MAY 31, 2013
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Are You Answering the Call?
With Congress considering tax reforms that could strip credit unions of their tax exemption, now is the time to mobilize your staff, board and members to send a clear message to legislators: Don't Tax My Credit Union!

  Georgia Credit Unions Keeping the Pace
Several Georgia credit unions have already reached out to their members to help spread the "Don't Tax My CU" message, and more such efforts are in progress. Examples can be seen on the Affiliates' website.

  Opportunity: Hearing on Potential Qualified Mortgage Changes
Rules on qualified mortgages need to be changed to allow credit unions to meet their members' borrowing needs while minimizing risk, CUNA President/CEO Bill Cheney wrote in a letter to a House Financial Services subcommittee chair.

  Urging FASB to Drop Credit Impairment Plan
A proposed change to the methodology for recognizing credit impairment would hurt the credit union system and could have serious consequences for the economy.

  NCUA Lifts Arrowhead Central CU Conservatorship
The National Credit Union Administration returned control of Arrowhead Central Credit Union, which was placed into conservatorship in 2010, to its members. Arrowhead is the first credit union since 2007 to emerge from conservatorship.

  Dust-Up On Interchange: Visa, MasterCard Sue Retailers Opposed to Settlement
Visa and MasterCard sued 11 retail organizations that opted out of a proposed $7.25 billion settlement of an antitrust suit against the card companies. The settlement would apply to all card issuers and could harm some credit unions.

  Looking for Grants? $1M Plus Available From NCUA
Low-income credit unions are eligible to apply for up to $24,000 each in NCUA grants for programs such as financial literacy, product development, training and others. A total of $1.18 million is available from NCUA.

  An Eye on Banks
The Atlanta Business Chronicle reported that banks earned record profits of $40.3 billion in the first quarter of 2013, largely from reduced provisions for loan losses and higher non-interest income.

96 millionAre You Answering the Call?

More than 1,500 messages have been sent to Congress from Georgia credit union members in the past few weeks, and that message is simple: Don’t Tax My Credit Union! Members across the country are sharing this concise yet powerful message to urge Congress to not raise taxes on the 96 million credit union members and preserve the credit union not-for-profit financial option for consumers.

Multiple committees in Congress are strategizing precisely how the federal government should tackle tax reform, and it is up to credit unions to ensure the credit union corporate income tax status is not dismantled. In that process, credit unions are vying with 400 other groups that are also working to preserve their own tax status. Last week members of the GCUA management team met with the Georgia delegation in D.C. to gain intel on the tax proposal discussions – and in almost every office, they were told that tax reform has a more than decent chance to become legislative language. Once something is written, it will likely be too late to amend if credit unions are included in the reform. Several offices indicated that now is the time to “make yourself heard”. No one else will speak out for the 96 million credit union members, so your action is vital!

How to get engaged with this effort:

Looking for a different way to engage your members? Get on the Vine to share a short (six second) video with your legislators. But regardless how you share the message with Congress, it needs to be heard in the THOUSANDS from Georgia consumers. Thirty-three credit unions in Georgia have started sharing the message with Congress – please join them in this effort today!

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RaceGeorgia Credit Unions
Keeping the Pace

The need for credit unions to get engaged in the nationwide call to action to protect our industry is monumental and will need to be sustained over the next several months (and possibly through the rest of the year). This long-term activity is necessary to continuously drive home the message to Congress that credit unions ARE worth protecting, but with any kind of long-term action, there is always fatigue. However, credit unions have an ace in their pocket – their members!

Do you have members who would send a message to Congress on why their credit union should be protected? You do – but you have to ask. Credit unions in Georgia are doing just that; educating members on the not-for-profit status of credit unions, and how that status benefits them. Here are just a few credit unions who have reached out to their members to tell Congress “Don’t Tax My Credit Union”:

  • At their May 16th Annual Meeting, Hallco Community Credit Union organized a member letter petition and sent 360 letters to Congress saying “Don’t Tax My Credit Union.”
  • Peach State FCU and United 1st FCU are placing educational articles and the call to action in their upcoming member newsletters, asking their readers to reach out to Congress.
  • Associated CU has and CGR CU, Coosa Valley FCU, Ethicon CU, GEMC FCU, Habersham FCU, HealthCom FCU, MidSouth Community FCU, Nashville CU, Peach State FCU, Piedmont Plus FCU, Robins FCU, The Wright CU, United Methodist Connectional FCU, and University Health FCU are in the process of placing the call to action on the front of their websites for all members to access and get engaged in the effort.

With each of these efforts, the credit unions are educating their members on the not-for-profit status of credit unions, and how members can help protect their ability to access THEIR credit union. Is your credit union asking members to get involved? It’s easy, and will help sustain the message to Congress that credit unions should be protected.

GCUA is also in the process of providing credit unions with additional tools and resources to help in this campaign:

  • Credit unions that use GCUA for their web services should contact Nadine Ferere at and they will add to your website a link to
  • On the GCUA main page a link has been added with access to state-level resources for this campaign. Those resources include sample newsletter articles and a link to a GCUA resource sharing page that will allow you to see what other Georgia credit unions are doing to spread the “Don’t Tax My Credit Union” message to their membership.

Members have historically loved their credit unions and want to fight threats to their institutions. But, for them to be involved they need you to take that first step of asking them to get involved.

Please share how your credit union is engaging members with GCUA today.

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RotundaOpportunity: Hearing on Potential Qualified Mortgage Changes

Qualified mortgage rules must be changed to ensure that credit unions will be able to meet their members' borrowing needs in a way that minimizes risk and default, CUNA President/CEO Bill Cheney wrote in a letter submitted to the U.S. Congress on May 21st. The letter was submitted to Shelley Moore Capito (R-WV), chair of the House Financial Services Committee's financial institutions and consumer credit subcommittee, ahead of a hearing entitled: "Qualified Mortgages: Examining the Impact of the Ability to Repay Rule."

To help improve the regulation for credit unions, the letter suggests expanding the ceiling on the debt to income ratio beyond the current 43 percent limit. Members of the subcommittee echoed some other concerns raised in the letter. There was broad consensus on both sides of the aisle that community-based financial institutions should not be harmed by the "ability to repay" rule as currently written. Specifically, members raised concerns about the 3 percent cap on points and fees and asked questions about the debt-to-income ratio established in the rule. The cap could potentially harm those participating in relationship banking.

Members of the subcommittee also discussed how this rule would interface with existing regulations. The CUNA letter also raised this point: "Examiners may be critical of credit unions and assess their CAMEL ratings accordingly if credit unions do not make mortgages that meet the qualified mortgage standards. We believe credit unions should retain the flexibility they currently have to either hold a loan in portfolio or sell it on the second mortgage market based on the needs of the credit union to manage its assets and obligations."

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GlobeUrging FASB to Drop Credit Impairment Plan

A Financial Accounting Standards Board (FASB) proposal that would change the methodology for recognizing credit impairment would be detrimental to the credit union system and could have serious, unintended consequences for borrowers and the economy, CUNA and GCUA warned in their comment letters, urging the accounting board to abandon the plan. The FASB proposal is "the most critical regulatory concern credit unions have faced in quite some time, including rules or proposals that have been issued under the Dodd-Frank Wall Street Reform and Consumer Protection Act," CUNA President/CEO Bill Cheney underscored in a letter to the board.

The FASB has proposed an accounting standards update regarding financial reporting of expected credit losses on loans and other financial assets held by financial institutions, including credit unions. The proposed model would utilize a single "expected loss" measurement for the recognition of credit losses. It would replace the multiple existing impairment models in U.S. generally accepted accounting principles that generally use an "incurred loss" approach. Under the proposal, the reporting entity would be required to estimate the cash flows that it does not expect to collect, using all available information, including historical experience and forecasts about the future. There are serious questions whether the proposal will achieve the FASB's stated objectives and also questions how the proposal will be reconciled with the proposed approach from the International Accounting Standards Board. Click here to read the GCUA comment letter and the CUNA comment letter. Stay tuned!

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NCUA logoNCUA Lifts Arrowhead Central CU Conservatorship

The announcement that control of the once-conserved Arrowhead Central CU has been returned to its members "is a positive step for the credit union, and a positive sign of the continued improvements in the economy and the credit union system.” Arrowhead is the first credit union since 2007 to emerge from conservatorship.

NCUA took the 116,000 member, $755 million-in-assets credit union into conservatorship in June 2010. At that time, Arrowhead's net worth ratio had fallen to 3 percent. The agency said NCUA staff, a new leadership team and a 10-member advisory board worked together to strengthen Arrowhead's loan underwriting standards, control costs and restore net worth. The credit union recently reported a net worth ratio of 10.5 percent, quarterly net income of $5.6 million, and membership of more than 116,000.

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SandstormDust-Up On Interchange: Visa, MasterCard Sue Retailers Opposed to Settlement

On May 24th Visa Inc. and MasterCard Inc. filed a lawsuit seeking declaratory judgment from a Brooklyn, N.Y., federal court against 11 retail organizations that opted out of a $7.25 billion interchange settlement proposal in an antitrust lawsuit against the card companies. The card companies seek a declaration from the U.S. District Court Eastern District of New York that their fee practices from Jan. 1, 2004, to the proposed settlement date of Nov. 27, 2012 – the period in which merchants opting out could seek damages under the interchange settlement – did not violate the federal and state antitrust laws.

May 27th was the deadline for nearly eight million retailers to opt out of the proposed settlement, which would end an eight-year battle over fees the card companies charge merchants. Last week Wal-Mart and 18 other major retailers said they would opt out and consider separate legal action. They indicated the settlement offers inadequate compensation for the billions of dollars they pay in interchange fees each year and forces them to sign away rights to initiate future lawsuits over antitrust issues. The lawsuit names only organizations that originally were party to the negotiations of the proposed settlement but who opted out. They include the National Association of Convenience Stores, National Grocers Association and National Restaurant Association.

How does this impact credit unions? Credit unions are not a party in the lawsuit, but this situation is being monitored as credit unions and other financial institutions would be impacted by the settlement's terms, which would require a reduced interchange rate fee of 10 basis points for an eight-month period and would apply to all card issuers. If the total interchange rate fee were reduced by $1.2 billion, those credit unions with card programs would lose about $50 million in total revenues, roughly 0.5 basis points of their total assets, CUNA said. The loss would hit a small number of credit unions with especially active credit card programs.

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MoneyLooking for Grants? $1M Plus Available From NCUA

Low-income credit unions can now apply for a total of $1.18 million in NCUA grants to help support their financial literacy, product development, collaboration, staff and board member training, office relocation and computer modernization efforts. Eligible credit unions may apply for as much as $24,000 in funding, and may file a single application for all funding initiatives. Grant applications can be filed between June 17 and July 12, and grantees will be announced at the end of August.

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BunnyAn Eye on Banks

On May 29th the Atlanta Business Chronicle reported  that nationwide, banks posted record profits of $40.3 billion in the first quarter this year, thanks primarily to reduced provisions for loan losses and higher non-interest income. Loan balances fell by 0.5 percent in the first quarter, due to a decline in credit card balances. And, the number of banks on the FDIC’s problem list dropped to 612, down from 651 the previous quarter. Other points:

  • Net operating revenue grew by only 1.6 percent from a year ago,
  • Net interest income was down 2.2 percent,
  • The banking industry net interest margin fell to 3.27 percent, its lowest level since 2006.

Here in Georgia, bank profitability rose to 18 percent in the first quarter. The number of Georgia banks reporting was 226, down from 237 last year. Georgia banks also have fewer employees than last year’s headcount: 45,213 as opposed to the 2012 number of 48,516. To read more on Georgia bank statistics, please click here.

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