five or more years of MBL experience; can demonstrate sound underwriting and servicing based on historical performance; have strong management, adequate capacity and policies to manage increased MBLs; and receive approval from NCUA. Under provisions of the new Udall bill, growth of a given credit union's MBL portfolio may be no more than 30% annually.

This legislation could bring 140,000 new jobs and $13 billion of new small-business lending into the economy nationwide, according to updated research figures from CUNA. The economic benefits come at no cost to taxpayers. CUNA also sent a letter of support (addressed to Senators Udall, Snowe and Schumer) to all senators. The letter recaps the 100-year history of credit unions’ serving the credit needs of their small-business-owning members, and how it was just since 1998 that an "arbitrary statutory cap" was imposed.

Action AlertWhile it is expected that a companion bill will be introduced in the House in the coming weeks, right now the focus is on the Senate as it is the highest hurdle. To overcome that hurdle, the bill will need the support of more senators, especially Republican senators. This can be done, but it will take the renewed effort of credit unions throughout the country. Please send a message to the two Georgia senators today here asking for their support of credit union member business lending. If you reside outside of Georgia, please click here to send a letter to your respective state’s senators.

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Interchange: CUs Moved the Needle in D.C. Last Week


Westmoreland
Credit union advocates meeting with U.S. Congressman Lynn Westmoreland during 2011 GAC

History may show that CUNA’S GAC was a key moment in the interchange debate shifting back towards small issuers like credit unions. The mantra of “Stop, Study and Start Over” was heard throughout the halls of Congress as credit unions helped tell the consumer and small-institution concerns over the interchange issue.

Retailers continue to push for implementation of the proposed Fed cap of 12 cents by July 21st. The Fed-revised rule is currently due out the end of April. But the Fed has received thousands of letters on the proposed interchange rule (from all stakeholders including retailers), probably too many to process to meet the April rule deadline. We know at least 450 came from Georgia credit union advocates!

In testimony two weeks ago, both Federal Reserve Chairman Ben Bernanke and FDIC Chairman Sheila Bair questioned whether the so-called “carve-out” of $10B would work effectively. Testifying before the House Financial Services Committee, Fed Governor Sarah Raskin was pushed repeatedly as to whether the Fed needed more time to study the rule, but she punted back that “it’s up to Congress.” Early this year, observers would have said there was no chance of delay of the Durbin amendment. Later, the same observers opined that the chance had moved to “slim.” Then, credit unions flew to Washington.

GCUA is very proud of the Georgia credit union visits with lawmakers last week, which were effective in putting a real “consumer face” on the issue for lawmakers of both parties. Republicans did not like the government interference in the free market with price-fixing below product costs, while Democrats did not like the probable disproportionate financial impact on credit union member pocketbooks, especially lower-income households. In all cases lawmakers are growing to see that while retailers may win, consumers are the big losers in this fight. In the final review, most of the Georgia delegation seems poised to support a delay in the Durbin interchange rule by the Fed should legislation make it to the floor of either chamber.

As of today with credit unions weighing in, the chance of a delay of Durbin is now an intriguing “maybe.” Granted, that is still far from “yes,” but for now momentum has shifted to our side. Among the positive developments:

  • The Senate Banking Committee is considering a hearing on the issue next week, with a bi-partisan team of senators putting together legislation. The bill is being drafted, so we have heard, by two members of the Senate Banking Committee: Democrat Sen. Jon Tester of Montana and Republican Sen. Bob Coker of Tennessee;
  • The House Financial Services Committee is reportedly preparing legislation that may be filed by Rep. Shelly Moore-Capito (R-WV), who chairs the Financial Institutions subcommittee (along with Vice-Chair Rep. Kenny Marchant of Texas). That subcommittee hearing on February 17th helped move our case forward about the damage the bill will do to do credit unions and the likely ineffectiveness of the so-called $10B carve-out.
  • This week, community bankers are in D.C. making their case on interchange, right on the heels of credit unions’ efforts.
  • Retailers across the country, sensing a loss in momentum, are starting up grassroots lobbying efforts and have a fly-in scheduled as well.

 That said, there are significant obstacles to actually getting legislation passed before the July 21st deadline:

  • Divided party control between the House and the Senate where neither chamber trusts the other.
  • Sen. Richard Durbin (D-IL) is still “dug in” and unlikely to agree to a delay, and insists the carve-out will work; he only needs 41 Senators to block legislation, while supporters need 60 to overcome his objections; 
  • The game of “chicken” where no one wants to go first: The House leadership, as reported by Reuters, Rep. Spencer Bachus (R-AL) told a banker group that the Senate must act before they do. House leaders do not want to force a vote on an issue pitting retailers against small community banks and credit unions, especially worried about the possible electoral effect on freshman members. The Senate will have to make some move before the House will possibly consider a floor vote.
  • Determining exactly what can pass: Repeal is not an option at this time. Can a one- or two-year delay pass with a Fed study of the issue and carve-out? Hopefully, but Sen. Durbin will oppose. What about legislation to put teeth into the carve-out? That may put Durbin more “in a box,” since he insists the carve-out will work as written, and he could be hard pressed to support measures he believes are already in the legislation.

What might legislation look like? One possibility is a combination of a one- or two-year delay (instead of the July 21st, 2011 effective date), a major government study of the issue including the impact on small issuers under $10B, and several provisions designed to make the carve-out for small issuers work, including:

  • Clear enforcement authority for an agency such as the Fed or other to police the system so merchants do not steer cards or route transactions around two-tier networks. 
  • Extending the $10B carve-out from interchange rate regulation over into network routing (which under Durbin allows merchants to direct transactions to networks of their choosing), and allowing exclusivity agreements (which are also banned under Durbin now) to continue for small issuers.
  • Mandating that all payment networks offer a two-tier system (this is legally questionable).
  • Having the Fed study debit card interchange revenue for small issuers over time to see if the carve-out is truly working, or whether income decreases despite the exemption.
Large banks are not merely sitting on their hands; they are reacting in creative ways to the looming July 21st deadline. The Wall Street Journal reports banks may no longer clear debit card transactions automatically for merchants unless merchants pay a “new fee” to clear those which would have been NSF otherwise, raising the specter of declined debit cards unless merchants opt in for a new fee. Others are discussing limiting debit card withdrawal amounts to $100 or $50 a transaction, thus forcing consumers to use credit cards (with unaffected interchange rates) instead of debit cards (and thus consumers arguably run up more debt). Other fees like debit card fees, fewer rewards programs, reduction of free checking, higher NSF charges and lower rates on deposits are some of the ways credit unions may cope with any major interchange reductions.
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CFA Expresses Concern About Fed Interchange Proposal

The Federal Reserve should consider broadening the pricing standard in its interchange proposal to include compensation for additional, legitimate incremental expenses, the Consumer Federation of America said in its comment letter filed during the Fed’s comment period on interchange.

SwipeThe CFA, which endorsed the proposed rule’s intent, noted that information it has received indicates that the Fed’s proposed 7 to 12 cents per transaction reimbursement would not cover some actual, incremental costs for providing debit cards. "We recommend that the Federal Reserve consider broadening its pricing standard to include compensation for [those] expenses," the consumer group said. Such expenses could include network processing fees for each transaction processed, charge-backs involving billing errors, and certain fraud losses, the CFA said, adding that a separate adjustment for effective fraud prevention measures is also justifiable.

The trade group also urged the Fed to pay close attention to how the rule would affect the financial viability of small depository institutions. The CFA letter did criticize the current interchange fee system, stating there is poor competition among payments networks, and alleging hidden interchange pricing and cross-subsidies being paid by low and moderate income (LMI) consumers, who generally don’t use debit cards, instead of by more affluent ones who do.

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Fed, FTC Plan Could Ease Credit Score Access

The Federal Reserve recently joined the Federal Trade Commission (FTC) to propose changes that would likely ease access to credit scores for consumers. In a joint release, the Fed and FTC said that their proposal would impact when credit providers are required to provide cardholders with their credit scores. The proposal would require creditors to disclose credit scores and related information to consumers in risk-based pricing and adverse action notices under the Fair Credit Reporting Act (FCRA) if a credit score was used in setting the credit terms or taking adverse action.

The changes would also revise content requirements for risk-based pricing notices and add related model forms to reflect the new credit score disclosure requirements, according to the Fed/FTC release.

The changes were proposed by the Dodd-Frank Act, which passed last year. The proposed rules will address both federal and state-chartered credit unions, and NCUA will not be required to independently address these matters. However, NCUA could release its own proposal if it feels the need to further clarify on the Fed/FTC action. Comments on the proposal will be accepted for 30 days after it is published in the Federal Register.

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Cheney Testifies About Burdens on Small Institutions

Cheney and Capito
CUNA President/CEO Bill Cheney (left) and Rep. Shelley Moore Capito (R-W.Va.)

On March 2nd, while credit unions were walking the Hill educating their elected leaders about the need for raising the MBL cap and conveying their concerns about the Durbin amendment’s potential impact on small institutions, CUNA CEO Bill Cheney was also on the hill testifying before the House subcommittee on Financial Institutions and Consumer Credit on the effect of the Dodd-Frank legislation on small financial institutions and small businesses.

  Cheney shared how credit unions, owned by their members, already have strong incentives to treat consumers well, but they face a crushing "crisis of creeping complexity" under a steady accumulation of regulatory requirements. In opening statements to the hearing, subcommittee member after member voiced concerns about one of those burdens – the interchange fee regulations contained in the Dodd-Frank Act. Cheney noted for the panel of federal lawmakers that as credit unions are not-for-profit financial cooperatives, members are the ones who receive the benefit of ownership, through reduced fees, lower interest costs and higher rates on savings. He warned that the increasing regulatory requirements pursuant to Dodd-Frank and other government initiatives – called by some the "creeping crisis of complexity" – is a major driver behind current credit union consolidations, making it impossible for smaller credit unions to exist. He added that credit unions are concerned that the increasing regulatory burdens also stifle innovation.

The CUNA leader highlighted two key areas of the Dodd-Frank law, which he termed "very significant" to credit unions:

  • He urged Congress to strike a legislative remedy that will ensure a meaningful carve-out from interchange fee restrictions for small debit-card issuers, which include all but three credit unions, as intended in the original bill.
  • He also mentioned the provisions of Dodd-Frank intended to reduce regulatory burden by requiring the Consumer Financial Protection Bureau (CFPB) reduce "unwarranted" burden and assess the impact of proposed rules on credit unions and community banks with less than $10 billion in assets. Cheney said that it is feared that the result of the CFPB's comprehensive review process there will be an increased, not decreased, regulatory burden.
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Chambliss
U.S. Sen.
Saxby Chambliss
Chambliss and Warner Lead Effort to Reduce Federal Deficit

Senator Saxby Chambliss (R-GA) and Senator Mark Warner (D-VA), are leading an effort in the Senate to develop a blueprint for reducing the federal deficit and putting a dent in the $14 trillion national debt. They are looking beyond the present-day debate over discretionary spending and considering controversial proposals such as raising the retirement age for Social Security, overhauling the tax code and reducing defense spending.

The March 8th edition of the Washington Post reported on a meeting recently held in Virginia to launch the public campaign to convince the public that merely cutting spending will do little to tame the $14 trillion national debt. Their event in Richmond was the first of at least two town halls – the other scheduled for next month in Atlanta.

Members of a bipartisan cluster calling itself the “Gang of Six,” Senators Chambliss and Warner are working with two other Republicans – Tom Coburn, of Oklahoma, and Mike Crapo, of Idaho – and two Democrats – Kent Conrad, of North Dakota, and Dick Durbin, of Illinois – to craft legislation based on the findings of President Barack Obama’s bipartisan fiscal commission, headed by former Sen. Alan Simpson and former White House Chief of Staff Erskine Bowles.

Click here to read the Washington Post article.

 
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State News
 

Georgia CapitolBills Move as Crossover Day Approaches

The state Legislature will bring a close to the 28th day of the 40-day session when they recess on Friday, March 11th, inching ever closer to day 30 (crossover day), which is scheduled for Wednesday the 16th. Crossover day is significant as it is the day that any legislation must “cross over” to the opposite chamber to be eligible to continue on its course to possibly become law. If a bill does not pass its originating chamber by this day, the only option it has in moving further in the process is to be amended onto another bill of similar subject matter that has already passed its originating chamber. This deadline equates to long session days and countless committee meetings in the weeks leading up as the legislators work to move bills forward. It is a benchmark day for lobbyists to know the status of bills that are monitored – both from the perspective of moving positive legislation, and the reverse for less desirable bills. Some bills of note that cleared their chamber this week are:

  •  The Department of Banking and Finance Housekeeping Bill HB 239 passed the House on Monday, March 7th with a vote of 170-1, after it had been amended on March 2nd to remove a section that clarified what constitutes a “false statement” made by directors. The bill now moves to the Senate for consideration.
  • The Property Registry Bill HB 110 by Rep. Mike Jacobs was heard on the House floor on Thursday, March 10th and passed with a vote of 117-39, after fighting back a late attempt by other interests attempting to kill the bill. Readers will recall that this bill seeks to standardize and restrict what counties and cities may institute (or change what they already have instituted) as foreclosure and/or vacant property registries. The bill, as passed the House, would exempt financial institutions from any county or city registry (and as such, registry fees) provided that they file the deed within 60 days listing the contact information on the property, and that the copy of such is sent to the county of property locale. The legislation now moves forward to the Senate where it will need to be worked closely through the process as groups such as DeKalb County are opposed to the bill.
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Down to the Wire: What’s Finding New Life?

Demonstrating how quickly bills can spring in to life around this time of the session is the Foreclosure Notice Extension Bill HB 419 by Rep. Billy Mitchell, as this legislation had not seen any activity until the day-of notification of the bill hearing on Wednesday, March 9th. Readers will recall that this legislation seeks to increase the notice of a foreclosure from 30 to 90 days, and to outline the right to cure a foreclosure in state statute. In the evening committee meeting on the 9th, the bill was amended to remove the foreclosure notice extension, leaving only the right-to-cure language in the bill. Afterward, Rep. Mitchell attempted to add the foreclosure notice extension back into the bill in full committee on March 10th ... which caused the bill to fail. Stay tuned for more information on this issue. There are several bills that have not moved forward and could be all but dormant for the rest of the session, barring any activity between press time and Wednesday the 11th. These bills range from the Co-Signer Notification Bill HB 245 by Rep. Rusty Kidd, the Credit Report Legislation SB 42 by Sen. Donzella James, and various bills referencing the foreclosure process, such as the Mortgage Rescue Scam Bills (HB 204 and HB 447) by Rep. Billy Mitchell, and the complete overhaul of the foreclosure process found in HB 338 by Rep. Bob Bryant.

VoteAlso, on March 9th the Tenant Property Rights Bill HB 445 by Rep. Andy Welch was put on hold until next session. This bill, as drafted, mirrors much of the federal regulations protecting tenants, but would (among other things) require specific notice of foreclosure to be provided to the tenant, and of particular note: if one foreclosed on a property where there was a tenant residing, the foreclosing party would be responsible to pay the security deposit to the tenant (which the tenant had paid to the previous owner). The Government Influence Team addressed concerns on the bill with Rep. Welch, and will continue to work with him as he rewrites this legislation. He has shared with the team that he intends to move legislation forward early in 2012 to allow all interested parties an opportunity to weigh in on the bill.

While not impacting credit unions, a bill of note that may move forward is HB 259 by Rep. Harry Geisinger. This bill represents another attempt to change the way in which ad valorem taxes are paid on vehicles, as it is becoming an annual attempt to change this process. The bill would require taxes to be paid on vehicles at the moment of purchase as opposed to an annual assessment, and the tax would also apply to casual vehicle sales. On the topic of tax bills, there are other tax bills which do not have to follow the same rules of crossover day. Those are the bills on the Special Council on Tax Reform recommendations (HB 385, HB 386, HB 387, and HB 388), and by design they would bypass the normal committee process in the Legislature. Watch for more details on these bills and more as the session is hearing legislation as of press time. To track any of the bills that are being monitored on behalf of credit unions please click here.

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BeesBanking Committees Buzzing With Activity

On Monday, March 7th a subcommittee of the House Banks and Banking Committee heard testimony on the Gold and Silver Bill HB 3 by Rep. Bobby Franklin. Readers may recall that this same legislation was addressed two years ago, and was reintroduced this year in the House and in the Senate (SB 116 by Sen. David Shafer). If passed, this legislation would require financial institutions to offer accounts in gold and silver, and would require any taxes to be paid in such. The bill was not moved forward at the end of the hearing and remains in the subcommittee. The Committee is scheduled to meet again this week to address HB 465 by Rep. Tom Weldon, which seeks to allow security instruments to be transferred in the same manner that they are released. More details on activity will be in the next Legislative Update email.

On the other side of the Capitol building, the Senate Banking and Financial Institutions Committee met on Wednesday, March 9th to hear SB 35 by Sen. Mitch Seabaugh. Readers will recall that this legislation would prevent a state agency from withdrawing deposited funds out of individual’s accounts without permission, and is a direct reaction to the much-publicized state tax refund debacle. While an official from the State Revenue Department and State Treasurer Tommy Hills addressed concerns on the bill, the Committee passed the legislation with the understanding that it needed work before it moved any further. Sen. Seabaugh seemed interested in having it pass committee, but it is unclear how much more the bill will move.

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Stone
Georgia Sen. Jesse Stone
Bankruptcy Legislation

On Wednesday, March 9th the Senate Judiciary Committee met to address 14 different pieces of legislation during a six-hour-plus meeting. This marathon meeting broached topics ranging from retail organized crime to mental health court issues, but of note to credit unions the committee heard the Condo Association Lien Bill SB 136 by Sen. Bill Hamrick (which was amended in committee to protect a lender’s priority status), and the Bankruptcy Reform Legislation SB 117 by Sen. Jesse Stone. In the last Creating Influence it was noted that in previous sessions this issue has arisen over the years with no change in Georgia while it has been increased in other states, and is back this session with even higher exemption increases than ever before attempted. The bill seeks to increase several of the exemptions: it would increase the personal and property exemption from $5,000 to $25,000 for personal property, and $50,000 for real property per debtor, and increase the wild-card exemption from $5,000 to $25,000. The bill was not moved forward for a vote in committee, but it appears that this may happen soon. The Government Influence Team continues to have frequent discussions with Sen. Stone on how such an increase could negatively impact lending practices, and while it is clear that he wants to increase Georgia’s exemptions, he may be reconsidering the huge jump his bill currently would institute. Stay tuned.

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Are You a Lobbyist? Ask Again in a Week

The most recent Legislative Update email highlighted the potential impact of the new Ethics Advisory Opinion , which dramatically broadens the definition of a lobbyist. Essentially, anyone who promotes or opposes any bill that could impact their place of business would be required to register as a lobbyist under this ruling. This negatively impacts any industry, and would – if not corrected – alter how credit unions are involved in calls to action, grassroots days, personal concern on industry related bills, legislative dinners, and the Hike at Home program. The Legislature immediately responded to this ruling by amending existing legislation (HB 232) on Tuesday, March 8th to correct the issue, which promptly passed the Senate Ethics Committee. Speaking on behalf of the legislative remedy, House Majority Whip Rep. Ed Lindsey shared that the ruling violated the First Amendment rights of all citizens, and that they wanted to move swiftly so as to correct the issue. As of press time, this bill is anticipated to be headed to the floor by the week’s end.

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Industry News
 

NCUA Reports CU Key Ratios Improved in 2010

Up arrowFederal credit unions reported net income of $4.6 billion in 2010, up from $1.5 billion in 2009, NCUA reported on March 3rd. Nationwide credit union membership grew .68 percent during 2010, even though it did decline slightly in the 4th quarter. By the end of 2010 90.5 million people were members of credit unions. NCUA reported that credit union investment, earnings and assets also grew last year. "While credit unions are still not back to their pre-recession performance, they are showing decent signs of recovery," CUNA Chief Economist Bill Hampel said. It is expected that 2011 will be even better than 2010 with continued declines in loan losses and some modest improvement in earnings.

The NCUA's December 2010 Call Report data note that loan delinquencies and charge-offs both declined during the year. Although total loans outstanding fell by 1.3% in 2010, used-vehicle loans increased by 3.4%, first mortgage real estate loans increased by 2.7%, and unsecured credit card lending rose by 3.1%. The agency also noted a 16.4% decrease in new-car loans during 2010. According to the NCUA report:

  • Assets increased 3.4%, totaling $914.5 billion;
  • Loans declined 1.3%, totaling $564.8 billion;
  • Shares increased 4.5% to $786.5 billion;
  • Investments increased 13.4% to $238.9 billion; and
  • Net income increased 208.3%.

NCUA Chairman Debbie Matz said that "credit unions, as a whole, are exhibiting positive trends in their operations," adding that the recovering economy helped net worth climb to 10.1% and increased credit unions' return on average assets (ROA) by 33 basis points. Credit union ROA totaled 0.51% in 2010, up from the 2009 total of 0.18. Complete details of December 2010 Call Report data are available in an Aggregate Financial Performance Report (FPR), and a one-page December 2010 Facts Summary posted online at: http://www.ncua.gov/DataServices/FOIA/foia.aspx#top.

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CUNA and Other Major Financial Trades to Support Interchange Suit

CUNA NewsNow reported that a federal court granted a request by CUNA and other financial trade associations to be allowed to file a statement in support of TCF National Bank's (TCF) lawsuit against the debit card interchange fee provisions of the Dodd-Frank Act. With the court's favorable ruling, CUNA and the other associations could file the "amicus brief" as early as Friday, March 11th.


The TCF suit, filed last October, charges that the interchange provisions of Dodd-Frank, which require the Federal Reserve Board to set restrictions on the fees debit card issuers can charge for the service they provide, are unconstitutional. The bank argues that the Fed's implementation plan restricts the bank's ability to recover costs associated with providing the debit card service. The filing of the amicus brief is a way to formally support TCF in its case and to explain the detrimental effect the Fed's proposed plan to implement the interchange provisions would have on the stability of the electronic payment structure that undergirds literally trillions of dollars of our economy, as well as the serious constitutional issues the (Fed's) action raises.

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Public Influence
 

The Durbin Amendment’s Effect on Credit Unions

A March 3rd blog on Forbes.com focused on the “The Durbin Amendment’s Effect on Credit Unions.” It highlights the Durbin amendment to the Dodd-Frank financial reform bill which has the entire banking industry up in arms, and denotes the Fed proposal as “Regulation (that) misses the target.” To read the blog in full please click here.

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CBS MoneyWatch: Best Way to Get Free Checking Is a CU

The best way for a consumer to obtain a free checking account is to join a credit union, according to a Monday article titled "Best Way to Get Free Checking," by Farnoosh Torabi, posted on CBS MoneyWatch.

CBS MoneyWatchAbout 96% of 50 major credit unions offered free checking, found the Bankrate.com 2011 Credit Union Checking Study, CBS said. About 81.5% of U.S. banking customers had free checking in 2009, and that number dropped to 72.5% in 2010, according to Moebs Services.

Although credit unions haven't been completely unaffected by the financial crisis, and have raised some fees, many of those increases are less than what large banks have recently levied on customers, the Bankrate study found. "I think parking some savings at a credit union, as either your sole banking destination or part of your overall banking 'portfolio,' is a fine way to bank smart," Torabi wrote. "The Credit Union National Association boasts that practically everyone is eligible to be a member at [a] credit union based on where you live, the company your work for, the school you attend or organizations you're a part of." Torabi added that she's been a member of Digital FCU in Shrewsbury, Mass., since she was a teenager and even though she no longer lives there, she still keeps an active account at Digital.

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Poll: Consumers Still Cautious

The Marietta Daily Journal highlighted the recent Georgia credit union poll on February 27th, noting that Georgia consumers are not optimistic about the state's economic condition, with just 12 percent of respondents to the latest poll from Georgia Credit Union Affiliates saying they believe the economy has improved in the past year. The rest characterized Georgia's economic situation as either about the same or getting worse than last year – sentiments that could have a material impact on consumer saving and spending throughout the state.

The quarterly Georgia Credit Unions' "Paying Attention" report indicates that, while consumers are working to build a buffer of savings by cutting back on expenses and delaying large purchases, they are still unprepared to deal with any further financial setbacks. The report compiled recent poll responses from more than 4,000 credit union members and aggregated data from credit unions statewide.

"As national statistics start to show an increase in consumer confidence, Georgia credit union members are still wary about their own personal financial health," said Mike Mercer, president and CEO of GCUA. "If the economy strengthens, consumers could become more optimistic. But, in the meantime, we expect to see cautious plans for spending and especially borrowing. In fact, loan demand at Georgia credit unions has been very soft."

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Youth Week 2011CUNA's Youth Saving Challenge Grows to 139 CUs

The 2011 National Youth Saving Challenge sponsored by CUNA is gaining steady momentum, CUNA said. The number of participating credit unions has grown to more than 100 and is expected to increase. Last year's Saving Challenge saw nearly 350 credit unions join it. Held in conjunction with National Credit Union Youth Week throughout April, the Saving Challenge puts the spotlight on youth in a contest tracking deposits. Last year, nearly 170,000 young members deposited $24.8 million into their savings accounts during the month, and more than 10,000 opened new accounts. The 139 credit unions joining the Saving Challenge have set a goal to take in more than $4 million in deposits from about 32,000 youth in April.

The challenge's popularity comes from its fun, flexible approach to encouraging young people to develop good savings habits, CUNA said. CUNA provides resources, promotional materials and products, and celebration ideas, but individual credit unions build their own celebrations using the unique service commitment that defines the credit union movement. For this year's program, CUNA has added a mentoring service designed to link up credit union staff new to the Saving Challenge with individuals who have already planned, hosted and completed many celebrations. The mentors want to share their success stories and answer any questions.

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Statewide News Coverage

Get the latest in statewide news coverage, click here.

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CUs in the News

Advisers steer shift to savings
Forsyth News.com

Get the latest in local CU coverage, click here.

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Consider This

View archives of this monthly e-news brief sent to journalists, click here.

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Paying Attention

View the quarterly report and poll of Georgia credit union members and CU trends, click here.

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News of the Competition
 

CNN Money Reports: Banks Lowering Credit Card Rates in Response to CARD Act

Zero percentMore than a million Bank of America customers saw their credit card rates decrease last month, the nation's largest credit card issuer confirmed this week. More cuts are coming from all the big banks.

The rate declines come as a result of the CARD Act, which requires credit card issuers to re-evaluate customers' accounts every six months – if they had their interest rate hiked after January 1, 2009. Before the rule, issuers were able to increase rates at any time and weren't ever required to re-evaluate accounts. To read the article that was published on March 9th click here.

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DistrustTrust Issues with Bank Customers

Despite efforts by banks to woo back consumer confidence from the financial industry crisis, 44 percent of retail banking customers around the world said their trust in the banking industry decreased in the past 12 months. For the U.S., customer confidence levels were lower: 55 percent of customers surveyed by Ernst & Young said they have less confidence than a year ago. The company conducted a global survey of 20,500 retail banking customers to gauge what drives their relationships with banks.

Credit unions, while not part of the study, will note the report advises banks that the keys to success will be brand management, personalized services and efficient pricing – something credit unions already do.

Levels of confidence are lower in regions hard hit by the economy, such as the U.S., the report said. The United Kingdom had the largest drop in confidence (63 percent). Other findings:

  • Macroeconomic factors had the most negative impact (53 percent) on customer confidence. Brand strength was cited as a key factor driving customer satisfaction worldwide.
  • Attrition levels are highest in Europe, with 39 percent having switched banks in the past. Leading factors in the switch were service quality (48 percent) and price (43 percent). Also cited were product offerings, branch proximity and lack of trust.
  • Finding a way to effectively deliver a personal service to customers will be a key success factor in the years ahead. While internet banking (83 percent), ATMs (79 percent), and branches (79 percent) are touch-points customers are most satisfied with today, satisfaction with call centers in consistently weaker (44 percent).
  • Banks need to reconnect with their customer base by improving the customer experience across their operations. Some are experimenting with new tools such as mobile banking, but there is demand across all channels – including call centers and branches – for greater personalization and attentiveness.

The Ernst & Young report is titled A New Era of Customer Expectation.

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