Through the support of our members and partners, NACUSO raised approximately $273,000 in contributions toward its Advocacy Fund (and predecessor Legal & Litigation Fund) over the past 3 years. The goal of the two funds together are to enable NACUSO to conduct crucial advocacy work on behalf of CUSOs and their credit union owners / partners.
In keeping with our commitment to be fully transparent and to regularly communicate our usage of these dollars (we provided detail of how the funds were spent from 2014-2015 last year, which is also included in the attached Report), we would like to provide you with the following information, which was provided in detail to each contributor in the first quarter of 2017. NACUSO spent the following amounts from the Advocacy funds during 2016:
$24,000 Dollar Associates, LLC - paid for advocacy work with Congress and NCUA on CUSO issues
$24,000 Messick & Lauer, P.C. - paid for advocacy work with NCUA and meetings with Congress on CUSO issues
$ 718 Travel to Washington DC for meetings with Congress and NCUA
$48,718 Total amount spent influencing Congress and NCUA for favorable CUSO environment
The remaining funds, out of the total $273,000 in combined contributions, equal $110,323. This represents the balance in Restricted Cash as of 12-31-16, as per the NACUSO Advocacy and Legal Fund Analysis report (click link below).
The NACUSO Board and its Legislative & Regulatory Advocacy Committee is continuing to prioritize the advocacy of a regulatory environment that is pro-CUSO and pro-collaboration within our industry. NACUSO needs your support for this initiative and to accomplish its purposes. While strategies may change over time based upon circumstances and opportunities to advance the cause of CUSOs, the necessity for funding of such initiatives is essential if NACUSO is going to remain in a position to impact the decision-making process for CUSOs and the credit unions that invest in, or utilize them.
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For a summary of how NACUSO has worked to maintain an environment that is supportive of collaborative investment, the following report entitled NACUSO Working For You (see below) provides a summary of the work we have done on your behalf. To capsulize some of its key points, a summary of what we feel are the NACUSO “wins” this past year are:
- Effectively opposing the costly extension of Vendor Authority to NCUA.
- Worked with NCUA on the revised MBL Rule.
- Advocating for the expansion of CUSO powers to originate loans credit unions are authorized to make, to help bring scale and expertise benefits to credit unions in all loan categories.
- Encouraged NCUA to be transparent in its budget and rule making including the OTR calculation.
- Working with NCUA to minimize adverse impact of the CUSO Registry and to correct the acknowledgements initially in the Registry.
To emphasize the last bullet above, initially, in its first version of the CUSO Registry documentation that CUSOs were required to submit with their data to NCUA in 2016, the agency’s acknowledgement form required CUSOs – when submitting their data – to accept responsibility under regulations that only apply to credit unions but were not intended to, apply to CUSOs. These acknowledgments, if left unchallenged and signed by CUSO officials, could have exposed CUSOs to potential penalties under regulations that do not, and were never intended to apply to CUSOs. Upon becoming aware of this inappropriate acknowledgement requirement, NACUSO worked directly with senior NCUA staff to bring our concerns to their attention. NCUA agreed to the NACUSO position and made the needed changes to the acknowledgements for the CUSO Registry data submission process. In addition, for those CUSOs who had already submitted their registration and signed the acknowledgements, NACUSO developed a letter with the appropriate wording for those CUSOs to send to NCUA to clarify this acknowledgement concern.
Effective advocacy requires ongoing diligence in following every aspect of regulatory requirements impacting CUSOs and the credit unions that invest in them and benefit from them. It necessitates prompt response at times and the ongoing resources to interact positively on behalf of the CUSO community on issues and requirements of all types. With a new Congress now in session, educating them on the benefits of credit unions and the collaborations that enable them to cost effectively serve their members, as well as invest in innovation, through CUSOs that help spread and minimize risk, is an important message we are delivering. We hope that you agree such diligent advocacy initiatives are crucial to the long-term viability of the collaborative movements within the credit union community.
We hope this report helps you see how we have carefully managed the funds entrusted to us, for Advocacy purposes. We would be happy to answer any questions that you may have. Thank you for your support, and for giving NACUSO the opportunity to support you as you serve your members. Please consider adding your support to our advocacy efforts by contributing today.
View NACUSO’s 2016-17 Advocacy Plan
View NACUSO’s Advocacy & Legal Fund Analysis
Best Regards,
Jack M. Antonini
President & CEO
NACUSO
Jack@nacuso.org
NACUSO Working For You
Legislative & Regulatory Advocacy Update
Vendor Authority
Knowing that obtaining vendor authority was the number one legislative issue for NCUA in 2015-16, Jack Antonini and Guy Messick met with key Congressional representatives in January to tell Congress why credit unions and CUSOs oppose the extension of this expansive, costly and unnecessary authority to NCUA. When NCUA made their official request for vendor authority, Congress was not persuaded by their arguments.
We continue to monitor the situation to ensure that the Senate and House recognize that such an unwarranted extension of regulatory and examination authority beyond the current statutory mandate of NCUA is both controversial in the industry and potentially damaging to an industry that is dependent upon third party relationships because of their smaller size in comparison to many of their competitors. Credit unions need third party support and collaborative innovation to continue to effectively meet their members’ needs, and a burdensome regulatory and examination regime for anyone who does business with a credit union will not foster that support and innovation.
NACUSO is focused on protecting credit union collaboration through CUSOs, but we need your help, so we can continue to be vigilant in monitoring legislation in Congress, please contribute to NACUSO’s Advocacy Fund today – click here to contribute.
NCUA’s MBL Rule
NACUSO was supportive of the positive changes in NCUA’s revised MBL Rule, including the greater authority to waive personal guarantees, a more balanced approach to construction loan limitations, enhanced flexibility on counting loan participations against the MBL cap and the improved treatment of 1-4 dwelling rental property. NACUSO also, in consultation with our business lending CUSO members, recognized that the Conflict of Interest provisions in the new MBL Rule could be misconstrued by examiners, so we have engaged with NCUA Board members and senior NCUA staff about the issue, and sent a letter to explain our concern and our recommended solution (see NACUSO’s MBL Conflict of Interest Letter to NCUA ).
Expansion of CUSO Authorized Powers
NACUSO wrote to the NCUA Board in 2015 requesting an amendment to NCUA Regulations Part 712.5 to add to the list of authorized CUSO powers to help facilitate a competitive solution to the growing Internet and peer-to-peer lending competitors for car loans and unsecured loans faced by credit unions in today’s environment (see NACUSO’s letter). Chairman Matz responded that she was not opposed to reconsidering new authorities for CUSOs, indicating “if CUSOs can legally provide additional services to benefit credit unions and their members without compromising safety and soundness, I would strongly support those efforts.” Chairman Matz went on to say that she had asked NCUA staff to review the policy and safety and soundness considerations relative to our request, and this review is already underway (see Chairman Matz response).
NACUSO has since asked the NCUA Board to consider updating the CUSO powers to align CUSO loan support with the loans credit unions are authorized to provide to their members (see NACUSO’s 2017 Expansion of CUSO Authorized Powers Letter to NCUA), so CUSOs can bring scale, risk mitigation and expertise benefits to credit unions in all loan categories, not just those listed in the regulations. While we explained the reasons for updating the NCUA Rules and Regulations Part 712.5 defining the permissible pre-approved activities a CUSO may provide, we also referred to our advocacy efforts to have auto loans and consumer loans added to the list of CUSO activities over the past two years, and the support that NCUA has communicated regarding those efforts. We respectfully submit that now is the time to update the CUSO regulations to clarify that CUSOs are authorized to assist credit unions with any loan type that credit unions are authorized to make.
Update on CUSO Rule Implementation
Pursuant to the CUSO Rule the NCUA adopted in November 2013, CUSOs have been required to report certain information directly to NCUA pursuant to the agreement with their investing credit unions. NCUA built an on-line reporting system that went live in the first quarter of 2016, and CUSOs updated their CUSO Registry information in the first quarter of 2017.
NACUSO continues to work with regulators minimize the regulatory burden on CUSOs and to help credit unions realize the maximum benefit from collaboration through CUSOs. We work to ensure regulations affecting credit unions and CUSOs are as favorable as possible, but we need your help to continue this regulatory advocacy work, please contribute to the NACUSO Advocacy Fund today.
NACUSO Supported Transparency on OTR
NACUSO has long expressed its concern about the growth of NCUA and its extension of its regulatory arm, both directly and indirectly, into areas of questionable statutory authority such as the de facto regulation and examination of CUSOs through the 2013 CUSO Rule. The extension of regulatory authority by NCUA comes with increased costs, costs that are paid for ultimately by credit union members.
NCUA takes money from the insurance fund to pay for its operations through the Overhead Transfer Rate (“OTR”). The OTR currently funds approximately 70% of NCUA’s budget. NCUA does not have to justify its expenses or ask permission from anyone to take as much money as it deems appropriate from the share insurance fund for its operations. Fortunately, under new leadership, NCUA has decided to be more transparent as part of its budget process and publish details of how it calculates the OTR.
NACUSO 2016-17 Legislative & Regulatory Advocacy Plan
As we explained when we announced the formation of the NACUSO Advocacy Fund two years ago, the regulatory climate that enabled credit unions to maximize the benefits of CUSOs and collaboration is under siege, and as an industry, we need to respond. NACUSO established an Advocacy Fund to supplement its efforts to promote and protect a collaboration/CUSO friendly regulatory climate.
At the 2016 NACUSO Annual Conference, we shared our 2016-17 NACUSO Advocacy Plan, based upon the four basic precepts upon which our advocacy work is based. Those four pillars are designed to support an environment that:
- Encourages credit unions to deliver a better member experience and improve the financial well-being of members
- Encourages credit unions to seek new collaborative ways to serve members needs
- Rewards investment in innovation and collaboration
- Supports the use of CUSOs as the incubators for collaboration and innovation so that credit unions can reap the benefits of entrepreneurialism without direct risks
The Advocacy Plan also identifies the key associational positions that NACUSO is focused on, for the benefit of CUSOs and their credit union owners, which are summarized as follows:
- Supports the development of clear examination guidelines that recognizes that NCUA has review powers and not examination powers over CUSOs. Such guidelines would inhibit de facto regulatory creep that would treat CUSOs as regulated entities that would discourage innovation and collaboration. NACUSO will intervene with NCUA in the more egregious cases if the CUSO or the investing credit unions request NACUSO’s assistance. NACUSO opposes any legislative efforts by NCUA to gain statutory authority to directly regulate and examine CUSOs through an unnecessary expansion of the agency’s examination authority over credit union vendors
- NACUSO supports the modernization of the permitted CUSO Services list to include all loan types that credit unions can originate to help bring scale benefits as well as risk mitigation and expertise benefits to credit unions
- NACUSO will encourage regulators to view innovation and collaboration as an essential part of a revitalized credit union model and adapt their regulations and supervision to encourage the responsible and prudent development of the collaborative model
Key strategies for accomplishing the NACUSO 2016-17 Legislative and Regulatory Advocacy Plan are detailed in the Advocacy Plan. In order to have a maximum impact upon the regulators and the industry, CUSOs and their credit union owners must stand united as we promote the unique collaborative opportunities and risk sharing benefits that our CUSOs provide. Together, our participation in collaboration advocacy efforts through NACUSO will be our most effective way of impacting the future regulatory environment under which CUSOs operate.
NACUSO will focus its advocacy efforts on those issues most critical to the CUSO community as a whole and will attempt to avoid watering down its message on key issues by taking public positions on all issues that may impact CUSOs or credit unions in a more indirect manner.
In the current environment it has become increasingly important for credit unions to find new sources of non-interest income in order to enhance earnings, build capital, and support member growth. Thus, collaboration and innovation are more critical now than ever before to create sustainability for the credit union movement. NACUSO educates the industry as a whole (CUSOs, credit unions and other providers) on the benefits of collaboration and innovation, facilitates cooperative business opportunities, and provides leadership on how to implement these strategies within a favorable legislative and regulatory environment.
It is the desire of NACUSO to be recognized as an effective organization in support of building a favorable legislative and regulatory environment through what we consider the four pillars of future credit union success – collaboration, innovation, growth and entrepreneurship. NACUSO will be balanced in approach, but bold in action to aggressively promote this agenda and will seek to join with other like-minded organizations, when appropriate, to work in collaboration with NACUSO to see these key agenda items accomplished.
All of the organizations associated with the NACUSO Board of Directors have already made contributions to the NACUSO Advocacy Fund. We urge you to add your collaborative voice to NACUSO’s advocacy efforts. Please complete the commitment form today, and send your contributions to NACUSO so we can help you. Please share with your friends in the industry who want to ensure a bright innovative, collaborative future for our industry and our members. If you or your industry friends are not yet members of NACUSO, now is the time to join, and be part of the collaborative solution. If you have questions about the NACUSO Advocacy Fund, click the link to go to the NACUSOAdvocacy Fund FAQ’s.
Thank you very much for your support, and for giving NACUSO the opportunity to serve you as you serve your members. It is a privilege that we truly appreciate.
Sincerely,
Jack M. Antonini
President & CEO
NACUSO
Jack@nacuso.org
Jack M Antonini
President & CEO – NACUSO
jantonini@aol.com (713) 208-0989
NACUSO’s 2018 Network Conference April 16-19 at Disneyland Resort in Anaheim, CA
Learn more about NACUSO in this short video!
If you do not have the resources on staff to compete in today’s world of instant gratification through the internet, and you want to compete and survive as an independent credit union, there is only one effective choice: collaboration. Fortunately, it is in the DNA of credit unions to collaborate. Through the CUSO structure credit unions have fostered effective collaborations that create new revenue sources from alternative financial products, dramatically reduced costs, increased the expertise available to credit unions and inspired innovative solutions to the problems facing credit unions. The inability to create significant spreads in net interest margins in today’s world is of great concern. CUSOs generate much needed net income for credit unions, helping provide capital to support growth in service to members.
The secret lies in managing the member experience. Member experience takes into account all the feedback from members and puts it into perspective in order for credit unions to address issues and tackle them. By working on member feedback, you convey to your members that “sense of community” is not merely a trending phrase but a sacrosanct philosophy which you respect and value. Managing member experience, however, doesn’t end with collecting feedback. It starts there and culminates in loop closure.
