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Credit Unions Vie with Banks for Consumers, Mortgages

With rules and regulation still underway from the Dodd-Frank Act, major mortgage lenders face competition from credit unions as their public image wanes with segments of the population.


Rising debit card fees drove some 650,000 consumers to credit unions over October, with social media movements responsible for galvanizing the exodus, according to a recent survey.

The ""Credit Union National Association"":http://www.cuna.org/ (CUNA) laid claim to the figures in a survey for which the trade group polled some 5,000 credit unions nationwide.

The consensus: CUNA members reported reaping $4.5 billion in new savings accounts with the influx of new members since late September.

In a ""statement"":http://www.cuna.org/public/press/press-release/issues/hundreds-thousands-of-consumers-billions-of-$$-move-credit-unions, the trade group attributed the migration to calls for a controversial $5 monthly debit fee by big lenders and a social-media inspired ""Bank Transfer Day"" that occurred in response.

""These results indicate that consumers are clearly making a smarter choice by moving to credit unions where, on average, they will save about $70 a year in fewer or no


fees, lower rates on loans and higher return on savings,"" said ""Bill Cheney"":http://www.cuna.org/cuna/bios/b_cheney.html, the trade group's president and CEO.

He said the largest credit unions ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô those with $100 million or so in assets ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô sopped up much of the inflow from financial institutions, with 70 percent accounting for the sizeable growth from late September onward.

""DowJones Newswires"":http://www.nasdaq.com/aspx/company-news-story.aspx?storyid=201111041346dowjonesdjonline000505&title=hate-your-bank-bank-transfer-day-is-saturday reported that art-gallery owner Kristen Christian struck the match that led to the backlash when she launched ""Bank Transfer Day"" on Facebook.

Lenders like ""Bank of America"":https://www.bankofamerica.com/, ""Regions Financial Corp."":https://www.regions.com/personal_banking.rf, and ""SunTrust Banks"":https://www.suntrust.com/ subsequently dropped the idea of a debit-card fee increase as it became more unpopular with consumers, according to ""_The Wall Street Journal_"":http://professional.wsj.com/article/SB10001424052970203707504577010291984996510.html?mg=reno-wsj.

A spokesperson for Bank of America did not immediately return a request for comment by e-mail.

_The Journal_ reported that big lenders went to consumers for help in making up fees lost as a result of the Dodd-Frank Act, which the newspaper said had slashed the amount of fees that financial institutions can charge over debit-card use.

The flock by consumers to credit unions marks the latest in a string of public relations problems for the nation's biggest banks, which continue to see unrest from populist movements like ""Occupy Wall Street"":http://occupywallst.org/.

Adding to their woes, an ""Office of the Comptroller of the Currency"":http://www.occ.treas.gov/ study reported that the draft version of the Volcker Rule ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô another Dodd-Frank provision - ""will cost financial institutions as much as $1 billion"":https://themreport.com/articles/occ-volcker-rule-will-cost-1b-for-banks-2011-10-28 in compliance-related expenses.

More recently, CUNA ""pitched itself into the fight over reform"":http://www.cuna.org/newsnow/11/wash110311-4.html in the secondary mortgage market, seeking to vie for access to originations as a proposal by ""Rep. Scott Garrett"":http://garrett.house.gov/ (R-New Jersey) generates more attention.

About Author: Ryan Schuette

Ryan Schuette is a journalist, cartoonist, and social entrepreneur with several years of experience in real-estate news, international reporting, and business management. He currently lives in the Washington, D.C., area, where he freelances for DS News and MReport.

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