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Credit Union Times

APRIL 19, 2017 | VOL. 28 | NO. 13 | CUTIMES.COM

Senate
Clouds
Dodd-
Frank
Overhaul
DAVID BAUMANN

dbaumann@cutimes.com

upporters of the House’s highly partisan process to overhaul Dodd-Frank are likely to face a stark political obstacle in the coming months: The United States Senate.

In the coming weeks, the House is likely to ram through a highly partisan bill that would, among other things, vastly decrease the power of the CFPB. But enactment of any regulatory overhaul is likely to require 60 votes in the Senate – a high hurdle that will require some compromise with Democrats.

And many Democrats are fans of the CFPB.

“If there is no bipartisan compromise, the CFPB will stay as it is presently structured because meaningful reform is going to require 60 votes in the Senate and that will be impossible to get without Democrat votes,” former NCUA Chairman Dennis Dollar said.

The House Financial Services Committee is scheduled shortly to mark up its plan to change the financial regulatory regime. The committee approved similar legislation last year, with Dem- Y17

LEGAL BATTLES

A CUSO Under Attack

A fierce legal battle is under way between a student loan CUSO’s seven big credit union members and what was once one of the largest for-profit education companies in the nation that went bankrupt last year.

What’s at stake in this controversial case is hundreds of millions of dollars that the CUSO claims it is owed.

Indianapolis-based trustee lawyer Deborah J. Caruso, who is representing ITT Technical Institute, claims the CUSO, Student CU Connect LLC, contributed to ITT’s closure and bankruptcy and argues the $224 million in dispute should be withheld and/ or recovered from the CUSO.

“The CUSO loan program scheme was, at a minimum, a colossal breach of ITT’s former management’s fiduciary duties, may have constituted outright fraud by such management and unquestionably resulted in a massive fraudulent transfer of ITT’s assets to and/or for the benefit of the defendants (the CUSO and its credit union members),” Caruso wrote in court documents.

New York City-based attorney Richard J. Bernard, who is representing the CUSO, said Caruso’s complaint has no merit.

“The defendants (the CUSO and its credit union members) at all times have acted properly and in good faith, and to the extent that ITT or its management has engaged in any wrong- Y15 Must Reads

redit unions gained a record share of the U.S. credit card market in 2016, in part because they have been able to match the marketing tools of big banks with rewards programs.

Banks had been able to domi-
nate the loyalty arena because of
the high expense of building a sys-
tem that tracks and acts on con-
sumers’ purchases by rewarding
them with points. Those systems
also have to provide ways for con-
sumers to redeem those points.

The expenses favored scale. In recent years, CUSOs have emerged that provide that infrastructure to smaller credit unions. Along the way, the technology behind rewards programs has improved, lowering the costs for big and small lenders alike.

“The bar to entry has gone to
the floor,” Andrew Gates, a loyalty
program consultant, said.

Now the test for credit unions will be graded on a human scale: How well can credit unions listen to their members, provide rewards members want, and engage members in using the rewards system both by earning points and redeeming them, according to Gates, CEO of Azigo Inc., a loyalty technology company.

Credit cards started becoming part of credit union offerings in the 1980s, and have grown

LENDING

CUs Make Cards More Rewarding

JIM DUPLESSIS jduplessis@cutimes.com

Y16

FOCUSREPORT: HUMAN RESOURCES

& BENEFITS

Workplace diversity: It’s on the minds of most organizations’ leaders, but not all have been proactive in its implementation. Learn why some believe it’s time to have an uncomfortable conversation about the topic in this Focus Report. Y6