AUGUST 24, 2012
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Testifying on the Weight
of Regulatory Burden

Regulatory compliance is a growing burden on credit unions, and disproportionately on smaller ones, a West Virginia credit union CEO testifies in a U.S. House hearing.

  House Members Urge CFPB to Delay Remittance Rule
A bipartisan group of U.S. House members urges the Consumer Financial Protection Bureau to postpone by two years the effective date of the CFPS's new rule on remittances, and to study the rules impact on consumers.

  Crossing the Finish Line in the Primary Runoff
Numerous national, state and local primary election contests were finally decided in the August 21 primary runoff election, and many of the winners face no competition in November's general election.

  Recipe for Election Success? Credit Unions!
Credit union participation is credited with helping decide several races in the recent elections, and the upcoming general election offers more opportunities for credit union people to get involved in the political process.

  Summer School? Not Quite – State Legislature Begins
Study on MVR Laws

A study committee of the Georgia Legislature is set to begin taking a close look at the state's motor vehicle code, and some areas of interest to credit unions are among the subjects that may be under scrutiny.

  New Required Option of No-Point, No-Fee Mortgages?
The Consumer Financial Protection Bureau proposed a rule under which mortgage lenders would be required to offer most prospective borrowers the option of loans with no points and no fees.

  Shark Week? More Like CFPB Week!
The Credit Union National Association took issue with the potential regulatory burden and compliance costs associated with the CFPB's recently released proposed rules for mortgage servicers.

  Mass Litigation Train: Next Stop Credit Card Collections
A New York Times article said many lawsuits filed by credit card companies to recover alleged bad debts are seriously flawed, quoting one judge who estimated that 90 percent of such suits can't prove that any debt is owed.

  Bank Fees Rising – What a Shock!
How Does Your Credit Union Compare?

MSNMoney reported that the fee environment for bank customers continued to worsen during the first half of 2012, citing a survey by that detailed higher fees and minimum balances.
  Big Box Retailers Unveil Mobile Payment Strategy
The Wall Street Journal reported that more than a dozen large retailers are planning to develop a mobile-payments network that would compete with similar services now offered by Google and other companies.

  Media Relations Training
Want to know how to use the media to get your credit union's message out more effectively? Plan now to attend the Affiliates' free Media Relations Training session, scheduled for Thursday, Sept. 13, at the GCUA offices in Duluth.

Testifying on the Weight of Regulatory Burden

Increased regulatory burdens and "the multitude of complex regulations" that credit unions must now address is one of the "most significant changes" in his 27 years in the movement, Tom Brewer, CEO of People's FCU in Nitro, WV told federal lawmakers on August 20th. Brewer testified at a House Financial Services financial institutions and consumer credit subcommittee field hearing by Rep. Shelley Moore Capito (R-WV) on how financial regulations impact job growth. Subcommittee members acknowledged that credit unions and small institutions did not cause the financial crisis, but are now having to live with increased regulations as a result.

NCUA, the Federal Reserve Board and state regulatory agencies have steadily increased the number of regulations imposed on credit unions. The regulatory burden could increase with the recent creation of the Consumer Financial Protection Bureau (CFPB), Brewer noted. Regulatory compliance is a top priority and an expense for Brewer’s $95 million, 11,000-member credit union. Budgets are tight for credit unions and every dollar spent on compliance represents a dollar that could be spent on direct member service. "Most of the costs of compliance do not vary by [the size of an institution] and, therefore, are proportionately a much greater burden for smaller institutions," Brewer said. Members are now seeing the regulatory impact. Brewer noted that some repetitive regulations have confused consumers, and that members feel the disclosures they are provided for loans and deposit accounts are excessive.

What can Congress do to help? The approval of the Examination Fairness and Reform Act (H.R. 3461) would improve the exam process for financial institutions. The bill would make information gathered by financial regulatory examiners available to financial institutions, codify certain examination policy guidance, and establish an exam appeals process that would allow financial institutions to air grievances before an independent administrative law judge. Similar legislation has been introduced in the Senate (S. 2160), and both bills have been referred to their respective financial institution committees. Brewer also seized the opportunity to share that one action Congress could take to improve the economy is to approve the MBL legislation that would increase the current 12.25% of assets credit union member business lending cap to 27.5% of assets.

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House Members Urge CFPB to Delay Remittance Rule

U.S. CapitolOn August 16th, a bipartisan group of 32 House members urged the CFPB to delay by two years, until February 2015, the effective date of its new remittance rule, and to conduct a study of the regulation’s impact to avoid “irreparable harm” to consumers. CUNA and other finance industry groups joined Reps. Blaine Luetkemeyer (R-Mo.) and Yvette Clarke (D-N.Y.) last month to seek support for a remittance rule delay.

The rule will impose arbitrary, unworkable requirements on international transfers of all sizes and purposes that will drastically curtail their availability for consumers, the lawmakers said in a letter to CFPB Director Richard Cordray. The CFPB's final remittance transfer rule, which is scheduled to take effect on February 7, 2013, would require remittance transfer providers to disclose the exchange rate, all fees associated with a transfer, and the amount of money that will be received on the other end. Remittance transfer providers will also be required to investigate disputes and fix mistakes.

Of some reprieve, the CFPB has provided a safe harbor exemption from the rule for remittance providers that transact 100 or fewer remittances per year. The CFPB indicated that at least 80 percent of credit unions that offer remittance services would be exempt. However, CUNA remains concerned about the safe harbor provisions and continues to encourage the CFPB to increase this safe harbor threshold.

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Finish LineCrossing the Finish Line
in the Primary Runoff

On August 21st, Georgians across the state voted in the primary runoff elections which decided three U.S. Congressional candidates, 12 state races, and a wide variety of local races. How did they fare? While many of these winners are right back on the campaign trail as they have competition in the general election on November 6th, eight of these winners, including three incumbents, have secured their desired posts due to the lack of competition in the general election. Below is a quick excerpt of the outcomes and except where noted, each of these primary runoff victors will face competition (some against sitting incumbents) in November along with the July 31st winners of the regular primaries.

U.S. Congressional Races

  • U.S. Rep. District 2: John House (R) will run against incumbent US. Rep. Sanford Bishop (D).
  • U.S. Rep. District 9: Doug Collins (R) will run against Jody Cooley (D) for this open seat.
  • U.S. Rep. District 12: Lee Anderson (R) ) (recount pending as of presstime)  will run against incumbent U.S. Rep John Barrow (D).

State Races

  • State Senate District 26: David Lucas (D) defeated incumbent Miriam Paris (D), and will run against Bobby Gale (R).
  • State Senate District 31: Incumbent Bill Heath (R) has obtained the seat due to no general competition.
  • State Senate District 44: Incumbent Gail Davenport (D) has obtained the seat due to no general competition.
  • State Rep. District 1: John Deffenbaugh (R) will run against Thomas McMahan (D) in this open seat.
  • State Rep. District 28: Dan Gasaway (R) has obtained this open seat due to no general competition.
  • State Rep. District 41: Michael Smith (D) will run against Phil Daniell (R) for this open seat.
  • State Rep. District 62: LaDawn “LBJ” Jones (D) has obtained this open seat due to no general competition.
  • State Rep. District 63: Ronnie Mabra (D) has obtained this open seat due to no general competition.
  • State Rep. District 66: Bob Snelling (R) will run against Kimberly Alexander (D) for this open seat.
  • State Rep. District 92: Tonya Anderson (D) has obtained this open seat due to no general competition.
  • State Rep. District 113: Incumbent Pam Dickerson (D) has obtained this seat due to no general competition.
  • State Rep. District 139: Patty Bentley (D) has obtained this open seat due to no general competition.

There were several other races on the primary runoff ballots; for more details please click here for the full Secretary of State report, statistics, locations and breakdown of these hard-fought campaigns.

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CookiesRecipe for Election Success? Credit Unions!

Throughout the year credit unions have been engaged in the campaigns of state and federal candidates, making a difference in the outcome. For one of these candidates, the return on the investment by credit unions was evident in the primary runoff: State Sen. Bill Heath. In late June, credit unions in north Georgia opened their doors to the Senator: He met with Coosa Valley FCU’s Cedartown branch, Family Savings FCU’s Hiram and Rockmart branches, and LGE Community CU’s Hiram branch in the district. These credit unions highlighted the visit in the media and/or newsletters that went out to almost 17,000 credit union members in the district during the July/August timeframe. This connection to the members was extremely valuable to the Senator’s campaign as he won his election by just over 1,000 votes! He is very appreciative of the efforts of the industry, and was blown away that there were other credit unions that were ready to engage in the two weeks between the primary and the runoff. While credit union involvement is powerful in an election, it creates resounding waves to other legislators and grows the credit union influence by more than just the candidate supported.

Leading up to the primary runoff elections, North Georgia Credit Union was the 16th credit union to get engaged in campaign activities. As of press time, the influence of credit unions extended to five Congressional races and five state races, with 141 individuals involved in campaign activities. Please click here to see all of the previous campaign support provided by credit unions across Georgia, and take advantage of the opportunities around you to engage in campaigns. There will be other avenues for credit unions to make a difference leading up to the November elections. Your time shared in this manner can grow the credit union influence dramatically!

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Summer School? Not Quite – State Legislature Begins Study on MVR Laws

Georgia CapitolThe state Legislature will commence study committee meetings to review the entire motor vehicle code section of Title 40 in Georgia law. Although the Legislature will likely focus on criminal provisions of the traffic code, any and all areas of this law could be subject to change. As such, the Government Influence Team will be engaged to see if they delve into areas of industry interest; sales, lending, titling, registration, liens and security interests – anything that may fall into the spectrum.

It is not unusual for the state Legislature to hold study committees during the off-session. There are usually several committees at work in the months leading up to January, and their activity is indicative of upcoming legislative issues that will be addressed in the next session. The study committee process allows for time for legislators to research a topic, and to allow interested parties to shape legislation the committee may produce.

The first meeting is on September 12th, where one can get a sense of the direction that the committee wishes to take with any proposed bills that arise out of the efforts. Stay tuned, and please share any comments or concerns with a member of the Governmental Affairs Team: Cindy Connelly, Mike Culbertson, or Brandee Bickle.

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CFPB logoNew Required Option of No-Point,
No-Fee Mortgages?

After floating the concepts earlier this year, the CFPB on August 17th took the next step and issued a 369-page proposal on new loan origination standards and compensation rules for mortgage loan officers. The proposal would:

  • Require mortgage lenders to make no-point, no-fee mortgage loans available to their prospective borrowers, unless the borrower is unlikely to qualify for such a loan. This option would help consumers who are buying or refinancing a home to compare their various loan offers.
  • Lenders would also need to provide mortgage borrowers who pay upfront points or fees on their mortgages with a certain minimum interest rate reduction.

The CFPB noted that the Dodd-Frank Wall Street Reform Act places certain restrictions on the points and fees offered with most mortgages, as well as on the qualification and compensation of loan originators. The act would prohibit payment of upfront points and fees for most mortgages, absent this CFPB rulemaking.

The agency's proposed mortgage loan originator qualification and screening standards would replace varied state and federal Secure and Fair Enforcement for Mortgage Licensing Act standards for loan originators working at credit unions, banks, thrifts, mortgage brokerage firms and nonprofit organizations with a single federal standard. Under the CFPB proposal, these loan originators would be subject to the same training and the same character, fitness and financial responsibility requirements, and would be screened for felony convictions. The proposal would also clarify portions of the Dodd-Frank Act that prohibit payment of steering incentives to mortgage loan originators. Portions of the Dodd-Frank Act that prohibit lenders from adding mandatory arbitration clauses and increasing loan amounts to cover credit insurance premiums would be also be implemented under the proposal. The proposal will remain open for public comment until October 16th. A final version of the proposal will be released in January.

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SharksShark Week? More Like CFPB Week!

CUNA has some serious concerns with the possible regulatory burden and added compliance costs of the proposed regulations for mortgage servicers that the CFPB issued on August 10th. The proposed rules, which are subject to a 60-day comment period ending on October 9th, implement some of the provisions of the Dodd-Frank Act on subjects such as simplifying billing statements, providing additional notice of rate changes and ensuring that consumers know all of their options to prevent foreclosures. CUNA will be working with various key committees and member contacts within the association to determine how best to address those concerns and issues. Many of the rules address provisions of the Real Estate Settlement Procedures Act and the Truth in Lending Act, and would require servicers to:

  • Make a "good faith'' effort to notify consumers of loss mitigation options. If a borrower is 30 days late in making a payment the servicer would have to let the borrower know of available options verbally. Written notification is required if the borrower is 40 days late.
  • Servicers would have to provide periodic billing statements that clearly break down charges. (Does not apply to fixed-rate loans if the servicer provides a coupon book or if the servicer services 1,000 or fewer mortgages. Exemption is only for mortgages originated by the servicer or where the servicer retains servicing rights.)
  • Servicers must provide 210 to 240 days’ notice prior to the first rate adjustment and subsequent notices to consumers 60 to 120 days before a payment change adjustment.
  • Servicers would not have to continue to provide an annual notice if a rate adjustment does not result in an increase in the monthly payment.
  • Servicers would have to promptly credit payments from borrowers, generally on the day of receipt. If a payment is less than the full amount, the payment may be held in a suspense account.
  • Servicers would not be permitted to charge a borrower for force-placed insurance coverage unless the servicer has a reasonable basis to believe the borrower failed to maintain hazard insurance.
  • Procedural requirements for responding to information requests or complaints; errors include an allegation by the borrower that the servicer misapplied a payment or assessed an improper fee. Servicers could designate a specific phone number and address for borrowers to use.

The CFPB is scheduled to issue final rules in January.

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Mass Litigation Train: Next Stop Credit Card Collections

The New York Times reported on August 12th that the same problems that plagued the foreclosure process and prompted a multibillion-dollar settlement with big banks are now emerging in the debt collection practices of credit card companies. As they work through a glut of bad loans, companies like American Express, Citigroup and Discover Financial are going to court to recoup their money. But many of the lawsuits rely on erroneous documents, incomplete records and generic testimony from witnesses, according to judges who oversee the cases. “I would say that roughly 90 percent of the credit card lawsuits are flawed and can’t prove the person owes the debt,” said Noach Dear, a state civil court judge in Brooklyn, who said he presided over as many as 100 such cases a day.

TrainInterviews with dozens of state judges, regulators and lawyers indicated that flaws are increasingly common in credit card suits, and lawsuits against credit card borrowers are flooding the courts. In certain instances, lenders are trying to collect money from consumers who have already paid their bills or increasing the size of the debts by adding erroneous fees and interest costs. The problem, according to judges, is that credit card companies are not always following the proper legal procedures, even when they have the right to collect money. Certain cases hinge on mass-produced documents because the lenders do not provide proof of the outstanding debts, like the original contract or payment history.

Although the amount of bad debt has fallen since the financial crisis, lenders are trying to work through the soured loans. In all, borrowers are behind on $18.7 billion of credit card debt, or roughly 3 percent of the total, according to Equifax and Moody’s Analytics. Amid the surge in lawsuits, credit card companies face scrutiny. The Office of the Comptroller of the Currency is investigating JPMorgan Chase on a complaint that nearly 23,000 delinquent accounts had incorrect balances. And, the Federal Trade Commission is working with courts across the country to improve the process for pursuing borrowers who are behind on their credit card payments, mortgages and other bills, and in a recent review of the consumer litigation system the commission found that credit card issuers and other companies were basing some lawsuits on incomplete or false paperwork.

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BooBank Fees Rising – What a Shock!
How Does Your Credit Union Compare?

MSN Money reported on August 14th that the fee environment worsened for bank customers in virtually every way possible in the first half of the year, according to a new survey from that highlighted banks fees rising. Average checking account fees at banks rose in every major category tracked, according to the new Mid-2012 Bank Fees Survey, conducted in July by Among the findings:

  • Minimum required to open an account: Banks required an average $408.76 to open a checking account, up from $391.41 in the previous survey.
  • Monthly service fees: Of the banks surveyed that charge a monthly fee, the average fee was $12.08 a month, up from $11.28 a month. That totals nearly $145 a year.
  • Minimum balance for fee waiver: The minimum amount needed to keep the bank from charging fee on deposits is rising to $4,446.57, up from $3,590.83.
  • Overdraft fees: At banks, overdraft fees were on average $29.83, an increase from $29.23 in year-end 2011.

The article made several suggestions for consumers, including shopping around, considering an online bank, considering a smaller institution, and matching one's needs with the bank's fees. A number of media covering this study also mentioned a study that found credit unions are a haven for fee-sensitive consumers.

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Smart phonesBig Box Retailers Unveil Mobile Payment Strategy

The August 15th edition of The Wall Street Journal reported that more than a dozen big merchants are expected to announce their plans to jointly develop a mobile-payments network that would battle similar services from Google Inc. and other companies, people involved in the effort said. Wal-Mart Stores Inc., Target Corp., 7-Eleven Inc. and Sunoco Inc. are among the companies hoping to elbow their way into the burgeoning market that turns smartphones into devices for making purchases. The push by merchants, called Merchant Customer Exchange, or MCX, is at an early stage, and the companies have yet to set a launch date or hire a chief executive. Stay tuned!

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Media Relations TrainingMedia Relations Training

What can you do to get your local media to help tell the story of your credit union's good deeds? How can you position your credit union's spokesperson as a thought leader?

These and other questions will be answered at the 2012 GCUA Media Relations Training.

Thursday, September 13th
10a.m. - 3p.m. (lunch included)
6705 Sugarloaf Parkway
Duluth, GA
Cost: FREE

You don’t want to miss the insightful panels lined up for you:

  • Using Social Media in PR
  • Developing Member Spokespersons
  • How to Approach Legislators With Your CU’s Message

Hear from your credit union colleagues about best practices, dos and don’ts for developing effective, results-focused media and communications strategies. And watch live mock interviews to help perfect your interviewing skills.

Back by popular demand: Lunchtime Media Panel featuring journalists from print and broadcast media who will share insight into the daily workings of a newsroom, what reporters and producers look for in a good story, how and when to pitch them, and what their pet peeves are.

Click here to register. Space is limited, so register today.

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