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CFPB Consumers complain about credit cards mortgages

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WASHINGTON (2/3/12)--The new Consumer Financial Protection Bureau (CFPB) began taking credit card complaints from consumers on July 21 and mortgage complaints on Dec. 1.   As of Dec. 31, its Consumer Response team had received 13,210 consumer complaints, including 9,307 complaints about credit cards and 2,326 complaints about mortgages, CFPB said in its Semi-Annual Report Monday.

Of those complaints, 44% were submitted through CFPB's website, and 14.7% through telephone calls. Referrals from other regulators accounted for 34.9% of complaints received, and the remainder were submitted via mail, e-mail and fax, the report said.

Roughly  6,470  complaints--or  69% of all complaints about credit cards--fell into 10 basic categories. Billing disputes, identity theft/fraud/embezzlement, and annual percentage rate (APR) /interest rate issues were the most received complaints. The categories, with the number of complaints and percentage of complaints are:

  1. Billing disputes -- 1,278 complaints or 13.7%;
  1. Identity theft/fraud/embezzlement-- 1,014 complaints or 10.9%;
  1. Annual percentage rate/interest rate--950 or 10.2%;
  1. Other--854 or 9.2%;
  1. Closing/cancelling amount--478 or 5.1%;
  1. Credit reporting--437 or 4.7%;
  1. Credit card payment/debt protection--383 or 4.1%;
  1. Collection practices--378 or 4.1%;
  1. Late fee--364 or 3.9%;
  1. Other fee--334 or 3.6%.
The bureau noted that consumers are interpreting these categories differently. For example, one consumer would choose "billing dispute" to categorize a problem while another would categorize it as an "interest-rate" issue.  It may revise the options over time to promote consistent categorization.

Mortgage complaints totaled 2,326, with 100% of them falling into six types of complaints. The top complaints were in the areas of inability to pay for the loan, other, and problems with the process of making the payments. The six areas, and the number and percentages of complaints are:

  • Inability to pay (loan modification, collection, foreclosure)--889 complaints or 38.2%;
  • Other--540 or 23.2%;
  • Making payments (loan servicing, payments, escrow accounts)--501 or 21.5%;
  • Applying for the loan (application, originator, mortgage broker) --235 or 10.1%;
  • Signing the agreement (settlement process and costs)--96 or 4.1%;
  • Receiving a credit offer (credit decision/underwriting)--65 or 2.8%.

The bureau sent 75% of the total complaints, or 9,885, to companies for review and response. Here's how they responded:

  • 5,476 or 55.4% of the companies reported the issue was closed with relief;
  • 3,028 or 30.6% reported the issue was closed without relief;
  • 203 or 2.1% provided administrative response;
  • 1,178 or 11.9% of the companies were reviewing the complaint.
Roughly 7,349 of the company responses were made available to the consumers who complained and the consumers were given 30 days to notify CFPB if they wanted to dispute the company's response. Of those consumers:

  • 3,448 or 47.5% were still reviewing the company's reported resolution;
  • 2,910 or 39.3% did not dispute the company's reported resolution;
  • 951 or 12.9% disputed the company's reported resolution.
Use the link to access the full report.

Definition of capital determines Basel III impact on CUs

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WASHINGTON (2/3/12)--Basel III guidelines on financial institution capital levels may have been drafted in response to the negative impact large banks made on the economic crisis, but credit unions and other financial cooperatives likely will be included in any resulting regulation. How credit unions manage member shares relative to their capital requirements could determine how significant the impact of those regulations would be.

The role shares play in defining credit union capital was the main topic of a World Council of Credit Unions (WOCCU) webinar Wednesday on recent changes to the Basel guidelines and their impact on credit unions.

Economist Glenn Westley, who has worked in the credit union and microfinance sectors, discussed changes proposed by the Basel Committee on Banking Supervision--which is part of the Bank for International Settlements in Basel, Switzerland--particularly as they relate to credit unions.

"Are credit union shares defined on the balance sheet as capital or as a liability?" Westley asked participants from seven countries who logged into Wednesday's webinar. "It depends on what you do with them."

The two-hour online event, also recorded for later viewing, looked briefly at the history of the Basel guidelines, which have become the basis for financial regulations in a growing number of countries, and the changes that have occurred since the first Basel Capital Accord in 1988. Basel I, as it was called, was developed primarily to serve as operational guidelines for large money-center banks domiciled in the Group of 10 (G-10), the world's most economically developed countries at the time. The guidelines' safe operating principles grew in popularity and eventually applied to both large and small financial institutions in more than 100 countries.

Basel I identified credit risk as the main threat to financial institution safety and soundness, and recommended that an institution must hold at least 8% of capital in risk-weighted assets, comprised of a variety of financial instruments. The committee revised its requirements for Basel II, issued in 2004, maintaining similar capital levels to protect against risk but requiring additional capital charges for operational risk (such as fraud) and market risk (such as interest rate risk).

The Basel Committee issued the Basel III capital and liquidity guidelines in December 2010 and June 2011 after the previous guidelines failed to prevent the global economic recession of the past few years. The latest guidelines revised the view of how capital standards are measured and applied, Westley said.

"In general, Basel III narrows the definition of what's acceptable and calls for more and higher quality capital than Basel II," Westley told participants.

In addition to revising capital requirements, the new guidelines propose adding a capital conservation buffer composed entirely of higher quality capital, a countercyclical buffer that comes into play if an institution's credit growth is excessive, and a leverage ratio that provides an extra layer of protection in the event of errors in financial risk models or in the values the Basel Committee assigns to risk-weighted assets.

Despite the new features, financial institution safety still comes down to a question of capital adequacy. In the case of credit unions, adequacy may hinge on how member shares are defined and how the credit union treats member access to those shares.

Credit unions must treat shares that can be redeemed by members without restriction as liabilities on the balance sheet, Westley said, explaining that members can withdraw such shares and that necessary capital can disappear when the credit union needs it most. Credit unions that can unconditionally refuse share redemption, however, can treat those shares as capital, equivalent to common equity tier 1 (CET1) capital (the capital category that also includes retained earnings) because they can remain with the credit union in times of financial duress.

"If credit union members can only redeem shares to the extent that such redemptions are fully offset by the issue of new shares to new or existing members, then the shares are CET1 capital," Westley said. "Like the issue of common equity, credit unions can count on having the full proceeds from shares sold through the end of the previous year."

To view a recording of the webinar, use the link. The webinar will be available to viewers for a fee through July.

Metro West Community program urges Buy American

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FRAMINGHAM, Mass. (2/3/12)--MetroWest Community FCU is trying to make it easier for members to "buy American" by offering extra-low-rate car loans to its members looking to finance domestic vehicles.

The credit union, formerly Framingham Municipal CU, is offering the deal Feb. 13-25, in honor of Presidents' Day, for members to get loans to purchase a new Ford, Chrysler or General Motors vehicle.

"With our country facing record debt and unemployment, I truly believe it's important to support our economy by buying American products," said John Gallinagh, president/CEO of the $92 million asset Framingham, Mass.-based credit union, introducing the loan.

"During these challenging times, we all need to step up and do our part for our country," Gallinagh added.

Business leaders, economists and politicians from both sides of the U.S. political aisle are extoling the virtues of buying American-made goods, the credit union said.

During a recent special series on ABC World News, "Made in America," anchorwoman Diane Sawyer asked people to survey products around their homes to see how much was manufactured in the U.S. Most were surprised at how few items in their homes were made domestically, said the credit union.

Sawyer urged viewers to buy American, saying if every American spent an extra $3.33 on U.S.- made goods, it would create almost 10,000 new jobs in this country.

For more information, use the link.

Articles tell why CUs mortgage rates are better

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MADISON, Wis. (2/3/12)--Three articles from national media outlets explained why mortgages offered by credit unions have better interest rates.

Because credit unions operate on a smaller scale than banks and are not-for-profit, they focus primarily on lower-risk loans, compared with other financial institutions ( Feb 1.)

"As a result, even during a large-scale financial crisis, credit unions do not tend to suffer as much losses as their competitors or banks," the article said. "So factors like mortgage rates are not affected much. The articles added, "You also will be able to apply for auto loans at lesser rates than at any other financial institutions."

A credit union mortgage loan is like any other mortgage loan except for the rate of the interest and terms of the loan, said (Feb. 1).

"Credit union mortgage rates may vary from [credit] union to [credit] union, but they are comparatively lower than bank mortgage rates," the publication said.

And when looking to refinance a mortgage loan, consumers should always include credit unions in their searches for the best deal, said (Jan. 19).

To read the article, use the link.

Wolske to keynote CUNA Marketing Management Schools

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MADISON, Wis. (2/3/12)--Jon Wolske, culture evangelist for Zappos Insights, will be the featured speaker at the 2012 CUNA Marketing Management Schools, April 30-May 3 in Las Vegas.

Wolske, a veteran employee and speaker for the online shoe company Zappos Inc., will share his solutions for credit unions seeking to strengthen their company culture and improve their service. Zappos Inc. is regarded an innovator in company culture and service. Wolske will also share insights about the role marketers play during crisis management.

Divided into a three-year program, the CUNA Marketing Management School addresses the theories, strategies and techniques behind credit union marketing. Credit union marketers of all skill levels will learn marketing strategies and tips to take back to their credit unions. The conference is for credit union marketers of all skill levels.

First-year attendees will learn the fundamentals of marketing for credit unions and gain a working knowledge of the marketing basics. Students attending the second and third years of the CUNA Marketing Management School will build on their introductory knowledge and learn how to use these skills to implement their own strategic marketing initiatives.

Attendees of the CUNA Marketing Management Schools will:

  • Work towards their Credit Union Certified Marketing Executive (CU-CME) designation, the only marketing executive certification program in the industry;
  • Strengthen their compliance management by attending a pre-conference marketing compliance workshop;
  • Experience an event endorsed by the CUNA Marketing & Business Development Council; and
  • Network with credit union marketing peers.
Attendees of the CUNA Marketing Management School can earn the CU-CME designation by attending all three years of the CUNA Marketing Management School and passing a comprehensive exam at the end of each term.

Ford Foundations 30M helped CDCU with mergers

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NEW YORK (2/3/12)--A $30 million investment from the Ford Foundation has allowed a community development financial institution to merge with seven credit unions in California, in an effort to expand low- and moderate-income families' access to responsible and affordable financial services statewide.

The Durham, N.C.-based Self-Help FCU saw an opportunity to increase its impact as the economic downturn threatened the survival of all types of financial institutions. By merging with credit unions in low-income communities--some struggling to navigate the economic environment--Self-Help aims to preserve and expand the availability of responsible financial services for families who need them most (PR Newswire Feb. 2).

Sixty percent of low-income neighborhoods in California do not have a bank or credit union, but the state has two times the concentration of check cashers and payday lenders than the rest of the country. Predatory financial services, with loan interest rates of 400% and more, and check-cashing fees costing up to $2,000 a year, cost low-income families in California more than $8 billion a year.

In the two years since the Ford Foundation invested $30 million, Self-Help FCU's asset size grew to nearly $400 million from $75 million; its net worth to $57 million from $12 million; and its membership to nearly 50,000 from 15,000.

Self-Help loans to borrowers also shot up fivefold--to about 15,000 loans for nearly $225 million from about 3,000 loans for $41 million. More than 80% of Self-Help's members are families living in communities that are either economically distressed or have high unemployment.

Self-Help's goal is to have 40 branches with more than $1 billion in assets combine serving 100,000 members. Building off Ford's initial $30 million investment of risk capital, Self-Help is now seeking additional funding to expand the effort.

For more information, use the video link.

CU cites success of Happy Unbanking campaign

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FARMERS BRANCH, Texas (2/3/12)--In 2008, three years before grassroots activist Kristen Christian challenged consumers to transfer their funds from banks to credit unions on Bank Transfer Day, People's Trust FCU offered Houston-area consumers a similar call to action.

That was when People's Trust FCU launched its "Happy Unbanking" campaign, which highlighted the differences between credit unions and banks.

The credit union's advertising agency provided an outsider's perspective of the not-for-profit financial institutions, Patrick Flynn, sales and promotions coordinator with People's Trust FCU, told the Texas Credit Union League (LoneStar Leaguer Feb. 1). "Credit union members know how great we are, but the majority of the public does not know what a credit union is," Flynn said. "Highlighting our differences from banks is an easy way to communicate what makes us special."

The credit union formed its call to action around a microsite described the credit union cooperative structure and philosophy.

Despite the name, the purpose of the campaign wasn't to attack banks, but to bring attention to the credit union philosophy, Flynn said. "While it did cross our minds that some would consider it 'attacking,' we were confident that the majority would see it for what it was, an ad campaign trying to make a difference and catch people's attention," Flynn said.

The $416 million asset credit union measured the campaign's success through website statistics, new accounts opened, public relations received through local media and industry outlets and feedback from members.

Flynn offered five steps for credit unions considering a similar campaign:

  1. Develop a budget;
  1. Determine how the campaign will support the credit union's mission;
  1. Determine the hook--what will get consumers' attention;
  1. Obtain buy-in, from tellers to the CEO; and
  1. Develop an implementation plan;

CU System briefs (02/02/2012)

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  • NORRISTOWN, Pa. (2/3/12)--Pennsylvania's Superior Court has overturned the conviction of a former CEO of United Food and Commercial Workers (UFCW) Local 1776 FCU for theft, saying that she did not knowingly waive her right to be represented by a lawyer at her three-day jury trial in July 2010. The three-judge panel said Anne L. Clyburn, 45, of Chester County, must receive a new trial because neither the lower court judge nor prosecutor advised her of the specific elements in each of the charges against her before she waived her right to a lawyer. The district attorney's office is deciding whether to provide a new trial or appeal the higher court's ruling. Clyburn was convicted of stealing funds from the $7 million asset credit union, which is based in Plymouth Meeting, Pa.  during the more than six years she served as president/CEO.. She was charged with giving herself $32,469 in unauthorized raises and writing four unauthorized credit union checks for personal use. In September, she was sentenced to one to seven years in state prison and an additional five years' probation. During her appeal, she said the lower court judge should not have allowed her to represent herself ( Feb. 2) …
  • PITTSFIELD, Mass. (2/3/12)--Employees of Pittsfield, Mass.-based Greylock FCU  raised more than  $124,000  in its annual campaign for United Way, a 6.5% increase over last year's donation. Employees raised $91,122 of the total through payroll pledges, raffles, a flower sale, soup day, bingo night and other functions. Employee contributions were added to the $33,000 corporate support, which included Greylock's partnership--for the 12th year--with Johnson Ford Lincoln Mercury Nissan to donate a car raffled off to support the United Way and a Facebook campaign. Winner of the car was Christine Degregorio, an employee of Berkshire Community College.  From left are Greylock's Berkshire United Way team: Cathy Chenail, Mark Mancari, Brad Felix, Katy Codwise, Dan Dillon and Anna Flynn. (Photo provided by Greylock FCU) …
  • ROYAL OAK, Mich. (2/3/12)--Thomas Zamberlan, CEO of Royal Oak, Mich.-based OUR CU, is etiring, ending a 46-year career with the credit union movement, the credit union's board announced Wednesday.  Zamberlan has been with the credit union since 1985 and has been CEO since 1999. In 2008, in the midst of the nation's financial crisis, he told members, "First and foremost, we are interested in a long-term relationship with you as a member. There is no substitute for a conservative management that aims to operate by the principle that what is good for you is also good for the credit union." "Tom's departure leaves a significant void," said Board Chairman Jeremy Water. "While we would prefer not to see him go, his years of leadership and continued growth leave us in a solid position." Zamberlan was the $204 million asset credit union's fourth president in 53 years of operation …

NYIB extends scholarship deadline to Feb. 10

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MADISON, Wis. (2/3/12)--The National Youth Involvement Board (NYIB) has extended its scholarship application deadline to Feb. 10.

Available scholarships include:

  • Robert L. Curry Scholarship. This scholarship is awarded to one league liaison or state delegate within the NYIB Network. The scholarship covers lodging and registration for the 2012 NYIB Annual Conference.
  • Regional Scholarships. Three scholarships cover registration to the 2012 NYIB Annual Conference. The NYIB regions are divided into West, Central and East for the scholarships.
  • "Serving the Underserved" Scholarship. One scholarship will be awarded to cover registration to the 2012 NYIB Annual Conference. It will be awarded to an individual working with a low income designated credit union or one that focuses on serving an underserved market.
  • Development Education Training Scholarship. Up to two NYIB scholarships may be awarded annually to persons in the NYIB Network to attend the National Credit Union Foundation Credit Union Development Education Training. The scholarship covers registration fees. Travel costs are not included.
  • World Council of Credit Unions (WOCCU) Young Credit Union People Program (WYCUP) Scholarship. One scholarship may be awarded annually to an NYIB Network member to serve as the NYIB designee for the WYCUP. The 2012 scholarship covers registration for WOCCU's 2012 World Credit Union Conference in Gdansk, Poland. Travel costs are not included.
  • Top Classroom Presenter Scholarships. NYIB Network members who are leading classroom presenters may be recognized with a scholarship covering registration to the NYIB Annual Conference.
The NYIB annual conference will be held July 30-Aug. 2 in New Orleans. The conference is designed to provide tools, techniques, and insight to credit unions for reaching and teaching young consumers and members.

To apply for scholarships, use the link.