CURRENT Newsletter | 30 October 2020 - Virginia Credit Union League

Credit unions are preparing their organization, staff, and facilities amid the upcoming election. Voting-leave rights, social political demonstrations, increased law presence, and business disruption are just a few questions being raised during these uncertain times.

Carefully assess policies, locations, and potential vulnerabilities while also considering additional preventative measures for employee and workplace safety.

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Register Now! CUNA’s Post-Election Webinar with CUNA Advocacy

Election day is right around the corner, but what happens after that? Join CUNA’s Leadership and Advocacy team on Nov. 5 at 2:30 p.m. to learn how the results from the 2020 election could impact your credit union and members.

>> Your vote counts! Just a reminder that early voting in Virginia ends Saturday, Oct. 31. Office hours and voting information for all County and City registrars is also available on the Department of Elections website. (Information is likely also available on the website of each individual county or city.)

For details on your polling place for Election Day, visit the Department of Elections website.

League Hosting Small CU Webinar Nov. 17 on Digital Marketing

Your League is helping host a webinar Nov. 17 as part of the CUNA-Leagues Small CU Webinar series. During this webinar, we will talk about the tactics credit unions need to implement for a robust digital marketing strategy.

In our current climate, it is more important than ever to be forward-thinking when it comes to digital marketing for your credit union. Topics covered will include:

Why is digital important to your marketing strategy?
How do I get started with digital marketing?
The top must-haves for successful digital marketing.

Programming in this series is FREE!

Presenters:
Brandon Frey, director of digital marketing (WebStrategies)
Kristin Harrison, director of business development (WebStrategies)

Moderator:
Nicole Widell, chief member engagement officer (VACUL)

InfoSight Adds FFIEC Cybersecurity Assessment Tool

As we wind down Cybersecurity Month, here’s a quick reminder that the Security channel on League InfoSight has added a page dedicated to the FFIEC Cybersecurity Assessment Tool.

Free Compliance Update Webinar Oct. 28

Attorney Jay Spruill, who coordinates the League Compliance Hotline through the Woods Roger law firm, provided a free webinar of compliance updates and hot topics on Wednesday. Jay covered recent regulatory changes at the state level and issues that should be on your radar for the remainder of 2020 and beyond.

Compliance / Regulatory Affairs

N.Y. Regulator First to Issue Climate Guidance for CUs, Banks

The New York State Department of Financial Services is calling on financial institutions it supervises to begin taking account of the financial risks posed by increasingly frequent and severe climate events.

In a letter to New York-regulated financial institutions, Superintendent of Financial Services Linda Lacewell outlined the agency's expectations, as well as the rationale behind them. The department is the first banking regulator in the U.S. to explicitly call for banks under its supervision to incorporate climate-related risks into their strategy, risk management and corporate governance.

“Climate change is happening now, and we have to take steps to manage the financial risks now,” Lacewell said in a press release Thursday. “We want to ensure that every institution is managing its own individual risks from climate change, which is critical for the safety and soundness of the financial services industry. By working with the industry and engaging in a dialogue on this serious issue, we are creating a road map for a more sustainable future.”

State and federal banking regulators have begun to speak out about the connection between serious weather events and the financial system, but until now they have stopped short of asking banks to stress test for climate risks.

That idea, which has already been adopted by central bankers abroad, seemed to be gaining more traction this year when the Commodity Futures Trading Commission released a report outlining the systemic financial risks posed by climate change and some steps to address those risks.

Among those steps, the CFTC subcommittee recommends that banking regulators work closely with the institutions they supervise to undertake climate risk stress testing pilots and explore potential opportunities to be had from a transition to a low-carbon economy. (American Banker, Oct. 29)

CUs Want CECL Changes, But NCUA's Hands Are Tied

While many in the credit union industry continue to call for an exemption from the Financial Accounting Standards Board’s current expected credit losses plan, industry groups want the National Credit Union Administration to make changes to its proposed CECL phase-in rule that allow for additional flexibility.

The agency approved a proposal in July that echoes similar action from federal bank regulators, giving credit unions a three-year phase-in period in the hopes of cushioning capital levels. Since then, NCUA Chairman Rodney Hood — along with other industry figures — has continued to call for credit unions to be made fully exempt from CECL requirements.

In comment letters submitted to the regulator after the NCUA proposal was issued, credit union representatives acknowledged that the regulator is largely subject to FASB’s decisions on the standard, but still found plenty of ways the proposal could be improved. (Credit Union Journal, Oct. 28)

NCUA Board Issues Proposal on Role of Supervisory Guidance

The NCUA board voted at a special meeting Wednesday to issue a joint interagency proposal on the role of supervisory guidance. The proposal was announced last week, and comments will be due within 60 days of its publication in the Federal Register.

Specifically, it codifies a September 2018 statement that supervisory guidance does not have the force and effect of law. Agencies issuing the rule include the Office of the Comptroller of the Currency, Federal Reserve, Federal Deposit Insurance Corporation and Consumer Financial Protection Bureau.

“By codifying the 2018 Statement, the proposed rule is intended to confirm that the agencies will continue to follow and respect the limits of administrative law in carrying out their supervisory responsibilities,” the proposal reads. “The 2018 Statement reiterated well-established law by stating that, unlike a law or regulation, supervisory guidance does not have the force and effect of law. As such, supervisory guidance does not create binding legal obligations for the public. The proposal would also clarify that the 2018 Statement, as amended, is binding on the agencies.”

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News About Credit Unions

CUs’ Hispanic/Latinx Outreach Success Part of Nov. 12 Webinar

Credit unions that have increased membership via outreach to Hispanic and Latinx communities also improved their business performance, a recent CUNA study found. This CUNA study will be reviewed in detail during a Nov. 12 webinar available free to CUNA members.

Specifically, CUNA conducted an evaluation of the effect of credit unions’ participation in Coopera Consulting’s Hispanic Outreach Program and Inclusiv’s “Juntos Avanzamos” (“Together we advance”) designation.

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Chairman Hood: COVID-19 Shows Need for Greater Financial Inclusion

National Credit Union Administration Chairman Rodney E. Hood delivered remarks this week at the annual Inclusiv Conference in support of a financial inclusion agenda that expands economic opportunity for all Americans.

“The COVID-19 pandemic has revealed a concerning aspect of American life; even in an age of relative plenty and prosperity, inequalities continue to plague our nation,” Chairman Hood said. “Consider the pandemic’s disproportionate impact on communities of color. That stems, in part, from economic opportunity, an area where leaders in the financial services industry can have a powerful impact by making a genuine commitment to a financial inclusion agenda.”

Hood cited the NCUA’s new financial inclusion initiative, ACCESS, as an example of what the agency is doing to foster greater financial inclusion, accessibility, and opportunity for all Americans.

“This initiative will bring together leaders across the NCUA to develop policies and programs in support of financial inclusion within the agency and the credit union system,” Hood said. “ACCESS will build on the earlier successes, including our Second Chance Initiative, PALS II Rule, and MDI Preservation Program, to expand and address the financial services, financial literacy, and employment needs of underserved and diverse communities.”

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News From Credit Unions

DCCU Supports COVID Relief with Employee 5K

Over the past two years, DuPont Community Credit Union (DCCU) has dedicated the Columbus Day weekend to a corporate volunteering activity. The pandemic meant DCCU needed to find an alternative that would provide employees with an opportunity to give back to the community in a meaningful way while allowing for social distancing.

DuPont Community Credit Union held its first Virtual 5K where employees were encouraged to walk, run, hike, or bike a 5K between Friday, Oct. 9 and Monday, Oct. 12 over the Columbus Day weekend. They could choose their location to complete the 5K and invite a friend or family member to participate with them. For each participant, DCCU would donate $25 to The Community Foundation’s COVID-19 Response Fund. A total of 259 people completed a 5K, comprised of 141 employees, 5 board members and volunteers, and 113 friends and family, bringing the donation total to $6,475.

“Despite being in the midst of a pandemic, supporting the community remains a focus of ours,” said Steve Elkins, DCCU’s President and CEO. “We found a creative way to work together without physically being together for an important cause.”

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DCCU Recognized for Support of Small Businesses Through PPP

The Virginia Credit Union League recently announced DuPont Community Credit Union (DCCU) as the winner of the 2020 Louise Herring Philosophy In Action Award in the $1 billion-plus asset-size category.

DCCU received first place for its approach to helping small businesses navigate the Paycheck Protection Program (PPP), a forgivable loan program delivered through the Small Business Administration (SBA) that offers financial support to businesses impacted by the pandemic.

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ABNB FCU Promotes Four Employees to New Positions

ABNB is proud to share the promotions of four exceptional employees. In their years at ABNB, these members of our team have demonstrated first-rate leadership abilities and commitment to improving our member experience in each of their respective departments.

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Economic / Financial Services News

COVID-19 Drives Used-Car Sales Boom

Used-car prices are up 23% from a year ago, and SUVs and trucks are up 17%. Demand shot up because so many consumers have switched from public transportation, ride-sharing, trains and planes to personal vehicles to avoid exposure to the COVID-19 virus. Government stimulus checks and the inability to spend much money on things like dining out have also goosed vehicle spending.

Prices of used cars have climbed by larger percentages than prices of trucks and SUVs because cars tend to be cheaper—which makes them more attractive to low-income workers, who have suffered the most economically during the pandemic. Also, inventories of used cars were already very low, because most new-vehicle buyers are choosing pickups and SUVs.

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U.S. Economy Recoups Two-Thirds of Ground Lost in First Half of 2020, But There is Still Far to Go

The U.S. economy grew at a record 7.4 percent between July and September and has recovered two-thirds of the ground it lost during the first half of the year. But economists remain wary, as the figures come just as the country is entering a period of rising coronavirus cases.

The data released Thursday morning by the Bureau of Economic Analysis was in line with expectations and stands in sharp contrast to the historic and devastating second-quarter plunge of 9 percent because of pandemic closures. As state shutdown measures eased over the summer and businesses brought people back to work, the economy and consumer spending looked vastly different, and much healthier, than they did between April and June.

But that doesn’t mean the economy has entirely healed, or that the pace at which the economy recovered in the third quarter will keep up in the final stretch of 2020, especially given a surge in cases of the novel coronavirus and a hazy timeline on whether another stimulus bill may be passed. (Washington Post, Oct. 29)

U.S. Consumer Sentiment Stalls in Final Weeks Before Election

U.S. consumer sentiment stalled in late October amid fears regarding a resurgent pandemic and political division among Americans ahead of the presidential election, according to new survey data from the University of Michigan showed.

The headline consumer sentiment index registered a final reading of 81.8 for October, virtually unchanged from the initial reading of 81.2. The latest index reading was also "insignificantly different" from September's 80.4, according to Surveys of Consumers Chief Economist Richard Curtin.

"Fear and loathing produced this false sense of stability," Curtin said. "Fears were generated by rising COVID infection and death rates, and loathing was generated by the hyper-partisanship that has driven the election to ideological extremes."

The index of consumer expectations increased month over month to 79.2 from 75.6, while the current economic conditions index fell to 85.9 from 87.8.

Curtin warned that the impact of the pandemic and political division will persist long after the election and may "permanently alter the economic and political landscape." (S&P Global Market Intelligence, Oct. 30)

ATM Fees Lowest They’ve Been in 15 Years

Out-of-network ATM fees are the lowest they have been in 15 years, with the average rate falling from $4.72 to $4.64, according to a Bankrate study cited in a CNBC report.

The dip is attributed to banks offering temporary fee waivers related to the COVID-19 pandemic. These include the surcharge banks levy on non-customers who use their ATMs, which is now at an average of $3.08, and the penalty banks charge customers for using another institution's ATM, which is at an average of $1.56.

Bankrate analyzed fees this summer on interest and non-interest-bearing accounts, as well as debit and ATM fees at 10 banks and credit unions in the 25 largest U.S. metro areas, according to the report.

The study showed Cleveland had the sixth-highest average of out-of-network ATM fees, at $4.91, just below No. 5 Washington, D.C. at $4.93 and just above No. 7 Pittsburgh and Phoenix, which were tied at $4.88. The highest fees recorded were in Atlanta, at $5.60, and the lowest fees were in Chicago at $4.11.

The study also revealed banks increased other types of fees during this time period. The average non-sufficient funds fee hit a new record of $33.47 this year, up from $33.36 in 2019 and $23.74 a decade ago. (ATM Marketplace, Oct. 23)

Risk Management

COVID-19 Money-Laundering, Terrorism-Financing Risks Covered in Upcoming Webinar

The World Council of Credit Unions’ COVID-19 Response Committee will host a webinar Nov. 19 at 10 a.m. (ET) on COVID-19 related money-laundering and terrorism-financing risks. This is the second in a series of bimonthly webinars hosted by the committee, of which CUNA is a member.

Registration is open for the webinar, which will feature representatives from the Financial Action Task Force (FATF), the independent inter-governmental body recognized for setting global standards for anti-money laundering (AML) and counter-terrorist financing (CFT) responsibilities, World Council of Credit Unions and AML Rightsource, a firm focused on helping financial institutions find Anti-Money Laundering (AML)/Bank Secrecy Act (BSA) and financial crimes compliance solutions.

It will feature presentations on:

The challenges, good practices and policy responses to new money laundering and terrorist financing threats and vulnerabilities arising from the COVID-19 crisis; and
How credit unions and other cooperative financial institutions must advocate for proportional treatment on AML/CFT regulations.

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Can CUs Keep Up with COVID's Evolving Phishing Threats?

With more credit union employees working from home than ever before, hackers are on the lookout for security weaknesses on home networks – often through email phishing schemes – that could compromise those institutions’ data.

The National Credit Union Administration cautioned the industry early in the pandemic about ongoing security risks, and the issue has taken on new relevance recently in the wake of more data breaches at retailers and October’s designation as Cybersecurity Awareness Month.

The annual True Cost of Fraud report from Lexis Nexis also indicates fraud – and its impact on the financial services sector – has increased since the pandemic began. The number of fraud attempts each month for the financial services sector has risen by 14% since last year, but the number of attempts that succeeded is up by 42%, according to the study, released earlier this month. The company’s research found that financial firms spend $3.64 for every dollar lost to fraud, a 12% increase from 2019.

The 2020 Phishing Trends Report from Keepnet Labs found that 90% of all successful cyberattacks begin via email. That's backed up by Specops Software, a Sweden-based provider of password management and authentication solutions that works with many U.S. credit unions, which said more than half of all businesses have seen a rise in cybercrime since working from home became the norm. (Credit Union Journal, Oct. 30)

Pandemic Response

Paid Pandemic Sick Leave Faces Unclear Future

Congress passed the Families First Coronavirus Response Act (FFCRA) at the onset of the coronavirus (COVID-19) pandemic, but it’s unclear whether it will be extended.

FFCRA provides paid sick leave and emergency relief through the Family and Medical Leave Act (FMLA) to allow people to take care of themselves or their families if they contract COVID-19, or care for their children if schools or childcare facilities are unavailable due to the virus.

FFCRA is effective through Dec. 31, 2020, but as daily reported cases continue to climb, there has been no indication if it will continue next year, says Bret Yaw, a specialist in labor and employment law at Ford & Harrison LLP.

“It’s yet to be seen whether Congress will extend the Families First Coronavirus Response Act,” Yaw says. “In March, the common thought was that the coronavirus would be around a little bit but we’d be in the clear by summer. That’s proven not to be the case.”

Yaw provided an update on labor and employment law during the 2020 CUNA HR & Organizational Development Council Virtual Conference Collection.

For organizations with less than 500 employees, Yaw says the paid sick leave portion of FFCRA applies to all employees and provides 80 hours, or the part-time equivalent, to employees who are unable to work or telework for reasons related to COVID-19 (i.e., the employee is sick or is caring for someone who is sick, or is caring for child because school or childcare is unavailable due to COVID-19 precautions).

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