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Engaging is EASY
It's really not that difficult to get your members engaged in the "Don't Tax My Credit Union" campaign. Three Georgia CUs tell you how it's done.

  NCUA Letter to FCUs on Possible FOM Violations
The National Credit Union Administration sent a letter to all federal credit unions reminding them of the rules on offering credit union admission to individuals based on their membership in associations.

  Message to (and from) Senators
Representatives of Georgia United Credit Union visited the offices of Georgia's U.S. Senators to deliver postcards from members urging the Senators to oppose taxation of credit unions.

  Share Your Voice
You know what issues are important to your credit union, and now is the time to share that information, as the process of shaping the credit union legislative agenda for 2014 is getting started.

  What’s the Right Amount of Capital?
The current credit union capital regime is outdated and needs to be changed in order to protect the industry in a serious financial crisis, NCUA Chairman Debbie Matz said in the August edition of The NCUA Report.

  NCUA Files Suit, Again!
The National Credit Union Administration filed a new lawsuit against Morgan Stanley, contending that the firm violated state and federal securities laws in the sale of mortgage-backed securities to corporate credit unions.

  Appeal of Interchange Under Way;
Asking for No "Interim" Rule

The Federal Reserve and CUNA asked a federal judge to maintain current interchange regulations while a case on the regulations' validity proceeds; the plaintiffs argued against the judge's ordering an interim rule on interchange fees.

  On Your Mark, Get Set, Vote!
A recent ruling by a federal judge will allow Georgia officials to set the state's 2014 U.S. Senate primary for May 20, making it the earliest primary election in state history.

  Making the Connection
A recent meeting with state Rep. Virgil Fludd offered Delta Community Credit Union representatives the chance to spread the credit union message and build a relationship with a member of the House Banks and Banking Committee.

  Money Talks: Comparison of Credit Unions and Banks
A recent article in The Washington Post reported that lending growth at credit unions outpaced that of banks in the second quarter of 2013, and that credit unions have posted 5.5 percent loan growth over the past four quarters.
  Fee Avoidance
A survey by the American Bankers Association found that more than half of banking customers reported that they pay no fees for services such as account maintenance and ATM use.

  Switch to Save Campaign Is Coming Up
The statewide Switch to Save Campaign, encouraging Georgians to switch their loans to credit unions and save money, is on track for October. Is your credit union making plans to participate?

Helping handsEngaging is EASY

Each week there are hundreds (even thousands) of Georgians who contact Congress to ask them to protect their ability to access credit unions. As of September 3rd there have been more than 64,100 messages sent by Georgia credit union advocates (click here for report). These contacts have been the direct result of credit unions engaging staff and members through the email call to action system, the toll-free number (877-642-4223), through lobby member drives, fliers, postcards and letters. And this does not even include the countless social media messages generated by credit unions! The next wave of social media contacts is coming soon; there will be a second nationwide push for Twitter contacts with Don’t Tax Tuesday II on September 10th to welcome Congress back as they return from their recess (please click here for a tip sheet on how to engage on Twitter).

Here in Georgia there have been continuous new waves of involvement by credit unions to keep the message consistent and unwavering: that credit unions are worth protecting. But has your credit union engaged yet? While day-to-day challenges and operational needs can absorb any credit union’s attention, make no mistake: Focus is needed on the Don’t Tax My CU campaign by everyone in the industry. Please note, educating and engaging your members can be EASY. But don’t take our word for it; here are three credit unions that put the E in Engagement:

Excel Federal Credit Union
Excel FCU has engaged in the Don’t Tax My CU campaign, generating quick results in an almost effortless manner – but it takes planning and more than one member touch point to see this type of success! The credit union has engaged through internal emails to staff, having the call to action on a website banner and holding an email marketing campaign to their membership. The question of why get involved was an easy answer; CEO Gary Nalley shared that it was important for them to get heavily involved with the campaign for two reasons:

  1. To preserve our industry in the format and for the purpose we were originally founded.
  2. To create awareness amongst our members that the "big" banks are lobbying against the "little" credit unions.

An interesting aspect of Excel FCU’s involvement in the campaign is that it has not only been positive for generating contacts to Congress to protect credit unions, but positive for the credit union specifically. Nalley shared that the awareness created amongst the membership through the campaign has translated into "good public relations for us, and in turn more members and accounts." Talk about a return on investment of time!

The success the credit union has seen with the campaign all boils down to members. Nalley cites the ability to generate contacts to Congress with strong positive relationships. "Our relationship with our members and their willingness to take the time to contact their representatives on behalf of their credit union" is what motivates them to get involved, he said. And has the credit union had any negative responses from asking its members to get involved? A resounding "no"! It could not be easier; just ask your members to get involved!

Etowah Valley Federal Credit Union
Etowah Valley FCU has reached out to its membership in a variety of avenues on the campaign – through social media posts, postcards and placing the call to action on the website banner. A unique twist on its web banner is the personal plea from CEO Veda Hilton on why the Don’t Tax My CU campaign is important to each and every credit union member. Her message illustrates the history and purpose behind the credit union income tax exemption, the impact of regulation on credit unions and the mission behind credit unions. Hilton shares that the credit union’s motivation isn’t about money, it’s about helping the members improve their financial well-being, and "credit unions serve Middle America; they provide a financial alternative like no other in the marketplace." Hilton asks the chilling question: "What happens when the competition is gone?"

Vice President Michelle Dollar shared that her first thought as to why get involved was, "How can we NOT get involved?!" Dollar has even taken the message to non-credit union individuals via social media sharing that if credit unions lose their tax exemption, then all consumers will suffer “because there will be no competition to keep bank fees down – after all, did the banks come up with free checking?” Dollar carries the passion for what credit unions stand for and said getting involved "not only rekindles that spark, but it’s also an opportunity to passionately remind our members that credit union membership is a tremendous value." The secret to success in generating contacts boils down to this passion for credit unions and the positive impact they make in people’s lives. This credit union is seriously concerned that the taxation of credit unions could put an end to the industry as we know it, and engages its members for this reason. And it is easy to do so; Dollar shares "it isn’t terribly difficult to participate" given all the different tools and resources. To take advantage of the tools for YOUR credit union and catch the spark, click here!

Ethicon Credit Union
Ethicon CU has engaged their members with the call to action through emails and postcards, and even has their members engage OTHER members in sending messages to Congress! CEO Deborah Beam expressed the enthusiasm of their membership getting involved in the campaign, sharing that they believe in the credit union movement and had members take stacks of postcards to their departments to get other supporters to sign. Their members’ message to Beam and her staff is extremely motivational for the entire industry: “I love my credit union and I will do what I can to help.” That’s a message any credit union would want to hear from their membership!

Beam shared that the Don’t Tax My CU campaign is important to all credit unions, especially to small ones. As a single-sponsor credit union, Beam shared that they remained true to their credit union beginning and that a tax on credit unions “is just another way to tax the consumer and possibly eliminate a financial choice.” Beam said that they got heavily involved because of this reason: “We are a small, single-sponsor credit union and feel our members are taxed enough – taxation on credit unions would be like taxing the members because THEY are the owners.”

It has been easy to engage their membership; they reviewed the structure of credit unions and explained how credit unions are owned, and sent an email to members “to ask Congress to leave credit unions out of any new tax laws or changes.” And their membership has made the postcard campaign even easier, with members encouraging other members to “drop by the credit union and sign” a postcard. How do you get your members to be your spokesperson? They already are; just take the easy steps that Ethicon did and ask them for help. They will, take it from Beam: “They believe in their credit union.”

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Exclamation pointNCUA Letter to FCUs on Possible FOM Violations

NCUA recently sent a letter to all Federally Chartered Credit Unions on member’s eligibility "without limitations":  Letter #13-FCU-03 ("Potential Violations of Common Bond Advertising Requirements"). This letter is a reminder to all federally chartered credit unions that have added associations to their field of membership that the rules need to be followed on advertising to individuals who want to become a member of the credit union.

The concern, which has been pointed out to NCUA by the American Bankers Association, is that some overly aggressive marketing campaigns by certain federal credit unions are facilitating membership through associational groups and are providing consumers with misleading information about single and multiple common bond membership requirements. NCUA is concerned if any credit union is advertising that their field of membership is “open to anyone.” This gives the false impression that there are no restrictions on joining a federal credit union – which is not the case. The letter is intended to remind FCUs of the:

  • Common bond requirements in the Federal Credit Union Act and NCUA rules;
  • Requirements for accuracy of advertising in NCUA rules; and 
  • Consequences of failing to comply with these requirements.

When NCUA approves an association into its FOM, they look for several factors before approving the addition.  The factors are:

  • Whether members pay dues;
  • Whether members participate in the furtherance of the goals of the association;
  • Whether the members have voting rights;
  • Whether the association maintains a membership list;
  • Whether the association sponsors other activities;
  • The association’s membership eligibility requirements; and
  • The frequency of meetings.

The vast majority of credit unions, at a minimum, are following the rule by accurately and clearly advertising their membership eligibility. If your credit union has an association in its FOM here are some things you should do:

  • Make sure the association is doing most of the seven steps above; and
  • Review your credit union’s advertising and promotional practices and ensure all current and future materials accurately portray membership eligibility.
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MessagesMessage to (and from) Senators

On August 27th, Georgia United Credit Union representatives visited the district offices of U.S. Senators Saxby Chambliss and Johnny Isakson to personally deliver postcards received from their members to speak out against taxing credit unions (to date more than 31,000 messages have been sent by Georgia United Credit Union members!). These meetings also provided the opportunity to share the credit union message and garner insight from the legislative staff. Of note to credit unions: The Regional Director from Senator Isakson’s office expressed that while they had been hearing the credit union message from Georgians, it was important that credit unions did not stop contacting them as Congress moves forward with the discussions on tax reform. His message was simple but telling: Credit unions must continue to work to preserve the exemption. Keep up the efforts with the campaign, each message and member makes a difference!

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Your voiceShare Your Voice

Credit union leaders around Georgia are shaping the legislative priorities for 2014, which will guide the legislative focus for all credit unions. Each year input is sought from credit unions to help hone the legislative agenda, and now is the opportunity to voice your opinion about the credit union issues that are most important to you! If you have not weighed in yet, please do so here by September 13th.

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StatusWhat’s the Right Amount of Capital?

The 15-year-old, one-size-fits-all credit union capital regime "is outdated and insufficient," and is "simply not enough to protect the credit union industry during a serious crisis," NCUA Chairman Debbie Matz reiterated in the August edition of The NCUA Report. The NCUA editorial mirrors remarks Matz made in July, when she said credit unions "need a flexible, forward-looking standard that makes sense for today and tomorrow." The current 7 percent leverage capital standard was set in 1998, and recent financial crisis and industry changes mean a newer approach is needed, she said.

So, what's the right amount of capital? The answer, Matz said, is complicated. "The answer will vary from credit union to credit union. But just because it's complicated doesn't mean we should shrink away from finding a solution. On the contrary, it underscores just how important it is to build a new risk-based capital framework for credit unions," Matz wrote. A developing NCUA plan could result in higher capital levels for credit unions with high concentrations of risky assets. The current 7 percent leverage capital standard, which is required by the Federal Credit Union Act, would remain the floor. However, Matz said credit unions with assets of $50 million and above could be subject to improved risk-based capital requirements to better correlate required capital levels to risk.

As it moves toward a final rule, NCUA will give credit unions and other stakeholders plenty of time to comment on the proposed changes. CUNA has supported net worth standard changes that better reflect risk than the present approach, but will not simply add net worth requirements to the current system, and has been urging the agency to adopt a more productive approach to rulemaking focusing on problem areas rather than issuing rules with blanket applicability, regardless of the credit union’s level of risk.

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NCUA Files Suit, Again!

NCUA announced on September 3rd it has filed a new residential mortgage-backed securities (RMBS) case against Morgan Stanley, alleging such things as "systemic disregard of underwriting standards." It alleges violations of federal and state securities laws in the sale of more than $566 million in mortgage-backed securities to the U.S. Central and WesCorp corporate credit unions, according to NCUA. The complaint alleges the offering documents of the securities sold to the failed corporate credit unions contained statements of material fact that were not true or omitted material facts. The originators systematically abandoned the stated underwriting guidelines in the offering documents and the securities were significantly riskier than represented, according to the complaint. The result, the complaint says, was that the securities were destined from inception to perform poorly.

ScalesAlthough filed on August 16th, the announcement of the lawsuit filing comes just three days after NCUA received some good news from the10th U.S. Circuit Court of Appeals. That court overturned a lower court ruling that claimed NCUA's RMBS case against RBS Securities was time-barred and should be dismissed. By overturning that ruling, the appeals court enabled the regulator to proceed with its lawsuits against 12 firms, including RBS Securities, which claim losses stemming from residential mortgage-backed securities sold to corporate credit unions.

NCUA has filed lawsuits against Barclays Capital, Credit Suisse, Goldman Sachs, J.P. Morgan Securities, RBS Securities, UBS Securities, Wachovia, Washington Mutual and Bear Stearns alleging violations of federal and state securities laws in the sale of mortgage-backed securities to the five corporate credit unions. However, a setback in one of these lawsuits occurred when a federal court on September 3rd dismissed almost $2 billion of civil claims NCUA filed against JP Morgan.

An interesting move on the Barclays case: the FDIC has entered the fray in NCUA's suit against Barclays Capital, supporting an NCUA appeal and arguing that the statute of limitations had not expired when the agency filed suit against the financial firm in September 2012.

Also, NCUA has settled similar suits with Bank of America, Citigroup, Deutsche Bank Securities and HSBC, bringing in more than $335 million in funds that were lost due to the corporate credit union investments. NCUA has said funds recovered through these cases will be used to help reduce the amount of future corporate stabilization assessments on credit unions.

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CardsAppeal of Interchange Under Way;
Asking for No 'Interim' Rule

The appeals process of the recent interchange decision is under way. The Federal Reserve and CUNA, with its coalition partners, filed separate briefs with the U.S. District Court for the District of Columbia on August 28th asking Judge Richard Leon to maintain current interchange regulations while a case on the validity of those regulations moves forward. In their briefs, both parties argued the court does not have the authority to require the regulator to issue an interim rule while the Fed appeals the decision to vacate its debit card interchange cap rule, which has been in effect since October 2011. Even the merchants’ coalition – the plaintiff in the case – called on the court to maintain current interchange regulations pending the results of a Fed appeal of the court's overturning its rule.

Leon was the judge who struck down the Fed's rules on debit interchange fees and routing procedures under the Durbin Amendment. He ruled at that time that the Fed did not follow narrow congressional intent when it implemented the cap and other changes imposed by what is known as the Durbin Amendment. Leon had asked for information on the feasibility of issuing an interim final interchange rule, and asked the Fed for an interim final rule implementation timeline.

The Fed said a stay "will preserve the status quo in the debit card industry while the Board's appeal proceeds, will prevent irreparable injury to plaintiffs in the form of a likely steep increase in interchange fees should the market return to its largely unregulated state prior to the Rule, and will avoid mooting the Board's appeal." The Fed also argued against developing and releasing an interim final interchange regulation while the court case moves forward. While this case continues likely over the next few months, work continues to ensure that credit union concerns are addressed. Stay tuned!

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On your markOn Your Mark, Get Set, Vote!

On August 28th the Atlanta Business Chronicle reported that in 2014, Georgia will have the earliest primary in state history. A federal judge has agreed to let Georgia officials move the state’s U.S. Senate primary from mid-July to May 20th. Judge Steve C. Jones originally requested the primary be moved to June 3rd, but Secretary of State Brian Kemp says that would have meant polls had to open the Saturday before Memorial Day. The date change is in response to a lawsuit filed by the Justice Department against Kemp’s office. The lawsuit claims Georgia’s July date didn’t allow a 45-day window for the return of overseas ballots before a potential runoff, as required by federal law.

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From left: Delta Community CU CEO Hank Halter, branch manager Lacie Banks and state Rep. Virgil Fludd
Making the Connection

On September 5th Delta Community Credit Union spent time building relationships with one of their district legislators, state Rep. Virgil Fludd (D-Tyrone). During the meeting, they shared what makes credit unions unique, how they are structured, how they collaborate with their fellow credit unions for the benefit of their members, and what legislative hot topics impact our industry on a state and federal level. Their time and efforts created positive inroads for credit unions with this member of the House Banks and Banking Committee!

This type of targeted meeting grows credit union influence, and strengthens (or creates) relationships with elected leaders who can impact any credit union. Thank you to CEO Hank Halter and his team for taking the time to make a personal connection and provided vital information on the industry.

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Money talksMoney Talks: Comparison of
Credit Unions and Banks

The Washington Post reported on August 29th that the second quarter of 2013 saw earnings growth at credit unions and banks, citing an increase in fee income and a decrease in troubled loans. Credit unions earned $2.2 billion in the second quarter, up 2.08 percent from the previous quarter, as reported by the NCUA. And the industry’s return on average assets ratio stood at an annualized 85 basis points at the end of the second quarter, inching closer to pre-crisis norms.

How does lending compare? Lending at the nation’s banks crept up by 1 percent, or $73.8 billion, during the second quarter. While the aggregate amount is significant, the pace of lending at banks falls short of credit unions as credit unions reported $613.7 billion in total loans in the second quarter, an increase of nearly $14 billion from the previous quarter, according to NCUA. They have posted 5.5 percent loan growth over the last four quarters, the strongest annual growth since early 2009.

The uptick in lending comes as financial cooperatives have attracted more members, nearly 2.1 million in the last four quarters. Membership has now reached 95.2 million across the country. Demand for auto loans fueled much of the lending financial cooperatives recorded in the second quarter, with lending for new vehicles expanded to $66.4 billion and lending for used cars rising to $121.3 billion, according to the NCUA. “The increases in lending, net worth and membership are especially positive signs,” said NCUA chairman Debbie Matz. “The brisk loan growth shows that federally insured credit unions are meeting the needs of more borrowers and putting their assets to productive use.”

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graph12.jpgFee Avoidance

On August 26th The Hill newspaper reported on an American Bankers Association (ABA) survey indicating a majority of banking customers have found ways to avoid most fees for holding accounts and withdrawing cash from an ATM. The ABA found most bank customers — 65 percent — spend $3 or less in monthly fees for banking services, such as checking accounts and ATM access. All told, 55 percent pay no fees, the survey found. When asked “How much do you estimate you spend on fees for banking services each month, such as fees for checking account maintenance, ATMS use and so forth?” consumers provided the following responses:

  • 55 percent said they pay nothing;
  • 10 percent said $3 or less;
  • 8 percent said $4 to $6;
  • 4 percent said $6 to $9; and
  • 14 percent said $10 or more.

Still, the number of people who pay nothing in bank fees declined slightly in the last year (59 percent reported paying no monthly fees in 2011), due in part to reductions in the fees merchants pay banks to use the payment system (interchange revenue). This is revenue banks rely upon to help cover the cost of providing checking accounts.

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Switch to SaveSwitch to Save Campaign Is Coming Up

Are you ready to participate in the statewide "Switch to Save" campaign during the month of October? Designed to encourage members and non-members to switch their loans from other financial institutions to Georgia credit unions and save money, this campaign is more powerful when more credit unions participate. And the campaign is flexible enough that credit unions can promote whatever loan products they wish under the statewide messaging umbrella!

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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