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PCUA applauds Senates six predatory loan bills

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HARRISBURG, Pa. (3/13/08)--The Pennsylvania Credit Union Association applauded the state Senate's passage by unanimous vote of six bills targeting predatory and other questionable mortgage-lending practices. The bills, S.B. 484 through 488, were introduced by Sen. Pat Browne (R-Lehigh) (Life is a Highway March 14). PCUA took an active role in negotiations to ensure homeowners were better protected without adding more unduly burdensome regulations on credit unions. "We applaud the senator's efforts and thank him for giving us an opportunity to discuss our concerns on behalf of Pennsylvania's credit unions," said Jim McCormack, PCUA president/CEO. The bills would:
* Amend the Loan Interest and Protection Law of 1974 to increase a monetary cap to $200,000 from $50,000; * Permit the state Department of Banking to publicly release information on pending enforcement actions and fines against nondepository licensees; * Amend the Real Estate Appraisers Certification Act regarding board membership, disciplinary measures and penalties; * Amend the Housing Finance Agency Law to require lenders to send copies of foreclosure notices to the Pennsylvania Housing Finance Agency so mortgage foreclosures can be monitored statewide; * Amend the Mortgage Bankers and Brokers and Consumer Equity Protection Act to create a new licensing category for individual mortgage originators who deal directly with the consumer by soliciting, accepting or offering to accept mortgage loan applications or negotiating mortgage loan terms; * Amend the Secondary Mortgage Loan Act to create a new licensing category for individual mortgage originators who deal directly with the consumer by soliciting, accepting, or offering to accept secondary mortgage loans (home equity) applications or negotiating secondary mortgage loan terms.
The package now heads to the Commerce Committee in the House of Representatives, said PCUA.

Former D. Edward Wells CEO convicted

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SPRINGFIELD, Mass. (3/14/08)--The former CEO of the defunct D. Edward Wells CU was convicted Thursday of multiple counts of embezzlement and other charges related to the embezzlement of $1.5 million from the credit union (Boston Herald March 13). Carol Aranjo, a nationally known advocate of community development credit unions, was convicted of multiple counts of embezzlement, filing false tax returns, bank fraud, filing false entries with a federal financial institution and obstruction of a federal examiner. Her husband, Alphonso Smith, was convicted of aiding and abetting, but was acquitted of some charges, said the news report. The thefts occurred between 1997 and 2003. D. Edward Wells, a community development credit union based in Springfield, Mass., was liquidated in 2003 by the National Credit Union Administration. The jury deliberated for four days after a five-week trial. Sentencing was set for June 19. Aranjo faces up to 14 years in prison (News Now Feb. 19).

CU System briefs (03/13/2008)

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* DUBLIN, Ohio (3/14/08)--The Ohio Credit Union League announced these 2008 Leadership Recognition Program awards (eLumination Newsletter March 12): William Burns and Ronald Moss of Kent CU, Volunteers of the Year; Doug Fecher, CEO, Wright-Patt CU, Professional of the Year; Central Ohio Chapter, Spectacular Chapter Award in its category; L.C.E. FCU, AurGroup Financial CU and Ohio University CU, Desjardins Youth Financial Education Award; Bay Area CU, Credit Union of Ohio, CME FCU and Kemba CU, Dora Maxwell Social Responsibility Award; CSE FCU and Day Air CU, Louise Herring Award for Philosophy in Action; and Classic FCU, Fiberglas FCU and Ohio University CU, Cutting Edge Marketing Brilliance Award. They will be honored at the Ohio Credit Union System's ZENITH08 conference April 24-25 in Columbus … * BATON ROUGE, La. (3/14/08)--Neighbors FCU has named Kathi Gill as president/CEO, according to the Louisiana Credit Union League (eNews March 12). Gill has been executive vice president at the $328 million asset, Baton Rouge-based credit union for the past 15 years. She recently was honored as the 2007 Alumnus of the Year of the Southwest CUNA Management School. A Certified Credit Union Executive, Gill serves as vice president of the Baton Rouge Credit Union Chapter, is a member of the CUNA Mutual Group Market Research Panel and a member of the Baton Rouge Rotary, serving on the Literacy Committee … * VANCOUVER, B.C. (3/14/08)--Credit Union Central of British Columbia announced it has posted a record net income of $24.4 million during 2007, a 47% increase from $16.6 million in 2006. Financial margin of $31.1 million also turned in a record, with a 20.5% increase from a $25.8 million record in 2006. Assets grew 9.4% to $5.66 billion. The trade association for the province's credit unions paid a dividend of 8.34%. After taxes and dividends, $17.7 million was transferred to retained earnings (Marketwire March 12) … * MARGATE, Fla., and SAN BERNARDINO, Calif. (3/14/08)--MediaNet Group Technologies Inc., which offers an online mall and affinity program platform through its BSP Rewards subsidiary, has announced it will build a private branded rewards mall for $1 billion asset Arrowhead CU, San Bernardino, Calif. Arrowhead offers 24-hour access to accounts, loan approvals online in seconds, and online banking services. Larry Strong, Arrowhead's president/CEO, noted that BSP services more than 700 merchants and 8,500 restaurants. BSP builds, brands and customizes proprietary loyalty/rewards/mall programs …

Kentucky bankers anti-CU bill still in committee

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FRANKFORT, Ky. (3/13/08)--A banker-backed bill that would result in burdensome restrictions and limits on Kentucky's credit unions' branching efforts is stalled in a state legislative committee. "We've been led to believe it's stalled, and the bill could be dead, but there are a couple more weeks left (in the legislative session). Call me in about two weeks," said Debbie Painter, director of the Kentucky Credit Union League's government affairs. The bill, SB 89, was introduced in the Senate Banking and Insurance Committee in mid-January and is backed by the Kentucky Bankers Association. Under current law, credit unions and banks wishing to add or change a branch, service center or ATM must give notice of their intent to their regulator. The bill would apply "a ton of regulations" to the application process for credit unions, but not banks. It also would make credit unions' budget process part of the Open Records Act, Painter told News Now. She credited grassroots efforts by credit unions in keeping the bill in the committee. "They've really came through for us," she said.

Political campaign ads bump iBelongs schedule

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HARRISBURG, Pa. (3/14/05)--While presidential candidates zoom in on the election in Pennsylvania, the Pennsylvania Credit Union Association's (PCUA) iBelong campaign has had to adjust its media plan for April. PCUA and its partner, Target Media, adjusted their plan for iBelong to make way for political advertising flooding radio and television air time before the Pennsylvania Primary Election on April 22, said PCUA (Life is a Highway March 13). iBelong's ad schedule will go off the air on April 13 and resume on May 5. "The Democratic candidates will spend nearly $50 million in media advertising between now and April 22 in Pennsylvania alone," said Jeff Wakeen, president/CEO of Target Media. He advised credit unions with ad programs to put their ad schedules on hold for the two weeks before the primary and resume advertising a week or two afterward. "Anyone trying to advertise during the week prior to the election will be lost in the 'noise' of the political arena," said Wakeen. The high demand for time for political messages means nonpolitical advertisers will pay exorbitant rates at that time, and still risk not getting on the air.

Auditor Most western Michigan CUs grew in 07

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ANN ARBOR, Mich. (3/13/08)--An audit by the St. Joseph, Mich., office of Plante & Moran indicates that Western Michigan credit unions experienced a strong 2007 and are not being hit hard by loan losses (MLive.com March 12). The reason credit unions in Western Michigan--and some in Southwestern Michigan--have experienced a strong fiscal year is because the economy is more diversified, David Adams, president/CEO of the Michigan Credit Union League, told News Now. And unlike banks, credit unions have less than 2% of their assets in commercial lending, whereas banks have 40% to 50%. Credit unions also make smaller loans than banks, Adams said. The MLive.com article mentions that Lake Michigan CU, Grand Rapids; Educational Community CU, Kalamazoo; Option 1 CU, Grand Rapids; Consumers CU, Oshtemo Township; and Berrien Teachers CU, St. Joseph, increased their net income for 2007. DFCU, Dearborn--Michigan’s largest credit unions--has done well this year and has distributed a record patronage dividend of $17 million to its members for the second year in a row, Adams said. Dividends are a great way to differentiate credit unions from banks, Adams added. Though the league is aware that some credit unions and banks in Michigan are struggling due to the economy, other credit unions are growing and adding value. “It’s a testament to the credit union model,” he said. Despite some bad news related to the economy, there’s a lot of good news for credit unions, Adams said.

Michigan CUs grow through MBL

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PLYMOUTH, Mich. (3/14/08)--Though credit unions in general have room to expand in the area of member business lending (MBL), individual credit unions “more and more” are beginning to reach the credit union MBL cap of 12.25%, according to Michigan Credit Union League President/CEO David Adams. Two credit unions doing particularly well with MBL in Michigan are Christian Financial, Roseville, and Consumer CU, Oshtemo, he told News Now. Credit unions have always offered member business lending, but the types and sizes of member business loans they are making has changed. Credit unions want to expand to other lines of business and diversify their lending, Adams said. Small business owners are attracted to credit unions because credit unions already have a relationship with them as members. Commercial banks tend to “roll out the red carpet” for the largest, most profitable businesses, leaving many small businesses behind. Many people look to credit unions as trusted service providers, and because they like value and good service, they turn to them for business needs. “Small businesses are not able to get the same value at banks,” Adams said. Credit unions also channel their business lending through credit union service organizations (CUSOs), which allow them to share expertise, Adams said. Some bankers argue that if the Credit Union Regulatory Improvements Act (CURIA) passes, it would allow credit unions to have an unfair advantage over banks because it would raise the cap on MBL to 20% of assets. Adams disagrees. “If we did [have an advantage in MBL], banks would convert to credit unions,” he said. While credit unions’ tax-exempt status helps them provide better rates to their members, “it’s ludicrous that raising the cap [on MBL] would threaten banks,” Adams said.

CUs against junk driving program nets NCUF grant

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BATON ROUGE, La. (3/14/08)--Southern Teachers and Parents FCU in Baton Rouge has taken a stance against “junk driving.”
Southern Teachers and Parents FCU, Baton Rouge, used a grant from the National Credit Union Foundation to help members buy their first car under its "Credit unions against junk driving” program. From lef: Ronald F. Smith, program coordinator; Sheila Minor Caldwell, the first member to buy a vehicle in the program; and Richard Turnley Jr., treasurer and manager. (Photo provided by Southern Teachers and Parents FCU)
With the help of a $29,840 National Credit Union Foundation (NCUF) grant, the credit union’s members will no longer have to drive cars that are ready for the junkyard. Instead, members who meet criteria and who attend auto workshops at the credit union will be eligible to receive up to $1,000 on a down payment toward their first car purchase (eNews March 12). The program, which bears the motto: “Credit unions against junk driving. We won’t let our members drive junk,” began in February and will end February 2009. Nonmembers may attend the workshops, but must become a member for the down payment incentive. Workshop topics include: financial planning, preventive car care maintenance, tips for buying a pre-owned car and auto financing.

South Africa passes landmark financial co-ops law

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MADISON, Wis. (3/14/08)--The South African government recently passed the Cooperatives Banks Act, marking the first financial cooperative-specific legislation to be passed in English-speaking Africa. The World Council of Credit Unions (WOCCU) assisted the Savings and Credit Cooperative League (SACCOL) of South Africa with drafting and reviewing the new legislation. Musa Mbingo, general manager of SACCOL, sees the formal recognition of financial cooperatives as a way to deepen and strengthen outreach to South Africa's poor. “In terms of poverty, South Africa's numbers are very high,” Mbingo explained. “There are many unbanked people who can't enter the mainstream banking system. Cooperatives are the solution to provide financial services. In the fight for poverty alleviation, [the legislation] is a big step.” Savings and credit cooperatives or SACCOs--credit unions--previously were regulated under an “exemption" to the Banking Act, which required deposit-taking cooperative financial institutions to join a self-regulatory organization. Most SACCOs and financial cooperatives affiliated with SACCOL, a WOCCU member. After unsuccessful attempts to address regulatory problems within the system, WOCCU was invited to make a legislative assessment in 2000. By October 2001, South Africans had launched a campaign to encourage banks to serve the poor. Due to the campaign's mass appeal, the Financial Sector Campaign Coalition (FSCC) was established. More than 50 community-based organizations rallied around FSCC to address mainstream financial exclusion of the poor. “SACCOL became pivotal within the FSCC and in addressing the exclusion of financial cooperatives operating under an ‘exemption’ rather than being brought into mainstream banking,” said David De Jong, former general manager of SACCOL and now regulator of cooperative banks for South African Microfinance Apex Fund, the new regulating authority for financial cooperatives. “One of the priority issues was a need to address the legislative and support environment for financial cooperatives,” he continued. Less than a year after FSCC's creation, government, business, labor and community constituencies organized and agreed to draft and enact legislation specifically for financial cooperatives. SACCOL and its affiliated SACCOs, South Africa's labor movement and WOCCU provided input for the Cooperatives Banks Act. SACCOs are now allowed to provide their members a full range of financial services, all covered by a deposit insurance plan. For the first time, this places financial cooperatives ahead of South Africa's mainstream banks, providing a unique window of opportunity for the movement, De Jong said. Dave Grace, WOCCU vice president of association services, who worked closely with SACCOL to draft the legislation, noted the importance of the law for African credit unions. “We hope this is the first in a sea of changes, enabling legislation for financial cooperatives in Africa.”

Illinois league meets with new director of DFI

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NAPERVILLE, Ill. (3/14/08)--Robert Meza, new director of the Illinois Division of Financial Institutions (DFI), acknowledged the importance of state-chartered credit unions in Illinois during a recent meeting with Illinois Credit Union League (ICUL) staff. “Meza also understood ICUL’s long collaborative relationship with the DFI,” said Steve Olson, ICUL executive vice president. “We look forward to working with him.” During the meeting, league staff discussed the Illinois credit union movement and confirmed changes in the Illinois Department of Financial and Professional Regulation and the DFI organization structure, said Dan Plauda, league president/CEO. Prior to his position with the DFI, Meza worked as an attorney and as the vice president of legal affairs for Urban Investment Trust Inc. in Chicago. ICUL staff plans to meet with Meza again at the Capitol to discuss credit union issues.

Ohio CU bill passes state Senate unanimously

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COLUMBUS, Ohio (3/14/08)--Credit union modernization legislation--Senate Bill 247--was recently passed by the Ohio Senate with a unanimous 32-0 vote. The Senate is expected to refer the bill to the Ohio House Financial Institutions Real Estate and Securities Committee, said the Ohio Credit Union League (eLumination Newsletter March 13). “We expect the credit union legislation to continue making solid progress through the House as it did in the Senate,” said John Kozlowski, league general counsel. The legislation seeks to modernize the administration, operation and governance of Ohio's state-chartered credit unions (News Now Feb. 15). The Ohio Financial and Financial Institutions Committee adopted several amendments to the legislation that would:
* Require credit unions to retain Suspicious Activity Reports for five years; * Provide further clarification of nonpaper document storage requirements; and * Provide authority for the superintendent of the Ohio Division of Financial Institutions to conduct national background checks within limits.