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CUs can attract Gen Y with Second Life

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MADISON, Wis. (2/5/08)--Credit unions soon may be able to attract members of Generation Y by appealing to their second lives. Scott Moriarty, vice president of lending for Virginia CU, Richmond, Va., and a Filene Research Institute i3 member, is working with fellow i3 members to create a credit union island using Second Life, a social networking application and virtual world that allows users to create avatars, or residents of the virtual world. Other i3 members involved with the project include Lesley Carrell, Fibre FCU, Longview, Wash.; Dave Brooke, Point Lima CU, San Diego; Steve Koenen, Altra FCU, La Crosse, Wis.; and Linda Armyn, Bethpage (N.Y.) FCU. Second Life is a three-dimensional, advanced social networking environment where avatars interact with their surrounding environment and communicate with others through instant messaging. The project is “an attempt to leverage an emerging technology in the Internet called 3-D Internet,” Moriarty said in an interview with Filene Chief Innovation Officer Denise Gabel. “We wanted to develop an environment where financial literacy can be gained more effectively for younger generations.” Credit unions can create virtual credit union branches through Second Life to enhance users’ financial education. “It allows credit unions to get their feet wet in an environment that’s relatively safe,” Moriarty said. Avatars can visit the branches and use currency--called Linden Dollars, which are backed by U.S. currency--to make purchases and see the effects of their financial decisions. Credit unions interested in pursuing the three-dimensional program need to have an open mind for technology, as most information technology filters block Second Life, Moriarty said. The credit union island project has three phases. The team is developing the game and working with Ohio University students to ensure it will allow users to learn about finances in a short period. After Phase One is complete, the prototype will undergo testing in Phase Two, which Moriarty estimated would be in December. Phase Three will focus on making the island easily available to credit unions. Some large corporations, such as Toyota, have used the environment to test new products. Instead of using traditional marketing, Moriarty said, credit unions should aim to provide service and build affinity. “It’s an experience you can create and derive on your own,” he said. For more information, use the links.

Chartering of new Delaware CU progresses

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WILMINGTON, Del. (2/5/08)--Chartering papers for a new credit union in Wilmington, Del., have been submitted and a location chosen, according to the Delaware Credit Union League. The Delaware Community Reinvestment Action Council recently received a $100,000 grant from the Longwood Foundation to renovate a building in Wilmington to serve as a low-income community credit union and personal finance training center, according to Rashmi Rangan, executive director of the council (Together Jan. 30). The credit union is tentatively named "Stepping Stones," in line with its mission of offering financial services to low-income residents as an alternative to payday lenders charging higher interest rates. Rangan said the credit union plans to offer small loans. Financial counseling will accompany every loan to ensure borrowers can repay it smoothly, he added. Housed on the second floor of the new building will be a computer center, where people can come to bank online, check a credit score or find housebuying information.

MnCUN adopts new mission core values statements

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ST. PAUL, Minn. (2/5/08)--The Minnesota Credit Union Network (MnCUN) Board of Directors adopted new mission and core values statements at its December 2007 board meeting. The revision process began during the September 2007 planning session as part of an effort to reexamine, refine and refresh MnCUN’s overall direction. McCUN's new mission statement is: "We are an association designed to ensure the success, growth and vitality of our member credit unions by creating a positive public environment though leadership, political advocacy, education, awareness and regulatory assistance." Its new core values statements include:
* We believe in sustaining and defending the credit union model of a member-owned, not-for-profit, democratically controlled financial cooperative; * We value all member credit unions regardless of size, charter or geographic location; * We believe credit unions are an essential service provider in the financial marketplace; * We believe in the philosophy "people helping people" by encouraging and supporting our member credit unions to become involved in the communities they serve; * We value people over profit; * We believe in the preservation of a strong dual chartering system; * We believe that all consumers should have the option to become a credit union member.
“The new statements serve as a reminder of who we are working for and what we hope to accomplish, said Mark D. Cummins, MnCUN president/CEO. "They will give us the direction we need to continue to effectively serve our member credit unions in 2008 and beyond.”

CU System briefs (02/04/2008)

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* MADISON, Wis. (2/5/08)--Jan Roche, president/CEO of the State Department FCU (SDFCU) in Washington, D.C., has been named to the board of directors of the Filene Research Institute, based in Madison. Her appointment was effective Monday. She will serve a three-year term. Roche previously worked with the Filene Research Council and has more than 20 years of business experience involving operations, financial management, new product development, marketing and infrastructure building. Prior to joining SDFCU, Roche was president/CEO of the U.S. Senate FCU in Washington, D.C. She also is a board member of Credit Union Miracle Day … * ARVADA, Colo. (2/5/08)--Melia Heimbuck has been selected as the new executive director of the Foundation of Colorado and Wyoming and director of credit union development, announced the foundation and the Credit Union Associations of Colorado and Wyoming (CUAC and CUAW). Prior to her new role, Heimbuck served as director of member services and previously as senior consultant for CUAC. She has six years of association experience and has background as a credit union development educator. Heimbuck also has experience with small credit unions and consumer and commercial lending …

Indiana fires up ignite initiative

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INDIANAPOLIS (2/5/08)--ignite, an state-level credit union innovation venture in Indiana, held its kickoff meeting, themed "Fuel for Innovation," with 20 credit union professionals from 17 credit unions attending.
Click to view larger image From left, front row seated: Doug True; Denise Gabel; Charlie White of Members United Corporate FCU; Nan Morrow; Gary Icenogle: Chad Gramling; Carolyn Probasco; Debby Blake; Michael Hostetler; Michelle Peterson; Evelyn Royer; Kay Neidlinger, Indiana Credit Union League vice president communications; and Joe Guilfoy, league vice president consulting and education. Back row, league President John McKenzie; Tony Meier; Bob Falk; Tim Lukomski; Kevin Sparks; Brian Wilkerson; Joe Hasto; Jim Johnson; Becky Summers; Jan Chronic; Marie "Sam" Shanks; Blake Dearing; Charles King; Lora Davison; and Kevin Kosek. (Photo provided by the Indiana Credit Union League)
The meeting discussed innovations attendees may engineer for credit unions and their members. The group was divided into four working groups to develop ideas for their innovations, to be introduced at meetings later in the year. The first of its kind at the state level, ignite is a joint venture among the Indiana Credit Union League and three Indiana credit union representatives associated with the Filene Research Institute’s i3 program. The representatives are: Doug True, senior vice president of technovation at FORUM CU and president of FORUM Solutions; Bob Falk, president/chief operating officer at Purdue Employees FCU; and Nan Morrow, vice president of corporate development at Centra CU. They comprise the ignite Leadership Team. In addition to support from the Indiana Credit Union League and Servicecorp, ignite receives sponsorship support from Members United Corporate FCU and the CUNA Mutual Group. “ignite goes beyond networking to be a cross-credit union collaborative effort, where the groups will be solving issues we all face,” said Falk. “The best thing would be if these teams come up with solutions we’ve never dreamed of.” The group already is using an ignite portal to share information, True said, adding, the group will gather again in May for an update on everyone's progress. A special portal--donated by Passageways, Purdue Employees FCU's credit union service organization--is the key communication tool for the working groups, where they share project information, pose questions, and track dates and time lines. "This is a high-energy, impressive group of individuals," said Morrow. "Credit unions and their members across our state and potentially across the country, will be able to benefit from the innovations that they will develop," she said. “As our league puts additional emphasis on offering more for the emerging leaders at Indiana’s credit unions, the ignite initiative fits perfectly into our plans,” said League President John McKenzie. At the meeting, ideas were sparked by the featured speaker, Denise Gabel, chief innovation officer with the Filene Research Institute, who oversees the i3 program. She outlined the processes used by members of the i3 working groups and provided highlights of the innovative projects undertaken by those groups. Working group members are:
* Debby Blake, manager, contact center, FORUM CU; * Tim Lukomski, chief financial officer (CFO)/vice president, support systems, Heritage FCU; * Carolyn Probasco, manager/CEO, Members United FCU; * Michael Hostetler, marketing coordinator, Finance Center FCU; * Kevin Kosek, director, business development, REGIONAL FCU; * Blake Dearing, mortgage sales manager, FORUM C; * Lora Davison, CFO, Northern Indiana FCU; * Jan Chronic, senior vice president marketing, Eli Lilly FCU; * Charles King, corporate attorney, Hoosier Hills CU; * Gary Icenogle, vice president marketing and business development, NorthPark Community CU * Becky Summers, vice president, Teachers CU; * Marie "Sam" Shanks, executive vice president, Indiana State University FCU; * Jim Johnson, vice president member services, Three Rivers FCU; * Tony Meier, assistant vice president/business development officer, Evansville Teachers FCU; * Kevin Sparks, vice president/CFO, Crane FCU; * Brian Wilkerson, vice president/chief operating officer, KEMBA CU; * Chad Gramling, product manager, Three Rivers FCU; * Joe Hasto, CFO, Eli Lilly FCU; * Evelyn Royer, vice president risk management/support services, Purdue Employees FCU; and * Michelle Peterson, marketing manager, Marion School Employees CU.

Maryland legislative night discusses fin ed bill

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ANNAPOLIS, Md. (2/5/08)--More than 70 credit union representatives joined 40 Maryland legislators Wednesday night at the Maryland and District of Columbia Credit Union Association’s (MDDCCUA) Legislative Night Reception. Among topics discussed was a financial education bill.
Posing at the Maryland and District of Columbia Credit Union Association's (MDDCCUA) Legislative Night Reception are, from left: Bert Hash, president/CEO of Municipal Employees CU, Baltimore; state House Speaker Mike Busch; MDDCCUA President/CEO Mike Beall; and Jim Brown, attorney. (Photo provided by the Maryland and District of Columbia Credit Union Association)
MDDCCUA President Mike Beall said he encouraged the adoption of a financial literacy bill, which would create a task force to study financial education and develop solutions to improve it in area schools. The task force would comprise credit union representatives and other educational agencies and groups (Focus Newsletter Feb. 4). It’s crucial that Maryland credit unions grow and be more dominant in the marketplace to protect consumers and serve them with low-cost financial services, he said. The bill, the Task Force to Study Mandatory Financial Literacy Education in Maryland Schools, is co-sponsored by Del. Dana Stein (D-Baltimore) and State Sen. C. Anthony Muse (D-Prince Georges County). Stein spoke at the reception, saying credit unions provide a great service to the state’s citizens and noting he is a proud credit union member. Mike Busch, state House Speaker, said he was proud to be a credit union member. Local credit unions are important to Maryland’s economy, and they should get to know their legislators and tell them what they do for their communities, he added.

CMG Visa alert Hackers a risk to e-business systems

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MADISON, Wis., and SAN FRANCISCO (2/5/08)--CUNA Mutual Group (CMG) issued a security alert yesterday morning identifying potential risks to financial institutions’ e-business systems after Visa told the company financial institutions are being targeted by hackers seeking cardholder information. Credit unions should use the alert to validate and confirm the security of their Web-facing systems, CMG said. CMG recommends that credit unions examine whether they have:
* Failed to use a network-based intrusion detection system; * Failed to use a host-based intrusion detection system; * Improperly segmented network environment; * Poorly configured ingress and egress firewall rules; and * Experienced structured query language (SQL) injection.
Visa also issued a second alert regarding SQL injection, stating it recently detected SQL attack methods targeted against websites and Web applications that were not properly designed or resided on unpatched systems. The latest SQL injection attacks pose serious additional risks to cardholder data stored or transmitted with systems and networks connected to the affected environment, the company said. Visa recommended that credit unions:
* Leverage an independent third party to conduct security assessments; * Assess and monitor the ongoing performance of security practices at key suppliers, especially those handling sensitive information; and * Develop a framework to assess partners, based on ISO-17799.
Credit unions also should validate and confirm Payment Card Industry Data Security Standards and Payment Card Industry Personal Identification Number Security Standards, CMG said in the alert. Credit unions that have experienced losses should contact CMG’s Credit Union Protection Response Center. For more information, use the links.

Michigan CEO testifies at state mortgage industry hearing

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NORTHVILLE TOWNSHIP, Mich. (2/5/08)--A credit union CEO testified Jan. 29 before the Michigan House Appropriations Investigations Subcommittee during a hearing about tighter state regulation on home lending. Large prepayment penalties contributed to many homeowners going into foreclosure, said Robin Frucci, president/CEO of Lansing Automakers FCU. He said the penalties make it difficult for borrowers to refinance subprime mortgages at affordable rates. Some lenders require the penalties to make up for the cost of providing mortgages at below-market rates in initial years, he said (Michigan Monitor Feb. 4). “You could look at regulating pre-payment penalties or banning them altogether,” he said, acknowledging that lenders would then have to come up with new options. Credit unions have done a good job in offering loans without those penalties attached, he said. “We’re responsible for what we put borrowers into,” he said. “When they’re not dealing with financial institutions they’re dealing with someone who may or may not be there.” Foreclosures affect the homeowners, their neighbors and the community’s property values. When asked if tighter regulations would help, Frucci said appropriations should be put on lenders. He encouraged lawmakers to license, test, and provide continuing education for mortgage brokers and loan originators, who do not have as much invested in the industry as traditional financial institutions, such as credit unions, according to the Monitor. Michigan has the third-highest foreclosure rate in the nation. A video of Frucci’s testimony is available on the Michigan Credit Union League’s YouTube channel. To view, use the link.

NASCUS conducts first CU Advisory Council of 08

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SAN FRANCISCO (2/5/08)--The National Association of State Credit Union Supervisors (NASCUS) held its first Credit Union Advisory Council Outreach Meeting of 2008. NASCUS and Mendell Thompson, Credit Union Advisory Council chairman, met with California credit union and league executives to provide updates on issues and to learn how NASCUS can further its advocacy efforts. Attendees were interested in unrelated business income tax (UBIT) developments and changes to the Internal Revenue Service Form 990. The group also discussed regulatory issues related to member business lending, third-party relationships and subprime mortgage lending. For the past two years, NASCUS has held nearly a dozen outreach meetings on a state and regional basis within the credit union community. It plans to visit North Carolina and Illinois and other states this year. Dates will be announced on the NASCUS website.

Washington league vows to fight banks on breach bill

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OLYMPIA, Wash. (2/5/08)--The Washington Credit Union League is taking on the state's bankers over the bankers' sudden opposition to two companion state bills that would protect consumers from financial fraud and identity theft via data breaches. Supporters of the bills--Senate Bill 6425 and House Bill 2838--were surprised to learn that after negotiating four successive drafts with supporters of the bills, bankers began working Jan. 28 in the legislature's back halls to kill the bills in committee. Those attempts so far have been unsuccessfully "thanks to legislators who see the epidemic of identity theft a priority that must be addressed," said the league "Washington's bankers seemingly have set their priorities for the legislative session: retail and business customers are worth more to protect than ordinary people, said the league in a press release. "This is a real David vs. Goliath story," said league President John Annaloro. "Credit unions spent over a million dollars in 2007 protecting Washington consumers following the massive breach of credit card data by TJX (Cos.) "The crux of the state's credit unions' disagreement with bankers on this issue is whether data breachers like TJX should be held financially accountable for the costs that result from their negligence," Annalora said, adding, "Consumer identity theft must be stopped." The list of opponents to the bill has grown the past few weeks. The bill now faces opposition from retailers, restaurants, grocers, the National Federation of Independent Business, and the Washington Bankers Association, the league said. Opposition from the bankers came as a surprise. The league vowed to continue to fight for important consumer protection legislation on behalf of all Washingtonians. The bill, sponsored by Rep. Brendan Williams (D-22) and Sen. Rosa Franklin (D-29), gives financial institutions the ability to hold accountable negligent businesses that handle and store unencrypted sensitive consumer information, including credit and debit numbers.