Welcome to the CFPB: Operational as of July 21st, Leadership Named

CFPB logoJust days before the Consumer Financial Protection Bureau (CFPB) became operational, President Obama announced his intent to nominate former Ohio Attorney General Richard Cordray to head the new agency… and not the architect of the CFPB, Elizabeth Warren. Cordray has been serving as the CFPB's assistant director for enforcement. Warren has been serving as special adviser to the U.S. Treasury Secretary and assistant to the President.

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Washington, D.C. News

Welcome to the CFPB: Operational as of July 21st, Leadership Named
Spotlight on Alleviating Credit Union Regulatory Burden
Gang of Six Deficit Efforts on Tax Reform Gains Momentum
Fed Issues Interchange 'Exempt/Not Exempt' Lists
House Subcommittee Tackles GSE Reform; Votes to Cut Freddie and Fannie Roles
Bernanke to Congress: Low Credit Access Stifling Economy
House Approves Flood Insurance Extension

Industry News

NCUA Considering Troubled Debt Restructuring Proposal
Credit Unions and Banks to Cease the Sales of Savings Bonds
Consumer Credit Rises in May, CU Members Borrow More
NCUA Files Third Suit Against Securities Firms

State News

Beat the July Heat With Visions of January
2011 Saw Positive Direction in State Revenue

Public Influence News

2011 REAL Deal Report Illustrates How Credit Unions Help Georgians 'Afford Life'
Mountain Empire CUs featured in Rome News-Tribune
Credit Unions Growing Commercial Lending Business
Credit Union MBL Push in the News
Excellence in Lending Entries Being Accepted: CUNA Mutual Group, CUNA Lending Council to Recognize CUs in Six Categories
The Crisis of Credit Visualized
CUs in the News
Consider This
Paying Attention
Statewide News Coverage

News of Interest

Challenges and Opportunities
450,000 to Receive Payments in Countrywide Settlement
July Foreclosure Notices Up 16 Percent in Metro Atlanta

News of the Competition

Wells Fargo Hit with $85 Million Penalty in Subprime Case
FDIC Sues Leadership at Failed Bank
Citigroup Profit up 24 Percent

July 22, 2011

 
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Georgia Credit Union Affiliates

AMERICA'S CREDT UNIONS

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Stay on top of what's happening with credit union advocacy by reading Creating Influence, the Georgia Credit Union Affiliates' advocacy e-newsletter! If you’d like to be added to the distribution list, email Advocacy@gcua.org or call an Advocacy Team member – Cindy Connelly, Mike Culbertson, Anita Paul or Brandee Bickle – at 800-768-4282.

 Washington, D.C. News
 

Welcome to the CFPB: Operational as of July 21st, Leadership Named

Just days before the Consumer Financial Protection Bureau (CFPB) became operational, President Obama announced his intent to nominate former Ohio Attorney General Richard Cordray to head the new agency… and not the architect of the CFPB, Elizabeth Warren. Cordray has been serving as the CFPB's assistant director for enforcement. Warren has been serving as special adviser to the U.S. Treasury Secretary and assistant to the President.

Cordray
Richard Cordray

A number of key Republicans opposed Warren for the position, raising doubts about the ability of her nomination to clear the Senate. Some in Congress are calling for structural changes to the CFPB before agreeing to confirm a director (see below article), and Cordray's nomination, also needing confirmation, is not guaranteed. Credit unions have been watching the development of the CFPB, and while Warren had publicly shared that she views the credit union industry as an ally in the fight to protect consumers, Cordray’s perspective remains to be seen. It is likely he will be opposed privately, if not publicly, by the banking industry, as it is reported that he is known as a “bank challenger” who launched several high-profile lawsuits against banks and lenders while serving as Ohio’s attorney general.

Created by the Dodd-Frank financial reform law, the CFPB became operational on Thursday, July 21st. The new agency has oversight of the Equal Credit Opportunity Act and the Fair Credit Reporting Act, as well as regulations addressing electronic fund transfers, mortgage originator registration, and mortgage assistance relief services. The CFPB is taking over authority of these and other rules from NCUA, Federal Reserve, FDIC, Office of the Comptroller of the Currency, Office of Thrift Supervision, Federal Trade Commission, and the U.S. Department of Housing and Urban Development.

The agency also plans to release separate reports on remittances and credit scores (credit score report found here). According to the agency, the remittance report will focus on ways to improve transparency and disclosures and on consumer remittance history. The credit score report focuses on differences between the credit scores that are provided to individual consumers for informational purposes and the credit scores that financial institutions use to determine eligibility for loans and other financial products. The agency is planning to "quantify the differences between the credit scores available to consumers and those used by creditors" in a follow up study. That pending study will also provide more details on how discrepancies in credit scores can harm consumers… and as of July 21st, consumers that are rejected for loans or other financial products will have free access to the credit score that was used to make the decision.

A release detailing the CFPB's work over the past year can be found here.

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SpotlightSpotlight on Alleviating Credit Union Regulatory Burden

Making it easier for the Financial Stability Oversight Council (FSOC) to stay or set aside potentially burdensome Consumer Financial Protection Bureau (CFPB) rules would balance consumer protection with safety and soundness concerns, CUNA said in a letter to Speaker of the House John Boehner (R-Ohio) and House Minority Leader Nancy Pelosi (D-Calif.). The FSOC is comprised of NCUA Chairman Debbie Matz, Treasury Secretary and FSOC Chairman Tim Geithner, Federal Reserve Chairman Ben Bernanke, and other regulators. The council, which held its first meeting in October of 2010, is charged with monitoring the financial system, overseeing the resolution of troubled financial institutions and providing a forum for discussion between financial regulatory agencies.

A bill (H.R. 1315) to be considered by the House would reduce the voting threshold needed for the FSOC to stay or set aside rules finalized by the CFPB from a two-thirds vote to a majority vote. The CFPB director would not be part of that vote. Potential regulatory issues could also be avoided if the CFPB, as suggested by CUNA, creates its own department to monitor regulatory burden. Such an office could be tied to the CFPB's Office of Community Banks and Credit Unions, and could work with NCUA and other regulators to assess the regulatory burdens face by credit unions and other financial institutions.

The CFPB was also the central topic of a July 19th Senate Banking Committee hearing entitled "Enhanced Consumer Protection After the Financial Crisis." Truliant FCU president/CEO Marcus Schaefer told the committee that while a consumer protection-focused regulator is a necessary part of the U.S. financial landscape, regulators should recognize that broadly implemented regulation can negatively impact the consumer-friendly practices of credit unions. Schaefer is chairman of the CUNA Federal Credit Union Subcommittee. "Seemingly small regulatory dictates can have a large impact on [credit unions and other small institutions] and ignore their 'local knowledge' of how best to communicate with members," Schaefer added. He also warned that "there may be unintended consequences to consumer-friendly institutions as the 'bad actors' are reined in by 'one-size-fits-all' regulations."
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Gang of Six Deficit Efforts on Tax Reform Gains Momentum

The bipartisan “gang of six” in Washington, D.C., which includes U.S. Senator Saxby Chambliss, has a deficit reduction plan that is gaining momentum, garnering the support of senators and President Obama. More than $1 trillion of the deficit cuts in the plan would come from tax increases in an overhaul of the tax code. The tax reform outline would cut the deficit, cap budgets, curb the growth of Social Security benefits, and reduce – but not eliminate – the tax breaks on mortgage interest, higher-cost health plans, charitable deductions, retirement savings, and tax credits for families with children. While both Republican and Democratic leaders remain wary, many senators are enthusiastic about the approach. Please click here to read more.

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Fed Issues Interchange 'Exempt/Not Exempt' Lists

As highlighted in the July 18th edition in the GCUA InfoSight Compliance eNewsletter, in the first step to facilitate a two-tiered debit card interchange fee structure, the Federal Reserve issued two lists – one with the names of each institution considered to be covered by the new cap on debit interchange fees and another with the names of those that are exempt. Credit unions are all too familiar of the Dodd-Frank Wall Street Reform Act, which required the Fed to set standards to determine whether debit interchange fees for larger issuers are reasonable and proportionate to their costs.

Federal ReserveThe Act exempts card issuers with less than $10 billion in assets. However, several parties including credit unions have voiced concern that the interchange law lacks enforcement for the exemption, and that there is no guarantee the networks will operate a two-tiered system. A resolution adopted by the Fed requires a report by April 2012 on whether there is a two-tiered system, and the impact of the rule on small issuers' interchange fee income. Staff will also bring a more comprehensive report to the board by April 2013 on whether there is a change in debit interchange fee income for smaller issuers, whether merchants are discriminating against small issuers, and the impact of exclusivity provisions.

The Fed plans to update its exempt/not exempt lists annually, and added that if an issuer does not appear on either list and is exempt from the interchange fee standards, it should "so certify to its participating payment card networks." If an institution believes its placement on a list is not accurate, the Fed said, it may submit a request for a correction of the information using this email address: IssuerExemptionListsRegII@frb.gov. A separate interim final rule would allow an additional penny to be charged if financial institutions are in compliance with Fed established fraud prevention standards. Comments on this interim final rule, which is effective October 1, will be accepted until September 30. The debit interchange cap is also effective October 1.
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House Subcommittee Tackles GSE Reform; Votes to Cut Freddie and Fannie Roles

Fannie & Freddie logosH.R. 2440, which would require government-sponsored mortgage enterprises Fannie Mae and Freddie Mac to "dispose of all non-mission critical assets," was approved via voice vote by the House Financial Services subcommittee on capital markets and government-sponsored enterprises on July 12th. The legislation, which is also known as the Market Transparency and Taxpayer Protection Act, was introduced by Rep. Robert Hurt (R-Va.). Under the proposal, the director of the Federal Housing Finance Agency would require Fannie Mae and Freddie Mac to identify all valuable assets and describe the functions, characteristics, and estimated values of the assets. The FHFA director would then determine which are and which are not critical to the GSEs' mission and will create a plan to sell or dispose of non-critical assets. Financial Services Committee Chairman Rep. Spencer Bachus (R-Ala.) said that "selling assets that have nothing to do with the mission of these two companies is critical to protecting taxpayers from wasteful spending, and ensuring that Fannie and Freddie engage only in activities related to their mission."

The subcommittee also voted to approve the Fannie Mae and Freddie Mac Transparency Act (H.R. 463); the Fannie Mae and Freddie Mac Taxpayer Payback Act (H.R. 2436); the Housing Trust Fund Elimination Act (H.R. 2441); the Cap the GSE Bailout Act (H.R. 2462); the Eliminate the GSE Charter During Receivership Act (H.R. 2439); and the GSE Legal Fee Reduction Act (H.R. 2428).

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Bernanke
Federal Reserve Chairman Ben Bernanke
Bernanke to Congress: Low Credit Access Stifling Economy

Limited credit access is one of several "headwinds" that the U.S. economy continues to face as the nation works to recover from the economic crisis, Federal Reserve Chairman Ben Bernanke said during the Semiannual Monetary Policy Report to Congress. Slowed consumer spending, low home values, and reduced government spending also continue to hinder recovery, he added. Bernanke spoke before the House Financial Services Committee on July 13th, and the Senate Banking Committee on July 14th.

Bernanke said that recent weak economic performance, which was demonstrated by an uptick in the unemployment rate and lower than expected job growth, could be blamed on "several factors that are likely to be temporary." These factors include the impact of high energy and food prices on consumer spending and the effects of Japan's recent earthquake on auto manufacturing. Officials predict that the nation's gross domestic product could increase by 2.9 percent in 2011 and 3.7 percent in 2012. Both of these increases would be better than what has occurred so far in 2012, and Bernanke said that his agency may again move to stimulate the economy if economic conditions do not improve.  

Call to ActionBernanke’s comments create the perfect backdrop for the credit union member business lending legislative initiative. Credit unions in Georgia and across the country have asked Congress for an increase in credit union member business lending authority as a way America's credit unions can increase access to capital for small businesses and help them create jobs with no cost to taxpayers. Lifting the credit union member business lending cap to 27.5 percent of total assets, as proposed in separate Senate and House bills, could inject an estimated $13 billion in funds into the economy and create more than 140,000 new jobs. To ask your legislators to support the increase to the MBL cap (and thank them if they are already co-sponsors), please click here.
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NFIP logoHouse Approves Flood Insurance Extension

The U.S. House on July 12th voted overwhelmingly in favor of a continuation of the National Flood Insurance Program (NFIP) for an additional five years, with only 22 nay votes (two from Georgia: Rep. Paul Broun and Rep. Tom Graves). The legislation (H.R. 1309) preserves the rights of credit unions and others to protect their collateral from flood hazards and would clarify that flood insurance purchases "would date back to the date the existing policy lapsed or became insufficient in coverage amount, including any premiums or fees incurred during the 45-day notification period." These changes are supported by credit unions through CUNA. The NFIP was set to expire on September 30.

Legislators from both bodies of Congress and both sides of the aisle have called for reforms to the NFIP, which provides more than $1.2 trillion in coverage to Americans in flood-prone areas. Sens. Tim Johnson (D-S.D.) and Richard Shelby (R-Ala.) have both cited the need for reforms in recent weeks, with Shelby saying that every part of the NFIP "must undergo significant revision for it to survive and continue on a sustainable path." The U.S. Government Accountability Office (GAO) late last month said that Congress should act to increase the financial stability of NFIP and limit taxpayer exposure.
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Industry News
 
Hyland
NCUA Board Member
Gigi Hyland
NCUA Considering Troubled Debt Restructuring Proposal

NCUA Board Member Gigi Hyland has hinted that the agency could soon release an Interpretive Ruling and Policy Statement (IRPS) addressing Troubled Debt Restructurings (TDR). Hyland in July's edition of The NCUA Report said the proposal would recommend that credit unions adopt charge-off, loan grading and modification frequency standards that are similar to those used by banks. TDR loans, which have specific accounting and reporting requirements, sometimes occur as a result of loan modifications. Financial statement notes and call report data associated with TDRs are also unique.

Credit unions would be advised to create and implement their own limits on the number and frequency of loan extensions, loan deferrals, loan renewals and loan rewrites, according to Hyland. She added that the potential guidance "would emphasize the need for comprehensive and effective risk management, reporting and internal controls related to these types of loans." The IRPS would also encourage credit unions to "adopt standards prohibiting additional advances that finance the unpaid interest and fees on these loans," she said. A similar approach could also be applied to closed-end and open-end loans that are secured by one- to four-family residential dwellings, she added. The agency addressed TDR-related issues in a webinar in January; please click here for the archived presentation.
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Savings BondsCredit Unions and Banks to Cease the Sales of Savings Bonds

After 75 years, savings bonds will no longer be sold at credit unions and other financial institutions as of January 1, 2012, the U.S. Treasury has reported. Series EE and I savings bonds will still be made available for purchase via the Treasury's online purchase platform, www.TreasuryDirect.gov. Consumers can also use the Treasury's online platform to convert existing paper bonds into electronic bonds and to purchase savings bonds via a payroll savings plan.

The Treasury estimates that the move from paper to electronic bonds will save $70 million in taxpayer funds over five years. Treasury Public Debt Commissioner Van Zeck said that "savings bonds are very much a part of this country's history and culture, and will remain a part of America's future – but in electronic form. It's time for us to take a 1935 model and make it a 21st century investment tool," Zeck added. Paper savings bonds may still be redeemed at financial institutions. Bonds that have been misplaced or damaged, but have not matured, can be reissued in paper or electronic form.

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Consumer Credit Rises in May, CU Members Borrow More

Consumers borrowed $5.08 billion more in May than they did in April, according the Federal Reserve's Consumer Credit statistics for May, released on July 8th. It was the eighth consecutive increase and more than the $3 billion increase forecast by economists:

  • The total amount borrowed in May reached $2.432 trillion, up from April's $2.427 trillion.
  • The amount borrowed from credit unions totaled $223 billion, up from April's $221.8 billion and March's $219.7 billion.

Credit cardCredit card debt or revolving credit shot up by $3.36 billion to $793.1 billion after a decline of $867 million in April to $789.8 billion, according to the Fed's statistics. May's figure is the largest monthly increase in credit debit since mid-2008, halfway through the financial crisis that led to the recession.

Although the Fed doesn't release a commentary, some analysts said one reason for the increase may be that consumers facing limited job prospects were forced to turn to credit cards frequently to pay bills.

At credit unions, revolving debt totaled $35.6 billion, up from $35.2 billion in April and $35 billion in March, according to the Fed's statistics. Non-revolving debt, which includes student loans and auto loans, grew $1.7 billion overall to $1.639 trillion, up from $1.637 trillion in April. At credit unions, consumers borrowed $187.4 billion in May, up from $186.6 billion in April. While other sectors saw increases in consumer debt, finance companies that saw a decline in both revolving and nonrevolving credit. The report does not include home mortgage loans and home equity lines of credit.

The Georgia-based electronic payments company First Data saw the same increase in dollar volume and transaction growth, citing that consumers are increasing turning to credit cards to fund non-discretionary purchases in a July 12th Atlanta Business Chronicle article. Some statistics:

June Transaction Growth

  • Credit - up 6.8 percent
  • Signature Debit - up 8.8 percent
  • PIN Debit - up 3.8 percent
  • Check - down 12.3 percent

June Dollar Volume Growth

  • Credit - up 10.7 percent
  • Signature Debit - up 8.5 percent
  • PIN Debit - up 6 percent
  • Check - down 12.6 percent
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NCUA Files Third Suit Against Securities Firms

NCUA is seeking $629 million in damages from RBS Securities, again alleging that that firm violated federal and state securities laws when it sold securities to Western Corporate FCU. This is the third suit of its kind. Similar suits have been filed against RBS Securities and J.P. Morgan Securities, LLC in Kansas federal District Court. Those suits related to securities that were purchased by U.S. Central FCU, based in Lenexa, Kansas. To read more, please click here.

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State News
 
Gov. Nathan Deal with 2011 Grassroots Academy participants Grassroots Academy
Beat the July Heat With Visions of January

Save the date: On January 24th the Grassroots Academy returns for its fourth straight year, and plans are under way for a unique experience for participants. The Academy is the ideal opportunity for credit union advocates to get connected with state leaders, gain inside information, and learn how they can make a difference for the industry. The Academy is equally valuable for both the previous or first-time participants, and is held across from the Gold Dome… but space, as in years past, will be limited. Watch for details in December and mark your calendar today!

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2011 Saw Positive Direction in State Revenue

Georgia’s tax revenue rose 7.8 percent for the fiscal year of 2011, which ended in June. The Georgia Department of Revenue reported on July 13th that the state received $15.3 billion in revenue from various taxes, compared to $14.1 billion in fiscal 2010. The state saw the boost from higher sales tax, individual income tax, and motor fuel taxes. To read the Atlanta Business Chronicle article on the breakdown, please click here.

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Public Influence News
 
2011 REAL Deal Report Illustrates How Credit Unions Help Georgians 'Afford Life'

As the economy rebounds, many Georgians are setting their sights on improving their financial situation and adopting a “new normal” lifestyle of saving and frugality. A new report by Georgia Credit Union Affiliates demonstrates how credit unions in the state are using community outreach and financial education initiatives to help Georgians achieve their financial goals.

The 2011 REAL Deal Report highlights the impact credit unions in Georgia made in 2010 to provide products and services to improve the lives of consumers with middle-class aspirations. “I think this information is so powerful and shows how much of a financial and humanistic impact that credit unions are having in Georgia,” said Bobby Michael, president/CEO of CORE Credit Union in Statesboro.

Click here to read the report. Credit unions throughout Georgia will receive a copy of the report soon. Credit Union Times and CUNA’s News Now have reported stories about the report’s findings. Click below to read the articles:

Georgia CUs help residents 'afford life'

Georgia Report Touts Members’ Financial Gains
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Mountain Empire CUs featured in Rome News-Tribune

Several credit unions in the Mountain Empire Credit Union Chapter were mentioned in an article in the Rome News-Tribune. The story came about through efforts of GCUA’s Public Influence Team working with PR firm Weber Shandwick. Mike Mercer, GCUA’s president/CEO, met with the reporter and Coosa Valley FCU President Ron Tomlinson to discuss the state of credit unions in Georgia. “A child knows what a bank is; they have a mental perception or concept of what that is,” said Tomlinson. “You say credit union, and a large number of educated people are not totally sure of what that is.”

The article spotlighted several credit unions and explained the unique difference credit unions bring to the consumer financial services landscape. Local governance is one of the keys to the credit union concept. Credit unions are owned by their members; there is no outside stock sold, the article explains. “We’re not in the business of harvesting profits from depositors and delivering to third party shareholders,” Mercer said. “All of the benefits of what goes on goes right back to the members, and so what that does is allow credit unions to focus more on service to members and making them happy.” The reporter noted Mercer’s comment that credit unions and traditional banks keep each other honest. “The for-profit sector keeps credit unions efficient because of the continuous pursuit of the return on investment,” said Mercer. “The credit unions keep the for profit suppliers honest with pricing; it’s a mutually beneficial thing for customers that both banks and credit unions exist in the same state.”

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Credit Unions Growing Commercial Lending Business

According to an article in USAToday, credit unions are expanding to fill a void in business lending left by banks since the financial crisis. As banks have been slow to start lending again, credit unions have gotten a head start. The article spotlights Des Moines, Iowa business owner who turned to his credit union after being turned down for a line of credit from his bank. “Businesses are looking for new sources of credit; credit unions are looking for new sources of borrowers,” said Pat Keefe, spokesman for CUNA. “They’re improvising strategies to do business lending.” The article cites credit unions’ fight to raise the business lending cap, and the opposition they face from the banking industry. Banking executives believe credit unions' exemption from federal income tax is already an unfair advantage, and they argue the increased emphasis on commercial lending calls the advantage further into question.

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Credit Union MBL Push in the News

In an appearance on Fox Business Channel on July 13th, CUNA CEO Bill Cheney noted for a national audience that credit unions "are ready to do more" to help the economy; they just need Congress to act by increasing the member business lending cap to make more capital available to the nation's small businesses. Fox Business anchor Charles Payne noted that opposing an MBL cap lift while small businesses are "drowning" is "beyond the pale" and asked who would oppose such a plan. Cheney said that bankers are the only group against it. Cheney touted the benefits of an MBL cap lift, noting that lifting the current 12.25 percent of assets cap to 27.5 percent could inject over $13 billion in funds into the economy, creating over 140,000 new jobs. "We know we need jobs to stimulate the economy, and we have no cost stimulus that can go out and help small businesses," Cheney said.

ASmarterChoice logoThe nearly 300 credit unions that are near the 12.25 percent of assets cap account for 51 percent of the total small-business lending done by credit unions, Cheney noted. Cheney added that credit unions have increased their small-business lending by 38 percent since December of 2007, while bank small-business lending has declined by 5 percent since then. Cheney also discussed the credit union difference, which gives consumers "a better deal" than for-profit banks. He noted CUNA's new Web site, www.aSmarterchoice.org, helps consumers find credit unions to join.
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Excellence in Lending Entries Being Accepted: CUNA Mutual Group, CUNA Lending Council to Recognize CUs in Six Categories

Excellence in Lending logoEntries are being accepted for the 12th annual Excellence in Lending Awards, which recognizes outstanding lending results and practices by credit unions. The Excellence in Lending Awards identifies and shares examples of lending excellence within the credit union movement by recognizing individual credit unions for their ability to serve members while sustain sound financial performance. Credit unions demonstrating an ability to meet member needs through innovation are excellent award candidates.

“This competition offers the opportunity for a credit union to be recognized as one of the industry’s best lenders,” said Dan Murray, vice president for lending services at CUNA Mutual Group. “This national recognition provides a great opportunity for credit unions to promote their award-winning lending success locally to potential members.” Credit unions may be nominated for the 2011 award in the following categories;

Consumer Lending Excellence

  • Assets less than $250 million
  • Assets more than $250 million

Mortgage Lending Excellence

  • Assets less than $250 million
  • Assets more than $250 million

Low/Modest Means Excellence

  • Any asset level

Business Lending Excellence

  • Any asset level

Applications and more information regarding the awards are available at http://www.cunalendingcouncil.org/awards/excellencelending.html. The deadline for submitting applications is August 5th.

Sponsored by CUNA Mutual and the CUNA Lending Council, the Excellence in Lending Awards will be presented at the CUNA Lending Council’s annual conference November 6-9 in New Orleans. Airfare, hotel and conference registration for one representative of each of the winning credit unions is included with the award. CUNA Lending Council is a community of credit union lending professionals dedicated to being the primary source of best lending practices and educational opportunities for the industry.
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The Crisis of Credit Visualized

This video offers a simplified explanation of the credit crisis facing the U.S. The video is in two parts, and explains how the banking and mortgage industries impacted the spiraling consumer debt disaster.

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CUs in the News

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 current issue as well as archives of this quarterly report, click here.

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Statewide News Coverage

Get the latest in statewide news coverage, click here.

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News of Interest
 

Cash or creditChallenges and Opportunities

The Associated Press reported on July 14th its recent poll findings on debit card use by consumers. Citing that about two-thirds of consumers use debit cards more frequently than credit cards, but if a fee were assessed, how would that impact their payment habits? The survey found that:

  • With a $3 monthly fee to use the card, 61 percent would opt to pay in another manner,
  • With a $5 monthly fee, 66 percent would pay differently,
  • With a $7 monthly fee, 81 percent would change their payment habits.

The article continues with the description of the recent interchange cap, and how large banks such as Chase, PNC Bank and Wells Fargo have already ceased or scaled back debit rewards programs, and the decline of free checking. In Georgia, Chase is testing a $15 fee for basic checking accounts in the Atlanta market. These changes and more by the above financial institutions and others will have an impact on consumer behavior… the full effect is yet to be seen. Are there challenges with the interchange regulation? Most definitely. However, with challenges there are opportunities for credit unions to succeed, to help their members, to further differentiate themselves and gain market share.

Reporter/blogger Henry Unger of The Biz Beat asks readers whether a monthly fee would drive them away from using debit cards. He cites the AP poll results mentioned above and gets some interesting responses. Click here to read over 120 comments by readers; some might surprise you.

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450,000 to Receive Payments in Countrywide Settlement

The New York Times reported on July 20th that more than 450,000 borrowers who were charged excessive fees by Countrywide Home Loans when they fell behind on their mortgages will begin receiving the $108 million the company agreed to pay in a settlement struck with the FTC in June of 2010. To read more please click here.

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July Foreclosure Notices Up 16 Percent in Metro Atlanta

Foreclosure notices in metro Atlanta rose 16 percent from a 30-month low set in June, according to data released on July 11th by Equity Depot. The 8,579 notices in the 13-county metro area represented a 4 percent increase from July 2010, Kennesaw-based Equity Depot said. Still, there was a silver lining in this year’s numbers: over the first seven months of the year, notices were down 6 percent compared with last year, which set a record. And over the past 24 months, July had the fifth lowest number of foreclosures, despite the hefty increase from June. To read more and see county-specific numbers, please click here for the Atlanta Journal-Constitution article.

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News of the Competition
 

Wells Fargo Hit with $85 Million Penalty in Subprime Case

The Wall Street Journal reported on July 20th that the Federal Reserve has assessed an $85 million penalty against Wells Fargo over allegations that a subsidiary improperly steered borrowers into costly subprime loans. This is the largest civil penalty the Fed has assessed in a consumer-protection action.

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FDIC sealFDIC Sues Leadership at Failed Bank

On July 14th, the FDIC sued 15 former directors and officers of a Haven Trust Bank, which failed in December of 2008. The FDIC is accusing the officials of gross negligence and other breaches of their duties. To read the Atlanta Journal-Constitution article on this, please click here.

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Citigroup Profit up 24 Percent

The New York Times reported on July 15th that Citigroup has announced a profit of $3.3 billion, beating analysts’ estimates. Citigroup’s results came after JPMorgan Chase’s announcement of a solid second-quarter performance across almost all of its business on July 14th. To read more, please click here. Breaking the trend was Bank of America, which reported a loss of $8.8 billion in the second quarter. To read more on BoA, please click here.

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