2017 NAFCU REPORT

2017 NAFCU REPORT

on

CREDIT UNIONS

Federal Advocacy, Education & Compliance

2017 NAFCU Report on Credit Unions | 1

NAFCU REPORT ON CREDIT UNIONS

November 2017

Table of Contents

BACKGROUND

5

KEY FINDINGS

7

CREDIT UNION TRENDS

8

Role in the Economy

8

General Financial Conditions

9

Industry Consolidation

11

Lending Standards & Conditions

12

Liquidity

13

Secondary Mortgage Market

14

CREDIT UNION SERVICE TO MEMBERS AND USE OF FEDERAL RESERVE SERVICES

15

Electronic Financial Services

15

Federal Reserve Services

16

LEGISLATIVE ISSUES FACING CREDIT UNIONS

19

Preserving the Credit Union Tax Exemption

19

Regulatory Relief

19

Data and Cybersecurity

20

Interchange Fees

21

Member Business Lending

22

Capital Reform

23

Housing Finance Reform

24

REGULATORY ISSUES FACING CREDIT UNIONS

25

Federal Reserve

25

Consumer Financial Protection Bureau

28

National Credit Union Administration

32

Department of Defense

35

Federal Communications Commission

35

EMERGING CHALLENGES

37

An Evolving Financial Marketplace

37

An Unlevel Playing Field

37

Keeping Pace with Technological Change

38

Growing into the Future

39

This material was prepared for a meeting between the NAFCU Board of Directors and the Board of Governors of the Federal Reserve System

Board of Directors and President and CEO of NAFCU

Richard L. Harris Chair Region V Director President/CEO Caltech Employees Federal Credit Union La Canada, CA Asset Size: $1.6B Members: 32,146 FOM: Multi-Occupational

Jeanne Kucey Vice Chair Region III Director President/CEO JetStream Federal Credit Union Miami Lakes, FL Asset Size: $197M Members: 21,704 FOM: Community

Debra Schwartz Treasurer Director-at-Large President/CEO Mission Federal Credit Union San Diego, CA Asset Size: $3.3B Members: 213,777 FOM: Community

Thomas W. DeWitt Secretary Region IV Director President/CEO State Farm Federal Credit Union Bloomington, IL Asset Size: $4.0B Members: 130,598 FOM: Service

Robert L. Fisher Director-at-Large President/CEO Grow Financial Federal Credit Union Tampa, FL Asset Size: $2.4B Members: 199,046 FOM: Multi-Occupational

Gary Grinnell Region I Director President/CEO Corning Federal Credit Union Corning, NY Asset Size: $1.4B Members: 103,797 FOM: Multi-Occupational

James A. Kenyon Director-at-Large President/CEO Whitefish Credit Union Whitefish, MT Asset Size: $1.4B Members: 54,899 FOM: Community

Jan N. Roche Director-at-Large President/CEO State Department Federal Credit Union Alexandria, VA Asset Size: $1.8B Members: 77,814 FOM: Multi-Occupational

Charles A. Rutan Director-at-Large President/CEO Southwest Airlines Federal Credit Union Dallas, TX Asset Size: $499M Members: 50,627 FOM: Multi-Occupational

Brian Schools Region II Director President/CEO Chartway Federal Credit Union Virginia Beach, VA Asset Size: $2.2B Members: 182,422 FOM: Multi-Occupational

FOM is Field of Membership

2 | 2017 NAFCU Report on Credit Unions

Daniel Weickenand Director-at-Large CEO Orion Federal Credit Union Memphis, TN Asset Size: $621M Members: 62,261 FOM: Multi-Occupational

B. Dan Berger President/CEO NAFCU Arlington, VA

Board of Governors of the Federal Reserve System

Janet Yellen, Chair of the Board of Governors. Her four-year term as Chair expires February 3, 2018, and her 14-year term as member ends January 31, 2024. She began her term on February 3, 2014. Prior to her appointment, Dr. Yellen was Vice Chair of the Board of Governors, a president of the Federal Reserve Bank of San Francisco and a member of the Federal Open Market Committee. She is professor emeritus at the University of California at Berkeley and has been a faculty member since 1980. She was also chair of the President's Council of Economic Advisers.

Randal Quarles, Vice Chair for Supervision. He took office on Oct 13, 2017, to fill an unexpired term ending January 31, 2018. Prior to his appointment, Mr. Quarles was founder and managing director of the Cynosure Group. Before founding the Cynosure Group, he was a partner at The Carlyle Group. Mr. Quarles served multiple positions in the Department of Treasury, most recently as the Under Secretary of the Treasury for Domestic Finance. He also served as the U.S. Executive Director of the International Monetary Fund, and was a partner at Davis, Polk & Wardwell.

Jerome H. Powell, member of the Board of Governors. He took office on May 25, 2012, to fill an unexpired term ending January 31, 2014. He was reappointed and sworn in on June 16, 2014 for a term ending January 31, 2028. Prior to his appointment, Mr. Powell was a visiting scholar with the Bipartisan Policy Center, where he focused on federal and state fiscal issues. From 1997 through 2005, he was a partner at The Carlyle Group. Mr. Powell also served as Assistant Secretary and as Undersecretary to the Treasury under President George H.W. Bush.

Lael Brainard, member of the Board of Governors. She took office in June 16, 2014, to fill an unexpired term ending January 31, 2026. Prior to her appointment, Dr. Brainard served as Undersecretary of the U.S. Department of Treasury and Counselor to the Secretary of the Treasury. Dr. Brainard also was previously the Vice President and Founding Director of the Global Economy and Development Program, and held the Bernard L. Schwartz Chair at the Brookings Institution. She also served in several staff positions in the Clinton Administration and was a professor of Applied Economics at the Massachusetts Institute of Technology (MIT).

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