Michigan Credit Union League: Issues, Initiatives and Solutions

Strategic Facility Changes Coming for MCUL and Affiliates in Late 2008

The Michigan Credit Union League and Affiliates have taken great pride in their record of past prudent business investments, profitable subsidiary companies, effective management of operating costs and strong investment returns – all of which have positioned the MCUL to offer member credit unions valuable trade association services at a fraction of the dues cost charged by other state associations.

This enviable situation continues to get better as the MCUL is now selling its Plymouth office to Edison Credit Union. As part of the transaction, the League will continue its transition of the association services functions to Lansing with a total of 24 employees soon to be housed in a beautiful new office one block from the Capitol Building. The 6,800 square feet will house the new MCUL headquarters, enabling us to strengthen our presence in the State Capitol with prominent signage displayed all around the nine story building across from the Comerica and National City towers. This move will also enable the MCUL to work toward housing a credit union retail operation in the same building in the near future.

In addition to the expanded Lansing presence, certain MCUL/CUcorp administrative functions and all CUcorp and CU Village operations will move one mile north to a new office on 7 Mile Road, just off of the I-275, 7 Mile Road ramp. This office will serve as temporary quarters for approximately 75 staff with another 10 employees moving to home office telecommuting status. The temporary location will be occupied for approximately 27 months, during which time CUcorp will begin plans for a more permanent facility in the Detroit metro area, most likely very near to the current offices.

In both cases, the new offices will be leased space as opposed to the current ownership position in the Plymouth facility. These important moves will both take place between November 2008 and January 2009, and will result in a combined estimated savings for MCUL & Affiliates of approximately $500,000 per year. These changes have been in planning by the MCUL and CUcorp boards of directors for over two years as the boards and management anticipated a weakening real estate market and the opportunities for cost efficiencies.

These cost savings will position the MCUL and CUcorp to help control costs and improve subsidiary earnings, thereby assuring the MCUL of maintaining its current low dues structure and affordable fee-based services for many years to come. This is occurring at a time of unprecedented consolidation in the credit union industry, which puts pressure on the MCUL’s dues funding. These same pressures are leading most state trade associations and CUNA to increase dues assessment levels and other fees. For the MCUL, this is not the case. In addition to the MCUL having one of the lowest dues assessment schedules in the nation, less than 10 percent of the MCUL’s total funding comes from dues. The major funding sources are now subsidiary income and investment earnings.

The MCUL Board has very prudently worked to manage the association’s Member Net Assets with a policy that strives to increase them by 2% per year in order to assure that investable funds continue to grow, so that shrinking dues receipts will not have the effect of requiring either dues increases or cutbacks in essential services for credit unions.

The MCUL and its subsidiary companies CUcorp, CU Village and HRN/HR Value Group are all committed to providing high quality solutions to credit unions at competitively low prices. This legacy of service and value will continue to make the MCUL and Affiliates one of the premiere state support organizations in the nation.

ISSUES
Important legislation and regulations that affect credit unions and what the MCUL is doing to address them, as well as other items that are having an impact on Michigan and its economy.

Federal Interchange Fee Legislation May be Dead for 2008
The U.S. House of Representatives Judiciary Committee met on July 16 to markup H.R. 5546, sponsored by U.S. Rep. and Judiciary Committee Chair John Conyers, D-Detroit. H.R. 5546, also known as the Conyers-Cannon Interchange Fee Bill, would force payment system providers and merchants to agree on interchange fees or argue the their case before a newly created tribunal. The Committee passed the bill on 19-16 vote with bi-partisan opposition. The Committee approved a number of changes. One of the changes is the so-called Opt Out provision. This change permits NCUA regulated credit unions with less than $1 billion in assets to “opt out” of interchange negotiations. Another change was elimination of the three member panel to settle fee disputes. Given the dwindling number of days left in this Congress, the chance for the bill to move out of the House appears unlikely. Both the MCUL and CUNA have strongly opposed this bill as the legislation would interfere in what the organizations believe should be a free-market process and could affect the ability of credit unions to provide credit and debit card services for their members. For more information, please click here.

U.S. House Passes Financial Services Regulatory Relief Bill
On June 24, the U.S. House passed H.R. 6312, also known as the Credit Union, Bank and Thrift Regulatory Relief Act (CUBTRRA). The bill eases field of membership and member business lending (MBL) restrictions in underserved areas for credit unions. The bill passed on a voice vote, having previously been placed on the suspension calendar. The MCUL and CUNA support this legislation, as it could permit credit unions to offer expanded services to their members – particularly in underserved areas. This has previously been blocked by bank lobbyists. For more information, please click here.

House Passes Predatory Lending Legislation
On June 18, the Michigan House of Representatives passed the much anticipated predatory lending legislation. The flagship bill, H.B. 5294, passed 80-29. The MCUL has supported the bill, because depository institutions, including credit unions, were exempted from this legislation. The House version of the bill was the result of almost a year’s worth of work, including several workgroup meetings. In its original form when introduced in the fall of 2007, this legislation would have placed severe lending restrictions on credit unions. However, since credit unions have not been the main contributor to the current foreclosure crisis, the MCUL worked to secure the exemption. For more information on H.B. 5294, click here.

Identity Theft Legislation Passes House
On June 24, the Michigan House of Representatives passed H.B. 6102 and H.B. 6103, with principle sponsors State Reps. Kathy Angerer, D-Dundee, and Brian Palmer, R-Romeo. Originally, the bills would have required credit unions, among other financial institutions, to notify members prior to transferring any personal identifying information. This notification would have created severe burdens for credit unions, as they already comply with federal regulations, and additional regulations could delay the speed of service to credit union members. Working with the sponsors, the MCUL was able to change the bills so that credit unions were no longer mandated to provide a notification. For more information on these bills, click here.

OFIR Issues Order and Letter on “Low Income” Designation Powers
On June 20, OFIR issued Order No. 08-027-M in response to an application by Communicating Arts Credit Union seeking to exercise the powers permitted for federal credit unions (FCUs) that have been designated “low-income” under NCUA Regulations. While the Michigan Credit Union Act does not address “low income” credit unions, NCUA regulations have permitted Michigan state chartered credit unions (SCUs) to apply for the designation through the NCUA and with the blessing of OFIR. However, due to some restrictions in the MCUA, not all the powers permitted FCUs could be enjoyed by Michigan SCUs. Following the issuance of the Order, and consistent with it, OFIR issued a Letter to Credit Unions dated July 3, 2008 (No. 2008-CU-01), which applies to all “low income” designated Michigan SCUs. It authorizes “low income” designated Michigan SCUs, just as their FCU counterparts, to accept non-member deposits; participate in the Community Development Revolving Loan Program; offer secondary capital accounts; and qualify for exemption from member business loan aggregate limits. View the letter by clicking here.

OFIR Letter Outlines Initiatives Regarding Safeguarding CU Data
In response to concerns stated in a June 10, 2008 letter from MCUL President/CEO David Adams to OFIR about safeguarding sensitive information, Commissioner Ken Ross outlined in some detail what is required by the State of Michigan with respect to this issue as well as what his agency is doing to ensure credit union data is carefully secured both within the agency generally, as well as through its examiners and their laptops. The letter indicated that OFIR must comply with various mandates from the Michigan Department of Information Technology, DMB and State of Michigan Operating Procedures. In addition, OFIR conducts regular staff training regarding confidentiality responsibilities and has incorporated additional layers of security to ensure data is accessed by only authorized users. For laptop users, additional layers of encryption and multi-factor authentication is also in place, with new processes for encrypted email communications between OFIR and the institutions it regulates. Regular reviews of the security processes are conducted reflecting awareness that technology advancements regularly degrade security solutions. Finally, OFIR is considering issuing some form of an “assurance letter” similar to what credit unions may seek from their vendors. For more information, contact Mike DeFors at mjd@mcul.org or MCUL ext. 464.

INITIATIVES
Updates on specific campaigns created by the MCUL to strengthen the credit union charter and differentiate credit unions from banks, as well as the Community Reinvestment Initiative (CRI).

Highlights on Strengthening the Charter

List of MCUL Endorsements for Federal and State Elections Available
The MCUL and the MCULLAF/MCULAF Board of Trustees have officially endorsed 12 federal candidates and 63 state candidates running in the 2008 elections. The MCULLAF/MCULAF Board of Trustees submitted the recommended list of credit union-friendly federal candidates to the MCUL Board of Directors, which was approved by the MCUL Board at its June 23 meeting in Northville Twp. The statewide primary vote is scheduled for Tuesday, Aug. 5, while the general election will be held on Tuesday, Nov. 4. To view a list of all endorsements in PDF format, click here.

Congressional Reports Available Online
The 2008 Congressional Reports used for this year’s Hike the Hill grassroots lobbying trip are now available online. They have been placed on the CRI Web site so credit unions may access them for quick facts or print them out to use in outreach efforts. Also available are the CRI Aggregate Report, individual federal district reports and the congressional brochure that was taken to Washington D.C. in June. This way, credit unions may print as many as they need and pass them along to boards of directors. These reports can be accessed by clicking here.

Michigan CU Officials “Hike the Hill”
Approximately 29 credit union officials along with MCUL staff were in Washington, D.C. June 11-12, meeting with members of Michigan’s congressional delegation. Hike The Hill attendees continued to push for the passage of CURIA as they visited all 17 Michigan congressional offices. Attendees received a briefing from CUNA and attended a luncheon with NCUA Chairman JoAnn Johnson as the featured speaker. Also while on the Hill, attendees urged members not to co-sponsor or support H.R. 5546, which would regulate interchange fees. (Please see above story above on H.R. 5546).

7^th Annual CURE Golf Outing Coming July 23
The 7^th Annual CURE Golf Outing is set for Wednesday, July 23, at Forest Akers West Golf Course in East Lansing, with registration beginning at 9:30 a.m. So far, 35 sponsors have committed $13,900, and 13 sponsorships worth $3,600 are still available. The second letter and the new brochure were mailed out June 9 to over 1,100 individuals and vendors. Currently, 95 golfers have registered and paid. View the brochure by clicking here.

Highlights on the Credit Union Difference

SAS Gazette Now Available
The first SAS Gazette of 2008 has been sent to small asset size credit unions ($35 million and under). The first issue looks at ways smaller credit unions are planning for the future by courting younger members and the youth market. The Gazette also looks at collaboration between two credit unions and the inner workings of the Family Medical Leave Act. The Gazette is available online for any credit union to read. The Gazette may be downloaded directly by clicking here.

2008 Compensation Survey on track for July delivery
The 2008 Compensation Survey is on track for a late July delivery. For the second year in a row, credit unions have the option to buy the completed survey in an electronic PDF form or the traditional hard copy. A reminder will also be e-mailed to CEOs this month with prices and the opportunity for those credit unions that did not participate in the survey to purchase the Compensation Survey for their planning purposes.

NCUA Examiners Meet with Relationship Managers
MCUL Relationship Managers Doris Brown, Ron Martin and Carolyn Miller and Vice President of CU Relations, Alan Babcock, enjoyed a rare opportunity to meet with NCUA examiners from Southeast Michigan on June 13. These MCUL staff and NCUA examiners met to become acquainted with each other and to become better informed of the resources that are available to assist troubled credit unions. Also present was Lynn Storum, NCUA Economic Development Specialist, Office of Small Credit Union Development, who discussed the resources that are available from her office. A similar meeting is under consideration with NCUA’s out-of-state examiner group led by Supervisory Examiner Andrew Healey.

Working Group Meets to Discuss Michigan’s Foreclosure Laws
On June 23, theState and Federal Issues Working Group met to discuss Michigan’s foreclosure laws. Discussed were the pros and cons of shortening various steps in the foreclosure process, whether during the notice and public posting period leading to the sheriff’s sale, or after the sale and through the redemption period. A shortened abandonment process was also discussed. While several comments were offered by committee members, additional feedback from MCUL membership is necessary to ensure specific provisions are identified where changes would be most beneficial.

SOLUTIONS
Products, services and educational events offered by the MCUL and Affiliates that are available now to help credit unions be successful and become informed in a constantly changing financial services industry.

Highlights on MCUL Solutions

MCUL to Host ID Theft Compliance Sessions across Michigan
To educate credit unions on the necessary steps for complying with new regulations related to identity theft, the MCUL will host several “Identity Theft Red Flags” workshops throughout the state in late July and early August. An ID theft program must be formally approved by credit union boards and include policies for detecting and responding to red flags of identity theft, with a mandatory compliance date of Nov. 1, 2008. MCUL/CUcorp General Counsel Veronica Madsen will be traveling to present several workshops throughout Michigan. Credit unions staff can sign up for the session closest to them by visiting the MCUL education events calendar by clicking here.

Imaginative Leadership Focus of MCUL Executive Summit
The Executive Summit is coming up Aug. 20-22 at Crystal Mountain Resort in Thompsonville. The educational sessions at the Executive Summit were chosen with the current state of the economy in mind. Opening the event is Mark Meyer of Filene institute. He will be discussing how credit unions across the nation must adapt in the face of competitive economic and social forces that are reshaping the world of consumer finance. The event will also provide insights from the General Motor Chief Economist, a panel discussion on leading in changing times, and Michigan First Gentlemen Dan Mulhern discussing everyday leadership. Additional information can be found by clicking here or visiting the MCUL Web site, keyword: 2008Exec. Discounted hotel rooms are being held until July 30; discounts apply for dates prior to and following the event for the convenience of those attendees wishing to extend their stay.

Compliance Topics for Board Members Featured at Fall Leadership Conference
The 2008 MCUL Fall Leadership Development Conference is coming up Sept. 19-21 at the Grand Traverse Resort in Traverse City. In response to the many compliance issues credit unions face, a new Board Compliance Series has been added as one of the learning tracks. Based on feedback from past attendees and from regulators, the new Compliance Series includes: Identity Theft Red Flags, a Meet the Regulators Panel Discussion and Third Party Due Diligence. Additional information can be found by clicking here or visiting the MCUL Web site, keyword: 2008FLDC.

Rory Rowland Presents Ideas for Non-Interest Income in Audio Conference
The MCUL is hosting an audio conference on August 12 to help credit unions boost their bottom line with non-interest income ideas from Rory Rowland. With net interest margins declining and competition increasing, many credit unions have been forced to turn to non-interest income to survive. And as the rate squeeze continues, all credit unions must find alternative ways to boost the bottom line. The "traditional business model," which relied on interest income exceeding operational expenses, is no longer valid as credit unions' products and services become steadily more complex. Sign up by visiting the MCUL education event calendar by clicking here.

InfoSight Quality Standards Under Review
The InfoSight Content Advisory Group has undertaken a review of its policies regarding content, format and quality standards. As the involvement from other Leagues continues to expand, the Advisory Group is working hard to ensure InfoSight remains a high quality, dependable and useful compliance resource product. Michigan is responsible for maintaining two channels: Loans and Leasing and Disaster Recovery. This is carried out by MCUL staff counsel Veronica Madsen, who also is responsible for maintaining Michigan-specific content for all fourteen channels. The standards review should be finalized by end of July.

MCUL Web site Reflecting Changes to Enhance Information Delivery
Providing useful information to credit unions currently falls under MCUL’s “Information Central” concept – whether through publications, the MCUL Web site or over the phone such as through the Compliance Helpline. Users of the MCUL Web site are likely aware of recent changes as information has been rearranged for a new look and to accommodate the addition of fresh multimedia features. The old “News and Publications” tab will be relabeled “Information Services” and will house existing publications as well be the home for the MCUL’s new multimedia features such as CUtv and audio and video podcasts. Free resources and reports will begin to be collected and posted under “Special Reports and Research,” a sub-section under the “Information Services” tab. As a major association duty, the MCUL understands the importance of ensuring the information needs of its members are properly met.

Highlights on CUcorp Solutions

CU PolicyPro Gaining Momentum with Leagues
After the national announcement of the Pennsylvania Credit Union Association’s intent to purchase CUcorp’s CU PolicyPro, its online operations policy manual, for all of its members as a dues supported benefit, three other Leagues have shown the same interest. The Louisiana Credit Union League, New Jersey Credit Union League and the California Credit Union League – all participants in League InfoSight have contacted CUcorp to discuss their options. A demo of CU PolicyPro can be viewed at https://ops.cucareonline.com/.

CU Growth Solutions Offers Resources to Develop Fall Marketing Campaigns
For credit unions who wish to construct a comprehensive marketing campaign for the fall, CU Growth Solutions’ team of experts can assist with planning needs across most marketing services, including market research, marketing communications, planning and consulting, brand development, name development, full-service creative, media planning and buying, and printing through CUGS business partner EPI Printing. For more information, contact CU Growth Solutions at MCUL ext. 249.

CU Village Offers “Growing Members” Online Youth Financial Education
CU Village’s Growing Members youth sites help credit unions teach younger members necessary financial skills while reinforcing the benefits of credit union membership. This service provides distinct turnkey sites for elementary, middle, and high school student, which includes monthly content updates and quarterly newsletters. For more information on Growing Members youth sites, contact info@cu-village.com or visit CU Village by clicking here.

“Your Money Matters” Podcasts Available for CUs to Distribute to Members

Credit unions can provide financial advice and insight into consumer financial decisions with the Your Money Matters (YMM) series of podcasts offered by CU Village. YMM podcasts cover a variety of financial topics ranging from budgeting to credit management and will also help guide members to use the credit union’s products and services. The service is completely turnkey, brandable to any credit union and includes two monthly shows. For more information on YMM podcasts, contact info@cu-village.com.

HRValue Group Merger with HRN Management Group Complete
With the merger of HRValue Group into HRN Management Group now complete, a 15 percent discount on the initial purchase of Performance Pro is still in effect. This performance management program is a resource for managing employee performance and comes with tools for creating job descriptions, documenting performance issues and tracking HR data. Credit unions wishing to explore this opportunity should contact Jessica Strasser via e-mail at jstrasser@hravluegroup.com or (734) 656.3489. A podcast featuring Strasser is also available by clicking here.