Filed under: Truth in Savings Act, accounts, credit unions | Tags: credit unions, overdraft services, Proposed Rule, Truth in Savings
There have been rumblings for quite some time about more regulation on overdraft services. Consumer advocates have been lobbying for change because they believe that “overdraft transactions are a high cost form of lending that traps low and moderate income consumers.” See Truth in Savings Proposed Rule. Federal Register Vol. 73, No. 97 at 28740. These advocates also worry about “debit card overdrafts where the dollar amount of the fee may far exceed the dollar amount of the overdraft, and multiple fees may be assessed in a single day for a series of small-dollar transactions.” Id.
Arguably, these overdraft services also keep consumers away from check cashing companies and keep them in traditional financial services with overall lower costs. However, examples such as the consumer who buys a pack of chewing gum with a debit card and is hit with a $20.00 fee for the transaction don’t help. Especially when, prior to overdraft services attaching to the account, the same purchase would simply have been denied without a fee.
Overdraft services are popular with credit unions and I would argue that credit unions are not among the primary abusers of extensive fees tied to these programs. Yet, the proposed changes to Truth in Savings are targeted at all financial institutions that offer the programs.
Highlights of the rule include setting requirements for notices to be given to consumers concerning opt-out rights, disclosure of overdraft service costs on statements and separating out balance inquiries to show funds available with and without the overdraft service.
Consumers can opt out of overdraft services now. The proposed rule would require financial institutions to provide the notice of this at various points prior to assessing fees to the consumer. Currently, giving the consumer specific costs of overdraft services in the consumer’s statement is reserved for financial institutions that advertise overdraft protection. This rule would eliminate that exception. The problem for credit unions is that some data processors still can’t comply with these requirements. ATM processors would face similar hurdles on ATM balance printing.
The comment period ends July 18, 2008. We’re slated to discuss this proposed rule (among other things) on CIiCU this month as well.
Rob Rutkowski will be teaming up with the Alabama Credit Union League on May 22, 2008 in Birmingham, AL to present a seminar on “Credit Union Accounts”, “Compliance” and “Identity Theft”. This seminar will cover various types of saving and share draft accounts, a review of non-personal accounts, and operations for account ownership. The seminar will also cover issues surrounding trust accounts, how to properly set up accounts, deposit account regulations including the Truth in Savings Act, handling accounts after the owner’s death and processes for handling abandoned property. Finally, Rob will cover various issues surrounding identity theft and will talk about how credit unions can protect their members’ sensitive information. If you are interested in attending this seminar, please visit this page: http://www.acul.com/portal/page/portal/ACUL/edusvc/calendar/ACUL%20CALENDAR%20CONTENT/Front%20Line%20Teller%20Boot%20Camp.pdf
Filed under: branch opening, credit unions, links, marketing, pictures | Tags: "credit union", building, coffeehouse, financial services, innovation
I spent some time on Tuesday with Dan Cwalina from Lormet Community Federal Credit Union. Lormet is about to open its new main office and I wanted to share some pictures I took and comment a bit on what this credit union is doing. Lormet began its existence in the 1930s as a steelworker credit union. Today it has assets of over $100 million and serves all of Lorain County, Ohio.
The new Lormet building has a large lobby, which is perfect for displaying automobiles from local dealers.
There’s a comfortable waiting area and enclosed loan section. The space is well thought out and designed. Members will always be dealing with credit union staff as they transact business. In a day of ever increasing automation, this is definitely a different approach.
The boardroom is very tasteful and modern.
There are training rooms that seat enough people to have educational seminars. Dan and I talked about setting up something where I might do a presentation later this year. At this point we just have to pick a topic.
The part of the building that’s generating the most attention is the coffeehouse. Arabica has a location inside Lormet’s building.
Members will be able to get coffee and spend time in this area in addition to doing their banking.
I had previously used this as an example on Current Issues in Credit Unions as a progressive way to bring people into the credit union. Here we will see it put into practice.
It takes courage to open up a credit union like this and embrace ideas of using the credit union’s physical structure as a resource beyond mere banking. I’m impressed by what Dan and his team have done and I can only imagine a favorable result for Lormet in terms of increased membership and demand for member services.
Filed under: PCUA, credit unions, disaster recovery, opinion, pictures | Tags: convention, PCUA, Randy Gilson, Union Station
I’m back from Pittsburgh where we exhibited at the PCUA convention. Here is a picture of Ben Bibler and Dawn Pagon at the booth.
If you remember walking through the exhibition hall and seeing a guy in a suit juggling periodically, that was me. We exhibited on Thursday and Friday and I stayed through Saturday. On Saturday, I gave two 90-minute Disaster Recovery presentations. These seemed to be well received.
I have to say, that I enjoyed staying at the Westin Convention Center. I had a nice view of Union Station outside my hotel window. Here’s a picture.
My partner at our law firm, Jim Valecko, has a picture of what Union Station looked like when it was still being used primarily as a train station. It is much cleaner now, in fact it is quite beautiful.
I also have to mention that it was a pleasure meeting Randy Gilson. Mr. Gilson is a waiter at one of the restaurants at the Westin. However he is also a one-man urban renewal project. He has created Randyland which is his vision of reusing and recycling and revitalizing part of the city. He impressed me as an energetic and rather extraordinary individual.
It is always great to work with the PCUA and this trip turned out to be no exception.
