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The Advocate - Legislative Update
Thursday, April 3, 2014 8:00 AM


New RBC Proposal Calculator

A key issue for credit unions this week, and through May 28, is the NCUA's risk-based capital (RBC) proposal. While NCUA has a calculator to help credit unions determine how the proposal would affect their net worth, CUNA's policy analysis team has loaded a new and improved version of the risk-based capital calculator to their website. The new CUNA calculator allows you to gauge the impact of the proposal over time by evaluating changes to a credit union's risk assets and ratio-numerator values, along with simulation of various risk-weighting options; and it will give credit unions the ability to realistically assess the impact of future balance sheet growth and earnings assumptions. Your credit union data will automatically be loaded into the calculator, which will eliminate the need to re-enter all of your information.

Your league and CUNA representatives are closely watching the RBC issue and remain vocal about the need for broad changes in the areas where the proposal does not conform to the requirements of the Federal Credit Union Act regarding prompt corrective action. We again encourage you to write comment letters to NCUA before the deadline of May 28. You can find more information about our comment campaign at CUNA’s grassroots website. A detailed summary of the RBC rule may be accessed here.

Please don't forget to share any comments you make with Cornerstone’s regulatory compliance counsel, Suzanne Yashewski, at


April is Project Zip Code Month

Yes, April is Project Zip Code Month, and all 35 Cornerstone chapters are urged to participate by visiting the Project Zip Code website and installing the 14.0 software.

Project Zip Code is a secure program that matches credit union members by state and federal districts, enabling elected officials to see how many of their constituents (and voters) belong to credit unions. It is one of the credit union industry’s most powerful advocacy tools and an essential component of Cornerstone's signature grassroots program, CU:ROAR. With the 2014 mid-term elections, it’s very important that all credit unions participate in Project Zip Code this calendar year.

Each Cornerstone chapter has a participation goal. To view the goal for your chapter, click here. Chapters have until April 30 to process the new upload, and chapters that meet their goals will be presented with a state flag that has flown over their respective state capitols.

Cornerstone's Project Zip Code website has additional resources that may be useful to you. Should you have questions, please do not hesitate to contact Jim Phelps at or April Mobley at


Legislative News

The Arkansas General Assembly recently finished its 2014 session, which addressed departmental budgets for all state agencies. In this session, only budget items can be filed unless a 2/3 majority vote of each house is obtained to introduce a non-budget item. While some political ads have been running on television and some candidates have been on the campaign trail, the real push will start within the next few weeks leading up to the Arkansas primary on May 20.

Chapters and Politics

The South Central Chapter of Credit Unions will host their first Reality Fair, Monday evening, April 7, in Malvern. A Reality Fair gives high school students a realistic view of the financial life of an adult. During the fair, participants are given an identity, a job, an education level, and family responsibilities; and they are asked to make financial decisions as they move through a series of life-experience booths. 

As the first chapter to host a Reality Fair in the state of Arkansas, chapter leaders wrote a grant application to the Cornerstone Credit Union League Foundation to purchase the Reality Fair for use in schools and events. 

Rep. Anne Clemmer, candidate for U.S. representative in the 2nd Congressional District, the seat being vacated by Rep. Tim Griffin, has been invited to attend. As a friend of credit unions, Cornerstone supports Clemmer's bid for this open seat.


Political News

Along with activity in the Legislature, Oklahomans are beginning to see some real buzz in the run-up to the filing period (April 9-11) for federal, state, legislative, and county offices.

According to new Credit Union Association of Oklahoma President Nate Webb, "One of the big topics of conversation continues to be the number of members announcing a decision to retire or not seek re-election. The latest domino to fall is House Speaker Pro-tem Mike Jackson (R-Enid). Jackson was the heir-apparent to the speakership but was upset by Representative Jeff Hickman (R-Fairview)."

To date, 10 senators are term limited, retiring, or running for other offices. In the House, the number of seats up for grabs is 19, and that number could grow before the end of the filing period. Webb adds that many Democrats are dropping out because they feel they aren't relevant in the Oklahoma legislature anymore.

Legislative Highlights

Committee work is currently dominating Oklahoma's legislative chambers, as bills originating in one chamber have been sent to the other chamber for consideration. Some of the bills still under review include:

HB2506. Assigned to the Senate Judiciary, we support this bill, which revises small claims procedure to benefit financial institutions.

HB2620. We support the bill, which is a property rights act, currently in the Senate General Government Committee. The bill would protect lienholders from paying fines and fees to municipalities on vacated property, as long as the property is maintained properly and doesn't pose a threat to property values in the surrounding area. We don't want to see it become a convenient revenue stream for municipalities or that any markup language would apply to a house that's been foreclosed on and sits empty but not abandoned.

SB0582. This bill is undergoing final markup language for the bill's author. We support this bill, which revises Title 42 to tighten the time frame in which lienholders must be notified.

SB2837. This bill, which we support and currently resides in the hands of the House Judiciary Committee, addresses the issue of "patent trolls." Slight modifications have been made to the original bill, but those are negligible and should not impact its overall intent.


Davis Testifies on Data Security Breach

The Texas House Committee on Business and Industry met Thursday, March 27, and opened the floor to leaders from state agencies, the bank community, credit card processors, retailers’ associations, and credit unions. As a key representative of the financial institution industry in Texas, the committee invited the Texas Credit Union Association to testify. On our behalf, Gary Davis, president of Chocolate Bayou Community Federal Credit Union, testified about the effects of data breaches on credit unions, including reissuance costs, fraud losses, and erosion of the public trust.

Davis reported that, so far, his credit union has "replaced around 500 debit cards at $6.05 per card, which includes the cost of making the card, processing, and mailing it to accountholders. But that cost reflects only a portion of the impact felt by consumers and financial institutions when a breach occurs."

Davis testified specifically about the Target, Nieman Marcus, and similar data breaches. "Simply complying with the Payment Card Industry Data Security Standard," he said, "could have prevented the millions of dollars that financial institutions had to spend on new cards; the tremendous amount of time that credit union employees spent addressing the breach with our members; the untold fraud losses yet to come; and the massive inconvenience and cost to our members who had to reestablish all of the automatic payments that were set to their debit or credit cards so their bills could be paid."

Winding down his comments, Davis requested that legislation be passed to greater protect the citizens of Texas by taking steps toward these actions:

  • Require merchants or individuals receiving payments by credit or debit card to securely protect the sensitive personal financial information they receive;
  • Require individuals and merchants who receive card payments to notify their card processor, or third-party pass-through agent, immediately upon detecting a breach;
  • Require that the card processors provide the breach information to the financial institutions that issued the card to the consumer;
  • Allow card issuers to recover costs resulting from a merchant's failure to protect or destroy the data;
  • Require anyone taking credit or debit cards to remove card data once the transaction is completed.

Davis stated that next year, the EMV chip card technology will be rolled out, and new cards will need to be reissued at between $4 and $9 per card. Chairman Oliveira asked whether or not this charge would be passed on to consumers, and Davis replied that they would not.


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