Don't punish credit unions for big banks' sins

Jim Nussle
Posted: Monday, May 11, 2015, 1:13 AM

Credit unions are thriving. More than 100 million Americans are members - an all-time high. Credit unions are making more loans and holding more savings than ever before. And by competing aggressively with banks, credit unions are saving consumers $10 billion a year on fees, interest rates, and the like.

That may not be the case for much longer.

Regulations aimed at reining in Wall Street are instead walloping credit unions. Meanwhile, 40 percent of the rules prescribed by the 2010 Dodd-Frank financial reform law have yet to be finalized. So the regulatory choke hold on credit unions will only grow tighter.

Federal officials must ensure that their efforts to ward off another financial crisis do not prevent credit unions from fulfilling their mission of providing affordable financing to Main Street businesses and middle-class families.

Credit unions differ from Wall Street banks because they are member-owned and not-for-profit. Their lack of overhead and focus on people instead of profits helps them offer better rates and cheaper fees than nearly any bank.

Most credit unions are community-based, so they know their members personally. That makes a huge difference when families fall on hard times.

In the wake of the financial crisis, big banks cut back on lending. But credit unions served as a safe harbor for families and small businesses. They continued to lend when others pulled back.

This personal connection explains why "members rate credit unions higher than banks on nearly every aspect of the customer experience," according to the latest American Customer Satisfaction Index survey.

But credit unions and community banks have been caught in the cross fire as regulators target the predatory and profit-driven practices of Wall Street's mega-banks. Since the beginning of the financial crisis, 15 different federal agencies have subjected financial institutions to more than 190 regulatory changes totaling nearly 6,000 pages of rules.

These regulations aren't aimed at credit unions. Nonetheless, they've saddled them with huge compliance costs. To keep up with the rules, credit unions have had to add staff, change internal policies and controls, design and print new forms, update computer systems, and help their members understand all these changes.

First Heritage Financial, a credit union-owned subsidiary based in Trevose, in Bucks County, reports that it has had to add three full-time employees to keep up with regulatory changes required by Dodd-Frank, the Consumer Financial Protection Bureau, and Fannie Mae. More than 8 percent of the money First Heritage spends on salaries covers pay for folks whose sole job is to ensure that it complies with these new rules.

It's not realistic to ask the average credit union to comply with the same regulations as the likes of JPMorgan Chase, Bank of America, and Citibank. Almost half of credit unions have five or fewer employees. At some large banks, the compliance department alone is 100 times bigger.

The rules are also raising costs for consumers. First Heritage has seen the costs associated with a typical loan - for things like credit scoring, fraud alerts, data verification, and tax transcripts - increase 250 percent. That translates to an additional $1,000 in charges for a standard loan.

Regulators seem oblivious to the effects of these rules. Not a single agency has calculated the burden that federal regulations are imposing on credit unions. That's why the Credit Union National Association - the organization I lead - has begun quantifying regulatory costs. Our research will demonstrate how excessively broad rules negatively affect community lenders.

Fortunately, relief may be on the way. The Senate Banking Committee, chaired by Sen. Richard Shelby (R., Ala.), and the House Financial Services Committee, chaired by Rep. Jeb Hensarling (R., Texas), recognize that laws intended to police Wall Street must not smother Main Street lenders under a one-size-fits-all regulatory blanket.

At the top of their agenda should be reform of the Federal Credit Union Act to allow credit unions to make more loans, especially to small businesses. Credit unions have been subject to arbitrary lending caps since 1998. Those caps need to go. That would create hundreds of thousands of jobs.

For more than a century, credit unions have partnered with Americans to finance home purchases, start businesses, and secure their financial futures. Congress must free these community lenders from unnecessary and harmful regulations so they can continue ensuring America's economic prosperity.

---

Jim Nussle is president and CEO of the Credit Union National Association. officeoftheceo@cuna.coop

Don't punish credit unions for big banks' sins

Apple Pay Lands 22 Credit Unions

By Roy Urrico CU Times May 06, 2015

Apple announced 24 new participating Apple Pay issuers, including 22 credit unions. More than 155 credit unions out of less than 250 issuers offer the service.

Among the new credit union issuers are the $415 million Bellwether Community Credit Union in Manchester, N.H.; the $243 million Benchmark Federal Credit Union, in West Chester, Penn; the $15 million Blackhawk Community Credit Union in Beaver Falls, Penn.; the $2 billion CommunityAmerica CU in Kansas City, Mo.; the $2 billion Community First CU in Appleton, Wis.; the $143 million Connections CU in Pocatello, Idaho, the $164 million cPort CU in Portland, Maine; the $140 million Denver Fire Department FCU; the $148 million Electro Savings CU in St. Louis; the $1.1 billion Elements Financial FCU in Indianapolis; the $448 million First Financial CU in Albuquerque, N.M.; the $541 million Greater Nevada CU in Carson City, Nev.; the $485 million Harvard University Employees CU in Cambridge, Mass.; the $665 million Interra CU IN Goshen Ind.; the $1.3 billion Kern Schools FCU in Bakersfield, Calif.; the $1.6 billion Nusenda CU in Albuquerque, N.M.; the $533 million People's Trust FCU in Houston; the $1.7 billion Premier America CU in Chatsworth, Calif.; the $505 million Premier Members FCU in Boulder, Colo.; the $2.2 billion SAFE Credit Union in Folsom, Calif.; the $248 million Scient FCU in Groton, Conn.; and the $358 million Tucson FCU in Tucson, Ariz.

Apple Pay is a mobile payment and digital wallet service by Apple Inc. that lets users make payments using the iPhone 6, iPhone 6 Plus, Apple Watch-compatible devices (iPhone 5 and later models), iPad Air 2 and iPad Mini 3. Apple Pay does not require Apple-specific contactless payment terminals and works with Visa's PayWave, MasterCard's PayPass and American Express's ExpressPay terminals.

When members add a credit or debit card to Apple Pay, the actual card numbers are not stored on the device or on Apple servers. Instead, each transaction receives its own unique device account number. The device then encrypts and securely stores the number. Each transaction receives a one-time, unique, dynamic security code, instead of using the security code from the back of the card.

Discover Financial Services signed an agreement with Apple that will allow Discover cardholders in the U.S. to set up contactless payments in stores with NFC-enabled payment terminals using Apple Pay.

On the merchant side, Apple most recently announced support from 10 retailers including GameStop and T-Mobile. Home Depot said it has plans to officially adopt Apple's service for in-store payments.

For the next version, Apple Pay 2.0, reports indicate that the Apple Pay software will fine-tune the platform, to include new features such as browser based payment methods and will enable users to pay through international merchants.

Myra Toeppe NCUA Director, Region 3 National Coalition of Firefighters Credit Unions Inc. - 2015 Conference

 

Myra Toeppe  NCUA Director, Region 3
As Regional Director, Ms. Toeppe is responsible for oversight of the chartering program for federal credit unions and the examination and supervision programs for all federally insured credit unions in Alabama, Arkansas, Florida, Georgia, Indiana, Kentucky, Louisiana, Mississippi, North Carolina, Puerto Rico, South Carolina, Tennessee and the Virgin Islands.
Ms. Toeppe joined NCUA in April 2011 as an Associate Regional Director, Operations after an almost 25 year banking regulatory career at the Office of Thrift Supervision (OTS) and its predecessor agency. Ms. Toeppe began her financial institution regulatory career in 1986 as an examiner with the FHLB–Atlanta and later became an examiner/commercial loan specialist for OTS.
In 2005, Ms. Toeppe was promoted to Field Manager responsible for the examination of thrift institutions primarily located in Georgia and Alabama. In 2008, Ms. Toeppe was promoted to Assistant Regional Director for Operations responsible for the examination and supervision of thrift institutions in Tennessee, Kentucky, and the Carolinas.
Ms. Toeppe earned her B.S.B.A. and M.B.A. from the University of Central Florida. She also is a 2011 graduate of the ABA Stonier Graduate School of Banking.

National Coalition of Firefighters Credit Unions Inc. - 2015 Conference

National Coalition of Firefighters Credit Unions Inc. - Donate

 

Invest in a Charitable Donation Account (CDA)

In December of 2013, the NCUA Board approved a final rule amending the incidental powers rule (Part 721) to clarify that a federal credit union is authorized to fund a CDA, a hybrid charitable and investment vehicle, as an activity  incidental to the business for which a FCU is chartered, provided the account is primarily charitable in nature and meets  other regulatory requirements.
A Charitable Donation Account (“CDA”) investment allows a credit union to make a charitable contribution while allowing the contribution to pay for itself.  Over the last 3-5 years, an investment in the CDA would have allowed a CU  to increase its charitable contributions while retaining a net return significant higher than generated on  its traditional  investments. Please see below the Investment Return Chart.

Learn More:         What Is A Charitable Donation Account? ALM Advantage of a Charitable Donation Account

Who do credit unions contact to make an investment?
Jason Ritzenthaler, CFA, CTFA
Co-Chief Investment Officer MEMBERS Trust
813-386-8705
Jason.Ritzenthaler@memberstrust.com

National Coalition of Firefighters Credit Unions Inc. - Donate

NAFCU: We've Always Opposed CFPB Rulemaking

 

First and foremost, let’s be clear: NAFCU listened to its members in 2009, and we listen to them now. We fight every day to make our members and the credit union movement stronger. As noted correctly in Ms. Anderson’s column, NAFCU has always been steadfast in strongly opposing the CFPB’s rulemaking authority over credit unions. At every possible opportunity, in hearings and in myriad letters to Congress, NAFCU has been unequivocal in its conviction.

Throughout the legislative negotiations in 2009, NAFCU strongly challenged the CFPB’s authority over credit unions.  Specifically, it was at the hearing before the House Committee on Small Business on Sep. 23, 2009, where Price Choppers Employees Federal Credit Union President and CEO Dawn Donovan, testifying on behalf of NAFCU, clearly stated our position. Notably, this was the only official hearing where credit union trade groups testified before Congress on financial reform, including the creation of the CFPB (earlier proposed as the CFPA). As Donovan pointed out:

“NAFCU does not believe such an agency should be given authority over regulated federally insured depository institutions, and opposes extending this authority to credit unions.

“As the only not-for-profit institutions that would be subject to the CFPA, credit unions would stand to get lost in the enormity of the proposed agency. Giving the CFPA the authority to regulate, examine and supervise credit unions, already regulated by the NCUA, would add an additional regulatory burden and cost to credit unions.”

Over time in subsequent testimony, we have been unwavering about the CFPB and the dangers of overregulation on credit unions. 

As SRP Federal Credit Union President and CEO Ed Templeton, who is also NAFCU’s board chair, testified just this year:

“As expected, the breadth and pace of CFPB rulemaking is troublesome, and the unprecedented new compliance burden placed on credit unions has been immense.

“The impact of this growing compliance burden is evident as the number of credit unions continues to decline, dropping by 22% (more than 1,700) in institutions since 2007. A main reason for the decline is the increasing cost and complexity of complying with the ever-increasing onslaught of regulations. Since the second quarter of 2010, we have lost 1,100 federally insured credit unions, 96% of which were smaller institutions below $100 million in assets. Many smaller institutions simply cannot keep up with the new regulatory tide and have had to merge out of business or be taken over. Credit unions need regulatory relief, both from Congress and their regulators.”

Our position was not a politically popular one, nor was it an easy one to take. NAFCU’s board of directors and our lobbying team stood strong under unbelievable political pressure throughout the Dodd-Frank Act negotiations. But then again, NAFCU has never shied away from difficult positions. Over the years, NAFCU has always taken positions that are in the best interests of NAFCU members and the credit union industry. And that will never change.  

Ms. Anderson is also correct in noting that the CFPB represents a significant hazard for credit unions – especially when you consider that not all the Dodd-Frank rules have been implemented yet. According to the Davis Polk report, in the first quarter of 2015, 235 (60.3%) of the 390 total required rulemakings have been finalized, while 84 (21.5%) rulemaking requirements have not yet been proposed. With still so many rules outstanding, it is a rather ominous outlook for credit unions and all the more reason for us to stand fast by our position.

NAFCU continues to believe credit unions should be exempt from CFPB rulemaking, and we will continue to advance that with full vigor at every juncture possible because it is the right thing to do. For us, there is little comfort in being right and seeing our worst predictions regarding the burden of overregulation come to fruition while our industry erodes. 

B. Dan Berger is president/CEO of NAFCU. He can be reached at 703-522-4770 or dberger@nafcu.org.

NAFCU: We've Always Opposed CFPB Rulemaking

A Follow-up to Operation Choke Point - NCUA Doesn’t Dictate Businesses CUs Can Serve

 

In response to a letter from House Financial Services Chairman Jeb Hensarling (R-Texas), NCUA Board Chairman Debbie Matz wrote that the NCUA has not and will not participate in Operation Choke point.

“NCUA does not dictate which businesses credit unions can serve as long as these businesses are legal and within the credit union’s field of membership, and the credit union can serve them safely and soundly,” she wrote in the letter dated April 15. “Going forward, the NCUA will continue to ensure that all our material and guidance clearly outline these policies.”

Matz explained that the NCUA issued a memorandum to all field staff in August of 2014, which stated the agency’s policy for opening and closing accounts is a decision generally left to the credit union.

“The decision may be based on a credit union’s particular business objectives, its evaluations of the risks associated with offering particular products or services and its capacity and systems to effectively manage those risks,” she wrote.

Mike Schuetz, owner of Hawkins Guns LLC in Wisconsin, has claimed the $272 million Heritage Credit Union in Madison, Wis. closed his account due to Operation Choke Point. Schuetz recorded a conversation with a branch manager who said the credit union was being pressured by regulators.

“They came in, looked at our books, looked at everything and said, ‘Here's some accounts we feel like we’re going to regulate you on,’ and they kind of put the screws to us on what we could and couldn't do type thing,” a manager stated in the recording. “We’re not anti-gun as a company but our hands are tied.”

Heritage’s CEO Anita Rauch told CU Times the account was closed for other reasons.

“Our position all along has been our inability to serve Mike at Hawkins Guns was simply a temporary situation,” she said. “It's not reasonable to think you can buy the software, plug it in and it just works. It takes a little bit of programming.”

Rauch said the credit union’s assets grew to $100 million in three years so the amount of monitoring for cash intense businesses increased.

“We began working on accommodating cash intense businesses no matter what the type of business. It wasn't strictly directed at guns or gun shop owners,” she said.

Compliance and How Much It Cost You!

Do you believe someone is actually measuring how much it costs to comply with all the new regulations.

BCI stands for Bank Compliance Index, a quarterly evaluation system created by financial experts at Continuity (formerly Continuity Control), a New Haven, Conn.-based provider of automated compliance solutions, to track the incremental burden on financial institutions of keeping up with regulatory changes. The number 1.35 represents the number of employees needed to address just the new regulations issued during the first three months of 2015.

“In real terms, Perdue said the BCI was calculated by measuring specific variables within the financial compliance realm. In this case, the 1.35 ranking is drawn from the efforts it would take to respond to the 61 new regulatory items issued during first quarter that comprised an aggregate 1,605 pages. At an estimated 331 hours necessary to address the regulations, multiplied by an average salary-and-benefits rate of $44.22 per hour for employees involved throughout the entire process, the financial cost of responding to new regulations would be $30,998 per institution for first-quarter activity.”

Read the complete report at; Webinar Discusses Hot Compliance Climate

Paul Harvey Fire & Ice

Operation Choke Point Accuser Speaks Out

Is your credit union being pressured by auditors to close or not open certain accounts because they feel they are too risky.

Not sure if you know about Operation Choke Point so I have included these 2 article's,

• One from a company complaining Operation Choke Point Accuser Speaks Out

When Mike Schuetz, owner of Hawkins Guns LLC in Hawkins, Wis., asked the branch manager for an explanation, he was told the credit union had received pressure from regulators. He recorded his conversation with the manager, who also explained the credit union did not serve businesses associated with guns and ammunition.

Schuetz is convinced the situation occurred as a result of Operation Choke Point, which the U.S. Department of Justice established to reduce fraud and reputational risk to financial institutions by pressuring them to refuse business from risky sectors.

“They told me I had to close it because I was a high-risk industry and they were not able to service me,” Schuetz told CU Times. “The local manager had a clip board from which she read off of with certain industries listed.”  Operation Choke Point Accuser Speaks Out

 

• A reply form our lawmakers, Lawmakers to NCUA: Abandon Operation Choke Point

House Financial Services Committee Chairman Jeb Hensarling and other committee leaders have asked the NCUA and the CFPB to cease any enforcement of Operation Choke Point.

The lawmakers requested that the agencies publicly disclaim their past, present and future involvement in Operation Choke Point or any similar operation. The agencies were asked to clarify their policy for documenting and reporting orders to financial institutions regarding the termination of deposit account relationships. Lawmakers also requested a notice in writing from each agency to confirm that employees have been notified about the policy.  Lawmakers to NCUA: Abandon Operation Choke Point

NCOFCU Has a NEW LOOK and FEEL

Welcome to NCOFCU's new look and feel!

Without signing in you can navigate the complete website, register for conferences and join (some sections limited to Standard Credit Union Membership and above) With a single sign in you can enter the member’s only portal. Associate Credit Union Membership is FREE. Standard Credit Union Membership is $250

We know your time is valuable and you don’t want to spend time trying to navigate trough a website to get what you want so we have tried to make it sweet and simple.

• Home Our Home page is our main advertising portal and should give you all the links that you will need to navigate through the site.
• Donate Here you find what you need to directly donate yourself or through your credit union.
• Newsroom This page takes you directly to our Firefighters Credit Union BLOG
• About Us Tells you who we are our mission and purpose, our leadership, scholarships, store and how to contact us.
• Join Us Memberships are listed and simple to use
• Events Here you will find information on all our upcoming events such as our 2015 Nashville conference with easy registration.
• Members Only Here you will find information proprietary to NCOFCU members (sign in required)

Staff / Volunteers & Vendors

• First time login will require you to request your password. Please use your e-mail that you provided NCOFCU when signing in. Remember this is a membership database and your information will be uploaded into any forms that you use. You can change your password or personal information within your profile once you are logged in.

Credit Unions
Each credit has been assigned an administrator, in most cases it is the CEO.
The administrator can:

• Join / Pay Dues
• Add, delete members
• Register credit union for conferences

If you would rather have a staff member be the administrator, please contact NCOFCU administration at 305-951-3306 with any issues or e-mail ncofcu@ncofcu.org

We have tried to work out all the bugs, but if you find any please let us know.

Thanks,

Grant Sheehan CEO
National Coalition of Firefighters Credit Unions
305-951-3306
ceo@ncofcu.org