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CU System briefs (03/23/2009)

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* HARRISBURG, Pa. (3/24/09)--So far in 2009, Pennsylvania's credit union members have purchased 1,928 new vehicles through Invest in America, the auto loan partnership between credit unions and General Motors and Chrysler Corp. LLC. GM dealers reported sales of 1,234 vehicles, and Chrysler reported 694 new vehicles sold to qualifying credit union borrowers. "While many lenders have scaled back or stopped making loans, the good news is that credit unions are still making loans to qualified vehicle buyers," said Pennsylvania Credit Union Association President/CEO Jim McCormack ... * WASHOUGAL, Wash. (3/24/09)--A black tube in a duffle bag, thought to be a bomb, outside Vancouver, Wash.-based Columbia CU's branch in Washougal, Wash. turned out to be fishing gear, according to kgw.com (March 20). A man who left the luggage and fishing gear outside the credit union returned just before the bomb squad evacuated the area. Police had already closed roads around the credit union. The incident followed another incident last week when police arrested a suspect in the robbery of LaCamas CU and discovered a bomb in the getaway car …

Drill tests drive-thrus as pandemic medicine distributors

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TOOELE, Utah (3/24/09)--Heritage West FCU was among the financial institutions involved in a county health pandemic drill that focused on distributing medicine through drive-throughs at financial institutions. The Tooele (Utah) County Health Department, which set up the drill Saturday, tested the use of credit union and bank drive-through windows to disseminate anti-viral medications to the public in the event of a flu pandemic, bioterrorism attack or other disaster (Deseret News March 22). Tooele residents participated by driving up to the window and sending a filled-out form through the pneumatic,cash-handling tube. The "medication"--a new gold dollar for each person in the vehicle--was placed in a prepared envelope by a public health nurse, under the direction of a pharmacist, and sent back through the tube to the vehicle. Health officials told the publication that 60% to 70% of the population could go through a nonmedical model to receive medication by driving in and out with directions on how to take the medicine. The drive-through model would reduce risk to exposure and provide an efficient way to dispense medication, which would be critical to saving the greatest number of lives, they said. The exercise in Tooele and a similar one in Grantsville served 809 cars, with 2,369 gold dollars given out in about two hours. The only difficulty: Getting sufficient size or amount of medication through the pneumatic tubes. The officials plan to work on packaging.

Mid-Atlantic Corporate reaffirms strength

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HARRISBURG, Pa. (3/24/09)--Mid-Atlantic Corporate FCU says the investments it holds with U.S. Central FCU "have continued to earn dividends, and we plan on holding them to maturity." The Middletown, Pa.-based corporate made the statement in a fax broadcast to its members Friday after the National Credit Union Administration announced it had placed U.S. Central and Western Corporate FCU (WesCorp) into conservatorship (Life is a Highway March 24). The corporate noted the deposits are guaranteed under NCUA's extended guarantee of corporate deposits. "Mid-Atlantic Corporate will maintain our normal practices of analyzing and evaluating portfolio valuation and risk, and the corporate will continue to look to various investment sources as our U.S. Central investments mature." Mid-Atlantic had moved toward greater diversification in its portfolio the past year and has not invested directly in retail mortgage backed securities, collateralized debt obligations or specialized investment vehicles. "We have no direct risk with these types of securities because we do not hold them in our portfolio," the statement said. "Our operations are not directly affected by these announcements," it said, noting it remains "a safe and sound institution that is perfectly positioned to meet our members' liquidity and investment needs."

CUs an emergency first responder in economy

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MANCHESTER, N.H. (3/24/09)--Credit unions in New Hampshire have taken on the role of emergency first responders in the ongoing economic crisis, according to a local newspaper. By offering higher interest rates, more mortgage refinancing programs and continuing consumer education to help members and the general public, credit unions are doing a better job than banks, said the Nashua Telegraph (March 23). The 23 credit unions headquartered in the state are making substantial efforts to help consumers, Rob Kimmett, senior vice president of marketing for the New Hampshire Credit Union League, told the newspaper. By “sticking with the basics,” credit unions have remained successful, even during the Great Depression, Kimmett added. The basics, seasoned with some incentives, have created a credit union recipe for success, the paper said. Some examples:
* Triangle CU, Nashua, offers an online savings account that was introduced in October and yields a return of 3.25%; * Bellwether CU, Manchester, encourages its members to call whenever life’s challenges--sickness, divorce, death--happen, or else the credit union contacts its members directly, said President/CEO Mike L’Ecuyer, adding that deposits at the credit union have been going up; * Granite State CU, Amherst, has been “hauling in mortgages,” the past few months, said Jody Ducharme, marketing communications liaison. She cited the non-profit credit union model for providing an edge over banks during tough economic times; and * St. Mary’s Bank, Manchester, the nation’s first credit union, is experiencing business as usual, said Steven Macek, director of retail lending. In the second quarter of 2008, the credit union recognized that members were facing difficulties, so it went through alternatives, modifications and short sales to help raise awareness and educate members about foreclosures.

Filene studies CUs tax-time help for low-income staff

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MADISON, Wis. (3/24/09)--For most people--especially for low-income consumers--income tax filing is the single biggest financial event of the year, and credit unions may be in a position to help, according to a new Filene Research Institute study. The study, The Economics of Serving Low-Income Employees at Tax Time: Implications for Credit Unions, authored by John Hoffmire, explores a partnership between Progress Through Business, a nonprofit organization focused on poverty alleviation issues, and H&R Block to offer tax preparation to low-income employees of Staples, Inc. The report shows how tax preparation services, corporations and nonprofit organizations can work together in the process. The study was conducted with funding from the National Credit Union Foundation and its signature program, REAL Solutions. More than 400 Staples employees took advantage of tax preparation and benefits enrollment services. These employees received higher tax credits or refunds and other tax advantages than they would have received without the service. The combination of tax preparation and public and private benefits enrollment also increased employee participation in employer-sponsored plans such as employee stock purchase plans, 401(k) retirement plans and tuition reimbursement programs. Enrollment in public benefits also increased, with higher claims for Earned Income Tax Credit, child care credits, renters’ credits, education credits, and other benefits aimed at low-income taxpayers. The advantage for Staples was a reduction in employee turnover. After one full year of tracking, those who participated in the program during the 2007 tax season showed a 32% improvement in retention over those who did not participate. “For each employee who participated in this program at a cost of $75, the company saved $480,” the study said. “The Tax Break program is more than a modest tweak in mainstream Volunteer Income Tax Assistance programs,” said George Hofheimer, Filene chief research officer. “This study is about providing tax preparation and public/private benefits enrollment to low- and modest-income employee groups for a fee,” he added. “Previous work by the Filene Research Institute confirmed the efficacy of at-work financial service programs, and this report suggests that replicating the Staples program at credit unions could have dramatic implications.”

New leadership appointed for U.S. Central WesCorp

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LENEXA, Kan., and SAN DIMAS, Calif. (3/24/09)--U.S. Central FCU and Western Corporate FCU (WesCorp) have new leaders to see them through the conservatorships imposed Friday by the National Credit Union Administration (NCUA). Jim Nance, who oversaw U.S. Central's asset and liability management from 1993 to 1996, has been named president/CEO of U.S. Central, effective yesterday. He most recently was chief administration officer of Icap Capital Markets, based in Jersey City, New Jersey. Nance told Reuters that credit unions will handle their problems on their own without having to turn outside the credit union system. He stressed that the credit union industry remains extremely well capitalized and will not likely need a bailout from taxpayers (Reuters March 22). Nance replaces Francis Lee. All other senior management remains intact, but the board has been replaced by NCUA, said Lyle Niedens, director of communications at U.S. Central. Philip R. Perkins has been named president/CEO of San Dimas, Calif.-based WesCorp, replacing Bob Siravo. Chief Investment Officer Bob Burrell also is no longer with the corporate, according to its website. Perkins brings more than 25 years of experience in the financial services industry, according to the website. Most recently, Perkins served as senior vice president, senior portfolio manager at Delaware Instruments, where he was responsible for asset allocation and sector decisions for a $5 billion Multi-Sector Fixed Income Mutual Fund complex. He also was with Deutsche Bank for five years as managing director of global markets in London, and as director, emerging markets in Moscow. Prior to that, Perkins was CEO of Dinner Key Advisors, a registered broker-dealer founded to trade derivative mortgage-backed bonds with institutional clients. He was a mortgage/collateralized mortgage obligation trader at Salomon Brothers from 1985 to 1990. In a letter to members on Friday, Perkins said WesCorp "will continue uninterrupted and members will not experience any disruption of services." NCUA Executive Director David Marquis told a webinar Monday afternoon that both Nance and Perkins "have extensive capital markets backgrounds."

CU bailout not from taxpayers--league op-ed letter

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MADISON, Wis. (3/24/09)--A so-called “federal bailout” of corporate credit unions is no such thing, and the $4.7 billion in aid comes from credit unions’ own self-funded insurance system--not from taxpayers, according to an op-ed letter from the Wisconsin Credit Union League. “That’s a novel idea--an industry trying to solve its own problems, credit unions helping credit unions,” wrote Brett Thompson, league president/CEO, in a letter in Monday’s Wisconsin State Journal, refuting the “federal bailout” assertion made in a March 13 letter to the editor by Kurt Bauer, president/CEO of the Wisconsin Bankers Association. “Bauer would be better off addressing the issues faced by his own industry than by trying to undermine confidence in credit unions at a time when regulators have proclaimed credit unions to be safe, healthy and lending vigorously,” Thompson concluded.

Mortgage company ordered to turn funds over to CU

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NEWARK, N.J. (3/24/09)--The U.S. Bankruptcy Court approved a consent order Friday requiring CU National Mortgage LLC to turn over all funds belonging to Picatinny FCU that the mortgage servicer allegedly withheld and to transfer mortgages it had been servicing to Picatinny's new servicer. CU National Mortgage and its parent U.S. Mortgage, based in Pine Brook, N.J., had filed for a Chapter 11 bankruptcy in U.S. Bankruptcy Court in Newark, N.J., listing more than $200 million in debts to Fannie Mae and 19 credit unions (News Now March 2). Picatinny FCU, a $247.5 million credit union based in Dover, N.J., alleged in a petition to the court that CU National Mortgage sold 58 of the credit union's mortgage loans-- totaling more than $14 million--to Fannie Mae without the credit union's knowledge or authorization. Credit unions have claimed more than $160 million of their mortgages went to Fannie Mae without authorization and that CU National Mortgage pocketed the money. The mortgage service also must turn over all loan files, reports, documents and other information, including electronic data, on the loans and any escrow being held on the properties.