Trusted News for Credit Union Leaders
Credit Union Times
MA Y 1, 2019 | VOL. 30 | NO. 14 | CUTIMES.COM
FOCUSREPORT:
SERVING MINORITY
GROUPS
The Great Recession resulted in a decline in homeownership in many
communities – especially those dominated by minorities. Learn how
credit unions can help minority groups rebuild their wealth and
embark on a path to financial success in this Focus Report. Y6
Must Reads
INVESTMENTS
‘Pensionize’ 401(k)s and IRAs
In a world of defined contributions, American workers have
three challenges – inadequate
savings, leakage (or loans/early
withdrawals) tied to their retirement accounts and the need for
retirement income. Plus, just half
of all DC plans offer a way for
investors to transform balances
into periodic retirement income,
with only one in five offering
guaranteed lifetime payouts.
This situation prompted Steve
Vernon of the Stanford Center on Longevity, Wade Pfau of
The American College of Financial Services and researcher Joe
Tomlinson to explore and devise solutions to “pensionize”
retirement plans. Their work,
first published last year and then
updated this year, finds that only
one-third of workers contact financial advisors, and most lack
the necessary skills to convert
savings into retirement income
and typically have short planning horizons.
But research from the Stanford Center on Longevity (SCL)
and Society of Actuaries (SOA)
has found a “straightforward retirement strategy,” according to
the three authors. “Choosing a
specific solution that will help
workers generate retirement income requires them to make
informed tradeoffs between potentially competing goals,” they
explained, such as “maximizing
lifetime income; providing access to savings (liquidity); planning for bequests;
EMPLOYEE BENEFITS
Should Your CU Self-Insure?
We are a l familiar with the say
ing, “If you want something don
properly, do it yourself.” But what
if this saying was also true: “If
you want something done profit
ably, do it yourself”?
When it comes to employee
health insurance, most employers would probably balk at the
dea of pulling the function in-house. Today, of course, most U.S.
employers farm out their benefit
plans – paying an insurance provider that contracts a network of
doctors and hospitals to care for
employees and manage claims
and other administrative minutiae. But a shift in regulatory com
pliance and recent technology
advancements mean the industry
is now seeing a growing number
of employers who are benefiting
significantly by, in some part, be
coming their own insurer.
The Sickness Pool
One of the challenges with the tra
ditional approach is that employee health insurance is a statistical
game of risk – and the odds may
be stacked against many employers. In most cases when an em
ployer pays premiums to a large
carrier for health insurance, they
are swimming in a giant pool with
many, many individuals with sig
nificant health conditions. Th
carrier is exposing itself to risk,
and everyone ends up subsidizing the higher-risk employee
population.
Picture two very different em
ployer environments, Y16
Life Insurance
Opportunities
Many scenarios can
trigger a sale. Y12
The Second
Bottom Line
Target minorities
to boost social
impact. Y7
fter Linda Levy retired
last year from the $55
million Lower East
Side People’s Federal
Credit Union in New York, N.Y.,
Cliff Rosenthal, former executive
director of the National Federa-
Credit Unions (now Inclusiv), said
it would be difficult to find a new
president/CEO who could fill her
shoes, according to a New York
Times article headlined “The Little
Bank that Could.”
In the April 13, 2018 feature
story, Rosenthal noted the suc-
cessor would require an “extraor-
dinary combination of being very
focused on the business aspect
and yet being in tune with the
political and social aspirations of
that community,” he said. “Those
things are not easy to find.”
After several months of search-
ing, the credit union board hired
that not-so-easy-to-find CEO,
Maureen Genna, who holds
an impressive combination of
work experience at credit unions
with sizable assets and small
credit unions where she devel-
oped a passion for serving the
underserved.
It was that same passion under
Levy’s executive tenure that fueled
the credit union’s growth in assets
and membership over the years
despite being surrounded by the
world’s biggest banks – not
CEO Profile: A Small CU Survivor
PETER STROZNIAK
pstrozniak@cutimes.com
Y17
GROWTH STRATEIGES
OMB Makes
Huge Power
Play
DAVID BAUMANN
dbaumann@cutimes.com
he NCUA’s regulatory
process may soon slow
to a crawl.
And it won’t be the
agency’s fault.
On April 11, the Office of Management and Budget announced
that beginning May 11, all guidance and rules issued by independent agencies, such as the NCUA,
CFPB and other financial regulators, must be submitted for review
by the budget office. If the rules or
guidance is deemed to be “major,”
they also will be required to submit them to Congress under the
Congressional Review Act.
Congress then would have to
decide whether to accept the rule.
If Congress votes against it and
the president signs the resolution,
the agency is prohibited from issuing a similar rule.
NCUA officials, with the exception of Todd Harper, the new
Democratic board member, have
been reluctant to comment on the
memo.
But former agency board members said the documents signify a
major power play on the part of
the Trump Administration.
“Undoubtedly it will undermine the independence of the
regulatory agencies and could
diminish their ability to respond
expeditiously to situations Y18
REGULATIONS