OCTOBER 19, 2012
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Congressional Gridlock Spiral
Despite the extreme partisanship that has resulted in historic gridlock in Washington, credit union advocates have succeeded in educating legislators on issues of industry importance, and must continue to do so.

  Paving the Way to Legislative Success for All Credit Unions
Face-to-face advocacy is the most effective way to promote legislators' understanding of credit unions, as illustrated by two Hikes at Home held earlier this month with members of Georgia's legislature.

  Large-Scale Connection
This week's International Credit Union Day festivities offered an excellent chance to spread the credit union message among elected officials, several of whom attended credit union chapter meetings around the state.

  Think It's Crazy Now? Wait for Redistricting's
Impact on Congress!

A study by a nonpartisan election reform group found that as a result of redistricting by state legislatures, there are even fewer competitive Congressional districts now than there were in 2010.

  Early Voting Under Way
Early voting for next month's elections began this week and will be an option Monday through Friday, plus Saturday, October 27. Read on for county-by-county information on how to exercise your vote in this way.

  Perfect Opportunity to Deliver the Credit Union
Message to Congress!

Registration has begun for the 2013 Governmental Affairs Conference in Washington, D.C., the premier opportunity for credit union advocates to meet with their elected representatives and advance the credit union cause.

  Card Fee 'Settlement' Start of Big Legal Battle
A proposed settlement of antitrust litigation involving credit card "swipe fees" is under fire from some of the merchants and groups involved in the case, who reportedly plan to ask the judge in the case to reject the settlement.

  House Financial Committee Staff Reports Analyze
'Too Big to Fail'

Staff analyses from two U.S. House members, one Democrat and one Republican, reach differing conclusions on how, or whether, the Dodd-Frank Act addresses the issue of "too big to fail" banks.

  Shield Credit Unions from Burdensome Mortgage Regs
Georgia Credit Union Affiliates has asked the Consumer Financial Protection Bureau to exempt credit unions from many provisions of proposed mortgage servicing rules, saying the rules would raise compliance costs.

  Remittance Exam on the Horizon for CUs
Over $10 Bil

The Consumer Financial Protection Bureau will finalize examination procedures for remittance regulations before the rules take effect Feb. 7, but CFPB authority over credit unions will apply only to those with $10 billion in assets or more.

  Growing in the Right Direction
The Atlanta Journal-Constitution reported that Georgia's rate of foreclosures is down 33 percent from this time last year, and that the state is now sixth in foreclosure rate, down from first in May of this year.

  Big Bank Lending, One Giant to Put Loans on Sale
CNN Money reported that lending by the nation's biggest banks is down at some and up only slightly at others, despite an influx of deposits, while the CEO of the largest U.S. bank said it plans to cut interest rates to boost lending.

  How Did You Celebrate?
October 18 was International Credit Union Day, an occasion celebrated by credit unions across the United States and around the world. Activities include several Georgia Credit Union Affiliates programs highlighting the benefits of credit unions.

  Cooperative Summit a Success
The first International Summit of Cooperatives, featuring nearly 2,800 participants from 91 countries, was such a success that organizers are considering another such event in 2014.

U.S. CapitolCongressional Gridlock Spiral

It is not news that the gridlock in Washington has reached historic proportions, considered by people on either side of the aisle as the least productive Congress since World War II. Even legislation that historically receives broad bipartisan support has encountered significant resistance and delay. Congress enacted none of this year’s appropriations bills by the end of the fiscal year, and the Senate Banking Committee has reported only four bills since the beginning of 2011. Hyper-partisanship rules on Capitol Hill; consensus is elusive, and gridlock is the result.

This environment has made it extraordinarily challenging for credit unions – or any other group – to move its legislative agenda. Nevertheless, credit unions continue to speak out on the issues of industry importance, and that voice is heard all over Capitol Hill. Through direct lobbying efforts, Hike the Hills, and witnesses that testified in 19 hearings since January 2011, Congress is aware of the issues of importance to credit unions and the members they serve. But where do things stand presently on key issues?

Member Business Lending
 Since the beginning of the year, credit unions, Leagues and CUNA have held hundreds of meetings with members of Congress to urge support for this legislation (H.R. 1418/S. 2231). The overwhelming message received from Senators is that they would like to see a legislative package that includes provisions for credit unions and banks which could benefit small businesses. Combining the Credit Union Small Business Jobs Act and the banks’ extension of the Transaction Account Guarantee Program (TAG) could produce exactly that type of package. To that end, CUNA has been working closely with key leaders in Congress to ensure that TAG does not move without MBLs. It is not clear when the vote on MBL will arise, but credit unions need to be ready when it does and could be anticipated during the lame- duck session. Stay tuned!

Credit Union Tax Status
One positive aspect of Congress’s inability to enact legislation is that the tax status has been preserved and the threat to the credit union tax status remains low (but not zero) in the near future. The tax status was never placed under serious threat during the Super Committee process for two key reasons: by all accounts, the Super Committee never got to a place where there was any proposal given serious consideration, and many on the Committee perceived the tax status to be too small in terms of revenue generation relative to the trouble it would cause to include it. Nevertheless, as we get closer to the end of the year, Congress will have to make decisions on how to avoid the so-called “fiscal cliff.” It is possible, but not probable, that the credit union tax status could come up in the context of those discussions.

Examination Fairness
 In response to concerns raised by credit unions regarding inconsistent and punitive treatment that some have received during their examinations, Leagues and CUNA have engaged Congress on the issue of examination fairness. There is legislation in both chambers (H.R. 3461 / S. 2160) that would require NCUA to cite the statutory and regulatory authority for examination determinations, make other examination reforms, establish an independent ombudsman to hear complaints about the examination process, and establish an independent appeals process to resolve disputes. While the bill has not received committee consideration yet, it has a positive impact. There is evidence from credit unions that examiners have been more accommodating and professional in recent examinations, and work continues to actively raise this issue with key lawmakers.

ATM Fee Disclosures
Leagues and CUNA have been working to get Congress to pass a bill eliminating the requirement under the Electronic Fund Transfer Act that ATM operators place a placard on the ATM notifying consumers of potential fees associated with usage of the ATM. In July 2012, the House of Representatives passed our ATM Fee Disclosure bill (H.R. 4367 / S. 3204) by a vote of 371–0.

The bill is currently stalled in the Senate by unrelated matters. The Senate Banking Committee leadership has combined the ATM bill with a piece of legislation designed to protect the privilege of information submitted to the CFPB. This combined legislation (S. 3394) is being held by Sen. Jim DeMint (R-SC) for reasons unrelated to either issue. Sen. DeMint is holding the standalone privilege bill (S. 2099) because he wants an up-or-down vote on the repeal of the Dodd-Frank Act. He is unlikely to release his hold on S. 3394 unless he gets that vote, and he is unlikely to be granted that vote. So, it’s created a standstill. Work continues to resolve the hold situation on the combined bill.

Regulatory Burden: Addressing the Crisis of Creeping Complexity
As the Consumer Financial Protection Bureau (CFPB) works to implement major portions of the Dodd-Frank Act, much of the credit union legislative activity in the 112th Congress has been focused on encouraging Congress to engage the CFPB and other regulators in an effort to reduce regulatory burden. This has manifested itself in several areas, including interchange fee and remittances regulation. Credit unions have asked Congress to enact legislation to reduce the burden on credit unions, including examination fairness legislation, the above ATM fee disclosures legislation, and privacy notifications legislation. And, credit unions were involved in advocacy efforts that resulted in the enactment of patent reform legislation, which will reduce lawsuits against credit unions, and flood insurance legislation, which will provide credit unions with greater certainty when making mortgage loans in flood-prone areas.

There are many other issues that have been addressed on behalf of credit unions, and although it has been an extraordinarily challenging time to advance a legislative agenda in Washington, credit unions have made progress on several key issues. But, work is not done. Of note, the lame-duck session could provide credit unions an opportunity to enact the MBL bill, and steps are under way to make sure that credit unions across the country are ready to win the vote when it comes.

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Paving the Way to Legislative Success for All Credit Unions

HighwayWhat makes credit unions different from the rest of the financial sector? How are people eligible to join? Why do credit unions work together? What motivates credit union management to continue to focus on what’s best for the member as opposed to serving personal interests? What challenges do you face as an industry? These are just a handful of the questions that credit union leaders fielded at two Hike at Home meetings this month with leadership individuals in the state legislature:

These two meetings provided an ideal opportunity not only to build a positive relationship, but to grow the understanding that two leadership individuals have of the credit union industry. Time well spent on any legislator, and the return on investment from these particular meetings was high as both Sen. Henson and Rep. Ramsey help shape the opinions of the other elected officials in their respective parties. Both legislators walked away with a firm understanding of what makes credit unions unique, and how legislation can have either a positive or negative impact on the ability to operate.

Only credit unions share their perspective with legislators – no other industry will speak out for what is important to the members you serve and your credit union. By meeting with elected officials, the credit union perspective can be shared to pave the way to legislative success for the entire industry. Thank you to the above credit unions for sharing their time, as well as all the other credit unions who have participated in previous Hikes.

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PeachLarge-Scale Connection

This week the festivities of International Credit Union Day provided credit unions the opportunity to celebrate with members and staff, and multiple chapters around the state celebrated with elected officials as well. The Augusta Chapter, the Chattahoochee Valley Chapter, and the Greater Atlanta Chapter each had at least one elected official in attendance for their meeting, with some legislators as the featured speakers. These venues provide an excellent opportunity for elected officials to connect with a wide variety of credit union leaders, and get a true sense of the collaborative spirit of our industry. Plus, it is a great way for legislators to see firsthand how many credit unions are in their districts!

There have been other chapters to host legislators during the year (Southeast Georgia Chapter, Greater Atlanta Chapter). Our thanks go to all of these chapters for making this large-scale connection with their elected officials. Inviting legislators to these meetings is an easy way to build influence in Congress and in the state legislature, and build awareness of our industry. If your chapter is considering topics for future meetings, please consider your legislator(s).

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ScreamThink It's Crazy Now? Wait for Redistricting's
Impact on Congress!

Think Congress is too partisan? A new study from the nonpartisan election reform group Fair Vote says that redistricting will make it even more polarized. According to the group’s analysis, 89 of 435 congressional districts were the real swing districts. But under the new congressional map created by redistricting — the districts where candidates are currently campaigning for seats in the next Congress — there are just 74 districts that fit that “swing district” bill.

In other words, starting with the election this November, nationwide there are now 15 fewer competitive districts than there were in 2010, and 83 percent of congressional districts now clearly favor either Democrats or Republicans. And because these members basically need to please only one side of the aisle to win reelection, they usually stick to the party line 100 percent of the time.

Redistricting is handled by the state legislatures in the vast majority of states — which leads lawmakers to draw safe districts for incumbents or, at least, to draw districts that their party will be able to win.

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Early votingEarly Voting Under Way

Want to make sure you have a say in this year’s elections? Instead of waiting for November 6th, try voting early. Early voting began on Monday, October 15, and is available as an option Monday through Friday, with a special Saturday voting on October 27th. For county-by-county information on where to go to take advantage of early voting, click here.

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Perfect Opportunity to Deliver the Credit Union Message to Congress!

GAC logoThe Credit Union National Association’s 2013 Governmental Affairs Conference will be held February 24-28 at the Washington Convention Center in Washington, D.C. CUNA’s GAC is recognized as the key conference to attend for political impact, credit union networking and industry updates. The GAC also offers a wide array of informative breakout sessions on hot topics, the industry's largest exhibitor showcase, and guest/family programs to tour Washington's sights. Registration is open at gac.cuna.org.

The GAC is all about making an impact: advancing the credit union legislative agenda and removing regulatory barriers so that credit unions can be their members’ best financial partners. This year’s theme, "Powerful Cause. Positive Effect." reflects the commitment credit unions have to the 95 million working Americans who rely on them every day. At the GAC, credit union leaders will have in-person meetings with their members of Congress and effect positive change for the credit union movement. It is critical that credit unions bring the power of our grassroots cause to the Hill and ensure a stronger future for credit unions. If you are interested in attending the conference, the Georgia credit unions have secured a room block at the Embassy Suites Hotel. Click here to find a rooming reservation form.

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Card debtCard Fee 'Settlement' Start of Big Legal Battle

Reuters reported that Visa, MasterCard and a group of retailers will ask Judge John Gleeson to approve the proposed interchange settlement the week of October 15th. In July, the $7.2 billion settlement was announced and was intended to resolve seven years of antitrust litigation between merchants and credit-card companies and their banks over so-called "swipe fees" that retailers pay to process credit-card transactions.

This could set the stage for a battle with Wal-Mart and hundreds of other merchants who say it is a bad deal. The article notes that 10 of the 19 trade groups and stores that led the litigation have indicated they will ask the judge to reject the settlement. The article also notes that there are many retailers that support the suit, and cites attorney Richard Arnold, who represents individual stores involved in the suit, including Kroger and Safeway, as saying that the opposition to the settlement is "untethered to the law, economics and dynamics of the case."

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Bachus and Frank
U.S. Reps. Spencer Bachus,
left, and Barney Frank
House Financial Committee Staff Reports Analyze
'Too Big to Fail'

During the week of October 15th, House Financial Services Committee Chairman Spencer Bachus (R-AL) and panel ranking member Barney Frank (D-MA) released competing staff analyses on how, or whether, the Dodd-Frank Act addresses too-big-to-fail banks. The Democratic report describes "how in fact [Dodd-Frank] provides for the orderly dissolution of failing institutions in order to protect the broader economy." The Republican report seeks to counter that claim, arguing that Dodd-Frank ends neither too big to fail nor financial bailouts. Read the Democratic report. Read the Republican report.

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Shield Credit Unions from Burdensome Mortgage Regs

House and shieldGCUA is urging the Consumer Financial Protection Bureau (CFPB) to exempt credit unions from many provisions of proposed mortgage servicing rules, or to refrain from applying provisions to credit unions in the proposals that do not implement a specific statutory requirement. The comment letter (along with letters from CUNA and other Leagues) addresses proposed amendments to Regulation Z, which implements the Truth in Lending Act (TILA), and Regulation X, which implements the Real Estate Settlement Procedures Act (RESPA). The regulations would coordinate with changes proposed in connection with the combined TILA and RESPA forms that will be provided for most closed-end mortgage loans. The mortgage forms and proposed rules are scheduled to be finalized by January.

These proposals were opposed, citing that the proposal will have a major impact on Georgia credit unions, and increase compliance costs. The comment letters noted that many of the provisions in the proposals would impose significant, burdensome requirements on credit unions. Further, many of the provisions that would be imposed on credit unions are not required by statute. Credit unions should not be punished through additional regulations that should be reserved for those bad apples in the marketplace. The comment letters urged the CFPB to use its exemption powers to confine the mortgage regulatory requirements to those entities that demonstrated a need for enhanced regulation by abusing consumers, not those that serve them well, such as credit unions.

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Up arrowRemittance Exam on the Horizon for CUs Over $10 Bil

Remittance regulation examination procedures will be finalized before the new rules become effective on Feb. 7, the Consumer Financial Protection Bureau (CFPB) said during an October 16th webinar. Dana Miller, of the CFPB's office of regulations, also made it clear that the bureau does not have any plans to push back that Feb. 7 compliance date. The webinar outlined the agency's pending remittance rule, which will 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 also will be required to investigate disputes and correct errors.

The CFPB's examination authority will apply only to credit unions with more than $10 billion in assets. And, there shall be a safe harbor exemption from the rule for remittance providers that transact 100 or fewer remittances per year. Remittance rule compliance examinations will be risk-focused, and the CFPB and other agencies will begin examinations for compliance once the rule becomes effective, Miller said. Asset size, transaction volume, the amount of existing oversight, and other factors will be considered when the CFPB decides which institutions it will examine first, Miller said. The CFPB is also considering adding remittance providers to the list of businesses it may supervise under its "larger participant" definition. The agency already has the authority to supervise some "larger participants."

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GrowingGrowing in the Right Direction

The October 11th edition of The Atlanta Journal-Constitution reported that Georgia’s rate of foreclosures is declining, and is 33% lower from this time last year. And while Georgia is 6th in the nation in foreclosure rate, that is down from being the highest in May of this year. Not all states have seen a decrease, even though the housing market is gradually recovering: States that have laws in place to slow down the rate of foreclosures (such as judicial foreclosure) have backlogged cases that are just now being processed. Excellent case in point when some state legislators seek to change Georgia to a judicial foreclosure process as they have attempted in years past!

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Big Bank Lending, One Giant to Put Loans on Sale

How have the big banks fared in lending as of late? CNN Money reported on October 15th that lending dropped 1% at JPMorgan Chase, the nation's largest bank, in July, August and September, from the three months before. Bank of America posted a $33 million net loss in income, but reports that its lending portfolio has increased. At Citigroup and Wells Fargo, lending was up, but not much, and not across the board. Citi's consumer lending was down, but its business lending was up. Wells was the opposite.

SpiderThe article poses the question, "Why lower loans?" It's not for lack of money to lend. At Citi, for instance, deposits grew by $30 billion in the past three months. Yet, lending only rose by $4 billion, and before the credit crisis, banks used to lend about 90% of their deposits. The article highlights the Federal Reserve’s recent pushing down of interest rates in the hopes to increase borrowing and spending. And, while mortgage rates have dropped, they haven't fallen as much as expected. The dip in overall interest rates suggests that mortgages should now be near 2.5%, instead of the current 3.4%. Mortgage rates actually rose slightly recently.

Some observers believe that a lack of competition in the mortgage market has allowed banks to keep mortgage rates high and discourage borrowing. Nonetheless, mortgage lending does appear to be the one bright spot at all the banks, but most of these loans are refis, and it's still not enough to create overall strong loan growth. Two things could be going on. With rates so low, some have said banks might not want to lend. Another theory is that borrowers are still not interested, seeing ahead of them the fiscal cliff and a general weak economy. However, JPMorgan Chase CEO Jamie Dimon told analysts that the bank plans to "cut prices," meaning offer lower interest rates, in order to boost loan growth. Dimon got some push back from analysts over making more low-interest loans. But Dimon says if banks want to grow they don't have a choice.

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ICU Day 2012How Did You Celebrate?

Yesterday, credit unions throughout Georgia, across the U.S. and around the world celebrated International Credit Union Day. This year, credit unions touted the member difference with the slogan, "Members Matter Most."

We hope your credit union joined in the fun on International Credit Union Day. Georgia Credit Union Affiliates helped get the word out to consumers across the state with some high-visibility efforts that shed a positive light on credit unions:

  • Coordinated a "Credit Union Switch and Win Sweepstakes." The campaign was run on three radio stations and online. Radio listeners entered via text message, the CreditYOUnion Facebook page or at www.georgiacreditunions.org for the chance to win one $1,000 prize. Participants also downloaded a document that explains "10 Easy Ways to Switch to a Credit Union." More than 400 Georgians entered the sweepstakes via text, online and via Facebook for a chance to win $1,000. As a result of the sweepstakes, 340 people "liked" the Facebook CreditYOUnion page.
  • Secured a signed proclamation from Governor Nathan Deal, recognizing October 18, 2012 as Credit Union Day in Georgia.
  • Assisted chapters in hosting legislators at chapter meetings.
  • Ran ads on several radio stations during International Credit Union Week, including Web banners and streaming announcements on the stations' websites.
  • Clear Channel’s Georgia Focus program spotlights Georgia credit unions and International Credit Union Day. The 30-minute community affairs program aired on nearly 100 affiliated radio stations throughout Georgia. Click here to listen.

All of the above messages reinforced previous messages that credit unions are the best choice for consumer financial services and that it’s easy to make the switch. We thank your credit union for celebrating International Credit Union Day!

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Cooperative Summit a Success

The first International Summit of Cooperatives was such a success that the hosts are considering another Summit in 2014. According to the three co-hosts – the International Co-operative Alliance (ICA), Desjardins Group and Saint Mary's University – the Summit provided an opportunity to demonstrate the amazing power of cooperatives to build a better world and to develop concrete strategies that will enhance its contribution.

Summit"This outstanding event really helped us define the future of the cooperative movement," said Dame Pauline Green, President of the ICA. "The Summit helped position the cooperative movement on the world stage. We are determined to make ourselves heard by major international organizations like the International Monetary Fund (IMF) and the World Bank, so that they take the cooperative model into account when making decisions," said Dame Green.

"Clearly, momentum has been created for the cooperative movement to assume its rightful place in the global economy," said Monique F. Leroux, Chair of the Board, President and CEO of Desjardins Group.

The discussions that took place throughout the Summit concluded with the Declaration of the International Summit of Cooperatives. This Declaration will be presented at the end of October at the ICA General Assembly, which will be attended by 10,000 participants. It will then be presented to the United Nations.

Many factors contributed to the Summit's success, in particular the impressive lineup of 163 speakers, including leading names like Madeleine Albright, Jacques Attali, Riccardo Petrella, A. Michael Spence, Nouriel Roubini and Rosabeth Moss Kanter. Representing Georgia credit unions were League Chairman Marshall Boutwell, CEO of Gwinnett Federal Credit Union; Diana Houston, senior vice president of business development with GCUA; and Mike Mercer, president/CEO of GCUA and board chairman of the Credit Union National Association.

Nearly 2,800 participants from 91 countries gathered in Quebec City to attend the Summit and discuss best practices among cooperatives. The presentation of nine groundbreaking studies was another key factor in the Summit's success. These studies shed new light on the place of cooperatives on the world stage and the major challenges they face – including promoting their unique strengths, becoming more agile and being more innovative so they can seize new business opportunities in rapidly expanding markets, such as emerging countries. Young cooperators also had a special role at the Summit; 170 young cooperators from around the globe, between the ages of 20 and 35, discussed ways to promote the cooperative model.

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