CURRENT Newsletter | 2 April 2021 - Virginia Credit Union League

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.

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!

Condolences to Our League, CU Family

Sad news to report from the extended League and credit union family today… Mary Frances Wood, wife of the late Buddy Wood, a longtime League employee, died this week. Buddy and Mary Frances are fondly remembered by all here at the League and many longtime credit union employees and board members. Buddy served the League for more than 20 years and ran the League Service Corporation until his retirement in 1996.

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.

Lending Risks Webinar April 14

Have a question you’d like to ask a risk consultant on lending trends and risks? Join us for a live webinar/ question-and-answer session where industry experts will focus their time on addressing what’s top-of-mind for you and your credit union peers.

During this session, we’ll cover:

Latest loan scams and trends
Shift to digital and impact on lending
Consumer Skip-a-Pay Programs
Member authentication

With digital lending a common practice for many credit unions, please share your insights regarding your 2021 lending focus, risks & loss controls by responding to this short Lending Benchmark Survey. Your input will help develop more peer comparisons with the aggregated results being made available during upcoming lending sessions and resources within the Protection Resource Center. The Benchmark Survey is optional but should take only 5 minutes to complete.

Registration Now Open for April 14 Webinar on BSA/AML Compliance

Federally insured credit unions can get valuable information on Bank Secrecy Act and anti-money laundering compliance during a National Credit Union Administration webinar scheduled for April 14.

Online registration for the webinar, “Bank Secrecy Act Update,” is now open, and it is scheduled to begin at 2 p.m.

Learn more

Recording of Recent League DEI Webinar Now Available

Many thanks to everyone who joined us for the recent DEI session with NCUA’s Marty Raines! We know some of you could not participate on March 18, so we’re providing a recording of the virtual meeting here. The slide deck can be downloaded here.

The session covers how DEI contributes to talent, growth, and innovation, and details what NCUA is doing to help you enhance your DEI efforts. Also, a reminder that the No Nonsense Experience Workshop is coming in May! (See below.)

Let’s Have an Uncomfortable Conversation: Diversity, Inclusion & Bias

Where are you in your diversity journey? Find out by joining us for The No-Nonsense Experience, starting Thursday, May 6.

Offered as a one-hour, weekly course May 6-27, The No-Nonsense Experience will be guided by a team of expert facilitators from JP Enterprises, and will focus on building conversation skills around your thoughts, intentions, actions and behaviors regarding Diversity, Inclusion and Bias.

Learn more / Register

Congrats to Our Diamond Award Winners!

The following Virginia-based credit unions that are among the winners of the 2021 Diamond Awards, the CUNA Marketing & Business Development Council’s annual awards honoring credit unions for outstanding marketing and business development programs, initiatives, and campaigns: 1st Advantage Federal Credit Union, BayPort Credit Union, NextMark Credit Union and UVA Community Credit Union.

Learn more

Advocacy / Governmental Affairs

Bipartisan Bill to Ease CU Member Expulsion Debuts in House

House Financial Services Committee members have proposed legislation that would allow credit unions to more easily expel members who engage in abusive or illegal behavior.

Introduced by Tom Emmer, R-Minn., and Ed Perlmutter, D-Colo., the legislation would improve existing language in the Federal Credit Union Act related to member expulsion in order to protect credit unions, members and employees.

The legislation would allow an appeal that would provide due process for the accused member. Currently, federal credit unions are required to hold a special vote and obtain two-thirds approval from all members in order to expel a member.

It would also provide parity with several state-chartered credit union models or standard bylaws, which often have a "for cause" provision or board-adopted policy for expulsion.

Emmer and Perlmutter introduced similar legislation last year, and a similar bill was also introduced in the Senate. (American Banker, April 1)

Under Virginia Redistricting Schedule, Lawmakers Might Vote on New Maps at Height of Election Season

It’s already too late for Virginia to redraw political districts in time for the 2021 House of Delegates races, but the U.S. Census Bureau’s decision to speed up its delivery of new population data means Virginia lawmakers could be voting on future maps right before the November elections.

Census officials had told states to expect to get the data by late September, but Virginia officials say they now expect to receive it by the second week of August.

Under the newly created Virginia Redistricting Commission’s constitutional timeline, receipt of the data starts a 45-day clock for the commission to submit new legislative maps to the General Assembly for an up-or-down vote. Once the legislature received the proposed maps, it has 15 days to vote on them.

That means a vote on new state Senate and House of Delegates districts could come at a special session in October, a few weeks before the Nov. 2 election when all 100 House seats will be on the ballot. The ramifications of the process occurring during the peak political season are unclear, but it raises the possibility that some candidates will be voting on maps that make dramatic shifts in the districts they’re running in as they’re making their final pitches to voters.

Learn more

Compliance / Regulatory Affairs

CFPB Rescinds 7 Temporary COVID-related Policy Statements; Policies Provided FIs Flexibility During Pandemic

The Consumer Financial Protection Bureau (CFPB) announced Wednesday it is rescinding seven policy statements issued last year that provided temporary flexibilities to financial institutions in consumer financial markets including mortgages, credit reporting, credit cards, and prepaid cards. The seven rescissions, effective April 1, provide guidance to financial institutions on complying with their legal and regulatory obligations.

The CFPB is also rescinding its 2018 bulletin on supervisory communications and replacing it with a revised bulletin describing its use of matters requiring attention (MRAs) to effectively convey supervisory expectations.

"It’s disappointing the CFPB chose to rescind several temporary COVID-19 policy statements while the pandemic continues to affect the finances of millions of consumers," said CUNA Chief Advocacy Officer Ryan Donovan. "This kind of unilateral action, taken without the benefit of notice or an opportunity to provide feedback, reduces flexibility and undermines the Bureau's own appeal for service providers to make sizeable accommodations for consumers. Regardless, credit unions will continue to assist members in need as they have done throughout the duration of the pandemic.”

Learn more

How Racial Justice Push Sparked New CRA Law in Illinois

A new Illinois law that is designed to push state-regulated financial institutions (including credit unions) to invest more in underserved communities grew out of the racial justice movement that swept the nation last year.

It happened before lenders, which opposed the measure, knew what hit them. Gov. J.B. Pritzker, a Democrat, signed the Illinois Community Reinvestment Act on March 23, less than three months after it was introduced, as part of a wide-ranging set of reforms backed by the Illinois Legislative Black Caucus.

While the law’s supporters celebrated their swift victory, opponents in the financial services industry expressed frustration with a speedy legislative process that largely shut them out.

Under the law signed last week, state-chartered lenders, including credit unions, will have an obligation to meet the needs of the Illinois communities in which they operate. The Illinois Department of Financial and Professional Regulation will be responsible for writing rules that operationalize the measure, as well as for conducting examinations. (American Banker, March 30)

NOTE: Credit unions have long-maintained that CRA doesn’t make sense for us given our not-for-profit, cooperative structure, field-of-membership limitations, and the fact we exist only to serve the needs of members, without regard to where they fall on the economic spectrum. Importantly, CRA was imposed on commercial banks in the late 1970s because banks were found to widely engage in discriminatory lending practices. For decades, the banking industry “redlined” – formally, systematically and blatantly blocking credit extension in minority and lower-income communities throughout the country. Credit unions never engaged in such practices.

Pandemic Response

Lenders Want More Funding for Newly Extended PPP

Lenders who successfully lobbied for more time to make Paycheck Protection Program loans now want more money to be made available for the program.

Though the PPP’s expiration date was recently extended from March 31 to May 31, there are concerns the program’s remaining $66 billion of funding could run out before the end of April.

The amount of available funds could drop substantially if thousands of applications stalled by error codes make their way through the Small Business Administration’s portal. And a number of banks that stopped making PPP loans resumed operations when the extension was passed. (American Banker, April 1)

Financial Services / Economy

CFPB Urges Mortgage Servicers to Prepare for 'Tidal Wave' of Distress

The Consumer Financial Protection Bureau urged mortgage servicers to take all measures needed to prevent avoidable foreclosures when pandemic-related federal emergency mortgage protections expire.

The CFPB on April 1 issued a warning that the regulator expects servicers to be prepared to offer assistance to borrowers needing help. A servicer's overall effectiveness in helping consumers will be considered when the CFPB uses its discretion to address compliance issues, according to the statement.

As of January, about 2.7 million borrowers remained in forbearance programs, including about 2.1 million borrowers who are at least 90 days delinquent on their mortgage payments. An additional 242,000 mortgages not in forbearance programs were at least 90 days delinquent. Nearly 1.7 million borrowers will exit forbearance programs in September and the following months, with many of them a year or more behind on their mortgage payments, according to the CFPB news release.

"There is a tidal wave of distressed homeowners who will need help from their mortgage servicers in the coming months," said CFPB Acting Director Dave Uejio. "Responsible servicers should be preparing now."

The CFPB will closely monitor how servicers engage with borrowers, respond to borrower requests, and process applications for loss mitigation. The regulator will expect servicers to comply with foreclosure restrictions in Regulation X in order to ensure that all homeowners have an opportunity to save their homes before the start of the foreclosure process. (S&P Global Market Intelligence, April 1)

H&R Block, Walgreens' Banking Ventures Pose a Threat for US FIs

Banks could be facing new competition from a couple well-known brands as tax preparation company H&R Block Inc. and pharmacy store chain Walgreens Boots Alliance Inc. are looking to launch financial service products.

Through its partnership with MetaBank NA, H&R Block plans to offer a digital bank account targeting underbanked individuals and those who lack strong banking relationships. Walgreens announced on March 30 that it plans to offer a bank account for its customers through partnerships with InComm Payments and MetaBank. While the retail companies' widely recognized brands and nationwide footprints present a threat to banks, industry consultants said securing those banking relationships long term could prove to be a challenge.

"[Banks] absolutely are worried, and I think they should be worried," said Lane Martin, a partner at Capco, a management and technology consultancy focused on the financial services industry.

H&R Block and Walgreens' banking aspirations come at the same time retail giant Walmart Inc. gears up to launch a financial technology startup company.

"You can look at this as being about financial services and banking and payments, and that's true, but it's mainly about influencing the consumer," Sam Kilmer, a senior director at Cornerstone Advisors, said in an interview. "[Banks] should keep an eye on it [and think] 'Are my bank's payments top of wallet or is someone like Walgreens or Chime or H&R Block or Walmart winning that battle?'" (S&P Global Market Intelligence, April 1)

Among Young Adults, Credit Unions Lose Luster to Big Banks

Credit unions will continue to struggle with narrowing net interest margins this year, while the economy will have a rebound of historic proportions this year, according to an economist with Raddon, a research and advisory group for financial institutions based near Chicago.

But the greatest threat to credit unions is the weakness of their bond with consumers younger than 42, said Bill Handel, chief economist and general manager of Raddon, a subsidiary of Fiserv.

“Generational relevancy is probably the existential issue that the credit union industry faces,” Handel said. “The fact is we have lost that relevancy to the younger demographic.”

Credit unions emerged in a better light than banks in the Great Recession. But in the COVID-19 pandemic, Raddon’s research is showing consumers view big banks as more responsive and responded more to the customer, to the pandemic than credit unions or community banks.

Learn more

News From Credit Unions

Riverside Health System Employees Credit Union Now Operating as 1st Advantage Federal Credit Union

Riverside Health System Employees Credit Union (RHSECU) and 1st Advantage Federal Credit Union have completed the final step of its previously announced merger, converting all RHSECU member data to the back-end core processing system managed by 1st Advantage. The formerly named RHSECU branch located inside of the Riverside Regional Medical Center is open and operating as the 1st Advantage Riverside Branch.

Learn more

Arlington Community FCU Announces New Leadership Staff

Arlington Community Federal Credit Union announced multiple new hires of key members of the leadership team. Each of these leaders will be responsible for significant priority strategies for the organization. ACFCU’s three new leaders are as follows: Marty Weitzel, Director of Business Lending; Nancy Davis, Director of Member Experience; and Jean Allen, Real Estate Manager.

Learn more

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