OCTOBER 4, 2013
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Keeping the Foot on the Gas
For one Georgia credit union, the keys to success in the "Don't Tax My CU" campaign have been keeping the message simple, presenting it through a number of channels and being persistent.

  Digging Deeper into the CU Tax Discussion with Congress
A Bloomberg Government briefing described the credit union tax battle as bankers and credit unions pushing lawmakers in opposite directions. It also found that many of the members of Congress who may decide the fate of the credit union tax exemption have personal ties to credit unions.

  Campus Banking Under Scrutiny
Seven Democratic members of Congress wrote to the CEOs of nine banks, asking for information about on-campus banking services for college students and expressing concern over possible high fees on students' accounts.

  Let Them Eat Cake!
The Middle Georgia Chapter of Georgia credit unions met to educate credit union advocates and a Congressional aide on the importance of the "Don't Tax My CU" campaign, and marked the occasion with a cake bearing the message.

  Georgia Weighs State Tax Reform
The Georgia Senate's study committee on taxation held a second meeting to look at the possibility of replacing the state's income tax with other forms of taxation, including higher taxes on goods and services.

  Time to Celebrate: International Credit Day!
International Credit Union Day 2013 will be celebrated around the world on October 17, and Gov. Nathan Deal has gotten things started in Georgia with an official proclamation.

  October Is Switch to Save Month in Georgia
October has been declared Switch to Save Month in Georgia, and credit unions are already helping members save money by switching their loans from other financial institutions to credit unions offering lower interest and fees.

  'Near-Real-Time' Push in Payments
An outgoing Federal Reserve Bank president said in an address at a payments symposium that the payments system needs to move toward "near-real-time" processing of payments to meet business and consumer needs.

  LIBOR Lawsuit One to Watch
A suit filed by NCUA against several major banks, alleging violations of antitrust laws through manipulation of an international interest-rate benchmark, could affect future credit union assessments to pay for financial stabilization.

  New NCUA Region III Director Announced
The National Credit Union Administration reported that Myra Toeppe will take over as Region III Director upon the retirement of current Director Herb Yolles, who plans to retire at the end of the year.

  Burdened by Bank Fees? Today Show Says CU!
A segment on NBC's Today show criticized banks for high fees that in some cases leave customers surprised, and suggested credit unions as a lower-cost alternative.

  Atlanta Makes #2 for Overdraft
The Atlanta Business Chronicle reported that according to a Bankrate.com analysis, Atlanta now has the second-highest overdraft fees in the nation, averaging $34.10, up 4 percent from 2013.

  Rigged Bids at Auctions
According to the Atlanta Business Chronicle, federal prosecutors have charged an Atlanta company with rigging bids at public foreclosure auctions so it could buy properties at artificially low prices.

  Money Woes
The Washington Post reported that several large banks have agreed to pay Freddie Mac $1.3 billion to resolve claims involving the banks' sale of improperly underwritten home loans that later went bad.

  CFPB Releases Report: Credit Card Law Led to $1.5 Billion Less in Late Fees
A Consumer Financial Protection Bureau report concluded that a 2009 law imposing new regulations on credit cards has been a success, cutting fees and reducing the overall cost of credit to consumers.

DriveKeeping the Foot on the Gas

On October 2nd credit unions joined together at a national virtual rally held in Washington, D.C., to draw attention of lawmakers, and urge them to preserve the credit union tax exemption in their tax reform plans. Here in Georgia the message continues from credit union supporters - credit unions are worth protecting! As of the end of September, more than 87,600 messages have been sent to Congress from Georgia advocates (please click here for breakdown), and this does not include all the social media messages from the October 2nd rally! Credit unions in this state continue to get engaged through chapter meetings (see related article below), Twitter, Facebook, the call to action system, sending articles in newsletters, t-shirts, buttons, postcards (and more). But how does one keep the foot on the gas pedal and generate sustained response from membership? Below is one credit union seeing week over week activity, and how it is able to engage its membership.

Robins Federal Credit Union
Robins FCU, lead by CEO John Rhea, has engaged headfirst into the Don’t Tax My CU campaign. SVP/Chief Administrative Officer Dee Dee Côté shared the importance to the credit union to “keep our members informed on this legislation that could ultimately affect the way they do business with us.” Education on the issue is key to the credit union’s approach, as it provides all the information necessary for members to make the decision on whether or not they feel it is important to contact their legislators in support of their credit union. And show their support they have!

How did you make this work? What steps did you take to educate your team? Côté shared her team’s simple approach: “We gathered the information and presented it to our staff via email.” But while simple, this approach was part of a larger strategy, as managers were provided the information ahead of time so they could be familiar and answer any questions from staff.

How did you educate your members? Keeping it simple, but also keeping in line with the strategy is the key to the internal process. Côté explained that Robins FCU educated its members in multiple ways: “We reached out to them via email, our monthly e-newsletter, on social media and on the homepage of our website.” And these steps were for more than just educating members; the credit union also utilized its social media platforms to “reach out to our own legislators as part of the Don’t Tax Tuesday efforts.”

How is your credit union able to generate strong contacts week after week? Anyone engaging in such a long, sustained campaign is bound to see fatigue and a drop in response. However, Côté shares a secret to member response: “I think the most important thing with providing any kind of information is consistency. Our initial messaging was distributed in July and is still up. Members may not act the first time they see it, but after return visits to our website they might be intrigued and click on the information.”

Did you experience any negativity or push-back from staff or members? Côté provides a resounding “no” to this question, stating, “Our members are always happy to receive information from us that is keeping them informed.” This consistent strategy of sharing the Don’t Tax My CU message with members has proved successful, and Côté shares it has been positive. “All of the feedback we’ve received has been gratitude for passing along the information and providing the tools for them to contact their legislators.” Great job!

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Digging Deeper into the CU Tax Discussion with Congress

On September 23rd, Bloomberg Government discussed the credit union income tax exemption battle in Congress, stating that credit unions and banks are pushing lawmakers in opposite directions. However, the article reported, many members of Congress are members of credit unions, and credit unions may find a sympathetic audience among lawmakers on the congressional tax-writing committees. Thirty-three of the 60 members of the House Ways and Means and Finance committees that have at least $1,000 in a credit union, several with mortgages through credit unions or accounts for their dependent children.

ShovelThe future of the credit union exemption has bubbled to the surface of discussions on revamping the Internal Revenue Code, as leaders of the tax-writing committees say all tax breaks will be examined. Credit unions – and banks that are critical of the exemption – have increased their lobbying efforts. The article continues on naming top lawmakers of both the Senate Finance and the House Ways and Means as credit union members, noting that membership on the tax-writing committees is bipartisan with a Democratic tilt.

Credit unions have been exempt by law from corporate income tax since 1951. Before that, the Treasury Department exempted them by regulation. The article notes the reason isn’t entirely clear why Congress decided to grant credit unions tax-exempt status in 1951, while taking it away from savings and loans institutions, beyond the idea that credit unions at the time were operated differently from taxable financial institutions. Banks fighting the exemption say credit unions have outgrown their original characteristics and, like savings and loan institutions, mutual banks and the Blue Cross-Blue Shield system before them, could survive just fine after losing special tax treatment.

In response, CUNA said banks have grown faster and credit unions still comprise only about 6 percent of the market share of depository institutions, a level they have maintained for decades. And, credit unions continue to put a greater share of their branches, about 42 percent, in lower-income areas, compared with 32 percent for banks, CUNA reported (although the article cites that the Government Accountability Office reported in October 2003 credit unions generally serve more affluent clientele than banks). It is no shock that advocates and critics of the credit union tax exemption have intensified their efforts on Capitol Hill in 2013 (for example, this recent letter sent on October 1st from the ABA – as long as the official word from the tax-writing committees is that all issues are open to discussion and the banks are pushing for changes, credit unions are not veering from their campaign!

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PiggyCampus Banking Under Scrutiny

Seven Democratic senators and representatives wrote to the CEOs of nine banks on September 26th requesting information about on-campus banking services for college students. The members of Congress expressed concern over some financial institutions offering incentives to colleges to gain access to potential customers. “These lucrative deals are great for banks and great for colleges, but students can get hurt when they are steered into financial products that carry high fees,” they wrote.

The members asked the banks to list higher education institutions with which they have account enrollment or co-branding agreements; to furnish the number of such accounts opened and the sum of fees collected from those accounts for the past three years; to supply the value of any consideration, monetary or otherwise, for making these agreements, and to disclose whether any bank representative had given gifts over $10 to a college official as part of a marketing strategy. In related news, the Consumer Financial Protection Bureau held a public forum September 30th on student checking accounts and other financial products.

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Let Them Eat Cake!

CakeWith a message good enough to eat (literally!), the Middle Georgia Chapter met on September 19th to draw attention and focus to the Don’t Tax My CU campaign. This meeting was held to educate credit union advocates on the reasons for engaging in the campaign, the methods and the status of the tax reform discussions in Washington, D.C. Joining credit union management, board and staff was Donovan Head, field representative for U.S. Congressman Austin Scott (R-8), who was present to learn more about this all-important call to action for credit unions. Our thanks to the Middle Georgia Chapter donning their inner Marie Antoinette with the cake, and for creating this event to generate volume on the Don’t Tax My CU message!

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Georgia CapitolGeorgia Weighs State Tax Reform

On September 20th a Georgia State Senate Study Committee held its second hearing on the possibility of shifting the state income tax to a fair tax hybrid, looking at various options to increase the taxes consumers pay on goods and services, and decrease or possibly eliminate the state income tax. Readers of Creating Influence will recall these meetings are monitored on behalf of credit unions, and any proposal will be closely scrutinized - especially one that may broaden the tax on services to include financial transactions. While no formal proposals have been shared yet in the hearings, there have been several references to a state fair tax bill in South Carolina, with the possibility of modeling one in Georgia after it. The South Carolina bill has a WIDE definition of taxable services, and contains an entire section of the taxation of financial services both tangible and intangible. While the road to any state tax reform it is uncertain, this is an issue that we will continue to monitor closely as the Committee drafts options. Stay tuned!

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International Credit Union DayTime to Celebrate:
International Credit Day!

Have you made your plans for International Credit Union Day yet? On October 17th credit unions all across the world will put their personal touch on this day, which has been celebrated since 1948. Here in Georgia, Governor Nathan Deal has already kicked off the celebration with a proclamation honoring the credit unions in this state and nationwide. This purpose of the day is to raise awareness about the positive impact credit unions have around locally and around the globe. Materials, celebration ideas, and various tools to help your credit union engage can be found here.

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Switch to SaveOctober Is Switch to Save Month in Georgia

Tied to ICU Day in October is the statewide Switch to Save campaign. The stories have already started coming in from the tracking forms, and Georgia credit unions are saving money for members who bring in their loan statements for review to determine if switching those loans to their credit union will save them money. It’s not too late to get on board. Help elevate the profile of credit unions in Georgia while saving your members money and adding to the rich story of how credit unions help people afford life. Check out the promotional toolkit for Switch to Save.

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Clock'Near-Real-Time' Push in Payments

The payments system should move in the direction of "near-real-time" processing, outgoing Cleveland Federal Reserve Bank President Sandra Pianalto said during her presentation during a Payments Symposium at the Federal Reserve Bank of Chicago on September 24th. "The United States lacks a universal, near-real-time retail payments option for consumers and businesses," she said. "Cash and debit cards are the closest thing to it, but both fall short of fully satisfying business and consumer needs. We have heard from payments stakeholders that there is demand for a better system."

Among the challenges to near-real-time payments are the evolving but unclear demand for the capability and an unclear business case at all points on the payments supply chain, she said. But, Pianalto added, the opportunities to save money in processing costs, ease cross-border transactions and unearth future consumer benefits outweigh the challenges. "A faster payments solution must be built on standards that preserve opportunities to offer unique services in the market while ensuring interoperability across the industry," Pianalto said, citing the participation of banks, vendors and processors in establishing the credit card system, ATM network and ACH that are the backbones of today’s payments system.

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CupcakesLIBOR Lawsuit One to Watch

NCUA filed suit in federal District Court in Kansas on September 23rd against 13 international banks, including J.P. Morgan Chase. The suit alleges violations of federal and state antitrust laws transacted by manipulation of interest rates through the London Interbank Offered Rate (LIBOR) system. NCUA said manipulation of LIBOR, the benchmark for setting interest rates around the globe, resulted in a loss of income from investments and other assets held by five failed corporate credit unions: U.S. Central, WesCorp, Members United, Southwest and Constitution.

NCUA claims the defendants in today's action individually and collectively gave false interest rate information through the LIBOR rate-setting process "to benefit their investments that were tied to LIBOR, to reduce their borrowing costs, to deceive the marketplace as to the true state of their creditworthiness, and to deprive investors of the interest rate payments to which they were entitled." The false information created the impression the defendant banks were borrowing money at a lower interest rate than they were actually paying, NCUA said. The agency said although more than 40 suits have been filed in relation to the LIBOR manipulation, the NCUA is one of the first federal financial regulators to sue in this area.

Why is this one to watch for credit unions? Recoveries from NCUA's legal actions will further reduce the total losses resulting from the failure of the corporate credit unions. Losses from those failures must be paid from the Temporary Corporate Credit Union Stabilization Fund. All federally insured credit unions repay expenditures from the stabilization fund through assessments, so any recoveries would help reduce future assessments on credit unions, NCUA noted.

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NCUA logoNew NCUA Region III Director Announced

Myra Toeppe will replace Region III Director Herb Yolles when he retires at the end of this year, the NCUA reported on September 23rd. Toeppe is the NCUA's current acting director of supervision in the Office of Examination and Insurance. She joined the NCUA in 2011 as associate regional director for operations in Region III, and has also served at the Office of Thrift Supervision and the Federal Home Loan Bank of Atlanta during her 25-year government career. With the announcement, the agency thanked Yolles for his 35 years of service to the NCUA. The agency noted Yolles has worked with every NCUA board member since Congress created the NCUA Board in 1978. Georgia credit unions will recall Yolles joined them this past May in Savannah at the GCUA Annual Meeting.

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Bank feesBurdened by Bank Fees? Today Show Says CU!

In a September 27th segment strongly criticizing banks for assessing unneeded fees on their customers, NBC's Today show offered credit unions as an alternative for consumers. Dozens of not-so-standard fees are popping up, leaving customers surprised in many cases, CNBC's Kayla Tausch reported. The NBC piece cited PNC Bank policies wherein customers with "Virtual Wallet" accounts could see a $7 monthly fee if they bank in a branch. Among the ways to waive the $7 charge: be a student, hold a minimum balance of $500 or pledge to bank only online, by mobile or at an ATM. Wells Fargo's move to charge a fee to customers electing to receive paper statements is also highlighted in the report. All in all, the average checking account can have 30 to 50 fees built in, Tausch said. Banks will bring in around $41 billion in fee income this year, she said.

Bank fees ignited the grassroots movement behind Bank Transfer Day, Nov. 5, 2011, which helped prompt a gain of 2.2 million new member accounts at credit unions. A 2013-2014 Fees Report generated by CUNA's Market Research Department details just how much credit union members save when compared to fees and charges levied on bank customers:

  • More than 80 percent of credit unions with checking services still offer free checking, compared to 39 percent of banks.
  • Only 18 percent of credit unions overall charge maintenance fees on non-interest bearing checking accounts. Half of those credit unions (9 percent) levy a general maintenance fee. The other 9 percent of credit unions charged fees only when a minimum balance fell below a certain threshold.
  • The median overdraft protection fee at credit unions is $25, compared to median fees of $30 at banks and $35 at larger banks.
  • The average non-member credit union ATM fee, for those charging them, is $2.10. Banks on average charge non-customer fees of $2.50 per transaction.
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TwoAtlanta Makes #2 for Overdraft

The Atlanta Business Chronicle reported on September 30th Atlanta’s banking costs are among the highest in the nation and growing, according to a new Bankrate.com analysis of 25 large markets.

Atlanta has the nation’s second-highest overdraft fees at $34.10, which is up 4 percent from 2012. The metro also has the third-highest ATM fees at $4.45 – up 2 percent. In the Bankrate.com analysis, it shares the suggestion to check out a credit union to avoid high fees!

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CowsRigged Bids at Auctions

No, not cattle auctions – foreclosure auctions! On September 25th the Atlanta Business Chronicle reported federal prosecutors have charged an Atlanta company, Penguin Properties LLC, with rigging bids at public foreclosure auctions so it could buy properties at "artificially suppressed prices." Filed Sept. 25 in federal court in Atlanta, prosecutors say the alleged conspiracy lasted from February 2007 to the beginning of 2012. Court documents do not disclose how many properties were purchased.

Various entities and individuals (that have not been charged) participated in the scheme as co-conspirators, the feds contend. They allegedly agreed "to suppress competition by agreeing to refrain from or stop bidding against each other to purchase rigged foreclosure properties at non-competitive prices." The feds charge that those involved paid off co-conspirators in exchange for their agreements not to compete at public auctions, conducted "secret" second auctions open only to members of the conspiracy, distributed payoff to co-conspirators, and caused artificially suppressed purchase prices to be paid to the financial institutions which owned the foreclosed properties.

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DrainMoney Woes

Having money woes? What about 1.3 BILLION worth?! The Washington Post reported on October 1st that Freddie Mac announced Wells FargoCitigroup and SunTrust Banks have agreed to pay a total of $1.3 billion to resolve claims on millions of home loans that have soured or may go bad. Freddie Mac and Fannie Mae have been seeking compensation from banks they claim misrepresented the quality of home loans sold to it during the housing boom. When the housing market crashed, homeowners defaulted on those loans en masse, saddling the mortgage finance companies with billions of dollars in losses.

Wells Fargo, Citigroup and SunTrust are among many lenders that sell home loans to Freddie Mac and Fannie Mae, which bundle them into mortgage-backed securities and cover the losses if a homeowner defaults. Since the government took control of Fannie and Freddie in 2008, the mortgage giants have been aggressively working to recoup losses, in part to repay the $188 billion they received in bailout funds. Fannie and Freddie have combed through millions of loans looking for shoddy underwriting to force mortgage lenders to buy them back. The pair has focused on mortgages issued between 2005 and 2008, a boom time in the housing market and a period that has led to a high number of delinquencies and defaults.

Freddie Mac’s settlements largely mirror the efforts of Fannie Mae. In July, Fannie Mae reached a $968 million settlement with Citigroup to resolve claims on 3.7 million home loans. The deal followed an agreement Bank of America struck with the financier to spend $6.7 billion to buy back about 30,000 troubled mortgages at a discount to their original value.

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CFPB Releases Report: Credit Card Law Led to $1.5 Billion Less in Late Fees

A 2009 law calling for new regulations on credit cards was largely a success, according to a new report from the federal financial watchdog.

The Consumer Financial Protection Bureau (CFPB) analysis released on Wednesday October 2nd, in conjunction with a field hearing in Chicago, found that the total cost of credit declined by about 2 percent from 2008 to 2012.

CFPB logo"Based on the information we have available to review changes in the credit card market, the Act eliminated many unfair fees, made some market practices more transparent, paved the way for easier comparison shopping, and created a market where consumers can see the costs upfront. These changes are critical to strengthening consumer protections in the marketplace and helping us rebuild our economy," CFPB Director Richard Cordray said in prepared remarks for the field hearing in Chicago.

The 2009 Credit Card Accountability Responsibility and Disclosure Act made a number of reforms to the way credit card companies could conduct their businesses. The law called for limits on unexpected interest rate hikes and various fees.

During the hearing Mary Dunn outlined the CARD Act challenges faced by credit unions. One challenge Dunn pointed out is remaining nimble enough to provide services members want when there are so many options out there. Dunn added that the CFPB must work to make sure that consumers are adequately protected while at the same time allowing financial institutions to do their jobs and provide financial services.

According to the CFPB report, consumers paid $1.5 billion less in late fees in 2012 and $2.5 billion less in fees for going over their credit limit. The percentage of people between 18 and 20 years old with a credit card has shrunk in half as a result of new restrictions designed to prevent young people from racking up large debt.

While the CFPB highlighted some improvements that have been made as a result of the CARD Act, the agency said it still has areas of concern, such as optional services that are sold by credit card companies to cardholders (for example, identify theft protection and credit monitoring), application fees or other fees that are charged before an account is opened and deferred interest products.

Online disclosures, disclosures concerning rewards products, and grace period disclosures are also of interest. The CFPB said it will study some of these areas, and could take future action to address these issues.

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