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Interchange rule would hurt members says N.C. op-ed

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WINSTON-SALEM, N.C. (4/11/11)--The proposed rule on capping interchange fees for debit cards "would put local credit unions at a serious competitive disadvantage" and increase costs for those who use debit cards, said an opinion-editorial written by Marcus Schaefer, president/CEO of Truliant FCU, Winston-Salem, N.C., and published in Thursday's Winston-Salem Journal. The provision known as the Durbin Amendment was passed "without a single hearing, no vote in the U.S. House and little discussion in the Senate," Schaefer said in the article. "Credit unions are owned by their members, and the lost revenue directly impacts the rates we pay on savings, the rates we charge on loans and the fees we have to charge to cover service costs," Schaefer wrote. "Although Truliant will attempt to minimize the impact on our members, consumers generally can expect new fees associated with their debit cards, limits on the amount or number of purchases and elimination of rewards programs and other benefits," he said. Schaefer noted that credit unions use retailers' interchange payments to cover the cost of issuing cards, accessing and maintaining the interchange system and providing services to members. "Big out-of-state banks and major financial institutions can more easily absorb the reduced revenues, potentially resulting in an unfair, two-tiered system where debit cards from local credit unions are more expensive to use. Retailers, in turn, may discriminate against these local cards, inconveniencing members and driving credit unions out of the market. Our member-friendly, no-cost debit card programs could be at risk." He likened the interchange rule to a hardware store being told to charge only the cost of the parts of the lawnmower it sells. Price controls generally stifle competition, impede innovation and hurt consumers, he wrote. "There is also concern that the real impact could be to force modest-means consumers out of the traditional banking system at the worst possible time." Schaefer concluded by urging legislators to "favor reviewing the issue further before allowing implementation." To access the entire article, use the link. The Credit Union National Association is supporting new bills recently introduced in the Senate and House that would delay implementation of the interchange fees provision until further study is made of the rules' unintended impact.

E-mail breach Has it hit just about everyone

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MADISON, Wis. (4/11/11)--Almost everyone seems to know someone whose name and e-mail address was among the millions compromised in a hacking of Epsilon, the world's largest e-mail marketer. Security experts and credit unions warned last week that consumers will see a sharp hike in phishing e-mails--especially targeted or "spear" phishing. Just how big is this breach, and how will it affect credit unions and members? Some say it likely will top the largest breach in history--the Heartland Payment Systems breach of 40 million accounts disclosed in 2009. Epsilon's parent company, Alliance Data Systems Corp., discovered the breach on March 30 and said it affects roughly 2% of its 2,500 clients. However, more and more of its clients are notifying their customers they were among the addresses compromised. Epsilon's clients include some of the world's largest retailers, banks and financial service companies, and telecommunications companies: Capital One Financial, Barclays Bank, U.S. Bancorp, Citigroup, Ameriprise Financial and JPMorgan Chase, Verizon, Charter Communications, TiVo, Best Buy, Walgreens, Kroger and Kraft Foods (AOL's and New York Post April 4, April 3 and April 8). Both security experts News Now interviewed agreed that the breach's impact will grow. "There's not a final answer yet [as to how many names and addresses were compromised] but likely it is more widespread than initially believed," said Brian M. Otte, senior vice president of corporate development at Perimeter, a security solutions firm headquartered in Milford, Conn., and a CUNA Strategic Services provider. Jay Liebe, director of integration at Las Vegas-based Switch SuperNAP, a provider of facility and network security and a CUNA Strategic Services provider, agreed. "I absolutely don't believe that all the problems have been disclosed," Liebe said, noting that Epsilon is "clearly on damage control, much like those in charge of Japan's nuclear reactors" affected by the catastrophe there. The breach's direct effect on the credit union market is not yet clear. "Initially, it was a couple of companies, but now it is effecting more and more companies," Otte said. Is the type of information stolen that serious? Opinions vary. Otte points out that names and addresses can be easily found through other sources and emphasized that "no financial information has been compromised. However, the hackers have access to e-mails and will use them to phish--an action that involves sending phony e-mails and collecting numbers from unsuspecting consumers." Names and e-mail addresses are all a hacker needs to send "targeted" phishing attacks against a specific brand. While many phishing expeditions rarely hit recipients who are actually customers of the company they claim to be, targeted phishing ensures recipients are customers of the company they're attacking. And that could trick recipients into disclosing more information that can be used in identity theft. Liebe says the breadth of scale of the companies involved indicates Epsilon was "careless" about differentiating different industries' information. "Clearly Epsilon had to have a flaw in its architecture to expose the kind of data it did and to expose such a wide area," he said. "There are many wonderful companies in credit unions' space who do a phenomenally successful job with security so they are able to protect their members' data," he told News Now. The fact that Marriott, Verizon and bank data are lumped together indicates they may not have treated sensitive banking data differently, Liebe said. "The data they had relate to their businesses, and Epsilon mixed it all together. I don't believe credit unions as a whole have their marketing services in that kind of setup." Both experts said credit unions can take specific steps to make sure their members don't succumb to the wiles of the people who hacked Epsilon's database. "First, they should alert their members and explain that they are not going to ever be asking for any sensitive information. Train members not to respond to the e-mails, not to give out their passwords, not to give out their Social Security numbers," Otte said. "Second, get an anti-phishing system or service so the credit union can be proactive in tracking to see if any phishing schemes are using their name," Otte added. Liebe advised that "credit unions share [with members] the hard work they do with security providers to make sure the data can't be shared and compromised. Credit unions don't give their data out like Epsilon did."

WOCCU conference serving up bacon eggs experts

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GLASGOW, Scotland (4/11/11)--The World Council of Credit Unions (WOCCU) will be serving up Bacon, Eggs & Business Experts first thing in the morning at its 2011 World Credit Union Conference, which will be held July 24-27 in Glasgow, Scotland.
The two-part breakfast series aims to help uncover ways to make the credit union more effective and more successful, with insights and advice from two business authors. Julian Birkinshaw is a professor of strategic and international management and deputy dean for programs at the London Business School. Birkinshaw is author of 11 books, most recently Reinventing Management. Over breakfast, he will discuss why high-quality management matters more than ever and how credit unions can make smarter choices and become more innovative in how they operate. Christian Stadler is an expert on long-term success and author of Enduring Success: What We Can Learn from the History of Outstanding Corporations, the first book with a non-U.S. perspective on long-range success. During breakfast , Stadler will share insight on why some companies have enjoyed stellar performance decade after decade, overcoming setbacks and making relentless progress. For more information, use the link.

Connecticut league announces new board

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MERIDEN, Conn. (4/11/11)--The Credit Union League of Connecticut has announced its board of directors and officers for 2011-2012. New board members are:
* Kathy L. Chartier, CEO, Members CU, Stamford (three-year term); * Edward V. Crowley Jr., CEO, Fairfield (Conn.) Municipal FCU, (two-year term); * John Dolan, chief lending officer, Charter Oak FCU, Groton (one-year term); * James N. Farrell, CEO, New Haven County CU, North Haven (one-year term); * Garrett R. Gizowski, CEO, United Shoreline FCU, New Haven (one-year term); * John E. Keet, Jr., CEO, Personal Care America FCU, Trumbull (three-year term); * Carl Skudlarek, manager/CEO, Bridgeport City Employees FCU, Bridgeport (two-year-term); * Joanne Todd, president/CEO, Northeast Family FCU, Manchester (two-year term); and * Keith Wiemert, president/CEO, Seasons FCU, Middletown (three-year term).
In 2009 the league Board of Directors Governance Committee surveyed affiliated credit unions proposing a restructuring of the director election system for the board. Changes in bylaws, approved by the membership in 2010, include a reduction in number from 12 chapter directors and six alternate directors to six chapter directors and three at-large directors to streamline board governance and provide a more equitable representation of the state’s credit unions, said the league. Officers for 2011-2012 are:
* Chair, Todd; * Vice chair, Wiemert; * Secretary, Chartier; and * Treasurer, Skudlarek.
The election took place following the league’s Annual Meeting April 5 in Plantsville, Conn.

Minnesota foundation grant funds teachers fin. ed

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ST. PAUL, Minn. (4/11/11)--The Minnesota Credit Union Foundation (MnCUF) has partnered with the University of Minnesota Extension (UMES) to create a series of webinars to teach educators about personal finance. The project’s goal is to help educators develop a higher level of confidence to teach personal finance to Minnesota youth. Through grant funding, UMES will produce a series of two-hour webinars using the National Endowment for Financial Education’s (NEFE’s) High School Financial Planning Program curriculum. The project, to be completed by the end of the year, will be free to anyone who works to improve the financial literacy levels of students--including educators and credit union professionals. “Studies show that teachers are not confident in their knowledge and competency in financial content topics,” said Patricia Olson, UMES associate director, family development and extension. “Our goal is to reach teachers with the NEFE curriculum and to provide additional content to help teachers feel confident in this extremely critical--but often intimidating--subject.” The project marks a shift in MnCUF’s overall objectives, with an emphasis on financial education as part of its core mission. “Clearly financial education is important to so many groups, organizations and individuals, which is illustrated by countless initiatives taking place around the state and the country,” said MnCUF Chair Pat Brekken. “Credit unions have told us that financial literacy is a subject of tremendous importance to them.” Webinars will be offered in “live” format and archived online for future use, allowing for training across numerous organizations and school districts.

CU System briefs (04/08/2011)

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* SUMMERVILLE, S.C. (4/11/11)--An ATM belonging to South Carolina FCU in Summerville sustained $3,000 in damage after someone used a blow torch to try to break into the machine on April 5. A similar incident was reported to police by a local bank on April 4. Police, on arrival, found five burn holes and melted plastic around the lock of the ATM's access door. The would-be thief was unable to breach the door of the ATM's steel safe. A temperature alarm on the machine did not activate because the culprit used a small torch. The incident was discovered by a contractor who maintains the machine (abcnews April 7) … * ALBANY, N.Y. (4/11/11)--Teens from Pittsford Mendon High School beat nine other high school teams to capture the 2011 New York State LifeSmarts Championship in Schenectady, N.Y. The event is coordinated in New York State by the New York Credit Union Foundation as an educational opportunity for students in grades 6-12. Runner up was Smithtown High School West. Shown here with Diane Lavigna-Wixted, left, foundation executive director, and former WRGB-TV anchor and quiz master Jack Aernecke, right, are, from left, winners Kylie Ryan, Denver Rawlins, Allison Hallock, Team Captain Stefan Styk; and Steven Pan. (Photo provided by the New York Credit Union Foundation) … * ALBANY, N.Y. (4/11/11)--National Credit Union Administration (NCUA) Board Chair Debbie Matz will address credit union leadership at the Credit Union Association of New York's 2011 Annual Meeting and Convention on June 3 at the Conference Center at Lake Placid, N.Y. Matz will discuss the agency's ongoing efforts to reform the credit union system and provide an update on key regulatory issues. The theme of the June 2-5 meeting and convention will be Credit Unions: Standing Tall … * VACAVILLE, Calif. (4/11/11)--Travis CU was presented the Seven Seals Award by the California Committee for Employer Support of the Guard and Reserve (ESGR) at a brief ceremony March 21 at the Travis Regional Armed Forces Committee luncheon. The award, named for the heraldry seals of the seven military services, recognizes efforts by citizens, businesses and organizations whose actions have helped reservists in all branches. Patsy Van Ouwerkerk, CEO of the Vacaville, Calif.-based, $1.8 billion asset credit union, signed a Statement of Support for the National Guard and Reserve prior to the award presentation. From left are Van Ouwerkerk; Andrew C. Wiktorowicz, California state chairman, ESGR; and Robert Anderson, Region 1 chair Northern California, ESGR. (Photo provided by Travis CU) …

CUs continue efforts to assist government employees

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MADISON, Wis. (4/11/11)--Credit unions with close ties to federal workers continued to play an integral role in preparations Friday for a possible government shutdown at midnight Friday. However, Congress avoided the shutdown by striking a budget deal an hour before the deadline. An article in the The New York Times (April 8) noted how credit unions prepared early for the possible shutdown and began offering furlough loans and similar financial assistance to some of the 800,000 government employees who would have been sidelined by a shutdown. The Credit Union National Association provided information for the article, which specifically described how NASA FCU would offer a 0% interest paycheck and furlough relief loans. Members of Transportation FCU, Washington, D.C., can apply for loans up to $3000 or two weeks of net pay, it said. Below the national media radar, credit unions nationwide serving federal workers were putting similar plans in place. Although they won't have to implement the special assistance, here is a rundown on what they had planned. The South Carolina Credit Union League reported that four of its member credit unions would extend services to affected federal workers:
* Palmetto Trust FCU, Columbia, offered a 30-day, 0% annual percentage rate (APR) loan for missed direct pay deposits during a shutdown. For members without direct-deposited pay, the same loan was offered at 3.5% APR. Loans were eligible for 30-day extension or reissue until the shutdown ends. * SPC CU, Hartsville, offered a 0% APR loan in lieu of net pay. * Members of CPM FCU, North Charleston, were told they could get a furlough loan for up to $2,000 with the first payment due in 60 days. There were no credit requirements or risk-based characteristics. * Charleston Area FCU said it would offer deferred payments on existing loans until affected members are paid, and would extend to eligible members on direct-deposit an interest-free, single-pay loan of up to $3,000 for those who would receive retroactive pay. Federal employees who would not receive pay for the shutdown period could request an unsecured loan.
In Portsmouth, N.H., Service CU was planning to credit direct deposit and allotments for military and government service members affected by a shutdown. The credit union also would provide a 0% loan rate with up to a 30-day payback and a line of credit up to members’ direct deposit amounts. Belvoir FCU, Woodbridge, Va., offered furlough emergency loans up to $5,000 with payment deferred for the first 60 days. The credit union also offered a skip a payment option for members who have loans and personal financial consultation services. At Hanscom FCU, Hanscom Air Force Base, Mass.,members whose paychecks were affected by a furlough would have access to a 0% APR interest line of credit equal to one month’s net payroll up to $5,000. Dubbed the Life Line Loan, this interest-free loan was attached to a member’s checking account to provide additional funds to cover checks, ATM withdrawals and debit card purchases. Also, the credit union said it would waive penalties for premature withdrawals on certificates of deposits for affected members. Justice FCU, Chantilly, Va., provided a furlough relief loan up to $3,000 at a 0% interest rate for 60 days. Loan amounts would have been based on the member’s net paycheck and require direct deposit with the credit union. Global CU, Spokane, Wash., offered members employed by the federal government interest-free loans to cover delayed pay checks and said it would extend auto loan and credit card payments without fees. Andrews FCU, Suitland, Md., announced it would advance mid-month pay on April 15 to active duty military members who had direct deposits. The credit union also offered 0% APR loans to other federal employees who have direct payroll deposits. The loans would have a 30-day term for repayment.

Ohio CUs raise 130000 for kids hospital

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COLUMBUS, Ohio (4/11/11)--Credit union leaders in Ohio presented $130,500 to Children’s Miracle Network Hospitals as a result of their annual statewide fundraising march to benefit children’s hospitals. The contribution brings Ohio credit unions’ five-year total since the inception of “Marching Miles for Miracle Kids” to a half-million dollars.
Click to view larger image At the Children’s Miracle Network Hospitals check presentation at the Ohio Credit Union league's InVest48 conference Tuesday in Columbus, Ohio, are, from left: Joe Dearborn, Children’s Miracle Network Hospitals; Akeia and Melody Evans; Kristina Hurlburt of Standard Register FCU, Dayton; and Judy Andrews of State Transportation Employees CU, Columbus. (Photo provided by Ohio HealthCare FCU)
The Evans family, ambassadors for Nationwide Children’s Hospital, and Joe Dearborn, senior director of Credit Unions for Kids, accepted the check on behalf of CMN Hospitals. The eldest child in the Evans family has been treated for cancer at Nationwide Children’s and has been cancer free for three years. More than 400 credit union professionals statewide shared in the announcement of this year’s grand total at the Ohio Credit Union League’s InVest48 conference held in Columbus, Ohio, Tuesday. Led by the Ohio Credit Union League’s Credit Unions for Kids Committee, the annual Ohio Credit Unions: Marching Miles for Miracle Kids walk-a-thon raises money for the nine children’s hospitals that serve Ohioans. The march kicked off in Cincinnati March 28, with walks following daily in Dayton, Toledo, Cleveland, Akron, Youngstown and Columbus. “We look forward to this event every year,” said Jaime Crooks, committee chair. “It’s our chance to collaborate together and show our true ‘People-Helping-People’ cooperative spirit.” Children’s Miracle Network Hospitals generates funds and awareness programs in partnership with and for the benefit of member hospitals/foundations and the children they serve. Organizations, media partners and individuals unite with Children’s Miracle Network Hospitals to help sick and injured kids in local communities. Donations to Children’s Miracle Network Hospitals fund specialized medical care, research and education.

N.C. lawmakers introduce prize-linked savings bill

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RALEIGH, N.C. (4/11/11)--The North Carolina Credit Union League is closer to a prize-linked savings program after legislation introduced this week in the state legislature. The league has been exploring the idea of launching the Save to Win prize-linked savings program first piloted in Michigan in 2009. Legislation introduced Tuesday in the North Carolina House of Representatives and Wednesday in the state Senate will give credit unions the needed change to make the program a success in North Carolina (Weekly Update April 8).
As the North Carolina House and Senate introduced legislation last week to allow credit unions to offer a prize-linked savings program in North Carolina, some 20 grassroots advocates met Wednesday with lawmakers in Raleigh. Pictured, from left, are: John Bell, North Carolina Community FCU, Goldsboro; Beatrice Williams-Louis, Fort Bragg FCU, Fayetteville; State Rep. Efton Sager (R-11); and Alexandra Boncek, North Carolina Credit Union League. Sager sponsored the North Carolina House version of the prize-linked savings bill. (Photo provided by the North Carolina Credit Union League)
The program provides incentives to help participants save, including an opportunity to win monthly prizes or a headline-grabbing grand prize. With every $25 dollar deposited into the Save to Win account, the saver is entered for the monthly and annual grand prize drawing, with a 10-entry limit per month. Now in its third year, Michigan program has opened more than 28,500 Save to Win accounts with $37 million saved, said the North Carolina league. “Michigan found that individuals who had not saved regularly before were encouraged by the possibility of winning,” said John Radebaugh, league president/CEO. “If credit unions here could launch this safe and exciting program, we could encourage new savers and promote new savings habits for North Carolinians.” Current law in North Carolina limits credit unions to holding two raffle drawings per year. The league concluded that asking for a legislative fix would ultimately enhance the success of Save to Win there. “After the start of 2011-2012 session, we approached our state lawmakers with the innovative savings concept and asked for an exemption for credit unions so that monthly prizes could be awarded,” said Lauren Whaley, the league’s director of legislative and regulatory affairs. “The level of support we have received from legislators shows the value of Save to Win in promoting stronger financial futures for credit union members.” The bipartisan bill faces no opposition. The Senate bill, SB 513, will now move to the Commerce Committee and HB 583 will move to the Banking Committee.