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Former WesCorp officials ask court for jury trial

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LOS ANGELES (4/6/12)--Officials of the former Western Corporate FCU have filed amended counterclaims and a demand for a jury trial in the lawsuit filed against them by the National Credit Union Administration (NCUA). 

The counterclaims were made Wednesday before the U.S. District Court Central District of California in Los Angeles by two of the officials NCUA had sued--Robert A. Siravo, former president/CEO of WesCorp, and Thomas E. Swedburg, former director of human resources.

Their second amended answer and counterclaims docuoment seeks dismissal of the case, with prejudice, and asks the court to order that NCUA, as liquidating agent for WesCorp, reimburse Siravo and Swedberg for their defense costs, damages, and other court costs. The filed document said they had incurred more than $100,000 in attorney's fees and costs of their defense. Siravo and Swedberg also demanded NCUA indemnify them under Policy 21 adopted by WesCorp to so current and former officials and employees could recover costs and attorney fees in case of a lawsuit.

NCUA sued five WesCorp senior executives to try to recoup $6.8 million in investment portfolio losses from mortgage backed securities, alleging the executives were negligent in monitoring the corporate's investments. NCUA also alleged a breach of fiduciary duty and fraud related to the investments that contributed to WesCorp's collapse.

In earlier decisions last month U.S. District Judge George H. Wu  granted NCUA's motion to strike certain defense but allowed the executives to amend their arguments related to their indemnification claim.

The court document filed Wednesday by the WesCorp executives also addressed the issues of decision-making related to investments WesCorp purchased and to WesCorp's Supplemental Executive Retention Plans (SERPs). Siravo received a lump sum SERP payments in 2008 totaling $6.8 million and Swedberg received $1.2 million, the document said.

Siravo and Swedberg argue that they acted in "reasonable good faith reliance on the statements, representations, and approvals of others upon whom they were entitled to rely, including but not limited to the WesCorp Board of Directors, individual directors, other WesCorp officers, the ALCO [WesCorp's Asset and Liability Committee], rating agencies, underwriters, brokers, issuers, auditors, investment bankers, financial advisors, and counsel."

Iowa business owner Raise MBL cap

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IOWA CITY, Iowa (4/6/12)--The owner of an Iowa City bed and breakfast has written a letter to the Iowa City Press-Citizen, urging Congress to pass the legislation that would increase credit unions' ability to provide more member business lending (MBL).

Shirley Hendrickson wrote that when her family loved to Iowa City from Arizona several years ago, they purchased the Mission House Bed and Breakfast.

"We went directly to the credit union, and they learned with us and gave us the support we needed, personally and for our business," she wrote in Sunday's Press-Citizen

She noted that legislation is moving in the U.S. Senate "that would enable credit unions to make more loans to small businesses, like mine. This legislation would be a great help to credit unions. And the timing is certainly right. The additional lending authority would enable credit unions to do more of what they do best--make safe and sound to their members in this case members who are looking to start or expand a business."

"Credit unions stand ready to help" but are constrained by the current 12.25% of assets MBL cap. The bipartisan legislation introduced in the House and Senate would raise the cap to 27.5%.  She cited the Credit Union National Association's statistics:  passing the legislation would mean $13 billion more available for small businesses, providing capital to create 140,000 new jobs at no cost to the taxpayer.  "More than 2,000 of those jobs would be right here in Iowa," Hendrickson said.

"Congress needs to act," she urged. "With more capacity to make small business loans, credit unions such as mine can do more to help their members, spur the creation of new jobs and help accelerate our nation's economic recovery."

Use the link to read the full letter.  Also, see links to videos of Mike Kelley and Joe Trettel, two small business owners in North Carolina, talking about their support of credit unions in raising the MBL cap. News Now reported about their support in an article, "MBL push at state level grows, reported in media," on Thursday. Use the links.

Judge throws out ATM notice lawsuit vs. PSECU

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HARRISBURG, Pa. (4/6/12)--A federal judge in Harrisburg, Pa., has dismissed a lawsuit that had alleged a credit union violated the Electronic Funds Transfer Act (EFT) with improper ATM fee notification, saying in his ruling that the credit union showed undisputed evidence that an unknown third party had removed its posted notice illegally.

The suit was filed on May 24, 2011 by Gerald Rivello Jr., who withdrew funds from an ATM owned by Pennsylvania State Employees CU, a $3.8 billion asset credit union located in Harrisburg, on April 30, 2011, according to the court documents.

In the past two years, there has been a spike in the number of lawsuits filed by individuals against more than three dozen credit unions and banks based on missing ATM fee notifications. Some plaintiffs travel the country looking for ATMs without the proper notices attached, take photographs, and sue several financial institutions (News Now A.

In this suit, Rivello, who was not member of the credit union, alleged he was charged a fee for the transaction and alleged that at the time there was "no clear and conspicuous external notice at or near the ATM that a fee would or may be charged."

U.S. District Judge Robert D. Mariani, in a ruling issued March 28, ruled that Rivello failed to provide evidence rebutting the credit union's complete defense, citing section 1693 (h) of the U.S. Code, which says that if the required ATM notice has been posted by the operator in compliance with the law and the notice is subsequently removed, damaged or altered by any person other than the operator of the machine, the operator has no liability.

His ruling cited affidavits and photographs that indicated the credit union posted a compliant fee notice to the ATM in 2006, that none of the credit union's employees removed the ATM fee notice, and when employees discovered the sticker was missing during a routine examination of the machine, they promptly affixed a new notice to the ATM.

The credit union testified that on February 2011, it initiated procedures to provide for routine inspections of its ATMs to ensure the compliant notices were posted. On May 12, 2011, an employee noticed the machine did not have a properly affixed fee notice and replaced it and other signage on the ATM and photographed the machine.  After the complaint was served another employee photographed the machine on Aug. 9, 2011 and the photo showed old adhesive next to the existing fee notice, which showed an earlier fee notice had been affixed.

"These affidavits present facts, which if unrebutted, require a finding that some third-party, and not the defendants, removed the required fee notice from the ATM," said the judge's ruling.  Rivello failed to offer evidence that would cast doubt on the defense and did not offer a rebuttal beyond merely stating the factual allegations from his original complaint. "Plaintiff's papers and submissions to this court fail to provide any evidence rebutting [the credit union's] defense beyond the assertion that the ATM did not contain the appropriate fee notice. Such submissions do not constitute evidence of a disputed fact."

A rash of lawsuits in 2010  prompted CUNA Mutual Group to warn credit unions to develop and write procedures for regularly inspecting their ATMs to ensure their signs are posted, to photograph the ATMs at the time of inspection, and to maintain the inspection log for all ATMs and have credit union management review the log (News Now April 25, 2011).

Former Coastway CU applies for stock IPO

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CRANSTON, R.I. (4/5/12)--Coastway Community Bank, which converted from Coastway CU to a banking charter in 2009, is seeking regulators' approval to form a depositor-governed mutual holding company.

Creating a mutual holding company typically allows banks to shift to stock ownership through an initial public offering (IPO). A Coastway release said the mutual holding company would be a separate legal entity that would own and control the bank as a subsidiary (Providence Business News April 4).

Depositors will vote on Coastway's plan later this month. The reorganization would then become subject to approval by the Federal Reserve Board, the Federal Deposit Insurance Corp. and the Rhode Island Department of Business Regulation.

Coastway stated it intends to use the reorganization to expand financial products and services, expand its capital base and establish relationships with other banks and financial service providers.

PCUA CRIF Lending deliver merchant lending

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HARRISBURG, Pa. (4/6/12)--A new partnership between the Pennsylvania Credit Union Association (PCUA) and CRIF Lending Solutions, Atlanta, will help Pennsylvania credit unions compete with finance companies for merchant lending.

A PCUA release stated the partnership will provide full-service, outsourced merchant lending to enable credit unions to offer 24/7 instant financing on products ranging from ATVs to swimming pools to online jewelry sales. 

The point-of-sale financing solution aims to ease credit unions' entry into a new market by handling every aspect of merchant lending, including merchant sourcing and sign-up, contract funding and disbursement.

Collection tactics prompt Dykstra letter to iAmer. Bankeri

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ONTARIO, Calif. (4/6/12)--The April 4 edition of American Banker included a letter to the editor from Diana Dykstra, in which the president/CEO of the California and Nevada Credit Union Leagues admonishes financial institutions to not victimize their members and customers with inaccurate record keeping.

Dykstra praised the Banker for an article which revealed that Bank of America knowingly sold credit card receivables that contained inaccurate information to a collection agency.

"My first instinct as a credit union CEO is to say that more banking institutions need to stop looking at their customers as just numbers on a balance sheet," Dykstra wrote.  "At credit unions, one tends to find far less of this activity, because our organizations are so people centric. Indeed, our institutions are owned and operated by our own members. The people who belong to the organization also serve the organization."

The article should serve as a wake-up call to the financial services industry, Dykstra said.

Financial institutions should focus on providing service to their members and customers, she added.

To read Dykstra's letter to the editor, use the link.

Filene report examines highly effective CU managers

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MADISON, Wis. (4/6/12)--Because they must learn quickly and solve problems effectively, about 87% of middle managers are above average learners, according to a recent study conducted by the Filene Research Institute.

The results of the survey--and the implications for credit unions--are described in Filene's latest report, "Attributes and Skills of Highly Effective Credit Union Managers," written by Michael Neill, president and founder of Michael Neill & Associates Inc.

Filene said the report can be used as a tool in hiring and promoting credit union middle managers.

The study also identifies other traits of effective middle managers, including:

  • Energy: The "tendency  to display endurance and capacity for a fast pace" is a key characteristic, with 86% of middle managers scoring above the average employee.
  • Decisiveness: Using the available information to make decisions quickly is critical, with 80% of respondents above average.
  • Verbal skills: Among effective middle managers, 69% are above average in verbal skills, making them better able to communicate with members, subordinates, peers and executives.
Also noted in the survey is where the group scores below average employees. Being lower than average is not negative; it highlights traits where good middle managers are atypical, according to the study. These traits include:

  • Objective judgment: Great middle managers are far less likely than average employees to rely solely on data in decision making. About 79% fall at or below the average, indicating a strong reliance on intuition.
  • Manageability: Highly effective managers want their own leaders to define outcomes and then let them complete those goals with relatively free rein--72% score below average in manageability.
  • Accommodation. Good middle managers are significantly less accommodating than the norm. With 73% scoring below average, good middle managers know where they shouldn't go with the flow.

Polands Buczkowski to keynote WYCUP at World CU Conference

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GDAŃSK, Poland (4/6/12)--Grzegorz Buczkowski, president and chair the Cooperative Savings and Credit Union Mutual Insurance Society (TUW SKOK), a World Council of Credit Unions' (WOCCU) associate member organization in Poland, will keynote this year's WOCCU Young Credit Union People (WYCUP) program.

The WYCUP program will be held in conjunction with the World Credit Union Conference, July 15-18 in Gdańsk, Poland.

Buczkowski didn't know he was headed down a credit union career path when he was hired in 1990 as a translator by Poland's Solidarity movement. At the time, a delegation from the trade union that helped overthrow communism was searching for an alternative to a financial service industry left in ruins by the departing communist government. Buczkowski helped bring together parties from Poland and the U.S. to create one of the world's fastest-growing and most successful credit union movements.

But in 2001, Buczkowski won a scholarship from the WOCCU WYCUP that helped set him on his career path. "Participating in WYCUP gave me the opportunity to network, exchange ideas and create professional relationships that have lasted to this day," said Buczkowski. "The experience was, to me, priceless."

The program, designed for credit union professionals and volunteers under the age of 35, provides specialized educational and networking sessions, and allows participants to participate in the conference networking and general sessions. Five WYCUP participants will receive scholarships that provide all-expense-paid trips to the 2013 World Credit Union Conference in Ottawa, Canada.

The WYCUP program seeks individuals who have already made significant contributions to the development of their own credit unions or regional/national credit union systems and have demonstrated the potential to employ their unique talents at the international level. Credit unions and credit union organizations that are World Council members can nominate young leaders to compete for a WYCUP scholarship.

To be eligible for the scholarship, nominees must:

  • Be sponsored by their credit union or credit union organization to attend this year's World Credit Union Conference in Gdańsk;
  • Be 35 years of age or under as of Jan. 1, 2012; and
  • Submit a completed nomination form to World Council with all supporting materials by June 1.

Mich. league CEO is SBA National Fin Services Champion

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LANSING, Mich. (4/6/12)--David Adams, president/CEO of the Michigan Credit Union League (MCUL), has been recognized by the U.S. Small Business Administration (SBA) as the 2012 National Financial Services Champion for his advocacy and work to increase small business lending at a time when access to capital is a national challenge.

The recognition of Adams marks the first time in recent memory that a credit union representative has been honored as a financial services champion for small businesses.

"Your hard work, innovative ideas and dedication to your community have helped you succeed," SBA Administrator Karen G. Mills wrote in the letter announcing the award. "The SBA is pleased to recognize your achievements and your role in driving our nation's economic growth."

Adams also received the state-level Financial Services Champion award from the Michigan Celebrates Small Business organization, made up of the U.S. SBA, the Michigan Economic Development Corp., the Small Business Association of Michigan,  Greater Lansing Business Monthly, the Edward Lowe Foundation and the Michigan Small Business & Technology Development Center.

During Adams' tenure, Michigan credit unions' small business loans have increased by an average of 21% annually in the past five years--more than quadruple the U.S. credit unions' 2011 growth rate of 5.1%. This comes during tough economic times when most banks were pulling back on business lending.

Nationally, credit union member business lending (MBL) has increased by nearly 45% between 2007 and 2011, while business lending by banks fell nearly 15% during that period, according to the Credit Union National Association (CUNA).

MCUL has been a strong advocate for efforts to strengthen small business lending, including calling for passage of a bipartisan plan to increase the arbitrary cap on credit unions' MBL from 27.5% of credit union assets to 12.25%. CUNA estimates that this member business lending increase would create 140,000 jobs and inject $13 billion in new funds into the economy, at no cost to taxpayers.

The Credit Union Small Business Jobs Bill (S. 2231/H.R. 1418) has the support of U.S. Sens. Carl Levin and Debbie Stabenow, and nine of Michigan's 15 members of Congress, including Reps. Gary Peters, Thaddeus McCotter and Bill Huizenga, who sit on the House Financial Services Committee. The legislation is expected to come before the full Senate in the next few weeks.

"For me to be recognized as the financial services champion by the U.S. Small Business Administration as well as the state level Financial Services Champion award from the 'Michigan Celebrates Small Business' consortium, truly is a testament to the good works of credit unions on behalf of small businesses," Adams said. "Whether working to pass important enabling legislation like the Credit Union Small Business Jobs Bill or the recently passed Small Business Lending Fund Act (H.R. 5297), MCUL and CUNA are strong advocates for expanded credit union business lending authority for all lenders. The league's other efforts to showcase and expand our credit unions' commitment to business lending are the basis for this wonderful recognition from the Small Business Administration, which I consider to be a team award for our industry."

Latino CU Conference to be held with CUNAs ACUC

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MADISON, Wis. (4/6/12)--The Network of Latino Credit Unions & Professionals' (NLCUP) Seventh Latino Credit Union Conference will be held in conjunction with the Credit Union National Association's (CUNA) 2012 America's Credit Union Conference (ACUC).

The NLCUP conference will take place, June 15-17 in San Diego, immediately before the ACUC, June 17-20. Conference information and registration can be found at acuc.cuna.org under preconference events. To encourage communication and networking between the two conferences, NLCUP conference attendees will receive a $200 discount off ACUC registration.

"Our goal is to help credit union leaders connect with the greater Latino community and raise awareness amongst the credit union community of the incredible opportunities that exist in serving the Hispanic market," said Maria Martinez, NLCUP chairman. "The momentum-driving content and leadership focus of ACUC is a perfect match with our vision for a more vibrant Latino presence in credit union movement."

NLCUP was created to expand the market share of credit unions serving Latino communities and to increase Latinos' representation and participation in the credit union movement.

The NLCUP conference is designed to help Latino credit union professionals gain exposure in the larger credit union movement and forge connections among fellow Latino credit union leaders. This year's conference theme, "Creating Opportunity ~ Creando Oportunidad," will feature journalist, author and performer Ruben Martinez and nationally syndicated journalist Ruben Navarette Jr. In addition, the conference will offer workshops and events in partnership with major system players.

"CUNA is committed to enriching our credit unions' relationships with Latino professionals and the larger Hispanic community," said Bill Cheney, CUNA president/CEO. "We are delighted that this year's NLCUP meeting is co-located with ACUC, and I expect there to be powerful synergies between the two events. This is a great opportunity for our two organizations to strengthen and grow the credit union industry."

Keynoting this year's ACUC in San Diego are business innovator and author Tom Peters; USAF pilot and philanthropist Major Dan Rooney; science-based marketer Sally Hogshead; bestselling business, technology and media author Chris Brogan; and a surprise keynoter, to be announced soon.