The Collaborative Connection

RBC – Acknowledging the Good Stuff 

Posted by Greg Michlig Tuesday, September 30, 2014 10:09:00 AM

Late yesterday, we heard that the NCUA will propose a revised risk-based capital (RBC) rule to be issued with a new comment period. I believe this calls for a few pats on the back all around the room.

First, to all of you who stepped up to the plate with comprehensive and thoughtful comment letters to the NCUA on the proposed rule, by attending a listening session to voice your concerns, or by delivering your message through other advocacy channels…well done.

Next, to Chairman Matz, for recognizing that the proposed rule needs significant revision, which will ultimately affect the rule’s structure to the extent that a new comment period will be necessary.

And, to Vice Chairman Metsger, for openly discussing the need for an implementation period of up to three years and a better approach to managing Interest Rate Risk. On IRR, he specifically stated, “I believe interest rate risk is important and must be addressed in the risk-based capital rule, but it should be addressed separately from credit risk. Weighting credit risk and interest rate risk with a single numerical value created conflicts that ultimately made it difficult to accurately weigh the risk of either.”

New NCUA Board member J. Mark McWatters’ comments, in a separate statement, are an early indication of his willingness to take a strong stand on such issues in a transparent manner. Importantly, he recognized the collective voice of credit unions, along with the involvement of Congress in his comments: “I am pleased that the Chairman has agreed to a new comment period for the proposed risk-based capital rules. As I stated last week, I will not consider the rules for adoption unless they are re-proposed with a robust comment period of not less than 60 to 90 days. I articulated this position out of respect for Congress and those members of the credit union community who have enthusiastically voiced their opposition to the proposed rules.

And although it’s not always wise to pat oneself on the back, I must say the work of the Leagues in activating a grassroots response to this rule throughout the country was quite significant. Through our confederated system, we worked closely with CUNA to align our efforts with their persistent advocacy, which was strongly backed by their in-depth research and analysis.

In McWatters’ statement, he added that: “…the previously proposed risk-based capital rules are deeply flawed and merit substantial revision. The devil is in the details, and I await the details before I can pass judgment on the next draft of the proposed rules.”

Considering the now universally acknowledged position that this rule is so severely flawed that revisions will trigger a new comment period based on the parameters of the Administrative Procedures Act, I would suggest there should be consideration of a completely new rule. One developed utilizing a significantly broader set of resources than in the previous process including, of course, the expansive comments brought forth through the previous comment period, the NCUA’s own RBC Practitioners Council, and continued dialogue with CUNA, Leagues, and other trade associations.

The fact that the NCUA is saying this is a new comment period, as opposed to a second comment period, leads me to believe that this may be the intent. If so, that would call for a seemingly appropriate, additional pat on the back.

Let’s Build a Bigger Bullhorn 

Posted by Greg Michlig Thursday, September 25, 2014 12:28:00 PM

This morning, an article in the Washington Post titled “Wal-Mart teams with Green Dot on checking account” caught my eye. The content is not surprising, as we all know the ambitions of the major retailers and the United States Postal Service when it comes to expansion in the financial services arena.

Their talking points are similar across the spectrum: There are many unbanked or under-banked souls out there who need these entities to step up and fill a void that traditional financial services providers are not; there is convenience in the number of physical locations these players bring to the market; they have created a financial model that is more consumer friendly than what is already available.

Again, nothing new here in that these are the same arguments that have been made for years and will continue to be made going forward. We all know the counter-points to these statements and we know that credit unions, through their not-for-profit structure and community focus, can and do offer convenient financial services to the un- and under-banked in a purposeful, socially conscious manner.

The issue at hand is the size of the bullhorn organizations like Wal-Mart and the USPS have to get that message out. The same can be said for the big banks that often deliver a similar message as these non-traditional entrants when it comes to convenience and service. In many cases, the very things they are promoting are exactly the same (home banking services, remote deposit capture, purchase protection on credit card transactions, no fee checking, 0% APR on balance transfers) as offered by many credit unions.

And as for convenience...credit unions boast more than 5,000 branch locations and over 2,000 kiosks nationwide in the credit union-owned CO-OP Shared Branching network, equating to the fourth largest financial institution branch presence in the United States, (October 2012 comparison based on claims located at fdic.gov). The CO-OP ATM network, offered to participating credit unions’ members surcharge-free, is larger than the networks offered by big banks such as Chase, Bank of America, and Wells Fargo. (September 10, 2012 comparison based on claims located at bankofamerica.com, chase.com and wellsfargo.com).

In New Jersey alone, there are 62 Shared Branch locations offered through membership in one of 34 participating credit unions and 679 CO-OP Network-branded ATMs.

This is not a new discussion. We have acknowledged the need to combine our resources and hone our focus on a common brand and integrated marketing approach. With few exceptions, credit unions cannot go it alone and effectively get their individual message out to the masses.

Here in New Jersey the Banking You Can Trust program was launched to serve this purpose and has been increasingly successful in getting the credit union message out to consumers. Through billboard campaigns, television and radio spots, event participation, sponsorships, social media, and community involvement, we have grown activity on the bankingyoucantrust.com Web site. But our bullhorn needs to be bigger. 

There are some good-sized credit union bullhorns in other states, and in those states credit unions realize greater consumer awareness and share of market. While the expensive media market in which we live presents a challenge in itself, the economic lag in New Jersey continues to put pressure on credit unions’ bottom lines and makes financial participation in the program understandably difficult for many credit unions. That being said, we will never compete in the share of mind battle with large retailers and other new market entrants if we don’t raise our collective voice through a bigger bullhorn.

If you are not already participating in the Banking You Can Trust campaign, I ask that you give it thought. The more we work together on this initiative, the better we will be collectively.

On a separate note, I want to express my gratitude to the team here at the New Jersey Credit Union League for their excellent work on our, just-completed, 80th Annual Meeting and Convention in Atlantic City. The comments I heard from those of you who attended were exceptionally positive and that is a reflection on the attention to detail and the hard work of the League staff.

I also thank the many of you who attended to make the event a success. Without you, the credit union professionals and leaders of New Jersey, the industry partners and supporters, the top-shelf speakers and special guests, including New Jersey Lieutenant Governor Kim Guadagno, our efforts here would be for naught.

Thank you for making the New Jersey Credit Union League 80 Years Strong. 

#FedSeat4CUs 

Posted by Greg Michlig Monday, September 08, 2014 10:19:00 AM

In my previous blog post, “Time for a seat at the Fed table,” I made what I feel is a compelling statement as to why the time is right for credit unions to pursue representation on the Federal Reserve Board of Governors. I was pleased to see a number of shares and retweets of the post on social media, including some well-known figures from the credit union industry. I have also had some conversations with individuals who support this idea and agree that we must act swiftly if we are to capitalize on this opportunity.

We at the New Jersey Credit Union League are doing our homework with regards to process and procedure when it comes to identifying and presenting interested candidates for consideration. Understanding that there is curiosity as to the specifics of the role of the Board of Governors, I share the following link from the Federal Reserve’s Web site: www.federalreserve.gov/faqs/about_12591.htm.

While perusing the Web site, I also found an interesting nugget in that within the “Benefits” section of the “Careers” tab, there is a bullet that lists “credit union offices for your banking needs.” Yes, this is indeed a benefit and it is good to see that the Federal Reserve recognizes this. In the same sense, it is my hope that there is recognition of the benefit of looking to credit unions for the community financial institution perspective lawmakers have indicated they desire on the board.

This is an opportunity for credit unions to increase our visibility in federal government in a new way. With two seats open, what better time for us to press the issue?

Recently I posted a message on social media with the hashtag, #FedSeat4CUs. All credit unions and credit union supporters are urged to use this hashtag to express the need for a credit union seat on the Federal Reserve Board. With our time limited, this is one way in which we can increase momentum in what has shown to be an effective grassroots fashion. 

Should you be interested in pursuing this opportunity or know of someone we should reach out to in this regard here in New Jersey, email me at gmichlig@njcul.org. We will work with you to provide the resources and direction necessary to garner consideration. 

Time for a Seat at the Fed Table 

Posted by Greg Michlig Friday, August 22, 2014 9:00:00 AM

I read with interest, the August 8th column by Kate Davidson of Politico titled “White House struggles to fill Fed small-bank spot”. The basis of the piece is that after Sarah Bloom, a former Maryland banking regulator now at the Treasury Department, and Elizabeth Duke, a longtime Virginia banker, left the Federal Reserve Board, the White House has had difficulty finding candidates to fill the vacated spots. For varying reasons, including the need to divest their interest in the family banks they run, at least some of those who have been considered from the community bank sector have declined.

Another key piece and the driving force of relevance for credit unions, is that lawmakers have been pressing the administration to nominate candidates with community banking experience. I think that presents an opportunity that should be pursued.

In the column, current or past chairmen/CEOs are listed from community banks ranging in assets of $152 million up to $1 billion. If that is the range in which the White House feels comfortable, credit unions are well versed with nearly 1,000 institutions in that demographic (there are roughly 3,000 banks in that range). From there, credit unions skew even more local, with a far greater number of institutions under the $152 million mark. If the Fed needs a “community” financial institution perspective, what better voice for that than credit unions?

The credit union representative, in addition to being a Main Street voice, would also provide a consumer perspective to the Fed’s deliberations. As member cooperatives, credit unions have long been committed to providing financial services that benefit the communities and individuals they serve. It is this consumer-centric approach that would seemingly add the perspective lawmakers are pursuing for the board.

There is also merit in adding a credit union voice to the Federal Reserve Board to work towards an element of proportional balance. Financial institutions of all charter types should have representation and the bank perspective is already present in the person of at least four current Fed governors.

The clock is ticking, however, as there is a push to identify candidates for confirmation before year-end. There appears to be an opportunity here. Let’s work together to identify and encourage qualified candidates so that we can capitalize and get credit unions a seat at the table.

Foundation of 80 Years Ensures All Across Nation Can Join, Use a Credit Union 

Posted by Greg Michlig Thursday, June 26, 2014 12:45:00 PM

If given the choice, would you prefer to be a member or a number? If you belong to a credit union, you probably understand that the value proposition of membership outweighs the “number” status associated with simply being a customer.

For 80 years, the New Jersey Credit Union League has supported credit unions in the Garden State. We’ve been proud to represent our affiliates and provide them with resources to better serve you, the consumers of our state. Here, in the communities surrounding the world’s top financial center, consumers have continually sought alternatives to big banks. Over the years, millions of New Jerseyans have made the decision to choose a credit union because we’ve made collaborative banking a success while offering first-rate member service and savings. But none of that would be possible today if it wasn’t for the work done in 1934.

The foundation for a strong credit union movement was set 80 years ago, on June 26, 1934, when President Franklin Roosevelt signed the Federal Credit Union Act into law, permitting credit unions to be formed across the country. Since that day, credit unions have developed considerably. Through the years, we’ve grown in membership as we’ve broadened our services to meet the needs of our members, from mortgage lending to education loans to digital banking.

Today, nearly 100 million people nationwide choose to be members of credit unions, with over 1 million here in New Jersey. Our state has over 190 independent, consumer-owned, volunteer-led, democratically controlled credit unions here to serve you.

As not-for-profit financial institutions, credit unions strive to be your best financial partner. In addition to values-based decision making focused on the communities and members they serve, credit unions return financial benefits directly to their members with higher returns on savings, lower rates on loans, and fewer, lower fees. Bank customers benefit too, as the presence of credit unions drives down loan rates, pushes up savings rates and influences fees. In fact, New Jersey consumers realized financial benefits of more than $47 million dollars in 2013.

We believe a key reason credit unions are your best financial partner is because we listen to the needs and interests of our growing membership by fostering service excellence. With services such as online banking, shared ATM access (the largest single ATM network in the country), and the growing number of convenient branch locations – and “shared branches” among credit unions – and dedication to competitive rates, credit unions’ top priorities are centered on those they serve, not in driving profits for a small group of shareholders. As a matter of fact, The American Consumer Satisfaction Index for credit unions is 85, compared to 73 for banks. We’re proud to note that in the most recent survey, credit unions were tied for the best Customer Satisfaction Benchmark among all 43 industries reviewed. 

We also believe it’s important to remove the barriers that exist to service, and we encourage members who are interested to become engaged on issues that are important to them. Members have stood with and come to the defense of their credit unions through strong grassroots support on many occasions over our 80 years. We believe it’s important that our elected officials hear from those who benefit from credit union membership and, as the state association for New Jersey’s credit unions, we continually work to foster open-door policies at the congressional level as well as with federal and state regulators.

As we move forward, it’s essential to look back and remember why credit unions were created. Credit unions are cooperatives that were developed to promote thrift among the American people – bound together by a common set of business principles and values. Volunteer leadership. Democratic control. Economic participation. Autonomy and independence. Member education. Cooperation among cooperatives. Concern for community.

Credit unions are living up to those business principles and values. At the New Jersey Credit  Union League, we will continue to be a voice for credit unions and deliver cooperative services that facilitate their growth. Together, we will remain steadfast in our efforts to put members first here in the state of New Jersey.

Plan to Win 

Guest Blog Post By: Chris Abeel
Posted by Greg Michlig Thursday, June 05, 2014 9:15:00 AM

In the midst of two of the most serious threats in recent memory to credit unions’ ability to fully serve their members, it seems timely to revisit the League’s participation in CUNA’s Plan to Win, A 435 Seat Strategy.

CUNA launched the Plan to Win in 2012 because banker opposition and overall Capitol Hill gridlock continued to stall some of our legislative initiatives. Little more than a year into the program, its importance became strikingly clear first when the credit union tax exemption came under threat, and a year later when NCUA unveiled its onerous risk-based capital (RBC) proposal.

What started as a proactive, offensive plan almost immediately demonstrated its value as a crucial defensive tool as well.

So what is the Plan to Win, A 435 Seat Strategy?

Simply put, it’s a set of advocacy goals, or vital steps, to ensure that every member credit union meets its collective responsibility to the credit union movement, so together we’re able to move lawmakers to where they “can’t say no” to credit unions.”

Let’s face it; we’ll never be able to compete with the deep pockets of bankers. But we have something bankers don’t, a committed constituency, the breadth and depth of which is the envy of every bank lobbyist. Our strength is in our numbers. Sure, bank customers outnumber credit union members, but how many bank customers actually like their bank, or more importantly, will take time to defend their bank to law and policy makers?

That’s why we regularly communicate to state and federal lawmakers the size of their credit union constituency. But the numbers alone are not enough. Lawmakers have to hear from those constituents. Otherwise we run the risk of being viewed as a paper tiger.

We got the message across when it came to municipal deposit reform with 5,000 postcards to Assembly members and 5,000 postcards to Governor Christie. Last year we got the “Don’t Tax My Credit Union” message through with 5,000 postcards to targeted members of New Jersey’s congressional delegation and more than 5,100 emails, telephone calls, and Twitter messages to our Capitol Hill lawmakers. Most recently, the system got NCUA’s attention with an unprecedented number of RBC comment letters from credit unions and lawmakers.

So how can a credit union ensure it’s meeting its collective responsibility? A good place to start is by ensuring its participation in various Plan to Win support components by regularly updating their Project Zip Code (PZC) numbers and ensuring they have an up-to-date Participation Agreement (PA) on file with the League.

PZC is safe, easy to use, and is a critical component of our advocacy program. Some 80 million CU members have already been counted nationwide. It is absolutely essential that we have 100% participation in N.J.

The law requires we receive the permission (PA) of NJCUL member credit unions in order to keep them informed of key CUNA and NJCUL federal political activities. Neither CUNA nor the League will contact any of your members directly, but it’s important that credit union professionals and volunteers know about these activities. Credit unions can decide individually whether they want to pass along this information to their members.

These tools are fundamental to communicating the size of, and mobilizing, our grassroots strength. In addition to participating in these vital Plan to Win steps, credit unions must also ensure that, at a minimum, their professionals and volunteers step up to the plate when we issue a Call-to-Action.

Credit unions should also consider participating in one or more of our various advocacy events such as the annual CUNA Governmental Affairs Conference (GAC) in Washington, Capitol Hill visits (Hike-the-Hill), meetings with state and federal lawmakers in their district offices, and Chapter Meetings that host elected officials as guest speakers.

As a cooperative system, each and every credit union has a responsibility not only to its own members, but to the members of every other credit union as well. While many of our credit unions are doing more than their fair share, it’s time that all assume responsibility for our mutual success.

One Year In 

Posted by Greg Michlig Tuesday, May 20, 2014 8:58:00 AM

Today marks one year on the job here in New Jersey. To answer a question that I’m asked often…yes it seems like a year. Although some days it seems like I’ve been here much longer, and others not so much. That’s good, in my mind. It means that I feel comfortable here and know that we are getting things done, but it also means that I understand that I must continue to discover the distinguishing characteristics of New Jersey and the credit union community we have here.

I am excited as I reach this milestone. We have implemented some new approaches and programs. We have increased our dialogue with you, the affiliates, to identify areas where we can refine and build our processes and deliverables to best suit your diverse needs. There are also a number of initiatives in the hopper that I believe you will find valuable. There is work to be done and in that work is great opportunity.

But today, I want to pause to say “thank you.”

Thank you to the fantastic staff here at the New Jersey Credit Union League. This is a high-caliber group of diligent, service-oriented professionals who put your needs first. They are also caring, genuine individuals who have embraced the changes that came along with me. We are a strong team and we continue to grow together.

Thank you to the NJCUL Board of Directors of 2013 & 2014. I am humbled and driven by the confidence you put in me a little over one year ago. I am grateful for the guidance you have given as I have acclimated to New Jersey. As much, I appreciate your straightforward approach, keeping the focus on getting things done for the credit unions of New Jersey.

Thank you to you, the credit unions of New Jersey. You have welcomed me to your state and your community in a way that makes me feel at home. I have had the opportunity to meet many of you over this first year and am thankful for the relationships that have formed and continue to grow throughout the state.

Finally, thank you to my wonderful wife, Stacy, and our children, Bailey, Taliya and Landon. We packed up our lives and moved from the Midwest, first setting foot in New Jersey for this new chapter 366 days ago. I cannot begin to explain what that means to me, but I know that “thank you” is only the tip of the iceberg.

It’s been a great year and I look forward to many more.

Thank you.

Free Stuff! 

Posted by Greg Michlig Thursday, May 15, 2014 10:37:00 AM

Sometimes I eat an apple without washing it. I don’t have an umbrella readily accessible. I’ve seen the fuel range indicator drop to dashes. I wear my Milwaukee Brewers T-shirt in New Jersey. That’s right…I live on the edge. And that’s why I’m going to address the age-old question; what do I get for my dues?

This is not an all-inclusive list, as I don’t think it’s possible to produce one. Many of the items are lumped into categorical groups, otherwise there would be too much redundancy with subsets and sister offerings across the various disciplines we attend to.

Now, there are levels to the “what’s included” question as well. In some cases, affiliates have access to member-only services that may have a cost attached, such as education sessions, credit union-specific options through the Banking You Can Trust campaign, marketing resources, shared compliance staffing, or programs like the Reality and Retirement Fairs offered in partnership with New Jersey Credit Union Foundation.   

The next level could be those items that are included in dues that are core to league value, but may not be as tangible as a specific product. For instance, advocacy. Consumer, legislative, and regulatory advocacy are key tenants of what we provide. These, along with political action initiatives, can be measured to some extent, but with many wins coming through staunch defense against rising regulatory burden and attacks from for-profit financial institutions, the understood value is in our united voice as the New Jersey Credit Union Community.

Add to that “included” level other resources and offerings such as the Creative You program, Hike-the-Hill coordination, member-only newsletters and communications, participation in NJ DNA, NJ PLAN, NJ READ and NJCUL Youth Involvement Board meetings and activities, small credit union tools and mentoring programs, a centralized source for sharing of best practices and access to the gamut of offerings provided by the Credit Union National Association (CUNA). I urge you to take advantage these offerings and opportunities.

Next, in the category of Free Stuff… the tangible products that are being provided at no additional cost through your affiliation with NJCUL. These are the things that you should be taking advantage of or at least taking the time to consider: 

  • Affiliate-only listings on the Banking You Can Trust and aSmarterChoice Web sites (automatic)
  • CU Policy Pro (regulatory compliance)
  • Job, resume, and classified postings
  • League InfoSight (regulatory compliance)
  • Member Benefits Report (specific to your credit union)
  • National Federation of Community Development CUs foreclosure avoidance toolkit
  • New Jersey and national quarterly statistical reports and analysis
  • NJCUL Compliance Help Line
  • RateWatch (interest rate comparison tool)
  • Salary data and position descriptions (in partnership with Callahan & Associates)
  • Select education sessions

These are meat and potatoes, as one person here said to me. There are other items, of course. I hope some come to mind as you read this.

So why go out on the edge and broach this subject here…now? Because in my conversations with credit union leaders throughout New Jersey, I continually find that there is a lack of awareness when it comes to many of these benefits of affiliation. While we promote these items in the Daily Exchange, in-person through credit union visits and networking activities, and through direct contact with stakeholders at credit unions, things fall through the cracks.

And this is understandable. Considering the onslaught of day-to-day tasks we all manage, at times we forget that people don’t know everything in the same way that we do. Specific to the league, we assume that people know we are here for them, know what we do, and because we send a daily newsletter, that people read every word. Well, not every word, but at least skim for the good stuff! Of course, that’s not the case and it’s on us to do a better job of ensuring the message is being delivered.

League Director of Marketing and Communications, Candice Nigro, is in the process of preparing a plan to help cut through some of the noise that we know exists within the broad array of communications you receive on a daily basis. As we do, I hope you’ll be responsive to our requests for information and, in turn, we’ll continue to do whatever we can to be sure the free stuff doesn’t fall through the cracks. 

Raising the Bar on Partnerships 

Posted by Greg Michlig Tuesday, April 29, 2014 9:16:00 AM

As I was reviewing the most recent PSG Newsletter, I reflected on the many conversations I’ve had with both credit union leaders and executives of the various business entities we work with here in New Jersey since my arrival nearly one year ago. These types of conversations aren’t new to me. Of the 19 years I’ve spent in the credit union movement, 100% of them have involved interaction with or employment as a supplier to credit unions. I have sat across the desk from credit union CEOs and executives hundreds of times, discussing value proposition, service level expectations, corporate philosophy, and impact on the bottom line. Those discussions have been extremely valuable in shaping my perception of the business environment in and around the movement.

As chairman of Professional Services Group (PSG) of New Jersey, I have taken time to understand and evaluate the structure of our business partner relationships, the delivery of our partners’ messages and, in some cases, the products we directly administer through the organization. There are many positives, yet evolution is essential in the fast-paced environment in which we operate.

Internally, we are working on process improvements to be certain you understand the “whys” related to which business partners have been selected. Of course some of those reasons are (or should be) fairly obvious, such as being the nation’s largest credit union-owned, surcharge-free ATM network; having a long history of success with credit unions and being recognized as Barron’s #1 Financial Advisor in New Jersey; being founded by credit union pioneers and partnering in the success of the movement on all fronts for over 75 years; partnering directly with PSG and the New Jersey Credit Union League to launch innovative new lending channels; or providing access to national and international brands that offer discounted services directly to credit union members.

Other reasons may not be so obvious, and that is where I see room for improvement. As we move forward, it is my intent to have PSG provide more information on the strengths of our business partners, allowing you to get a jump-start on your due diligence in what has become an ongoing vendor evaluation process.

We will also be asking for more involvement from you. Whether through technology or in-person conversations, we have increased and will continue to provide channels to further increase the opportunity for you to provide feedback on new business lines, as well as existing and prospective business partners. While we fully intend to continue to bring new ideas forward, your voice in vetting those and providing additional ideas is essential. That is how, as an aggregator, PSG can best serve your credit unions and members.

Expect more on this topic in the second half of the year, as we work on raising the bar on our efforts in this area. I understand how important strong, trusted business partnerships are to your operations and place our responsibility to serve the affiliated credit unions of this state as a resource in this regard very high.

Was it Over When the Germans Bombed Pearl Harbor? 

A commentary on the reaction to NCUA’s proposed Risk-Based Capital rule.
Posted by Greg Michlig Tuesday, April 01, 2014 10:58:00 AM

I’m guessing many of you know the scene from the movie Animal House when Dean Wormer comes down hard on Delta Tau Chi Fraternity. If you don’t, you should stop what you are doing, write a comment letter to NCUA on the Risk-Based Capital proposal, and then rent/download the movie and watch it.

For those of you who do recall, you’re probably chuckling to yourself right now. However, in the context I’m thinking, you shouldn’t be. The scene begins with John “Bluto” Blutarsky (played by John Belushi) walking in to find his fraternity brothers and exclaiming:

“Hey! What’s all this laying around stuff? Why are you all still laying around here for?”

His brothers fill him in on what’s happened…the administration has laid the groundwork for expulsion of the fraternity and its members from the college. Blutarsky goes on with the well-known, historically inaccurate, yet strongly motivational:

“What? Over? Did you say ‘over’? Nothing is over until we decide it is! Was it over when the Germans bombed Pearl Harbor? Hell no!”

Funny, I know…especially if you have seen it.

The reason this comes to mind, though, is that I have the same question for all of you when it comes to NCUA’s proposed Risk-Based Capital rule (available here).

“Hey! What’s all this laying around stuff? Why are you all still laying around here for?”

There has been a massive amount of information published in the press, provided by CUNA and NJCUL, and discussed at small meetings, large conferences, through Webinars, and on conference calls since the day this proposal was rolled out. The consensus is…this rule as written, will, among other things:

- Disincent many forms of credit union lending and long-term investments.

- Restrict capital investment, in order to re-establish acceptable risk-based capital levels.

- Increase the need for non-interest income.

- Increase the pressures for consolidation.

- In short: Cripple the credit union movement.

This is a BIG DEAL, folks. And to that, I say:

Was it over when the NCUA rolled out the Risk-Based Capital proposal? Hell no!

But you need to get up off the couch and run out the door (or to your desk) yelling “Let’s do it!”

We have held two of three collaborative comment letter writing sessions in New Jersey and have had minimal participation. This is disappointing.

We have heard people say a) this doesn’t affect our small credit union, b) I’m not good at writing comment letters, c) I don’t want retribution from the regulator, and the list goes on.

Simply put: a) regulation on one credit union inevitably affects all credit unions, b) there are tools, resources, and FREE workshops to help you craft your comment letters, c) if you sit idly by, they’ve already won the battle.

The New Jersey Credit Union League will be filing its first (there may be more) comment letter this week. If you have visited www.njcul.org recently, you will see this is the preeminent issue on the home page. There is a countdown to the closing date for comment letters and a tally of how many of you have stepped up to the plate. CUNA president/CEO, Bill Cheney, will be here for an NJCUL Town Hall meeting today and you can bet this will be a topic of significance.

This is a BIG DEAL!

There are a myriad of issues to comment on with regards to this proposal.

- First and foremost, excessive capital requirements, primarily on lending, but also CUSO investments.

- No recognition of the fact that while a credit union may remain “Well Capitalized” in the new system, the amount to reach the buffer credit unions now have above the minimum requirement is an additional $7.3B that will need to be raised.

- Length of time allotted to restructure balance sheets if passed, is far too short (18 months, vs. 2019 for banks to conform to Basel III).

- NCUA examiners have the ability to subjectively require higher risk-based capital for individual credit unions.

- With credit unions’ success in weathering the recent Great Recession relative to other financial institutions, is this rule even necessary?

- Is it in violation of the Federal Credit Union Act?

This is not the place to list all the concerns, but it is also not the last you will hear from us on this. 

The New Jersey Credit Union League will be sending information directly to credit unions regarding the financial and regulatory realities of this rule very soon. We will also continue to provide assistance through our Compliance Hotline (800-792-8861 ext. 112) and in league publications.

CUNA has provided great resources and documentation on this issue at www.cuna.org/rbc. There, in addition to a detailed review of the rule in several forms, you can find a calculator that provides more depth in its ability to analyze your current and projected realities based on this rule, than what you would find on the NCUA Web site.

This is a CALL-TO-ACTION, my friends. Whether a credit union or a provider for credit unions, YOUR LIVELIHOOD IS AT STAKE. It is not the time to sit on the sidelines, idly by. It is time to step up and say:

“Let’s do it!”

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