APRIL 4, 2014
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Housing Finance Reform (Issue 1 of 6)
A fast-moving housing finance reform bill that was introduced in the U.S. Senate last month is headed for a markup hearing in the Senate Banking Committee.

  Congressional Report Alleges Target Weaknesses Led to Breach (Issue 2 of 6)
A recently released Senate Commerce Committee report found that Target missed several opportunities to prevent last year's data breach that compromised the financial information of millions of consumers.

  Vote! (Issue 3 of 6)
An early Georgia primary election presents challenges to credit unions' efforts to engage their members politically, but the Affiliates' ElectionWatch website can help in this vital process.

  Big Box Walmart Enters Interchange Litigation Fight
(Issue 4 of 6)

After passing on earlier litigation over interchange fees, Walmart has entered the fight by filing a lawsuit alleging that Visa and the nation's largest banks have conspired to fix interchange fees and inflate network fees.

  April Is National Financial Literacy Month! (Issue 5 of 6)
April offers credit unions a great opportunity to help their members afford life by giving them the education and tools needed to enable them to make wise financial decisions.

  Capital Plans Rejected (Issue 6 of 6)
The Federal Reserve told five large banks to rethink their plans to pay out billions of dollars to their shareholders, saying the banks needed to address weaknesses in their risk management strategies.

Housing Finance Reform (Issue 1 of 6)

Housing financeOn April 29 at 10 a.m. (ET) the Senate Banking Committee will hold a hearing to mark up its housing finance reform legislation, per the committee chairman, Sen. Tim Johnson (D-SD), and its ranking Republican member, Sen. Mike Crapo (R-ID). This bill is moving; it was just March when these two senators unveiled their housing finance reform proposal and used another bill, the Corker-Warner bill (S.1217) as its framework. If passed, it would: 

  • Protect taxpayers from bearing the cost of housing downturns;
  • Promote stable, liquid and efficient mortgage markets for single-family and multifamily housing;
  • Ensure that affordable, 30-year, fixed-rate, prepayable mortgages continue to be available;
  • Provide equal access for lenders of all sizes to the secondary market; and,
  • Facilitate broad availability of mortgage credit for eligible borrowers in all areas and for single-family and multifamily housing types.

The 425 pages of reforms contain an important modification from an earlier draft: A cap for membership in a mutual securitization company was drastically increased, as recommended by CUNA. Other credit union priorities for housing finance reform include maintaining a functioning secondary mortgage market that provides credit unions equitable access and the ability to continue to offer mortgage products with predictable payments, like the 30-year fixed-rate mortgage, and ensuring the transition to a new system is smooth.

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U.S. CapitolCongressional Report Alleges Target Weaknesses Led to Breach
(Issue 2 of 6)

U.S. retailer Target missed several opportunities to stop last year's data breach that compromised around 40 million debit and credit card numbers and the personal information of 70 million customers, a new Senate Commerce Committee report has revealed. The report was released at a March 26th committee hearing on the data breach. The breach impacted credit unions, costing them an estimated $30.6 million, and future fraud could increase these costs. The Senate analysis highlighted certain issues contributing to the breach, including: 

  • Target's decision to give network access to a third-party vendor that failed to follow broadly accepted information security practices. "The vendor's weak security allowed the attackers to gain a foothold in Target's network," the report said;
  • Target's failure to respond to multiple automated warnings from anti-intrusion software which detected malware installations and reported on escape routes hackers planned to use to remove data from Target's network; and
  • Target's failure to properly isolate sensitive data from other less sensitive data on its network.

CUNA has asked Congress to address data security relative to merchants, who are not held to the same standards of security as credit unions and other financial institutions. In particular, CUNA suggests all payment system participants are held to comparable levels of federal data security requirements; those responsible for the data breach should be responsible for the costs of helping consumers; and those responsible should ensure that consumers know where their information was breached. 

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Vote!Vote! (Issue 3 of 6)

Every election GCUA designs ElectionWatch, a nonpartisan website to help encourage credit union members to vote. However, this election it is all the more important to engage your credit union in get-out-the-vote messaging as there is a big disconnect in awareness of the elections. Georgia has moved up its primary election to May 20th, and advance voting begins as early as April 28th in some areas.

Primary elections historically have low voter turnout; however, many races across the state ONLY have primary competition, making those votes that are cast the deciding votes on who represents many of us.
Here are five easy ways your credit union can get involved:

  1. Add ElectionWatch to your website as a resource on voting and elections.
  2. Utilize one of the ElectionWatch articles in your credit union newsletter (three examples).
  3. Incorporate get-out-the-vote messaging in your social media platforms (examples).
  4. Share the ElectionWatch “Idol” video with staff and/or members (click the white "play" arrow).
  5. Increase awareness on the early primary date with your phone system on-hold message (example).
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WalmartBig Box Walmart Enters Interchange Litigation Fight (Issue 4 of 6)

Walmart took legal action alleging that Visa and the nation's largest banks have conspired to fix interchange fees and inflate network fees charged to retailers. Walmart, in its 39-page complaint, said it filed suit "to recover damages for anticompetitive conduct" by Visa. The suit, Wal-Mart Stores Inc. v. Visa USA Inc., was filed in the U.S. District Court for the Western District of Arkansas. The suit is similar to one filed in 2008, in which a coalition of merchants alleged that MasterCard and Visa set artificially high credit card interchange fees. Walmart declined to take part in that suit, which resulted in a $5.7 billion settlement being awarded to the merchants by U.S. District Judge John Gleeson in the Eastern District of New York, Brooklyn. That settlement has been appealed by the National Retail Federation.

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TreeApril Is National Financial Literacy Month! (Issue 5 of 6)

April is National Financial Literacy Month, a time to promote greater consumer education on personal finances among credit union members. While credit unions work to instill consumers with the information needed to make smart financial decisions to help people better afford life, this month is a great time to shine light on all the opportunities available to engage members. NCUA has come out with various tools and resources to help engage members in financial literacy, including a Twitter chat on April 23rd from 11 a.m. until noon using the hashtag #NCUAChat. This awareness month is a great opportunity to highlight one of the things credit unions do best: help people afford life by equipping them with the right tools to make sound financial decisions!

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Rejected stampCapital Plans Rejected (Issue 6 of 6)

On March 26th The Washington Post reported that Citigroup, HSBC, Santander, Royal Bank of Scotland and Zions Bank are all facing questions about their ability to ride out another calamity in the financial markets. The Federal Reserve said these five big banks need to resubmit their proposals to pay out billions of dollars to shareholders because of weaknesses in their capital plans.

The other 25 banks subject to the review were given the thumbs up to move ahead with plans to increase their dividend payouts, which analysts have pegged at about $75 billion in total in the aftermath of the financial crisis. Regulators insisted that banks sock away enough capital — cash, investor equity and other assets — to cushion against losses and stave off future taxpayer bailouts. Congress mandated that regulators give banks an annual checkup and granted the authority to stop banks from paying out capital.

As an improving economy and deep cost cuts bolster profits, banks have been eager to lavish investors with excess capital in the form of dividends or share buybacks. However, regulators have remained cautious about capital planning. “With each year we have seen broad improvement in the industry’s ability to assess its capital needs,” Fed Governor Daniel Tarullo said in a statement. “However, both the firms and supervisors have more work to do as we continue to raise expectations for the quality of risk management in the nation’s largest banks.”

While the Fed praised the progress Citigroup has made in improving its risk management, the central bank was less ebullient about the bank’s “ability to project revenue and losses under a stressful scenario.” The Fed said the bank had failed to make “sufficient” improvements in areas regulators had previously said needed work. Citigroup was the largest U.S. bank to have its capital plan rejected, a blow for an institution that has fought hard to reduce expenses and mitigate risks after the crisis.

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