CURRENT Newsletter | 4 August 2020 - Virginia Credit Union League

The Virginia Safety and Health Codes Board formally adopted the Temporary Safety Standards and they are effective immediately. They expire at the end of the year unless repealed earlier or extended.

These standards are designed to supplement and enhance Virginia Occupational Safety and Health (VOSH) guidance and regulations and do not override the Governor’s orders. The regulations also indicate if an employer is complying with the CDC guidelines, the employer will be considered to be in compliance with these standards. Therefore, the question is whether your workplace is up to date with the CDC!

League, Woods Rogers Law Firm Partner on Webinar Covering Virginia's COVID Safety Standards, Leave Options

Aug. 5 Event is FREE to Member CUs

Your League, in partnership with Woods Rogers, will be offering a free webinar this Wednesday (Aug. 5) on two very important topics that we know you and your credit union leaders are discussing right now. With Virginia adopting updated workplace safety standards and many school districts announcing virtual learning for the upcoming school term, we want to help you navigate through these challenging times and overcome any uncertainties.

The webinar is scheduled for Wednesday, Aug. 5 (2 PM – 5 PM) with a 15-minute break.

This webinar will be broken into two sessions. You only have to register once and can attend either session or both. Both presentations will include a time of Q and A and open discussion. Please encourage your leadership team to join us.

Session 1: Workplace Safety Standards Updates (2 PM – 3:15 PM)
The Commonwealth of Virginia has adopted first-in-the-nation workplace safety standards for the COVID-19 Pandemic. The standards establish requirements for employers to control, prevent, and mitigate the spread of COVID-19. They apply to every employer, employee, and place of employment in Virginia. Woods Rogers attorneys will provide an overview of the new requirements.

Break: (3:15 PM – 3:30 PM)

Session 2: Where are COVID-19’s Leave Options Headed and What Will Continued to be Covered? (3:30 PM – 5:00 PM)
The Families First Coronavirus Response Act of 2020 made overnight changes to employee leave options. From emergency paid leave to expanded FMLA to interpreting the FLSA in the time of COVID-19, this session will review how to handle current leave issues—including questions about childcare as K-12 school districts announce a combination of in-person instruction and virtual studies for the upcoming school term. This webinar will help anticipate what you need to know when/if the COVID-19 laws expire and workplaces return to the “new normal”.

Virginia League Expands Partnership With African-American Credit Union Coalition

The Virginia Credit Union League is expanding its partnership with the African-American Credit Union Coalition, formally joining the organization as a member for 2020.

The League also offers a $2,000 scholarship that allows a Virginia-based credit union professional or official to attend AACUC’s annual conference. The scholarship was established in honor of Lynette Smith, a tireless credit union advocate and a champion for the credit union movement at both the state and national levels. She is a past chairwoman of the AACUC and current President/CEO of TruEnergy Federal Credit Union in Springfield, Va.

The pandemic has forced AACUC to retool its annual conference as a five-part virtual event, titled Commitment to Change Conversation Series. Your League will sponsor the first day’s session.

You can learn more about the event and register online at aacuc.org.

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League’s Free ‘Shift Happens’ Webinar Series Continues Aug. 11

Your League will offer an ongoing series of free webinars. Registration is now open for the first sessions, including:

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Action Alert: Support PPP Loan Forgiveness Legislation - S. 4117, H.R. 7777

Encourage credit union staff and your community’s small business to visit CUNA’s Grassroots Action Center and write to Congress in support of H.R. 7777 and S. 4117, the Paycheck Protection Program Small Business Forgiveness Act. This legislation will allow America's small business owners and Main Street financial institutions to remain focused on serving their communities rather than jumping through burdensome regulatory hurdles

Act Now!

League Providing Virtual Workshops on IRAs

This year will see the most significant changes to individual retirement accounts (IRAs) in more than a decade.

Your League is providing a two-day Essentials and Advanced Virtual IRA Workshop on Sept. 22 and 23 from 9 a.m. – 3:45 p.m. each day. This interactive workshop will be led by instructors presenting live with opportunities to pose questions and engage in the discussion.

Advocacy / Governmental Affairs News

Postal Banking Amendment Should be Rejected from House FSGG Bill

CUNA joined financial trade associations representing institutions in every state Thursday to urge House leadership to reject the inclusion of a postal banking provision in the Financial Services and General Government (FSGG) Appropriations Act for FY2021. An amendment offered by Reps. Bill Pascrell (D-N.J.) and Marcy Kaptur (D-Ohio) would provide $2 million to the U.S. Postal Service for postal banking pilot programs throughout the United States.

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Compliance / Regulatory News

Regulators Issue Guidance Before COVID-19 Loan Accommodation Periods End

The Federal Financial Institutions Examination Council outlined risk management and consumer protection principles that it says financial institutions should adhere to while working with affected borrowers as COVID-19-related loans near the end of initial accommodation periods.

The FFIEC, an interagency body comprised of five federal banking regulators, said monitoring and assessing loan accommodations on an ongoing basis allows a financial institution to timely detect any deterioration, including potential loss exposure. When executing an accommodation, financial institutions must provide "clear, accurate, and timely" information to borrowers and guarantors, the FFIEC said.

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NCUA Updates 2020 Supervisory Priorities

In a recent Letter to Credit Unions, the NCUA updated its 2020 supervisory priorities to reflect economic conditions that emerged in response to the COVID-19 pandemic, as well as various statutory and regulatory changes that have occurred since March 2020. With these revised priorities, the NCUA is focusing its examination activities on areas that pose elevated risk to the credit union industry and the National Credit Union Share Insurance Fund given the current environment.

NCUA Board Approves FOM Changes; Says It's 'Critical Step' to Serving Underserved

With a unanimous vote, the NCUA Board approved changes to its chartering and field-of-membership regulations.

The 3-0 vote approving the final rule on Thursday laid the foundation to enable better access to safe and affordable financial services for “community charter approvals, expansions or conversions.”

According to the NCUA, the final rule was a re-adoption of a previous provision which allowed “an applicant to designate a combined statistical area, or an individual, contiguous portion thereof, as a well-defined local community if the chosen area has a population of 2.5 million or fewer.” The initial provision was vacated in March 2018 by a U.S. District Court decision.

The rule adds a provision to the NCUA’s FOM regulation to address potential discrimination issues when it comes to the selection process for combined statistical areas as well as core-based statistical areas.

Chairman Rodney Hood said Thursday’s vote was “a critical step in the NCUA’s ongoing work to allow credit unions to alleviate some of the difficulties of low-income and underserved Americans in accessing financial services.”

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NCUA Chairman Hood Letter to Credit Unions Encouraging CUs to Take Diversity Self-Assessment

The National Credit Union Administration (NCUA) Chairman Rodney E. Hood wrote a letter (20-CU-23) to credit unions’ board and CEOs encouraging them to commit to taking NCUA’s Annual Voluntary Credit Union Diversity Self-Assessment as “a small but important step” to diversity and inclusion.

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CFPB Releases Two New HMDA FAQs

The CFPB has released two new Home Mortgage Disclosure Act (HMDA) FAQs in response to questions on reporting requirements for multiple data points, specifically if the information was not the dispositive factor in a credit union.

Pandemic Response

COVID-19 Planning Is Top Compliance Concern

Business continuity planning related to COVID-19 has replaced cybersecurity as a top concern for compliance officers at advisory firms, according to a just-released Investment Adviser Association poll.

The annual 2020 Investment Management Compliance Testing Survey, now in its 15th year, found that 384 compliance officers are most worried about business continuity plans, eclipsing cybersecurity, which had ranked as the top compliance concern for six consecutive years.

The 2020 survey was cosponsored by IAA, ACA Compliance Group and BrightSphere Investment Group.

Forty-three percent of the firms responding had $1 billion to under $10 billion in regulatory assets under management. Roughly half of the remaining respondents were from firms managing $10 billion or more, with the other half managing less than $1 billion.

The survey was conducted from April 20 through May 31.

While nearly two thirds (64%) of respondents cited COVID-19-related continuity planning as the hottest compliance topic, an overwhelming 88% reported that COVID-19 had caused no material impact to their firm. Eighty-one percent of responding firms reported that all of their employees were working from home.

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Survey Shows Financial Services Workers Financially Struggling the Most From COVID

New TransUnion research reported that more than half of consumers said their household has been financially impacted by COVID-19 and that they will not be able to pay their bills and loans in less than six weeks.

What’s more, consumers with a member in their household who works in restaurants, financial services, manufacturing or retail are struggling the most financially.

According to TransUnion’s online survey of more than 2,000 adults released last week, 69% of consumers indicated there is someone in their household who works in the financial services industry and was impacted by a job loss, reduction in work hours or loss of freelance work.

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Risk of Employee Mental Health Conditions Remains 'Alarmingly Elevated'

The mental health of the U.S. workforce improved slightly last month, but employees remain at much higher risk for problems like anxiety and depressive disorder due to the COVID-19 pandemic, according to Total Brain.

Total Brain, an app platform that provides computerized, self-monitoring assessments of the mental health of U.S. workers to both employers and health care providers, has compiled monthly samples of its data since February, in partnership with the National Alliance of Healthcare Purchaser Coalitions and One Mind at Work. In June, Total Brain found the number of employees at risk for mental health conditions remained “alarmingly elevated,” when compared to just before the pandemic.

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OIG Says Financial Institutions Reported Pervasive Fraud From COVID-19 Loan Program

Hundreds of financial institutions have reported more than 5,000 instances of suspected fraud involving hundreds of millions of dollars stemming from a Small Business Administration COVID-19 loan program, according to a new report released Tuesday by the SBA’s Office of Inspector General.

“Nearly 440 financial institutions ranging from small, local credit unions to major national institutions have contacted us to express serious concerns,” according to the OIG. “Our law enforcement partners report similar calls from financial institutions.”

In its 13-page report, the OIG highlighted that a federal credit union reported to the criminal division of the Department of Justice that the cooperative received $15 million in SBA deposits. The credit union audited 60 of the transactions and determined that 59 appeared to be fraudulent, according to the OIG report, which did not identify the credit union.

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Financial Services / Economic News

Economic Growth Likely Muted in Fall, Winter Due to Pandemic

CUNA’s latest Economic Update for July features CUNA Vice President, Diversity, Equity and Inclusion Samira Salem examining how the latest impacts of the COVID-19 pandemic will affect consumers through the end of next year.

“The economic recovery started as states opened up in late May and early June, but the latest surge of COVID-19 leading to around 70.0% of those states reversing re-opening,” she said. “This is certainly slowing economic activity and increasing the likelihood of a protracted recession.”

Salem said she expects economic growth to remain muted in the fall and winter months as “we adjust to this new normal of mask wearing, and social distancing and get more testing and tracing in place.

Overall CUNA economists project a 5.3% fall in relative GDP in 2020, followed by a growth of 4.0% in 2021 and a decreasing trend in U.S. unemployment, from around 10.0% end of 2020 to 8.0% end of 2021. To put this into perspective, the highest unemployment rate during the Great Recession registered 10.0%.

Salem noted unemployment is highest in Black and Latinx populations, which are more likely to work in low-wage jobs taking the biggest hit during pandemic.

“The brunt of the burden is falling on those least able to bear it,” she said, adding that women are also disproportionally impacted due to things like childcare concerns. “Recovering from job loss tends to take longer for these groups they spend more time looking for jobs and generally find jobs that pay less than the ones they’ve left.”

In mid-July the 30-year mortgage rate hit 2.98%, the lowest recorded rate.

“The housing market seems to be coming along, this is obviously helped by historically low interest rates,” Salem said. “Despite the fact there’s tight inventory and relatively high home prices, but the lower mortgage rates have particularly helped boost mortgages and refinances.”

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Google Checking Accounts: Why CUs, Banks Want In

Google has now signed up eight financial institutions as checking account partners, once again raising the question — what's in it for them?

The partners are a diverse group — three global firms (BBVA, BMO Financial Group and Citigroup), two community banks, an online bank for college students and two credit unions.

Neither side is forthcoming about who pays whom for the checking account relationships, or how much. And questions remain about consumer privacy issues.

But several of the new partners interviewed for this story said the marketing and technology-sharing opportunities that a relationship with a tech giant like Google offers are simply too great to pass up.

Emmett Higdon, director of digital banking at Javelin Strategy & Research, said financial institutions are most likely looking for what some experts call an innovation halo effect.

“They're looking to get the brand recognition of being aligned with Google,” he said.

Coastal Community Bank in Everett, Wash., says that's true but that there will be tangible benefits, also.

“For us, this is a great opportunity to leverage Google’s expertise with technology and offer enhanced customer experience that we could never dream of,” said Eric Sprink, president and CEO of the $1.2 billion-asset bank. “It gives a platform for our customers we couldn’t build ourselves in any reasonable time frame.”

For SEFCU, Stanford FCU and any other credit unions who align with the company, there could be hurdles ahead. Credit unions face field-of-membership limitations that restrict who they can serve, which could hamper those institutions' push to grow their member base.

These deals raise many questions around data privacy, the first being, how much account data will Google have access to? No one will answer this today. Google declined a request for an interview on Monday. But there are other questions, too.

On top of the privacy risks, banks and credit unions have always feared the threat of a major digital player like Google moving into banking.

Some analysts suggest Google could be working with these institutions simply to learn about the business of banking. (Credit Union Journal, Aug. 4)

News From Credit Unions

Chartway Federal Credit Union Looks Forward to Welcoming Cadmus Credit Union Members

Following approval from the National Credit Union Administration and the Virginia Bureau of Financial Institutions, Chartway Federal Credit Union (Chartway) is pleased to announce a July 31, 2020, merger is planned with Cadmus Credit Union (Cadmus).

Together, the $2.3 billion credit union will have a membership base of 190,000, more than 30 branches, and a full slate of online, mobile, video, and telephone banking services.

The merger follows an announcement by Cenveo Worldwide Ltd. to permanently close its Cadmus printing facility in Richmond, Va.

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News About Credit Unions

Mortgage Originations at CUs Up 30 Percent in 2019

S&P Global Market Intelligence is reporting that mortgage originations at credit unions was up almost 30 percent in 2019.

According to Home Mortgage Disclosure Data, credit union originated $177.3 billion in home mortgages in 2019. This was up from approximately $137 billion in 2018.

However, credit union market share of mortgages slipped from 6.9 percent in 2018 to 6.7 percent in 2019.

Navy Federal Credit Union (Vienna, VA) was the top credit union mortgage originator in 2019 funding $19.78 billion in mortgages. This was up 20.3 percent from the prior year. Navy FCU is the 19th largest mortgage lender in 2019.

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Hauptman Nomination Committee Vote Scheduled for Wednesday

The Senate Banking Committee will meet in executive session Wednesday to, among other nominees, vote on the nomination of Kyle Hauptman to serve on the NCUA board. Hauptman, current economic advisor to Sen. Tom Cotton (R-Ark.), would take the seat of current board member J. Mark McWatters.

Hauptman was nominated June 15 and testified before the committee July 21.

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International Credit Union Day Oct. 15

The World Council of Credit Unions and CUNA have announced the theme for 2020’s International Credit Union Day: “Inspiring hope for a global community.”

“This year's global health crisis has been trying for many communities around the world, but credit unions stayed true to their cooperative principles and stepped up during this time of economic uncertainty,” the organizations said. “Hope is a global resource that everyone has a right to feel and experience."

This year International CU Day is Oct. 15. For info, go here.

Security / Fraud Prevention

FinCEN Addresses Cybercrime Exploiting COVID-19

The Financial Crimes Enforcement Network (FinCEN) issued an advisory July 30 to alert financial institutions to potential indicators of cybercrime and cyber-enabled crime observed during the COVID-19 pandemic. Many illicit actors are engaged in fraudulent schemes that exploit vulnerabilities created by the pandemic, according to FinCEN.

The advisory contains descriptions of COVID-19-related malicious cyber activity and scams, associated financial red flag indicators, and information on reporting suspicious activity.

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