Senate Panel Approves Three Data-Breach Protection Bills

Capitol with digitsOn September 22nd, the Senate Judiciary Committee approved by a 10-8 party-line vote panel Chairman Patrick Leahy’s data-breach protection bill (S. 1151). The legislation includes added language that would exempt financial institutions that are subject to the Gramm-Leach-Bliley Act from the legislation’s data protection and notice requirements. However, concerns still abound about the scope of the bill’s pre-emption provisions. Sen. Chris Coons (D-Del.), who was involved in crafting the GLBA exemption with Leahy, said he would work to resolve those concerns as the legislative process moves forward.

Read more
 

Washington, D.C. News

Senate Panel Approves Three Data-Breach Protection Bills
CU Advocates Travel to D.C. Around October Hearing for MBL
Shelby Introduces Reg Relief Bill

Industry News

FFIEC Releases 2010 HMDA Data
Economic Forecast and Its Impact on Credit Unions
Charges Brought Against Gambling Site Tied to CU with Money Laundering

Election News

MBLs On the Campaign Trail
Campaign Ads to Come Early to Georgia

Public Influence News

WSJ: Credit Unions a Better Value Than Banks
Credit Unions Growing as Banks Are Shrinking
CUs in the News
Consider This
Paying Attention
Statewide News Coverage

News of Interest

Visa, MC Expected to Raise Small-Purchase Fees

News of the Competition

Taking Advantage of a Window of Opportunity
BoA Drops Low-Rate Mortgage Program

September 30, 2011

 
Project ZIP Code
 
Contact Your Legislator
 
Maximize the Power of the Media
 
State Legislative Update
 
Legislative Grids
 

Georgia Credit Union Affiliates

AMERICA'S CREDT UNIONS

Extend the Reach of Creating Influence

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
 

Key with lock symbolSenate Panel Approves Three Data-Breach Protection Bills

On September 22nd, the Senate Judiciary Committee approved by a 10-8 party-line vote panel Chairman Patrick Leahy’s data-breach protection bill (S. 1151). The legislation includes added language that would exempt financial institutions that are subject to the Gramm-Leach-Bliley Act from the legislation’s data protection and notice requirements. However, concerns still abound about the scope of the bill’s pre-emption provisions. Sen. Chris Coons (D-Del.), who was involved in crafting the GLBA exemption with Leahy, said he would work to resolve those concerns as the legislative process moves forward.

In related news, the committee also approved by identical 10-8 party-line votes data-breach protection bills – S.1408 and S. 1535 – sponsored by Sens. Dianne Feinstein (D-Calif.) and Richard Blumenthal (D-Conn.), respectively. While those measures are similar to Leahy’s S. 1151, S. 1408 and S. 1535 both have significant flaws with respect to the treatment of GLBA institutions, pre-emption and other issues.

Back to top
 
 

Hike the HillCU Advocates Travel to D.C. Around October Hearing for MBL

Georgia credit union advocates will be traveling to Washington, D.C., October 4th through the 6th, and one of the top topic items for the individual meetings with the Georgia delegation is promoting member business lending. Their message echoes hikers – both in the district and in D.C. – from previous meetings, and is ideally timed. The potential benefits that lifting the MBL cap could provide for an ailing economy will be front and center at a scheduled October 12th hearing before the House Financial Services subcommittee on financial institutions and consumer credit.

Credit unions continue the push to garner additional support for H.R. 1418 and S. 509, both of which would lift the MBL cap to 27.5% of assets. The MBL cap-lift bills have been suggested as one small piece that could be added to the Obama administration's larger plan to reinvigorate the ailing economy. There are two bills:

Back to top
 
 

Shelby Introduces Reg Relief Bill

Senate Banking Committee ranking member Richard Shelby (R-Ala.) introduced the Financial Regulatory Responsibility Act of 2011 (S. 1615) on September 22nd that would require financial regulators to justify proposed rules. The legislation would mandate, among other things, that regulators do a detailed analysis of a rule's benefits and costs, including its effect on economic growth and net job creation. Under the bill, regulators would be barred from promulgating a rule if the analysis showed that the regulation's costs outweighed its benefits.

All of the Senate Banking Committee's Republican members are co-sponsors of the legislation. "My colleagues and I are simply proposing that each financial regulator determine whether the economic cost of a new regulation exceeds its economic benefit," Shelby said. "If it does, then the regulation should not be implemented." Read more.

Back to top
 
 
Industry News
 

MortgageFFIEC Releases 2010 HMDA Data

The Federal Financial Institutions Examination Council released the 2010 Home Mortgage Disclosure Act data on mortgage lending transactions at the 7,923 covered financial institutions including credit unions on September 22nd. The data includes disclosure statements, aggregate data for metropolitan statistical areas, nationwide summary statistics of lending patterns, and Loan/Application Registers, the FFIEC said in the release. This data covers 12.9 million mortgage applications, 3.2 million mortgage purchases, and 165,000 denied preapproval requests. The 2010 data continued to show a historically large percentage of Federal Housing Administration-insured mortgages. Such mortgages accounted for 36 percent of all originations in 2010, about the same as the 37 percent in 2009, and up from 7 percent in 2007.

Overall, loans backed by the FHA, Veterans Administration or federal farm programs accounted for 46 percent of all new mortgages in 2010, a Federal Reserve analysis article said. "The increase … reflects several factors, such as increased loan-size limits allowed under the FHA and VA lending programs and reduced access (including more-stringent underwriting and higher prices) to conventional loans …," the article said. According to the data, reported mortgage applications in 2010 declined 14 percent from 2009 to 12.9 million, far below the 27.5 million applications reached in 2006, the year before the financial crisis emerged.

Back to top
 
 

Recession and recoveryEconomic Forecast and Its Impact on Credit Unions

CUNA’s Economic and Credit Union 2011-2012 Forecast is less optimistic than previous ones due to weakening manufacturing numbers, a frail labor market, falling equity prices and the turmoil related to the Euro-zone crisis. And, the possibility of a double dip recession has increased.

How does the forecast impact credit unions?

  • "Credit unions have been making progress, but it has been slow progress," said Paul Ledin, CUNA senior data analyst. As uncertainty in the market remains, loan growth will remain weak and the uncertainty will act a headwind against credit unions' loan growth.
  • "A recession is not likely to happen, but the fear in the market is what causes problems -- all driven by the manufacturing and other economic numbers being down," he added. There now is a one-in-three chance of recession, which has gone upward from a one-in-four chance. The fact that the chance increased is causing concern.
  • A key factor is a higher than normal unemployment rate, which leads to higher delinquency and charge-off rates. That in turn feeds into lower loan demand because more people are unemployed. "People will pull back on spending, which will depress loan growth," Ledin said.
  • Another factor is the flattening of the Treasury yield curve in 2012 due to the Federal Reserve's "operation twist." As long-term interest rates fall, the cost of funds will remain steady, but the interest income derived from them will decline, Ledin said. "It's clear the Fed can push down interest rates, but how that translates into loan demand is not as clear at credit unions," he added.
  • Members are in synch with credit unions. People are behaving like credit unions are; during the past few years, they have built up their rainy-day funds. Members are probably going to become more sensitive to short-term interest rates -- balancing savings versus consumption. But the uncertainty issue still is there, and it will affect long-term spending for bigger-ticket items.

Is there anything credit unions should do?

  • "As the interest margins come down, for credit unions to thrive they will need to drive volume to maintain their current level of income. They'll want to grow loans," Ledin concluded.

Back to top
 
 

Online gamblingCharges Brought Against Gambling Site
Tied to CU with Money Laundering

The Department of Justice has charged the owners and executives of an online gambling site, which deposited funds into a now-defunct Arizona-based credit union, with paying themselves $444 million since 2007 while defrauding players in what the government alleges was a massive Ponzi scheme.

The department filed an amended complaint Sept. 20, according to The Wall Street Journal (Sept. 26). It had filed civil allegations against the site, Full Tilt Poker, as well as other online poker sites and executives at related companies in April, accusing them of money laundering, bank fraud, and illegal gambling.

The government alleges the site allowed players to bet with funds it never collected, creating $130 million in phantom funds, and then used other players' money to pay both players cashing out and the site's owners. The government closed the site in April and the company could not pay $300 million the Justice Department said it owed players. The situation that "tipped the balance" involved Vensure FCU, a small credit union in Mesa, Ariz., which allegedly deposited poker-related funds and was placed into conservatorship by federal regulators in April. NCUA placed the credit union into conservatorship on April 15. When it finally shuttered the credit union in July, NCUA said the 140-member, $8.1 million asset credit union was insolvent and had failed to properly diversify its business. The agency had recommended the credit union build a loan program but found it relied on income from processing online gambling transactions to survive.

Back to top
 
 
Election News
 

Election 2012MBLs On the Campaign Trail

Credit union advocates have been hard at work pushing for an MBL increase, and that hard work surfaced on the presidential campaign trail as a talking point of two candidates:

  • Rick Perry, speaking at the Iowa Credit Union League Convention, shared that credit unions that serve small businesses need to be freed up to help revive Main Street, and need to see the member business lending cap raised.
  • Mitt Romney discussed MBLs with a credit union advocate who was present at an Arizona business roundtable, and said he would look into the MBL issue himself.
Back to top
 
 

Campaign Ads to Come Early to Georgia

Georgia’s Secretary of State Brian Kemp announced on September 29th that the presidential primary in Georgia will be held on March 6th, 2012 … or “Super Tuesday.” Republican National Committee rules actually forbid any state other than Iowa, New Hampshire, Nevada and South Carolina from holding a primary before this date … and those states that violate those rules (several, such as Missouri, Arizona, and Michigan) will lose half of their voting delegates on the Republican side. Click here to read more.

Back to top
 
 
Public Influence News
 
Wall Street JournalWSJ: Credit Unions a Better Value Than Banks

An article in the The Wall Street Journal touted credit unions as a more affordable option than banks. "Credit unions are able to beat banks across the board because they're nonprofit and owned by members, so they have an incentive to offer the best deals possible," says Greg McBride, senior financial analyst at Bankrate.com," according to the article, which appeared with the headline "Credit Unions: a Cheaper Banking Option." Some highlights from the article:

  • About three out of four credit unions still offer accounts with no monthly service fees.
  • Out-of-network ATM fees and overdraft fees are lower at credit unions on average.
  • Credit unions charge members an average 99 cents for using an out-of-network ATM, compared with an average $1.41 for banks.
  • Credit unions also offer more attractive rates on certificates of deposits, credit cards and loans.
  • About 95% of credit unions offer auto loans.

The article advised consumers to look for local credit unions and find out about eligibility at aSmarterChoice.org, the new site developed by CUNA and the leagues to help consumers understand that credit unions are the best option for consumers conducting their financial business. The site also features the industry's most comprehensive CU locator tool.

Back to top
 
 
Credit Unions Growing as Banks Are Shrinking

Georgia credit unions increased assets and loans in the past year, even as banks lost ground in those areas. To read more please click here.

Back to top
 
 

CUs in the News

Get the latest in local CU coverage, click here.

Back to top
 
 

Consider This

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

Back to top
 
 

Paying Attention

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

Back to top
 
 

Statewide News Coverage

Get the latest in statewide news coverage, click here.

Back to top
 
 
News of Interest
 

Visa, MC Expected to Raise Small-Purchase Fees

Visa Inc. and MasterCard Inc. plan to increase the fees merchants pay for small-ticket debit purchases to the full amount allowed under the Federal Reserve's new rules that take effect Oct. 1, said analysts interviewed by Bloomberg News (Sept. 23) . The move could discourage some merchants from accepting debit cards for small transactions. The world's largest payments networks may increase fees from eight cents for a $2 purchase to 23 cents, Thomas McCrohan, analyst at Janney Montgomery Scott LLC, told the publication.

DiceThe move could result in a backlash from "mom and pop" merchants such as coffee shops, which process a lot of $3 transactions, said Bloomberg News. A second analyst, John Kraft with D.A. Davidson & Co., said Visa plans to increase its rate for some small ticket transactions to an amount equal to the Federal Reserve's cap. Although Visa and MasterCard have not officially announced these specific increases, they have indicated they would change interchange fees on debit cards in response to the Federal Reserve's rules finalized in June and mandated by the Dodd-Frank Act. The rules limit the fees merchants pay for a consumer's debit-card transaction to 24 cents per transaction. The cap applies to banks with assets of $10 billion or more.

Here in Georgia, the Atlanta-based payments processor First Data Corp. sent clients a notice earlier this month saying that Visa will increases prices for small-ticket debit transactions subject to the new rate caps to a price that would equal 0.05% of the transaction amount, plus 21 cents and a one-cent adjustment for fraud costs. Any increase for small ticket transaction fees would not likely affect all merchants equally because fees vary depending on the type of retailer and volume of card purchases.

Back to top
 
 
News of the Competition
 

WindowTaking Advantage of a Window of Opportunity

The Durbin Amendment’s new rules to limit interchange fees to large institutions go into effect in October. With several large banks instituting monthly fees and eliminating rewards, CITI Group is taking advantage of the window of opportunity institutions like Bank of America, American Express, and Discover Financial Services are creating … and ramping up their card offerings to the public. Citi stated that it is hoping to capitalize on the actions of these companies, and convince dissatisfied debit customers to use credit cards instead. To read the September 20th Wall Street Journal article highlighting their strategy, please click here.

Back to top
 
 

BoA Drops Low-Rate Mortgage Program

The Atlanta Development Authority has been forced to drop a new program offering 30-year fixed-rate home mortgages because of a Bank of America decision to stop servicing the loans. BOA is winding down its correspondent lending business, which allowed the company to function as the master servicer for the development authority’s 3.5 percent interest mortgages. As a result, this loan pipeline for the authority is closed. To read the September 23rd Atlanta Business Chronicle article, please click here.

Back to top