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U.S. Central defendants ask for PIC-test suit dismissal

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BIRMINGHAM, Ala. (1/27/10)--The U.S. District Court in Birmingham, Ala., Monday gave 13 executives and former executives and volunteer board members of U.S. Central FCU 14 days to respond to the latest filing in a securities fraud lawsuit brought against the individuals and U.S. Central's accounting firm RubinBrown by Corporate America CU (CUAC). The suit centers around U.S. Central's action in December to convert $450 million of non-permanent capital to permanent paid-in-capital shares known as "PIC II." Neither U.S. Central nor the National Credit Union Administration (NCUA)--the conservator of U.S. Central--is a party in this complaint filed by the Alabama-based corporate. Corporate America CU filed its response brief to the defendants' Dec. 16 motion to dismiss the case on Friday. The case is before U.S. District Judge Inge Johnson. At issue is whether the PIC II shares are securities. Unlike the other cases involving U.S. Central, the defense argues that the PIC II capital shares in U.S. Central do not qualify as "securities" under the federal securities laws. Instead, they argue that NCUA--not the Securities Exchange Commission (SEC), which administers the federal securities laws on which much of CACU's complaint is premised--is the regulator responsible for federally insured credit unions such as U.S. Central. NCUA's regulations, specifically 12 CFR part 704, apply to corporate credit union capital instruments such as PIC II, and NCUA's role as the federal safety and soundness regulator of corporate credit unions means that the securities laws should not apply based on established legal precedents, according to defense filings. Attorneys for the U.S. Central executives and board argue that if the PIC II are not securities, then the CACU's federal and state securities laws claims should be dismissed because those laws only apply to the offering and/or sale of securities. The defense lawyers also argued that the claims not based on securities laws should also be dismissed because Alabama would only be the appropriate venue for the non-securities claims if those claims piggyback on securities laws claims, since U.S. Central is based in Kansas, according to the motion to dismiss. CACU's complaint alleges securities fraud and breach of fiduciary duty against the individuals, and professional negligence and state securities law violations against the accounting firm RubinBrown for its valuation of the PIC II shares. CACU's response to the motion to dismiss reiterated the complaint's theory that PIC II shares are securities, which are subject to the Securities Exchange Act of 1934.

MoneyGram extends Haiti wire-transfer discount

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MINNEAPOLIS, Minn. (1/27/10)--CUNA Strategic Services provider MoneyGram International announced Tuesday it is extending its special pricing for money transfers to Haiti through Sunday. MoneyGram had announced early last week it would offer special pricing of US$1 and similar pricing in foreign currencies, for money transfers to Haiti from any of its 186,000 locations throughout the world. Forty of its money-transfer agent locations in earthquake-stricken Haiti are operational and able to receive transfers, including three in Port au Prince, Haiti's devastated capital city, and five locations in surrounding cities. Use the link to find specific information about the agent locations. Overall MoneyGram service in Haiti consists of about 130 agent locations operated by Unibank, Rapid Transfe, FONKOZE and Grace Trading. More than half the locations are within the disaster areas. "We are working as hard as we can, in concert with our core relationship banks, authorities conducting relief efforts and our functioning local agents in Haiti, to help restore the flow of funds to the Haitian people. Through our worldwide agent network, we are also providing updated information to senders on agent locations in Haiti where their loved ones can receive transactions," said Dan O'Malley, executive vice president of the Americas at MoneyGram. "As the recovery progresses and cash becomes more available for payout, more agent locations will come online again. We will provide periodic updates on agent availability as the situation develops," he said. Also, through Feb. 13, customers can visit any MoneyGram ExpressPayment U.S. agent location and use the Red Cross code 3886 to send a donation to the American Red Cross. In the credit union movement, credit unions are continuing to collect funds for disaster relief efforts for credit unions, their employees and volunteers, and members. Haiti has 175 credit unions with 404,090 members. The World Council of Credit Unions has staff in Haiti to assist credit unions and their members. Credit unions can give to the Credit Union Disaster Relief Fund by contributing to the Worldwide Foundation for Credit Unions, and, for U.S. credit unions, through the National Credit Union Foundation's CUAid disaster effort system at To support Haiti's credit unions and members through the international credit union disaster fund, make payments, via check, credit card or wire to: Worldwide Foundation for Credit Unions Inc., 5710 Mineral Point Road, Madison, WI 53705, USA. Donations also can be made online with a credit card at For wire transfer information, contact Valerie Breunig, Worldwide Foundation for Credit Unions at 608-395-2055 or via e-mail Please indicate the donation is designated for the Haiti Disaster Relief Fund.

CUs shine in several media reports

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MADISON, Wis. and WASHINGTON (1/27/10)--Credit unions continue to shine in the press, with the latest round of positive stories about credit unions. Bloomberg TV featured Credit Union National Association Chief Economist Bill Hampel Monday evening talking about existing home sales data and what it suggests for the economy. An article entitled "Credit unions are going strong," a story on bank ratings, noted that Pensacola, Fla.-area credit unions "could teach some local banks a thing or two about effectively managing customers' deposits," said (Jan. 24). Credit unions "have managed to shine," the publication said, citing quarterly ratings by a Coral Gables, Fla., research firm. It ranked 11 area credit unions with five-star ratings, the highest rating, and three with four-star ratings. By comparison, it awarded five-star ratings to only three local banks and four-star ratings to two other banks in the area. In Sioux Falls, S.D., "The Big Difference in Credit Cards," noted that credit union credit cards are an option to credit union companies that raise rates and fees and cut credit limits and added, "they might be what you need to help you financial deal with our tough economy" ( Jan. 26). The article interviewed Sioux Falls FCU President Fran Sommerfeld, who said the credit union hasn't raised rates or cut credit. It also interviewed Marya Leber, who switched to a credit union credit card from a Citibank card in August. Rates weren't the only reason for the switch. "If you have a problem you can come in [to the credit union] and talk to these people; it's not like you're calling India," Leber told An item on loan modifications in The Wall Street Journal's MarketWatch section (Jan. 22) by Andrea Coombes, assistant personal finance editor, admitted she had never been a credit union customer, "but the more I learn about these financial institutions, the more interested I get. The interest rates they charge on credit cards and mortgages tend to be slightly lower than banks' rates, but it's their reputation for customer service that really piques my interest." She told of shopping for a home mortgage and her visit to Redwood CU. "The branch manager chatted with me for a while about my options, ran through some possible scenarios, and then put me in touch with the loan expert. Like the branch manager, he was quick to respond and helpful."

Wichita CUs Repossessions trending upward

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WICHITA, Kan. (1/27/10)--Repossessions of cars and trucks have been trending upward since the fall, creating an increase in the number of vehicles for sale in the parking lots of credit unions throughout Wichita, Kan. The rising number of repossessions are a sign that more consumers are unable to make their monthly car payments because their savings accounts have been depleted and their unemployment benefits have run out, according to some Wichita credit union executives (The Wichita Eagle Jan. 26) . “I kind of expect it to continue, maybe even go up this year,” Jim Holt, president of Mid-America CU, told the newspaper. Repossessions in 2009 were triple the amount of previous years, Larry Damm, president of Cessna Employees CU, told the paper. “It’s huge,” Damm added. “The difference here is voluntary repossessions. Folks just drove in and gave us the keys. And we believe we’re going to be there for another year.” During economic downturns, credit unions generally see an uptick in repossessions, credit union executives told the paper. “This isn’t unique to Wichita,” Bob Corwin, CEO of Meritrust CU, told the paper. “I’m hearing this [downturn] is a little bit more unique because of the uncertainty as to when the cycle might end.” Because credit unions are “taking a bath” on the resale value of repossessed cars and trucks, “we do everything we can to try and keep that car in [members’] driveways as long as we possibly can,” Chuck Bullock, CEO of TECU CU, told the paper. “During 2009, you might as well have hung a scarlet letter around an SUV or pickup,” he added, alluding to their resale value. To read the article, use the link.

Heartland settlement offer to CUs expires Friday

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WASHINGTON (1/27/10)--Credit unions have until 5 p.m. PT Friday to accept the joint Visa Inc./Heartland Payment Systems data breach settlement offer sent out Jan. 14, reminds the Credit Union National Association (CUNA). CUNA staff met Tuesday with representatives of Visa to discuss the joint settlement, which stemmed from efforts to recoup losses and costs incurred when financial institutions, including credit unions, reissued thousands of consumers' debit and credit cards compromised during Heartland's 2008 data breach. Issuing financial institutions can access the offer by using the Visa link. Credit unions with questions can call 888-847-2488, email with general questions, or contact their Visa account executive. The companies announced the maximum $60 million settlement in which Visa-branded credit and debit card issuers may recover losses earlier this month (News Now Jan. 11). The agreement is contingent on acceptance by financial institutions representing 80% of the eligible issuers' U.S. accounts that Visa considered as under risk of being comprised. The general industry buzz is that it's likely that the 80% threshold will be met. Participation in the settlement program supplants any other recoveries that may be available to issuers through Visa and requires accepting issuers to release Heartland, its sponsoring bank acquirers and Visa from any liability--legal or financial--related to the Heartland intrusion. The settlement offer has brought a complaint filed against Heartland's acquiring banks by attorneys appointed by the court to represent the proposed class of Visa issuers against Heartland in a pending class action lawsuit in Houston (News Now Jan. 21). The attorneys say the proposed Visa/Heartland settlement has four weaknesses:
* It may offer little compensation to payment card issuers; * It gives credit unions and banks little time to decide whether to participate; * It releases Heartland and other parties (the acquiring banks) from liability; and * It is being touted for reasons that "are not entirely accurate."

Free CUs for Kids marketing workshop in November

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SALT LAKE CITY (1/27/10)--Children’s Miracle Network Tuesday announced a complimentary Credit Unions for Kids Cause Marketing Workshop to be held Nov. 10. The workshop is designed for credit unions in the early stages of developing a Credit Unions for Kids campaign and for those looking to re-energize their existing program. Presented by CO-OP Financial Services, the workshop will be held during the Children’s Miracle Network’s annual Celebration event at Walt Disney World in Orlando, Fla. The one-day workshop will feature speakers from the nonprofit and credit union communities. Experts will share information and best practices that credit unions can use to create and execute successful campaigns. The keynote speaker will be Jennifer L. Maher, president/cause coach of The Cause Academy. Maher has more than 15 years of experience in the cause industry, having led the national corporate alliances and brand marketing initiatives for nonprofit organizations Make-A-Wish Foundation of America and the YMCA of the USA. Participants will be invited to attend all of the Children’s Miracle Network Celebration events, including a Champions children pin exchange and a medal ceremony. Travel and hotel must be covered by the participant. Credit unions have partnered with Children’s Miracle Network since 1996, when the Credit Union for Kids program was introduced nationwide. Today, credit unions nationwide collaborate with credit union chapters, leagues and business partners, including CO-OP Financial Services, raise funds for 170 Children’s Miracle Network hospitals. Since its inception, Credit Unions for Kids has generated nearly $80 million for children’s hospitals. For more information, contact Joe Dearborn at 480-614-9673 or by e-mailing

Possible suspect in CU shooting at hospital

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CENTRALIA, Wash. (1/27/10)--Police have detained a man they say matches the description of an individual who attempted to rob a TwinStar CU branch in Centralia, Wash. The attempted robbery led to a standoff with police at TwinStar Monday morning. Olympia police detained a man Monday with two gunshot wounds in his elbow and hip. The man had been dropped off in downtown Olympia by a taxi driver, who tipped off police. The police picked up the man after he knocked on the door of a home asking for help. A gunman had entered the credit union Monday around 7 a.m. as employees arrived to work. He grabbed an employee and put a gun to her head and a knife to her throat. When police arrived at the scene, an officer walked up to the employee entrance and saw the woman mouth to him, “He has a gun.” The officer pulled the employee to safety and fired two shots (The Chronicle Jan. 26). The Centralia SWAT team surrounded the building for several hours. Police then detonated four stun grenades and entered the credit union. With the help of a video feed, authorities later determined that the man likely fled minutes after the officer fired two shots. The gunman did not take any money, the newspaper said. The detained man is being treated for his injuries at a Seattle hospital. He has refused to give his name to police or emergency staff, the newspaper said. TwinStar has $742 million in assets. For more information, use the link.

Dupacos new online banking no cookie cutter

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AUSTIN, Texas and DUBUQUE, Iowa (1/27/10)--Dupaco Community CU has launched an online banking platform to provide members with new personal financial services that reach beyond the norm. The platform, MoneyTracker, has integrated personal financial management capabilities including customizable user alerts, transaction searches, budgeting, and an online safe deposit box. The platform is offered through a partnership with Jwaala, the credit union’s online banking vendor. Dupaco wanted “something that would set it apart from the cookie-cutter solutions,” said Steve Ervolino, Dupaco senior vice president of information services. “Power users love the transaction reporting features and customizable alerts, yet the straightforward design makes it easy to use for those members who simply want to balance their checkbook,” he added. Dupaco Community CU, Dubuque, Iowa, has $675 million in assets.

Yahoo headline story features Mica HuffPost interview

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MADISON, Wis. (1/27/10)—Yahoo! featured Credit Union National Association (CUNA) President/CEO Dan Mica’s interview Friday with the Huffington Post in its Tuesday business section headlines. The story is based on an interview the editor of Huffington’s Move Your Money page conducted with Mica. In it, he again emphasizes the benefits of consumers moving their money to credit unions at a time of public anger and dissatisfaction with the large banks that caused the financial crisis. The piece includes a link to Mica’s recently posted YouTube “Mica Minute” on moving your money to a credit union (see related News Now story--“Mica YouTube video urges ‘move money’ to a CU”) and also links to CUNA’s Credit Union Locator page. Mica told Huffington he hopes “‘the cold shock-wave’ of populist fervor sweeps the financial system and leads customers to credit unions.” Consumers will find that switching won’t just be an effective protest, it will also be a change for the better, he added. “At a credit union they treat [you] like a person, not a number,” Mica said, because smaller financial institutions don't have the “dismissive arrogance” of the largest banks, Huffington added. “Mica said that over the last year credit unions have had a 2% growth rate--higher than the population rate, and the quickest pace that credit unions have seen in a decade--and searches to find local credit unions have tripled in recent weeks,” Huffington wrote. “We’ll always find a complaint here and there about a credit union, but 99.9 out of 100 people are happy to put a bumper sticker on their car that says ‘I love my credit union,’” Mica told Huffington. “That is not the case with banks.” To read the article, use the link.

N.Y. association testifies for municipal deposits

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ALBANY, N.Y. (1/27/10)--Credit Union Association of New York President/CEO William Mellin testified Tuesday in support of municipal deposits for credit unions at the state’s Joint Legislative Hearings on the 2010-2011 Executive Budget Proposal in Albany, N.Y.
Click to view larger image William Mellin (bottom left), Credit Union Association of New York president/CEO, testified to support municipal deposits for credit unions at a state joint legislative hearing on Tuesday in Albany, N.Y. (Photo provided by the Credit Union Association of New York)
During his testimony, Mellin urged lawmakers to support New York Gov. David Paterson’s proposal to give local governments the option of placing their municipal deposits in credit unions. Currently New York credit unions cannot accept municipal deposits. “Credit unions have the potential to help state and local officials in a way that doesn’t cost state or local taxpayers a dime, but instead will save them money and increase the range of options available to elected officials throughout the state,” Mellin said. “By embracing the concept of municipal depository choice, the governor has provided to the legislature a cost-effective means of maximizing the tax dollars of New Yorkers and providing local governments’ much-needed flexibility as they seek to save resources.” Mellin also noted that:
* The Federal Credit Union Act authorizes federal credit unions to accept municipal deposits; * California, Connecticut and New Jersey already authorize their credit unions to accept the deposits; and * The banking industry claims that credit unions are undeserving of the deposits because they are tax-exempt, but credit unions do pay taxes, including property and payroll taxes.
“At a time when all taxpaying citizens have been forced to pay for the missteps of the banking industry, that same industry should not be opposing legislation that does nothing more than provide localities a further option in seeking to minimize taxpayer dollars,” he said.

CU System briefs (01/26/2010)

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* PORTLAND, Ore. (1/27/10)--OnPoint Community CU has been named one of the 10 Most Admired Companies in the Portland (Ore.) Business Journal's ranking of financial service organizations for 2009. The ranking is determined by CEOs and top managers of more than 1,800 organizations in Oregon and southwest Washington. The $2.8 billion asset credit union--the largest in Oregon--has 202,000 members. At a time when other financial institutions struggled with the economy, OnPoint's deposits rose 10% to $221 million in 2009, the credit union said. It also reinvested $425,000 during the year into community partnerships. It plans to open four to five branches a year for the next five years, including branches soon in Bend, Redmond and Oregon City ... * TREVOSE, Pa. (1/27/10)--Steven Kaplan, secretary of the Pennsylvania Department of Banking, addressed the board of TruMark
Click to view larger image Click for larger view
Financial CU, Trevose, on Thursday. Kaplan discussed his role at the department and shared his views about the current economic situation, the financial regulatory reform bill in Congress, and the proposed Consumer Financial Protection Agency. From left are TruMark Financial board members Daniel L. Dillard, R. Terrance Brunt, and Joseph J. Bily; Kaplan; and board members David A. Rufibach, William A. Tollok and Richard V. Lawn. (Photo provided by TruMark Financial CU) ... * HARRISBURG, Pa. (1/27/10)--Pennsylvania credit unions met with U.S. Rep. Chaka Fattah (D-2) in Philadelphia as part of the Pennsylvania Credit Union Association's (PCUA) goal to meet with all 19 congressional and two Senate district offices (Life is a Highway Jan. 26). They briefed Fattah on credit union issues such as the member business lending cap, overdraft protection, interchange, and the Community Reinvestment Act. Fattah expressed support of credit unions and MBL legislation. From left are Mick Hilling, vice president, marketing, American Heritage FCU; Fattah; Jim McCaw, member of PCUA's Governmental Affairs Committee and State Credit Union Advisory Committee; and Christina Mihalik, PCUA vice president, governmental affairs. (Photo provided by the Pennsylvania Credit Union Association) ... * LANSING, Mich. (1/27/10)--Richard Lowe, long-time director of Southeast Michigan State Employees CU, Southfield, Mich., died Jan. 13. He was a past CEO of Detroit Postal CU and a past chairman of Michigan Association of Credit Unions (now Michigan Credit Union League). He also had worked as an examiner in the Credit Union Division of the Financial Institutions Bureau, according to the league (Michigan Monitor Jan. 25) ...