CURRENT Newsletter | 4 March 2021 - Virginia Credit Union League

Your League has almost wrapped up its virtual Hike-The-Hill events with our Congressional delegation. We secured appointments with nine lawmakers, which offered us the opportunity to lobby for credit union priorities, including various pandemic relief measures (troubled debt restructuring measures, simplifying PPP lending and extending borrowing authority for the Central Liquidity Facility); data security (federal legislation that would require application of a robust national data security and privacy standard to all entities that collect or hold personal data); and protection of credit unions’ tax status.

“These virtual meetings help us keep our issues in front of our lawmakers,” noted League President Rick Pillow, “and they also provided credit unions an opportunity to showcase their service to members and their communities during the past year.”

During the calls, credit union representatives shared how they’ve waived fees for members, created skip-a-pay and forbearance programs, provided emergency loans to members, and participated in the SBA’s PPP initiative to aid small businesses.

Lawmakers also heard from credit unions on the challenges they’ve experienced during the pandemic, including upticks in fraud.

Leagues across the nation are conducting virtual Hike-The-Hill events as part of CUNA’s Governmental Affairs Conference.

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CUNA GAC Coverage:

Scrutiny on Credit Unions’ Ability to Help Members: CUNA GAC

CUNA economists are predicting slow loan growth and tight margins this year even as they expect the economy to surge.

But whether or not their forecasts are exactly on the money, CUNA Chief Economist Mike Schenk said the more important measure will be how well credit unions are using their institutional and financial assets to improve financial well-being in their communities.

Schenk told attendees of a virtual CUNA GAC presentation Tuesday that credit unions are passing the test—so far.

Schenk presented a graph showing that consumer loans reported in the Fed’s G-19 Consumer Credit Report dropped from March to May with banks showing a sharper drop than credit unions. By September, credit union lending was 2% higher than March levels, while bank lending was 1% lower.

“Credit unions behaved the way policymakers expect them to behave in crisis situations,” Schenk said. “We were chartered after all with member ownership for a reason, because policymakers knew that if we had that different focus, we would treat capital differently. We would look at it as a war chest to be built up in good times and used in tough times. That’s exactly what we’ve done.”

While credit unions’ heritage is based on serving members, policymakers are increasingly taking a similar interest. And data shows there’s work to be done.

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General Assembly Adjourns; Lawmakers Create CDFI Fund

The General Assembly has officially adjourned, with a couple of measures of interest to credit unions being forwarded to the governor for his signature.

Your League was pleased to see the establishment of a Community Development Financial Institution (CDFI) fund for the state with $10 million in funding come July 1. The fund’s primary purpose would be to provide loans, grants and forgivable loans to small businesses or community revitalization real estate projects through community development credit unions and banks. Criteria for the program is to be developed by the Department of Housing and Community Development. The appropriation includes up to $300,000 for administrative overhead, including the hiring of up to three full-time employees.
Your League supports HB1964 (Del. Lamont Bagby) which provides the State Corporation Commission should more flexibility in working with troubled credit unions prior to insolvency.
Your League worked to amend HB2175 (Del. Luke Torian) to protect creditors’ interest with respect to judgment liens. This bill is identical to SB 1327. (Jennifer L. McClellan).

Your League also worked with a large group of stakeholders on companion bills HB2307 (Del. Cliff Hayes)/SB1392 (Sen. Dave Marsden), which have created a data privacy bill for consumer protection. Credit unions are exempted owing to our compliance with the Gramm Leach Bliley Act, but laws that touch on consumer data protection are obviously of keen interest to credit unions. The bill has been signed by the governor but has a delayed effective date of Jan. 1, 2023.

Virginia is the second state in the nation to adopt its own data protection rules.

The law, known as the Consumer Data Protection Act had broad support from the tech industry, and will allow residents of the commonwealth to opt out of having their data collected and sold, similar to a California law that went into effect last year. Under the new law, Virginia residents can also see what data companies have collected about them, and correct or delete it.

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Reminder: Final Days for CULAC Grand Sweepstakes!

With CUNA GAC comes the annual CULAC Grand Sweepstakes, CULAC’s largest fundraising event! The big change this year: the CULAC Grand Sweepstakes is going virtual!

The Sweepstakes offers contributors a unique opportunity to win dozens of prizes donated from our League partners and the grand prize - a Peloton Bike+ Basics and a one-year membership subscription.

The sweepstakes closes March 5! We need your help to meet last year’s record-setting total of $300,000. And remember, for each $10 contribution you make, you will receive one (1) entry into the CULAC Sweepstakes.

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Virtual Front-line, Teller Training Coming March 10; Register Now!

Your League is offering a dynamic, after-hours virtual training for your front-line employees on March 10. This interactive, virtual program focuses on six modules that remind the teller how important their job is, how significant their actions are, and tips on improving how they interact with members. This teller-training program is information-packed and attention-grabbing! Employees will leave this workshop with a renewed commitment to excel on the job.

DATE: March 10.
TIME: 5:30 p.m.-7:30 p.m.
EDUCATIONAL INVESTMENT: $39 for CUs less than $10 million in assets; $69 for CUs $10 million-$100 million; $99 for CUs with more than $100 million in assets.

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Registration Opens for Mid-Level Management Leadership Series

Focusing on mid-level managers is important to your credit union’s success. Your credit union's mid-level managers, branch managers, and department leads are often the primary point-of-contact for employees. Their management style, good or bad, has a tremendous impact on employee performance and workplace well-being. It is extremely important for credit unions to invest in the professional development and personal growth of their mid-level leaders.

The Mid-Level Management Leadership Series is a four-part virtual learning experience (March 10 & 11, April 14 & 28) specifically designed to provide mid-level leaders with the skills and tools they need to lead effectively, remove barriers and optimize performance.

Educational Investment: $425 per person. This series is hosted by our TRGroup partner, the Kentucky Credit Union League.

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League Hosting Compliance, Regulatory Update Webinar March 17

Join us March 17 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.

Diversity, Equity and Inclusion: Beyond the Buzz

Join Us March 18 for Webinar with NCUA Diversity Communications Specialist Marty Raines

Diversity, Equity, and Inclusion, or DEI, have been popping up in conversations, in the media, and on meeting agendas with increasing frequency lately. But beyond buzz words and catchphrases, what do they really mean?

In this March 18 webinar presentation (10 a.m.-11 a.m.), NCUA's Diversity Communications Specialist Marty Raines will define diversity, equity, and inclusion, and more importantly, share what they mean for our credit unions. Join us to learn how DEI contributes to talent, growth, and innovation, and to find out what the NCUA is doing to help you enhance your DEI efforts.

Learn How to Optimize Your Card Portfolio; Free Webinar March 25

Understanding key portfolio metrics, cardholder behavior and their relationship to your business is critical to longterm success. By integrating data from multiple sources, Card Expert^SM from Fiserv can enrich your business strategy and help build consumer engagement. The analytics you want and insights you need are brought to life through intuitive and configurable dashboards that provide a 360º view of your debit and credit card programs. Join us on March 25 for a free webinar to learn more about how you can put Card Expert to work for you.

Virginia Sister Society Hosting March 23 Virtual Event

The Virginia Sister Society of the Global Women’s Leadership Network is offering a free virtual program on March 23, offering participants an opportunity to connect with peers to discuss these five topics:

Managing Remote Employees Effectively
Professional Growth and Development
Transitioning From Crisis Management to Growth Management
Rebuilding Teams and Morale Post Pandemic
Leading With Strength, Even When You May Not Feel Strong

Advocacy / Governmental Affairs

New Bill Provides Some Exemptions from CU Commercial Loan Cap

Credit unions are cheering bipartisan legislation introduced Monday in the U.S. House of Representatives that is aimed at helping small businesses recover more quickly from the economic downturn caused by the coronavirus pandemic.

The bill, sponsored by Reps. Brad Sherman, D-Calif., and Brian Fitzpatrick, R-Pa., would allow credit unions to exempt any loans made to small businesses since March 13, 2020, from the member business lending cap. If it is passed the National Credit Union Administration would be required to issue implementing regulations that ensure a credit union’s safety and soundness are not impacted by the loans.

Similar legislation was introduced in the House and the Senate last year, with Sherman also attaching his name to the House bill.

The Credit Union National Association also applauded the legislation. It would help ensure “all available business credit is deployable during and after the pandemic so small businesses can get back to business and Main Street communities can recover quickly,” CUNA President and CEO Jim Nussle said in a press release. (American Banker, March 2)

Lenders Urge Congress to Postpone PPP Deadline American Banker

As the latest Paycheck Protection Program version approaches its expiration date on March 31, financial institutions are urging Congress to postpone the deadline, American Banker reported March 3.

A week ago, the Biden-Harris administration announced several planned reforms to the program, including changing the formula for calculating loan amounts, and the U.S. Small Business Administration released an interim final rule to that end.

Lenders are requesting an extension to sort through the recent changes. Lawmakers aim to hold a hearing in March to look into the formula issue, but it is unclear if they can intervene before the PPP's expiration date, the report said.

PPP lenders have additionally requested that the SBA prioritize retroactive payments after the formula's release, but the agency said it "lacked the administrative authority to implement such a change," according to the report.

Compliance / Regulatory Affairs

CFPB Proposes Delay of QM Amendment Compliance Date

The Consumer Financial Protection Bureau (CFPB) Wednesday proposed a rule that would delay the mandatory compliance date for the recently finalized amendments to the General QM definition.

The proposal would, in effect, extend the temporary GSE patch which is slated to expire upon the general QM definition’s mandatory compliance date. The mandatory compliance date would change from July 1, 2021 to Oct. 1, 2022 but would not change the rule’s implementation date of March 1, 2021. CUNA supported the amendments to the General QM, believing it is an important step in turning the General QM into a viable option for credit union originations. (CUNA’s News Now, March 3)

Pandemic Response

Pandemic Brought Record Consumer Complaints About Credit Bureaus

The three biggest credit reporting agencies caused more angst for consumers last year than even old standbys like debt collectors, a new study finds.

As the pandemic shredded the financial picture for many Americans, complaints about the behavior of financial companies to the Consumer Financial Protection Bureau more than doubled in 2020. That's according to the U.S. PIRG Education Fund, which studied grievances lodged with the CFPB last year.

Complaints about problems with financial companies spiked more than 50% to 444,551 in 2020, with more than half of the grievances lodged with the CFPB made against Experian, TransUnion and Equifax, according to the analysis.

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The Surprising Effect of the Pandemic On Credit Scores

The pandemic continues to have a surprising effect on the credit of Americans, as credit scores recently rose to record levels.

At the start of 2020, the average FICO credit score was 703. By October, the average FICO credit score had increased to 711, according to Experian FICO credit score data, MarketWatch reported.

“It makes sense when you consider government stimulus programs and relief measures, coupled with the reality that consumers have cut back on spending partly because of coronavirus restrictions and business shutdowns,” MarketWatch said.

“We are seeing promising signs in terms of how consumers are managing their credit histories against the backdrop of the COVID-19 pandemic,” Rod Griffin, senior director of consumer education and advocacy at Experian, told MarketWatch.

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Biden Agrees To Reduce Number Of Stimulus Checks, Lowering Income Cutoff

President Joe Biden and Senate Democrats have reportedly reached an agreement to reduce the number of stimulus checks sent out as part of the new relief bill while keeping the full $1,400 payments intact for those who received them in the prior rounds of relief, multiple news outlets reported—a major development in stimulus negotiations ahead of a crucial mid-March deadline to pass a new bill.

Individuals earning less than $75,000 annually and couples earning less than $150,000 will still receive the full $1,400 payment, as with the latest rounds of checks and as passed by the House on Saturday, the Washington Post reported, citing an unnamed Democratic source.

Individuals making $80,000 or more, and couples earning at least $160,000 will receive no stimulus check under the deal, down from $100,000 and $200,000, respectively, in the previous rounds of relief.

17 million. That’s about how many fewer Americans, including 5 million children, will receive stimulus checks in the updated proposal as compared to past rounds of relief, according to data from the Institute on Taxation and Economic Policy cited by the Washington Post.

Financial Services / Marketplace

As Millions of Americans Fall Behind on Mortgages, CFPB Nominee Wants to Stave Off "Looming Problems" for Homeowners

Staving off another housing crisis is a top priority for the nominee to head the Consumer Financial Protection Bureau. Rohit Chopra, President Joe Biden's pick for the job, told the Senate Banking Committee during a confirmation hearing Tuesday the agency charged with making sure financial institutions treat customers fairly needs to be ready for housing fallout due to the coronavirus pandemic.

"My intuition is we have to be ready for potentially looming problems when it comes to forbearances that might flip to foreclosures," said Chopra. "I don't want to see another foreclosure crisis in this country. And we need to do everything we can to make sure the laws are being followed and homeowners can navigate their options."

The agency on Monday released a report warning that more than 11 million families are at risk of losing their housing amid the coronavirus pandemic. The report says 8.8 million families are behind on rent and another 2.1 million families have fallen at least three months behind on their mortgages last year, an increase of 250 percent. Homeowners owe nearly $90 billion in missed payments, a level not seen since the height of the Great Recession. A federal ban on housing foreclosures runs through June, but it's unclear what will happen when it ends.

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Fed Digital Currency Gains Steam with Democrats in Power

Democratic leaders in the Biden administration and Congress are raising the volume on proposals for the Federal Reserve to issue a digital currency and establish government-backed accounts to expand banking options to underserved consumers.

It has been no secret that the Fed is studying the idea of issuing a digital dollar on the heels of other countries, such as China and Japan, actively testing their own central bank digital currencies.

But last month, Treasury Secretary Janet Yellen confirmed the administration's endorsement of a U.S.-backed digital currency, saying it could result in "faster, safer and cheaper payments" for U.S. residents who lack bank accounts.

On Monday, Senate Banking Committee Chairman Sherrod Brown, D-Ohio, who has championed legislation to create FedAccounts, urged the Fed to move ahead. He called the Fed's study of a central bank digital currency "a natural complement" to his plan for the U.S. to provide every citizen with a free account that they could access at banks, credit unions and post offices. (American Banker, March 3)

News About Credit Unions

Women CEOs of Smaller CUs to Launch New Support System

Women CEOs from 13 credit unions of asset sizes $300M or less from across the nation came together to launch the Credit Union Women’s Leadership Alliance (CUWLA), a critically important support system to share best practices, offer opportunities for mentorship, better support the communities they serve, and more.

“Access to a trusted support system is a key factor in the sustainability of smaller credit unions, that, I believe, are the backbone of the credit union movement,” said Lily Newfarmer, president/CEO of Tarrant County’s Credit Union, CUWLA Founder and CUWLA Board Chair.

CEOs of smaller credit unions face unique challenges that are often best understood by those in a similar position. Smaller credit unions have all the same responsibilities, bottom-line pressures, and compliance mandates of larger credit unions, but with the added burden of having to wear multiple hats. Many smaller credit unions are led by women, who must overcome their own set of hurdles within the financial services sector.

“By creating a support system such as CUWLA, women who run smaller credit unions will not only have opportunities to grow on a personal and professional level, but also have the needed tools to help them grow their credit unions and better serve their members,” Newfarmer added.

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America’s Credit Union Museum launches 'Moments in Credit Union History'

America’s Credit Union Museum, located in Manchester, New Hampshire, is where the history of the credit union movement lives on. Only in the museum will you find an incomparable collection of items, materials, and media, chronicling the significant people, events, records and milestones that form and document the basis of what credit unions are and what they do.

The graying of the credit union industry is no secret. We are losing stories of those real examples of the values, philosophy, struggles and successes of credit unions with every retirement or passing. The museum, seeking a way to preserve and share those stories for generations to come, began collecting “CU Stories” from credit unions across the nation.

And then came the Coronavirus pandemic and ‘stay-at-home’ orders.

The museum used the time away to partner with the Cooperative Credit Union Association to capture and produce “Moments in Credit Union History.” These segments, sponsored by CUNA Mutual Group, feature credit union professionals sharing unique memories from throughout their careers.

“Moments in Credit Union History” launches with a three-part interview featuring Dick Ensweiler, a ‘self-proclaimed credit union enthusiast’ with over 53 years in the credit union movement. Dick recalls his beginnings days in the movement and shares his passions serving the Latino community.

According to the museum’s Executive Director, Stephanie Smith, these stories “They capture the human side of the credit union movement, telling the stories in the voice of those who were there, and we share them to inspire future credit union leaders.”

Smith notes that 24 interviews have been completed for season one of “Moments in Credit Union History” and invites other credit union trailblazers to contact her at ssmith@acumuseum.org to share their memories and stories.

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News From Credit Unions

Chartway Federal Credit Union Announces 2021 - 2022 Board of Directors

Chartway Federal Credit Union is proud to announce that on February 23, 2021, the credit union held its 62nd Annual Meeting virtually. During this time, the following individuals were elected by acclamation to the board of directors: James S. Bibbs, E.L. “Lou” Gull, Jr., and Richard A. McGrath.

Following the Annual Meeting, the board held an organizational meeting and elected the following officers:

Capt. George E. Sauer III, USN (Ret.), chair
Richard A. McGrath, 1st vice chair
Nancy W. McMahon, 2nd vice chair
E. L. “Lou” Gull, Jr., secretary
Robert O. Holmes, treasurer

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UVA Community Credit Union Welcomes Joe Raichel as Chief Lending Officer

UVA Community Credit Union is thrilled to announce the hiring of Chief Lending Officer (CLO), Joe Raichel. The new position of CLO reports to credit union President/CEO, Alison DeTuncq and will support the credit union’s strategic direction of consumer, indirect, and real estate lending, as well as business lending and services.

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Risk Management

What Isn’t Sheltering in Place During Pandemic? Overdraft Lawsuits

Overdraft lawsuit firms are not “sheltering in place” during the pandemic. In fact, they have become more aggressive and creative, and are driving up the price tag on their demand letters—into six figures—reports one expert.

During CUNA’s virtual GAC, Cristina Miller, partner at Styskal, Wiese & Melchione, LLP and who works with CUs on overdraft cases, provided an outlook on what credit unions can expect this year from OD lawsuits, and what they can do to protect themselves in what is a quickly changing legal environment.

“The class-action lawyers have not sheltered in place,” Miller said. “They are innovative and are finding ways to get their plaintiffs to court. In fact, they have gotten more innovative during the shutdown. Too, we used to see demand letters asking for settlements in the $20,000 to $30,000 range. Now we are seeing letters demanding six figures.”

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Additional Resources:

CUNA Mutual Group Risk Alert: CUs Face New Threats of Lawsuits Related to Overdraft Fees (May 2020)
Overdraft / NSF Fee Demand Letters and Lawsuits Continue (May 2020)
Spike in Overdraft / NSF Fee Demand Letters Witnessed By Credit Unions (August 2019)
Overdraft / NSF Fee Lawsuits Again Target Credit Unions (April 2019)
Credit unions Face Overdraft Fee Lawsuits (July 2018)

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