ABA Launches New Anti-Credit Union Effort

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As thousands of credit union advocates invaded the nation’s capital this week, the American Bankers Association on Monday announced it will step up its campaign against the largest credit unions.

The association said it has purchased ads on Politico’s “Morning Money” newsletter and on digital and social media platforms.

The move came as more than 5,000 credit union advocates arrived at CUNA’s Governmental Affairs Conference. Many of those advocates plan to meet with hometown members of Congress during their visit.

In describing the effort, ABA said, “The ads highlight several ways that large credit unions have far exceeded their statutory mission to serve individuals of modest means – from buying up taxpaying banks to purchasing naming rates to sports stadiums. They also call for a reexamination of the tax exemptions for these institutions.”

The association also said its explorecreditunions.com website will feature blog posts alleging that credit unions have outgrown their “special treatment.”

For a lengthy period, that website did not identify the ABA as its host. It was only after CU Times reported that the association was the website’s sponsor that the ABA acknowledged that.

The Independent Community Bankers of America has its own anti-credit union campaign called “Wake Up.”

NCUA issues corporate CU proposal, discusses CECL policy

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The NCUA board issued a corporate credit union proposal, adopted a final interagency policy statement on the current expected credit loss (CECL) standard at its Thursday meeting. The board also heard briefings on credit union mortgage rates and the National Credit Union Share Insurance Fund.

The corporate credit union proposal is intended to update, clarify, and simplify several provisions of the corporate credit union regulation.

Specifically, it would:

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  • Permit a corporate credit union to make a minimal investment in a CUSO without the CUSO being classified as a corporate CUSO under NCUA’s rules;
  • Expand the categories of senior staff positions at member credit unions eligible to serve on a corporate’s board;
  • Amend the minimum experience and independence requirement for a corporate’s enterprise risk management expert; and
  • Require a corporate to deduct certain investments in subordinated debt instruments issued by natural person credit unions.

“In issuing the corporate proposal, we appreciate NCUA’s objective of providing additional clarification and simplification regarding the corporate credit union regulation,” CUNA Deputy Chief Advocacy Officer Elizabeth Eurgubian said. “CUNA is currently evaluating the proposed changes in detail.”

Comments will be due within 60 days of the proposed rule’s publication in the Federal Register.

The CECL interagency policy statement addresses:

Supervisory expectations for documenting and validating expected credit loss estimation processes;
Responsibilities of boards of directors and management; and
Examiner reviews of allowances for credit losses.
NCUA staff mentioned it is continuing to work on a proposed rulemaking to provide a three-year phase in of CECL for regulatory capital purposes. Staff is hopeful such a standard will be proposed by the second or third quarter of this year and potentially finalized by year-end.

Agency staff also mentioned the agency will be launching a CECL webpage later this year that will include links to resources from NCUA and others.

The mortgage rate briefing involved an agency analysis of 2018 mortgage originations, comparing interest rates and loan characteristics for loans originated by credit unions and other financial institutions.

The analysis, based on 2018 HMDA data, evaluated 30-year conventional fixed-rate, first-lien loans for one-unit, owner-occupied properties. The research determined that mortgage loans originated by credit unions generally carried lower interest rates than mortgage loans originated by other lenders, which could result in thousands of dollars in savings for credit union member-borrowers.

The briefing on the share insurance fund for the quarter ending Dec. 31, 2019 showed indicated total income of $78.6 million and net loss of $50.5 million.

The balance sheet showed total liabilities and net position of $16.722 billion, an increase of roughly $875 million from Dec. 31, 2018. The fund’s equity ratio stands at 1.35% as of the end of the last quarter.

CECL policy statement, corporate CU proposal on NCUA’s Feb. 23 agenda

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The NCUA board will discuss a final interagency policy statement on the current expected credit loss (CECL) standard and propose a rule on corporate credit unions at its Feb. 20 meeting. The meeting will take place at 10 a.m. (ET), and will be streamed live on NCUA.gov.

CECL is a new accounting standard that uses an “expected loss” measurement for the recognition of credit losses. CUNA is concerned about its effect on credit unions, both from a compliance standpoint (credit unions have listed it as a top challenge) and its impact on the financial standing of credit unions.

CUNA commented on the proposed interagency policy statement in December, requesting NCUA continue to be proactive in its outreach to credit unions in terms of examination and guidance.

The agenda also includes:

Quarterly update on the share insurance fund;
Proposed rule on corporate credit unions; and
Board briefing on credit union mortgage rates

CUNA, Leagues urge immediate FCC action on TCPA petition

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Nearly three years have passed since CUNA submitted its petition for Telephone Consumer Protection Act (TCPA) clarity with no action, CUNA and all 35 state Credit Union Leagues wrote the agency Wednesday. Since then, the organizations note, judicial interpretations surrounding the TCPA have become increasingly more contradictory.
 CUNA and leagues have called for clarity from the FCC since its 2015 TCPA ruling, which has led to uncertainty over credit unions being able to contact members with important account information without being exposed to legal action.

CUNA’s petition, submitted in September 2017, asked the FCC to clarify the TCPA applicability to information calls made to a wireless phone by either:

  • Adopting an establishing business relationship (EBR) exemption from the prior consent requirement for credit union informational calls and text messages to cell phones; or alternatively
  • Exempting credit union information calls or texts from the prior consent requirement if they are in fact free to the called party under the called party’s wireless plan.

“The different treatment of informational calls to cell phones and landlines is antiquated, unfair, and fails to reflect how the vast majority of consumers communicate today. Adoption of either of the Petition’s proposed exemptions would restore the balance that Congress sought to achieve between consumers’ privacy interests and the legitimate interests of businesses to communicate with their consumers,” the letter reads. “With the uncertainty stemming from a confusing patchwork of contradictory court interpretations continuing to threaten credit unions’ legitimate business obligations to inform members, the need for the Commission to act is immediate. Accordingly, we urge the FCC to promptly grant the Petition.”

The letter also highlights the relationship that exists between credit unions and member-owners which spawns a variety of communications, including timely financial information to governance and financial education.

“Members welcome and expect this information. When a credit union conveys such information to a member at her home over a landline connection, the call does not require the member’s prior consent,” the letter reads. “If the member, however, takes that same call at home on a cell phone, the rules are completely different.”

National Credit Union Youth Month 2020 focused on 'Money Magic'

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The official theme for this year’s National Credit Union Youth Month is “Money Magic! Share, Spend and Save at Your Credit Union.” This engaging and colorful theme makes saving exciting by showing young members the joy of setting aside money for everyday spending and helping others. Celebrate National Credit Union Youth Month this April to help promote lifelong healthy money habits.

YM2020“We’re showing kids that it’s important to save, and easier to do so when you have a goal in mind,” says Michelle Kamke, marketing projects manager at CUNA. “We’ve incorporated fun characters like a flamingo and unicorn into this year’s theme to make it easier to capture the attention of young members everywhere.”

Youth Month festivities serve as a launching pad to create lifelong relationships with young members by showing them the unique power of credit unions to help them achieve their goals.

Michael Murdoch, communications specialist at Wauna FCU says, “Credit Union Youth Month is more than just a time to recognize members, it’s a time to champion healthy financial habits, strengthen the integrity of your shop and showcase your devotion to the betterment of others.”

See how others have brought Youth Month to their credit union and find inspiration for your celebrations. 2020 Youth Month-themed promotional materials and merchandise are available now in the CUNA Member Celebrations Store.

When you celebrate Youth Month with us this April, share your story using the hashtag #CUYouthMonth to build awareness for your credit union and the credit union movement.

Start planning today at cuna.org/youthmonth.

Fed Report: CUs Slip on Autos, Gain on Credit Cards

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Credit unions appeared to be falling further behind other automobile lenders in December, while still gaining slightly with credit cards, according to a Fed report released late last week.

The Fed’s G-19 Consumer Credit Report showed all lenders held $1.19 trillion in car loans in December 2019, up 3.5% from a year earlier.

The report did not include balances by lender type; estimates for banks and credit unions from other sources are not yet available for December.

However, CUNA Mutual Group showed credit union auto loan growth has been consistently slowing in recent months, and November 2019 balances were only 2.7% higher than in November 2018.

The 10 largest credit unions, which tend to perform better than smaller ones, did increase their auto loan portfolios faster than the five largest bank lenders at year’s end, according to NCUA Call Report data released in the past 10 days.

The Top 10 credit unions held to $43.7 billion in auto loans as of Dec. 31, up 3.6%. New cars loans fell 0.4% to $19.9 billion, while used car loans grew 7.3% to $23.8 billion.

The five corporate lenders held $301.3 billion in auto loans as of Dec. 31 — 2.5% higher than a year earlier. The five — Ally Financial, Capital One, Wells Fargo, JPMorgan Chase and Bank of America — hold about a quarter of the nation’s auto loans.

CUNA Mutual Group estimated credit unions held $380.3 billion in automobile loans in November. That amount represents 32% of total auto loans estimated by the Fed. That share is down from 32.1% in September 2018, 32.3% in December 2018 and 32.2% in June 2019.

The Fed’s G-19 report consists of two parts.

The first part is revolving debt, or credit cards, which rose 4.2% over 12 months to reach $1.1 trillion as of Dec. 31 among all lenders, and non-revolving debt, which includes auto loans, government and private student loans, and other term loans excluding real estate.

The second part is non-revolving consumer loans, which rose 4.8% to $3.1 trillion as of Dec. 31 among all lenders, with automobile loans represented 38.5% of non-revolving loans, down from 39% in December 2018.

Student loans rose 4.7% to $1.64 trillion, and 53% of non-revolving loans in December 2019, compared with 53.1% a year earlier. Data on student loans and motor vehicle loans are reported quarterly for all lenders.

Credit unions held $414.7 billion in non-revolving consumer loans in December 2019, up 2% from a year earlier, and they continued to gain a slightly larger share of credit card debt in December.

Credit unions held $67.8 billion in credit card debt in December, up 8.3% from a year earlier and representing 6.2% of the debt held by all lenders. Their share was up from 6.1% in November 2019 and 5.9% in December 2018.

Banks held $988.1 billion in credit card debt, up 4.4% from a year earlier. Their share was 90% in December 2019, compared with 89.9% in November 2019 and December 2018.