e-Weekly

May 11, 2011

FiCEP Financial Counseling Certification Program still accepting registrations
The FiCEP Credit Union Financial Counselor Certification Program is now underway, but there is still room for a few more students to join the class prior to the first webinar on May 24.

This unique program offers credit union professionals the opportunity to earn professional certification as a credit union Certified Financial Counselor. It does so with a blend of first rate materials, webinars, local in-person classroom sessions, and the proctored examinations necessary for certification.

On Tuesday, May 24, the first module, “Introduction to Financial Counseling,” will be reviewed in the first of eight webinar sessions. The webinars and sessions will follow on a bi-weekly basis (with minor exception) until the course is completed in September. Two in-person review and testing sessions (one on July 13 and the other on September 28) will be offered at the Credit Union Center as part of the program. Alternative dates will be offered to participants who are not available to sit for the scheduled exams.

Click here to register or for more information. If you have any questions, please contact Rob Kimmett, SVP Marketing and Public Relations, at rkimmett@cucenter.org or 1-800-842-1242.

NCUA finds direct debit costs higher for small credit unions
The National Credit Union Administration (NCUA) recently released results of a survey of 296 credit unions that has provided additional information about some of the costs and income produced by debit card transactions for credit unions of different sizes. NCUA analysis found that the direct costs of providing debit card services are "progressively higher for smaller credit unions."

In a letter to the Federal Reserve (Fed) Board highlighting the survey results, NCUA Chairman Debbie Matz urged the Fed to modify its proposed rule on interchange fees "to take into consideration the unique circumstances of smaller credit unions." Without careful drafting of the implementation rule, credit unions under $10 billion in assets, which are intended to be exempt from government-imposed interchange fee limits, may find themselves shifted to the "large institution cap level of compensation."

The NCUA review found that credit unions, especially smaller ones, often use a third party to access debit card payment networks. "Because the payment networks may include a processor that offers only the large institutions cap rate fee...the proposed rule seems likely to result in market forces shifting income for credit unions under $10 billion" to the large institution cap.

Under requirements of the Dodd-Frank Wall Street Reform Act, the Federal Reserve has proposed a debit card interchange limit that would top such fees at 12 cents.

The NCUA's analysis found that "direct costs per transaction do not fall below the proposed cap until credit unions reach $100 million to $500 million in assets."

NCUA acknowledged its cost analysis "likely understates costs for debit card transactions" and was limited to a portion of the total costs of providing debit services. It excluded all "labor, facilities, equipment and other overhead costs," and it appears NCUA considered only a subset of the fees that credit unions pay to third parties in the provision of debit services.

CUNA is inquiring as to which of the many costs of clearing, authorization and settlement were and were not included in NCUA's analysis.

Credit unions with $10 million or less in assets pay a median cost of 31 cents per debit transaction. Credit unions with $50 million to $100 million in assets pay a median cost of 19 cents per transaction. The NCUA said that these costs "significantly exceed the maximums allowed under the proposed rule."

Overall, the NCUA found that the smaller the credit union is, the more likely it is that that credit union would lose money on debit card transactions, and again asked the Fed to ensure that a planned interchange fee cap exemption for credit unions with under $10 billion in assets will work as planned.

Consumer credit up 3% in March, down at credit unions
U.S. consumers borrowed more than expected in March--with credit totaling $2.46 trillion, the Federal Reserve (Fed) said recently. That was 3% or $6 billion more than in February. Credit unions lent $219.7 billion during the month--about $2.2 billion less than in February. While credit card debt stayed the same as in February for credit unions, their March non-revolving loans slipped $2.2 billion.

March's overall consumer credit outstanding was the sixth consecutive month that borrowing had increased, following February's increase of $7.6 billion, said the Fed. Economists surveyed by Dow Jones Newswires had estimated a $4.8 billion gain in consumer credit (The Wall Street Journal May 6).

Overall revolving credit card debt and non-revolving loans such as auto, student, and mobile home loans each increased 3% during March, said the Fed. Overall credit card debt totaled $796.1 billion, compared with $794.2 billion in February. March marked the second time in 31 months that credit card debt increased, signaling that American consumers may be letting their credit debt grow again (The Atlantic May 6).

Analysts offered several possible explanations for the increase in credit card debt. One possible explanation is related to rising gas and food prices forcing some consumers to run a credit card balance to make ends meet, said The Atlantic. Or it could be that consumers are eager to spend again. According to Bloomberg.com, gains in payroll may be giving consumers the ability to borrow more, and consumers are more confident about the economic outlook and their financial situation.

For credit unions, credit card debt remained at $35.3 billion, same as in February, but $6 million less than in January, said the Fed's report. Credit unions lent $184.5 billion in revolving loans, compared with $186.7 billion in February and $188.2 billion in January, the report said.

Overall non-revolving credit totaled $1.629 trillion, nearly $4.1 billion more than in February. In credit unions, non-revolving loans totaled $184.5 billion, compared with $186.7 billion in February and $188.2 billion in January.