July 14, 2014
Monday Edition
President's point

This past Thursday I attended the second NCUA Listening Session in Chicago. I want to say thank you to Florida Credit Union CEO Mark Star and GTE Financial CEO Joe Brancucci for attending this event as well. It was a good meeting that was packed with more than 150 credit union officials with an additional 50 or so staff from NCUA. Chairman Debbie Matz made opening remarks, but her director of the Office of Examination and Insurance, Larry Fazio, answered most of the questions regarding the Risk-Based Capital proposal. He is clearly the subject expert at the agency and the chief architect of the proposal.

The Risk-Based Capital proposal dominated the meeting. I was encouraged that Chairman Matz said that all of the risk weights on investments, CUSOs, mortgages, and MBLs would see some positive changes. Plus, the implementation period on the final rule will be longer than the proposed 18 months. Since banks had five years under Basel, this is good news. She did not give a specific time frame.

The agency is also rewriting a portion of the proposed rule to make it clear that the additional capital requirements for individual credit unions will clearly show that it’s not a new power for the agency or examiners. It will show that the current process on capital requirements will be maintained which is the regional director approves then it goes to the full NCUA board.

Now there were some tense moments during the session. Many credit unions asked for a second comment period. This is obviously something that has been corresponded to the NCUA before the Listening Sessions. Chairman Matz continues to say that a second comment period will not be given unless significant changes are made. She referred to the Administrative Procedure Act which states the NCUA does not have to offer a second period unless substantial changes occur to the original draft rule as published. My hope is that she will see that credit unions clearly want a chance to see the re-written rule and have a chance to comment. The devil is in the details, right? Digging in on this procedure doesn’t make sense to me and may require us to reach out to members of Congress.

Chairman Matz once again said that credit unions don’t need to maintain a capital “buffer” above the proposed eight percent for adequate and 10.5 percent for well capitalized. She also said the agency has no plans to reduce these numbers. I feel like this will be a major sticking point if those numbers aren’t reduced and could result in legal challenges to the proposed rule. Chairman Matz also stated that CUNA’s estimate of $7 billion in new capital requirements if the proposed rule is adopted is way off and suggested the number will be more in the $700 million range. I feel like it will be more in the middle of those two numbers and that’s still a lot of capital to raise which will adversely affect credit unions and their members.

There is another Listening Session this week in Alexandria. Our SVP of Association Services Jared Ross will be in attendance. He will provide some thoughts on that meeting in Friday’s eSignal Daily. As I left Chicago, I thought about one statement the chairman said when asked about making the rule stricter than the banks received on Basel, she said “state regulators regulate for compliance. As both the regulator and the insurer, NCUA regulates for safety and soundness as well." I would venture to guess our state regulators would not agree with that statement. Credit unions have a long history of safety and soundness and came through the Great Recession in good shape, much better than the banks. I hope the 2,000 plus comment letters and the Listening Session comments will provide enough incentive for the NCUA to really take a hard look at the proposal and come back with meaningful changes.

Where’s Patrick: This week I will be on vacation, traveling back to Michigan. The President’s Point will take a week off and return July 21. That column will look at what was talked about at the summer AACUL meetings in Chicago. To see my tentative schedule for the next two weeks, click here.

Check out the President's Quarterly video on the League's YouTube channel.

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Rep. Miller thanks LSCU for help with MBL bill

Last week Rep. Jeff Miller (R-FL) introduced HR 5061 to amend the Federal Credit Union Act to exclude extensions of credit made to veterans from the definition of a member business loan. The League's Governmental Affairs team worked closely with Rep. Miller on the bill.

In his newsletter to constituents, Rep. Miller wrote, "I thank the League of Southeastern Credit Unions for their assistance in this effort and credit unions everywhere for the invaluable services they provide their members and our veterans." The bill has been referred to the House Committee on Financial Services.

Read more about the bill by visiting the LSCU Top Stories

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Housing fin. reform must ensure CU access to markets: CUNA

CUNA Interim President/CEO Bill Hampel's letter is addressed to Reps. John Delaney (D-MD), John Carney (D-DE), and James Himes (D-CT), sponsors of the Partnership to Improve Homeownership Act (H.R. 5055), which was introduced Thursday.

The bill would establish an insurance program through Ginnie Mae. All government-guaranteed single-family and multi-family mortgage-backed securities would be supported by a minimum of five percent private sector capital, standing in a first-loss position. The remaining 95 percent of the risk would be shared equally between Ginnie Mae and a private reinsurer.

It would also wind down Fannie Mae and Freddie Mac, revoking their charter but allowing them to be sold and recapitalized as entities with different business plans without any of their current unique powers.

In CUNA's letter, Hampel thanks the congressmen for their support of housing finance reform and praises their act for continuing the dialogue that will lead to the future mortgage finance system.

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Global study finds 1 in 6 U.S. students financially illiterate

In a recent international study that looked at the financial capabilities of 15-year-olds, U.S. teenagers scored below average in financial literacy, and roughly 17.8 percent of American students were found to be financially illiterate, meaning they failed to complete even the most basic of tasks.

"This group of students can, at best, recognize the difference between needs and wants, make simple decisions about everyday spending, recognize the purpose of everyday financial documents, such as an invoice, and apply single and basic numerical operations," found the Organization of Economic and Development, which administered the international assessment.

About 29,000 15-year-olds from 13 countries participated in the test, which gauged knowledge and financial skills such as reading and comprehending a bank statement, calculating the long-term cost of a loan or understanding how insurance works.

Americans scored just below the mean score of the 13 countries. The average score was 500, and U.S. teenagers averaged a 492.

Those from Shanghai-China posted the highest average score in financial literacy, above 600, with Belgium, Estonia, Australia, New Zealand, the Czech Republic and Poland behind them, though only 1 out of 10 students were able to handle complex financial situations across the board, including in the United States.

Students with bank accounts scored higher than those without them, the study found. In the United States, about 50 percent of 15-year-olds reported having bank accounts and in general performed better than those who didn't.

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2014's ICU Day website up and running

The 2014 International Credit Union Day (ICU) is Oct. 16 and will be here before you know it. Start your ICU Day celebration on the right foot by visiting the ICU Day website. There you can download and print your own version of the Local Service. Global Good.™ poster and find marketing tools to make sure this ICU Day is a success.

Check out this year's clothing line
While you are visiting the website be sure to check out this year's clothing line in the Celebrations Store. Get your order in by Aug. 29, and you'll be entered to win free shipping (up to $50 for five lucky shoppers) for your order! If you miss the Aug. 29 date, don't worry, you still can benefit from early-bird pricing through Sept.12.

Tweet your plans using #ICUDay
Join the conversation about ICU Day this year with the #ICUDay feed on Twitter. Share your ideas and plans with credit unions around the world and see all the heart-warming stories from 2013.

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In This Issue
Monday Edition
President's point
Rep. Miller thanks LSCU for help with MBL bill
Housing fin. reform must ensure CU access to markets: CUNA
Global study finds 1 in 6 U.S. students financially illiterate
2014's ICU Day website up and running
LSCU & Affiliates Media

2014 Southeast Credit Union Conference and Expo

The LSCU & Affiliates hosted the Southeast Credit Union Conference and Expo. The conference featured former Florida State Football Coach Bobby Bowden, National Credit Union Foundation Executive Director Gigi Hyland, CUNA Mutual Group CEO Bob Trunzo, and Filene Research Institute CEO Mark Meyer.

President's 2Q Video
The LSCU & Affiliates President/CEO Patrick La Pine provides an update from the second quarter and also looks ahead to the rest of the summer.

Upcoming Event Deadlines
TOMORROW Last Day to Register - LSCU BSA Essentials & Advanced Workshops - Mobile, AL
July 16 Last Day to Register - LSCU BSA Essentials & Advanced Workshops - Huntsville, AL
Aug. 1 Last Day to Register - Southeast Supervisory Committee Conference - Point Clear, AL
Aug. 5 Last Day for Early Bird Rate – LSCU Fall Regulatory Compliance Update – Tallahassee, FL
Aug. 7 Last Day for Early Bird Rate -  LSCU Fall Regulatory Compliance Update – Birmingham, AL

Sept. 8 Last Day to register - LSCU Fall Regulatory compliance Update - Birmingham, AL

Sept. 9 Last Day for Early Bird Rate – LSCU Collections & Bankruptcy School – Birmingham, AL

Sept. 10 Last Day to Register - LSCU Fall Regulatory Compliance Update - Birmingham, AL

Sept. 23 Last Day for Early Bird Rate – LSCU OFAC/BSA Basic & Advanced School – Tallahassee, FL

Sept. 23 Last Day for Early Bird Rate – LSCU Lending School – Birmingham, AL

Upcoming League Events
TODAY-16 - SE Regional Director's Conference
TODAY - The Rise of Bitcoin & Virtual Currencies
July 15 - New CFPB Income Verification Rules
July 16 - BSA Essentials & Advanced, Mobile
July 16-17 - Philosophy in Action Workshop Orlando
July 16 - Overdraft Protection Review
July 17 - BSA Essentials & Advanced, Huntsville AL
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