By The Way
The By The Way newsletter is a great way to keep Kentucky credit unions informed of the latest updates in governmental affairs, compliance and regulations, education and training. In addition, By the Way highlights the difference credit unions are making on a daily basis.
League Updates
CUNA Announcements
Educational Opportunities
Credit Union News
Compliance Updates
Career Opportunities
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A Message from the President
As we enter the holiday season, it’s a good time to stop and reflect. Reflect on the good and the challenging times this year has dealt us. We’ve been hit with a pandemic, a Presidential election that just seems to keep going and we’ve lost so many credit union friends and family members. Because we cannot take anything or anyone for granted, I want to take this time and say thank you to the people that make this association a huge success.
First of all, thank you to our League staff for all of their hard work, dedication, determination and for their positive attitudes. They continue to show me, every day, how much they love and appreciate their jobs and our credit unions.
I want to thank our Board of Directors for their continued support, patience and encouragement as we navigate through this time.
Lastly, I want to thank our member credit unions not only for their support of the League but for how they have stepped up to support and serve their staff, members and communities. While we continue to step back, pivot, be flexible and all the other catchphrases you want to insert – we should take a moment and be thankful. We are and will continue to be a very blessed industry.
On behalf of our Board and Staff, I want to wish everyone a very safe and Happy Thanksgiving.
Sincerely,
Debbie Painter
League President
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Governmental Affairs Update
November 2020 is one I am sure we are not likely to forget.
This month brought along, and sometimes acrimonious, election season to a close as we saw Former Vice-President and now President-Elect, Joe Biden, triumph at the national level, but saw Republican Super-Majorities grow even larger here in Kentucky. In addition, to growing the Republican Super-Majorities in both the State House and the State Senate, Kentuckians again re-elected Sen. McConnell and he was shortly thereafter re-elected by his colleagues to serve another term as the Senate Republican Leader. Whether or not he will serve as Majority or Minority Leader in the Senate is still to be determined with 2 Special Elections coming up early in January for both Georgia Senate seats.
Regardless of how the Georgia contests conclude, your League is in a great position to continue on our successful execution of advocacy initiatives and goals. Along with all of your efforts, the League has, and will, continue to cultivate positive relationships with those in power to enact and enforce laws and regulations which affect the Credit Union industry.
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Pre-Registration for CU Policy Pro Opens December 1st
The League’s Board of Directors unanimously approved another free service for all affiliated Kentucky credit unions in 2021. In conjunction with League InfoSight, we are now offering the CU PolicyPro compliance product as another value-added benefit of membership.
As the regulatory environment continues to be challenging, credit unions need policies that have been researched, developed and written by regulatory experts. CU PolicyPro provides a comprehensive suite of over 230 model policies plus a full policy management system that allows credit unions to customize any model content to fit the credit union’s own operations. This is an invaluable product that credit unions can use with to create and distribute policies to staff, board members and examiners.
Together with InfoSight, your credit union will have at its disposal a comprehensive suite of policies and regulatory compliance guidance written especially for credit unions by legal and financial experts.
We are pleased to be able to offer this very valuable product and hope you will take advantage of the benefits it will provide your credit union.
We will be allowing credit unions to pre-register for access to CU PolicyPro starting December 1st.
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Nominate someone for 2021 Credit Union Hero of the Year
A Credit Union Hero has a passion for putting the credit union philosophy of people helping people into action. Who comes to mind that deserves recognition for their contribution to your credit union members and local community? Give them the acknowledgment and appreciation they’ve earned by nominating them for Credit Union Magazine’s Credit Union Hero Award, sponsored by Symitar. Nominations are being accepted until Dec. 14.
What makes a Credit Union Hero? Qualified individuals:
- Are credit union system employees or volunteers
- Are working or retired
- Are unsung heroes, going above and beyond to promote credit union philosophy
- Exhibit a firm belief in and dedication to credit union principles
- Make a difference in their community
Share how your Credit Union Hero has made a difference.
SUBMIT YOUR NOMINATIONS
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Make our collective voice heard at CUNA GAC
With 2021 shaping up to be the most consequential advocacy year in a generation, we have too much to fight for to sit this one out. Every year CUNA Governmental Affairs Conference (GAC) brings together thousands of credit union advocates to launch the credit union advocacy agenda.
On March 2-4, 2021, we'll migrate CUNA GAC to a premium virtual platform, bringing together credit unions, Leagues, thought leaders and policymakers for a dynamic online experience that recreates many of the features you've come to expect and love.
REGISTER TODAY
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NEW! Board & Committee Learning Loft:
What's on the Economic Horizon for Remainder of 2020
When: December 1, 2020
Time: 4:00 p.m. – 5:30 p.m. EST (3:00 p.m. - 5:30 p.m. CST)
Where: Virtual Learning Experience
Educational Investment: FREE for board directors and volunteers of League-affiliated credit unions
The Board & Committee Learning Loft is a new, informal virtual learning experience created with credit union volunteers in mind. Join us periodically for special sessions on a variety of topics pertinent to your volunteer leadership role at your credit union.
CUNA Mutual Group Chief Economist Steve Rick is in high demand these days discussing the state of our nation's economy and where it's headed for the remainder of 2020 -- and into 2021.
Join Steve as he discusses:
- The top trends credit unions need to be aware of and planning for right now;
- The main takeaways when it comes to the current state of the mortgage market;
- The top trends credit unions should be attentive to as they look ahead to 2021.
About the Speaker: Steve Rick
 Steve Rick is a director and the chief economist for CUNA Mutual Group. He is an economic researcher, analyst and forecaster with an expertise in consumer markets and the credit union industry. Rick's forecasts are the starting point for the strategic planning process and help create a clear understanding of the underlying trends and links between the general economy, the financial services industry, and CUNA Mutual Group's policy owners. Rick was previously the senior economist for CUNA's Economics & Statistics Department for 22 years.
In addition to his work at CUNA Mutual Group, he serves on the Board of Directors of the University of Wisconsin Credit Union (UWCU). The owner of a B.S. in Finance and a B.S, an M/S and a Ph.D in Economics, Rick shares his fiscal and economic expertise as a senior lecturer with the Economics Department at the University of Wisconsin-Madison and the facilitator/instructor of CUNA Management School's Stanford Bank Game.
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How to Prepare for the Coming Delinquency Tsunami
An Exclusive Session Just for Kentucky!
When: December 2, 2020
Time: 10:00 a.m. – 11:30 a.m. EST (9:00 a.m. - 10:30 a.m. CST)
Where: Virtual Learning Experience
Educational Investment:
- Under $100 million assets: $99 per Credit Union
- $100M+: $199 per Credit Union
Investment includes unlimited attendees from the same credit union.
Don’t let your credit union’s current delinquency numbers and low bankruptcy filings give you a false sense of security. Most experts agree there is a tidal wave of defaults coming your way! High unemployment, new waves of layoffs and a fractured economy will not bring good news. It won’t be long before the stimulus money, modifications, forbearances and other pandemic rescue options are exhausted and the dormant delinquencies arise.
Even during the best of times, collections is a very tricky proposition. An effective collections process must include sound methods for communicating with troubled members, resolving the delinquency, recovering collateral on defaulted loans and doing all of this while following an increasing variety of state and federal laws, rules and regulations.
Join credit union attorney and collections guru David Reed for an exciting virtual training event as he highlights the latest techniques, tips and trends to maximize your collections function in the new world order.
This session will cover:
- Conducting a Collections Inventory and Risk Assessment
- New Methods for Scoring Default Risks
- Mining for Member Service Opportunities
- Appreciating Workout Options – From Consumer Loans to Real Estate
- Refining Repossession and Foreclosure Processes
About the Speaker: David Reed
David Reed’s training philosophy is centered on the member service approach to effective collections. In his 25 plus years of law practice he has been a bankruptcy and collections attorney for debtors AND credit unions. When he “saw the light”, he went to work for a credit union and became a collections manager AND then general counsel! He may be the only attorney training credit unions today who has seen collections and bankruptcy from both the members’ and credit unions’ perspectives.
Attorney, author, consultant and nationally recognized speaker, David A. Reed is a partner in the law firm of Reed and Jolly, PLLC. Through Reed and Jolly, Mr. Reed provides guidance to credit unions concerning a variety of matters including the establishment and revision of credit union policies and procedures, organizational compliance, collections, security, contractual agreements, regulatory matters and corporate governance. His engaging speaking style has garnered him status as a regular lecturer nationwide on topics such as regulatory compliance, consumer lending, bankruptcy and collections.
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Registration for the Emerging Leaders Program is now Open
Are you ready to LEAD?
The Emerging Leaders Program is an extensive leadership program focused on developing credit union professionals who demonstrate leadership potential.
About the Emerging Leaders Program
- 9-month commitment
- 6 one-day leadership development face-to-face workshops
- 1 community service-learning group project
- Limited to 20 leaders
Why apply?
- Develop and build leadership skills.
- Share and grow with peers.
- Learn from nationally recognized presenters and industry experts.
For questions or additional information regarding the Emerging Leaders Program, contact Katie Means at [email protected].
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Abound Credit Union Continues Support of Veterans with Over $60,000 in Donations
Abound Credit Union, a long-term partner of USA Cares, is proud to continue supporting their mission to assist military families in crisis and help them create a foundation for long-term stability. Despite the challenges caused by the pandemic, Abound has already donated $60,000 year-to-date and is currently on track to donate another $5,000 before year-end.
These funds directly help military families remain in their homes, pay their utility bills, and buy food and fuel. So far, Abound Credit Union and its members have helped approximately 60 military families in 2020 alone. USA Cares is ensuring that the most vulnerable members of our military and veteran communities are not forgotten. In 2020, this has taken on new importance as quarantines and social distancing can be especially difficult for veterans suffering from depression.
“Abound Credit Union continues to be one of our strongest partners at a time when the military and veteran communities we serve need support more than ever,” said Trace Chesser, President/CEO of USA Cares. “The credit union’s commitment to serving the military and providing financial education aligns with our own mission of acting as the support system veterans and their families need. We’re so pleased to have them as a long-term partner.”
USA Cares originally started as a grassroots partnership of the Fort Knox Chapter of the Association of the United States Army, Kroger Food Stores – Mid-South Division, and WAVE-3 TV, the NBC affiliate in Louisville. Abound Credit Union, formerly known as Fort Knox Federal Credit Union, was one of the earliest supporters of USA Cares and continues to give towards their mission along with many of the credit union’s generous members.
“We’re proud of our ongoing partnership with USA Cares, which directly supports veterans and their families,” said Ray Springsteen, Abound Credit Union President and CEO. “The strength of the credit union, which has been serving military and civilian members for 70 years, allows us to support organizations like USA Cares, provide financial education programs, and create more possibilities for Kentuckians.”
A portion of the donations to the organization were dues paid by Abound Credit Union for new credit union members who joined as part of the USA Cares Patriot Club field of membership. In 2014, USA Cares launched the Patriot Club which is open to anyone wishing to support the organization’s mission and donate to supporting military families. All dues and gifts to the Patriot Club go directly to sustain USA Cares’ support of military families.
For more information about USA Cares, please visit www.usacares.org.
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Commonwealth Credit Union Offering Enrich and iGrad Financial Wellness Platform to Members and Students
Commonwealth Credit Union has partnered with San Diego-based financial education company iGrad to make the award-winning Enrich™ financial wellness platform and the student-focused iGrad™ financial wellness platform available to its members as well as more than 30,000 University of Louisville, Metropolitan College and Kentucky high school students.
In alignment with the Kentucky Financial Empowerment Commission, Commonwealth Credit Union’s goal is to make financial education more accessible to Kentuckians.
“iGrad’s focus on behavioral economics provides countless tools and resources to help members and students understand their relationship with money and ways to navigate both their strengths and challenges. Both the iGrad and Enrich platforms have a contemporary social media feel, easy accessibility, relevant personalization, depth of content, and user-friendly design, all of which appeal to members and school partners.” - Mary Handiboe, Commonwealth Credit Union Financial Education Supervisor
CCU Financial Education Supervisor Mary Handiboe said that if high school and college students can develop thoughtfulness towards money management while they are in school, they may have greater potential to create future financial success.
“iGrad’s focus on behavioral economics provides countless tools and resources to help members and students understand their relationship with money and ways to navigate both their strengths and challenges,” Handiboe said.
After undergoing an extensive selection process, CCU selected iGrad due to its robust content, personalization possibilities and ability to align with Commonwealth Credit Union’s mission of bettering lives, she said.
Kentucky recently passed a bill requiring high school students complete financial literacy programming prior to graduation. Handiboe said that teachers are finding the site extremely helpful.
“Both the iGrad and Enrich platforms have a contemporary social media feel, easy accessibility, relevant personalization, depth of content, and user-friendly design, all of which appeal to members and school partners,” Handiboe said.
Enrich is used by more than 20,000 employers and more than 300 financial institutions nationwide to provide behavior-changing financial literacy education, tools and resources to employees, customers and members. iGrad is currently used by more than 600 colleges and universities, including Columbia, Duke, Ohio State and Arizona State.
Recognized with the 2019 Eddy Award for Financial Wellness by Pensions & Investments, Enrich offers adaptive, interactive financial education content on topics including student loan debt, mortgages, budgeting, investing, retirement, long-term health care and more.
An April National Endowment for Financial Education (NEFE) survey illustrated the already devastating impact of the pandemic on personal finances. Eighty-eight percent of those surveyed said that the pandemic is causing increased financial stress.[1]
Data collected from Enrich shows that as financial understanding increases, stress level drops.
“The Enrich and iGrad platforms can help people of all income levels and in all stages of life,” LaBreche said. “Commonwealth Credit Union is demonstrating the importance of financial wellness by offering Enrich and iGrad to members and Kentucky college and high school students, who can access the platform virtually and receive customized financial education specific to their needs and situation.”
Research shows that financial literacy programs can lower student loan defaults, decrease financial stress, improve academic performance and teach students how to manage their finances for a lifetime.
1 - https://www.nefe.org/news/polls/2020/survey-covid-19-crisisi-causing-financial-stress.aspx
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League Compliance Update
November marked my first full month since adding Compliance to my portfolio at the League and let me just say how much I have enjoyed the opportunity to learn and to work more closely with many of you in answering your tough questions. This month, much of the discussion shifted away from the rapid-response of the past few months and towards a focus on the impacts that are coming in the future yet to be felt by members and financial institutions.
In addition, this month is also likely to bring the confirmation of Kyle Hauptman (not yet confirmed at time of writing) to the NCUA Board, replacing the seat currently held by Member McWatters. With an eye to the future, and the likely elevation of Member Harper to the Chairman’s seat, the League hosted a Zoom call on the 20th with Board Member Harper and discussed a variety of issues including Credit Unions’ actions and reactions to the sharp increase in member deposits that they have experienced this year.
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OCC Report Identifies Top Emerging Risks for Financial Institutions
The Office of the Comptroller of the Currency (OCC) has released a new report in which it said its top “emerging risk” is credit risk.
The OCC said in its Semiannual Risk Perspective for Fall 2020 report that credit risk “is increasing as the economic downturn impacts customer ability to service debts.”
The report seeks to provide an overview of the risks facing the national banks and federal savings associations regulated by the OCC and is based on data through June 30. It focuses on four primary areas: operating environment, bank performance, special topics in emerging risk, and trends in key risks.
In addition to credit risk, the OCCU report said other risks identified include:
- Strategic risk due to the historically low rate environment, potential credit stress and their effect on bank profitability.
- Elevated operational risk as financial institutions respond to altered work environments and an evolving and complex operating environment. Cybersecurity threats contribute as a key driver of the heightened operational risk environment, the OCC said.
- Rising compliance risk due to a combination of altered work environments, and the requirement to quickly operationalize federal, state, and proprietary programs designed to support businesses and consumers.
The full report can be found here.
Source: CU Today
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Fed’s Vice Chair Offers Update on Fed’s New Strategy Framework
Federal Reserve Vice Chair Richard Clarida has provided an update on the Federal Open Market Committee's new strategy framework – adopted in August and reported by CUToday.info – to better reflect economic changes and monetary policy approaches.
Richard Clarida
Throughout the coronavirus pandemic, the Fed has made clear it will use every tool it has available and essentially further said there will be no limits on the liquidity it will make available as it responds to the coronavirus pandemic. During its August meeting, the FOMC updated its Statement on Longer-Run Goals and Monetary Policy Strategy, which NAFCU Chief Economist and Vice President of Research Curt Long said "looks to avoid the mistakes of the past."
The Changes
Under the updated statement, significant changes were made to:
- Maximum employment, which the FOMC emphasized that maximum employment is a broad-based and inclusive goal and reports that its policy decision will be informed by its "assessments of the shortfalls of employment from its maximum level
- Price stability, as the FOMC adjusted its strategy for achieving its longer-run inflation goal of 2% by noting that it "seeks to achieve inflation that averages 2% over time," adding that, to achieve it, "following periods when inflation has been running persistently below 2%, appropriate monetary policy will likely aim to achieve inflation moderately above 2% for some time”
- Explicitly acknowledge the challenges for monetary policy posed by a persistently low interest rate environment
The Steps Taken
At the FOMC's September meeting, the committee announced the Fed's plans to increase its holdings of Treasury securities and agency mortgage-backed securities in efforts to "sustain smooth market functioning and help foster accommodative financial conditions," and support the flow of credit to households and businesses. The committee cited the critical role the asset purchases are playing in economic recovery during its meeting earlier this month, NAFCU noted.
"Looking ahead, we will continue to monitor developments and assess how our ongoing asset purchases can best support achieving our maximum-employment and price-stability objectives," Clarida said.
He further indicated the Fed will likely keep rates lower than it otherwise might – even if it does eventually raise rates – to continue supporting the economy.
Inflation Direction
In terms of inflation, Clarida clarified the new framework "aims ex ante for inflation to average 2% over time, but it does not make a (time-inconsistent) commitment to achieve ex post inflation outcomes that average 2% under any and all circumstances and constellations of shocks.”
Source: CUToday
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FHFA Validates, Approves Classic FICO Score Model for Use by GSEs
The Federal Housing Finance Agency (FHFA) has validated and approved the Classic FICO credit score model for use by the government-sponsored enterprises (GSEs).
“The validation and approval of Classic FICO by the Enterprises allows them to continue supporting the mortgage market while assessing more modern credit score models that were submitted in response to the 2020 Joint Enterprise Credit Score Solicitation,” the agency stated in a release.
The FHFA said it expects it will take the GSEs an additional year to complete the validation and approval process of the remaining credit score models submitted in response to the solicitation.
Source: CUToday
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IRS to mask key business transcript details; protect taxpayers from identity theft
Moving to protect business taxpayers from identity theft, the Internal Revenue Service today announced that starting December 13 it will begin masking sensitive data on business tax transcripts.
The announcement provides 30 days for stakeholders to make any adjustments. The IRS began informing tax professionals of this change during the summer Nationwide Tax Forums. The agency previously masked sensitive data on individual tax transcripts two years ago.
A tax transcript is a summary of a tax return. Transcripts are often used by tax professionals to prepare prior year tax returns or represent the client before the IRS. Lenders and others use tax transcripts for income verification purposes.
Here's what is visible on the new tax transcript:
- Last four digits of any Employer Identification Number listed on the transcript: XX-XXX1234
- Last four digits of any Social Security number or Individual Tax Identification Number listed on the transcript: XXX-XX-1234
- Last four digits of any account or telephone number
- First four characters of the first, and last name for any individual (first three characters if the name has only four letters)
- First four characters of any name on the business name line
- First six characters of the street address, including spaces
- All money amounts, including wage and income, balance due, interest and penalties
For both the individual and business tax transcript, there is space for a Customer File Number. The Customer File Number is an optional 10-digit number that can be created usually by third parties that allow them to match a transcript to a taxpayer. The Customer File Number field will appear on the transcript when that number is entered on Line 5 of Form 4506-T, Request for Transcript of Tax Return, and Form 4506T-EZ.
Here's how it would work for a taxpayer seeking to verify income for a lender:
- The lender will assign a 10-digit number, for example, a loan number, to the Form 4506-T. The Form 4506-T may be signed and submitted by the taxpayer or signed by the taxpayer and submitted by the lender.
- The Customer File Number assigned by the requestor on the Form 4506-T will populate on the transcript. The requestor may assign any number except the taxpayer's Social Security number or Employer Identification Number.
- Once received by the requester, the transcript's Customer File Number serves as the tracking number to match it to the taxpayer.
More information about the masking of transcripts can be found at IRS.gov's e-Services page after December 13.
Source: IRS.gov
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Federal Credit Union Meeting Flexibility During the COVID-19 Pandemic
The NCUA understands COVID-19 continues to affect federal credit unions and their members to varying degrees. The agency, therefore, is extending the relief measures outlined in Letter to Federal Credit Unions, 20-FCU-02, NCUA Actions Related to COVID-19 – Annual Meeting Flexibility.
Under this authority, a federal credit union may adopt, by a two-thirds vote of its board of directors, the bylaw amendment below to Article IV without additional approvals by the NCUA. As indicated by the underlined language below, the NCUA is also adding optional language related to board of directors’ meetings to the amendment. A federal credit union may choose to adopt the amendment with or without the underlined language related to board of directors’ meetings.
Federal credit unions choosing to adopt the following amendment (with or without the language related to board of directors’ meetings) should ensure that the cross-citations conform to their version of the bylaws.
Section 6. Emergency exception to in-person quorum requirement. This credit union may hold its annual meeting of the members, the required in-person regular meeting of the board of directors under Article VI, and special member meetings for authorized purposes other than member expulsion under Article XIV of these bylaws, virtually1 and without an in-person quorum if all of the following conditions apply and are certified in meeting minutes by a resolution of the majority of a quorum of the board of directors:
- At least one of the following is located in an area where a federal, state, or local authority has declared a state of emergency or major disaster:
- all or part of a community the credit union serves; or
- the credit union’s headquarters.
- The credit union has the technological capacity to facilitate virtual meeting attendance, voting, and participation.
- Members receive at least seven days’ advance notice of the change of a member meeting to a virtual meeting format and appropriate instructions for how to join, participate, and vote during the virtual meeting.
- The NCUA has issued general or specific guidance notifying the credit union that it is appropriate to invoke this bylaw provision.
The NCUA hereby notifies all federal credit unions that, if they have adopted this bylaw amendment, it is appropriate to invoke its provisions at any point in 2021 for meetings occurring in that year, if a majority of the board of directors so resolves for each such meeting. General quorum requirements must still be met for all-virtual meetings.
Please refer to Letter to Federal Credit Unions, 20-FCU-02, NCUA Actions Related to COVID-19 – Annual Meeting Flexibility for specific directions on how a federal credit union can postpone its annual meeting, how to amend the date of its annual meeting by using the fill-in-the-blank provision in its bylaws, and quorum requirements.
For elections, the federal credit union bylaws allow four options. If a credit union’s board or management determines that a different option would be more convenient, they may amend the credit union’s bylaws with the vote of two-thirds of the directors.2 If a federal credit union holds an all-virtual annual or special member meeting with electronic voting, however, it must adopt Option A4.3
Finally, the Federal Credit Union Bylaws permit flexibility for sending out member notices during the coronavirus pandemic. Article IV, § 2 of the bylaws provides that notices for member meetings may be sent by electronic mail to members who have opted to receive statements and notices electronically. As such, a paper mailing is not required for all members, only those members who have not opted in to electronic statements and notices.
If you have any questions or concerns, please contact your NCUA Regional Office.
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