June 15, 2012
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U.S. Capitol House Committee to Take Up
ATM Disclosure Bill June 27

The U.S. House Financial Services Committee scheduled for June 27 consideration of a bill that would repeal the current requirement that ATMs have physical notices of possible fees for transactions.

  Secretary of State Speaks to Credit Union Members
In a video available through the ElectionWatch website, Georgia Secretary of State Brian Kemp discusses the importance of voting, as well as election resources, voter registration and voting procedures.

  Legislators Ask CFPB, DOE to Examine Bank/College Cards
U.S. lawmakers asked the Consumer Financial Protection Bureau and the U.S. Department of Education to look into bank-affiliated student debit cards now in use at more than 900 colleges and universities.

  Trade Groups Ask for Small-Business Review
on Ability-to-Repay Rule

Trade groups including the Credit Union National Association asked the Consumer Financial Protection Bureau to conduct a Small Business Advocacy Review panel examination of the CFPB's proposed ability-to-repay rule for mortgage lending.

  Fighting Back in Interchange Legal Battle
The Federal Reserve Board filed its response to merchant groups' call for summary judgment in the merchants' lawsuit against the Fed, which they say exceeded its authority when it set debit interchange fees.

  CFA Study: Big Banks' Overdraft Fees Up
The Consumer Federation of America said overdraft fees charged by the nation's 14 largest banks, after holding steady for two years, have started to creep up again.

  How Do Georgia Credit Unions Compare?
The National Credit Union Administration released its first Quarterly U.S. Map Review, which analyzes several financial indicators on a state-by-state basis.

  Family Net Worth Plummets Nearly 40%
The Federal Reserve reported that the net worth of the average American family dropped by nearly 40 percent between 2007 and 2010, largely because of the collapse in housing prices during the recession.

  Baucus Calls for More Revenue from Tax Code Rewrite
U.S. Sen. Max Baucus said an overhaul of the U.S. tax code is moving along, but said the final plan must raise more revenue, reduce the deficit, and address the growing disparity between rich and poor.

  Two CUs Take Cooperation to Next Level
The Augusta Chronicle reported that two Georgia credit unions, in an arrangement that exemplifies the cooperative nature of the credit union movement, are sharing office space in a 4,000-square-foot building in Augusta.

  Georgia Credit Union Affiliates Wins Top Honors from AACUL
At the annual meeting of the American Association of Credit Union Leagues, GCUA won first-place awards for Best Social Media Program and Best Public Relations Program, and honorable mention awards in two other categories.

  And the Bank Closures Keep on Coming...
Regulators closed four banks on June 8, bringing the number of failed banks nationwide so far this year to 28.

U.S. CapitolHouse Committee to Take Up ATM Disclosure Bill
June 27

Recently, House Financial Services Committee Chairman Spencer Bachus (R-Ala.), announced that on June 27th the House Financial Services Committee is slated to consider the credit union-supported bill that would protect credit unions and other financial institutions from frivolous lawsuits by repealing the outdated requirement that a notice must be attached to ATMs stating that a fee may be charged.

The ATM bill, known as H.R. 4367, was introduced by Reps. Blaine Luetkemeyer (R-Mo.) and David Scott (D-GA13) in April. It has 95 co-sponsors, which includes most of the members of the Georgia House delegation. This past week saw commitments from the following members of our delegation: Reps. Jack Kingston (R-GA1), Phil Gingrey (R-GA11) and John Barrow (D-GA13). The GCUA Government Influence Team will continue to work to get the final few legislators to support the credit union position.

The bill would eliminate portions of Regulation E (Electronic Funds Transfer Act), that require credit unions and other financial institutions that provide ATM services to display a physical notice on the ATM that a fee will be charged. Under the legislation, ATMs would only be required to display the ATM disclosures on a screen, and give ATM users the choice of opting in to such a fee.

The notice disclosure is redundant because the actual fee also appears on the ATM video monitor before the transaction is completed. But if the notice isn’t attached to the ATM, Regulation E permits successful class-action plaintiffs to recover the lesser of $500,000 or 1 percent of the ATM operator's net worth plus attorneys’ fees and costs.

As a result, some people have removed placards, photographed ATMs without them and filed lawsuits. These same individuals may then use this as evidence of apparent noncompliance and as grounds for lawsuits, and the number and cost of these lawsuits continues to climb. CUNA recently estimated that the total number of these lawsuits could be in the hundreds, and many credit unions are settling the cases to avoid the cost of litigation.

In a February letter, CUNA and six other trade groups asked the House Financial Services and Senate Banking Committees to pass a bill repealing the placard requirement because such lawsuits were growing and could reduce both the number of ATMs and consumer convenience.

In addition, CUNA has also asked the Consumer Financial Protection Bureau (CFPB) to address the ATM disclosure issue.

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From left: Georgia Secretary of State Brian Kemp, GCUA Director of Communications Anita Paul
Secretary of State Speaks
to Credit Union Members

The GCUA Government Influence Team recently met with Georgia Secretary of State Brian Kemp to film a short video specifically for credit union members on the importance of voting. This video, among other tools, is a part of the ElectionWatch web resource for credit unions.

Has your credit union taken advantage of this free, nonpartisan, get-out-the-vote resource for your members? Credit unions across Georgia are utilizing this tool, linking it to their websites as a way to educate members on the importance of voting and provide the necessary resources if a member has questions on poll locations, ways to vote, or registering to vote. There are also tools for your credit union which include sample newsletter articles that you can customize for your membership. The primary election is July 31st. Take advantage of this free nonpartisan resource today!

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Legislators Ask CFPB, DOE to Examine Bank/College Cards

Fallout from a recent study, by the U.S. Public Interest Research Group (U.S. PIRG) Education Fund, that many colleges are pushing students into using campus debit cards that carry "numerous unnecessary, costly and unknown bank fees," has hit Capitol Hill. On June 7th, Sen. Richard Durbin (D-Ill.) and Rep. George Miller (D-Calif.) urged the Department of Education and the Consumer Financial Protection Bureau (CFPB) to examine the bank-affiliated student debit card practices at more than 900 colleges and universities.

Student cardThe legislators said that the debit cards held by many students "may come with high user fees, hidden transaction costs and insufficient consumer protections – adding to the mountain of debt many higher-education students must take on." In addition the legislators said, "U.S. student loan debt is reaching the $1 trillion mark, we should not allow costly and inappropriate debit card fees to add to that debt."

The letters cited the PIRG report that named PIN debit fees, balance inquiry fees, abandoned account fees, account closure fees, and prepaid debit card reloading fees among those giving students trouble.

However, PIRG in a separate release said, "a well-structured debit card program can provide benefits to students."

Credit unions in many states offer the benefits of credit union membership to students through on-campus branches or college- or university-affiliated credit unions that serve students and employees of the school.

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Trade Groups Ask for Small-Business Review on Ability-to-Repay Rule

The Consumer Financial Protection Bureau (CFPB) recently delayed the release of its ability-to-repay mortgage rule until later this year, and the Credit Union National Association (CUNA) and 15 other trade groups asked the Consumer Financial Protection Bureau to conduct a Small Business Advocacy Review panel examination during the proposed ability-to-repay rule's recently reopened comment period.

CFPB logoUnder the still developing ability-to-repay rule, mortgage originators would be required to consider a homebuyer’s ability to repay their loan before a loan could be offered. The ability-to-repay rule was scheduled to be released as a final version in July, alongside a number of other CFPB mortgage disclosure and rule changes, but the agency delayed its release after new mortgage information came to light. The CFPB has added time to its process to consider new comments from the financial services industry.

"Given the potentially significant impact of the ability-to-repay rule on the housing market ... we believe that regulatory best practice calls for the CFPB to formally consult with small businesses through an SBAR panel," the trade groups said in a letter.

They added that convening a targeted SBAR panel to address the important issues raised in the reopened comment period will not compromise CFPB’s statutory deadline for finalizing the rule.

"A thorough examination of how the ability-to-repay rule will impact small businesses, combined with recommendations gained from the SBAR panel, will help build consensus that will improve the efficacy of the final product," the trade groups said. Read the letter.

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Boxing gloveFighting Back in Interchange Legal Battle

The Federal Reserve Board filed its response in a federal court in Washington, D.C., to merchants' arguments for summary judgment in their lawsuit challenging the board's debit card interchange fees rule mandated by the Dodd Frank Act. The lawsuit was filed in March seeking a summary judgment declaring the interchange rule and network non-exclusivity regulation invalid. The merchants' suit alleges the Fed interchange cap is too high and that the Fed exceeded its authority on the rule. The cap became effective in October and restricts interchange fees for debit transactions for issuers with assets of $10 billion or more to 21 cents.

CUNA and a coalition of associations representing thousands of small and large financial institutions held a conference June 4th to review the brief. The coalition filed its own amicus brief earlier in the case, providing financial institutions' perspective on the rule. They argue the rule's interchange cap is too low and that it does not allow debit card issuers to cover their costs and earn a reasonable rate of return on their investments. The Fed's brief, filed in the U.S. District Court for the District of Columbia, made several arguments that it had interpreted the interchange statute reasonably. Stay tuned!

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CFA Study: Big Banks' Overdraft Fees Up

After two years at the same level, fees charged by the 14 largest U.S. banks when customers overdraw their bank accounts are starting to inch upward, says new research from the Consumer Federation of America (CFA).

The survey comes on the heels of news that credit unions continue their growth spurt in membership into 2012 after record growth during fourth quarter of 2011. As we are aware, much of that growth stemmed from consumers' dissatisfaction related to higher fees charged by big banks. The news media have repeatedly warned consumers that banks will start searching for other ways to raise fee revenues.

RocketAs for the overdraft fees, "the two-year period of flat fees coincided with the implementation of a new Federal Reserve Board requirement that banks get affirmative permission from consumers to incur overdraft fees on debit card and ATM overdrafts," said CFA in a press release. "While the typical overdraft fee remains at $35 per transaction, two of the largest banks — U.S. Bank and Fifth Third Bank — have announced changes to their tiered-fee structures that indicate rates are again on the rise," the organization said.

"Big bank overdraft fees for a single transaction are very high, ranging from $33 to $37 at the largest banks," said Jean Ann Fox, director of financial services for CFA. "Consumers can be charged $370 in one day, according to the maximum fee and daily limit fee policies that banks have."

Of the 14 banks surveyed, five — Fifth Third, PNC, RBS Citizens, SunTrust and U.S. Bank — charge tiered fees that vary depending on how many overdrafts are incurred in a 12-month period, said CFA. Nearly two-thirds of those surveyed add on second or per-day fees if customers do not pay the overdrafts immediately, said CFA.

Three banks — Bank of America, Citibank and HSBC — do not allow customers to incur overdraft fees when using a debit card for purchases. The latter two also prevent overdraft fees triggered at an ATM. The other 11 largest banks encourage their customers to opt-in to pay overdraft fees on very small purchases.

The survey found the biggest changes related to the order in which banks processed payments from accounts. As recently as 2010, almost all major banks paid transactions from largest to smallest received — or reserved the right to do so — a practice which could result in consumers with low balances overdrawing their accounts and paying even more overdraft fees, said CFA.

Since 2010, CFA found that some banks have changed their processing order policies, paying time-stamped transactions in the order received, before processing checks and other transactions from largest to smallest. Eleven of the banks surveyed still pay some transactions from largest to smallest.

To review the entire report, click here.

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USA mapHow Do Georgia Credit Unions Compare?

On June 5th NCUA released its first Quarterly US Map Review featuring analysis of key financial indicators on a state-by-state basis. Anyone with Internet access can view how the credit unions in their state rank on Return on Average Assets, Share of CUs with Positive ROA, Total Delinquency Rate and Loan Growth. From our state’s perspective, Georgia was:

  • One of 13 states whose ROA was between 50 and 70 basis points (national average was 84),
  • In the majority of states with a share of credit unions with positive ROA between 70 and 80 percent (national average was 74 percent),
  • One of 24 states with a delinquency rate between 1 and 1.5 percent (national average was 1.4 percent), and
  • Trending with the majority of states with a loan growth of 0 to 5 percent (national average was 2.17 percent).
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Family Net Worth Plummets Nearly 40%

The average American family's net worth dropped almost 40 percent between 2007 and 2010, according to data from the Federal Reserve's Survey of Consumer Finances released on June 11th. The results underscored the severity of the recent recession. It was the largest drop in family median net worth since the survey started in 1989.
Piggy bankThe stunning drop in median net worth  – from $126,400 in 2007 to $77,300 in 2010 — indicates that the recession wiped away 18 years of savings and investment by families. "Although declines in the values of financial assets or business were important factors for some families, the decreases in median net worth appear to have been driven most strongly by a broad collapse in house prices," the survey said.

Families who reside in the West and South, where the housing market was especially hard hit by the recession, were worse off than their peers in the rest of the country.

Median home equity fell 42.3 percent from $95,300 in 2007 to $55,000 in 2010. “The decline in median net worth was especially large for families in groups where housing was a larger share of assets, such as families headed by someone 35 to 44 years old [median net worth fell 54.4 percent] and families in the west region [median net worth fell 55.3 percent],” the survey said.

While the overall level of debt owed by families was unchanged, debt as a percentage of assets rose to 16.4 percent in 2010 from 14.8 percent in 2007 because the value of the underlying assets, especially housing, decreased faster.

The Fed study, called the Survey of Consumer Finances, offers details on savings, income and debt, as well as assets and investments owned by American families.

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Tax reformBaucus Calls for More Revenue
from Tax Code Rewrite

The New York Times reported that Senator Max Baucus of Montana, the chairman of the Senate Finance Committee, said on June 11th that an overhaul of the tax code was moving forward, but that any plan must raise more revenue, help reduce the deficit and address the nation’s growing disparity between rich and poor.

Jobs, innovation, competitiveness and opportunity should be four principles that govern the tax code, he said in a speech at the Bipartisan Policy Center in Washington. “Our tax code is growing out of control,” said Baucus, a Montana Democrat. “It’s time we had a tax code for the 21st century.”

Unless Congress acts, tax rates on wages, capital gains, dividends and estates will increase at the end of the year as tax cuts expire. The tax increases are part of a so-called fiscal cliff that includes automatic spending cuts and could push the U.S. into recession if Congress does nothing, according to the Congressional Budget Office.

Baucus said he is making progress on a detailed tax reform proposal that would attract bipartisan support,” he said. He also hinted at major changes to the corporate income tax code that would lower rates and curtail, if not end, the United States’ worldwide corporate income taxation, but would tighten rules that allow American companies to shift income to offshore tax havens. Instead of automatically extending dozens of temporary business tax breaks, he said, Congress this year must pick which breaks should live and which should lapse.

That plan is likely to stay under wraps until after the November election, unless broad support for it coalesces earlier. Baucus does not want partisan lines drawn around the plan during the campaign season. Click here to read the New York Times article.

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CollaborationTwo CUs Take Cooperation to Next Level

The Augusta Chronicle recently profiled a collaboration between two area credit unions that is indicative of the cooperative spirit of the credit union movement. Augusta VAH FCU and Georgia’s Own CU have collaborated in a shared-space arrangement.

According to the article, sharing space allows both credit unions to benefit not only from decreased overhead costs, but also greater security from an increased number of employees in the building. Twenty staff members work in the 4,000-square-foot building in Augusta. “This kind of cooperation may seem atypical for the financial sector,” said Phyllis Cochran, CEO of Augusta VAH FCU, “but it’s par for the course with credit unions.”

Click here to read the entire article.

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CongratulationsGeorgia Credit Union Affiliates Wins Top Honors
from AACUL

Communicators from the nation’s state credit union leagues gathered at the annual American Association of Credit Union Leagues’ (ACCUL) Communicators Conference June 6 -8, 2012.

As part of the three-day event, the Pro and Blockbuster Awards were presented to leagues that demonstrated outstanding communications efforts in their outreach to credit unions and to consumers.

Georgia Credit Union Affiliates (GCUA) received two first-place awards in the following categories:

GCUA also received two honorable mention awards in the following categories:

  • Print Advertisement: Credit Unions... Part of the Solution
  • League Publication: Connection

Judges for the Pro and Blockbuster Awards included professionals in the fields of public relations, marketing, communications and advertising, as well as representatives from CUNA Mutual.

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DominoesAnd the Bank Closures Keep on Coming...

On June 8th, regulators closed four banks, bringing the year’s failed bank total to 28. The banks were: $46.1-million million-asset First Capital Bank, Kingfisher, Okla.; $54.4 million-asset Carolina Federal Savings Bank, Charleston, S.C.; $43.1 million-asset Farmers and Traders State Bank, Shabbona, Ill.; and $533.1 million-asset Waccamaw Bank, Whiteville, N.C. The total cost to the Deposit Insurance Fund is estimated at $80.8 million. To see the list of failed banks click here.

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