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|The Pulse (10-08-14)|
The Pulse (10-08-2014)
October 8, 2014 ● Volume 03, Issue 40
Credit Union News
This week, the Minnesota Department of Commerce named Marcia Armstrong Lewis as its new Chief Examiner. Lewis was recently part of the Minnesota Credit Union Network team, serving as Compliance & Audit Consultant from 2012-2014.
Lewis brings 25 years of financial institution experience to the Commerce Department, which includes hands-on experience in a diverse range of positions. Specifically, she has experience in risk management, internal auditing, training, compliance and operations. She also has worked to establish, develop and strengthen programs that facilitate credit union compliance with regulations. Lewis has been a certified compliance officer since 1997 and has been designated as a Certified Financial Services Auditor since 1998. In addition to her credit union experience, Lewis serves as an adjunct instructor at Globe University/Minnesota School of Business where she teaches business, business ethics, management, operations and entrepreneurship.
“With her background and ability to fully understand the intricacies of credit union operations, Marcia is an excellent choice to fill the Chief Examiner position at the Department of Commerce,” said MnCUN President & CEO Mark D. Cummins. “As we at the Network continue to deepen our relationship with our state regulators, Marcia will be a strong asset within Commerce staff, and we look forward to working with her in her new role.”
As Chief Examiner, Lewis will be responsible for reviewing and approving applications for charter conversions, mergers, bylaw amendments, and field of membership expansions. She will also review exams conducted by field staff and coordinate the state and federal examination schedule.
Lewis replaces Carl Schwartz, who retired from his position as Chief Examiner of the Minnesota Department of Commerce on Aug. 1. Commerce is also expected to announce its Program Director of Credit Unions in the near future, as well as additional examination staff.
Data breaches have become commonplace in today’s environment, impacting consumers, credit unions, and financial institutions nationwide. On the heels of the massive Target data breach announced in late 2013, the year 2014 included similar announcements from Home Depot – even larger than Target – as well as other breaches from SuperValu, Dairy Queen, Jimmy John’s and so many other retailers.
As credit unions know all too well, when data breaches occur the liability falls on the financial institution from which the cards have been issued – and fraud costs and related expenses aren’t reimbursed by retailers. According to the national survey performed by the Credit Union National Association (CUNA), the Target data breach alone cost credit unions more $30 million.
In the past week, MnCUN joined forces with CUNA to urge credit unions in Minnesota – and nationwide – to contact Congress about the need to take action to help prevent data breaches.
“Given the increasing frequency of the failure by merchants to protect consumers’ data – as well as the increasing notoriety in the news media of each event – now is the right time to begin pressing Congress on this issue, in order to set the stage for action in the coming weeks,” MnCUN President & CEO Mark D. Cummins Cummins said.
The latest reports of data breaches have added considerable weight to the contention that Congress must act, and as soon as possible. But to push Congress to act, it must hear from credit unions, loud and clearly, when it returns in November, and when it convenes anew early next year.
Credit unions are encouraged to take the following action steps as quickly as possible:
Also, CUNA recently launched a second national survey to determine the extent of damage done to credit unions by the Home Depot data breach. This information will be vital in convincing policymakers that changes must be made in how data breaches are handled and prevented. CUNA has asked for survey replies by Friday, Oct. 24, and all Minnesota credit unions should complete the survey to help capture the most accurate information about the impact of data breaches.
The following information will be needed to complete the survey:
By taking action, credit unions will tell Congress that they need to act to stop data breaches and will help raise awareness about the impact data breaches have on their members.
On Oct. 1, MnCUN held a conference call with more than 65 credit union participants from around the state to share information related to the barrage of recent data breaches. Minnesota credit unions last gathered to talk about the Target data breach on a call with MnCUN in February, and the more recent breaches at Home Depot, SuperValu, and Jimmy John’s have further illustrated the need for data security requirements for merchants.
MnCUN President & CEO Mark D. Cummins began the call by providing an overview of the costs incurred by credit unions and other financial institutions. Last month the Wall Street Journal reported that the financial industry has spent as much as $2,500 per employee on cybersecurity, as compared to $400 per employee in retail and consumer product companies.
Representing CUNA, Associate General Counsel for Special Projects Robin Cook talked about legislative activities and legal actions related to the breaches. CUNA is calling on Congress to ramp up security standards for merchants, which don’t have to comply with nearly as stringent of requirements as financial institutions, and the Network has been in constant contact with Congress about this issue.
Also participating in the call was Leah Work, CO-OP Financial Services Business Development Manager, Product & Technology. Work shared information about data security and the challenges and opportunities that technologies such as EMV, encryption and tokenization – such as Apple Pay – mean for the industry.
The call wrapped up with a Q&A session, along with the opportunity for individual credit unions to provide input about how they are handing data breaches.
In case you missed the call or would like to listen to all or portions of it again, a recording is available on the Data Breach page on the MnCUN website.
For compliance resources, see the cyber security resources page under regulatory compliance special topics.
NCUA recently issued a proposed rule regarding federal credit unions ownership of fixed assets. Under the proposal, federal credit unions with $1 million or more in assets would not be allowed to hold investments in fixed assets not exceeding 5 percent of the federal credit union’s shares and retained earnings unless the credit union implemented an effective fixed assets management plan. This fixed assets management program would replace the current requirement that a credit union receive a waiver from NCUA prior to exceeding the 5 percent limit. The board-approved fixed assets management program would need to include certain elements, including a written policy, internal controls and monitoring, and analysis.
In addition, the proposed rule would allow federal credit unions up to five years from the date of acquisition of any premises to meet the partial occupancy requirement regardless of whether the premises are improved or unimproved property.
Last week, the Minnesota Credit Union Network commented on NCUA’s proposed rule. MnCUN’s response – which incorporates input from the Regulatory Review Committee – agrees that the proposed rule, in general, provides regulatory relief to credit unions by permitting credit unions more flexibility in managing their own fixed assets. However, while applauding NCUA’s efforts, MnCUN also provided several suggestions for enhancing the proposal, such as: broadening the parameters of a credit union’s board-delegated authority for minor acquisitions of fixed assets, not just equipment; eliminating the analysis of future marketability requirement; and eliminating the full occupancy requirement or, in the alternative, a requirement of “substantial occupancy.”
Credit unions are encouraged to submit their own comment letters and are welcome to use MnCUN's letter as a guide. The comment due date for the proposed rule is Friday, Oct. 10. MnCUN’s comment letter can be found on the Out for Comment page of the Network website.
Last week, the Minnesota Credit Union Network (MnCUN) continued its statewide series of “Minnesota Minded” events in Rochester, featuring news about the growth Minnesota credit unions have experienced since the financial crisis.
The latest Minnesota Minded event included Mayo Employees Federal Credit Union CEO/Administrator Mary Hansen, Red Wing Credit Union President/CEO Aaron DeJong, HomeTown Credit Union President/CEO Kim Westphal, State Sen. David Senjem and MnCUN President & CEO Mark Cummins. The group highlighted credit union community involvement and financial education initiatives.
“Minnesota credit unions have seen record growth over the past two years due to consumers’ trust in their local credit unions,” said Cummins. “With financial education and community initiatives, credit unions help consumers develop skills for a stronger financial future.”
Sen. Senjem added, “Credit unions are based on trust. They are member-owned, member-directed and always put the needs of their members first.”
In 2013, Mayo Employees Federal Credit Union set out to
save members $18 million on loan payments during the year. Not only did the credit union meet its goal, but it also
exceeded it by nearly $1 million – saving members $18,970,687. Through educational seminars, credit score clinics and one-on-one meetings with loan officers, credit union members identified opportunities to refinance or consolidate debt. These activities saved members money over the life of their loans and helped them work toward a path of financial wellness.
“We continue to look for opportunities to help our members and their families benefit from this type of assistance,” said Hansen. “Our members can be confident that their credit union will always look out for their best interests. We are dedicated to our mission of ‘You care for them, we care for you.’”
Red Wing Credit Union’s DeJong provided another example of how credit unions focus on community. DeJong and his staff are involved with Red Wing Youth Outreach, a local organization dedicated to providing life skills education and mentoring for adolescents facing serious challenges.
“We teach young people how to establish regular savings habits and avoid the trap of payday loans,” said DeJong. “As they grow into adulthood, we encourage them to learn about and explore the services that credit unions can provide to help them plan a stronger financial future.”
Minnesota credit unions have also led the way in financial education by establishing branches in schools, including the state’s first run by HomeTown Credit Union at Owatonna High School. The credit union received the Distinguished Service Award from the Minnesota Business Educators for Outstanding Contribution to Business Education in 2012 for its efforts in developing the student branch.
“The main objective of our student-run branch is to provide students with the financial skills they’ll need for a successful future,” said Westphal. “The in-school branch gives students the opportunity to work and learn at the same time.”
MnCUN's Minnesota Minded press tour kicked off in August and has included press events in St. Paul and Brainerd. Editorial board meetings have also been held in Fargo and Moorhead. Visit the Minnesota Credit Union News Channel for videos, stories, and complete coverage of the press tour.
Minnesota credit unions have been back in the classroom for over a month, continuing a commitment to educating consumers about the basics of money management.
According to data recently released by the National Youth Involvement Board (NYIB), seven Minnesota credit unions reported teaching personal finance education to 5,446 students of varying ages during the 2013-2014 school year. These students were reached through nearly 200 financial education presentations in the classroom.
“Educating consumers about personal financial management is a fundamental mission of credit unions across the state,” said Dave Larson, Chair of the Minnesota Credit Union Foundation. “As the saying goes, ‘A rising tide lifts all boats.’ By educating members about budgeting and saving, and encouraging better borrowing and spending habits for all consumers, credit unions are able to have a significant impact on Minnesota’s financial future.”
While the numbers are impressive, Larson acknowledges that the data is significantly under-reported, since logging financial education presentations through the NYIB is not a requirement.
“I can say without hesitation that credit unions across the state are doing even more than the statistics reflect,” said Larson, encouraging credit unions to establish a regular habit of reporting classroom presentations to the NYIB.
Reporting financial education presentations is beneficial to the Minnesota Credit Union Network, CUNA and NYIB in providing information to state and federal elected officials. This quantitative data helps illustrate to lawmakers the credit union difference. Plus, in this day and age of bank attacks, credit unions need to showcase the activities that they do to improve their communities.
It is vital for credit unions to document and report such efforts! The information you submit is used to demonstrate how credit unions make a difference in the lives of young people and, at the same time, helps protect the unique status of credit unions as not-for-profit financial cooperatives.
Reporting your information helps NYIB recognize you, your credit union and the state. In addition, your educational efforts contribute to the decline in bankruptcies; benefiting consumers, credit unions, and the economy.
Any credit union employee or volunteer who makes a presentation to groups of students or youth audiences age 22 and younger can report it. Presentations can be conducted in a broad range of educational settings, including a traditional classroom, Scout troop meeting, church group, community group and others.
Acceptable presentations can be conducted on these and other consumer and financial related topics:
(Note: When presenting Junior Achievement modules or HSFPP presentations, each chapter should be recorded separately.)
To report presentations, visit www.nyib.org and log into the "reporting” section on the right side of the page. Additional information can be obtained in the reporting FAQ section of the NYIB website. With questions or for assistance in reporting appropriate presentations, contact NYIB North Central Regional Coordinator Janice Quigg.
It’s time to lace up your bowling shoes and join the Minnesota Credit Unions for Kids (MnCU4Kids) committee for its 7th annual Bowl-O-Rama on Thursday, Oct. 23. This event will provide credit union professionals and volunteers the opportunity to raise money for Gillette Children’s Specialty Healthcare and have fun doing it.
All proceeds from this fundraiser go to Gillette Children's Specialty Healthcare and its clinics around the state, which help kids with disabilities and chronic conditions. Gillette is Minnesota’s Children’s Miracle Network (CMN) designated hospital.
The Bowl-O-Rama begins at 11 a.m. at Stars & Strikes Entertainment Center in Wyoming, Minn. Participants will enjoy lunch, three games of bowling and prize drawings. Plus hear from a Gillette family that directly benefits from the contributions made through MnCU4Kids.
Registration for this event ends this Friday, Oct. 10.
Credit Unions in the News
Follow the links on the stories below to read more about the outstanding programs, new initiatives and well-deserved recognition received by your peers recently. Got news of your own? Send stories, pitches, press releases and published articles to MnCUN Director of Communications Connie Kuhn.