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Craig Inducted Into Utah CU Association Hall Of Fame

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RIVERDALE, Utah (3/20/13)--The Utah Credit Union Association will induct the former president of America First CU, Rick Craig, into the organization's Hall of Fame.

Craig recently retired from America First CU, Riverdale, Utah, after serving 16 years as president (The Pak Banker March 19).

He previously spent 20 years as the credit union's executive vice president and two years on the board of directors.

Under his leadership, America First CU in 2007 was recognized as one of the best places to work in Utah.

Craig served on the CUNA Governmental Affairs Committee and was on the faculty of Western CUNA Management School for 31 years.

Craig also served on the America Institute of Certified Public Accountants (AICPA) Audit and Accounting Guide Task Force, and on the AICPA Governmental Affairs Field of Membership Committee.

CU System Briefs (03/20/2013)

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  • SAN ANTONIO (3/20/13)--Security Service FCU in San Antonio has hit the $7 billion mark in total assets. The credit union's success is due to its conservative business principles, sound lending and controlled growth during the past several years, said SSFCU officials. Also, its quality service to members, along with competitive products and services, and its convenient service delivery channels were factors, they added. "Security Service is fortunate to be in such a positive position," said Jim Laffoon, SSFCU president. "The trust and loyalty we have received from our members over the years and the service our employees provide them have played key roles in our credit union's success" (LoneStar Leaguer March18) …
  • WESTBURY, N.Y. (3/20/13)--NEFCU, based in Westbury, N.Y., and serving Long Island, has passed the $1 million mark in scholarships and grants it donates to high school students, student teachers, graduate students and educators. "Our scholarship and grant programs provide an opportunity to reward students who will be our future leaders and acknowledge those educators who provide the inspiration, support and resources to help them succeed," said Valerie Garguilo, vice president of marketing and community relations for NEFCU. The $2 billion asset credit union offers four scholarships and grant opportunities a year: Funding Your Ideas (FYI) Teacher Grants of up to $250; Making a Difference Family Scholarship of $1, 000; Making a Difference Premier Scholarship, $20,000 over four years; and the NEFCU Making a Difference College Scholarship for Student Teachers and Graduate Students of $1,500 …
  • HUNT VALLEY, Md. (3/20/13)--Atlantic Financial FCU's Board of Directors has appointed Matthew P.  Piazza, as the new president/CEO, effective March 7. A certified public accountant, Piazza previously headed the finance department as vice president of finance at the Hunt Valley, Md.-based, $98 million asset AFFCU. He prepared monthly, quarterly and annual financial reports, managed the credit union's investment portfolio, and updated policies and procedures. He also oversaw AFFCU in two credit union mergers by spearheading the accounting processes, and he served on AFFCU's Asset Liability Management Committee. Before joining AFFCU Piazza was an assurance manager at CliftonLarsonAllen LLP (formerly Clifton Gunderston LLP), where he audited credit unions across the country with assets as large as $21 billion. He succeeds long-time President/CEO Richard T. Webb, who announced his plans to retire by this month …

Military Publications Make The Case For CUs

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WASHINGTON (3/20/13)--More consumers are looking to credit unions during tough economic times because of better interest rates on checking and saving accounts and more consumer-friendly products, according to an article that appeared in several military publications. 

Since 2004, credit union membership is up 12%, rising to a total of  93.8 million members last year, according to the National Credit Union Administration, said the Army Times (March 25). The article, "Making a Case for Credit Unions," also appeared in Marine Corps, Navy and Air Force publications. The Credit Union National Association provided information for the story.

Credit unions are a good fit to serve mobile military populations, Retired Army Col. Roland "Arty" Arteaga, DCUC president, told the publications. The Defense Credit Union Council has 210 member credit unions, he added.

"Once a member always a member," Arteaga told the publications.  "With technology the way it is, you don't physically have to walk into any particular facility. You can conduct your transactions from any part of the world." 

Some credit unions that were founded to serve military members have expanded outside of the military, the article said. "For example, Security Service FCU [in San Antonio] was founded by service members but has greatly expanded it field of membership," the article explained. "Troops and their families now make up less than 10% of the credit union's membership base."

The article also featured a sidebar about several credit unions that serve military communities and that are offering products to help those affected by sequestration--not military personnel who are currently unaffected, but rather spouses of military members and military retirees who work for the federal government as civilians. Andrews FCU, Joint Base Andrews, Md., and Redstone FCU, Redstone Arsenal, Ala., are offering a "Sequestration Bridge Loan" and "Furlough Assistance Loan" respectively, each up to $5,000 to those displaced from their jobs, the article said.

In a related matter, Tinker FCU (TFCU) in Oklahoma City, with $2.9 billion in assets, is telling it members who receive furlough letters in the aftermath of the federal budget sequestration to bring them into the credit union for assistance. It has about one-third of it 270,000 members relying on the U.S Air Force for their livelihoods (Journal Record March 18).  

TFCU will provide free planning, special loan repayment arrangements--such as skipping a payment--and a reduction in short-term loan-interest rates. "We don't want to get [members] into long-term debt to solve a short-term problem," Matt Stratton, TFCU marketing vice president, told the Journal Record.  

CO-OP On EMV News: Stay Cautious on Deployment Until 2014

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RANCHO CUCAMONGA, Calif. (3/19/13)--CO-OP Financial Services supports and voted in favor of the Secure Remote Payment Council (SRPc) Chip and PIN Workgroup's agreement on a common U.S. debit application identifier (AID) and application for Europay, MasterCard and Visa (EMV) deployment. But CO-OP urged credit unions to be cautious on deploying EMV until 2014.

SRPc announced Tuesday that 10 of its debit network members agreed to adopt a common U.S. debit AID and work with Discover Financial Services to license the D-Payment Application Specification, known as D-PAS, as the foundation for the common U.S. debit chip payment solution.(Use the link to access the press release)

Adoption of the AID and application "is extremely important to credit unions because it preserves their routing and network choices in connection with the emerging EMV standard," said Stan Hollen, president/CEO, CO-OP Financial Services.

"As a founding member of the Workgroup, CO-OP has actively participated in the SRPc to represent the interests of credit unions, and we will continue to help drive next steps, both in governance and deployment of the common U.S. debit AID and application," he said.

"While this solution simplifies efforts for the industry, commercialization will take time," Hollen continued. "Given that EMV is being driven by liability shifts, not regulatory or network mandates, we recommend that issuers wait until 2014 before moving forward with their business case for EMV deployment in order to ensure that the market is ready."

He noted that in the coming months CO-OP will provide guidance to its client credit unions "in the form of multiple tools to help them determine their own roadmap for EMV. This will include tactical advice on upgrading ATMs, issuing debit cards with the common AID, what to do about credit, how to calculate the economics of switching to EMV and related fraud trends."

SRPc's announcement said the Workgroup "will also evaluate enhancing the specification's security by including the one-time card number technology developed by First Data/STAR specifically to mitigate impact from skimming and data breach frauds."

CO-OP Financial Services will host a free webinar on March 26, at 11 a.m. PT to discuss the latest developments concerning the EMV standard. For more information, use the link.

The SRPc is a trade association focused on security standards for Internet- and mobile-based payment methods, including EMV. For more information on EMV, visit the "Ask the EMV Expert" page on CO-OP's website by clicking on the link below.

NJ Bill Would Add FCUs To Advisory Council

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TRENTON, N.J. (3/20/13)--New Jersey Senate President Steven Sweeney (D) has introduced legislation that would expand the state's Credit Union Advisory Council (CUAC) to seven members and provide for representation of a minimum of two federally chartered credit unions.

Through the CUAC, state-chartered credit unions advise the state government on credit union-related matters, said the New Jersey Credit Union League. (The Daily Exchange March 20). Members are nominated by the governor and must be confirmed by the state Senate.

The legislation recognizes that federally chartered credit unions, though primarily regulated by the federal government, also are subject to state laws and regulations and should be represented on the council.

"Preserving and expanding the independent council are part of the New Jersey Credit Union League's strategic plan," Chris Abeel, league director of government affairs, told News Now.

In October, NJCUL successfully lobbied for an amendment to preserve an independent CUAC. The bill was a response to a Department of Banking & Insurance (DOBI) recommendation under an executive order from Gov. Chris Christie that directed all departments to review the duties and spending of independent state boards, commissions, authorities and agencies.

DOBI determined that the consolidation of CUAC and two other boards into one Consumer Finance Advisory Board "would best serve the needs of the citizens of this State," said the league. The new board would have included nine statutorily defined representatives with two seats designated for credit unions.

The league argued that the consolidation would lump very different financial service providers into one advisory board with duties that would be inconsistent with those individual providers' businesses and expertise, Abeel said.

"The board would have included representatives with conflicted expertise and interests," Abeel told News Now.

The new legislation, with amended language, would consolidate two of the boards while preserving an independent CUAC.

Mich CUs Testify For Homestead Exemption In Foreclosures

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LANSING, Mich. (3/20/13)--The Michigan Credit Union League last week testified before the state House Committee on Tax Policy in support of legislation that would allow financial institutions to realize the full benefit of the principal residence exemption, or "homestead exemption," on foreclosed properties.

"This legislation would provide actual relief to credit unions that are forced to foreclose, despite their best efforts to keep the borrower in their home," MCUL CEO David Adams said.

MCUL officials were joined in their testimony by representatives from Michigan State University FCU, East Lansing, Mich. and E&A CU, Port Huron. (Michigan Monitor March 18). The legislation was also supported by the Michigan Association of Realtors and the Michigan Bankers Association, but was opposed by the state Department of Treasury.

Law enacted in 2012 allows financial institutions to file paperwork to technically retain the exemption so future buyers don't have disruptions or additional cost. However, the financial institution is still required to pay additional non-homestead amounts through a different statutory route.

The proposed legislation, sponsored by state Rep. Frank Foster (R-Petoskey), would eliminate the non-homestead requirement.

"The additional mills from the non-homestead rate represent conditional revenue, based on our members' decision whether or not to foreclose, and eliminating this requirement doesn't reduce the amount that would normally be due to the state under the homestead rate," Adams said.

The bill also would reduce the costs associated with unfortunate circumstances for borrowers and lenders, and would benefit communities by providing more flexibility to repopulate homes, Adams said.

Court Dismisses Space Coast Suit On CDOs, Allows Amended Complaint

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FORT LAUDERDALE, Fla. (3/20/13)--A federal court Monday dismissed without prejudice Space Coast FCU's more than $100 million lawsuit against Wall Street banks and ratings agencies over collateralized debt obligations (CDOs) sold to Eastern Financial Florida CU. However, it will allow Space Coast to amend its complaint to remedy shortcomings in its case.

Space Coast, based in Melbourne, Fla., acquired Miramar, Fla.-based Eastern Financial Florida CU in June 2009 in an emergency merger approved by state regulators. As successor in interest, Space Coast filed the lawsuit in the U.S. District Court for the Southern District of Florida, in Fort Lauderdale. The case involves 12 CDOs sold to Eastern Financial between 2005 and 2007.

"Space Coast's complaint must be dismissed because it does not plead defendants' alleged fraud with particularity, nor does it state a plausible claim for relief," wrote U.S. District Judge James I Cohn in Monday's ruling.

He declined to address other issues raised in the complaint because "Space Coast has not identified any fraudulent statements or omissions that defendants made regarding the specific CDOs purchased by Eastern, the court cannot evaluate defendants' other arguments that depend on those statements or omissions," according to the court document.

Space Coast's complaint alleged that the banks and ratings agencies engaged in six types of systemic fraud by "using knowingly inflated, inaccurate and unreliable credit ratings to sell the rated CDOs" and omitting that:

  • The ratings were the results of secret, out-of-model investments;
  • The ratings for CDOs were graded on a curve;
  • Certain ratings assigned were unreliable guesses instead of educated opinions;
  • CDOs were mispriced in the first quarter of 2007 to dump over-valued mortgage related bonds from their balance sheets onto investors;
  • Secret short sellers had warped CDO assets and priced them so they would fail; and
  • The correlation input used to create the CDOs and rate the notes were inaccurate.
The judge's ruling said the complaint "failed to plead in detail how each defendant defrauded Eastern." But, the judge wrote, "Space Coast may be able to cure these problems by alleging in detail, and with a plausible factual basis, the fraud that each defendant committed in connection with the CDOs owned by Eastern."

Defendants in the suit are: Merrill Lynch and its credit corporation, Merrill Lynch Home Loans; Wells Fargo Securities (former Wachovia Capital Markets); J.P. Morgan Securities (formerly Bear Stearns & Co.); UBS Securities; Barclay's Capital Inc.; Richard S. Fuld Jr., who ran Lehman Brothers at the time; Moody's Investors Service Inc.; and The McGraw-Hill Cos. Inc. (Standard & Poor's Ratings Services).

PCUF Marks 17th Year With 500th Grant

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HARRISBURG, Pa. (3/20/13)--The Pennsylvania Credit Union Foundation marked its 17th anniversary Tuesday by providing its 500th grant.

The grant was given to a staff member at City Co FCU in Pittsburgh to allow her to attend the Judge Bradley Leadership School (Life is a Highway March 19).

"What is remarkable is that today, the foundation continues its astounding success because of its consistency in a philosophy that all of its programs will result in continued, increased credit union membership, as well as a more financially savvy consumer," said Ray Brunner, PCUF chairman.

The first PCUF grant was awarded Dec. 27, 1996, to PHILCup, a nonprofit organization, to assist three low-income credit unions in Philadelphia.

The foundation since has raised more $3 million and awarded more than $2.2 million in grants.

St Paul Croatian FCU Fraud Ring Member Sentenced

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CLEVELAND (3/20/13)--A man who pleaded guilty to working with a loan fraud ring that brought about the collapse in 2010 of Eastlake, Ohio-based St. Paul Croatian FCU has been sentenced Monday to 27 months in prison and ordered to pay $1 million in restitution.

Marko Nikoli, 35, was sentenced in a U.S. District Court in Cleveland. He had pleaded guilty to two counts of bank fraud and one count of money laundering. The latter charge stemmed from the purchase of a $60,000 Mercedes Benz (News-Herald.com March 18).

One of nearly two dozen persons arrested in connection with the fraud, Nikoli is the nephew of Koljo Nikolovski, considered the ringleader for the fraud scheme. Niklovoski, of both Eastlake and Macedonia, is serving an 18-year prison term in connection with more than $2.9 million in fraudulent loans.

The loan scheme involved more than 1,000 loans for more than $70 million combined to about 300 accountholders at the credit union.  The credit union's CEO, Anthony Raguz, is serving a 14-year prison sentence and was ordered to pay $72 million for pocketing bribes, kickbacks and cash gifts related to the loans.

The National Credit Union Administration placed the credit union into conservatorship in April 2010 and liquidated it a week later, saying it was insolvent. The conservatorship reflected $170 million in losses to the National Credit Union Share Insurance Fund in one of the biggest credit union failures in U.S. history.

Bankrate: Five Doors To CU Membership

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MADISON, Wis. (3/20/13)--While credit unions have membership requirements, most consumers qualify for membership at a credit union. A Bankrate.com article outlined the different "flavors" of credit unions that serve consumers' interests.

The article cited Credit Union National statistics that track about 7,200 credit unions in the U.S.

"There's a credit union for everyone," Bill Cheney, CUNA president/CEO told Brankrate.com. "You just have to find it."

The article points readers to aSmarterChoice.org to find a credit union that serves their needs.

Bankrate.com cited five types of credit unions that consumers are eligible to join. They include:

  • University credit unions, which are usually open to alumni, faculty, students and nearby residents, the article said. At the University of Southern California CU in Los Angeles, students, alumni and staff can use the credit union's three on-campus branches. Los Angeles residents are also eligible for membership.
  • Community development financial institutions, which serve consumers of low- to moderate-income. The CDFI designation allows them to apply for government grants to open multiple branches in hard-hit communities, Pamela Owens, vice president of programs for the National Federation of Community Development Credit Unions, told Bankrate.com. For example, members of Alternatives FCU in Ithaca, N.Y., can get free tax preparation and a seven-week financial education course.
  • Credit unions with ties to special causes. For example some credit unions are building their memberships around green initiatives and sustainability, the article said. Since being founded in 2000, Permaculture CU in Santa Fe, N.M., has funded $15.2 million in loans to support sustainable living projects such as energy-saving cars, microloans to farmers and educating the public on permaculture, a design principle that promotes self-sustaining ecosystems.
  • Church-based credit unions, which have a long history within the credit union system. The Alliance Catholic CU in Ann Arbor, Mich., for example, serves several Catholic parishes and offers 48-month auto loans at less than 2%, and debit and credit cards. Many church-based credit unions have extended eligibility to their surrounding communities, the article said.
  • Military credit unions, which serve the needs of service members, their families and veterans. One such credit union, Service CU in Portsmouth, N.H., offers free checking accounts with no minimum deposit, online banking, free bill pay and rewards debit cards to its members.