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We’re prepping to head out for the GAC this next week.  Should be a great event from what I hear.  We’re meeting with our local rep Darlene Hooley and we also get some face time with Gordon Smith (R) and Ron Wyden (D), our state senators.  We’re also meeting up with the folks from CUES, Ongoing Operations, Brent from Trabian, Morris @ EverythingCU, and quite a few others.  Also looking forward to meeting up with a bunch of other CU folks for some cold, frosty beverages Tuesday night at Capitol City Brewing.

On a side note, I’m flying out of Salem, OR for the first time!  We just got service to Salt Lake!  Most of the time we have to drive up to Portland, but for anything on the east coast, flying out of Salem is going to rock!  Can’t wait to see everyone out there and met a bunch of new faces!

We were interviewed for a CU Times article a while back and it looks like it made it into the most recent issue.  I’ve yet to see the actual print copy of the mag as ours gotten eaten by the post office, but I have read it online.  Here is the link.

The Federal Reserve proposed some changes to Regulation D this week that will be of interest to those reclassifying their deposits.  While the proposed rule changes do make a few tweaks, I will only focus on those relevant to Deposit Reclassification.

The Fed is actually trying to make life a little easier for FI’s by changing some of the wording relating to the Six-Three area of Reg D.  In the past, the regulation has limited "convenient" transactions to only 6 per cycle, with check and debit card transaction to only 3.  The new proposed rule would change to wording to continue to allow for 6 transactions and eliminate the other "3" limits.

There were also a few changes related to pass-through accounts and their legality in certain situations, but that’s getting a little down in the weeds. Long story short, these proposed changes do not directly impact an FI’s ability to reclassify their deposits.

Here are the new proposed rules from the Fed.  By the way, I can’t stand reading regulations, but unfortunately, I’m getting pretty good at it and somebody’s got to do it!

Driving up to Lacey, WA for the Super Bowl yesterday, my mind wandered over work, as usual, and I began thinking about the massive amounts of capital that CU’s have laying around.  Deposit Reclassification’s main job is to free up non-interest earning assets and turn them into income generators for the CU or bank.  If all of the CU’s reclassified their deposits, they could earn an extra $154M which could be returned right back to our membership.  I recalled a Filene article a while back referencing the over-capitalization of the CU market, it said that CU’s were overcapitalized by $29B dollars.  Yes, that is $29 billiondollars!  Assuming CU’s actually invested their excess capital, that would be an additional $1.4B of income to the CU industry.  Imagine what credit unions could do with that much extra money!

With the economy in its current state, many people feel comforted by the fact that we do have the excess capital.  It will give CU’s something to fall back on if something really hits the fan.  But what is an adequate amount of capital?  The NCUA says 7%, but last I heard the average CU had about 11% or 12%.  Are CU’s doing a disservice to their members by hoarding all of this money on their balance sheets?  Or are they just exhibiting extreme risk avoidance?

I noticed LifeLock got $25M in series c funding today.  A month or so back there was a conversation going on at Banktastic about identity theft companies and if they were really worth the money.  Search for credit union identify theft on Google and you’ll end up with a bunch of credit unions offering their service to their members.

So my question is who should be providing this?  Should the consumer be buying this out of pocket?  Is it a value add to a product line for a bank or credit union to offer?  At Banktastic, Mark makes reference to the fact the he looks at it like car insurance, only cheaper.  You pay a bunch of money a month and rarely ever use it.  I can understand how some FI’s would want to offer this to their customers/members, but is it really worth the expense for the limited subset of people this type of product appeals to?

OpenID is a relative new authentication framework what is being used by more and more websites across the internet.  It enables end users of web apps to maintain one identity instead of having a username and password associated with each and every website or service an individual uses.  Microsoft attempted to do this with their Passport service years ago that has recently morphed into the Live services.  OpenID however, is:

"…an open, decentralized, free framework for user-centric digital identity. OpenID takes advantage of already existing internet technology (URI, HTTP, SSL, Diffie-Hellman)…"

 Individuals can be issued an OpenID from many providers such as ClaimID, MyOpenID, or Verisign.  There is already an estimated 160M OpenID’s in use on the internet so chances are some credit union members already have them.

Does OpenID have a place in the banking system?  I could envision it being used to log into online banking for members, SSO functionality to enable seamless integration into other online vendors, like e-statement providers or credit card processors.  OpenID could also be used internally to provider other SSO to separate systems behind the firewall.  Each AD or LDAP user could automatically get an OpenID that would enable them to log into their banking platform, imaging platform, lending platform, intranets, etc.  That is of course if vendors supported it.  I’m sure there will be many people who will attack the open-source nature of OpenID and claim it will be not secure enough to support members logging into an online banking platform.  Phishing is a concern for this type of service, so could it be made secure enough, as it matures, to be usable by FI’s?