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FBI probing breach targeting Citibank

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WASHINGTON (12/23/09)--The Federal Bureau of Investigation (FBI) is investigating a computer security breach targeting Citigroup Inc.'s subsidiary, Citibank, says The Wall Street Journal (Dec. 22). The theft resulted in tens of millions of dollars stolen by hackers working with Russian cybercriminals, the newspaper said, adding the attack was detected over the summer but could have occurred as long as a year earlier. Citigroup denied the report, saying its system had no breaches and no losses--either for customers or the bank. The newspaper cited a source "familiar with the case" who said the FBI, the National Security Agency, the Department of Homeland Security and Citigroup had "swapped information to counter the attack." The federal agencies declined to comment, said the newspaper. A Citibank customer, Robert Blanchard, co-owner of a lighting company in Mount Vernon, N.Y., told the newspaper he tried to log into his company's Citibank account on July 6 but couldn't do so with his regular password and token code. Citibank changed his password and sent him a new one by overnight mail, but he still couldn't get in. Before he could call his local bank branch, online thieves had sent more than $1 million from his account to banks in Latvia and Ukraine. Investigators discovered a computer at his lighting company had been infected by a computer at another company he co-owns. That computer dragooned his lighting company computer into a group of computers used to attack others. The software loaded onto his computers included a spyware program that logged keystrokes. Citibank sleuths began working to help him recover $810,855 from the Latvian bank, and Citibank gave him the remainder, said the article. Citigroup said the Blanchard case was an isolated fraud incident." Citigroup has stayed mum about such incidents since 1994, when Citibank revealed that a Russian hacker had stolen more than $10 million from customer accounts, said security analysts. Most of the money was recovered. However, the bank's competitors used the incident to try to steal its largest depositors. The recent incident indicates that today's hackers have more sophisticated elements that are harder to block from intrusion, said security companies in the article.

WOCCU applauds supported U.N. resolution

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MADISON, Wis. (12/23/09)--World Council of Credit Unions (WOCCU), together with the global credit union movement, applauded the United Nations (U.N.) General Assembly's vote Friday proclaiming 2012 the International Year of Cooperatives. The proclamation recognizes the important role cooperatives of all types, including credit unions, play in strengthening and supporting global economic social development. Recognition by the U.N. also strengthens the global cooperative movement itself, according to Pete Crear, WOCCU president/CEO. "WOCCU has always been proud to be at the forefront of global credit union development, but the International Year of Cooperatives raises the stakes on the important role cooperatives play," said Crear. He was a member of the U.N. committee that drafted the recommendation. "By recognizing the value cooperatives have in social development, the U.N. is honoring the work we've already done. However, the declaration also poses a challenge to make cooperatives even more influential and effective in the work we will do in the future," Crear said. WOCCU staff participated in the development of the original recommendation that led to the declaration. Staff also contributed to the U.N. Secretary General's report, "Cooperatives in Social Development," which served as the foundation for the recommendation. In advance of Friday's vote, WOCCU worked with its members to lobby U.N. representatives to ensure passage of the resolution. The recommendation leading to the General Assembly vote cites cooperatives' abilities to "promote the fullest possible participation in the economic and social development of all people." It also recommends the promotion and growth of financial cooperatives to meet the goal of inclusive finance by providing access to financial services. The U.N. declaration encourages all member countries and stakeholder organizations to support cooperatives by raising public awareness of cooperatives' roles in "sustainable development, eradication of poverty and (support of) livelihoods of various economic sectors in urban and rural areas." The declaration further encourages governments to create legal and social environments conducive to promoting cooperative development "by providing a level playing field for cooperatives vis-à-vis other business and social enterprises, including appropriate tax incentives and access to financial services and markets." "Credit unions and other cooperatives will play an even greater role in social and economic development both at home and around the world in the years to come," Crear added. "Our role is to not only spread the good word, but help strengthen cooperatives' capabilities to reach and serve people who need that service most." In the next few months, WOCCU will coordinate with the U.N. and the International Cooperative Alliance on planning and facilitating the International Year of Cooperatives.

Dispute over CU National fraud losses moves to federal court

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MADISON, Wis. (12/23/09)--A dispute between CUNA Mutual Insurance Society (CUMIS) and credit unions looking to recover losses related to fraud at CU National Mortgage Corp. has moved to U.S. District Court in Madison, Wis., from state court. “The case was moved to federal court by one of the credit unions,” said Rick Uhlmann, CUNA Mutual Group senior manager of media relations. “This is a procedural action that does not change the substance of the dispute over insurance coverage.” Twenty-six credit unions lost $140 million after being defrauded by CU National Mortgage, which closed after filing for bankruptcy in February. The credit unions argue that the losses they incurred should be covered under surety bonds they purchased from CUMIS, a subsidiary of CUNA Mutual Group. CUMIS filed two declaratory judgment actions in June and August in Wisconsin state court asking the court to declare that the surety bonds did not cover the losses from the CU National Mortgage fraud (News Now Dec. 8). CUNA Mutual filed the judgment action to resolve questions about coverage. The court served the actions, and the case was moved to federal court last week. CU National Mortgage President, Michael McGrath, pleaded guilty in June to defrauding the credit unions and Fannie Mae. He admitted to conspiring with others to fraudulently sell credit unions loans and use the proceeds to finance U.S. Mortgage’s operations and investments for himself and the company (News Now June 12).

Streifel elected to CUNA board special elections announced

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MADISON, Wis. and WASHINGTON (12/23/09)--Susan Streifel, an incumbent from Woodstone CU, Federal Way, Wash., has been elected to the Credit Union National Association (CUNA) Board in District 6, Class A. Streifel ran against Jon Hernandez of CalCom FCU, Torrance Calif. The position represents credit unions with fewer than 20,000 natural person members. District 6 is composed of Alaska, California, Hawaii, Idaho, Nevada, Oregon, Washington, American Samoa, Guam, Johnston Atoll, Midway Atoll, Northern Mariana Islands, Palmyra Atoll and Wake Atoll. Also, a special election will be conducted for the director seat in District 6, Class C, following the resignation Friday of Dave Rhamey, former president/CEO of Silver State Schools CU. Nominations are due to CUNA on Jan. 20. The special election will be conducted by written ballot from Jan. 21 to Feb. 12. The term of office will expire at the adjournment of the 2012 Annual General Meeting. CUNA is expediting the election process to ensure a successful candidate is in place to attend CUNA's Governmental Affairs Conference/February board meeting. Nomination and voting times have been cut to roughly three weeks each. Another special election for a District 4, Class D position--previously held by Wisconsin Credit Union League President Brett Thompson--is in progress. So far, one nomination has been received: Patrick Jury, president of the Iowa Credit Union League. Nominations for that election are due Jan. 8. Nomination forms will be accepted by fax (608-231-4874), email, or hard copy sent to 5710 Mineral Point Road, Madison, WI 53705.

SECU donated 270000 to 900 charities in 09

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RALEIGH, N.C. (12/23/09)--State Employees’ Credit Union (SECU) of North Carolina employees and members made contributions benefiting more than 900 nonprofits in the 2009 State Employees Combined Campaign (SECC). SECU employees donated more than $66,000 to this year’s campaign, and SECU members, via their foundation, provided $200,000 in funding for the SECC Resource Guide Listing, helping to offset administrative costs of the campaign to assure more funds reach the North Carolinians who need them most. In a year when overall giving to the campaign was down by 20%, SECU employees increased their giving by 15%, surpassing their 2008 figure by nearly $9,000. This outreach complements the credit union’s ongoing charitable efforts at its 226 branches and multiple operations centers, SECU said. “In this time of great need in North Carolina, SECU’s employees are demonstrating their commitment to helping others through efforts such as the SECC,” said Leigh Brady, senior vice president of SECU’s Education Services department. She noted the efforts exceeded expectations for the campaign. “Equally impressive is the commitment of SECU members, providing critical funding for the SECC Campaign in the absence of state resources,” Brady said. SECU, based in Raleigh, N.C., has more than $16.7 billion in assets.

Kinecta FCU CEO resigns effective year end

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MANHATTAN BEACH, Calif. (12/23/09)--Kinecta FCU announced Monday that its board of directors has initiated a search for a new president/CEO. Current President/CEO Simone Lagomarsino has resigned from her position. She will remain with the organization through Dec 31. “I speak on behalf of the entire board in expressing our appreciation to Simone for the leadership she has provided to Kinecta over the past three-and-a-half years,” said Mary Yasui-Yamabe, Kinecta board chair. “Her leadership, through an extraordinarily difficult time, has been invaluable in ensuring Kinecta came through the global financial crisis and challenging economic environment safe, sound and strong. “Our 2009 losses were due principally to WesCorp investment write-downs, building our allowance for loan losses, and National Credit Union Shared Insurance Fund expenses,” Yasuyi-Yamabe continued. “Our fourth-quarter numbers reflect the strength and stability of our operations and our credit union, and clearly show the worst is behind us. Kinecta’s rate of delinquency formation has been declining for several months, our capital ratio is now 6.63%, up 22 basis points in the past two months, and we plan to restore operations to profitability and bring the capital ratio above 7% in 2010. “During Simone’s tenure at Kinecta, we have significantly improved operational effectiveness, increased efficiencies and enhanced technology infrastructure,” she added. “We wish her the very best moving forward, and have no doubt she will be successful in this next chapter of her career.” Lagomarsino led the credit union for 3.5 years. “I leave Kinecta knowing the credit union is healthy and has a strong capital position with exceptional performance and member satisfaction,” she said. “I have no doubt Kinecta will achieve great success ahead.” Kinecta FCU, based in Manhattan Beach, Calif., has $3.93 billion in assets.

CUNA closed Thursday-Friday no INews NowI

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WASHINGTON and MADISON, Wis. (12/23/09)--In observance of the holidays, the Washington, D.C., and Madison, Wis., offices of the Credit Union National Association (CUNA) will be closed Thursday and Friday. News Now will not post editions those days and will resume regular publication on Monday. Next week, CUNA will be closed Jan. 1 for the New Year's Day holiday. News Now will not publish a Jan. 1 edition.

CU System briefs (12/22/2009)

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* MADISON, Wis. (12/23/09)--A robbery Monday in Madison, Wis., in which citizens teamed up to help police nab a suspect, occurred at Badger Campus CU, on Spring Street, near the University of Wisconsin-Madison campus. It did not occur at UW CU, as local news accounts and News Now reported in Tuesday's edition … * OGDEN, Utah (12/23/09)--Goldenwest FCU, a $714.6 million asset, Ogden, Utah-based credit union, announced that for the sixth consecutive year, its members will earn a bonus dividend this year. Goldenwest will pay a 7% annual yield on shares for the month of December. Collectively, members will earn more than $640,000 with the bonus dividend. The bonus program has provided more than $13 million to members during the past six years, Goldenwest said. The bonus dividend is paid on primary, secondary, individual retirement and Christmas Club share accounts (Deseret Morning News Dec. 22) … * PLYMOUTH, Mich. (12/23/09)--Glenn Ray is the Michigan Credit Union League’s new director of public affairs. He succeeds former director Mike Bridges and will work at the league’s Lansing headquarters (Michigan Monitor Dec. 21). Ray will develop a proactive media relations program, oversee the league’s CUBE TV and manage the credit union fundraising drive to support a cooperative advertising campaign. Ray has more than 15 years of experience working for Ford Motor Company in financial communications and public affairs. He also was the director of public, government and industry affairs at ArborGen in South Carolina and served as director of public and media relations with Quicken Loans in Livonia, Mich. ... * RANCHO CUCAMONGA, Calif. (12/23/09)--Jim Blouin has been named regional sales manager-Northeast for CO-OP Financial Services. With more than 20 years of credit, debit and ATM processing sales and relationship management experience, Blouin spent 12 years at Fidelity National Information Services Inc. (formerly Certegy Card Services). He began his career with The Howard Bank, NA/Banknorth Group, Inc. Blouin will be based in Montpelier, Vt., and will be responsible for business development and sales in the region. CO-OP Financial services provides a nationwide ATM network, debit processing services, ATM processing and other account-driven access channels such as shared branching, checking imaging and mobile payments …

New CDCU in Long Island City thanks federation

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LONG ISLAND CITY, N.Y. (12/23/09)--The East River Development Alliance (ERDA) is thanking the National Federation of Community Development Credit Unions for helping the group obtain a federal charter for a community development credit union (CDCU) that will open next year in Long Island City, N.Y. The federation has worked with ERDA for five years to get the CDCU chartered. The CDCU will be the first chartered in the region since 2000. The federation also committed $100,000 to the CDCU. “The launch of our credit union will embed a culture of ownership and savings in public housing neighborhoods in Western Queens,” said ERDA President/CEO Bishop Mitchell E. Taylor. “We believe that this is a replicable model for change in other public housing neighborhoods nationwide.” ERDA--a non profit that supports credit union organizers--targets communities with average incomes below $24,000. The New York City average income is $39,000, and the U.S. average income is $43,600. ERDA organizers plan to hold a press conference about the CDCU soon. First Bergen FCU, Hackensack, N.J., also was chartered this year with help from the federation. “Chartering of new credit unions has unfortunately become a rare event--only two new federal charters this year, both of them CDCUs,” said federation President/CEO Cliff Rosenthal. “This is one of our major areas of concern, and one which we are vigorously advocating with the National Credit Union Administration.”