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Veterans Day

We thank all veterans of the U.S. Armed Forces. Celebrate Veterans Day, November 11th, and take time to thank a veteran for their service and commitment to protecting us and our country.

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In Celebration of Thanksgiving, Creating Influence will not be published on November 25 and will resume on its next scheduled publication date of December 9.


Durbin, Reed Asking for One-Page Fee Disclosure

Fee disclosureSen. Richard Durbin (D-IL), known for the “Durbin Amendment,” which altered the interchange process for debit-card transactions and triggered large institutions to consider a $5 monthly fee for their debit cards, is now spearheading an initiative to change financial disclosure forms. On November 3rd Sens. Durbin and Jack Reed (D-RI) asked the Consumer Financial Protection Bureau (CFPB) to require financial institutions to post on their websites a standardized disclosure form that lists all fees and key terms associated with checking accounts. Durbin said the one-page model disclosure is intended to give consumers "clear, upfront and accurate information about the fees that they will be charged and will allow consumers to shop around and make sound financial decisions."
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Washington, D.C. News

Durbin, Reed Asking for One-Page Fee Disclosure
Financial-Trading Tax Bills Introduced
Date: CFPB to Review Obsolete Regs
Public Choice in Mortgage Closing Form Revisions
Issues On the Horizon: Credit Card Interest-Rate Cap Legislation

State News

Tax Reform on the Horizon

Industry News

J.P. Morgan Seeks NCUA Lawsuit Dismissal
WOCCU Launches International Year of Co-ops Online Platform and Resources

News of Interest

Durbin Proposes the FTC Report on the Impact of Interchange
New Federal Foreclosure Appeals
CFPB to Give Offenders Early Warning
Possible Growth Option for CU Card Programs? MasterCard Sees Spike in Card Use

News of the Competition

Wally World Not Your Competition? Think Again.
Public Backlash Prompts Bank Fees to Fly Away

Public Influence News

Banks or Credit Unions?
650,000 New Members
4th Annual REAL Deal Reunion Makes Big Impact
CUs in the News
Consider This
Paying Attention
Statewide News Coverage

November 11, 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
 
Reed and Durbin
From left, U.S. Sens. Jack Reed
and Richard Durbin
Durbin, Reed Asking for One-Page Fee Disclosure

Sen. Richard Durbin (D-IL), known for the “Durbin Amendment,” which altered the interchange process for debit-card transactions and triggered large institutions to consider a $5 monthly fee for their debit cards, is now spearheading an initiative to change financial disclosure forms. On November 3rd Sens. Durbin and Jack Reed (D-RI) asked the Consumer Financial Protection Bureau (CFPB) to require financial institutions to post on their websites a standardized disclosure form that lists all fees and key terms associated with checking accounts. Durbin said the one-page model disclosure is intended to give consumers "clear, upfront and accurate information about the fees that they will be charged and will allow consumers to shop around and make sound financial decisions."

The legislators suggested that the CFPB form could be based on a form developed by The Pew Charitable Trusts' Safe Checking in the Electronic Age Project. This form includes disclosures on account-opening fees, monthly account fees, ATM fees, overdraft and check processing policies, and other items. Pew, which focused attention on practices by credit-card issuers in 2008-2009, has been working to do the same with checking-account fees. In a study earlier this year, it said bank disclosures typically overwhelm depositors with an avalanche of paper, citing an average of 111 pages. Read more here, and read the Pew results here.

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U.S. CapitolFinancial-Trading Tax Bills Introduced

On November 2nd, Sen. Tom Harkin (D-IA) and Rep. Peter DeFazio (D-OR) introduced bills that would impose a 0.03 percent tax on financial trading transactions, and urged the Congressional deficit-reduction panel to include the idea in their proposal. The tax, which would take effect on January 2013 if passed, would apply to most non-consumer financial trading, including stocks, bonds and derivatives contracts. The bills would exempt initial issuance and debt with an original term of less than 100 days.

The tax “would help raise necessary funds to invest in our infrastructure and the education of our children, among other priorities, and would do so without hurting job creation. There is no question that Wall Street can easily bear this modest tax,” Harkin said. The legislation, which is modeled on a European Union proposal for a 0.1 percent financial-transaction tax on stock and bond trades, initially has garnered little Congressional support. Read Harkin’s press release here.

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Date
Raj Date
Date: CFPB to Review Obsolete Regs

The Consumer Financial Protection Bureau will soon review federal regulations affecting consumers and financial firms that may be "obsolete, unnecessary, redundant, or counterproductive," Raj Date, who runs the CFPB's daily operations, told the House Financial Services’ Financial Institutions Subcommittee on November 2nd. The bureau "will initiate a targeted review of these rules in search of ways to update and streamline the regulations," he said.

Date, who was testifying on the CFPB's first 100 days, also assured panel members that agency decisions will be based on sound research, not ideology. "We will not shoot from the hip. We will not reason from ideology. We will not press a political agenda. Instead, we are going to be fact-based, pragmatic, and deliberative" Date said. House Financial Services Committee Chairman Spencer Bachus (R-Ala.) reiterated his concern that the CFPB is too autonomous and powerful. "My fear is that there are simply no checks and balances. It could easily become a loose cannon," he said. Read Date’s testimony.

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Public Choice in Mortgage Closing Form Revisions

The Consumer Financial Protection Bureau is asking for public comment on the mortgage closing document samples that combine the federal Truth in Lending disclosures and the required Real Estate Settlement Procedures Act (RESPA) HUD-1 Settlement statement into a single "closing" document. The model mortgage closing forms are intended to show whether the final loan terms and costs match the terms quoted in the estimate provided after application, and would help determine whether the interest rate or monthly payments could change after closing, according to the CFPB.

The two prototypes, named "Hornbeam" and "Ironwood," build upon the feedback received in the first phase of the project that focused on the loan estimates consumers receive shortly after they apply for a mortgage, the CFPB said. To make a selection please click here. The CFPB has begun testing the mortgage closing documents in Iowa, and three more versions of the new mortgage closing forms will be revised and released to the public between now and February. The CFPB has also planned to develop new mortgage regulations once the mortgage disclosure form revision project is completed.

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Issues On the Horizon: Credit Card Interest-Rate Cap Legislation

On November 8th Sen. Sheldon Whitehouse (D-RI) along with eight other Senators …  including Sen. Dick Durbin (D-Ill) … introduced legislation (S. 1829) that would amend the Truth in Lending Act to allow states to cap credit card interest rates and overturn the 1978 Supreme Court decision that allows nationally chartered institution interest rates to take precedence over states’ interest rate laws. This bill may sound familiar, as it was introduced in 2009 and offered as an amendment to the Dodd-Frank Act, and introduced again in 2010 but did not advance. While it is not anticipated to move given the current political climate, if it does credit union advocates will be alerted.

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State News
 
Ralston
Georgia Speaker of the House David Ralston
Tax Reform on the Horizon

State-level tax reform, the much-debated effort that failed to pass the state Legislature in 2011, has been the topic of several recent articles in the press and will very likely be on the agenda of the 2012 session, according to House Speaker David Ralston. “Tax reform as an issue here in the General Assembly didn’t die,” he said in a November 4th article with Insider Advantage. “We simply delayed it so we would have data that we felt like was the most credible we could get. I think we’re close to having that.” House Majority Leader Larry O’Neal and Senate Majority Leader Chip Rogers, echoing that sentiment, told members of the Georgia Chamber of Commerce on November 3rd that the reforms still are needed and should come in a single, comprehensive bill rather than piecemeal.

What was proposed in 2011 was an expanded sales taxes on a whole range of currently untaxed services, coupled with income-tax cuts to make the changes revenue neutral. The proposal underwent numerous changes as it clawed its way through the Legislature until Ralston halted the plan in the remaining days of the session. And, it isn’t clear whether all of the pieces of the plan are together yet or not. “We had a lot of proposals out there, we’ve continued to vet them and talk about them over the interim since the end of last session, and my sense is there’s still strong support here in the House and I’m led to believe that there is support in the state Senate to go back and look at passing a comprehensive reform of our tax code.” Ralston insisted that whatever the final version might be, it will not lead to a tax increase. “I think we all share a commitment to avoid any kind of tax increase,” he said.

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Industry News
 

JPMorgan logoJ.P. Morgan Seeks NCUA Lawsuit Dismissal

J.P. Morgan Securities has asked the U.S. District Court for the District of Kansas to dismiss the NCUA securities sale-related suit, saying that the agency is "ignoring its own assessment" of what led to the corporates failures and is instead blaming JP Morgan for the corporate credit unions' losses. NCUA in its suit claims that J.P. Morgan sold a combined $1.5 billion of questionable residential mortgage-backed securities (RMBSs) to corporate credit unions, making numerous material misrepresentations in the offering documents. These misrepresentations caused the corporate credit unions that bought the notes to believe the risk of loss associated with the investment was minimal, when in fact the risk was substantial, the agency added. The corporates' investment in these RMBSs, and the eventual declines in value, effectively rendered the corporates insolvent, the NCUA said.

NCUA filed the suit earlier this year as liquidating agent of U.S. Central FCU, Western Corporate FCU, Members United Corporate FCU and Southwest Corporate FCU. The agency has requested nearly $2 billion in combined damages from Goldman Sachs, RBS Securities and J.P. Morgan. The agency has brought four lawsuits and said earlier this year that it expects to take an additional five to 10 actions. NCUA said any recoveries from these legal actions would reduce the total losses resulting from the failure of the five corporate credit unions and would help to reduce the amount of future corporate credit union stabilization fund assessments on credit unions. NCUA Deputy Executive Director Larry Fazio earlier this year said the agency would need to charge between $7 billion and $9 billion in future assessments to pay for the remaining losses from troubled assets at corporates, and added that he could not predict how long the NCUA would need to continue charging Temporary Corporate Credit Union Stabilization Fund assessments.

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WOCCU Launches International Year of Co-ops Online Platform and Resources

IYC logoThe United Nations earlier this year announced 2012 as the International Year of Cooperatives (IYC), a time to recognize the contributions of cooperative enterprises worldwide, including credit unions. The International Year of Cooperatives officially launched the week of Oct. 31 - Nov. 1 with a series of meetings and workshops at the U.N.'s New York City headquarters, and the World Council of Credit Unions (WOCCU) launched a special section on its website that contains information and resources for WOCCU member organizations interested in recognizing and celebrating the yearlong designation. The website also features a forum through which members, credit unions and other cooperative business leaders can share ideas, photos and video about IYC and current issues affecting credit unions. The website features a growing list of celebration and service ideas, financial cooperative information, links to related sites and events and IYC branding guidelines. Those interested may subscribe to the RSS feed on the IYC Forum, www.woccu.org/iyc_forum, to receive updates as they are made.

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News of Interest
 
Durbin
U.S. Sen.
Richard Durbin
Durbin Proposes the FTC Report on the Impact of Interchange

Sen. Richard Durbin (D-Ill.), the architect of debit interchange fee-cap regulations that became effective last month, is proposing that the Federal Trade Commission report on the interchange cap's impact on small-issuer interchange fee income and whether merchants are discriminating against small issuers that are still able to charge more for debit card purchases. The original debit interchange fee-cap legislation required the Federal Reserve to monitor these markets and release a report. The report is due in late 2012. It has been suggested by some in the media that the Fed-to-FTC change may indicate that Durbin does not trust the Fed. Durbin's amendment to his legislation is tucked into a Financial Services General Government appropriations bill that will be added to an upcoming "minibus" spending bill.

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New Federal Foreclosure Appeals

ForeclosureThe Atlanta Journal-Constitution reported on November 1st that there is a new federal foreclosure appeals process: homeowners in foreclosure in 2009 and 2010 can request independent foreclosure reviews and get restitution if they were financially harmed by errors or misrepresentations by 14 of the nation's largest loan servicers, according to the new appeals program. As many as 4.5 million homeowners nationwide who believe 14 loan servicers, including the largest operating in Georgia, unfairly or illegally foreclosed upon them will get a chance to ask for an independent review and could get restitution under a federally prescribed program.

It was unclear how many Georgians’ loans were being serviced by the businesses, which include Wells Fargo, SunTrust Banks, Bank of America and JPMorgan Chase & Co. Also unclear is how Georgia’s foreclosure process, which doesn’t include the courts, will affect the appeal. John Walsh, the acting U.S. Comptroller of the Currency, announced the program as part of the ongoing consent order requiring servicers to correct deficiencies discovered by earlier reviews of records.

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CFPB logoCFPB to Give Offenders Early Warning

On November 7th the Consumer Financial Protection Bureau (CFPB) said it plans to give individuals and institutions subject to potential agency action an "early warning" before legal or regulatory proceedings are taken. The suspected offenders would be allowed to provide "any relevant legal or policy arguments and facts" in writing within 14 days of the notice, the CFPB said.
 
The early warning notice process is to allow the subject of an investigation to respond to any potential legal violations that CFPB enforcement staff believes have been committed before the CFPB ultimately decides to begin legal action. The CFPB stressed that these notices are discretionary in nature, are not required by law, and may not be given in all situations, adding that they may not be used in cases of ongoing fraud or in instances where the CFPB needs to act quickly.

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Money with question markPossible Growth Option for CU Card Programs?
MasterCard Sees Spike in Card Use

The New York Times reported on November 2nd that MasterCard’s third-quarter profit soared 38 percent on a big spike in card use. The Purchase, N.Y.-based payments processor also attributed the strong results to new deals with certain banks to issue debit cards bearing its logo and new transaction processing deals overseas. MasterCard’s net income was $717 million, or $5.63 per share, on revenue of $1.8 billion. That exceeded Wall Street's expectations for profit of $4.81 per share, on revenue of $1.7 billion. Purchase volume, the amount spent on debit and credit cards, rose 17 percent worldwide. In the U.S., spending is up 13 percent. MasterCard Inc. says it increased rebates and incentives, a common practice in the industry aimed at winning business.

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News of the Competition
 

Wally World Not Your Competition? Think Again.

Wal-MartA November 7th New York Times article reported that Wal-Mart is capitalizing on the recent bank fee focus in the media. Highlighting the Wal-Mart Money Centers as an alternative to bank accounts, the article focuses on their lower fees, money-transferring services and prepaid debit cards. Four years ago, Wal-Mart abandoned its plans to obtain a long-sought federal bank charter amid opposition from the banking industry and lawmakers, who feared the retailer would drive small bankers out of business and potentially conflate its banking and retail operations.

Ever since, Wal-Mart has been quietly building up à la carte financial services, becoming a force among the unbanked and “unhappily banked,” as one Wal-Mart executive put it. While Wal-Mart has said it is  no longer seeking to expand its financial-services operations to offering loans, it is expanding … and has obtained full bank charters in both Mexico and Canada, leading one to presume it is only a matter of time for Wal-Mart to do the same here in the U.S. To read more please click here.

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Flying dollarsPublic Backlash Prompts Bank Fees to Fly Away

SunTrust Banks and Bank of America have backed away from the hated debit card fee, inciting Regions Bank to stop charging their $4 per month fee. The AJC reported on October 31st that after strong consumer backlash, SunTrust planned, effective November 2nd, to stop charging clients with its Everyday Checking accounts a monthly fee of $5 to use a debit card as a purchasing card at retailers. Not to be outdone, Regions Bank decided to stop the fee a day earlier, on Nov. 1st. Wells Fargo backed away from a monthly debit fee earlier in October; it had tested a $3 monthly fee in Georgia and other markets. Chase and other major U.S. banks also indicated they would not pursue the fees.

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Public Influence News
 

Question markBanks or Credit Unions?

On November 9th, Atlanta Journal-Constitution reporter Rick Badie moderated an op-ed debate between Mike Mercer, president and CEO of Georgia Credit Union Affiliates, and Joe Brannen, president and CEO of the Georgia Bankers Association. Fueled by the recent consumer backlash against big banks, the opinions of the two agencies express the conundrum of financial-services consumers in choosing the most appropriate provider to meet their needs. Mercer discusses what credit unions offer. Brannen writes about the advantages of banks.

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Happy customers650,000 New Members

The official Bank Transfer Day came and went on Saturday, November 5th, and by now the dust has settled and tallies have been taken of how many consumers switched from bank customers to credit union members. But regardless of the numbers of new accounts or increased deposits generated by "the Day," the real story for credit unions is the lasting benefits that the event has fostered.
 
Increased awareness of credit unions and the credit union difference is clearly one of the big benefits. Just as big banks were experiencing insurmountable reputational damage – when announcements of new fees were coupled with consumers' residual resentment of bailouts – credit unions were highlighted in media across the country as an important resource for consumers looking for a better way to do business. Scores of stories nationwide highlighted credit unions as not-for-profit and owned by their members, and more consumers than ever before heard the message that credit unions generally offer higher rates on savings, lower rates on loans, and lower fees than the megabanks.

Credit unions here in Georgia have remarked on the large spike in new memberships, and nationwide an estimated 80 percent of credit unions saw their membership increase in October, with at least 650,000 consumers across the nation having joined credit unions in the past four weeks. More than four in every five credit unions experiencing growth since September 29 attributed to a combination of consumer reactions to the new bank fees plus the social media-inspired Bank Transfer Day, which urged consumers to switch from big banks to smaller credit unions and community banks. Below is a roundup of articles covering Bank Transfer Day:

Bank Transfer Day: CUNA Estimates 40,000 Plus New Accounts On Saturday
Credit Union Times, Nov. 8th

Bank Transfer Day: BofA Blinks, but CUs Remain Grateful
Credit Union Times, Nov. 8th

Anger at big banks sends some to credit unions
The Atlanta Journal-Constitution, Nov. 7th

Should You Join the Credit Union Boom?
ABC News, Nov. 8th

Bank Transfer Day, the Day After
Time, Nov. 7th

Credit Unions Feel Boost from Bank Transfer Day
Fox Business, Nov. 7th

Should You Transfer Your Money to a Credit Union?
Slate, Nov. 7th

Thousands Vote With Their Feet, Say Goodbye to Big Banks
NASDAQ, Nov. 7th

For more stories on Bank Transfer Day, click here.

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REAL Deal Reunion4th Annual REAL Deal Reunion
Makes Big Impact

In its fourth year, the REAL Deal Reunion brought together credit union representatives from across the state for a full day of learning and networking on November 3rd. Liaisons from among the state’s 70 REAL Deal Credit Unions joined with other credit union professionals who attended meetings of the Human Resources Council, Marketing Council and the Risk Management Council.

Best practices in serving members with middle-class aspirations was the core of discussion at the REAL Deal Reunion. Marshall Boutwell, CEO of Gwinnett FCU in Lawrenceville, shared strategies for implementing a successful Fresh Start Auto Loan program. Bobby Michael, CEO of CORE CU in Statesboro, explained how his credit union has made extreme inroads lending to high-risk C, D and E credit score borrowers. And Nancy Pierce, a field consultant with the National Credit Union Foundation’s REAL Solutions program who was Skyped into the meeting, focused on best practices in developing a Second Chance Checking Account program.

REAL Deal Reunion - CouncilEach council met independently and heard from experts in their respective fields about the latest practices to serve members better:

  • Attorney Jonathan Martin spoke to the Human Resources Council about social media limitations, new developments at the Department of Labor and the EEOC, as well as how to deal with difficult people, and navigating the waters of labor laws.
  • The Risk Management Council heard from Polly Bell, CEO of MEA FCU in Columbus about a recent robbery incident, and how her staff managed the harrowing ordeal.
  • The Marketing Council learned about extreme, “out-of-the-box” strategies to grow credit union membership and build loyalty. The presenter, Julie Ferguson, also served as the lunchtime speaker for the entire group, and shared how staff enthusiasm can impact the member experience, and why it is the responsibility of all in the credit union to further the industry philosophy.
The REAL Deal Reunion was sponsored by Fiserv. Next year, the REAL Deal Reunion will be held as part of the GCUA Annual Convention in Savannah, May 9-12. More information is to come.
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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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