AUSTIN, Texas — There is a "new day" coming as Congress considers a trio of bills related to the member business lending cap.
That was the message from Dick Ensweiler, CEO of the Cornerstone Credit Union League, at the group's Annual Meeting here Wednesday. He told a huge room of delegates representing CUs from Texas, Arkansas and Oklahoma there is hope on the horizon.
"There are three bills in Congress to address the cap that strangles credit unions so badly," he said: One would exempt loans to veterans who want to fund a business, one would exempt certain small housing projects and one that would raise the cap to 27.5% from its current 12.25%. Referring to the latter bill Ensweiler declared, "This is more logical and allows credit unions to help their communities. I think we are going to see a new day. We have momentum now."
In his annual report to the three-state membership of the Cornerstone League, Ensweiler identified a long list of "challenges and opportunities" in the environment in which credit unions operate. He said CUs have been doing a "great job" the past five years dealing with low interest rates.
"You have sharpened your pencils and gotten the fat out of the system," he told attendees. "I am so proud of all credit unions, and as the Fed indicates it might raise rates soon, credit unions will be in a position to do even better."
The Cornerstone League is working with Congress to make the Consumer Financial Protection Bureau indicate how a new regulation would affect credit unions before it takes effect, Ensweiler reported. Although NCUA recently stated CUs would face no more new regulations from it in 2015, Ensweiler said there is work to do with the revised risk-based capital rule and the fixed asset rule that currently is out for comment. "It is up to you to make sure the rule works for your credit union," he told the crowd.
Regulatory agencies want to ensure CUs have the "right kind" of concentration limits on their lending, Ensweiler continued. He urged credit unions that are adding mortgages and home equity loans to make sure they can stand a rate rise.
Technology, Security, Interchange
With a large number of new developments on the technology front — chip cards, remote deposit, online and mobile payments, to name a few — Ensweiler said management at every CU has to decide what is "right" for it. However, he added, credit unions will have to have an e-commerce security policy in place to show examiners.
On the mobile wallet front, Ensweiler said, "The retailers are introducing a system called 'CurrentC' that would eliminate interchange income. We need to be aware of this."
Succession, Advocacy, Regulatory Proactivity
Between today and the year 2020, 60% of credit union CEOs will be retiring, Ensweiler said. He advised CUs to "make sure they have the right people in place" and offered the League's help in succession planning and staff development.
Turning to advocacy, he declared, "All of us have the responsibility to engage with legislators on both the state and national levels. It is important they understand we are different from banks. Congress is looking at a lot of bills. As cooperatives, we have an amazing story to tell — we exist to serve our members. Banks are about profit — that does not resonate."
Representatives from CUs should meet with legislators when they are at their home office and tell the story of the credit union movement, he said. The special point of emphasis: show how legislation affects credit union members that are the constituents of lawmakers.
Ensweiler noted state regulators "tell us what they are going to do to us before they do it" through advance notice of rulemaking. He said if a rule gets no response, regulators assume they got it right and the rule will go into effect as proposed.
"Take the time to read the rule. Determine how it will affect the credit union and how it serves its members, and then write a letter to the regulator," he counseled. "NCUA said it would not change the risk-based capital rule, but then when it received 2,000 comment letters it did make a change. If there is a big response, it makes a difference."
