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CURRENT Newsletter | 16 April 2021

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Advocacy / Governmental Affairs

Compliance / Regulatory Affairs

News About Credit Unions

News From Credit Unions

Chapter News

Operations

Marketplace / Economy

Headline News

IGNITE 2021, League Annual Meeting Registration Now Open!

We’re excited to announce the return of IGNITE, the League Annual Meet­ing! Now slated for Nov. 10-12, 2021 in Vir­ginia Beach, we’ve secured the new Marriott Virginia Beach Oceanfront as our host hotel.

Legal Marijuana and Your Workplace: It’s Going to Get Complicated

Virginia has become the 16th state to legalize non-medical, or recreational, marijuana use. Governor Northam’s recent amendments to Senate Bill 1406 have been approved, meaning legalization will go into effect on July 1, 2021. Thirty-five states (including Virginia) already allow medical use. This legalization trend likely will continue and employers are wondering what it means for their workplaces.

Generally speaking, employers can and should still ban workplace intoxication and the use of intoxicants, including marijuana, in the workplace as a matter of workplace safety. However, other drug use policies might get more complicated. This will depend on your industry, business model, and state and local laws.

Learn more

League Hosting Compliance Webinar April 28

Join us on April 28 for a free compliance/regulatory update with attorney Jay Spruill. The hour-long webinar (10 a.m. start time) will cover frequently asked questions on the League compliance hotline, key federal regulatory issues, and any recently enacted state laws that might affect your operations.

Also, feel free to send your questions prior to the webinar to your League’s Mary Amyx at mamyx@vacul.org. She’ll gladly forward them to Jay to ensure they are covered during the webinar.

Learn more and register here.

Emergency Relief Payments and Exemption From the Creditor Process

A Virginia law pertaining to the exemption from creditors of federal “emergency relief payments” under the Covid-19 federal relief legislation (“CARES Act”) was amended by the Governor on March 31, 2021. The General Assembly approved those amendments last week (April 7).

This alert is to remind our members of certain requirements if your credit union receives notice, either from the payment itself or from the account holder, that certain funds in an account represent pandemic-related emergency relief payments from the federal government under legislation passed by the US Congress.

Learn more

League's 2020 Impact Report Now Available

2020 was a challenging year, in so many regards. The pandemic required your League to revamp, retool and rethink how we delivered value and provided services to member credit unions. It’s a point of pride for us that you place your faith in our organization and our people, and in 2020, we strived to deliver the timely, relevant resources you needed to best manage so many unprecedented challenges.

Our 2020 Impact Report is now available, and we hope you’ll share this document with your board and staff. 2020 proved yet again that our movement is stronger together and better able to manage our shared challenges when we work arm-in-arm, in a spirit of cooperation and collaboration.

Your League thanks you for your support, your membership, and for your good work in serving members and your communities!

Overview of Fiserv's Card Expert Solution: Free April 22 Webinar

Transform your data into actionable insights that drive fact-based, consumer-focused decisions.

League partner Fiserv will offer a free webinar April 22 that will assist you in understanding key portfolio metrics, cardholder behaviors and how their relation to your credit union's card strategy is paramount for success. Learn how Fiserv’s “Card Expert” solution can help enrich your card strategies and build member engagement.

Register

Advocacy / Governmental Affairs

Loosely Regulated Fintech Companies Pose Risks to Credit Unions, CEO Tells House Panel

Congress should carefully regulate fintech companies and give credit unions the regulatory freedom to compete against them, Carlos Pacheco, CEO of the $1.4 billion Premier Members Credit Union in Boulder, Colo., told a House subcommittee Thursday.

“It is important that Congress ensures laws are modernized to allow regulated financial institutions, such as credit unions, to keep up and compete with technological advances,” Pacheco said in testimony presented to the House Consumer Protection and Financial Institutions Subcommittee. The subcommittee held a hearing on trends in institutional charters.

Pacheco, whose credit union has $1.4 billion in assets, added, “As technology companies expand, and new charters emerge to compete in the financial services marketplace, it is important that they compete on a level playing field of regulation and supervision – from data privacy and security to consumer protection.”

He called on Congress to lift the credit union member business lending cap during the pandemic in an effort to make it easier for credit unions to make small business loans during the coronavirus crisis.

Pacheco also said that the Federal Credit Union Act has several outdated requirements. He cited the need to expand investment options for credit unions and allow all types of credit unions to serve underserved areas in order to increase financial services to those underserved areas.

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Longer CU Loan Maturities Would Make Education More Affordable

Bipartisan legislation extending the loan maturity limit for federal credit unions would help more credit unions enter the student lending sector, CUNA wrote to the Senate Banking, Housing and Urban Affairs Committee Tuesday.

“Total student loan debt in the United States has reached $1.7 trillion and is now the second largest factor of household, with the average graduate saddled with over $37,000. Yet, a recent study found that hiring for entry-level college graduate positions has fallen 45%, the letter reads. “While most student loans originate with the government, more and more credit unions are finding ways to support student borrowers through private loans.

“However, one barrier for many federal credit unions from entering the student lending sector is the 15-year loan maturity limit,” it adds.

Sens Tim Scott (R-S.C.) and Catherine Cortez Masto D-Nev.) introduced a bill last month, the Expanding Access to Lending Options Act, that would increase the federal credit union loan maturity limit by five years.

Learn more

Waters Says FinCEN Needs at Least $74.3 Million Soon to Implement New Law

The Treasury Department’s Financial Crimes Enforcement Network needs a quick infusion of at least $74.3 million to begin implementing anti-money laundering and Bank Secrecy Act changes enacted by Congress last year, House Financial Services Chairwoman Maxine Waters (D-Calif.) said Monday.

“I believe that these funds are critical to properly implement the requirements of the [changes in law],” Waters wrote in a letter to the House Financial Services Appropriations Subcommittee.

Waters is asking for a supplemental appropriation that would be appropriated before the FY22 appropriations are enacted. She said that if funds are available, she would favor enacting an even larger supplemental appropriation of $98.5 million to provide FinCEN with the flexibility to hire employees needed to implement the new law.

The Biden Administration last week asked for $191 million for FinCEN for FY22. That represents a $64 million boost from the current fiscal year.

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Compliance / Regulatory Affairs

Interim Final Rule Provides CUNA-League Sought PCA Flexibility

The NCUA Board will publish an interim final rule Monday making two temporary changes to its prompt corrective action (PCA) regulations to help ensure that federally insured credit unions remain operational and liquid during the COVID-19 pandemic. A similar rule expired at the end of 2020, and CUNA and Leagues have called on NCUA to reinstate PCA flexibility.

The first change temporarily enables the NCUA Board to issue an order applicable to all federally insured credit unions to waive the earnings-retention requirement for any federally insured credit union that is classified as adequately capitalized.

The second modifies these regulations with respect to the specific documentation required for net worth restoration plans (NWRPs) for federally insured credit unions that become undercapitalized.

These temporary modifications will be in place until March 31, 2022.

Learn more

Biden Administration to Reinstate Fair Housing Rules Vacated by Trump

The Biden administration is moving to reinstate two key fair housing rules that were rolled back under President Trump, according to notices published this week by the Office of Management and Budget.

The Department of Housing and Urban Development is looking to restore a 2013 rule outlining its use of the “disparate impact” legal standard in fair-lending cases and the 2015 “affirmatively furthering fair housing” rule meant to guide local jurisdictions on compliance with the Fair Housing Act.

Former President Donald Trump rescinded the “affirmatively furthering fair housing rule” last year via executive order, calling the rule “complicated, costly, and ineffective" in a blow to community groups and housing advocates who said the rule helped to combat housing discrimination.

Also last year, then-HUD Secretary Ben Carson finalized controversial steps to replace the Obama-era disparate impact rule with a weaker standard.

Disparate impact is a legal doctrine that opens up lenders to fair-lending enforcement even if their lending policies were unintentionally discriminatory. It has long been unpopular with financial institutions. However, big banks urged the Trump administration to shelve its plan last year following the police killing of George Floyd that sparked a national dialogue on racial equity. (American Banker, April 14)

Agencies Issue Statement and Request for Information on Bank Secrecy Act/Anti-Money Laundering Compliance

The federal banking agencies, in consultation with the Financial Crimes Enforcement Network and the National Credit Union Administration, recently issued a joint statement addressing how risk management principles described in the “Supervisory Guidance on Model Risk Management” relate to systems or models used by banks to assist in complying with the requirements of Bank Secrecy Act (BSA) laws and regulations.

Learn more

NCUA Releases OMWI Annual Report to Congress

NCUA released its Office of Minority and Women Inclusion (OMWI) annual report Wednesday detailing the agency’s progress in 2020 in advancing diversity, equity, and inclusion in its workforce. The report also highlights the agency’s efforts to ensure fair and inclusive business practices as well as assess the diversity policies and practices of the entities it regulates.

The full OMWI 2020 Annual Report to Congress can be found on the NCUA website.

Learn more

News About Credit Unions

CU Loans Outstanding Increased 0.2% in February

Credit union loans outstanding increased 0.2% in February, compared to a 0.2% decrease in January of 2021 and a 0.2% increase in February of 2020, according to CUNA’s latest Monthly Credit Union Estimates. The monthly report has been updated with a new look for 2021.

  • Unsecured personal loans led loan growth during the month, rising 3.2%, followed by fixed-rate mortgages (0.4%), and used auto loans (0.1%).
  • On the decline during the month were adjustable-rate mortgages (-0.2%), home equity loans (-0.6%), new auto loans (-0.9%), credit card loans (-1.2%), and other mortgage loans (-2.6%).
  • Credit union savings balances increased 1.8% in February, compared to a 0.9% increase in January of 2021 and a 2.1% increase in February of 2020. Share drafts led savings growth during the month, rising 4.0%, followed by regular share (2.0%), money market accounts (2.0%), and individual retirement accounts (0.3%).
  • On the decline during the month were one-year certificates (-0.1%).
  • Credit unions’ 60+ day delinquency declined to 0.5% in February.

Learn more

How Long Can CUs Keep Sacrificing Fees?

Fourth-quarter data from the NCUA, the most recent information available, showed an 11.3% year-over-year increase in noninterest income across the industry, compared with 7.3% growth in the year ending Dec. 31, 2019. Much of that, however, was driven by fees from mortgage refinancing and the Paycheck Protection Program.

Fee income paid by members – such as overdrafts, NSFs, transfer fees and more – makes up only a portion of the NCUA’s noninterest income calculation, which also includes fees paid as part of loan applications, interchange income and more. Fee income makes up only a portion of overall noninterest income for the industry, which rose by more than 11% last year on the strength of PPP and mortgage refis.

With PPP expiring soon and the mortgage refi boom expected to slow down sometime this year, credit unions are attempting to determine how they can cut fees but still maintain the same levels of profitability. (American Banker, April 15)

CUs Raise Numerous Concerns Over New Emergency Capital Investment Program; NCUA Says It’s Working With Treasury to Ensure CUs Have What They Need

Credit unions eligible for a new $9 billion federal program that provides emergency capital have expressed some frustrations over what they say have been inconsistencies in the process of filing applications, while also expressing other concerns.

Other sources have told CUToday.info some inconsistencies are understandable, given the newness of the program for both NCUA and Treasury, with NCUA telling CUToday.info the Emergency Capital Investment Program (ECIP) comes with unique requirements and that it has been in regular communication with Treasury.

The Consolidated Appropriations Act of 2021 created the ECIP in response to the coronavirus pandemic to encourage low- and moderate-income community financial institutions to augment their efforts to support small businesses and consumers in their communities.

Learn more

Reminder: Join Inclusiv for An Earth Week Celebration for Credit Unions

Join Inclusiv on Wednesday, April 21, for this fun, interactive event. You’ll have the opportunity to:

  • Hear about sustainability initiatives happening in credit unions
  • Connect in small groups with others in the credit union space working on sustainability and green lending
  • Learn how your credit union can get involved in the United In Sustainability (UIS) Credit Union Network to share best practices, obtain key tools, and lead industry action
  • Learn about Inclusiv’s new Solar Lending Professional Training and Certificate program and receive the application link (currently available free of charge!)

Learn more

CUNA Mutual Challenges Credit Unions, Donors With $1 Million Pledge to Worldwide Foundation for CUs

CUNA Mutual Group is committing up to $1 million to the World Council of Credit Unions—if credit unions rise to a challenge.

CUNA Mutual Group said it will provide a matching grant based on the amount of 2021 donations that come into Worldwide Foundation for Credit Unions, the fundraising and engagement arm of World Council. For every dollar donated to the Worldwide Foundation, CUNA Mutual Group will give one dollar to the World Council.

“We are overwhelmed by this generous show of support from CUNA Mutual Group. As one of World Council’s oldest members—and the largest annual donor to our Worldwide Foundation—they have long demonstrated their commitment to the work we do to support the international credit union movement,” said WOCCU President/CEO Brian Branch in a statement.

Originally beginning operations in 1971, the World Council is celebrating its 50th anniversary in 2021.

Learn more

News From Credit Unions

We Promise Foundation Grants $62,500 to Roc Solid Foundation

Chartway Federal Credit Union’s We Promise Foundation has presented a charitable grant of $62,500 to Roc Solid Foundation, a Chesapeake-based nonprofit that builds hope for kids fighting cancer.

“As the charitable arm of Chartway Federal Credit Union, the We Promise Foundation provides life-changing experiences that bring joy, hope and smiles to children facing medical hardship or illness,” said Karen Lane, executive director. “That’s why we’re so proud to present this grant to the Roc Solid Foundation. Together, we can provide the priceless gift of play to build hope for every child and family fighting pediatric cancer.”

Learn more

Chapter News

Tidewater Chapter Charity Golf Tournament Tees Off June 4

The Tidewater Chapter will hold its 8th Annual Charity Golf Challenge on June 4 at Sewells Point Golf Course in Norfolk. ALL credit unions – regardless of location - are invited!

Format will be four-man captain’s choice. The cost will be $100 per player. Proceeds will benefit Children’s Hospital of the King’s Daughters, our local Children’s Miracle Network Hospital! Please join us for this exciting event, which has raised more than $100,000 for CHKD during the past seven years.

Learn moreopens a pdf / Register

Operations

Vaccination, Testing & Prevention: 3 Keys to Returning Employees to the Workplace

As many employers contemplate returning remote workers to the workplace, employers need multiple different but complementary approaches to keep them safe.

  • Employers should continue to emphasize basic public health measures to prevent the spread of respiratory disease until the pandemic is over.
  • Employers also need to promote the vaccination of their employees. We now know that vaccination is highly effective at preventing both symptomatic COVID-19 and asymptomatic COVID-19. That’s especially helpful, since spread from employees who themselves don’t realize they are ill has been responsible for many workplace outbreaks.
  • As we move toward vaccinating all willing adults, employers should focus on testing to diminish the risk of workplace spread. Up until now, testing has been implemented by a minority of employers, largely because tests have been expensive, and many tests have required up to three days of processing, making them far less useful in preventing workplace spread. The good news is that this is changing.

Learn more

Why CUs Should Make a Priority of DEI

A focus on diversity, equity and inclusion (DEI) within an organization and its members is one of the most important areas to move up the list of priorities throughout the industry, says one DEI expert.

“Most credit unions were at the beginning of their DEI journey in recent years, but 2020 was a watershed moment for everyone,” said Paul Dionne, research project manager at Filene Research Institute, in a NAFCU Journal report. “Credit unions quickly shifted from merely acknowledging the importance of DEI at an organization to actively taking steps to ensure the organization represented the community it serves.”

The nature of credit unions and their ties to the community means that many already had latent DEI practices in place, said Dionne. “The next step in the journey is to evaluate what already exists and to be more intentional to fill in the gaps and create a more coherent DEI strategy.”

Learn more

CU DEI Collective Launches New Website

The CU CEI Collective, an organization devoted to advancing Diversity, Equity and Inclusion (DEI) in the credit union industry, launched its new website Thursday. The updated website is designed to build a collection of DEI resources and opportunities available to all members and supporters of the credit union movement.

The intent of the website is to create a space where credit unions can act together as a system to advance DEI. It will be a space to share various perspectives, learn by being curious, and encourage action towards creating credit unions that value diversity and strive for creating a deep sense of belonging.

Learn more

Marketplace / Economy

Surge in State Revenues Shows Virginia’s 'Economy is Coming Back'

State revenues surged by more than $270 million in March, an 18.5% increase powered by boosts in high-wage jobs, internet sales and a booming housing industry as Virginia emerges from the COVID-19 pandemic in a stronger budget position than when the public health emergency began a year ago.

The increase Gov. Ralph Northam announced on Tuesday puts Virginia $1.35 billion ahead for the first nine months of the fiscal year, compared with the same period a year ago, and positioned for a potential budget surplus when the fiscal year ends on June 30.

State revenues through March 31 were $691 million higher than projected in the two-year budget that the General Assembly adopted on March 12, 2020, the same day that Northam announced the public health emergency because of the global coronavirus pandemic.

“The economy is coming back quicker than people anticipated,” Secretary of Finance Aubrey Layne said Tuesday.

Northam is poised to sign the third state budget the assembly adopted in 12 months. The latest budget includes more than $400 million in revenues that the governor identified in February for the legislature to use in this fiscal year, but current revenues already are $900 million ahead of that revised forecast.

“Virginia’s solid revenue picture is yet another sign that we are emerging very strong from the pandemic and continue to address its impacts on our economy,” Northam said Tuesday. “Together with the General Assembly, we have worked to ensure these gains will translate into additional relief to families and businesses and the targeted investments we need for a broad-based, equitable recovery.”

Learn more

Consumer Prices Move Higher as White House, Fed Monitor Inflation

Consumer prices moved 2.6 percent higher in March compared with a year ago, fueled by a strengthening economy and comparisons to last spring when the coronavirus pandemic set off unprecedented upheaval.

The consumer price index, which measures the change in what customers pay for goods and services such as groceries, clothing and gas, climbed 0.6 percent from February to March, the U.S. Labor Department reported Tuesday. The results were slightly higher than the 2.5 percent and 0.5 percent forecast and represented another uptick in prices for the year.

Although inflation is edging upward, federal officials have stressed that the shift will probably be short-lived, as parts of the economy begin to normalize after more than a year of the pandemic. (Washington Post, April 13)

 



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