CURRENT Newsletter | 23 July 2021 - Virginia Credit Union League

The National Credit Union Administration Board unanimously approved publication of a proposed rule that will offer a new regulatory framework designed to simplify risk-based capital requirements for “complex” credit unions.

Following NCUA Board action in January 2021, complex credit unions are now defined as those with more than $500 million in assets.

NCUA’s proposal would provide two alternatives to the adoption of risk-based capital requirements by complex credit unions set to become effective on Jan. 1, 2022.

The proposed approach would retain the 2015 risk-based capital rule but enable eligible complex FICUs to opt-in to a “Complex Credit Union Leverage Ratio” (CCULR) framework to meet all regulatory capital requirements. Under the CCULR approach, the NCUA anticipates that eligible credit unions would hold higher amounts of mandatory capital above the seven percent net worth ratio in exchange for an off-ramp from the RBC Rule.

“Though supportive of the Complex Credit Union Leverage Ratio approach, your League completely agrees with board member Hood’s assessment that the underlying risk-based capital framework passed in 2015 makes for a useful tool, but it should never have become a rule,” said League President/CEO Carrie Hunt. “That said, we’re grateful NCUA is working to provide a simplified method of capital adequacy for complex credit unions and that they’re addressing a number of technical issues with the RBC rule, which is showing its age.”

“Unfortunately, we face a very tight window between the end of the comment period for this rule, consideration by the board, and the RBC rule’s effective date of Jan. 1, 2022,” said Hunt. “There are almost two dozen questions on which NCUA seeks comment, so we strongly encourage credit unions to participate in the process.”

The 60-day comment period will begin once the proposed rule is published in the Federal Register.

Read the Proposed Rule

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League Outlines Priorities as General Assembly Readies for Special Session

Your League is asking Virginia lawmakers to consider three priorities when they convene Aug. 2 for a special session of the General Assembly.

In a letter to Sen. Janet Howell and Del. Luke Torian, chairs of the Appropriations Committees in their respective chambers, the League outlined its support of the following:

Unemployment Trust Fund – The League supports the use of an estimated $1.3 billion of federal emergency aid to replenish the state’s unemployment trust fund.
Department of Housing and Community Development (CDFIs) – We applaud the $10 million allocation in the biennial budget that establishes a Virginia Community Financial Institutions (CDFI) Fund. We understand the one-time appropriation is primarily intended for commercial purposes focusing on small businesses. There are 6 CDFI credit unions in Virginia of which the majority can benefit from additional CDFI funds or reallocated funds geared toward consumer lending such as affordable housing and transportation.
Broadband – The League supports the Commonwealth Connect Coalition and believes access to broadband is essential for economic development, quality health care, and educational opportunity. Credit unions and their members will benefit from universal broadband access.

Read the letter

League Gears Up for Next Phase of Fight in State-Level FOM Case

New pre-hearing filings have been entered in the state-level field-of-membership case now before the State Corporation Commission (SCC). The case has a formal hearing date of Oct. 29, 2021.

Your League is a party to the case involving a field-of-membership expansion for the state-chartered Virginia Credit Union. The Virginia Bankers Association and a number of its member banks objected to Virginia Credit Union being granted permission to serve the Medical Society of Virginia, a 10,000-member association offering support and services to medical professionals across the Commonwealth. VBA and the banks party to the case asked the State Corporation Commission to revisit the FOM expansion approval made by the Bureau of Financial Institutions and Commissioner Joe Face Jr.

The new filings include testimony from Heidi Lewis, a now-retired manager for two small, Virginia-based credit unions; Bill Hampel, retired Chief Economist and Policy Officer for the Credit Union National Association; and League Chief Advocacy Officer David Miles.

“The field-of-membership approval by BFI and Commissioner Face was entirely appropriate in this case,” noted the League’s David Miles. “Virginia Credit Union and the League have worked to buttress our arguments with expert testimony and the real-world experience of small credit unions.”

“We remain committed to upholding the dual-chartering system and fending off banker attacks in whatever form they take,” noted Miles. “We recognize that a loss in this case poses a significant threat in that it would have a chilling effect on state-chartered, multiple-common-bond credit unions’ pursuit of charter expansions. It would also weaken the state charter, a concern for us as advocates of a dual-chartering system grounded firmly in the principle of parity between the state and federal charters.”

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League Calls on Congress to Preserve CUs' Special Access on Military Bases

Your League wrote Sen. Tim Kaine this week, joining other credit union organizations seeking to preserve the Department of Defense’s discretionary authority to allow credit unions to use land and space on military bases at a nominal rate. CUNA, the Defense Credit Union Council, and the National Association of Federally Insured Credit Unions wrote to the Senate Armed Services Committee in advance of this week’s closed markup of the FY22 National Defense Authorization Act.

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League Urges NCUA to Return NOL to 1.3%

Your League urged NCUA this week to return the National Credit Union Share Insurance Fund's (NCUSIF) normal operating level (NOL) to the more normalized 1.3% or lower.

"We believe changes are warranted given the current economic landscape and pending resolution of the obligations associated with the corporate credit union asset management estates and NCUA Guaranteed Notes (NGN) Program," the letter reads.

"The industry is well capitalized and the NCUSIF meets all statutory solvency requirements. Therefore, the NOL should not be any higher than it absolutely needs to be. Virginia credit unions support a strong fund but believe that the fund need only reflect true risk in the system; as much money as possible should be in the hands of credit unions to deploy to their members."

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League Offers Cherry Blossom Run Entry Codes

As a proud sponsor of the Credit Union Cherry Blossom Ten Mile Run® (Sept. 12) benefitting Children’s Miracle Network Hospitals, your League has 20 Guaranteed Race Entry Codes for the Run or the 5K Run-Walk. Need an entry code?

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Advocacy Ask: Help Ensure Interchange Regs Aren’t Extended to Credit Cards

CUNA and the Leagues are working to ensure interchange regulation is not extended to credit card programs. Quantifying the costs and return on credit card programs and understanding the impact of potential regulations on credit unions and their members is critical to our urgent and proactive advocacy efforts. We need your help by providing this information for your credit union. Please complete the survey by July 30.

Take the Survey

#ilovemycreditunion Day July 30 - Let's Share the Power of the 'CU Difference!'

Are you in? On July 30, the credit union movement will come together across the social media stratosphere to spread inspiring and authentic conversation about our credit unions and system using the common hashtag, #ilovemycreditunion.

We’d love for Virginia-based credit unions to join the effort!

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How to Launch a Credit Card Program at Your CU: July 29 Webinar

Think you can't jump into the credit card space … think again! With FISERV's new Credit Choice solution, you can offer a competitive card for your members without having to be a card expert. Learn how you can partner with FISERV during our July 29 webinar on a top-of-wallet product for your members.

Winning the 'War for Talent' Among Peer-to-Peer Dialogues at Ignite 2021

For many credit unions, the 'War for Talent' is very real. Employee turnover doesn’t always involve high stakes, but it’s always expensive, note experts. So what strategies can you employ to retain your most valuable employees?

We'll look at a host of topics during a special peer-to-peer dialogue at Ignite 2021, including:

The Employee Experience (EX) through Journey Mapping
Why Employee Engagement (not just Employee Satisfaction) Really Matters
How to Equip Managers with Coaching Tips

Learn more about Ignite 2021

Young Professionals Advocacy Workshop Scheduled Aug. 4-6

Young credit union professionals will have the opportunity to learn from CUNA and League advocacy experts on the best ways to advocate for the credit union movement at CUNA’s Young Professional Advocacy Workshop. The three-day virtual training will take place Aug. 4-6.

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Advocacy / Governmental Affairs

Warren: CFPB Should Take a Closer Look at Overdraft Fees, Crypto

Massachusetts Sen. Elizabeth Warren is widely perceived as the architect of the Consumer Financial Protection Bureau and she used the occasion of the agency's 10th anniversary to call for more robust oversight of cryptocurrency and banks' overdraft practices.

“There are so many areas still where the bureau can make a difference,” the Democratic senator said during a virtual event.

“I think one of them is overdraft fees,” Warren said. “This is an area where there's a lot of predatory behavior by giant banks that make billions of dollars in profits and squeeze every last penny out of customers who are struggling.” (American Banker, July 20)

CUNA Urges Congress for PCA Forbearance

On Thursday, CUNA sent a letter to members of the Senate Banking, Housing and Urban Affairs Committee to ask for congressional help to improve Prompt Corrective Action (PCA) and make changes to the Central Liquidity Facility (CLF) to assist credit union members during the pandemic.

In a letter filed from CUNA to the committee, CUNA President/CEO Jim Nussle wrote, “The COVID-19 pandemic and ensuing economic crisis has impacted every aspect of society. Credit unions and their members have not been immune from the consequences, but credit unions have remained in a position to continue to serve their members through the crisis as a result of critical steps taken by Congress, the administration and the NCUA.”

BayPort Announces Winners of Third Annual $50,000 Debt Paydown Sweepstakes

BayPort Credit Union announced it has selected 10 winners in their annual $50,000 Debt Paydown Sweepstakes, raising awareness of and improving the financial performance wellness of members.

Spanning seven cities, this year’s 10 winners reflect BayPort’s expansive membership across both the Virginia Peninsula and Southside, from Gloucester County, Virginia, to Nags Head, North Carolina. From a Newport News Shipbuilding worker to a City of Chesapeake employee, ranging in age from 36 to 54, each received up to $5,000 to help reduce or pay off their BayPort debt.

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News About Credit Unions

New Report Reveals How Credit Union Boards Responded to Pandemic & DEI

CUES in Madison, Wis., released a special report last week on credit union board effectiveness during the pandemic and diversity, equity and inclusion on credit union boards.

The 21-page report, “COVID-19 and DEI: Revolution & Evolution in the Credit Union Community, The State of Credit Union Governance 2021,” drew on survey data collected from 182 leaders in the financial cooperatives sector. The majority of respondents were from credit unions located in the United States, representing those with both small and large assets. Participants primarily included board members, CEOs and senior staff.

Regarding DEI issues, the CUES report found credit union leaders were more comfortable and have more frequent conversations when their board had DEI policies in place.

However, seven out of the eight demographic groups are underrepresented on credit union boards, the CUES report found. The demographic groups included those under 65 years old, women, non-whites, persons under 40 years old, persons not born in the U.S. or Canada, veterans, persons with disabilities and Native Americans.

Loans Outstanding Increase in May vs. April; Membership Up 0.2%

Credit union loans outstanding increased 0.8% in May, an improvement over the 0.6% increase in April of 2021 but still trailing the 1.1% increase in May of 2020, according to CUNA’s latest Monthly Credit Union Estimates.

Credit card loans led loan growth during the month, rising 2.0%, followed by used auto loans (1.4%), fixed-rate mortgages (0.8%), new auto loans (0.5%), home equity loans, and unsecured personal loans (both rising 0.4%).

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Financial Services / Economy

Home Prices Hit Another Record High in June

Home sales inched slightly higher in June as the inventory of available homes to buy increased, but home prices still remained on a tear, according to a report from the National Association of Realtors.

Consistently low inventory has pushed prices higher over the past year. The median price for an existing home in June hit an all-time high of $363,300, up 23% over last year. That marks 112 straight months of year-over-year gains.

Risk Management

CISA Releases Alert, Analysis on Chinese Cyber Operations

The Cybersecurity and Infrastructure Agency (CISA), along with other federal law enforcement agencies, released an alert (AA21-200B) and analysis on Chinese state-sponsored cyberthreats to federal, state, and local governments, as well as private industry.

According to the agencies, Chinese state-sponsored cyber actors aggressively target U.S. and allied political, economic, military, educational, and critical infrastructure (CI) personnel and organizations to steal sensitive data, critical and emerging key technologies, intellectual property, and personally identifiable information (PII).

The alert provides information on tactics, techniques, and procedures used by Chinese state-sponsored cyber actors.

The analysis notes that in 2021, the U.S. Intelligence Community assessed that the People’s Republic of China presents a “prolific and effective cyber-espionage threat, possesses substantial cyberattack capabilities, and presents a growing influence threat.”

Learn more

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