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CU System briefs (02/06/2013)

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  • LAWRENCEVILLE, Ga. (2/6/13)--Gwinnett FCU, based in Lawrenceville, Ga., has changed its name to Peach State FCU tobetter reflect its widening membership base and footprint in Georgia, said the 52-year-old , $231 million asset credit union. In the past 20 years, Peach State expanded from Gwinnett County and now includes seven counties: Barrow, Clarke, DeKalb, Gwinnett, Jackson, Oconee and Walton.  It serves more than 41,000 members, 26,000 of whom live outside Gwinnett County, said Peach State President/CEO Marshall Boutwell. "The name Peach State not only acknowledges our entire membership base, but it also allows for future growth without geographic constraints."  Peach State's support to school systems and commitment to members won't change, he said. "Our underlying dedication to education is part of our foundation. We will continue to support education in our service areas through sponsorship of the Teacher of the Year awards, and awarding student and career advancement scholarships because we believe this tradition should be maintained." …
  • CARSON CITY, Nev. (2/6/13)--
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    Carson High School, Carson City, Nev.,  has its own "Senators" debit card for student checking accounts. Students designed the card in a contest offered by Greater Nevada CU, which has a branch at the school. More than 60 students entered the contest. The top three design winners, selected by a panel of students, teachers, and credit union representatives, were asked to combine their designs into one to meet Visa criteria and receive approval from the card company. Greater Nevada awarded gift cards to the winners. Shown with their designs are, from left: Mhervin Dagdagan, Amanda Yau and Athena Favero.  The contest was part of an ongoing program to promote awareness of the educational branch and financial literacy at the school.  "Contests like the debit card design pique students' interest in something they may not otherwise think about," said Teresa Breeden, engineering, drafting and art instructor at Carson High. "Plus, we have our very own debit card design now, which should continue creating awareness of the student checking account and other financial resources available right here on campus." (Photo provided by Greater Nevada CU) …
  • FARMERS BRANCH, Texas(2/6/13)--Arlington (Texas) FCU President/CEO Patricia Mott will retire March 31, after 36 years at the credit union, according to the Texas Credit Union League (LoneStar Leaguer Feb. 5). Jim Merrit will act as interim CEO during the search for a successor. In 1976, when Mott began her career, Arlington FCU was a share, certificate and loan credit union serving the city of Arlington employees and their families. It added checking and card services, then mortgage, home improvement and home equity loans, and granted membership eligibility to 57 select employee  groups.  In 1998 and 2001, it expanded charters to the communities of Arlington and Mansfield.  Mott served as a league director in 1990-1998 and as director to Southwest Corporate FCU in 1991-2010 …

CUNA to FOX Biz: CUs' private student loans better

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NEW YORK (2/6/13)--College tuition has been increasing more than the rate of inflation, but credit unions' private student loans can help, the Credit Union National Association's Mike Schenk told Fox Business  Monday.

Economic instability and stagnate wages have made it difficult for families to save for college, said Schenk, CUNA's vice president of economics and statistics, in the item entitled "Saving for College: Three Trends to Know." Sixty percent of the U.S. population live paycheck to paycheck, he said.

The article outlines three approaches for preparing for college : financial aid including grants, scholarships and government loans; private student loans; and saving accounts, including 529 college savings plans.

Parents and students can turn to the private sector for an unsecured loan, said the article, which noted credit unions are getting into the private student loan market.

"It's not like you can get all your money through the government," Schenk told the publication. "The amount of money is not unlimited, so we offer an alternative."

Credit unions take a little different approach when it comes to student lending, said Schenk. They tend to require students to make a monthly payment,  which can be as low as $25 while the student is in college, he said.

"It gives the student some skin in the game and gets them familiar with the process and helps them understand 'Yes, this needs to be paid back,'" Schenk said. While the interest rate on these unsecured loans varies in each credit union, Schenk pointed out that credit unions have typically been able to offer lower rates than banks.

Canada's Desjardins Group buys large stake in Qtrade

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MONTREAL, Que., and VANCOUVER, B.C. (2/6/13)--Desjardins Group, Canada's largest cooperative financial institution, has accumulated a sizable minority stake in Qtrade Financial, a discount brokerage firm with business from Ontario to the west coast.

The move expands the cooperative's online trading services outside Quebec and will complement its current discount brokerage, Disnat, said The Globe and Mail (Feb. 5). Both Qtrade and Disnat platforms will be operated independently, said Desjardins spokesperson Andre Chapleau.

Desjardins Group, which is a network of caisses populaires (credit unions)  is based in Quebec, while Qtrade is based in Vancouver, B.C.  Qtrade has built up a wealth management unit that provides a back-office infrastructure credit unions need to offer asset management services, said The Globe and Mail.

Desjardins Group will acquire 25% to 40% of Qtrade's existing privately held shares and has the right to buy the remaining majority stock for the next six years. Qtrade often earns top marks in the newspaper's annual survey of Canadian online trading platforms.

Desjardins has been expanding its reach from Quebec to other provinces the past few years. For example, it acquired Western Financial, a bank and insurance company based in Alberta in 2010.

DoJ sues S&P over rating of RMBS/CDOs bought by WesCorp, others

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WASHINGTON (2/6/13)--Noting losses at Western Corporate FCU and other investors, the Department of Justice filed a lawsuit Monday against Standard & Poor's Financial Services LLC (S&P), alleging that S&P committed fraud in rating residential mortgage-backed securities(RMBS) and collateralized debt obligations (CDOs) in the years leading up to the financial crisis.

The suit against S&P and its parent, McGraw-Hill Companies Inc., was filed in the U.S. District Court for the Central District of California, Los Angeles. It alleges that S&P issued inflated ratings that misrepresented the securities' true credit risks.

The complaint also alleges that S&P falsely represented that its ratings were objective, independent and uninfluenced by its relationships with investment banks, and that its desire for increased revenue and market share led it to favor the interests of those banks over investors.

In announcing the lawsuit, Attorney General Eric Holder said the Central District of California is "home to the now-defunct [WesCorp], which was the largest corporate credit union in the country. Following the 2008 financial crisis, WesCorp collapsed after suffering massive losses on RMBS and CDOs rated by S&P."

U.S. Attorney Andre Birotte Jr. of the Central District of California said that in addition to huge numbers of homeowners with subprime mortgage loans affected in his seven-county district, "institutional investors located in my district, such as WesCorp, suffered massive losses after putting billions of dollars into RMBS and CDOs that received flawed and inflated ratings from S&P."

The complaint includes a list of 76 CDOs as examples of investments that went bad. Eleven were sold to WesCorp and 26 were sold to Eastern Financial Florida CU. Banks receiving the listed CDOs included Citibank, which received 22 on the list; Bank of America, eight; M&T Bank, seven, and First Midwest, 11.

The suit seeks civil penalities under the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA) based on three forms of alleged fraud: mail fraud, wire fraud, and financial institution fraud.

The complaint says that from 2004 to 2007, S&P was so concerned with possibly losing market share and profits that it limited, adjusted and delayed updates to the ratings criteria and analytical models it used to assess credit risks in CDOs and RMBS. It allegedly weakened those criteria and models from what its analysts believed was necessary to make the ratings more accurate, and  from March to October 2007, it allegedly inflated ratings on hundreds of billions of dollars' of CDOs. Nearly every CDO it rated during the period failed.

Joining in the announcement were attorneys general from California, Connecticut, Delaware, the District of Columbia, Illinois, Indiana, Iowa and Mississippi, who have filed or will file similar civil fraud suits against S&P. In the past three years, the Justice Department has filed nearly 10,000 financial fraud cases against nearly 15,000 defendants, including more than 2,900 mortgage fraud defendants.

Zai sentenced in St Paul Croatian FCU fraud

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AKRON, Ohio (2/6/13)--Akron, Ohio, financier and developer A. Eddy Zai was sentenced Tuesday to seven years and three months in prison for defrauding the St. Paul Croatian FCU out of $10 million and ordered to pay the largest restitution in the history of Northeast Ohio--$23 million.

Zai was part of an extensive loan fraud ring that contributed to the collapse of the Eastlake, Ohio-based credit union in 2010.

Zai, 45, pleaded guilty in November to conspiracy, bank fraud, bank bribery, money laundering and making false statements to a financial institution (The Plain Dealer Feb. 5). Zai allegedly failed to make payments on the fraudulent loans from 2007 to 2010. Before 2007, he used fraudulent loans from other lenders to repay the credit union, prosecutors said.  His company was allegedly dependent on loans to survive.

He allegedly admitted to paying thousands of dollars in bribes to St. Paul Croatian FCU CEO Anthony Raguz in exchange for loans. Raguz is serving a 14-year prison term for accepting more than $1 million in bribes, kickbacks and gifts in exchange for issuing over 1,000 fraudulent loans involving 300 accountholders (News Now Nov. 27)

More than 24 people have been indicted for taking out fraudulent loans from the credit union. Several have received prison sentences.

The National Credit Union Administration says the credit union's conservatorship was one of the largest failures in credit union history, costing the National Credit Union Share Insurance Fund more than $170 million.

CUs' role in fin lit aired on Pa cable

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Pennsylvania State Treasurer Rob McCord (seated left) explains how parents and grandparents can help children set financial goals and work to achieve them during a financial literacy panel on Pennsylvania Cable Network (PNC) Monday. From left: Corinna Wilson, PCN moderator; McCord; Michael Kaczenski, Pennsylvania Credit Union Association board chairman; Mike Wishnow, PCUA senior vice president, communications and public relations; and Matt Bergman, teacher, Milton Hershey School.  (Photo provided by the Pennsylvania Credit Union Association)
HARRISBURG, Pa. (2/6/13)--Panelists emphasized the importance of ongoing financial literacy--and credit unions' role in furthering it--during a Financial Management 101 program, which debuted on the Pennsylvania Cable Network (PCN) Monday night.

"Financial education begins with a simple conversation between teacher-student, or parent-child," said Pennsylvania Credit Union Association Board Chairman Michael Kaczenski, who also is president/CEO of Sun East FCU in Aston (Life is a Highway Feb. 5).

The panel urged viewers to begin financial literacy education with young children and continue through senior citizens, said PCUA.

Panelists included Pennsylvania Treasurer Rob McCord; Kaczenski; Michael Wishnow, PCUA senior vice of communications and public relations; and Matt Bergman, teacher at the Milton Hershey School. Corinna Wilson of PCN served as moderator.

Bergman suggested parents or teachers take the conversation a step further, to openly discuss with children mistakes made in financial decisions. Wishnow explained the role credit unions play with members, as well as in schools and communities, on financial management and education.

The series of quarterly financial literacy town meetings is sponsored by PCUA and the Pennsylvania Credit Union Foundation.

NEFCU loans rise while it aids hurricane recovery

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WESTBURY, N.Y. (2/6/13)--Long Island's NEFCU is experiencing substantially increased loan volumes while helping its membership recover from the effects of Hurricane Sandy.

NEFCU provided its members $50 million in special low cost loans in Sandy's wake. The credit union offered a first-year 1% annual percentage rate (APR) on personal loans to assist with repairs, an auto loan discount and auto loan rates as low as 0.74% APR to replace vehicles lost in the storm. NEFCU also offered a special 0% interest rate on its Visa credit card for purchases made at major home improvement retailers

As a result of these programs, the $1.9 billion credit union saw a surge of two-and-a-half times its typical volume for personal loans and one-and-a-half times its usual volume for auto loans.

"We are committed to helping our fellow Long Islanders recover from the aftermath of this devastating storm" said Edward P. Paternostro, president/CEO of the Westbury, N.Y. based credit union. "We are extremely proud to have been able to respond so quickly to the needs of those most hard-hit, and provide the assistance they needed to begin the rebuilding process."

NEFCU was granted the Small Business Loan Expeditor designation, which provides it with the ability to offer expedited business loans and lines of credit to help business owners in need due to Hurricane Sandy.

The credit union also donated $20,000 to Long Island Cares for local Sandy relief efforts.

Also, 54 NEFCU members received funds totaling $35,000 from the National Credit Union Foundation (NCUF) program, CUAid.coop, for disaster relief recovery efforts. NCUF activated the online disaster relief program to raise money for credit union members along the East Coast affected by Hurricane Sandy. CUAid is the only program of its kind that allows credit unions, their employees, volunteers, and members across the U.S., to contribute directly to support fellow credit union staff, volunteers and members in need.

Ohio league to increase consumer awareness in 2013

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COLUMBUS, Ohio (2/6/13)--After generating earned media coverage equivalent to an $825,000 advertising campaign in 2012, the Ohio Credit Union league is aiming for $1 million in coverage for 2013 to drive more members to credit unions.

"Between the relationships we have developed, the opportunities to develop more, and the large number of Ohioans who do not utilize a credit union, we have plenty of room to grow," said Patrick Harris, league media and public relations director (eLumination Newsletter Jan. 23).

The league used software to track every print article or television news segment that mentioned credit unions in 2012. Every article or segment is assigned an advertising value based on the positive impression left on viewers or readers, the number of likely readers or viewers and the item's placement (News Now Dec. 17).

Ohio credit unions have already been mentioned in multiple outlets in 2013, including ClearChannel radio stations, The Columbus Dispatch and Dayton Business Journal, said the league.

Fall 2013 DE training is open

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MADISON, Wis. (2/6/13)--Registration is open for the Fall 2013 Credit Union Development Education (DE) training class, taking place Sept. 4-11 on the University of Wisconsin campus in Madison, Wis.

Attendees of the National Credit Union Foundation's six-day total-immersion experience will learn about credit unions' social responsibility, and domestic and international development through interactive education and professional networking.

"Registration is limited to just 42 attendees, so the sooner individuals register for DE training the better," said Lois Kitsch, NCUF's national program director. In fact, the spring 2013 DE training has been sold out since last October, she said.

DE training is open to everyone--from new employees who need a credit union orientation, to seasoned executives who need to recharge. 

Credit Union Development Educators return to their jobs with a new understanding of how to promote cooperative principles and credit union values as distinct advantages in today's competitive financial services marketplace, NCUF said.

The registration fee includes seven nights of single-room lodging, and all training materials and meals.

For more information, use the link.