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GAC in the media

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MADISON, Wis. (3/8/11)--The Credit Union National Association's (CUNA's) Governmental Affairs Conference (GAC) last week in Washington, D.C. attracted some attention not only from prominent media in Washington, but from far flung venues such as Germany and Asia. Comments by House Speaker John Boehner (R-Ohio), Treasury Department Undersecretary Jeffrey Goldstein, Consumer Financial Protection Bureau (CFPB) head Elizabeth Warren, and Sen. Mark Udall (D-Colo.) received the lion's share of the coverage. Those joining trade press to report on speakers at the conference included FoxNews.com, MSNBC's "FirstRead," The Hill, Politico, Digital Media, Barrons, Business Journals, the National Mortgage Professional Magazine and Las Vegas Sun as well as stations such as KJCT8.com. Even before the GAC began, an article in The Hill (Feb. 27) talked up the event, as did an earlier blog by CUNA President/CEO Bill Cheney in the Hill's Feb. 15 issue. This year social media also played a part. Sen. Udall's comments about increasing small business lending and creating jobs by using credit unions' ability to lend was posted on his Facebook page. And CFPB's website featured a video of Elizabeth Warren speaking at CUNA's GAC. A tweet from her office indicated that National Public Radio was working with her on the video. Also, media reported on CUNA Strategic Services' alliances with Fynanz, a private student loan provider; Harland Clarke and Intersections' pact on identity theft; and Ongoing Operations' new business continuity solutions.

Corporate America USC accounting firm settle suit

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BIRMINGHAM, Ala. (3/8/11)--Corporate America CU and RubinBrown LLP, an accounting firm for U.S. Central FCU, have settled a lawsuit arising from estimates of paid-in-capital (PIC) shares after U.S. Central was placed in conservatorship. The settlement is confidential and no terms were disclosed. In such settlements, neither party admits liability to the other. RubinBrown is a St. Louis-based companied hired to prepare valuation of PIC shares for conversion before U.S. Central suffered losses and went into conservatorship. The suit by Birmingham, Ala.-based Corporate America centered around U.S. Central's action in December 2009 to convert $450 million of non-permanent capital to permanent paid-in-capital shares (PIC II). RubinBrown said the shares were worth at least $450 million, and, according to the complaint filed by Corporate America, the corporate relied on the estimates when it exchanged its member capital shares in U.S. Central for PIC shortly before U.S. Central was taken into conservatorship.

Media Banks fee tactics contrast with CUs free checking

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MADISON, Wis. (3/8/11)--Several media outlets recently contrasted credit unions’ free checking with banks’ fee tactics. A Monday article titled “Banks look to Replace Lost Debit-Card Fees” in The Wall Street Journal mentioned that while big banks look for ways to make up lost money caused by new rules that limit how much merchants can charge customers for debit-card transactions, credit unions still are offering free checking to members. Large financial institutions--such as Bank of America (BofA), JPMorgan Chase & Co. and Wells Fargo--are overhauling debit card programs by eliminating rewards and adding new fees to checking accounts, the Journal said. The article described how Shilpa Banerji, a consultant in Washington, D.C., switched to a credit union last year when BofA began charging her a checking account fee. She said she usually uses her debit card for purchases under $30, and the specter of more disruptions upsets her. In other media accounts:
* Of the 50 largest U.S. credit unions, 38 “still offer free checking accounts with no strings attached,” said The Associated Press (Feb 25). The article added: “Even among the credit unions where customers have to pay for checking, nearly all offer ways to avoid fees by meeting certain conditions. For example, consumers can maintain a minimum balance, set up direct deposit or sign up for electronic statements. The survey also found that nearly half the credit unions do not require a minimum balance to open an account. Fees also rose modestly from last year; bounced check fees are up by about a dollar to $26. ATM fees rose slightly to $2.10, from $2.” * BethPage (N.Y.) CU introduced its new free checking account by “saying no to checking fees from big banks,” according to Creditunionsonline.com (March 7). The demand for a free checking product is high on Long Island, and consumers want to save money wherever they can and are not used to paying for what previously was a free checking account, Gerard Schmitt, BethPage vice president of marketing, told the publication.
To read the articles, use the links.

Heacock Krall on Minnesota Fed Advisory council

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Click to view larger image Roger Heacock (center), president of Black Hills FCU, Rapid City, S.D., has been named to the Minneapolis Federal Reserve Bank’s Community Depository Institutions Advisory Council. Heacock testified on behalf of the Credit Union National Association before the House Small Business Committee during a hearing on member business lending in 2009 (Photo provided by CUNA)
MINNEAPOLIS (3/8/11)--Roger Heacock, president of Black Hills FCU, Rapid City, S.D., and Gail Krall, president Minnesota Power Employees CU, Duluth, Minn., are among the 10 members appointed to the newly formed Minneapolis Federal Reserve Bank’s Community Depository Institutions Advisory Council (CDIAC). The appointments were announced Friday. The board of governors of the Federal Reserve System has created a national CDIAC to broaden the scope of input on economic credit conditions. To complement the national effort with regional perspectives, each Federal Reserve Bank is establishing a District Council comprising representatives from credit unions, community banks and thrifts. Heacock’s term on the council ends at the conclusion of 2012. Krall’s term expires year-end 2013.

WOCCU to APEC CUs promote financial inclusion

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SAN FRANCISCO (3/8/11)--Credit unions are at the forefront of promoting financial inclusion among poor and remote population groups, and should be considered a key resource by governments looking to increase financial service delivery to their populations. That was the message World Council of Credit Unions (WOCCU) took to the Asia-Pacific Economic Cooperation (APEC).
Credit unions have a prominent role to play in global financial inclusion strategies, Dave Grace, senior vice president of association services at World Council of Credit Unions, told delegates attending last month’s Asia-Pacific Economic Cooperation meeting. (Photo provided by World Council of Credit Unions)
APEC is an organization of 21 countries bordering the Pacific Ocean that met at the invitation of the U.S Treasury Department last month to discuss economic development in their countries. WOCCU was one of only three private-sector organizations and the only one representing financial cooperatives invited to participate in the discussions. APEC delegates gathered at the Federal Reserve Bank of San Francisco Feb. 23-24 to further work begun by the Group of 20 (G-20) nations to develop and refine financial inclusion programs in their own countries. Steps toward this goal include the measurement of gaps in service delivery, policy development and private sector engagement, and program execution and evaluation of results. Workshop participants also discussed policy options that ministries of finance could take to encourage greater use of quality and affordable financial services among their entire populations. With 16,417 credit unions already serving 124 million members throughout the APEC region, financial cooperatives are at the forefront of resources available to promote financial inclusion, according to Dave Grace, WOCCU senior vice president of association services, who participated in the meeting. “In the APEC region, ministries of finance now understand the critical role that credit unions can play in ensuring access and usage of financial services among the poor and under-banked,” Grace said. “We also helped shape policy options that encourage financial inclusion, such as utilizing government benefit payments as a gateway product to the financial system and providing tax incentives to institutions active in the financial inclusion area.” APEC’s roots took shape as a discussion group in 1989, and the APEC Secretariat was formally established in 1993 in Singapore. APEC member countries include Australia; Brunei Darussalam; Canada; Chile; the People’s Republic of China; Hong Kong, China; Chinese Taipei; Indonesia; Japan; the Republic of Korea; Malaysia; Mexico; New Zealand; Papua New Guinea; Peru; the Republic of the Philippines; the Russian Federation; Singapore; Thailand; the U.S. and Vietnam.

Uninsured depositors file suit in New London closure

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NEW HAVEN, Conn. (3/8/11)--Five members who had deposits in the now defunct New London Security FCU filed a lawsuit Thursday in a U.S. District Court in New Haven, Conn., seeking $4 million in damages from the National Credit Union Administration (NCUA). The suit stems from a $12 million embezzlement by the $13 million asset credit union's long-time investment advisor and former A.G. Edwards branch manager, Edwin F. Rachleff. Rachleff, 82, committed suicide while the NCUA was in the processes of closing the credit union in July 2008. An audit revealed Rachleff allegedly stole the investments from 1988 to July 2008. In the suit, the five members allege that NCUA examiners, supervisors and administrators were "negligent in carrying out their ministerial duties and responsibilities" while examining the credit unions' investments. They say they lost $4 million in uninsured deposits and presented their administrative claims to NCUA on Feb. 10, 2010. NCUA denied the claims in their entirety on Aug. 11, 2010, according to the complaint filed Thursday. Filing the suit were Melvin Goldblatt and Joan Lazerow of Connecticut, Mark D. Fetcher, of Florida; Gloria Johnston of California; and Douglas C. Antupit of Connecticut. They also have filed lawsuits against Wells Fargo Advisors, a subsidiary of Wells Fargo & Co., which is a successor in interest to Wachovia and the brokerage firm A.G. Edwards and Sons.

Hackers steal 527000 from LES FCU account at bank

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BATON ROUGE, La. (3/8/11)--Computer hackers from the Ukraine made unauthorized transfers totaling nearly $527,000 from LES FCU, Baton Rouge, La., in September 2009 through the credit union’s commercial account with Capital One, according to a lawsuit filed in U.S. District Court Thursday. The hackers transferred the money by slipping an e-mail attachment with malware past a credit union accountant, according to the complaint filed against Capital One by the credit union’s insurer, Fidelity & Deposit Co. of Maryland. The insurer reimbursed LES FCU for $321,873. More than $200,000 of the siphoned funds were recovered before they could be claimed by the criminals at wire transfer locations worldwide, the court documents said. Capital One is alleged to have permitted the unauthorized transactions after an LES FCU accountant received an e-mail purporting to be from the Internal Revenue Service (IRS) around Sept 14, 2009, according to the complaint. The e-mail was from “a den of thieves,” who directed the accountant to “an official-looking” website, said the complaint filed Thursday. At that website, a “key logger program” was secretly downloaded to the accountant’s computer. The program allowed the thieves to obtain the credit union’s Capital One user IDs and passwords. On Sept. 16, the accountant accessed the credit union’s Capital One account and noticed that nine unauthorized transfers had been made Sept. 15. Capital One mailed notifications to the credit union regarding the nine wire transfers processed, but did not attempt to contact the credit union directly. At 9:15 a.m. Sept. 16, LES FCU contacted Capital and reported the unauthorized transfers. Capital One then notifed the credit union that an additional five wire transfers had been executed earlier in the morning of Sept. 16. The credit union advised Capital One that these transfers were also fraudulent. In all, Capital One processed 14 unauthorized wire transfers from LES FCU’s account totaling $526,613 in less than 24 hours. Capital One stopped the transfer of $204,740, but refused to reimburse the remaining $321,873, claiming the wire transfers were initiated through a security breach at LES FCU. Capital One reported the matter to the Baton Rouge Police Department, which referred it to the Secret Service.

Mich. OFIR outlines governance rate-risk issues

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LANSING, Mich. (3/6/11)--The first Michigan Credit Union League’s (MCUL) 2011 meeting with Michigan’s Office of Financial and Insurance Regulation (OFIR) was held on Wednesday with John Kolhoff, OFIR’s new deputy commissioner of the Credit Union Division, and Acting Assistant Director Denice Schultheiss, said MCUL.
John Kolhoff (speaking), deputy commissioner of the Michigan Office of Financial and Insurance Regulation (OFIR), and OFIR Acting Assistant Director Denice Schultheiss, to his right, discuss concerns with Michigan Credit Union League staff at OFIR's first 2011 meeting. (Photo provided by the Michigan Credit Union League)
The meeting began with a profile of the credit union industry in the state, including the impact of recent retirements on the Credit Union Division. Four vacancies exist, but the division is expected to be fully staffed. Some organizational adjustments will be made in the Upper Peninsula, which traditionally shares examiners with the Bank and Trust Division, said the league (Michigan Monitor March 7). OFIR identified key issues it is focusing on this year: continuing to work with credit union boards to clarify their governance role and working to ensure greater diversity of talent and skills on the boards. Board oversight of executive management especially during the current economy is another area that will be assessed, the OFIR officials said. Financial literacy also was discussed at the meeting. Other issues discussed included how interest-rate risk will draw the attention of examiners, with the possibility of rising interest rates negatively impacting interest-rate spreads. Allowance shortfalls, market value of loan collateral and member business lending participations also are on the table. Kolhoff stressed the importance of working with credit unions to resolve issues they experience during the examination process, saying he appreciates feedback and his door is open to credit unions.

CU System briefs (03/07/2011)

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* GREENSBORO, N.C. (3/8/11)--Piedmont Advantage CU CEO Judy Tharp was recognized as Alumni of the Year by the Cameron School of Business at the University of North Carolina Wilmington at a reception on campus March 1, said the North Carolina Credit Union League (Weekly Update March 7). Tharp graduated from the school with a concentration in management in 1978. She became the first CEO of Cape Fear Employees CU, a startup credit union, and is active in several industry organizations including the North Carolina Credit Union League and Credit Union Executives Society. She currently is vice-chair of the Carolinas Credit Union Foundation, a board member of the Carolina Credit Union Services Corp., and a member of the Cooperative Alliances Committee of the Credit Union National Association. Piedmont Advantage CU is a $212 million asset credit union based in Winston-Salem, N.C. … * FERNDALE, Wash. (3/8/11)--A 59-year-old woman who wore a gray wig and makeup to make herself look older has been charged with first-degree identity theft, criminal impersonation and multiple counts of forgery after she allegedly impersonated her deceased mother in a pension fraud scheme. Loewen B. Craft, 59, was arrested by detectives at Industrial CU, Ferndale, Wash. The credit union asked her to visit the branch to complete paperwork for an account she opened in her dead mother's name and Social Security number. Craft's mother, Betty Becker, died in 2007, and Craft allegedly began collecting Becker's retirement benefits after that (The Bellingham Herald March 4) …