AUGUST 23, 2013
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apple Making the Grade
If the credit union income tax exemption is to "make the grade" and survive the tax-reform process, even more credit unions need to step up and let their legislators know how important this issue is to their members' financial well-being.

  Looking for an Idea?
Need a way to get your members involved in the "Don't Tax My Credit Union" campaign? The Affiliates can provide you with postcards your members can sign so they can be delivered to legislators during the upcoming Hike the Hill.

  Driving Home the CU Message
Georgia United CU delivered the first of thousands of "Don't Tax My Credit Union" postcards to the offices of U.S. Rep. John Lewis and U.S. Rep. Tom Price, taking the opportunity to share the credit union message.

  Navigating the Interchange Battle Landscape
A federal judge raised the possibility that financial institutions might have to pay "damages" over interchange fees, even though they followed the Federal Reserve's rules implementing the Durbin Amendment.

  NCUA Board Member Takes Oath
Rick Metsger was expected to be sworn in Friday, August 23, as the newest member of the NCUA Board, succeeding Gigi Hyland, and is expected to take part in the next scheduled meeting of the board on September 12.

  Illustrating the Credit Union Footprint
The annual meeting of the National Conference of State Legislators, held last week in Georgia, offered credit union advocates the chance to build relationships with elected officials who vote on bills affecting the industry.

  Merchants Sue Visa, MasterCard
A group of more than 200 merchants sued Visa and MasterCard under the Sherman Act, alleging that the companies' policies force the merchants to pay hundreds of millions of dollars in excessive interchange fees.

  Testing the Waters in the Mobile Payments Market
The Atlanta Journal-Constitution reported that Facebook is conducting a "very small test" of a mobile-payments system that would allow Facebook users to make payments using a mobile app.

  Lending Woes in China
The New York Times reported that China is experiencing a credit crunch that is slowing economic growth and contributing to rising default rates on loans made through informal lending processes.

  No Savings for the Young
More than half of those responding to a recent Affiliates survey said their children do not have savings accounts at financial institutions, presenting an opportunity to demonstrate the benefits of CU membership to the young.

  Stop Searching, It’s Here!
This year's Media and Communications Training from the Affiliates, scheduled for September 16, will offer participants valuable guidance in dealing with the media and other groups to promote the benefits of credit unions.

  Join the Switch to Save Campaign in October
GCUA is launching a statewide "Switch to Save" campaign to encourage credit union members and non-members to save money by switching their loans from other financial institutions to Georgia credit unions.

Above: DOCO CU CEO Barry Heape, center, and credit union staff in their "Don't Tax My Credit Union" T-shirts
Making the Grade

While Congress is on a short recess, House Ways and Means Committee Chairman Dave Camp (R-MI) and Senate Finance Committee Chairman Max Baucus (D-MT) continue their efforts to steer the country towards tax reform, visiting various businesses to promote their “blank slate” approach. This is the environment in which credit unions are working hard together on the Don’t Tax My Credit Union campaign, as this blank slate approach would remove all tax exemptions from the code and only add back in those deemed to “make the grade.” More and more Georgia credit unions are getting involved to protect their members (please click here for update); as of August 21st almost 58,000 messages have been sent by Georgia credit union supporters! However, given the Congressional road show, more are needed so credit unions ARE among those that “make the grade” and are protected. Looking for a different way to get involved? See how one credit union is educating their membership:

DOCO Credit Union
DOCO CU has been actively engaged in the Don’t Tax My Credit Union campaign, using social media, sending emails to membership and utilizing their website to get their members involved. But it is what they do on Fridays that adds to increased awareness with a unique twist! On Fridays staff don “Don’t Tax My CU” T-shirts to help engage in conversation with the members. Seeing a group of DOCO CU employees in the branch or out in the communities brings immediate focus and attention to this important campaign. CEO Barry Heape believes it is important to get heavily involved as “taxation on credit unions is the greatest threat we face as an industry.” Heape shared that a tax on credit unions would “seriously impact our ability to fulfill the ‘people helping people’ philosophy of credit unions.” Adding, “Paying taxes on our earnings would translate into drastically fewer benefits being returned to our members.” Heape fears that “our business model would no longer exist, and sadly, credit unions would no longer be a driving force in keeping the financial services market competitive.” But how did they get involved? While they are heavily engaged, getting involved on any level is easier than one might think:

How did you educate your team? Heape cites the help from GCUA and CUNA saying GCUA staffdoes a great job keeping Georgia credit union CEOs updated on the ‘Don’t Tax My Credit Union’ campaign and reminding us to push harder at the local level.” The information he receives does not just stay with Heape; his staff and volunteers are updated and encouraged to take action. Heape says that “when our staff understands how easy it is to send electronic letters to our congressmen and senators, they can better tell our members how easy it is to do.” DOCO developed simplified talking points for front-line staff to help them engage in conversations about the issue, and the shirts have been a great lead-in for staff. Being able to start the conversation with, “Did you notice the T-shirts we’re wearing?” could not be easier!

The T-shirts were a great idea; what kind of response have you had with members and/or the community? This is a departure from the norm for their credit union; employees normally wear button-down shirts and blazers. “When our members walk in on Fridays and see us in T-shirts and jeans, they are immediately curious,” Heap said. It is more than just the visual impact; Heape has found the t-shirts have been a great icebreaker for staff AND members as it helps them engage in the campaign and understand the importance of their involvement. And the shirts are quite the popular item. “We received so many requests from members to get their own T-shirts that we have ordered shirts to give away. The overwhelming response has been exciting.”

Have you experienced any negativity or push-back from staff or members? Heape has actually seen the exact opposite, commenting, “All we have heard is positive support of our efforts.” A key factor to the success can be found in the staff at DOCO CU. Heape shared that the staff is “genuinely passionate about fulfilling our mission as a credit union and understands the urgency in fighting to preserve our tax exemption status.” This sentiment is shared by their members, citing that according to branch feedback, “Our members want to continue enjoying our great rates and affordable products and services, so they are supporting our campaign as well.” And while their credit union is seeing success, they continually seek new ways to be involved such as the below postcard drive (see related article). Great job!

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Cat and fishLooking for an Idea?

Seeking an idea on how to get your credit union members involved in the “Don’t Tax My Credit Union” campaign? There are Don’t Tax My CU postcards available for credit unions who want to engage their membership in lobbies. It is easy to implement; at teller windows credit unions ask members to speak out for their credit union by signing the three postcards (one to each of their Federal legislators). Points to remember:

  • To ensure that they go to the correct Representative, please denote which branch collects postcards, and
  • Return to Cindy Connelly before September 12th so they can be delivered on the Hike the Hill.

Need more time? Not a problem; postcard collection can continue past the 12th and GCUA will help with additional delivery options. Interested? Please email Cindy Connelly today with the total number of postcard sheets requested. Postcards are available on a first come, first served basis, so get yours today!

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Office of Rep. Tom Price Office of Rep. John Lewis
Georgia United CU staff with U.S. Rep. Tom Price (center left) Georgia United CU staff with U.S. Rep. John Lewis' staff
Driving Home the CU Message

During the August Congressional recess, Georgia United Credit Union began the first delivery wave of thousands of postcards to legislative offices driving home the message of “Don’t Tax My Credit Union”! The credit union has collected over 16,000 postcards from members, and these messages were shared with Rep. John Lewis (D-5) and Rep. Tom Price (R-6) this week.

They also utilized the time to discuss the benefits of credit unions as a financial cooperative in the communities they serve. Their ideal use of the recess with these visits to legislators generated nationwide notice in the August 21st edition of Credit Union Times; our thanks to Georgia United CU for all of their efforts in the campaign!

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LandscapeNavigating the Interchange Battle Landscape

U.S. District Court Judge Richard Leon changed the landscape of the interchange case during a scheduling conference by introducing the possibility of financial institutions’ paying "damages" even though they complied with the Fed's rules implementing the law, best known as the "Durbin Amendment." “Damages” could take the form of debit card issuers’ being ordered to “disgorge” revenue obtained from interchange fees because of the Fed’s failure, as the judge sees it, to follow the requirements of the Durbin Amendment.

For most credit unions, the Durbin Amendment’s exemption from interchange fee caps for institutions with less than $10 billion in assets likely should protect them from the threat of paying damages. The fee cap exemption is written into the law, not the Fed’s rules — which were the focus of Judge Leon’s ruling. Even so, there is concern that any financial institution (especially the four credit unions above the exemption) could be required to pay a penalty for following rules established by a federal agency. Work continues to ensure that no credit unions are subject to penalties in this case, especially since financial institutions were not even a party to the case subject to the judge’s ruling.

In a positive move on August 21st the Fed’s General Counsel shared that the Fed plans to appeal the district court’s July 31st decision that struck down the Fed’s rules on debit interchange, and that the Fed wishes to obtain closure quickly on this issue. And, the Fed’s position is that an interim rule would be unnecessary, as it would force all parties to adopt a rule on a short-term basis while this legal battle continues. Stay tuned; for more information please click here for the Interchange Resource Page.

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MetsgerNCUA Board Member Takes Oath

As of press time, Rick Metsger will officially become NCUA’s newest board member in a private ceremony on Capitol Hill around 10 a.m. on August the 23rd, filling the spot vacated in October 2012 when former board member Gigi Hyland left the agency after her term (and subsequent extended period of time sitting on the board) had expired. Metsger will participate in the board’s next meeting September 12th. Named as interim senior policy advisor for Metsger is 26-year NCUA veteran David Shetler, who will serve until a permanent aide is selected. Shetler is now deputy director of the Office of National Examinations and Supervision.

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FootprintIllustrating the Credit Union Footprint

Understanding the credit union footprint is important for consumers, media and legislators in any state to further the credit union industry. From an advocacy perspective, opportunities are sought regularly to educate legislators on the positive impact credit unions have in the communities. One such opportunity came during the week of August 12th when the state of Georgia hosted thousands of legislators from all across the country at the National Conference of State Legislators (NCSL). Individuals from various state credit union leagues, along with GCUA, were on hand to educate legislators and their staffs on the credit union difference, the number of credit union members in their respective states and the positive difference credit unions make. With the event in Georgia this year, it was a prime opportunity to connect with more than 100 legislators from this state and build relationships with individuals who vote on the bills that could impact credit union operations.

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CardsMerchants Sue Visa, MasterCard

More than 200 merchants filed an antitrust lawsuit on August 15th in a Texas U.S. District Court against Visa and MasterCard, claiming the card companies' policies force them to pay hundreds of millions of dollars in excess interchange fees. The suit claims the two card companies have adopted nearly identical membership rules preventing financial institution-issuers of credit and debit cards from competing for merchant acceptance of the cards. The lead plaintiff is Delta Air Lines, and most of the plaintiffs are in the travel and energy industry, among them several airlines, hotels such as La Quinta Inns and Red Roof Inns, and travel companies such as Orbitz Worldwide and Travelocity, as well as Radio Shack and Pier 1 Imports.

The suit alleges the card companies violated the Sherman Act. The plaintiffs seek unspecified damages, along with punitive damages and attorneys' fees. "Because Visa and MasterCard have as their members nearly all card issuers in the U.S., and because those card issuers have agreed to rules that preclude them from independently competing for merchant acceptance, Visa and MasterCard and their members have obtained and maintained market power in the market for merchant acceptance of debit cards in the U.S.," said the complaint. Saying interchange fees are their biggest operating expense, the merchants allege that maximum debit interchange fees enacted by the Federal Reserve as a result of the Durbin Amendment have not eliminated the anticompetitive effects of the card companies' setting default fees.

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Facebook Testing the Waters in the Mobile Payments Market

The Atlanta Journal-Constitution reported on August 15th that Facebook will test the water on a mobile payments service allowing users to make purchases inside mobile applications using payment information they have added to their accounts on the social network. Facebook is working on a "very small test" and the company says there is no set schedule for making the service available to users. The service would use payment information shoppers store on Facebook to automatically complete checkout forms of certain mobile apps. Then, the app would process the purchase. Forrester Research analyst Denee Carrington thinks Facebook will face a challenge in offering mobile payments even though the company has been building up its database of users' credit cards. "Consumers want safe, seamless and convenient mobile payments and there are a growing number of competitors that consumers trust more — such as PayPal, Visa ( and others," Carrington said in an e-mailed statement.

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ChinaLending Woes in China

The New York Times reported on August 16th on the drying up of credit and its impact on cities in China and the entire Chinese economy. Across China, growth has slowed and with that slowdown has come rising defaults on loans made outside the conventional banking system. The cracks are showing in many sizable cities where informal lending has dominated for a quarter-century. The biggest, most economically diverse metropolitan areas like Beijing and Shanghai seem considerably less affected, but also have many small and medium-size businesses that depend on informal lending. As some borrowers began defaulting early this year, worried lenders in the informal sector raised interest rates for small and medium-size businesses, previously 25 to 40 percent a year, to as much as 125 percent a year. The increase set off a much broader wave of defaults in recent weeks, as owners found themselves unable to repay billions of dollars in bad debts, many of them handwritten and hard to enforce in court.

Although changes are being slowly introduced, state-owned banks have long been allowed to lend only at low, regulated rates barely above the inflation rate, with the total value of loans controlled by quarterly quotas. All over China, these loans go overwhelmingly to large state-owned businesses, government officials and politically connected individuals, who then relend the money at much higher interest rates to small and medium-size businesses in the private sector.

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KidNo Savings for the Young

More than 52 percent of respondents to the Georgia Credit Union Affiliates' Midyear 2013 Consumer Survey report their children do not have savings accounts at financial institutions. This provides credit unions with an opportunity to promote children's savings accounts with their members and also attract youth at an early stage to see the benefits of credit union membership. National statistics paint a bleak picture of financial literacy among young people. Only 27 percent of young adults possess basic knowledge of interest rates, inflation and risk diversification, according to the National Bureau of Economic Research. Also, the 2012 Consumer Financial Literacy Survey indicates 44 percent of Americans continue to learn about financial literacy primarily from their parents or at home. GCUA's report shows how parents can better equip their children to manage their finances responsibly:

  • Provide an allowance. Children learn by doing. Base the amount of the allowance on a child's age, maturity and the cost of living in one's area. As children grow, increase the allowance and let them take over buying some necessities.
  • Let them do some of the research. Some parents require their children to find out how much money they need for something they want and to submit detailed "budget" requests in writing. These can become the basis for negotiating allowances. This practice works especially well when they go off to college and the amounts under discussion go from tens and hundreds, to thousands of dollars.
  • Don't penalize children for working. Reducing allowances when children get a job punishes them for taking the initiative.
  • Encourage (or require) regular saving. Open a credit union savings account in children's names. Then encourage them to put a percentage of what they earn or receive as a gift into savings. Use this to teach them how to put money aside for big expenses.
  • Teach by example. It's still the best teacher. Believe it or not, children do pay attention to what parents do, including how they manage money. So parents should make sure to practice what they preach.
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SearchStop Searching, It’s Here!

The Media and Communications Training is back! The media training hosted by GCUA on September 16th will include some of the popular elements of past sessions and incorporate some new communications training to equip attendees to represent (and train others in their credit union) their credit unions and tell their stories.

In addition to the lunchtime media panel where journalists will share the best ways to reach them and pitch a story idea, there will also be a panel discussion on using a multi-media approach to telling the credit union story. The panel will be made up of experts who are using everything from social media to video to promote the credit union message. Cpl. Jake Smith of the Gwinnett County Police Department will be speaking on how to handle tough media questions. Another panel discussion will focus on training front-line staff on messaging, whether it’s to educate members about a new loan program or get people engaged in “Don’t Tax My Credit Union.”

And although media interviews are a great way to tell the story of your credit union, you probably have more opportunities to speak at your local Rotary or Kiwanis Club meetings than you do being on TV, so we’ll be conducting a session on “Getting It Right Every Time” for any kind of public speaking. Registration is free, but spots are limited, so click here to reserve yours.

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Switch to SaveJoin the Switch to Save Campaign in October

Running in conjunction with International Credit Union Month in October, GCUA is launching a statewide “Switch to Save” campaign encouraging members and non-members to switch their loans from other financial institutions to Georgia credit unions and save money. The international theme for ICU activities is “Unite for Good,” and GCUA is looking to credit unions to unite in participating in this campaign to elevate the profile of Georgia credit unions. The campaign is flexible enough that credit unions can promote whatever loan products they wish under the statewide messaging umbrella.

A statewide public relations campaign beginning in the middle of September will utilize print, radio and online outlets to promote October as the month to “Switch to Save.” Participating credit unions will be provided with a variety of pre-designed customizable tools to share the message with their members. To assist in tracking, credit unions will submit a short form after completing a loan review and/or refinance. This information will be used in follow-up activities to reinforce the message beyond October that switching loans to credit unions saves consumers money. Click here to watch a video about the campaign, which includes a dedicated website for consumers.

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