Wednesday, November 30, 2011

Giving the Gift of Credit Union Membership This Holiday Season

Giving the Gift of <b>Credit Union</b> Membership This Holiday Season: What better fits that description than a credit union membership? By opening an account for a friend or family member at your credit union, you are granting them lifelong access to affordable financial products, better rates on loans, higher yields on ...
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What Comes First, The Car Or The Buyer?

What Comes First, The Car Or The Buyer?: New fuel efficiency regulations will cost $157 billion to implement, auto regulators say, but that's also how much in gas savings car buyers will see through 2025, as long as the rules are effective. The new standards, under Corporate Average Fuel Economy regulations, require automakers' lineups to have an average gas mileage of 35.5 mpg ...

NCUA Sues Wachovia Securities over Corporate Credit Union Losses

NCUA Sues Wachovia Securities over Corporate Credit Union Losses: Agency goes after firm now known as Wells Fargo Securities for mortgage-backed securities sales to U.S. Central, WesCorp.

More on Advertising; BSA Advisory Group

More on Advertising; BSA Advisory Group:

Written by Steve Van Beek

Yesterday's blog post mentioned the difference between the requirements for the "official sign" and the requirements for the "official advertising statement."  

Thanks to a helpful commenter, we were informed of our inaccurate discussion of when the "official sign" is required.  It is required at teller windows and:

"Each insured credit union must also display the official sign on its Internet page, if any, where it accepts deposits or open accounts, but it may vary the font sizes from that depicted in paragraph (b) of this section to ensure its legibility."  

Yesterday's post (which has been updated) indicated the official sign was required on the CU's main Internet page.  However, 12 CFR 740.5(a) indicates that credit unions need to use the official advertising statement on their main Internet page:

"§ 740.5   Requirements for the official advertising statement.

(a) Each insured credit union must include the official advertising statement, prescribed in paragraph (b) of this section, in all of its advertisements including, but not limited to, annual reports and statements of condition required to be published by law, and on its main Internet page, except as provided in paragraph (c) of this section. For annual reports and statements of condition required to be published by law, an insured credit union must place the official advertising statement in a prominent position on the cover page of such documents or on the first page a reader sees if there is no cover page."

Thus, for pages where the credit union accepts deposits or opens accounts the official sign would be required.  However, if the credit union does not accept deposits or open accounts on its main Internet page - the credit union could use any of the three versions of the official advertising statement discussed yesterday.

That being said, I think it makes a lot of sense to include the official sign on your main Internet page.

  • The official sign (NCUA logo) is one that members are accustomed to seeing on credit union main pages.

  • Non-members searching your website would be informed of your insured status upfront via the official sign - which catches the eye more than "Federally insured by NCUA."

  • The use or non-use of official sign is an easy item for examiners or auditors to catch.  Even if the official sign is not a requirement on your main Internet page, the credit union might need to defend its decision to use the official advertising statement rather than the official sign. 


The Financial Crimes Enforcement Network (FinCEN) requested nominations to fill 14 seats on its Bank Secrecy Act Advisory Group (BSAAG).  One seat is designated for a representative of a credit union trade group.  NAFCU is seeking individuals who are interested in serving on the BSAAG and wish to be nominated.  The term runs for three years. 

The group is tasked with providing policy recommendations to the Treasury regarding the BSA.  The BSAAG is comprised of representatives from federal regulatory and law enforcement agencies, financial institutions and trade groups, whose members are subject to the BSA. 

The nomination notice can be found here.

If you are interested in being nominated, please contact Dillon Shea, NAFCU’s regulatory affairs counsel at or at 703-842-2212.

Mortgage applications plummet 11.7%

Mortgage applications plummet 11.7%: Mortgage applications fell 11.7% this past week as demand for refinanced loans cooled across the country, an industry trade group said.
The Mortgage Bankers Associated noted that its market composite index – a measure of loan application volume – dropped 11.7%.
The steep drop is tied to a 15.3% decline in the refinancing index. Meanwhile, the seasonally [...]

Tuesday, November 29, 2011

Home prices ease to 2003 levels

Home prices ease to 2003 levels: National home prices declined on an annual basis in the third quarter, to levels last seen eight years ago -- but the rate of decline slowed from the prior three months, according to a report issued Tuesday.

Cloud Computing is Misunderstood, But Maybe it Doesn't Matter

Cloud Computing is Misunderstood, But Maybe it Doesn't Matter: I predict that 2012 will be the year that cloud computing loses a lot of its luster for enterprises. Not because it is going away or anything like that. Rather, the opposite is happening ? it is becoming so ubiquitous and commonplace that business and IT end-users alike will almost forget that they?re even using ...

Monday, November 28, 2011

Massachusetts CU Manager Condemns Occupy Movement

Massachusetts CU Manager Condemns Occupy Movement: Tina Mooney, CEO/manager at RAH Federal Credit Union, did not hold back on her long list of criticisms of the Occupy movement.

Durbin Fails Again

Durbin Fails Again: On this past Wednesday we witnessed another failure of government intervention. This time it is heightened by the audacity of the lobbying organization that helped write the law with the help of Congress under the guise of the Dodd Frank Bill, which was designed to help consumers. Oh, what a tangled web we weave when ...

Confusion Surrounding Free Checking

Confusion Surrounding Free Checking:

Written by Steve Van Beek

There continues to be an increased focus on checking accounts - especially with the implementation of the Durbin Amendment and the responses of the larger banks.  

One of the side issues is the increased focus is the use of the term "free" to describe a checking account product.  Banks and credit unions are reviewing their existing products to determine if they can still be properly called "free" even though there are some fees that apply.

This review has usually ended up with confusion and internal discussions at the financial institution on whether an account can be called "free" or not.  

Here is 12 CFR 707.8(a) of Truth in Savings which contains the general prohibition:

"§ 707.8   Advertising.

(a) Misleading or inaccurate advertisements. An advertisement must not:

(1) Be misleading or inaccurate or misrepresent a credit union's account agreement; or

(2) Refer to or describe an account as “free” or “no cost” or contain a similar term if any maintenance or activity fee may be imposed on the account. The word “profit” must not be used in referring to dividends or interest paid on an account."

Unfortunately, the rule just gives us a general prohibition without any specifics.  The specifics are buried in the Official Staff Commentary of Truth in Savings - Appendix C.  See specifically the commentary to 12 CFR 707.8(a) as well as the cross-reference to the commentary under 12 CFR 707.4(b)(4).  


Now, why would the regulators use a general prohibition and then put all the details in the commentary?  I think part of it was so the regulators would be able to adjust the commentary if new fees or new uses of an account began to pop up.  However, the accounts changed drastically over the years and the staff commentary has not been updated to reflect the current environment.   

The Consumer Financial Protection Bureau now has power over Truth in Savings (both Reg DD for the banks and Part 707 for credit unions).  Will they clarify the requirements?  The CFPB has discussed clarifying regulations and removing unnecessary burdens in multiple speeches in the past.  If the CFPB does clarify which fees can be charged on a "free checking" account - they will probably come up with a much more consumer-friendly determination.

For now, we wait to see if the CFPB steps into Truth in Savings.  And, we continue to crawl through the official staff commentary searching for clues as to which fees can and cannot be charged on a "free checking" account. 

Saturday, November 26, 2011

Friday, November 25, 2011

US Consumer Strength Contrasts With Euro Weakness Bonds rallied on Wednesday as trading continued to be driven by European news. While the failed German Bund auction drew the most talk, the deeper, substantive issues in the Euro region were the underlying market drivers. US economic data reports were positive as jobless claims remained below 400,000 and consumer confidence as reported by the UofM ticked higher. (READ MORE)

NAFCU Expands Compliance Team

NAFCU Expands Compliance Team: NAFCU said it has added two credit union veterans to its compliance team as new regulatory compliance counsels.

Wednesday, November 23, 2011

Monday, November 21, 2011

Is Your Board Bored?

Is Your Board Bored or Just Left Behind?: Credit union boards must be shaped for the present and the future because credit union history is unlike anything we have seen.

Saturday, November 19, 2011

News & Announcements | Waterbury Firefighters Federal Credit Union

News & Announcements | Waterbury Firefighters Federal <b>Credit Union</b>:
WATERBURY, CT, November 11, 2011 – Michael Kinne, president and CEO of the  Firefighters Federal Credit Union (FCU) in Waterbury, has announced that Gregory Zeliff of Wethersfield, Connecticut, has been named the FCU’s new vice president of lending. “;lid...

Friday, November 18, 2011

The Market Review
Better U.S. Data, but E.U. Still the Focus
European Powers Divided, Casting Uncertainty
In Europe, a rift between the Germans and the French over the role of the ECB has developed, threatening the alliance which has seemingly kept the region together. As the alliance shows cracks, investors are shying away from anything non-German which has sent sovereign debt costs higher around the euro zone. French debt yields have risen to record levels against  (read more)

Former JPMorgan Banker: Exploiting Consumers Is 'The Purpose Of The Banking ...

Former JPMorgan Banker: Exploiting Consumers Is 'The Purpose Of The Banking <b>...</b>:
In October, 650000 Americans joined credit unions, which, as Mooney noted, are “supposed to be run in the interests of all members.” 40000 more joined them on Bank Transfer Day earlier this month. Wall Street, meanwhile, continues to ignore America's ...
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Matz Says NCUA 2012 Budget Will Protect CUs: Print Preview

Matz Says NCUA 2012 Budget Will Protect CUs: Print Preview: This opinion piece will be among the news, features, analysis and insight filling the pages of the next print edition of Credit Union Times.

Using Prisoners As Unpaid Firefighter Squads | Disinformation

Using Prisoners As Unpaid <b>Firefighter</b> Squads | Disinformation: Cities and towns from coast to coast are straining under the weight of budget shortfalls, so what are they to do? Lay off essential public employees and replace them with slave labor by prisoners -- it's what Camden County, Georgia is doing in ...

Christmas comes early for credit unions

Christmas comes early for <b>credit unions</b>:
Masked revolutionaries didn't show up last weekend at local credit unions, but plenty of money-toting customers did. The wave of new business was in response to Bank Transfer Day, a movement that hatched online on the coattails of the Occupy Wall ...
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Thursday, November 17, 2011

Onsite Coverage: NCUA Lowering NCUSIF Reserve Balance

Onsite Coverage: NCUA Lowering NCUSIF Reserve Balance: ALEXANDRIA, Va. — Because of the credit union system’s financial health, the NCUA is lowering the NCUSIF’s reserve balance from $1.2 billion to $871 million.

House approves higher FHA conforming loan limits

House approves higher FHA conforming loan limits: The House of Representatives voted 292-121 to restore the elevated conforming limits for jumbo mortgages for the Federal Housing Administration Thursday.
The Senate is expected to give a final vote in the coming days.
Members of a joint committee compromised earlier this week to include language in a minibus spending bill that would raise the limits on [...]

Onsite Coverage: NCUA Approves 5.1% Budget Boost

Onsite Coverage: NCUA Approves 5.1% Budget Boost: ALEXANDRIA, Va. — The NCUA Board today approved a budget increase for next year of 5.1%.
National Coalition of Firefighters Credit Unions

Here are the 2011 board of  directors of the National Coalition of Firefighters Credit Unions. This is the first board elected by the membership and is an excellent representation of the firefighters credit unions across the country.

Top Row; Eugene Benick, CEO Newark Fireman FCU, David Lantrip, Director Houston, Sean Costello, Director Boston, Jerry Horwedel, Director LA Fireman's, Scotty Shelton, Director Baton Rouge FCU, Grant Sheehan CEO NCOFCU,
Bottom Row; Michael McCormick, Director San Diego Firefighters, Frances Reed CEO, Firefighters Credit Union Tulsa OK, Linda Williams, CEO Akron, Michael Tobler, CEO Albany Fireman’s FCU.

Officers; Michael Tobler President, Jerry Horwedel VP,  Michael McCormick Secretary,  Eugene Benick Treasure.

3Q11 Growth Fuels Potential for 2012

3Q11 Growth Fuels Potential for 2012: Positive growth in credit union's share balances and core deposits show significant increase in the industry's reach in 2011....[Read Article]

Wednesday, November 16, 2011

Homebuilder confidence improves, gradual gains expected in 2012

Homebuilder confidence improves, gradual gains expected in 2012: Homebuilder confidence in the market for new single-family homes rose by three points to 20 on the National Association of Home Builders/Wells Fargo (WFC: 25.12 -0.67%) housing market index for November, the second consecutive monthly gain.
The NAHB said the number builds on a revised three-point increase in October, and brings the confidence gauge to its [...]

A Collection Method That Works

A Collection Method That Works: Northwest Federal Credit Union turns a difficult situation into a chance to engage and help members....[Read Article]

Tuesday, November 15, 2011

Credit Unions Snag A Greater Share Of Mortgage Applications

Credit Unions Snag A Greater Share Of Mortgage Applications: The credit union industry posted higher market share levels by applications and funded loans in 2010 compared with 2009....[Read Article]

Five Essential Leadership Lessons For Women

Five Essential Leadership Lessons For Women: What leadership challenges do women face today?

Survey: Industry Health Up Sharply But Membership, Loans Still Lag

Survey: Industry Health Up Sharply But Membership, Loans Still Lag: “The continued threat to earnings seems to have spurred a number of credit unions to execute workflow efficiency and expense management strategies, though much room remains for improvement,” Glatt said. In detailing HealthScore history, the reported ...
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Corporates Boost Capital By 22% In First Half Of 2011

Corporates Boost Capital By 22% In First Half Of 2011: Continuing corporate credit unions are posting healthy financials amid a changing landscape....[Read Article]

FASB Accounting Updates

FASB Accounting Updates:

Written by Tessema Tefferi, Regulatory Affairs Counsel

While the pace of change in accounting rules appears to have slowed down, the Financial Accounting Standards Board (FASB) is still active, especially with projects geared towards converging U.S. Generally Accepted Accounting Principles (GAAP) with international accounting standards. While there are many FASB- and GAAP-related issues that affect credit unions, I thought it would be helpful to provide an update on three, each of which NAFCU members have inquired about in recent months.

Fair Value for Loans

Earlier this year, FASB tentatively dropped a proposal to require fair value accounting for all loans, including those credit unions hold to maturity (HTM loans). No action is expected on this front until the 1st quarter of 2012, at the earliest. Under the tentative decision, the value of loans is measured as follows:

  • Financial assets being held for sale and are actively traded, entities to measure them at fair value and record any changes through net income.

  • Financial assets that are considered investments with a focus on minimizing risk and maximizing return are measured at fair value, with any changes recorded through “other comprehensive income.” The effect is that the investments affect equity on the balance sheet rather than net income on the income statement.

  • Financial assets are held to maturity are measured at amortized cost. So, they are booked at cost and written down each period as the loan is settled over time.

More information about this project can be found here.

Lease Accounting

In August 2010, FASB issued an Exposure Draft to make significant changes to its rules relative to lease accounting. The proposal is part of FASB’s work with the International Accounting Standards Board (IASB) to converge US GAAP with international standards.

An important part of the lease accounting proposal was to require leases (with terms longer than 1 year) to be recognized as fixed assets in credit unions’ balance sheets. Lease payments would be recognized in balance sheets as follows: (1) initially recognize a liability to make lease payments and a right-of-use asset, both measured at the present value of the lease payments; (2) subsequently measure the liability to make lease payments using the effective interest method; and (3) amortize the right-of-use asset on a systematic basis that reflects the pattern of consumption of the expected future economic benefits.

The impact of the proposal is potentially critical for some credit unions because recognizing leases as assets could impact credit unions’ net worth ratio, specifically as to the calculation of “total assets’ in the denominator of the ratio. Some impacted credit unions may also incur additional costs, including costs associated from hiring outside experts and/or additional staff time.

Fortunately, FASB is re-considering the proposal. In fact, the proposal will be re-exposed (FASB lingo for re-proposed) for comments, likely in the first quarter of 2012.

To stay current on this project, follow FASB’s updates here.

Financing Receivables and the Allowance for Credit Losses

An accounting standard issued in 2010 will soon be effective for non-public entities, including credit unions. Accounting Standards Update 2010-20 applies to financing receivables, which is generally defined as a contractual right to receive money on demand or on fixed or determinable dates that is recognized as an asset on the entity’s balance sheet. These include loans, trade accounts receivable, notes receivable, credit cards, and receivables relating to leases that are other than operating leases. For such assets, the standard would require reporting on disaggregated basis.

The standard applies to credit unions, but the significant exclusions from the scope of the standard likely mitigate the effect of the standard on most credit unions. Notably, certain receivables are NOT within the scope of the standard, including: receivables measured at fair value, or the lower of cost or fair value; trade accounts receivable with contractual maturities of less than one year, and debt securities.

The standard is effective for the first reporting period after December 15, 2011 (note: for public entities, it became effective for reporting periods after 12/15/10).

San Francisco Fed says Europe may pull US back into recession

San Francisco Fed says Europe may pull US back into recession:

Researchers from the Federal Banks of San Francisco and Kansas City say the odds of a U.S. recession in 2012 are greater than 50% because of the European debt crisis.

The figure below shows the recession-probability forecasts. The lines represent complex Leading Economic Index-based predictions the researchers previously made.

"To interpret these predictions, think about an experiment in which two coins are flipped, with heads representing recession and tails expansion," the researchers say in an economic report.

"One coin represents the recession odds from domestic factors, the other coin from international factors. The figure below shows the probabilities of flipping heads with the domestic and international coins. The overall probability of recession is reflected in the thick blue line."

The combination of the two recession coins, shown in the combined risks line, indicates the odds are greater than 50% that we will experience a recession sometime early in 2012, the Fed researchers say.

Back in September, fund managers surveyed by Bank of America Merrill Lynch (BAC: 6.05 0.00%) said they believe Europe will slide into a recession in the coming months.

Roughly 68% of survey respondents viewed the euro zone debt crisis among the largest of risks to global investments.

In the next few months, the odds of a U.S. recession due to domestic factors appear reasonably contained, the researchers say. Those odds increase gradually and reach about 30% in the second half of 2012, after which, they decline. Recession odds based on international factors peak at about 45% toward the end of 2011, but decline rapidly thereafter.

"The message is clear. Prudence suggests that the fragile state of the U.S. economy would not easily withstand turbulence coming across the Atlantic," the report states.

"A European sovereign debt default may well sink the United States back into recession. However, if we navigate the storm through the second half of 2012, it appears that danger will recede rapidly in 2013," they conclude.

Write to Justin T. Hilley.

Follow him on Twitter @JustinHilley.


Why Millennial Women Are Burning Out At Work By 30

Why Millennial Women Are Burning Out At Work By 30: Young professional women may not relate to the financial struggles their Millennial peers are protesting against during the Occupy New York movement.

NCUA Settles With Citi, Deutsche Bank Over Corporate Failures

NCUA Settles With Citi, Deutsche Bank Over Corporate Failures: Agency says $165.5 million will help lower future costs of corporate rescues.

Firefighting competition heats up in Myrtle Beach

<b>Firefighting</b> competition heats up in Myrtle Beach:
The volunteer firefighter had just finished what's called the “toughest two minutes in sports” competition of the Scott World Firefighter Combat Challenge, being held this week in Myrtle Beach. Armstrong is an emergency room physician at Grand Strand ...
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Myrtle Beach Sun News