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IWSJI others note CUs stance on interchange fees

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MADISON, Wis. (6/22/10)--Several media outlets, including The Wall Street Journal, noted credit unions’ stance on interchange fees. A House-Senate conference committee, which is hammering out a final financial regulatory reform package, is expected to take up the interchange issue today. The Credit Union National Association (CUNA) opposes a plan that would require the Federal Reserve to set interchange fees. The articles noting credit union efforts in opposition of the interchange plan are:
* The Wall Street Journal on Saturday, which said: “Local community banks and credit unions are likely to hang onto free checking longer than their bigger rivals. That is because such institutions will see less of a financial impact from some of the new regulations, and therefore may be under less pressure to add fees. Smaller banks often promote themselves as being customer-friendly, with products that are less complicated than those offered by big banks. One downside to smaller institutions is that they usually don’t have extensive ATM or branch networks. That means consumers who travel often could get stuck paying out-of-network fees for cash withdrawals if they use another bank’s machines. Such fees can add up quickly.” * Crains Cleveland Business (June 21-27), which mentioned that John Magill, CUNA senior vice president for legislative affairs, said retailers pay about 1.5% of a purchase in interchange fees. “Some of that money goes to the issuer--a credit union or bank," Crains said. "Some goes to a processor, such as Visa, and some is kept by the retailer. Those fees are meant to pay for maintenance of the card system. Fraud and other losses, under the new proposal, fees would be reduced drastically to cover only the cost of the transaction itself. Mr. Magill said that could cost credit unions between $35 and $50 per car per year.” * The TimesRecordNews of Wichita Falls, Texas, on Saturday, which reported opinions on interchange from the Texas Credit Union League. “While groups representing small businesses advocated for the amendment as a way to cap interchange rates and reduce costs to merchants, banks and credit unions are pushing back,” the newspaper said. “They claim that, despite a clause excluding institutions with less than $10 billion in assets, they will be severely affected by regulation. The exclusion includes 99% of banks and all credit unions ...” Winter Prosapio, spokeswoman for the Texas Credit Union League, told the newspaper, “Midsize and small banks and credit unions’ debit card programs often just break even. Small (card) issuers don’t gain the benefits of scale.”
The House on Monday offered alternative language on interchange for the final regulatory reform package. (SEE RELATED STORIES: New interchange language, same concerns, says CUNA; CUNA reviews House interchange alternative; urges CU opposition.) To read the articles, use the links.

INY TimesI Its smart to join a CU

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NEW YORK (6/22/10)--It’s smart for consumers to join a credit union, The New York Times said Friday. In an article titled “Credit Unions Are Beckoning with Open Arms,” columnist Ron Lieber wrote that credit unions provide good value on financial services. “Today, credit unions often (but not always) offer lower interest rates on credit cards and better deals on auto and other loans than most banks …” Lieber wrote. “One way to become a member is through occupational classification, where credit union members work for the same employer or perform the same job,” he added. “The second is a community credit union, where members must live in the same ‘well-defined’ region.” Lieber noted that in the early 1980s, members of associations were permitted to join credit unions as an element in a push to include populations that banks were not reaching. “The idea was to get credit union service to people who wanted it from people who wanted to give it to them,” said Wendell A. “Bucky” Sebastian, who worked for the federal credit union industry regulatory body at the time and now is executive director of the National Credit Union Foundation. Now some questions and disputes abound about field of membership issues, particularly from bankers, Lieber added. “What representatives of the American Bankers Association find particularly objectionable, though, are the big credit unions that have their own associations for what appears to be the express purpose of signing up people and then making them eligible for credit union membership,” Lieber wrote. However, Sebastian thinks bankers’ arguments are hiding another issue, Lieber added. “It’s all camouflage for the fact that they don’t like that there are institutions that are willing to work on a nonprofit basis,” Sebastian said. “When you don’t have to call Wall Street every quarter and cut rates on savings and raise fees so you can suck even more money out of customers’ pockets and put it in shareholders’ pockets, well, they can say anything they want. But at the end of the day, their goal is to take as much money from customers as possible and give it to stockholders.” Although Lieber said he doesn’t know who is right, he sees a bottom line for the consumer. “So many people haven’t gotten the message yet, that it’s worth repeating again, once more, with feeling,” Lieber concludes. “Anyone can join a credit union. And until the industry regulator stops allowing many of the biggest credit unions to offer services to anyone who shows up or logs in, you’d be foolish not to check out a few the next time you need financial services.” USA FCU, San Diego, also is mentioned in the article. To read the article, use the link.

IL.A. TimesI more media feature CUs letters on interchange

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LOS ANGELES (6/22/10)--Continuing the push against an interchange amendment in the Senate version of the financial regulatory reform bill, a number of credit unions’ letters to the editor were published in media nationwide. Among the most prominent is a letter to the editor from Melia Keller, president, Mid-Cities Financial CU in Compton, Calif., that was published in The Los Angeles Times Sunday. Credit unions and the Credit Union National Association (CUNA) have opposed the interchange amendment because it would make it more difficult for credit unions to offer card products and services. Credit union supporters continue to contact their representatives, with the number of phone calls and emails to D.C.-based legislators totaling over 600,000 as of last Friday (News Now June 21). CUNA also hosted a “fly-in” where credit union representatives met with their constituents about the interchange amendment. In the letter, “An unlevel playing field for little banks,” Keller wrote, “The amendment opens the door to preferential pricing for certain customers. There will no longer be a level playing field of flat pricing for customers of all sizes.” Other letters to the editor published recently include:
* “Amendment to reform bill will harm consumers,” published in The Dayton Daily News Friday by Douglas Fecher, president/CEO of Wright-Patt CU, Fairborn, Ohio; * “On regulatory relief, base argument on fees on actual merits,” by Michael J. Kurish, president/CEO, Associated School Employees CU, Youngstown, Ohio, in The Warren Tribune; * “Consumers, credit unions losers in bill,” by Michael J. Kaczenski, president/CEO, Sun East FCU, Aston, Pa., in The Delaware County Times; and * “Costly amendment,” by Greg Olmsted, president of North Alabama Educators CU, Huntsville, Ala., in The Huntsville Times.
Kaczenski noted that “the irony of all this is the very consumer friendly institutions with the fairest pricing structures will be forced out of the debit card business, thus eliminating choices for consumers.” The House on Monday offered alternative language on interchange for the final regulatory reform package. (SEE RELATED STORIES: New interchange language, same concerns, says CUNA; CUNA reviews House interchange alternative; urges CU opposition.) To read the articles, use the links.

Filene report addresses CU implications of living trusts

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MADISON, Wis. (6/22/10)--Credit unions looking to capitalize on trends regarding living trusts should focus marketing on high-income and high-asset members older than 50, according to a new study from the Filene Research Institute. “Credit Union Implications of Living Trusts” offers a look at trends in trust creation and detailed breakdowns of who is most likely to open trust accounts. Credit unions are advised to consider the needs of women in establishing trusts and target members with significant assets in defined contribution plans. In 1980, 84% of workers at medium to large companies were eligible for defined benefit plans from their employers, but by 2008, just one-third of such workers had access to the plans. As access to the plans disappear, trust accounts are being replaced by defined contribution plans--like 401(k) and individual retirement accounts, Filene said. The study found that about one in 10 U.S. households with an adult at least 50 years old has a living trust. The average trust holder is 72 years old with 14 years of formal education, $1 million in nonhousing wealth and three children. As more retirees receive retirement benefits as lump-sum rather than annuity payments, more have an opportunity to set up living trusts--through credit unions. “As financial partners of choice for many of today’s retiring workers, credit unions should take a hard look at offering trust services, which can keep valuable relationships and valuable assets at the credit union,” Filene added. The study was authored by Jinkook Lee, Filene research fellow and senior economist at RAND Corp.; Arie Kapteyn, senior economist at RAND; Jung-Seung Yang, a PhD candidate in economics at Seoul National University in South Korea; and Christopher Sharon, a doctoral fellow at the Pardee RAND Graduate School and assistant policy analyst for the RAND Corp.

Tornado damages CU in Minnesota

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WADENA, Minn. (6/22/10)--A tornado last Wednesday reportedly wiped out Wadena (Minn.) FCU. “The credit union was destroyed,” Pete Skaalen, executive vice president of the Minnesota Credit Union Network, told News Now Monday morning. “The roof was blown off and the windows blown in and ruined. We don’t know the exact extent of the damage at this point. We know nothing further than we did last Friday.” State and National Credit Union Administration (NCUA) regulators worked through the weekend “to get the operation up and running,” he added. “We don’t at this time know if it is up and running yet,” Skaalen said. “It was about a $10 million asset credit union with about two full-time employees. We will try to communicate with other credit unions to see if there are any other needs that have arisen.” Also, the offices of Woodco FCU, located in Lake High School in Millbury, Ohio, southeast of Toledo, were destroyed along with the school during a tornado on June 6. The credit union, led by CEO Juanita Zunk, immediately activated its disaster recovery plan and had the credit union running within days in a temporary space at CanDo CU, three miles away in Walbridge, Ohio (e-Lumination Newsletter June 16). Back-office operations are set up in CanDo CU’s conference room, and front-line services are operating out of a vacant position on the teller line and dedicated drive-thru lane. Despite the overwhelming circumstances, the disaster recovery plan is so detailed that it’s guiding the staff and board through every step they need to take, Mark Sommer, CEO of CanDo CU, told the Ohio Credit Union league. The NCUA, Ohio Credit Union Foundation, and several credit unions throughout Ohio are offering assistance to Woodco FCU.

First Carolina Corporate elects board

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PINEHURST, N.C. (6/22/10)--First Carolina Corporate CU elected its board of directors June 14 at its annual meeting. Chuck Purvis, executive vice president of Coastal FCU, Raleigh, N.C., was elected to the board for a three-year term. Lucile Beckwith, president/CEO of Palmetto Trust FCU, Columbia, S.C., and Scott Woods, president/CEO of South Carolina FCU, Charleston, S.C., were re-elected to three-year terms. Scott Weaver, president/CEO of Carolina Foothills FCU, Spartanburg, S.C., was elected to a one-year term on the board. The board also elected Woods as chairman, Purvis as vice-chair, Steve Harkins as treasurer and Randall Crawford as secretary. Harkins is president/CEO of South Carolina Telco FCU, Greenville S.C., and Crawford is president/CEO of WNC Community CU, Waynesville, N.C. Outgoing chair Jack Braswell, president/CEO of Members CU in Winston-Salem, N.C., recognized outgoing director Anne Shivers, president/CEO of Carolina Collegiate FCU, in Columbia, S.C. Shivers volunteered with First Carolina for nine years. She served as treasurer, ALCO chairman and credit committee chairman. Other continuing board members include Braswell; Bob Bruns, president/CEO of Charlotte (S.C.) Metro FCU; and Jim McDaniel, president/CEO of Heritage Trust, Charlotte, S.C. First Carolina, Greensboro, N.C., has $1.7 billion in assets.

Lifting MBL cap a way to help small biz--IWall St. JournalI

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NEW YORK (6/22/10)--Small businesses, despite the recovery, are still struggling to land credit, said The Wall Street Journal (June 21). It notes several proposals and programs that could assist, including the proposal to lift credit unions' member business lending (MBL) cap to 25% of assets from 12.25%. Most of the government programs created to address the credit crunch and help small businesses focus on Small Business Administration loans, which are less than 10% of overall lending to small businesses, said the Journal. Banks say loan volume is down because demand is down and regulators are pressuring them to curb lending and stiffen underwriting. Regulators say the banks are making regulators a "convenient excuse" for banks who don't want to tell borrowers they can't loan. In 2009 small business loan portfolios dropped at big banks 9% from the previous year, more than double the drop for their entire lending portfolios, the Journal said, citing statistics from a recent Congressional Oversight Panel report. At the smallest banks, small business lending dropped 2.7%, while overall portfolios declined 0.2%. However, credit unions have seen growth in their lending. "Another proposal targets credit unions, which have boosted their lending through the recession. Legislation in both the House and Senate would let these nonprofits lend 25% of their assets, up from 12.25% under current law," the Journal added.