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CURRENT Newsletter | 17 June 2021

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Compliance / Regulatory Affairs

Education & Training

Financial Services / Economy

Headlines

Compliance Alert: Responding to a Power of Attorney Agent’s Request to Add or Change a Right of Survivorship or Beneficiary Designation

Credit unions sometimes are asked by an agent under a power of attorney (POA) to have a person added as joint owner to the account of a member (the principal under the POA). Or a POA agent may seek to add or change a payable-on-death or other beneficiary designation on the member’s account. In some cases, the agent may seek to add himself or herself, or a family member, as joint owner or beneficiary on the account.

What is significant in all these situations is that the agent is seeking to act in a way that will create (or take away) a right of survivorship in the member’s account upon the member’s death. Naturally, this raises concerns. How should the credit union respond?

CULAC Fundraiser ‘$30 By the 30th’ Underway; Support CUs’ Advocacy Work

It’s June, which means it’s time for our annual $30 by the 30th campaign supporting CULAC. This is one of the best ways to support one of our movement’s strongest advocacy tools – by donating $30 or more to CULAC by June 30.

As the 117th Congress continues its work, the credit union movement is facing threats on multiple fronts, including attempts to apply new CRA-like rules to credit unions, expand regulations and even place new limits on interchange and our ability to fight fraud and data breaches impacting our members.

Learn more | Contribute here

Fiserv Webinar: Exceptional Member Service as a Differentiator for Your Card Program

Providing exceptional service is a differentiating factor in the crowded and hyper-competitive card market. Join our free June 24 webinar and learn how serving your members’ needs is key to “customer satisfaction” and loyalty and why it matters for an optimal credit union member experience.

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Turnkey Mortgage Solutions: Learn More about Our New Partnership with CUMA During a July 14 Webinar

Looking for a turnkey, customizable mortgage solution for your credit union? Credit Union Mortgage Association (CUMA), your League's newest business partner, boasts a 40-year track record of providing best-in-class mortgage-related services to credit unions of all asset sizes, including origination, processing, underwriting, servicing, closing and secondary market access.

Join us for a July 14 webinar (at noon) to learn about CUMA and what they can help you do for your members!

Register

CUs Among Recipients of Grant Funding to Support Minority Business Ownership

Sen. Mark Warner announced Tuesday that several Virginia-based credit unions will share in the more than $21.6 million in funding from the U.S. Department of Treasury to support minority business ownership.

This funding comes from the CDFI Rapid Response Program, which was created and funded by a $12 billion investment in Community Development Financial Institutions and Minority Depository Institutions as part of the COVID-19 relief bill that was signed by President Donald Trump in December.

Warner’s release says the billions invested in CDFIs and MDIs will include $3 billion in grants that will be delivered through the CDFI Fund.

Credit unions receiving the funding include: Democracy Federal Credit Union, DuPont Community Credit Union, Freedom First Federal Credit Union, Peoples Advantage Federal Credit Union and RVA Financial Federal Credit Union.

Learn more

Financial Education Boot Camp July 20

Looking to whip your credit union's financial education program into shape? Stumped on where to start? The Virginia Credit Union League's Financial Education Committee is here to get the program at your credit union into tip-top shape!

  • Date: July 20, 9:30 a.m. – 11:30 a.m.
  • Format: Virtual Workshop
  • Cost: $20. $10 of each registration fee will be donated to support the good work of Feed More!

Whether you are new to providing financial education or consider yourself a pro, this low-cost, high-impact workshop is guaranteed to provide tools and tips you can use immediately at your credit union. Now, more than ever, financial education can demonstrate the Credit Union Difference -- building member loyalty and providing an important opportunity to serve your community.

Register early and attend for a chance to win special prizes!

Minimizing Negative Staff Impact When Getting Back to The Office

Similar to when employees began working remotely, there are peripheral issues and concerns to consider as a larger percentage of the staff return to the office.

One recent poll suggests nearly half of the workers feel anxious about their own health, mental well-being, and the health of their families when going back to the workplace. As with all workplace safety and health efforts, staying safe will be the combined effort of employers taking the right steps to reduce risk, remain flexible if possible, and maintain strong communications with employees.

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Aligning DEI with Social Impact Strategies at Your CU

The work you are doing around DEI and social impact doesn’t have to be separated. In fact, you’ll make a much larger impact if you align your DEI and social impact strategies with your business model and operations, allowing you to tackle social challenges through creative partnerships within your community and philanthropy, all while differentiating your brand in a crowded financial services space.

Next week, June 22-23, we’re bringing you ideas, inspiration, and tangible resources for your credit union to #AmplifyImpact.

  • Day 1: With insights from academics, thought leaders and credit union practitioners, we will answer the question “How should credit unions act on their DEI and social impact commitments to see the impact of their investments in their people and their communities?”
  • Day 2: Take those insights from Day 1 and use them to better understand how to advance your DEI efforts and create a focused and impactful social impact strategy through experiential sessions.

Registration is FREE to Filene Members and since this is a virtual event, we have seats still available. Invite your team and register at http://www.filene.org/amplifyimpact.

AACUC Annual Conference: League Providing Scholarships

Your League is providing scholarships to the African American Credit Union Coalition (AACUC) Annual Conference, slated for Aug. 16-21.

The virtual AACUC conference has special pricing for the members, small credit unions and young professionals. We’re providing upward of $2,000 in scholarships for the event, so there’s a good chance we’ll be able to accommodate several scholarship requests!

Here’s how you can apply for a scholarship:

  • Contact the League’s Nicole Widell at nwidell@vacul.org.
  • Let Nicole know why you want to attend (a short paragraph or two will suffice). Please provide your credit union, phone number and current job title. NOTE: Your credit union must be an affiliate or associate member of the League to qualify.
  • Note the scholarship for which you’re applying:
    • AACUC or National Association of Latino Credit Unions & Professionals (NLCUP) Members - ($200)
    • Small Credit Union (less than $100 million in assets) & Minority Depository Institutions – ($99)
    • Emerging Leaders / Young Professionals – ($99)
  • Please apply for a scholarship no later than July 30. We’ll notify scholarship winners beginning Aug. 2. Once you’re notified, register for the conference at https://www.aacuc.org/22nd-annual-conference and we’ll reimburse you for the registration fee.

Learn more about the conference (including full schedule) here.

Virginia's COVID-19 Workplace Rules Could Be Up for Revision or Repeal

A mask mandate and other statewide rules adopted in January to prevent the spread of COVID-19 in Virginia’s workplaces could be headed for revisions or possibly a repeal.

Gov. Ralph Northam urged the Virginia Safety and Health Codes Board this week to hold a meeting to revisit those rules before June 30, when a state of emergency that Northam declared last year due to the pandemic is set to expire.

The rules, which required businesses to put in place multiple safety policies such as mask-wearing and sanitation, were controversial when they were adopted. Numerous business groups said the rules imposed an inflexible burden on businesses, but the rules were backed by some unions and worker advocacy groups that argued it would save lives.

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Related: Governor Northam Lifts Mask Mandate to Align with CDC Guidance, Announces End to COVID-19 Mitigation Measures

FHLBank Atlanta 2021 Election of Directors

Federal Home Loan Bank of Atlanta (Bank) has begun the election to fill certain directorships on the Bank’s board of directors, including the member directorships in Alabama and the District of Columbia, and one public interest independent directorship. The term of the directorships to be filled in this election begins on Jan. 1, 2022, and ends on Dec. 31, 2025.

Pursuant to the Bank’s board-approved Equal Opportunity Policy Statement, which is available on the Bank’s website, the Bank encourages the consideration of diversity in nominating or soliciting nominees for positions on the Bank’s board of directors.

Individuals interested in being considered for the public interest independent directorship must complete and return to the Bank, by 5 p.m. EDT on July 9, 2021, the application and related forms that are available on the Bank’s website. If you have questions, please contact Tina Carew, Associate General Counsel, at 404.888.8549 or tcarew@fhlbatl.com.

Compliance / Regulatory Affairs

CFPB Issues Interpretive Rule on Authority to Resume MLA Exams

The Consumer Financial Protection Bureau (CFPB) issued an interpretive rule Wednesday that explains the basis for its authority to examine supervised financial institutions for compliance with the Military Lending Act (MLA).

This CFPB position reverses the agency’s previous position in 2018 that it did not have examination authority regarding the MLA. Based on this announcement, the CFPB will resume MLA-related examination activities for the financial institutions under its authority, such as credit unions with over $10 billion in assets.

Learn more

COVID-19 Pandemic Has Driven New Compliance Costs, According to Report

The COVID-19 pandemic has exacerbated the rising cost of compliance for financial institutions, a new report reveals. The pandemic has increased the opportunity for financial scams and wrongdoings as companies and individuals shift to online processes and transactions in view of social distancing rules and work-from-home arrangements, noted The Asset.

Globally, the estimated cost of financial crime compliance across all financial institutions reached $213.9 billion last year, surpassing the $180.9 billion recorded in 2019, data and analytics services provider LexisNexis Risk Solutions shared in its latest True Cost of Financial Crime Compliance Global Report.

Much of the sizeable expenditure increases came from Western Europe and the United States, which collectively represented 82.7% of the total projected costs. Germany and the U.S. bore the bulk of cost increases at $9.6 billion and $8.8 billion respectively, The Asset noted in its analysis.

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BSA 2.0? What a New IRS Proposal Could Mean for Credit Unions

CUNA and NAFCU have joined with other trade groups in sending a letter to the House raising concerns over a proposed new tax reporting requirement included under President Joe Biden's budget proposal.

Under the new reporting requirements, financial institutions would be required to file an annual information return for all business and personal accounts with more than $600 in their account. The annual reporting requirement would include information related to gross inflows and outflows, including the amount of cash, transfers to and from accounts held by the same owner, and transactions with foreign accounts.

In the letter, NAFCU, CUNA and the trades said proposals "to create new reporting requirements for financial institutions appear to impose cost and complexity that are not justified by the potential, and highly uncertain, benefits."

Learn more

Education & Training

Dollar Associates to Host Webinar on Daily Deposit Management

Dollar Associates will host a free webinar June 23 from 2 p.m.-3 p.m. ET to address the deposit influx at credit unions and how daily deposit management is becoming a priority.

According to Dollar Associates, an increasing number of credit unions have begun looking for ways to manage their balance sheet on the deposit side, and there is a growing movement in credit unions to put in place daily deposit management programs to serve depositors with more options and to take some deposits off balance sheet.

For information and to register, go here.

Financial Services / Economy

Up in ARMs: Outstanding Loans at CUs Increased During April, Savings Growth Slows

Credit union loans outstanding increased 0.6% in April, compared to a 0.1% increase in March of 2021 and a 0.3% increase in April of 2020, according to CUNA’s latest Monthly Credit Union Estimates.

Adjustable-rate mortgages led loan growth during the month, rising 1.2%, followed by fixed-rate mortgages and home equity loans (both rising 0.9%), used auto loans (0.6%), and other mortgage loans (0.04%).

Unsecured personal loans (-1.9), credit card loans (-1.0%), and new auto loans (-0.2%) declined during the month.

Credit union savings balances increased 1.7% in April, compared to a 4.4% increase in March of 2021 and a 4.6% increase in April of 2020. Share drafts led savings growth during the month, rising 5.9%, followed by money market accounts (2.0%), and regular shares (1.3%), CUNA reported.

Learn more

CU Loans Outstanding Increased 0.6% in April

Credit union loans outstanding increased 0.6% in April, compared to a 0.1% increase in March of 2021 and a 0.3% increase in April of 2020, according to CUNA’s latest Monthly Credit Union Estimates.

Adjustable-rate mortgages led loan growth during the month, rising 1.2%, followed by fixed-rate mortgages and home equity loans (both rising 0.9%), used auto loans (0.6%), and other mortgage loans (0.04%).

Unsecured personal loans (-1.9), credit card loans (-1.0%), and new auto loans (-0.2%) declined during the month.

Credit union savings balances increased 1.7% in April, compared to a 4.4% increase in March of 2021 and a 4.6% increase in April of 2020. Share drafts led savings growth during the month, rising 5.9%, followed by money market accounts (2.0%), and regular shares (1.3%).

Learn more

Auto Loan Delinquencies Plunge at US CUs in Q1

Auto loan delinquencies at U.S. credit unions continued to decline in the first quarter both on a linked-quarter basis and year over year.

At the end of March, U.S. credit unions reported $1.02 billion in delinquent new vehicle loans, a decline of 33.2% quarter over quarter and 41.8% year over year. Meanwhile, $2.50 billion in used car loans were delinquent as of March 31, down 40.5% year over year.

Approximately 0.92% of aggregate new and used car loans were delinquent at U.S. credit unions as of March 31, down from 1.40% and 1.57% at the end of 2020 and the first quarter of 2020, respectively.

Meanwhile, total auto loans at credit unions rose 1.7% year over year to $384.57 billion as of March 31, as used vehicle loans drove the growth with a 4.9% jump from the year-ago quarter. However, new auto loans continued to decline, reaching their lowest levels since the second quarter of 2018, as they dropped 3.4% from the first quarter of 2020. (S&P Global Market Intelligence, June 9)

As Auto Lending Shifts Online, CUs Feel Squeezed

U.S. credit unions are making fewer loans for new cars due to a change in consumer behavior combined with a shortage of inventory.

New-car loans at credit unions fell by $5 billion, or 3.4%, in the first quarter from a year earlier, according to data recently released by the National Credit Union Administration. By contrast, used-car loans at credit unions grew by $11.4 billion, or nearly 5% in the same period, signaling that the new-car segment is subject to pressures that don't affect adjacent categories.

The COVID-19 pandemic prompted buyers to purchase cars online instead of at a dealership, increasing the chance that the loan stays in-house with captives such as American Honda Finance, said Geoff Bacino, a credit union consultant and former NCUA board member.

“Credit unions wanting to be part of this new paradigm must navigate the online financing model or push prequalifying for members looking for a new car,” Bacino said. “Auto lending can be a good book of business for credit unions, but the model is changing and credit unions will have to adjust.”

The reality is that dealers control the majority of the auto lending business today, said Tim Scholten, president of the credit union consultancy Visible Progress.

Dealers have programs with specific lenders, who tend to be larger banks that specialize in auto lending, so unless a credit union is part of a dealer program it will get a shot at only a few loans, Scholten said. (American Banker, June 14)

CUs Keep Growing Membership, Led by PenFed's 17% YOY Jump

Membership at U.S. credit unions increased 3.6% year over year to 127.1 million as of March 31, and 19 of the 20 largest credit unions posted growth.

Tysons, Va.-based Pentagon FCU, also known as PenFed Credit Union, grew membership by the most among the 20 largest credit unions with a 17.0% year-over-year increase, as of March 31. Chicago-based Alliant CU posted the second-highest growth rate at 15.3%, followed by Vienna, Va.-based Navy FCU's 11.8% membership growth. (S&P Global Market Intelligence, June 15)

Fed Mulling Potentially Competing Payments Innovations

The Federal Reserve is developing a payments platform set to launch in a couple of years to help consumers complete transactions in real time. At the same time, the central bank is studying the potential creation of a digital currency, which would serve a similar purpose and maybe even more.

A growing number of observers are asking: Could one of those payment innovations ultimately make the other obsolete?

FedNow, planned to be up and running by 2023, is meant to dramatically improve the speed of the Fed's payment rails. But experts say a digital dollar offered by the central bank would do the same thing, while also enabling more programmable transactions and potentially being available to consumers who lack a bank account.

"If the digital dollar proves to be wildly successful, then I see FedNow going the way of the check a few years later,” said Stephen Aschettino, a partner at Reed Smith. “It'll still exist, and people will still use it, but it'll have much lower volume than I think it will initially.”

When FedNow comes online, any financial institution with an account at one of the Fed’s regional banks will be able to use the service to process real-time payments around the clock. That will enable customers to send and receive money instantly instead of waiting multiple business days for funds to clear.

Yet lately, the idea of a digital dollar has grabbed more attention. On Tuesday, a House Financial Services Committee task force held a hearing on the subject days after a similar hearing was held in the Senate Banking Committee. (American Banker, June 16)

New Research Finds a Retirement Crisis for Many Americans Made Worse by the Pandemic

Many in the U.S. are facing a retirement crisis that has only been made worse by the pandemic, according to new research.

COVID-19 has exacerbated financial stress, prompting many Americans to withdraw from their retirement savings. In fact, noted Clever Research, which conducted the poll, cited Pew Research showing the pandemic has accelerated rates of retirement among Baby Boomers, with 3.2 million more retiring in the third quarter of 2020 compared to the same period in 2019.

Saying it was seeking to better understand how Americans are preparing (or failing to prepare) for retirement, Clever said it surveyed 1,000 workers about their personal finances, retirement savings, and expectations for the future.

Among the key findings was that Americans of all ages generally expect to retire around age 66, but 40% of Boomers say they’ve put retirement plans on hold due to the pandemic.

Learn more

Americans Are Keeping Their Cars Longer, as Vehicle Age Hits 12 Years

The average age of vehicles on U.S. roadways rose to a record 12.1 years last year, as lofty prices and improved quality prompt owners to hold on to their cars longer.

It was the first time the average vehicle age rose above 12 years, according to data released Monday by research firm IHS Markit. While the average vehicle age has risen steadily over the last 15 years, the trend accelerated during the coronavirus pandemic partly because of a drop in new-car sales, IHS said.

The finding reflects the stronger value of vehicles throughout their life cycles, from higher new-vehicle prices Americans have been paying for years to steeper prices on the used-car lot, said Todd Campau, associate director of aftermarket solutions at IHS. Improved vehicle quality also is a factor, he said.

Whereas 20 years ago a car might have changed hands once or twice and lasted 100,000 miles, it is more common today for a car to have multiple owners and last for 200,000 miles or more, he said.

 

 



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