CURRENT Newsletter | 9 October 2020
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Headline News
- CUs See Important Win in FOM Case Before State Corporation Commission
- Virginia Credit Union League Endorses Mark Warner for Re-Election to Senate Seat
- Learn More About Your League's Services at Free Oct. 14 Webinar
- GWLN Virginia Sister Society Offering Virtual Programs on Leadership Oct. 15, 22
- It’s Back! Ignite 2021 Set for April 14-16 in Virginia Beach
- Registration Now Open for 2021 CUNA GAC, March 2-4
- ICU Day Oct. 15!
Compliance / Regulatory News
Financial Services / Economic News
- Loan Growth Resumes Pre-Pandemic Rate
- With Total Debt Topping at Least $20B, CUs May Need to Prepare for Members Needing Help with Utilities
- Will CFPB's QM Proposal Create New Housing Bubble?
- Bank of America Takes on Payday Lenders
Pandemic Response
- SBA, Treasury Announce Simpler PPP Forgiveness for Loans $50K or Less
- Trump Says Negotiations Have Restarted Over Relief, Stimulus Legislation
- Warning Signs in Loan Books: Scruffy Lawns, Shrinking Bank Accounts
Headline News
CUs See Important Win in FOM Case Before State Corporation Commission
Virginia’s credit union system scored a significant win yesterday when the State Corporation Commission hearing examiner presiding over an important field-of-membership case sided strongly with Virginia Credit Union and the League.
Senior Hearing Examiner Ann Berkebile’s recommendation to the SCC judges, who must now render a ruling in the case, asks the judges to adopt her report, uphold the Bureau of Financial Institutions’ decision to allow Virginia Credit Union to add the Medical Society of Virginia to its field-of-membership, and dismiss the case brought by the Virginia Bankers Association and several of its member banks.
Last year, the state Bureau of Financial Institutions approved a field-of-membership expansion for Virginia Credit Union to serve the Medical Society of Virginia, a 10,000-member association offering support and services to medical professionals across the Commonwealth.
The Virginia Bankers Association and several of its member banks objected, petitioning the State Corporation Commission to rehear and reconsider the decision of the Bureau of Financial Institutions to allow Virginia Credit Union to serve the group. The Commission granted the bankers' request to stay the expansion decision.
A two-day hearing was held in July 2020, with more than 10 hours of arguments and testimony. Your League is a party to the case. You can view case information here.
Virginia Credit Union’s original petition to add the Medical Society of Virginia to its field-of-membership was filed in 2018.
“While the long journey for this case is not over, this is an important win for credit unions,” noted Virginia Credit Union League President Rick Pillow. “The hearing examiner’s report found that BFI Commissioner Joe Face’s decision to grant Virginia Credit Union’s field-of-membership expansion was supported by credible evidence when it was issued and is consistent with the law. What’s more, the hearing examiner shot down other key arguments bankers made in the case, specifically the alleged harm to banks resulting from the FOM expansion and the Medical Society of Virginia’s ability to form a de novo credit union.”
Virginia Credit Union League Endorses Mark Warner for Re-Election to Senate Seat
The Virginia Credit Union League, the statewide trade association representing 116 not-for-profit credit unions and their 4 million member-owners residing in the Commonwealth, has endorsed Sen. Mark Warner in his re-election bid for the U.S. Senate.
“Sen. Warner is a friend and fan of member-owned credit unions, and we are proud to support his re-election to the U.S. Senate,” said Virginia Credit Union League President Rick Pillow. “He is a proven leader who has focused on bipartisan legislation to ensure Americans’ access to home loans, businesses’ access to credit and pandemic-relief loans, and important regulatory relief measures for community-based credit unions.”
The League's support of Sen. Warner dates back two decades to his successful run for Virginia governor in 2001. The League also endorsed Warner in 2008 and 2014, during his two successful U.S. Senate runs.
Learn More About Your League's Services at Free Oct. 14 Webinar
Have new staffers joined your team or do you have someone on your staff or Board who needs to learn more about the League and our products and services?
Please have them join us Oct. 14 for our popular CU Employee and Volunteer Orientation, scheduled as a FREE webinar (10 a.m. until noon).
- Get an overview of CU history, philosophy and the “Credit Union Difference.”
- Learn what resources and services the League and the Credit Union National Association offer credit unions.
- Get an overview of the credit union system - both national and local.
- Gain a better understanding of credit union key ratios and acronyms.
- Get an introduction to our credit union system partners.
- Hear how you can get involved in helping to make the credit union system stronger!
GWLN Virginia Sister Society Offering Virtual Programs on Leadership Oct. 15, 22
The Global Women’s Leadership Network Virginia Sister Society Committee is excited to offer a new virtual program in October. We are working with Lynda McNutt Foster, CEO of Cortex Leadership Consulting, to provide two virtual leadership events on “AGILITY - Today’s Leadership Super Power.
If you’re ready to build your AGILE SUPERPOWER, then this two-hour virtual program is for you! If you’re interested in participating in these events, please be prepared to:
- Participate in both large and small group discussions on camera.
- Share your challenges and learn from others.
- Find real solutions to build your leadership superpower!
Seating is limited. Please only register for one event.
View the event flyer here.
It’s Back! Ignite 2021 Set for April 14-16 in Virginia Beach
We’re excited to announce the return of IGNITE, the League Annual Meeting! Slated for April 14-16, 2021 in Virginia Beach, we’ve secured the newly opened Marriott Virginia Beach Oceanfront as our host hotel.
You can make hotel reservations now at this location: http://bit.ly/VACUL2021-hotel
Registration information for the event will be distributed in the coming weeks, so stay tuned!
Safety is our priority! We will continue to monitor guidance from local, state and federal officials regarding the safety of meetings during the COVID-19 pandemic.
The Marriott is hosting meetings and has established safety protocols based on guidance from state and federal officials.
You can learn more on their website: http://bit.ly/VACUL2021-hotel2
Registration Now Open for 2021 CUNA GAC, March 2-4
Registration for the 2021 CUNA Governmental Affairs Conference (GAC) is now open. Next year’s CUNA GAC will be held March 2-4 and delivered in real time using a full-feature, interactive digital platform.
The online format will integrate many of the conference’s most popular events including live speakers and breakout sessions, a virtual exhibit hall, and the opportunity to (virtually) Hill Hike.
ICU Day Oct. 15!
Next Thursday (Oct. 15), we'll celebrate the 72nd anniversary of International Credit Union Day, a day when credit unions around the world work together to celebrate not-for-profit financial cooperatives. This year’s global crisis has only served to reinforce the important role credit unions play around the world to more than 291 million members.
How appropriate that this year's theme is "Inspiring hope for a global community."
Thank you for all you do on behalf of your members! And please let us know how you plan to celebrate ICU Day!
Compliance / Regulatory News
InfoSight Adds FFIEC Cybersecurity Assessment Tool
October is Cybersecurity Month, but of course, you knew that! In recognition of the cybersecurity awareness, here’s a quick reminder that the Security channel on League InfoSight has added a page dedicated to the FFIEC Cybersecurity Assessment Tool.
Financial Services / Economic News
Loan Growth Resumes Pre-Pandemic Rate
Credit union loan balances have returned to the relatively weak growth rates that prevailed before the pandemic, according to a CUNA report released Tuesday.
However, CUNA data showed that first mortgages are the only major sector supporting the portfolio growth. A year ago, above-average growth also came from credit cards and unsecured personal term loans.
CUNA’s Credit Union Monthly Estimates report showed total portfolios stood at $1.18 trillion as of Aug. 31, up 6.6% from a year earlier. Total loan grew 6.4% from August 2018 to August 2019, falling to a low of 6.1% for November, then rose to a high of 6.9% in March on the precipice of the pandemic.
Overall portfolio growth slowed after the World Health Organization declared COVID-19 a pandemic on March 11, but not so much. The lows were a familiar 6.4% in April and June. The highs were 6.6% for May and August. (Credit Union Times, Oct. 6)
With Total Debt Topping at Least $20B, CUs May Need to Prepare for Members Needing Help with Utilities
Credit unions might want to prepare for an influx of members seeking help with utility payments in the coming months.
A new analysis has found debts related to electric and gas bills could reach or exceed $20 billion by the end of 2020—debts many “may never be able to repay.”
During the early months of the pandemic, a number of states put bans in place to prohibit power and utility companies from disconnecting customers behind on their bills. Now, just 21 states and the District of Columbia still have such disconnection bans in place.
That leaves roughly 179 million Americans at risk of losing service even as the economy continues sputtering, according to the National Energy Assistance Directors’ Association (NEADA), which is tracking the moratoria, the Washington Post reported.
Related: Dominion won’t disconnect customers despite end of state-ordered freeze
Will CFPB's QM Proposal Create New Housing Bubble?
The Consumer Financial Protection Bureau's proposed overhaul of its mortgage underwriting rule is alarming critics who say it will lead to another housing bubble. One commentator even claims the plan will violate fair-lending laws.
The agency in June proposed using a pricing threshold, instead of the current debt-to-income limit, to determine which loans are Qualified Mortgages and therefore safe from liability. Lenders have argued the current 43% DTI limit is too restrictive. The new plan would award QM status to loans capped at 150 basis points above the prime rate.
But free-market advocates and others worry the new QM standard will flood the market with unaffordable loans and boost defaults in a repeat of 2008. (American Banker, Oct. 8)
Bank of America Takes on Payday Lenders
Bank of America plans to offer some of its customers access to short-term loans, the latest blow to the payday lending industry.
Customers who have had checking accounts for more than a year can apply to borrow as much as $500 for a flat $5 fee, the Charlotte, N.C.-based lender said Thursday. The bank will require that the advance, available in increments of $100, be paid back in three equal installments over 90 days.
Even before the coronavirus pandemic, about 40% of U.S. adults said they would struggle to pay for an unexpected $400 expense such as a car repair or a small medical bill, according to a survey by the Federal Reserve. This year, unemployment has soared, leaving many consumers struggling to keep up with their bills. (American Banker, Oct. 8)
Related: Payday Lenders Say CFPB Loan Rules Are Illegal
Pandemic Response
SBA, Treasury Announce Simpler PPP Forgiveness for Loans $50K or Less
The Small Business Administration (SBA), in consultation with the Treasury Department, Thursday released a simpler loan forgiveness application for Paycheck Protection Program (PPP) loans of $50,000 or less. This action streamlines the PPP forgiveness process to provide financial and administrative relief to America’s smallest businesses while also ensuring sound stewardship of taxpayer dollars.
CUNA’s continues to support House and Senate bills that would provide simple forgiveness for PPP loans under $150,000 and “commonsense” liability protections for PPP lenders.
SBA and Treasury have also eased the burden on PPP lenders, allowing lenders to process forgiveness applications more swiftly.
Trump Says Negotiations Have Restarted Over Relief, Stimulus Legislation
The negotiations over a new package of stimulus and relief legislation President Trump said were over two days ago are now apparently back on.
“I shut down talks two days ago because they weren’t working out. Now they are starting to work out, we’re starting to have some very productive talks,” Trump said in an interview on Fox Business Network.
Trump said he believes House Speaker Nancy Pelosi (D-CA) “wants it to happen, because it’s so good for our country, we really need it.”
Such a package is of keen interest to credit unions, as it could include stimulus checks that would create a new flood of deposits for CUs, relief for beleaguered industries and local governments served by CUs, and extensions of various pieces of the CARES Act.
Various bills have been discussed on Capitol Hill with price tags ranging between $1.6 trillion and $2.2 trillion. The House earlier passed a bill with $3 trillion in spending.
Warning Signs in Loan Books: Scruffy Lawns, Shrinking Bank Accounts
Financial institutions are reviewing a wider range of borrower behavior to determine the amount of stress in their loan portfolios.
Delinquent loan payments, a sign of distress for everything from small business loans to mortgages, are largely being held in check by deferrals and other modifications. But problems linger, as evidenced by continued high unemployment and a cloudy economic outlook tied to the coronavirus pandemic.
Government programs created more blind spots for FIs. Though deferral requests are declining, a lack of any new stimulus is prompting more bankers to warn that credit quality could start to crumble in the coming few months. (American Banker, Oct. 8)
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