NCUA 5300 Online System Effective 10/1 Posted by AVCU on 12:44 PM

As a reminder, NCUA’s new online call report system goes live October 1, 2009. The Agency adopted a final rule that will provide a secure, web-based system to allow federally insured credit unions to submit financial reports, reports of officials, and other information online. The system replaces the current 5300 call report system for natural-person credit unions. In 2010 it will supplant the 5310 call report for corporate credit unions. The system is mandatory for credit unions with internet access effective October 1, 2009. NCUA estimates that approximately 435 credit unions without internet access will submit paper call reports in lieu of the online system initially. NCUA will enter that call report information into the online system for them. Under the new system all data may be submitted from any computer with internet access, so NCUA will no longer issue software to submit reporting data.

NCUA has held several informational webinars on this new system, and the next one is October 7, 2009.

• NCUA Reporting Rule
• NCUA 5300 Call Report FAQs/Instructions/Forms

Dodd Voices Separate CU Regulator Support Posted by AVCU on 5:07 PM

Today Senator Christopher Dodd (D-CT) made public his position on credit unions and their regulatory system. For some time Senator Dodd says indicated he doesn’t favor changing the regulatory structure of credit unions, but today he publicly made a statement to that effect at a Senate Banking Hearing about Strengthening and Streamlining Prudential Bank Supervision. Senator Dodd was told by Senator Merkley that in addition to community banks, credit unions are also concerned about being rolled into a single regulator. In response, Senator Dodd said that he wanted to make it clear that streamlining regulators shouldn’t apply to credit unions, and that credit unions are okay. In response to that statement, Senator Corker said “You have just given evidence to where the real political clout is” in reference to the influence of the nation’s credit unions on members of Congress.

DC Update for Week of 9/28 Posted by AVCU on 10:10 AM

The House returns on Tuesday to consider several bills under suspension of the rules, and will do so again on Wednesday. None of the bills on the suspension calendar this week are relevant to credit unions. Later in the week, the House will consider the conference report to accompany the Energy and Water Appropriations bills. Other conference reports may be brought to the House floor for consideration if they become available. No votes are expected in the House on Friday, October 2. The Senate also returns tomorrow and will resume consideration of the Defense Appropriations Act.

There are several hearings and markups on both sides of the Capitol slated for this week that are of interest to credit unions:

• On Tuesday, the Senate Finance Committee will resume its markup of "The America's Health Future Act." Also on Tuesday, the Senate Banking Committee will hold a hearing entitled, "Strengthening and Streamlining Prudential Banking Supervision."

• On Wednesday, the Senate Banking Committee Subcommittee on International Trade and Finance will hold a hearing entitled, "International Cooperation to Modernize Financial Regulation." Also on Wednesday, the House Financial Services Committee will hold a hearing entitled, "Perspectives on the Consumer Financial Protection Agency." CUNA will not be testifying at this hearing, but will be submitting a statement for the record of this hearing.

• On Thursday, the Senate Small Business Committee will hold a hearing on "Re-authorizing the Small Business Administration Finance Programs and the Impact of the Small Business Provisions of the Recovery Act." Also on Thursday, the House Financial Services Committee will hold a hearing entitled, "Federal Reserve Perspectives on Financial Regulatory Reform Proposals."

All CUNA testimony and letters to Congress are posted on the CUNA Legislative Affairs website shortly after they are transmitted to Congress.

Overdraft Fee Debate Hot in DC Posted by AVCU on 1:03 PM

Earlier this week Bank of America, Chase and Wells Fargo said they are reduc­ing overdraft fees. House Financial Services Chair Barney Frank (D-Mass.) says he supports the moves by the nation’s 3 biggest banks but will still push legislation requiring changes in overdraft policies at banks. The Federal Reserve is also considering strict limits on overdraft fees that could come later this year. The three banks, which offer overdraft protection on all checking accounts, will allow consumers to opt out of the service, eliminating potential overdraft fees. Chase and Wells Fargo will cancel fees for accounts over­drawn by $5 or less. BofA will end fees on accounts that are short $10 or less.

“These are positive changes, but the system has gotten completely out of whack,” says Senate Banking Chair Chris Dodd (D-Conn.). He introduced legislation to crack down on overdraft fees last week. The banking industry earned $39.5 billion from service charges on deposits last year, up from $1.97 billion in 2006, according to data from the FDIC. Fees for everything from ATM usage to balance transfers accounted for 25% of the indus­try’s total revenue and cutting back on such fees poses a problem. Critics says levying heavy fees to consumers is unfair, since the U.S. gov­ernment recently allocated more than $700 billion to support troubled American lenders. Consumer advocates have paraded examples of consumers who have paid $40 for a cup of coffee because they unwittingly ran a negative balance in their checking account.

Synergent Rebates $750k Posted by AVCU on 12:53 PM

In August, the board of directors of Synergent, the for-profit subsidiary of the Maine Credit Union League, voted to share its success with participating credit unions by declaring a rebate totaling $750,000 to the credit unions that using Synergent’s products and services. The rebate is based on the volume of business each credit union did with Synergent during the period of August 1, 2008 – July 31, 2009. Synergent has approximately 140 credit unions as business partners for Technology, Card, Check Processing, Print & Creative and other services. Synergent is a business partner of the Association of Vermont Credit Unions. As such, a substantial number of Vermont credit unions are Synergent clients.

Maine CU to Bank Conversion: Members Vote Posted by AVCU on 12:40 PM

In one of the geographically closest to Vermont credit union to bank conversion attempts, it’s been reported that voting by members of Kennebec Valley Federal Credit Union was completed earlier this week. Results haven’t yet been posted but are promised to be known within 10 days of the vote that was held at a meeting on Tuesday. The membership vote culminates a move proposed by the credit union’s board last fall, whereby the credit union would convert to a bank charter, then merge with Kennebec Savings Bank. The Maine Credit Union League has opposed the proposed conversion to a bank charter and subsequent merger.

CUNA OpSS Council: Branching Strategy Advice Posted by AVCU on 3:29 PM

Branch building by credit unions will continue in the near future, but tempered by economic realities and lacking the aggressive posture of the past. That’s the message of “Branch Strategies,” a white paper released by the Credit Union National Association’s (CUNA) Operations, Sales & Service (OpSS) Council. The paper presents compelling evidence that the slowdown will affect both banks and credit unions. Branch expansion requires significant investment, but usually generates a better than average adjusted ROI, according to research cited in the paper. Branch locations also drive checking growth and primary financial institutional status.

Credit unions branches in grocery stores may arise again as community charters increase. Advantages . . .

· market research has already been done

· foot traffic is guaranteed

· the cost is much less than a traditional branch

· the hours are extended.

There are, of course, disadvantages . . .

· lack of a drive-up

· lack of control over the lease and building

· small space and high transactions

· sometimes low loan volumes

A new type of branch employee is evolving . . .as the branch evolves from a transactional to an advisory role employees are becoming cross trained in opening accounts, loan applications, CDs, sales and staff can no longer be just an order taker. Most importantly, the new branch employee has to be a relationship builder.

CUNA Council members are entitled to a complimentary copy of the white paper and more than 200 others. Non-members can purchase white papers for $50 each. The paper is available online in the white paper section of www.cunacouncils.org – select the “OpSS” tab.

Possible Delay in CARD Act Date Posted by AVCU on 12:16 PM

U.S. House Financial Services Committee Chairman Barney Frank (D-MA) and Joint Economic Committee Chairwoman Carolyn Maloney (D-NY) are reportedly seeking a delay in mandatory compliance with the CARD Act (Credit Card Accountability, Responsibility, and Disclosure Act) which has been the cause of much scurrying by credit unions, who are primarily the sole victims of the 21-day statement to due date compliance issue. Frank and Maloney are set to hold a Capitol Hill press conference today at 2:00 pm to announce their proposed CARD Act delay legislation. Key lawmakers are holding a press conference tomorrow to announce legislation to speed up the effective date of the remaining CARD Act provisions to Dec. 1.

Joint Economic Committee Chairwoman Carolyn Maloney (D-N.Y.) and House Financial Services Committee Chairman Barney Frank (D-Mass.) will hold a Capitol Hill press conference on Thursday at 2 p.m. to announce the new legislation regarding the effective date of the Credit Card Accountability, Responsibility, and Disclosure Act.

The law, signed by President Obama in May, has given many credit unions heartburn regarding the 21-day requirement between the borrower receiving a bill and treating a payment as late. Some credit unions bill their cards more frequently than monthly according to member preference.

Suspicious Activity Report (SAR) Busts Fraud Scheme Posted by AVCU on 12:02 PM

The Financial Crimes Enforcement Network (FinCEN) website reports the story of a fraud case that supports how important it is for financial institutions to know their customers/members, have appropriate staff training and to submit suspicious activity reports (SARs) whenever necessary. The case highlights a scheme targeting the elderly by offering non-existent certificates of deposit. “As part of the scheme, one of defendants rented office space in one state and hired workers to handle investor inquiries. He also established a mail drop in a distant city to receive investor payments. The bank SAR that initiated the case noted that one of the defendants opened accounts for several businesses that ultimately turned out to be fronts for the fraud scheme. The bank noticed that checks made out to one business were deposited into the account of another business. In addition, the bank believed the transactions in the account were indicative of fraud because there appeared to be no discernable legitimate business activity, only small monthly payments to individuals that appeared to be interest payments. The SAR narrative described critical elements of the crime in detail.”

Law enforcement and prosecutors stated that “the SAR proved instrumental in ending the scheme and the funds in the frozen account provided restitution for some victims. The two defendants were sentenced for their roles in the scheme.” FinCen is working to make it easier for financial institution staff to file currency transaction reports (CTRs) and SARs by continuing to enhance its newly developed BSA E-Filing System website. The full story of the fraud case is on FinCen’s website for viewing.

On a related note, AVCU’s 2009 BSA/Anit-Money Laundering Training Seminar is being held for affiliated credit union employees on 10/20/09. Follow the link for details. The seminar fulfills the required financial institution training obligations of the BSA and Patriot Act.

DC Update for Week of 9/14 Posted by AVCU on 10:15 AM

The House and the Senate return to Washington today. The Senate resumes consideration of H.R. 3288, the Transportation and related agencies appropriations bill. The House will consider bills under suspension of the rules today and tomorrow before turning attention to H.R. 3246, the Advance Vehicle Technology Act of 2009 and H.R. 3221, the Student Aid and Fiscal Responsibility Act of 2009. The latter is the bill that would terminate the Federal Family Education Loan Program (FFELP). CUNA does not support H.R. 3221, and has lobbied against it since introduction. CUNA’s letter to the House Education and Labor Committee is available for review.

On Wednesday of this week the House Financial Services Committee will hold a hearing on proposals to enhance the Community Reinvestment Act. The witness list has not been released but reports are that the following groups have been invited to testify:

• American Bankers Association
• National Community Reinvestment Coalition
• Massachusetts Commissioner of Banks.

Representative Eddie Bernice Johnson (D-TX), sponsor of H.R. 1479, the Community Reinvestment Modernization Act, is also expected to testify. CUNA will send a letter for the record of the hearing, which will be made available to credit unions.

The Consumer Financial Protection Agency legislation is now NOT expected to be voted out by the Financial Services Committee during the week of September 21. Reports are that the Committee may hold additional hearings before proceeding to consideration of the legislation, perhaps in early October.

As a reminder, all CUNA letters to Congress are available for review.

CRA Hearing Next Wednesday Posted by AVCU on 10:29 AM

The U.S. House Financial Services Committee, chaired by Barney Frank, set next Wednesday as the date for its exploration of Community Reinvestment Act (CRA) issues. The committee hearing, entitled "Proposals to Enhance the Community Reinvestment Act," will start at 10 a.m. on September 16. The hearing can be viewed live via webcast at that time.

Filene Seeks Researchers/Innovators Posted by AVCU on 10:21 AM

The Filene Research Institute has created many publications and training packages in recent years and is seeking to further those ideas to the point where they can be implemented in credit unions with ease. With hopes of taking credit unions “beyond the research,” the Institute is looking to hire a select number of advisors before the end of the year that will be able to apply findings and innovations into the credit union movement through a series of 18-month projects. Projects will include coverage of the following topics:

• Young Adult Advisory Services
• Credit Union Collaboration Advisory Services, and
• Innovation Application Services

Additional information on each project’s focus can be found at http://filene.org/. Ideal candidates will be ambitious and active innovators who have a successful history of experience in working within the consumer financial services marketplace. Formal proposals are to be submitted to research@filene.org by 9/29/09.

Support for O.D. Fee Restraints Posted by AVCU on 4:14 PM

U.S. Senate Banking Committee member Charles Schumer (D-N.Y.) said this week that he wants more consumer protections associated with overdraft protection plans and will back legislation targeting abusive practices. Stories surfaced this week that bank profits for checking/ATM overdraft fees now surpass those of credit cards. In 2009 banks are expected to garner $27 billion by covering overdrafts on checking accounts. Schumer says overdraft legislation should:

• Require consumers to opt in, or have a chance to opt out, of overdraft protection programs;
• Increase disclosure of fees and APR charges on overdraft loans;
• Require a warning when an electronic transaction may trigger an overdraft loan fee;
• Prohibit financial institutions from manipulating the order in which checks and other debits are posted if it causes more overdrafts and fees;
• Require proportional fees so that a fee for a nickel overdraft is lower than a fee for a $100 overdraft.

Legislation introduced in the House by N.Y. Democrat Rep. Carolyn Maloney, (H.R. 946, the Consumer Overdraft Protection Fair Practices Act), includes these provisions. Schumer says he’ll co-sponsor similar Senate legislation by Chris Dodd (D-Conn.), who chairs the Senate Banking Committee.

Frank Eyes Obama Cabinet Job? Posted by AVCU on 4:03 PM

The Political Intelligence page of Boston.com reports Massachusetts Congressman Barney Frank having desires for an Obama cabinet position, specifically leading the Department of Housing & Urban Development. The revelation is made in a biography hitting stores this month called “Barney Frank: The Story of America’s Only Left-Handed, Gay, Jewish Congressman.” First, however, he says he has more legislation to pass, wants at least two years in Congress with Obama as President. and a solidly Democratic Senate. According to author Stuart Weisberg, more than 150 people were interviewed for the book, along with 30 hours with Frank himself. The author claims the book to show Frank as a pragmatic politician with an unabashedly liberal agenda and whose depth of intellect and sense of humor make him among the most influential and colorful DC personalities. The book is available for pre-order on Amazon.

VSECU CEO Featured in BizPeople Vermont Posted by AVCU on 5:50 PM

Vermont credit union executive Steve Post is on the front cover of the September issue of Business People Vermont, a full color magazine distributed to 6,500 business owners in northern Vermont monthly. The article begins with Steve’s post college start in public utilities in Colorado, migration to Rochester, Vermont with wife Nancy to start a credit union career with White River Credit Union, and eventual progression to the leadership role at Vermont State Employees Credit Union where he has been for 21 years. The article references changes in the credit union over those years, management style, business philosophies and family insights. Read the article in entirety here.

Post Congressional Recess DC Update Posted by AVCU on 10:37 AM

Congress returns to Washington today for what is expected to be a very long work period. The House is scheduled to be in session each week through the end of October, when it is "scheduled" to adjourn, the October 30^th deadline isn’t expected to be met. It is expected Congress may continue up to the Veterans' Day holiday in November. Health care reform, financial regulatory restructuring, student lending reform, transportation funding authorization and the fiscal year 2010 appropriations are top issues expected to be considered before the end of the session. Consequently, it’s a much safer bet that Congress will adjourn closer to Christmas than Columbus Day.

On Wednesday of this week, the House will act on Resolution 556 under suspension of the rules, which recognizes the 75th anniversary of the enactment of the Federal Credit Union Act. It was introduced by Rep. Jim Himes (D-CT), John Larson (D-CT) and Paul Kanjorski (D-PA) and recognizes the "valuable services to their member, financial alternatives for the underserved, and economic stimulus to our Nation even as we face a financial crisis today," provided by credit unions. Read the resolution here.

On Wednesday evening at 8:00 pm the House and Senate meet in joint session to receive an address from President Obama.

The Senate schedule is less defined. It convenes this evening and takes up a travel bill, but the schedule for the rest of the week hasn’t been announced. While the health care bill is deliberated in committee the Senate is expected to push through as many appropriation bills as possible in September. Senate action is expected on the Commerce, Justice and science appropriations bill, the Interior and the environment appropriations bill and the Transportation and Housing and Urban Development appropriations bill. If the Senate completes action on these, they will have acted on seven of the twelve appropriation bills. The House has already acted on all twelve. The Senate appropriation process will likely spill over beyond the end of the fiscal year.

Two hearings of note this week: On Tuesday, House Financial Services holds a hearing entitled, "Progress of the Making Home Affordable Program: What Are the Outcomes for Homeowners and What Are the Obstacles to Success?" Also on Tuesday, House Judiciary Subcommittee on Commercial and Administrative Law will hold a hearing entitled, "The Role of the Lending Industry in the Home Foreclosure Crisis."

It is very possible that House Financial Services will hold a hearing on the Community Reinvestment Act later this month, even as early as next week. H.R. 3216, the Consumer Financial Protection Agency Act is expected to be marked-up by House Financial Services before the end of the month.

NCUA 5300 Call Report Webcast #2 - 9/23 Posted by AVCU on 10:13 AM

The National Credit Union Administration (NCUA) has implemented its new web-based system for collecting Report of Officials and 5300 Call Report information. With a new system and new requirements asked for all users, the NCUA has offered a series of webcasts to assist credit unions with the transition and answer questions in becoming familiar with the new system. The second webcast being offered by NCUA is set for 1:00 p.m. EST on 9/23.

NCUA’s new online system has two sections – “Credit Union Profile” and “Online Call Report.” The profile collects standardized information that won’t likely change, such as Report of Officials information, disaster recovery information, emergency contacts, etc. Credit unions may begin inputting profile information now and need to have it completed 10/1. The “Online Call Report” will collect Call Report information. September data may be entered beginning 10/1 and must be completed by 10/19.

Register for the second free informational webcast here.

ABA Economist: CU Members Are Suckers Posted by AVCU on 12:19 PM

Well, he didn't directly say it but Keith Leggett, senior economist at the American Bankers Association, certainly infers it in his latest "Credit Union Watch" blog entry. He rants about how credit unions promoting ownership by their members is really a hollow ownership. On members ownership of their credit union, Leggett cites a quote from an Amercian Banker article by researcher Alex Pollock:

It can’t be sold. It has no market value. It can’t be redeemed. You can’t borrow against it. You can’t take it with you when you switch your account to another financial institution. Theoretically, you could get a distribution of any remaining net assets upon liquidation of the credit union, but if successful, it will never liquidate.

Leggest claims that a credit union would only liquidate if insolvent, which negates the value of ownership, and that the only thing of "value" to members that they don't get banks is the right to elect the board members, which he also pooh-poohs because your vote is only worth as much as everyone else's no matter how much business you do with the credit union. Leggett's ultimate statement on the worth of ownership held by credit union members is his final comment:

P.T. Barnum is probably smiling from the grave.

For more ABA perspectives on credit unions like "Credit Unions Gone Wild," "Where Have All The Charters Gone" and "Breaking News - Zombie Update" see the link to Leggett's opines to the right of this page.

CUNA Mutual Buys Crop Insurer Posted by AVCU on 11:51 AM

In a recent letter to credit unions CUNA Mutual President and CEO Jeff Post announced the purchase of Producers Ag Insurance Group (ProAg), to provides multi-peril crop insurance coverage to family farmers and agriculture producers nationwide. The move follows CUNA Mutual’s initial foray into crop insurance when it became a reinsurance partner with ProAg in 2006, and acquired a minority stake in the ProAg in 2007. ProAg does business in 40 states, generates approximately $500 million in annual premiums and is based in Amarillo, Texas. ProAg has been owned by the Latham family, and will continue to be led by current management.

CUNA Mutual bills the recent purchase as a diversification strategy that utilizes the company’s competencies and provides alternative revenue streams for future growth. Crop insurance from companies like ProAg protects farmers from financial losses resulting from natural causes such as drought, excessive moisture, hail, wind, frost, insects, disease and commodity price volatility. This is an $8 billion industry in the U.S.

For more details about the CUNA Mutual purchase of ProAg see the joint press release.

Filene Webinar: Influence Importance Posted by AVCU on 10:33 AM

On September 10^th the Filene Research Institute will present the second in a series of webinars it’s calling “Images Matter.” The first installment, “How We Think,” was led by Maya Bourdeau, the Institute’s innovator in residence. She showed how marketing and membership retention can be strengthened in your credit union. In the second installment on September 10^th, “How We Influence,” Bourdeau will build upon the thought processes and subconscious responses discussed in the previous webinar. She’ll inform participants how to interpret sensory cues as they relate to the business of credit unions. With experience as a managing director for the boutique marketing firm “Olson Zaltman Associates,” Bourdeau will draw upon previous credit union studies and scientific research to present the influential cues credit unions can use in business conduct with members. Register for “How We Influence” here. Presentation slides from the first installment, “How We Think,” are also available for download. The “How We Think” webinar takes place from 12:00 noon to 1:00 p.m. (EST) on September 10^th.

CNN Money Highlights CU Biz Lending Posted by AVCU on 10:21 AM

The Small Business section of CNNMoney.com on 9/2/09 points to credit unions as a growing solution for viable small businesses meeting increasingly tough times with traditional commercial banks and other lenders. The story cites four examples of small business owners successfully improving their financial posture moving away from banks. Among those examples is the story of husband and wife owners of a 19 employee electric company in Florida. Sharon and Mike consolidated their mortgage and six vehicle loans into a single loan with Grow Financial CU when traditional business lenders turned them down. Refinancing with the credit union saved the small business $4,000 per month. The other examples of alternative financing cover SBA loans, microloans and peer-to-peer lending. Read the entire story here.

State of Mobile Banking in New England Posted by AVCU on 2:28 PM

Mobile Banking may be all the buzz among financial institutions right now, but a new paper by the Boston Federal Reserve and New England Automated Clearinghouse reports there is still a lot of apprehension and misunderstanding among financial institutions. The 46-page “Mobile Banking in New England: The Current State of the Market” is comprised of two sections. The first does a great job of explaining what mobile banking and isn’t, and cites the different technologies and players involved. The second section reveals findings of a study of New England banks and credit unions regarding their understanding of mobile banking, why they’re involved or not, what mobile banking services they provide, whether they charge consumer, and a variety of other findings. The survey was conducted in July of 2008.

Oddly, mobile banking is often more widespread and developed in developing nations whose financial services industries bypassed brick and mortar and ATM machines and began remote service when cell phones were already ubiquitous among consumers. Their security measures however, which are a big consumer stumbling block in the United States, may be less developed than those to which U.S. banks and credit unions are accustomed.

Big Opportunity In Small Business? Posted by AVCU on 12:50 PM

One in thirteen small businesses is “under-banked” . . . . running their business from personal accounts. That’s among findings reported by James Van Dyke of Javelin Strategy. He writes about data his company compiled revealing a big opportunity financial institutions, credit unions included, have in serving struggling small businesses in tough economic times. He cites a huge need by these fledgling businesses for payroll services, overdraft protection, payments management and more.

The Filene Research Institute also recognized the opportunity for credit unions to assist the growing number of baby boomers becoming entrepreneurs in a downsized economy. Last year it began a pilot program with select credit unions called “What’s the Big Idea,” which is basically an online service provided by a credit union to help its members assess their new business ideas and potential for financing, success, etc. Read all about it and the credit unions that piloted the project here.