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Former Centrix owner appeals liquidation order

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DENVER (6/11/08)--The former owner of Centrix Financial LLC--a subprime auto lending service that serviced credit unions and that is in Chapter 11 bankruptcy--has filed a notice of appeal of a liquidation plan approved earlier this year by the U.S. Bankruptcy Court. Robert E. Sutton, the former owner, and two entities--6762 S. Potomac LLC and Centrix Consolidated LLC--filed papers stating the issues on appeal Friday through attorney G.W. Merrick in the U.S. Bankruptcy Court for the District of Colorado. The appeal seeks to address whether the U.S. Bankruptcy Court erred in several rulings it made, including a ruling confirming the Chapter 11 reorganization, according to court documents obtained by News Now. Judge Elizabeth E. Brown had approved the reorganization plan on April 21, after almost two years of court maneuverings in the case by a growing list of participants. The notice of appeal also takes issue with the court ordering the appellants to cease-and-desist from filing claims objections and the court's overruling of Sutton's objections to the liquidation confirmation. The reorganization would have involved Centrix and its seven affiliates under bankrupty protection to consolidate into a single entity, with Centrix assuming all the affiliates' assets and liabilities. It would pool the resources to pay each affiliate's creditors (News Now Jan. 22). Credit unions and other entities have claimed millions against the company's assets. More than two-thirds of Centrix's portfolio is owned by roughly 230 credit unions throughout the nation. It underwrote more than 250,000 loans totaling $4 billion (News Now Sept. 6, 2002). The reorganization was considered the best opportunity for creditors-- including credit unions--to secure any money that might be handed out through the liquidation process (News Now April 25). Sutton's appeal would delay the distribution process of any funds. Centrix was placed under involuntary Chapter 11 protection on Sept. 15, 2006 by creditors IFC Credit Corp., Suntrust Leasing and Wells Fargo Equipment Finance Inc. They said Centrix owed them a combined $4.6 million in lease payments. Several days later Centrix and its affiliates filed voluntary petitions for Chapter 11 protection.

CU System briefs (06/10/2008)

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* NAPERVILLE, Ill. (6/11/08)--The Illinois Credit Union System has contributed $6,000 toward building two veterans' homes during the 2008 national party conventions in Denver and St. Paul, Minn. The Credit Union National Association (CUNA), leagues and credit unions from across the nation will team up with "Homes for Our Troops" to build specially adapted homes for two severely injured veterans and their families. One home will be in Denver; the other in St. Paul, Minn. The host leagues--the Credit Union Association of Colorado and the Minnesota Credit Union Network--are working to obtain donations and volunteers locally, and credit unions throughout the nation are contributing donations for the events. Illinois Credit Union League President/CEO Dan Plauda urged credit unions to join in the cause, which "exemplifies the 'people helping people' philosophy of the credit union movement." … * RALEIGH, N.C. (6/11/08)--State Employees' CU in Raleigh collected more than $43,000 for March of Dimes March for Babies spring event. More than 160 SECU team members walked in the three-mile march. This year, branch and operations employees participated in numerous fundraisers, including bake sales and raffles, to raise funds. SECU's 2008 total was $7,000 more than the amount collected last year (Carolina Newswire June 6) …

Idaho league names pro volunteer of year

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BOISE, Idaho (6/11/08)--The Idaho Credit Union League has named the winners of this year’s Outstanding Professional of the Year and Outstanding Volunteer of the Year Awards. Brent Neibaur, CEO, Advantage Plus FCU, Pocatello, was presented the Outstanding Professional award at the league’s 72nd meeting. Jim Simpson, board chairman, Magic Valley FCU, Twin Falls, received the Outstanding Volunteer Award. Neibaur has been with Idaho credit unions for nearly 20 years and places a high value on member and employee relations, the league said. He is committed to education and training for employees of all levels, striving for longevity and continuity, and earning staff support and loyalty, the league added. Simpson’s credit union praised his contributions during his tenure on its board of directors, which spans dour decades. During his time of service, Simpson has missed few meetings. Although his current position on the credit union board is chairman, he has held a number of leadership roles throughout his years of service. In addition to receiving plaques and diamond pins from the league, donations of $250 will be made to the National Credit Union Foundation in their names.
Jim Simpson, Magic Valley FCU, Twin Falls, received the Outstanding Volunteer Award at the Idaho Credit Union League’s 72nd meeting in Boise. (Photos provided by the Idaho Credit Union League)
Brent Neibaur, CEO, Advantage Plus FCU, Pocatello, was presented the Outstanding Professional award at the Idaho Credit Union League’s 72nd meeting in Boise.

Hannaford breach lawsuits consolidated under one judge

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PORTLAND, Maine (6/11/08)--More than 20 lawsuits filed in four states over a recent data breach of grocery chain Hannaford Bros. Co.'s computer network have been consolidated under one judge in Portland, Maine. The decision, by a seven-judge panel meeting May 29 in Asheville, N.C., was announced Monday (Bangor Daily News and Associated Press via Boston HeraldJune 10). It means that the lawsuits already filed--and any filed in the future-- will be consolidated under the federal court's multi-district litigation program and be heard in Portland by U.S. District Judge D. Brock Hornby. The panel's order indicated that centralization in Maine would be convenient to the parties and witnesses, and promote the "just and efficient conduct" in the court. Hannaford's headquarters is in Maine and relevant documents would be easier to make available there, the panel said. Attorneys for victims who filed lawsuits in Florida had asked the cases to be consolidated there. The lawsuits stem from a breach from Dec. 7, 2007, to March 10, which allowed hackers to steal the credit and debit card numbers of 4.2 million Hannaford customers while they swiped the cards for authorization of purchases at grocery stores. It was the first major breach of a system that was compliant with industry standards. The breach affected customers at about 300 stores--most of them Hannaford stores and Florida's Sweetbay chain. When the breach was made public, the Maine Credit Union League noted that Maine's credit union and banks would feel the brunt of the attack. At that time, 68 credit unions in the state were reissuing more than 100,000 credit and debit cards to try to limit the amount of fraud (News Now March 24). As of June 1, at least 23 lawsuits related to the breach were filed: 14 in Maine, seven in Florida, one in New Hampshire and one in New York. Judge Hornby is expected to assign a team of attorneys to act as lead counsel on all the cases by the end of June, said the Bangor Daily News.

N.J. league board proposes new structure

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HIGHTSTOWN, N.J. (6/11/08)--The New Jersey Credit Union League board of directors is proposing a new governance structure. Due to changing demographics and new challenges, the league decided to take on the task of governance restructuring last year.
From left) New Jersey CU League Chairman Steve Schlundt, NJCUL President/CEO Paul Gentile and NJCUL Board Member Shawn Gilfedder prepare for a special Webcast announcing the proposed governance changes. (Photo provided by NJCUL)
The league board appointed a 14-person Governance Task Force to recommend to the board a new structure (The Weekly Exchange June 9). “We recognized as a board that it was time to evaluate our governance structure and see if we could make changes that would make us a more efficient league,” said Steve Schlundt, league chairman and CEO, Atlantic City Fireman’s FCU. “By doing so, we feel it will improve the way we do business, and most importantly, help us with our primary task of meeting the needs of our members.” Some of the changes the new structure would bring to the league are:
* Board reduction: The board size would be reduced from 15 to nine; * Term limits: Board members could serve three consecutive three-year terms; * Asset representation: Three directors would be elected from three tiers: Tier A, including less than $25 million in assets; Tier B, more than $25 million in assets; and Tier C, credit unions of any asset size (at large); * Board qualifications: Candidate must be either a board member or president/CEO (or equivalent) of an affiliated credit union in good standing; * Voting rights: Credit unions will vote on candidates in their tier, as well as the at-large tier; and * Timing: If approved, the new election rules will be immediately implemented for the 2009 elections cycle, with the newly elected board seated in 2009.
The league board has approved the restructuring changes. The final step before implementation is the membership vote, which will take place at the league’s annual meeting Sept. 21-23. The changes will be distributed next week to New Jersey credit unions through a webcast, according to Paul Gentile, president/CEO of the New Jersey Credit Union League. He said the webcast is just one of many methods of communication the league will use to ensure everyone is aware of the changes. "It is our duty at the league to ensure members are fully informed about the governance bylaw amendment and what it means to the structure of the league board," he said. "It is in the hands of the membership and they must be educated well in advance of our annual meeting this September."

CUs in Idaho raise 211000 for CMN

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BOISE, Idaho (6/11/08)--Idaho credit unions raised more than $211,000 for Children’s Miracle Network (CMN) through their Credit Unions for Kids Program in 2007. The donation brings the 13-year total to more than $1.5 million raised by Idaho credit unions for CMN, said the Idaho Credit Union League. Of the money raised, 100% goes to benefit sick or injured children in the state. Funds raised in the southeast region are given to Children’s Primary Medical Center in Salt Lake City; those from the south, southwest and south central regiona are donated to St. Luke’s Children’s Hospital; and funds raised in the north and north central regions benefit CMN facilities in Spokane, Wash., and Coeur d’Alene, Idaho. Credit unions donating the largest amounts are:
* Cornerstone CU, Caldwell; * East Idaho CU, Idaho Falls; * Idadiv CU, Nampa; * Idahy FCU, Boise; * Inkom Cement Employees CU, Inkom; * Lewis Clark CU, Lewiston; * Pine Tree Community CU, Grangeville; * Pocahy Family CU, Pocatello; * Potlatch No. 1 FCU, Lewiston; * Pocatello Railroad FCU, Pocatello; * Quinco CU, Nampa; and * SEI-US Employees FCU, Pocatello.

Illinois CUs take next steps with REAL Solutions

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NAPERVILLE, Ill. (6/11/08)--Partner credit unions involved with Illinois’ REAL Solutions effort recently met at the Illinois Credit Union League (ICUL) headquarters to discuss their next steps to add programs and products to serve low-wealth households. REAL Solutions is designed to help credit unions offer services that have proven successful in serving people of modest means, working families and low-wealth households. REAL Solutions is a National Credit Union Foundation program offered nationwide. Thirty credit unions have signed up for REAL Solutions in Illinois, ICUL said. The credit unions will focus on a number of initiatives, including payday alternative loans, youth and young adult programs, immigrant outreach programs, member education, check cashing and voluntary income tax assistance (VITA). Other focus areas include first-time homeowner programs, stored-value cards, asset building savings programs and safe accounts. During the meeting, credit unions participated in a diagnostic interview with REAL Solutions field coach Mark Lynch, who gathered information on products and services that the participating credit unions offer and areas of interest for future programs. The group found that:
* Asset size for partner credit unions ranges from less than $1 million to more than $1 billion; * Ten partners have a payday alternative loan product; * All partners said they want to learn more about payday alternative loan products; * Five partners offer formal financial and credit counseling programs to members, while 16 offer information programs; and * All 30 said growth is a primary business focus.
The next meetings are scheduled for June 26 and July 23 at the ICUL. At the meetings, speakers will present information on payday lending and VITA.

Iowa growth commission focuses on five areas

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DES MOINES, Iowa (6/11/08)--The Iowa Credit Union Growth Commission will review industry trends and market research as it relates to credit union growth in five key areas. The commission was created by the Iowa Credit Union League board of directors in 2007 to offer recommendations for credit union growth strategies. At a time when credit union membership growth in Iowa is generally stagnant, credit union members are aging, competition is increasing, margins are shrinking, and new markets are emerging, the growth commission recognized the need to focus on strategic, innovative and collaborative ways to serve Iowans in the future, said the league. Comprising 23 Iowa credit union leaders, the commission spent more than six months reviewing research and discussing the future of the credit union movement. Their meetings, facilitated by John Lass, senior vice president, product development, CUNA Mutual Group, led to the identification of five key areas to help stimulate growth in Iowa. These concepts include:
* Back office support; * Human resources support; * Marketing support; * Mobile banking; and * Virtual banking.
The commission plans to complete research to assess the needs of the marketplace, specifically for the back-office support, human resources support, and marketing support areas by the end of the summer. With the market research in place, the league will conduct a financial analysis to determine the most viable solutions and will begin developing business plans and product launches only if needed. “The growth commission members dedicated many hours of their time and energy to this initiative,” said Patrick S. Jury, league CEO. “Because of their thoughtful opinions and desire to help the credit union movement, we have been able to identify key areas that will make the Iowa credit union movement stronger.” Chairing the commission are: Jean Hoeger, co-chair, Alliant CU, Dubuque; and Mark Heth, co-chair, Iowa Community CU, Waterloo. The league also developed a new position in 2007, the director of credit union growth. In that position, Jim Niederhauser is responsible for managing the commission efforts and aligning with Iowa credit unions to evaluate growth strategies for their future The Iowa Credit Union League also has created several subsidiary companies focused on helping credit unions grow. In 2005, the league established Community Business Lenders, a credit union service organization (CUSO) that provides credit unions with the resources and third-party support to offer member business loans to small business owners and individuals. In 2006, the league launched Coopera Consulting, an Iowa-based agency that helps credit unions reach out to emerging markets.

NCUF joins Savings for Life Coalition

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WASHINGTON (6/11/08)--The National Credit Union Foundation (NCUF) has joined the Savings for Life Coalition, led by the Aspen Institute, to create “a pathway to financial security for all Americans.” NCUF Executive Director Steve Delfin signed a support letter for the coalition this week. The Savings for Life report by the Aspen Institute Initiative on Financial Security (IFS) outlines the coalition’s approach: “We believe that by truly engaging the best minds in finance, we can find common ground on which to build a new set of savings vehicles that would help more Americans save, invest and own. And at the same time, we can build a vibrant new market of savings product consumers … “What is needed is the right nexus to bring the financial services sector and low- and moderate-income Americans together,” the report continued. “Given the right savings vehicles with the right incentives for both individual savers and the financial services industry, more Americans can access the pathway to greater savings.” “NCUF supports initiatives to improve the present state of savings in America,” Delfin noted. “We understand the implications for families and for our country as a whole. Creating opportunities to help Americans save more and invest in key assets like home ownership and secondary education will build wealth that can be passed on to future generations and contribute to our country’s long-term economic growth. “REAL Solutions, as well as NCUF’s fundraising and grant-making across America, promotes a wide variety of financial education and savings-building programs,” Delfin pointed out about NCUF’s signature program. “We focus primarily on helping working families with low wealth and modest means.” NCUF is collaborating with the Aspen Institute and the Annie E. Casey Foundation on an initiative to help non-prime car buyers steer clear of predatory auto loans. A free “Steer Clear” Auto Lending Summit will take place July 22 from 10 a.m.-2 p.m. EDT at the Credit Union House on Capitol Hill in Washington, D.C. The first 40 participants who RSVP by June 13 will receive a preview of a joint research report, “Credit Unions Help Car Buyers Steer Clear of Predatory Loans.” “By saving car buyers thousands of dollars on reliable transportation to work, we hope to create more discretionary income for these borrowers to save,” Delfin said. “NCUF looks forward to bringing the affordable auto loan initiative to scale, as well as working with IFS to promote a dialog on solutions to America’s savings crisis,” Delfin said. “Together we can achieve transformational philanthropy that will strengthen the financial security of households across America.” Credit union leaders on the IFS Advisory Board include John Tippets, president/CEO, American Airlines FCU, Fort Worth, Texas, and William Bynum, CEO, Hope Community CU, Jackson, Miss.

N.Y. foundation unveils 10 ID-theft video PSAs

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ALBANY, N.Y. (6/11/08)--The New York Credit Union Foundation recently unveiled at a reception in Albany a series of 10 video public service announcements (PSAs) that are part of a statewide educational and consumer campaign about identity theft.
New York State Assemblyman James Tedisco (left) (R-Capital) spoke at the introduction of public service announcements aimed at preventing identity theft during a reception in Albany, N.Y., attended by credit union representatives and legislators.
William J. Mellin, president/CEO, Credit Union Association of New York, talks with Mindy Bockstein, chairman and executive director of the New York State Consumer Protection Board, about the New York Credit Union Foundation’s consumer identity theft and awareness campaign. (Photos provided by the Credit Union Association of New York)
The campaign, “Who are You? Identity Thieves Really Want to Know!” targets New York’s 4.2 million credit union members. It features 15-second PSAs in English and Spanish. The PSAs feature Assemblymen Peter M. Rivera (D-Metropolitan) and James N. Tedisco (R-Capital), and a group of credit union leaders and members. After the reception, the foundation, the New York State Consumer Protection Board and the Credit Union Association of New York, presented an identity theft workshop to New York State legislature. The one-hour session was hosted by Senate Consumer Protection Chair Charles J. Fuschillo Jr. (R-Long-Island) and Assembly Consumer Affairs and Protection Chair Audrey I. Pheffer (D-Metropolitan). Foundation Executive Director Diane LaVigna-Wixted addressed the audience. “Identity theft is not only devastating financially to the victim, it also has negative effects upon the victim’s credit union and all organizations that serve credit unions,” LaVigna-Wixted said. “By working together on this initiative, we present a united front to credit union members and consumers, and promote the credit union difference through financial education.” Topics covered by the campaign include: identity theft: what it is, how it occurs and how to minimize risk; how to protect a Social Security number and computer; how to shop safely online; prevent skimming and recognize scams and frauds; and what to do if an identity is stolen. Other components of the campaign include a webinar to introduce bilingual marketing materials to credit unions; train-the-trainer sessions that have trained 89 individuals from 48 credit unions, eight community organizations and New York legislative offices; and two- to three-minute educational videos with Mindy A. Bockstein, chairman and executive director, New York State Consumer Protection Board. The foundation is providing PSAs and educational videos to credit unions to stream on the Web and in their lobbies. Credit unions also received a sample press release and newsletter article. The campaign is a collaborative project of the foundation, the association of New York and CUNA Mutual Group. Funding for the project comes from a settlement of antitrust claims brought by the Office of the New York State Attorney General and the Federal Trade Commission. Additional funding was provided by Covera Card Solutions and a grant from the National Credit Union Foundation.

Federation CEO addresses World Social Finance Summit

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NEW YORK (6/11/08)--Because of the subprime crisis, “the dominant financial system in the U.S. is being questioned in a way it has not been before,” Cliff Rosenthal, president/CEO, National Federation of Community Development Credit Unions, told the World Social Finance Summit. The meeting of socially oriented cooperatives, banks and policy advocates was held in Quebec, Canada, Thursday. The catastrophic losses and the widespread economic distress present “an unprecedented opportunity to bring the credit union and cooperative message to millions of Americans,” Rosehtnal said. Rosenthal found broad agreement with his assessment of three major challenges faced by social and cooperative finance institutions across national lines. “First, global capital standards designed with large banks in mind are a major threat to the survival of smaller, socially oriented institutions,” he said. “A second major threat comes from the increasing crush of regulations, which again have a disproportionate effect on small institutions. Finally, there is the threat of demutualization, or conversion to for-profit status with the loss of mission.” The summit was organized and sponsored by the Belgium-based International Network of Investors in the Social Economy and, locally, by Quebec’s Desjardins Caisse d’economie Solidaire, a member of the Desjardins credit union network. Over 150 delegates attended from five continents, from as far away as Togo and Cameroon, Scandinavia, Brazil, the Philippines, British Columbia, and Australia. Stressing the urgency for action, conference speakers laid out a series of interrelated crises: The financial crisis, the energy crisis, the environmental crisis, the escalating food crisis, and a growing water crisis. In every sense of the word, the present situation is “unsustainable,” they said. The financial system, in particular, must be transformed: instead of making people merely a means to produce profit, finance must serve human needs, speakers agreed. Return on investment must account for environmental and social costs, they added. The conference closed with a declaration signed by the participants, including the federation, which affirmed the basic common values underlying the social finance movement: Placing human needs first.