CURRENT Newsletter | 23 June 2020 - Virginia Credit Union League

Virginia-based credit unions and the Virginia Credit Union League collectively donated $270,756 to Children's Miracle Network Hospitals in 2019, according to the hospitals. The funds raised marked the second-highest annual total in donations over the course of the partnership, which began in 2003. With last year’s totals, Virginia's credit unions have raised more than $3.5 million for Children's Miracle Network Hospitals since the beginning of the partnership.

"Every child deserves the hope and healing offered at children's hospitals across the commonwealth and nation," said Rick Pillow, president of the Virginia Credit Union League. "Virginia's credit unions are proud of the support we've been able to provide to our local hospitals."

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League Co-Hosting Webinar Series for Small CUs

Start adapting industry best practices to the unique challenges of your small credit union. CUNA-League System Small CU Webinar Series is a new live and recorded webinar series that’s free for CUNA and League members. It kicks off on Tuesday, August 4, 2020, and runs through Spring 2021. Get impactful best practices relevant to small credit unions on hot topics, including member experience, digital marketing, lending and more.

The first sessions include:

August 4, 2020: New member growth: Learn from the best in the industry
August 11, 2020: Revising your budget following COVID-19 Pandemic
August 18, 2020: Getting to know your members A LOT better and why DEI matters

See a full list of free webinars and register here.

Virginia to Enter Phase 3 of Re-Opening on July 1

Virginia will enter Phase Three of the state’s Forward Virginia reopening plan on July 1, Gov. Ralph Northam said Tuesday.

“This gives us about three-and-a-half weeks of Phase Two where we have been able to follow the data,” Northam said during his Tuesday COVID-19 press conference. “There continue to be surges in other states, and we are monitoring that very closely.”

Northam outlined Phase Three details last Thursday during his press conference.

Phase Three details will include:

Social gatherings of up to 250 people allowed.
Occupancy/capacity limits will be lifted on retail stores, restaurants, bars and breweries.
Face coverings will still be required in indoor public spaces.
Telework is still encouraged, when possible.

“It still means you’re safer at home, especially if you’re vulnerable” Northam said. “It means we’re still strongly encouraging teleworking. People still need to focus on physical distancing in all situations outside of their home. Face coverings are still the right thing to do in indoor, public spaces."

CUNA Mutual Group Offering Free Online Education Forum June 25

CUNA Mutual Group is offering the Moving Forward Forum, a free webinar on June 25. The Forum will feature three, 45-minute online sessions:

How Leveraging Agility Will Help You Meet Uncertainty Head-On
Leading is more complex than ever. We will share some of the strategies that are helping us lean into this uncertainty with confidence!
Maximize Credit Unions’ Non-Interest Income
Today’s unprecedented economic conditions will greatly impact credit unions’ Key Performance Indicators (KPIs), and, in particular, credit union earnings. In order to be there for your members and to keep regulators satisfied, credit unions must explore every aspect of their income statement to leverage additional income. Learn strategies to sustain and improve your Non-Interest Income revenue stream and explore industry best practices to help with your strategy.
Multicultural Consumers—The Good, The Bad and The Opportunity
Recent events have amplified differences in income, healthcare access and discrimination toward people of color that had been less visible to the general population, and this is presenting new challenges that will require novel solutions. Is your credit union ready to connect with this market?

CFPB Issues QM Proposals Addressing GSE Patch Expiration

The Consumer Financial Protection Bureau (CFPB) issued two Notices of Proposed Rulemaking (NPRMs) Monday to address the impending expiration of the Government-Sponsored Enterprises Patch (GSE Patch). CUNA has called on the CFPB to provide clarity on the future of the GSE Patch, which is scheduled to expire in January 2021 or when the GSEs (Fannie Mae and Freddie Mac) exit conservatorship, whichever comes first.

The NRPMs are:

A proposal to amend the General QM definition in Regulation Z to replace the DTI limit with a price-based approach. It also proposes that lenders take into account a consumer’s income, debt, and DTI ratio or residual income and verify the consumer’s income and debts; and
A proposal to amend Regulation Z to extend the GSE Patch to expire upon the effective date of a final rule regarding the first notice’s proposed amendments to the General QM loan definition in Regulation Z.

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Compliance / Regulatory Affairs News

NCUA Could Start Completing On-Site Exams as Early as July

The National Credit Union Administration will take a phased approach to returning employees to normal operations.

NCUA said Thursday that it developed the transition plan for returning to on-site operations, which could be as early as July 6. Conducting voluntary on-site examinations at credit unions is part of the plan's first phase.

The agency initially halted on-site exams in mid-March over fears of exposing employees to the coronavirus.

IRS Announces Relief for Taxpayers Affected by COVID-19 Who Take Retirement Plan Loans, Distributions

The Internal Revenue Service (IRS) has released Notice 2020-50 to help retirement plan participants affected by COVID-19/coronavirus take advantage of the CARES Act provisions providing enhanced access to plan distributions and plan loans.

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This tax relief and other information related to the effects of COVID-19 on federal income tax is available on the IRS Coronavirus Tax Relief pages of IRS.gov.

California CU Must Face Claim Over Website Accessibility, Court Rules

A California state appeals court has revived a visually impaired man’s disability discrimination case against San Diego County Credit Union over its website accessibility, an issue that broadly has presented liability issues for credit unions.

The plaintiff who brought the lawsuit in July 2017 has relied on special software that can turn visual information on a computer screen into sound. The complaint, which asserted a claim under California civil rights law, alleged the credit union’s website was incompatible with the software and posed “numerous access barriers.”

California’s Fourth Appellate District on Friday overturned a trial judge who had dismissed the complaint shortly before a scheduled trial. The appeal court’s decision doesn’t resolve the broader question of whether a website is a “public accommodation” within the meaning of the Americans with Disabilities Act, or ADA.

The appeals court concluded “ADA Title III liability can attach if the plaintiff shows a connection between the alleged disability discrimination on a website and the plaintiff’s ability to access and/or enjoy the benefits of the entity’s physical location.”

Lawsuits brought under the federal Americans with Disabilities Act alleging website inaccessibility have exploded in recent years. But the rising tide of federal litigation appears to have flattened, according to a recent report from the management-side law firm Seyfarth Shaw. In 2019, there were 2,256 ADA website-accessibility lawsuits filed in federal courts in 2019, just two fewer than the number of complaints filed in 2018. The report did not track the number of ADA-related suits in state courts.

The lawyers argued, as summarized by the appeals court, “that courts have no jurisdiction to require a private entity to alter its website to comply with the ADA because the United States Congress has the exclusive role to establish website standards, and Congress has not established such standards.”

“Even without these standards, the courts have the authority to interpret applicable ADA provisions and apply them to website accessibility issues,” the appeals court said. (Credit Union Times, June 22)

Education / Training

FFIEC to Host BSA/AML Examination Manual Webinar June 26

The Federal Financial Institutions Examination Council will host an interagency webinar on Friday, June 26, beginning at 1 p.m. (ET). The focus of this webinar is on the 2020 updates to the FFIEC’s BSA/AML Examination Manual.

Registration is now available. The event will be recorded and available within approximately five-business days after the webinar.

Specifically, staff will address the BSA/AML compliance program sections and examination procedures relating to:

Scoping and planning,
BSA/AML risk assessment,
Assessing the BSA/AML compliance program, and
Developing conclusions and finalizing the exam.

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African-American CU Coalition to Host New Virtual Event on Social Inequalities

The African-American Credit Union Coalition will host a new virtual event in August that will launch a series of discussions among credit union professionals about how they can address economic, health and social inequalities that affect minorities in their communities.

The virtual event, which will be held from Aug. 10 to Aug 14, is free and open to the public. Event and registration information is available at www.aacuc.org.

Economy / Financial Services

Majority of Americans Struggle to Minimize Debt During COVID-19

From work reduction to cuts in pay and job loss, millions of people have been impacted financially in the U.S. by the COVID-19 pandemic in one way or another. So it is not surprising that when it comes to reducing debt, a majority of Americans are currently finding it harder than ever to pare it down.

In a recent report released by BAI and the National Foundation for Credit Counseling (NFCC) from a joint Harris Poll on the topic of consumer spending and saving habits in light of COVID-19, the data showed that more than 55% of Americans have factors that have made it significantly more difficult to minimize their debt during this pandemic. The most common factor per the poll was the reduction of income.

Per the study, which polled 2,067 adults in the U.S. between May 12 and May 14, the data showed that this number has increased significantly since both March 2020 and March 2019. Other reason indicated in the survey for the difficulty in debt reduction included unexpected financial emergencies, job loss and/or the inability to find room in the budget to increase payments.

“The challenges related to debt reduction are amplified for those who have lost their jobs as a result of the pandemic,” NFCC President/CEO Rebecca Steele said. “Insufficient levels of emergency savings coupled with prolonged periods of unemployment make it more essential for the expansion of long-term debt management solutions provided by nonprofit credit counseling agencies.” (Credit Union Times, June 22)

Pandemic Response

Federal Housing Agencies Extend Foreclosure Moratorium to Aug. 31

The Federal Housing Finance Agency (FHFA) is extending its foreclosure and eviction moratorium for loans backed by Fannie Mae and Freddie Mac until at least August 31 to protect borrowers and renters during the coronavirus pandemic.

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Powell, Former Fed Chiefs Make the Case for More Government Aid

More than 100 economists, including former Federal Reserve chairs Ben Bernanke and Janet Yellen, have written the four top congressional leaders, urging Congress to pass another economic recovery package before most benefits from the CARES Act expire this summer.

The letter stresses the needs of lower income households — almost 40% of those earning less than $40,000 a year lost a job in March — and highlights the deeper economic and health crises suffered by minority communities compared to white communities.

“Black Americans have consistently faced unemployment rates twice that of White Americans” and black, Latino and Native American households account for a greater share of COVID-19 deaths, according to the letter sent to Sens. Mitch McConnell, R-Ky., and Charles Schumer, D-N.Y., and to Representatives Nancy Pelosi, D-Calif., and Kevin McCarthy, R-Calif.

A recent analysis by the Brookings Institution, based on data from the Census and the Centers for Disease Control, found that the age-adjusted COVID-19 death rate for black Americans is 3.6 times that of whites and for the Hispanic/Latino population 2.5 times that of whites.

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New PPP Tool Connects Small Business with Small-Asset Lenders

The Small Business Administration has launched a dedicated online tool for small businesses and non-profits to be matched with Community Development Financial Institutions (CDFIs), Minority Depository Institutions (MDIs) and other smaller asset size lenders in the Paycheck Protection Program (PPP).

SBA’s Lender Match is an additional resource for pandemic-affected small businesses who have not applied for or received an approved PPP loan to connect with lenders.The forgivable PPP loan is emergency relief assistance aimed at sustaining businesses and keeping employees on payroll. Lender Match does not accept Economic Injury Disaster Loan applications.

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Survey: Economic, Cultural Impact of Virus Concern Virginia Execs

A newly released survey finds that Virginia business and nonprofit leaders are concerned not only about the financial but the cultural impact of the COVID-19 pandemic.

The Culture Conundrum survey, which polled 365 leaders across Central Virginia, Hampton Roads and Northern Virginia, was conducted from May 19-31 by Williamsburg-based marketing research firm Brand Planning LLC and Richmond marketing firm Elevation on behalf of a coalition of six Virginia businesses and nonprofit organizations, including the Community Foundation for a greater Richmond, Richmond consulting firm Floricane, Richmond-based strategic communications firm The Hodges Partnership and Virginia Business.

Highlights from the survey include:

90% of people polled say that the pandemic has been a threat to their business, and 87% reported a loss of revenue.
Among nonprofit leaders, 47% say they are “extremely” concerned about revenue loss, while 37% of business leaders share that level of concern.
Among respondents’ top priorities in moving forward, 88% say they are working on engaging with employees to build morale; 88% are improving products and services; 84% are working to improve communication with internal and external stakeholders; and 81% are searching for new revenue sources.
89% of respondents say their current mindset is “determined,” while 73% say they’re concerned, and 62% feel stressed. On the positive side, 58% say they feel confident, and 43% are optimistic.

“There is no denying the economic impact that this crisis has had on businesses and nonprofits alike, but the story lingering beneath the surface is the effect the pandemic is having on our human connections — with customers, employees, board members, donors, vendors — all of the people that comprise our work communities,” said Cleve Corlett, president of Brand Planning, in a statement. “The survey exposes that loss and underscores the fact that workplace leaders recognize how fragile and important these cultural connections are to their organization.”

Although “this research tells a story of the virus’ impact in qualitative terms,” said John Sarvay, founder and president of Floricane, “there are real human stories behind these statistics, stories of hardship and struggle but also stories of resilience and perseverance.” Interaction is important for organizations’ missions, purposes and cultures, he added, a fact that many business executives and nonprofit leaders recognize now.

Sherrie Armstrong, president and CEO of the Community Foundation for a greater Richmond, which manages more than 1,200 charitable funds, said that although the pandemic has been “absolutely devastating to countless organizations throughout the commonwealth,” the survey has revealed “a powerful sense of grit and determination among our business and nonprofit leaders. It’s this kind of leadership that will not only help buffer the ultimate impact of the pandemic in Virginia but position these organizations to better compete in a post-COVID climate.”

The full report is available at TheCultureConundrum.com.

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Security / Fraud Prevention

Why a Hack at Wells Fargo Matters to Credit Unions

A sophisticated new fraud tactic initially aimed at Wells Fargo could pose risks for other financial institutions, including credit unions.

In the case of Wells, employees of large corporations are being targeted with phishing emails that impersonate the Wells Fargo security team and use innocent-looking calendar invitations as clickbait.

The fraudsters try to get message recipients to click on the invitations, which take them to a malicious website that resembles the Wells Fargo site, according to Abnormal Security, a cybersecurity research firm that says it discovered the attack.

At that site, victims are asked for sensitive information like the username, login, card PIN or number for their personal accounts held at Wells. As of Friday the campaign had targeted about 15,000 to 20,000 people, Abnormal Security said in a June 18 blog post. It’s unclear how many have been duped by the scam.

Credit unions could be at a higher risk for falling victim to this type of hack because many smaller institutions haven’t put the same protections in place some larger shops have out of a belief that hackers and other fraudsters are more inclined to go after bigger targets. (Credit Union Journal, June 23)

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