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Study Young investors not confident of retirement savings

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BALTIMORE, Md. (3/14/12)--Only 39% of investors between 21 and 50 years old are confident they have enough money for retirement. But most (63%) of this group have yet to develop a detailed financial plan for retirement,  and many underestimate how long they will live in retirement, according to new research from T. Rowe Price.

This might be an opportunity for credit unions to provide financial education and tools to help their members in this age group think long-term about their finances after retirement, as well as savings and investment plans and individual retirement accounts (IRAs).

Of the investors surveyed who have a detailed plan, 58% say they believe they will have enough money to retire, said the survey, which focused on IRAs and the investing practices of Generation X (ages 35 to 50 for purposes of this research) and Generation Y (ages 21-34).

"This research underscores the fact that many more young investors need to get started planning for their retirement, even though the date may be decades away," said Christine Fahlund, senior financial planner for the Baltimore, Md.-based global investment management organization.

She noted the study also "demonstrates the important financial and psychological benefits of having a detailed savings and investment plan.  Whether they do it on their own by using planning tools or by working with an adviser, the earlier investors begin saving, the more years their assets will be able to compound and potentially grow."

The survey looked at components a detailed plan might include.  Of those who have a plan, 77% said it would target an anticipated monthly budget; 84% would have a specific monthly withdrawal strategy; and 78% would consider  life expectancy and how long their savings might need to last.

Gen Xers and Yers said they expect to receive income from multiple sources. Most common are:

  • 401(k)s or other workplace retirement plans, 74%;
  • IRAs, 65%; and
  • Non-retirement accounts such as checking, savings, stocks, bonds and mutual funds, 64%.
Sixty-three percent of investors aged 50 and under expect to receive Social Security benefits.  "Younger investors' confidence in the Social Security system was surprisingly positive," said Fahlund. "Still, it shouldn't be relied upon too heavily. Investors need to consider it as only one source of retirement income and make sure they are contributing to their retirement through other accounts."

When asked at what age they expect to retire, the mean age given was 62.  When asked how many years they expect to live in retirement, the mean answer was 22 years.  The latter number is a significant underestimate, said Fahlund.

"To be adequately prepared and to ensure they don't outlive their money, investors should save at least 15% of their salary, including any available employer match, and consider a possible retirement of 30 or more years, to age 95," said Fahlund.

The online survey was conducted by Harris Interactive on behalf of T. Rowe Price among 860 adults ages 21-50 who have at least one investment account.

Wis. DFI alerts consumers to fake debt collectors

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MADISON, Wis. (3/14/12)--The Wisconsin Department of Financial Institutions (DFI) has issued an alert to consumers about phone calls from bogus debt collectors. Credit unions can help by providing advice to their members on what to do if they receive such calls.

The callers attempt to collect money on loans that consumers never received or loans received but for amounts they do not owe, said DFI Tuesday.

"DFI has received calls from dozens of concerned Wisconsin consumers who have been targeted by these callers," said DFI Secretary Peter Bildsten.

Credit unions can warn members to be suspicious of callers attempting to collect debt over the phone and provide these tips for handling such calls:

  • Ask callers for their name, company, street address and telephone number. Refuse to discuss any debt until you get a written validation notice in the mail. It must include the amount of the alleged debt, the name of the collection agency, the name of the creditor allegedly owed, and the consumer's rights under the Fair Debt Collection Practices Act.
  • Refuse to speak to the callers if they haven't provided a written notice from the collector. If collectors call back, hang up or do not answer subsequent calls.
  • Do not give the caller personal financial or sensitive information such as bank or credit union account, credit card or Social Security number to someone you don't know. Scam artists such as fake debt collectors can use the information to commit identity theft.
  • Report the call to your state financial regulator, the Federal Trade Commission  at or the Federal Bureau of Investigation at

Northwest CUs pick up 9.2 of nations new members

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FEDERAL WAY, Wash., and BEAVERTON, Ore. (3/14/12)--Two states, Washington and Oregon, accounted for 9.2% of the nation's total new membership gain of 1,344,936 during 2011, according to National Credit Union Administration data.

The two states added 123,752 new credit union members last year, with Washington attracting 104,000 members and Oregon picking up nearly 20,000. During fourth quarter alone, they combined for 50,000 new memberships, bringing the total membership in Oregon and Washington to 4.2 million.

Nationally, the fourth quarter saw a net membership gain of 398,732.  Washington added 38,301 or nearly 10% of the nation's new membership for that quarter. Oregon added about 11,400 members, which represents more than half its yearly net membership gain.

"Last year was historic in terms of credit union awareness," said Northwest Credit Union Association (NWCUA) CEO John Annaloro. "As a region, though, the Pacific Northwest--especially Washington--outperformed most of the rest of the nation by 15%-to-20% in terms of pure gains."

NWCUA noted that the 2011 membership numbers in Oregon are skewed by an interstate merger of First Tech FCU in Beaverton, with California's Addison Avenue CU. The merger caused about 162,000 Oregon members to shift under this technicality to become part of California's numbers.  The data, which adjusts for this, show that 19,753 consumers joined a credit union in the state in 2011.

"A lot of factors played into what happened during last year's fourth quarter," said NWCUA President Troy Stang. "The important takeaway is that more people have access to cooperative finance than ever before at a time when it is desperately needed."

Many reasons exist as to why consumers moved their money to a credit union last year, but Bank of America's announcement that it would charge a $5 a month debit card fee undoubtedly contributed, said NWCUA.

"We've always said that if consumers have a reason to consider credit unions, that cooperative finance would win the day," said David Bennett, NWCUA director of public relations. "2011, especially its fourth quarter, proves that the benefits of being a credit union member are far more powerful than being a nameless customer of a big bank."

Washington was one of the states that worked more directly with some groups of the Occupy movement, such as Occupy Seattle.

"We did things differently here for Bank Transfer Day than what most associations did around the country," said Bennett, noting he and several credit union volunteers "actively engaged Occupy Seattle" when it requested them to help. "The group "told us what it was going to do--march people to credit unions and make a big show of it and drop them off so they could sign up [for memberships or new accounts]. They asked us to help them do it appropriately and in a way that was as comfortable for credit unions as it was going to be uncomfortable for banks," he said.

Occupy asked NWCUA and credit unions "for information on how to join and where to join. We didn't have to explain why," said Bennett. "Occupy Seattle chose us, and we had the responsibility to provide that information. Our earned media exposure was nearly 100% positive, and we had acres of it."

Bennett noted that "credit unions were not at Bank Transfer Day in Seattle to march, yell or scream. Credit unions were there to serve members of our community who were asking for help."

CU System briefs (03/13/2012)

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  • BRUNSWICK, Maine (3/14/12)--Atlantic Regional FCU settled its lawsuit against a former employee convicted of embezzling about $500,000 by agreeing to accept $370,000 in restitution (Associated Press March 12). Marsha Richard, 23, of Topsham,  Maine, allegedly manipulated accounting entries related to checks that members deposited but were later returned due to non-sufficient funds. Richard pleaded guilty and was sentenced to 33 months in federal prison …
  • GULF SHORES, Ala. (3/14/12)--An Alabama woman was extradited to Pennsylvania on charges related to allegedly using an ex-boyfriend's name and personal information to open credit accounts. The accounts at Mechanicsburg, Pa.-based Members 1st FCU were allegedly opened by Donna Dick, also known as Donna Carbaugh. The 49-year-old woman was charged with forgery, identity theft, stalking, harassment and flight to avoid apprehension, trial or punishment. This is the third time Dick is accused of using the ex-boyfriend's information to open accounts (Press-Register March 10) …
  • WARMINSTER, Penn. (3/14/12)--Freedom CU is sponsoring Biz Kid$ for the fifth year in a row on public television station WHYY. A Freedom CU release cited the program's focus on educating school-aged children about saving, budgeting, investing and giving back to the community. The approximately $500 million asset credit union has provided financial education materials to more than 250 classes to reach roughly 50,000 students since 2006. A Freedom Web tile will appear on WHYY's website on the Biz Kid$ home page …
  • HARRISBURG, Pa. (3/14/12)--Two credit union leaders have been named Women of Influence for 2012 by the Central Penn Business Journal. Carol Fastrich-Aranos, vice president of marketing at AmeriChoice FCU, Mechanicsburg,  and Diana Roberts, president/CEO of Hershey FCU, Hummelstown, were honored for their work on behalf of credit unions as well as their community efforts (Life is a Highway March 12). Fastrich-Aranos serves on the board of directors of the Pennsylvania Credit Union Foundation. Roberts is a member of the Pennsylvania Credit Union Association board of directors and is a past board chairman, as well as a former member of the Credit Union National Association Board of Directors …

Barnes named California DFI commissioner

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SACRAMENTO, Calif. (3/14/12)--Teveia Barnes has been appointed commissioner of the California Department of Financial Institutions (DFI), succeeding William S. Haraf,  who announced his resignation Monday.

Haraf's last day is Friday.

"Credit unions and banks in California have tremendous regard for Bill Haraf's expertise as a regulator," said Diana Dykstra, president/CEO of the California and Nevada Credit Union Leagues. "He is committed to the health of the banking system in California, well versed in the financial services marketplace, and has an exceptional professional background.  Bill has been open and fair with credit unions, and we have benefited from his strong leadership during one of the worst economic downturns in California and nationwide."

Barnes has been a partner at the law firm of Foley and Lardner LLP since 2005 and president and executive director at Lawyers For One America since 1999. She was executive director and general counsel at the Bar Association of San Francisco from 2001 to 2003.

Barnes worked at the Bank of America National Trust and Savings Association from 1986 to 1999 in multiple positions, including associate general counsel and senior vice president.

She serves on the boards of directors for the U.S. Bank Advisory Board of Northern California and On Lok Inc.

The position requires confirmation from the California State Senate.

Sentencing postponed for developer in kickback scheme

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PHOENIX (3/14/12)--A U.S. District Court judge postponed sentencing until April 9 for a Yuma, Ariz., businessman who allegedly took part in a scheme to defraud AEA FCU.

U.S. District Court Judge Susan Bolton rescheduled the sentencing because new information about the scope of the losses that led to AEA FCU's insolvency have emerged (Yuma Sun March 12).

Frank Ruiz in June pleaded guilty to one count of conspiracy and one count of transactional money laundering for receiving millions of dollars in fraudulent business loans from William Liddle, AEA's former vice president of business lending.

Under the terms of his plea agreement, Ruiz could have been sentenced up to 15 years in prison, but the government has requested that he receive a 12-month sentence and years of probation because of his assistance in the successful prosecution of Liddle and his wife, Rhonda.

Ruiz accounted for about $900,000 in losses, according to the government. The majority of the $50 million in fraudulent loans were made among the Liddles and other borrowers.

In postponing the sentence, Bolton said that Ruiz should be held accountable for more losses. She called the loan scam a Ponzi scheme.

According to his plea agreement, Ruiz could face a maximum $250,000 fine, a maximum five years in prison and three years of probation for the one count of conspiracy. For the second count of transactional money laundering, he faces a maximum $250,000 fine, a maximum of 10 years in prison and three years' probation ( March 11).

AEA FCU, based in Yuma, Ariz., with $229 million in assets, was placed into conservatorship by the National Credit Union Administration until it recovered.

CUs to showcase youth fin lit on Capitol Hill

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MADISON, Wis. (3/14/12)--Credit unions' innovative financial education programs for youth will be featured during a Capitol Hill event on Wednesday, March 21, sponsored by the National Credit Union Foundation (NCUF).

Volunteer Gerry Singleton, left, high-fives  a teen after spinning the "Wheel of Reality" at the National Credit Union Foundation's Reality Fair last year at the Credit Union National Association's Governmental Affairs Conference. (Photo provided by the National Credit Union Foundation)
The NCUF's Financial Reality Fair will showcase interactive financial literacy tools for high school students from noon to 2 p.m. in the Caucus Room of the Cannon Office Building, in Washington, D.C., during the Credit Union National Association's Governmental Affairs Conference (GAC).

The event aims to introduce legislators and their staff to credit unions' efforts to engage youth in financial education. Students from Roosevelt Senior High School will take part in the hands-on event, which is open to observers from the GAC. 

Students move through the reality fair by identifying a career choice and starting salary, completing a budget and then making choices that determine whether they can balance needs and wants to stay within their budget. A financial counselor meets with each student to review the outcome.

The Credit Union League of Connecticut, Maryland & DC Credit Union Association, Congressional FCU, HEW FCU, and GPO FCU provide support for the event.

CUNA to iEntrepreneuri Check out CUs for MBLs

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MADISON, Wis. (3/14/12)--Credit unions offer a viable option for small businesses seeking financing, according to a Credit Union National Association (CUNA) economist who was quoted in an Entrepreneur magazine article that appeared online.

"Because credit unions are member-owned financial cooperatives, we don't have to make a lot of money," Mike Schenk, CUNA vice president of economics and statistics, said in the article, headlined "When Seeking Funding, Credit Unions Can Be Worth Checking Out."

"You'll often find interest rates and fees lower than at commercial banks, and because the small-business borrowers are members, the credit union leadership is often likely to have more flexibility in lending to them," Schenk added.

At the same time, credit unions are not willing to take a lot of risk, so it's important the business owners clean up their credit reports before seeking funding from credit unions. But credit union loan officers often have more authority than loan officers at larger banks, the article said.

Pat Keefe, CUNA vice president of communications and media relations, also contributed to the article. Keefe outlined the types of business services most credit unions offer.

CUNA and credit unions are pressing Congress to increase credit unions' MBL cap to 27.5% of assets from 12.25%. Doing so would open up more opportunity to offer MBLs, inject $13 billion in loans into the economy and create as many as 140,000 new jobs, with no cost to taxpayers, CUNA said.

Southeastern CUs growth trends up

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BIRMINGHAM, Ala. and TALLAHASSEE, Fla. (3/14/12)--Alabama and Florida credit unions saw positive growth in assets, membership and lending--including member business lending (MBL) during 2011, according to the League of Southeastern Credit Unions (LSCU).

Alabama and Florida credit unions added $2.7 billion in assets in 2011 from 2010. That includes $1.3 billion added in the fourth quarter.

Membership rose in the fourth quarter with southeastern credit unions adding 34,000 new members for a total of 110,000 new members between the states for 2011--75,000 new members in Florida, the largest gain in more than five years, and 35,000 in Alabama, the largest gain in four years.

"When we look at the membership and asset numbers for 2011, it's certainly some of the best we've seen in years," said LSCU President/CEO Patrick La Pine. "The membership numbers are most likely higher for credit union members that are using a credit union for their primary financial institution. Through our Image Campaign research, we found many people moved their money from a bank to a credit union after already having a savings account or loan with the credit union."

Florida credit unions grew their MBL portfolios by 2.6% in the fourth quarter and 2% for 2011 year over year, while Alabama credit unions grew their MBLs by 2.7% for 2011 year over year.

Delinquent loans in Alabama fell for the second consecutive year and remain below the national average. In Florida, delinquent loans remain above the national average, but have fallen for two straight years and are under 3% for the first time in four years. Net charge-offs are at a five-year low in Alabama and well below the national average. Net charge-offs in Florida dropped for the third straight year.

In 2011, Alabama credit union members' savings grew at a two-year high of 9.7%--nearly twice the national credit union average and more than 4% higher than 2010. In Florida, credit union member savings grew nearly 3%--an improvement from 2010 when credit union member savings growth was flat.

The Credit Union National Association (CUNA) and credit unions are pressing Congress to increase credit unions' MBL cap to 27.5% of assets from 12.25%. Doing so would open up more opportunity to offer MBLs, inject $13 billion in loans into the economy and create as many as 140,000 new jobs, with no cost to taxpayers, CUNA said.