e-Weekly

July 13, 2011

MA Credit Union Tornado Relief Effort
While the Tornado that ripped through Western and Central Massachusetts took mere moments to end lives, tear down homes, and wreak havoc on many communities, it will take years to repair the physical damage done. The work of rebuilding is just getting started.

The communities hardest hit are pulling together with the help of the Red Cross, numerous community groups, and state and local government. Among the organizations that are working to help are the area credit unions. This part of the state is fortunate to have a large number of credit unions, and like credit unions throughout our state, they were on hand from the beginning to help as soon as the storm subsided.

The Credit Union Association of Rhode Island is reaching out to its member credit unions to help get the word out about a credit union relief effort. The Massachusetts Credit Union League has joined together with its Pioneer Valley Chapter and the Central Massachusetts Chapter to organize a credit union response to this terrible catastrophe. They are looking to harness the generosity and community spirit of the credit union community to help those hardest hit.

The area credit unions, through their representatives on the chapter boards, have indicated that raising money for the Red Cross is the best way that the credit union community can help. Your gift will enable the Red Cross to prepare for and provide shelter, food, emotional support, and other assistance in response to disasters.

The Credit Union Tornado Relief Effort will accept donations collected by credit unions and combine them into one large donation from the credit union community. Want to help? Simply determine what it is you would like to contribute and make a check out to the Red Cross Pioneer Valley Chapter, then mail that check to the Massachusetts Credit Union League, 845 Donald Lynch Blvd., Marlborough, MA 01752.

CUNA at CFPB to discuss 'large issuers'
The Credit Union National Association (CUNA) was one of several industry representatives that recently discussed how the Consumer Financial Protection Bureau (CFPB) should approach its regulation of non-bank/non-credit union "larger participants" in consumer financial services.

The CFPB meeting aimed to identify what types of large non-bank/non-credit union financial entities should be subject to CFPB supervision and examination. It is considering regulating non-financial institution auto lenders, debt collection agencies, credit reporting agencies, prepaid credit card firms, debt relief firms, and money transfer firms. The CFPB is accepting public comment on how to treat these types of entities.

CUNA and the CFPB were joined in the discussion by the Independent Community Bankers of America (ICBA), the AFL-CIO, and several other industry and consumer groups. The CFPB is holding additional meetings with more than 100 organizations.

Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, the CFPB is authorized to supervise all sizes of nonbank payday lenders, private student lenders, and mortgage companies. Dodd-Frank requires that the CFPB issue an initial rule on large non-bank firm regulation no later than July 21, 2012, one year after the designated transfer date.

While the supervision of privately insured credit unions was not discussed during the CFPB roundtable on large non-bank financial entities, CUNA following the meeting said it is committed to minimizing the regulatory burden of these credit unions. CUNA added that, if the CFPB elects to take on regulation of privately insured credit unions, it should rely on state-regulators to examine these credit unions.

Consumer credit rises in May, credit union members borrow more
Consumers borrowed $5.08 billion more in May than they did in April, according the recently released Federal Reserve's Consumer Credit statistics for May. It was the eighth consecutive increase and more than the $3 billion increase forecast by economists. Consumers also borrowed more from credit unions.

The total amount borrowed in May reached $2.432 trillion, up from April's $2.427 trillion. The amount borrowed from credit unions totaled $223 billion, up from April's $221.8 billion and March's $219.7 billion.

Credit card debt--revolving credit--shot up by $3.36 billion to $793.1 billion after a decline of $867 million in April to $789.8 billion, according to the Fed's statistics. May's figure is the largest monthly increase in credit debit since mid-2008 mid-way through the financial crisis that led to the recession.

Although the Fed does not release a commentary with the statistics, some analysts said one reason for the increase may be that consumers facing limited job prospects were forced to turn to credit cards more frequently to pay bills (Reuters July 8).

At credit unions, revolving debt totaled $35.6 billion, up from $35.2 billion in April and $35 billion in March, according to the Fed's statistics.

Non-revolving debt, which includes student loans and auto loans, grew $1.7 billion overall to $1.639 trillion, up from $1.637 trillion in April. At credit unions, consumers borrowed $187.4 billion in May, up from $186.6 billion in April.

While other sectors saw increases in consumer debt, finance companies saw a decline in both revolving and non-revolving credit. The report does not include home mortgage loans and home equity lines of credit.