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Wis DFI: FIs' Health 'Good News For Wisconsin Economy'

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MADISON, Wis. (4/8/13)--Wisconsin's state-chartered credit unions and banks are a bright spot in the state's economy and are well-positioned to help fuel the state's economic growth, according to Peter Bildsten, secretary of the Wisconsin Department of Financial Institutions.

He cited two improvements in the financial institutions the past two years:  earnings have rebounded, with credit unions' net income growing 81% in 2012 over 2011, and banks' earnings up 53%; and capital is back to pre-recession levels with credit unions' net worth  as of Dec. 31 at  10.25%--"the best in five years"--and banks at their highest in decade--at 11.12%.

"Banks and credit unions are a key component of the state's private-sector economic engine," Bildsten said in a press release. "These institutions make loans to help businesses expand and create more jobs. They help drive the real-estate market by originating mortgages, allowing people to achieve the dream of owning their own home. They provide products and services that give consumers access to credit and allow them to better manage their money."

The institutions "are eager to lend," he said. "Loan standards have changed somewhat since the recession, but that is not necessarily bad. In order to survive, banks and credit unions have to make loans, but in order to thrive, they must make good loans."

Credit unions in the state and throughout the country are working so that they can continue helping the economy through making loans to small businesses. The Credit Union National Association, the state leagues, and credit unions are urging Congress to raise credit unions member business lending cap from the current 12.25% of assets to 27.5% of assets.

This would enable credit unions to make more small business loans and inject $14.5 billion in new loans into the economy, says CUNA.  It also would help generate 158,000 new jobs the first year the raise would go into effect.

CU System Briefs (04/08/2013)

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  • FORT WAYNE, Ind. (4/8/13)--Fort Wayne-based Pinnacle CU said Friday it was working to reopen its Hobson Road branch, which was the target of a robbery Wednesday night. A teller who left work after 5 p.m. Wednesday was abducted by a man with a gun. He forced her inside her home, bound her wrists, then tied up a family member who arrived later. A second gunman joined them, and they waited until dark. The men took the teller and the family member to the credit union. One stayed with the relative in the car, while the other accompanied the teller inside and forced her to open the vault. The men got away with an undisclosed amount of cash (News-Sentinel, and Indiana News Center April 4) …
  • MERIDEN, Conn.  (4/8/13)--Credit Union League of Connecticut President/CEO Tony Emerson, left, poses with Credit Union National Association President/CEO Bill Cheney after Cheney addressed 250 attendees at the league's 79th Annual Meeting Wednesday in Plantsville, Conn. Cheney reviewed regulatory and government issues as well as challenges and improvements in the industry, pointing out there is much work to be done. Buddy Gill, senior adviser to National Credit Union Administration Chairman Debbie Matz, discussed changes to federal regulations and analyzed economic, political and banking competition issues that influence regulatory decisions.  Harriet May, former CUNA Board chair, examined what is behind the credit union philosophy and how its presence in financial services can engender progress toward a "more perfect" industry for consumers.  (Photo provided by the Credit Union League of Connecticut) …
  • MADISON, Wis. (4/8/13)--St. Petersburg, Fla.-based PSCU, a longtime supporter of the Filene Research Institute, has renewed its Platinum-level Sponsorship for 2013 as one of four Filene Chairman's Benefactor members. PSCU is principal sponsor of Filene's innovation work, most notably its i3 innovation group. The credit union has been a Chairman's Benefactor since 2004. "Even in the face of the Great Recession, PSCU maintained its strong support," said Mark Meyer, Filene CEO. "PSCU's own strategic focus on innovation matches ours so closely."  PSCU's lifetime contributions to Filene place it among the institute's top three overall donors. It has participated in dozens of Filene initiatives, including the inaugural Crash the GAC young professional meeting, innovation field trips to Finovate in New York and San Francisco, Filene's 30 Under 30 young professional group, and its CU Tomorrow and COOL Solutions research devoted to attracting young adult members and employees …

Tomalin To Head Up CUNA Madison Operation, Succeeds Franklin

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MADISON, Wis. (4/8/13)--Jill Tomalin has been named executive vice president and chief operating officer of the Credit Union National Association's Madison, Wis., operations, the association announced today. She succeeds John Franklin, who retired from CUNA last month.

A 13-year veteran of CUNA, Tomalin will oversee all of CUNA's Madison-based operations revolving around meetings and conferences, information technology, training and development and vendor sales. She will also oversee the CUNA Councils, and CUNA Strategic Services, the CUNA/league-owned subsidiary offering products and services to credit unions.

"Jill's long experience in the credit union system, combined with her talents and conceptual vision, furnish her with unique insights to the challenges of this position and the needs of credit unions across the country," said CUNA President/CEO Bill Cheney.

"She's committed herself to credit unions; this promotion gives her even greater opportunities to further share that commitment."

Most recently senior vice president of Association Services, Tomalin joined CUNA in 2000 as director of educational resources. Prior to that, she served in management roles for the Texas Credit Union League and Credit Union Executives Society.

Tomalin earned a BA and an MBA from the University of Wisconsin-Madison. She is a credit union development educator and a certified league executive.

NerdWallet: CUs May Have The Answer In Debt Relief

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NEW YORK (4/8/13)--Consumer debt is climbing--the latest Federal Reserve figures say debt is at nearly $2.8 trillion--but NerdWallet says consumers can get debt relief from credit unions. 

"Many credit unions understand their members' debt problems and they want to help solve them," NerdWallet wrote in a blog entitled "Credit Union Debt Relief Programs."

"We've found credit unions nationwide that offer debt relief solutions ranging from debt management tools to free financial counseling, all in service to the improvement of your personal finances. Visit the nearest credit union branch to find the debt relief program that works best for you," said the blog.

The website lists 10 credit unions with special programs to help members:

  • Arsenal CU, Arnold, Mo.;
  • CommonWealth One FCU, Alexandria, Va.;
  • Consumers CU, Kalamazoo, Mich.
  • First CU, Chandler, Ariz.;
  • Icon CU, Boise, Idaho;
  • San Mateo CU, Redwood City,Calif.;
  • PrimeWay FCU, Houston;
  • United Advantage NW FCU, Portland, Ore.;
  • Xceed Financial CU, El Segundo, Calif.; and
  • UniWyo FCU, Laramie, Wyo.

The article devotes a paragraph to each credit union's specific programs. For the full article, use the link.

Decline In Volunteerism Presents Recruiting Challenges

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FARMERS BRANCH, Texas (4/8/13)--Volunteerism is on the decline across industries. As a result, credit unions must do a better job of "selling" volunteer opportunities, a breakout session speaker said last week at the Texas Credit Union League's Governmental Affairs Conference and Member Meeting & Expo.

Volunteering has points that credit union must promote to potential board volunteers, Jason Boles of Fans Created Inc., said during a breakout session last week at the Texas Governmental Affairs Conference and Member Meeting & Expo. (Photo provided by the Texas Credit Union League)
"Let's be honest," said Jason Boles of Fans Created Inc. (LoneStar Leaguer April 5). "The credit union volunteer role is not traditionally sexy. It's a tough sell." 

Recruiting volunteers, especially from younger generations, is a challenge faced by many credit unions, Boles said.  But it can be done. 

Credit unions must know who they are looking for by identifying required skills, knowledge and experience, developing a director "perfect profile," and writing a detailed job description of the position.

He encouraged attendees to open up the search beyond friends, colleagues and the credit union's original sponsor group. 

Volunteering has a number of selling points that Boles encouraged credit unions to promote to potential volunteers. Those selling points include:

  • The ability to network with other professionals;
  • The opportunity to grow their resume and expand their knowledge;
  • The opportunity to lead and/or enhance their leadership experience; and
  • The ability to truly make a difference.
Boles encouraged credit unions to create diversity within their board rooms to avoid doing "more of the same" and "getting the same results." Diversity must go beyond race and age, he said. When seeking diversity on the board, credit unions must consider diversity in skill sets, life stages and education, he said.

CUs Provide Dose Of Reality In Three States

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MADISON, Wis. (3/8/13)--Credit unions in Connecticut, New Jersey and California recently provided high school and college students with a sample of everyday financial life by hosting reality fairs.

Among the booths at a reality fair in Connecticut was EZ Loans, representing high-cost credit providers who try to tempt students to overspend. (Photo provided by Connecticut Credit Union League)
The reality fairs helped credit unions kick off April as Financial Literacy Month.

More than 550 students from 22 high schools in Connecticut spent the morning of March 26 learning the challenge of living within a budget at Central Connecticut State University in New Britain. Students chose their careers in advance of the fair, researching starting salaries and how much additional school is required to begin their chosen professions, the Credit Union League of Connecticut said. Each student received a personalized budget worksheet based on their individual goals.

New Jersey City University students stop by the stations manned by credit union volunteers to make monthly purchases during a reality fair hosted by Liberty Savings FCU, Jersey City, N.J . (Photo provided by New Jersey Credit Union League)
Representatives from 25 Connecticut credit unions and 15 local businesses volunteered at the fair.

Among the booths at the fair was EZ Loans, which represented high-cost credit. "Those guys over there [EZ Loans] told me they were helping me, but I had to get a part-time job just to pay the money back," one student said. "I was doing okay until I talked to them."

The fairs were indeed a dose of reality for the students. "This is harder than I expected," said one participant.

In New Jersey, Liberty Savings FCU, Jersey City, sponsored a reality fair manned by about 30 credit union volunteers for New Jersey City University students, the New Jersey Credit Union League said (The Daily Exchange April 3).

Khemarak Chor speaks with Leticia Mata, Orange County's CU assistant vice president of community education and development, about finances during a Bite of Reality held at St. Mary's Hospital in Long Beach, Calif. (Photo provided by California and Nevada Credit Union Leagues)
The program, initially developed for high school students, was modified for the university's mostly non-traditional student population. The median age of a freshman there is 26 years old.

Students had the option to provide their credit score, rent payment, number of dependents, anticipated student loan balance and checking and savings account balances upon graduation. Their personal financial information was then entered into their customized budget worksheets.

Credit union volunteers also received help from the school's FLEX (Financial Literacy Expert) team, who helped modify the program for the school and helped with registration.

In California, more than 40 teens from the Long Beach area participated in Bite of Reality, a hands-on simulation program offered by the Richard Myles Johnson Foundation and the California and Nevada Youth Involvement Network, which supports financial education for young people in Nevada and California

The event was held at St. Mary's Hospital, Long Beach, and hosted by the RMJ Foundation, the Long Beach branch of Orange County's CU and St. Mary's social education group, EM3.

Students received an occupation, salary, spouse and family, student loan debt, credit card debt and medical insurance payments. They visited stations to "purchase" housing, transportation, food, clothing, household necessities, day care and more. A "credit union" assisted with financial needs. Students were also challenged with unexpected expenses and windfalls.

Court Orders S&P To Provide Documents For RBS Lawsuit

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NEW YORK (4/8/13)--A federal court in New York City Thursday ordered, as part of an agreement, Standard & Poor's Financial Services LLC to produce all documents related to residential mortgage backed securities (RMBS) that are at the heart of CUNA Mutual Group's $72 million lawsuit against RBS Securities.

U.S. District Judge Naomi Reice Buchwald, in a memorandum and order that recited an agreement the parties made with the court in a conference call, ordered the ratings agency to produce:

  • All documents in S&P's electronic "deals files" for each of the 11 RMBS certificates that were issued by RBS Securities and rated by S&P; and
  • All documents reflecting any efforts by RBS to coerce or pressure S&P with respect to the securities deals and all documents reflecting S&P's response.
"We are pleased with the court's decision to order S&P's to produce records related to the $72 million of failed mortgage-backed securities CUNA Mutual Group bought from RBS Securities," said Phil Tschudy, CUNA Mutual Group media relations manager.

"As we previously stated, we consider the documents to be highly relevant to our claims against RBS as they relate to the question of RBS' role in S&P's rating of the mortgage-backed securities at issue in the litigation against RBS," he told News Now.

S&P had alleged in a motion last week that the subpoena for documents was a fishing expedition, but CUNA Mutual Group responded the documents were "highly relevant" to its claims regarding the RMBS.

CUNA Mutual's lawsuit against RMBS, which is before the U.S. District Court for the Western District of Wisconsin, Madison, seeks recission and alleges unjust enrichment for more than $70 million in investments made in 15 certificates from 10 RMBS offerings from 2002 to 2007.  Investors learned later that the securities were backed by defective, improperly written loans.

The suit, which was filed by CMFG Life Insurance Co., CUMIS Insurance Society Inc. and Members Life Insurance Co., maintains the products sold were misrepresented.  

S&P is also being sued by the Department of Justice over its role in reviewing and inflating the value of the RMBS pools that collapsed. Some of those were sold to CUNA Mutual and to corporate credit unions (News Now March 11).

League Launches 'Banking You Can Trust' Ads

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HIGHTSTOWN, N.J. (4/8/13)--The New Jersey Credit Union League launched its Banking You Can Trust member testimonial television commercials on cable stations throughout the state Thursday.

The commercials, featuring credit union members telling their stories about how credit unions have helped them, are part of the Banking You Can Trust cooperative advertising campaign the league launched in 2009 (The Daily Exchange April 3).

The league is also updating its radio, Web and print ads, which will be released this month..

The TV ads can be viewed on YouTube. Use the link

The ads will run on both Comcast and Cablevision.

Councils' Paper Discusses Three Factors Impacting Branches

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MADISON, Wis. (4/8/13)--Economics, technology and changing consumer behavior are changing the look, feel and function of the credit union branch, according to a new white paper from the CUNA Technology Council and the CUNA Operations, Sales & Service Council.

The paper, "Is Technology Causing Branches to Close but Service to Thrive," includes interviews of credit union professionals and analysts and an examination of relevant research.

Among the conclusions the paper makes:

  • The branch is not going away, but it is evolving from processing basic transactions to a venue for problem solving, handling complicated transactions, as well as acting as an educational, sales and service center.
  • The branch is a focal point and educational center for small business lending, which is built on relationships, not transactions.
  • Consumers want human interaction along with technology in their financial services.
  • Declining fee income and margins, as well as regulatory pressures and increasing costs, will cause a rethinking of the business model and branch development.
  • The economics of alternatives to building a branch are compelling--it costs an estimated $1 million to $2 million to build a branch with five to eight employees, at a cost of $350,000 to $400,000 annually to operate.
  • Branch expenses tend to be higher than alternative channel costs. Existing members, though, often use more services with the addition of online channels.
  • Online members are more actively engaged with the credit union and cost more to serve than those who aren't.
To access the paper, use the link.

Maine Legislature Passes League's Student Lending Bill

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PORTLAND, Maine (4/8/13)--The Maine Legislature overwhelmingly has passed a Maine Credit Union League-backed bill that would authorize providing loan insurance on supplemental student loans.

Credit unions and the league "worked cooperatively with others to help draft and pass this legislation," said league President John Murphy (Weekly Update April 5).

Murphy noted that "all of the hard work resulted in legislation that had strong bi-partisan support, and will enable more credit unions to provide a sound student lending product to consumers. Having the financial education component included reinforces our strong advocacy in this area."

The bill modifies the Finance Authority of Maine's Higher Education (FAME) Loan Program to specify that FAME may provide the insurance and renames it the Higher Education Loan and Loan Insurance Program. It also includes a financial education requirement that students must satisfy as a condition for receiving the loan.

The votes in the state House and Senate occurred last week, and the bill has been sent to Gov. Paul LePage for signature. If he signs it, the bill will become effective immediately as emergency legislation, said the league. A signature means the bill will become effective immediately as emergency legislation, said the league.

On a national level, the Credit Union National Association is developing a working group to address credit union student loan issues with the National Credit Union Administration and the  Consumer Financial Protection Bureau, which has received thousands of complaints related to student loans, according CUNA President/CEO Bill Cheney, writing in last week's The Cheney Report.  Only one of the 3,525 student loan-related complaints in CFPB's  complaint database is against a credit union.