California & Nevada leagues' meeting kicks off
The California and Nevada Credit Union Leagues kicked off their Annual Meeting and Convention Monday evening with a slew of big name speakers, including Jim Nussle, president and CEO of the Credit Union National Association and Mark McWatters, chairman of the National Credit Union Administration board; Teresa Freeborn, president and CEO of $948 million Xceed Financial Credit Union, El Segundo, Calif., and chair of CUNA’s Awareness Advisory Group, provided an update on efforts by CUNA and the League System to raise consumer awareness of credit unions; and artist Phil Hansen shared the secrets of embracing limitations.
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Notes from Nussle
Jim Nussle, president and CEO of the Credit Union National Association, said CUNA was cautiously optimistic after a first read of the recently unveiled tax reform plan in Congress.

“The proposed tax cuts did not come after credit unions – at least not yet,” he said. “But any time Congress is looking at taxes we have to remain vigilant.”

Nussle listed several fall advocacy priorities for CUNA, including seeking regulatory relief in the Senate, continuing to protect credit unions’ tax status, getting appropriations to fund the Community Development Financial Institutions Fund and National Flood Insurance, seeking Stabilizations Fund refunds from NCUA, continuing to defend NCUA’s proposed field of membership rules in court, and increasing pressure on Congress to strengthen national data security standards.

Nussle also encouraged CUs to use CUNA’s Member Activation Program to get members engaged in public policy debates. “We have the third-largest political action committee in the country,” he said.

CUNA’s Awareness campaign is gathering data “so we can create better awareness of credit unions in the future. We need to put credit unions on a better plane,” Nussle said.
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NCUA's reg matrix
Mark McWatters, chairman of the National Credit Union Administration board, said he is frequently asked, what is NCUA doing to provide regulatory relief? “Quite a bit,” is his answer.

“[Fellow NCUA board member] Rick Metsger and I are going through regulations and putting them into a matrix,” McWatters said. “The categories include regulations that are easy to change and those that are difficult or costly to change. For anyone who wants to see this roadmap, it is not a secret, we publish it in the Federal Register.”

McWatters gave the gathering of credit union professionals a rundown on the status of several regulatory initiatives, starting with the field of membership rule released several months ago – after the FOM rule was finalized, it became the target of bankers’ lawsuit that currently is pending in federal court.

As for one of the long-running topics in credit union circles, the ability for CUs to raise supplemental capital, McWatters said, “It strikes me it is entirely appropriate that credit unions be able to raise supplemental capital as allowed by the Federal Credit Union Act.”

“Last month we finalized an appeals rule,” he told the crowd. “When I got to NCUA I was concerned about your rights to challenge NCUA; that you feared retaliation if you dared to challenge the findings of an examiner. Is it a perfect rule? No, it is not perfect, but it is better than any other financial regulator.”

McWatters added he believes it is time to “loosen the shackles” on corporate credit unions and let them do business again.
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Spending money to make money
The NCUA chairman acknowledged the recently release rule covering voluntary mergers was controversial, but he said he had one overriding question in such instances: when a member votes on a merger, are they getting all the facts to allow them to make an informed decision?

“Stepping away from regulation, we are looking at NCUA itself,” he continued. ‘We are closing regional offices, but not overnight. We are reassigning people. We intend to have the changes done by Jan. 1, 2019. That is a long time, but it will make sense for the agency and the people who work for the agency.”

NCUA is working on making changes to the call report, told the audience. “We want to make changes that lessen your burden, and the burden on us. We are setting up a virtual examinations group to figure out the best way to change examinations. We want a formal way to examine credit unions from a distance while assessing risk – risk within your credit union and risk to the Share Insurance Fund. A huge percentage of the NCUA budget – 70 percent to 80 percent – is examiner pay and examiner travel. We are spending some money to see how to save money.”

NCUA has changed offices within the agency to make it “more efficient, more credit union friendly, and more responsive to credit unions,” McWatters said.

One of the hottest topics in credit union circles in 2017 is the proposed consolidation of the Temporary Corporate Credit Union Stabilization Fund into the National Credit Union Share Insurance Fund. McWatters noted the equity ratio of the NCUSIF has been coming down in recent years, and said the operating ratio of the NCUSIF is set using pre-recession methodology, from 2007, which could have led to a credit union premium assessment this year.

“That did not make sense to me, because we had the Stabilization Fund that has been very successful,” he said. “There is almost an embarrassment of riches in the Stabilization Fund. I wanted to borrow from the Stabilization Fund, but was told we could not do that.”

The next thought McWatters had was to merge the two funds together. He said if NCUA took the excess funds from the TCCUSF and put those in the Share Insurance Fund, there would not be an assessment.

“That would mean going from writing a check to receiving a check. We can do it, but the next question is, how big is the dividend? In the last month, NCUA has conserved two credit unions, so there is a question of how the book those losses.”

The normal operating level of the NCUSIF is 1.30 percent. McWatters noted he first proposed moving that figure to 1.33 percent, but eventually adjusted upward to 1.39 percent due to merger of the “very risky” assets of the Stabilization Fund. He said analysis showed the various Guaranteed Notes in the Stabilization Fund had a potential to be short $400 million in a moderate recession, which is why he said the operating level needed to be so high. “Hopefully we do not have a moderate recession, and then another dividend would be coming to credit unions.”
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Awareness update
Teresa Freeborn, president and CEO of $948 million Xceed Financial Credit Union, El Segundo, Calif., and chair of CUNA’s Awareness Advisory Group, said the overarching goal of the awareness initiative is to create top-of-mind consumer awareness of the credit union difference. She said the initiative – which was introduced 17 months ago at CUNA’s ACUC in Seattle – is still in the research phase.

“It takes a lot of resources to get all that research,” she noted. “It has to be research driven, because we have to know what consumers think and what they want. We have designated Brand Cap as the creative agency, which works closely with our consultants, The Glover Park Group.”

Freeborn said Brand Cap offers expertise on design, digital and branding, and is tasked with brand platform and creative development. “The important thing is they ‘get’ credit unions,” she said of Brand Cap.

One question Freeborn fields frequently: what is a brand platform? Her answer: a brand platform is something that becomes the organizing principle for the category of credit unions. She said it will drive all of the decisions the awareness committee makes, and it will drive how the committee members think. She noted Starbucks is guided by the principle of the third space – apart from home and work. A brand platform drives strategy, not just marketing, she added.

The committee is still working on the language of the brand platform, but Freeborn hinted it will have to do with getting ahead, with members having a better financial future by being affiliated with credit unions. She said the brand platform also will highlight the “unique business model” CUs have, one that treats people as people, not account numbers, and the fact credit unions are small enough to care but big enough to matter.

So far the research effort has identified perhaps the biggest obstacles to credit union growth: four myths associated with every CU – I can’t join, it is more for those in need, accessing my money may be hard, and they are too small.

These myths are found in consumers from every part of the country, Freeborn said.

“Our research shows 65% of people know all about credit unions. They are aware of the positives, but they simply think they cannot join. As a result, we have sharpened the brief to address the ‘I can’t join’ myth.”

Another common belief is a CU is only local, or is a mom and pop shop. “People think if they move or go on vacation they cannot access their money,” Freeborn said. “As we go forward with this initiative, we have to emphasize anyone can join, and we are big enough.”

All of those involved in the awareness initiative currently are developing creative concepts. Freeborn said these will be designed to be “bold and disruptive,” and promised they would be tested with both members and non-members. These concepts will be unveiled at CUNA’s Government Affairs Conference 2018.

“Whatever we do it has to work; it has to resonate with people,” she said. “Before we do a national rollout, we will test it in a number of markets.”
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'Seize the limitation.'
Phil Hansen is an artist who was diagnosed with permanent nerve damage in his forearm – normally terrible news for an artist.

“I was sitting there trying to take this in, and the doctor told me to embrace the shake,” Hansen recalled. “The more I embraced the shake, the more I made art in a different way. I discovered if I worked on a larger scale, my hands were less of an issue. In embracing my limitations, I was able to drive my creativity.”

According to Hansen, what he thought would be the “ultimate limitation” turned out to be the “ultimate liberation.” He said for each human being, seeing our limitations differently comes from having a different perspective. “As an artist I am always aware of light and shadow. Our success comes from how easily we use the things that are right in front of us.”

Hansen delivered a TEDtalk, which he said led to conversations about transforming challenges. There is a difference between a limitation and a self-limiting belief, he insisted, adding a limitation is something that has been put in our way, while a self-limiting belief is something we have put in our own way.

“We can transform our belief in how our limitations affect us,” he said. “Kids see limitless possibilities. But as we get older we are told about what we cannot do, so we change from thinking, ‘what if?’ to ‘what is.’”

“My limitation was straightforward: my hand shakes. But my belief is what was limiting: if my hand shakes, I cannot produce my art,” Hansen said. “I learned to ask the right question: how can I do art with a shaky hand? Ask yourself new questions about your limitations.”

Humans are in the habit of counting on external resources, which Hansen noted works well when times are good, and there is always more money and people to help us. The challenging times give us far more potential for success, he insisted, because that is when we turn to our internal resources.

“We can choose to get ahead by tapping those internal resources,” he declared. “Can you imagine what we can do if we embrace our limitations? Real change comes from the inside, and from believing in ourselves. There are solutions to every problem, as long as we keep our minds open to unexpected sources. When we invite ourselves to see limitations as opportunities, we see open possibilities.

“We tell each other to seize the day. Let’s say, seize the limitation,” he said.