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Top 10 emerging risks for CUs outlined at ACUC

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BOSTON (6/23/09)--Today’s fraud landscape is becoming more complex, featuring extensive intertwined risks--some old but with new wrinkles and some emerging at the pace of new technologies. The emerging risks will require credit unions to adopt rigorous, cross-channel fraud monitoring strategies, a CUNA Mutual risk expert said Monday.
Ann Davidson, CUNA Mutual Group, noted that the tough economy is not only motivating criminals but also "people you never thought would commit fraud." The product manager of the Credit Union Protection risk management spoke about emerging trends in risk and fraud during a breakout session at America's Credit Union Conference and Expo in Boston. (Photo provided by CUNA Mutual Group)
Ann Davidson, speaking Monday to a standing room only crowd at the America’s Credit Union Conference (ACUC) and Expo in Boston, recommended taking a holistic view of fraud. That means realizing that a particular fraudulent act may not directly or immediately result in a loss but may later manifest itself in another form. Fraud schemes are increasing as a tough economy motivates not only criminals but also “people you never thought would commit fraud,” Davidson said. She outlined the 10 hottest schemes in 2009 facing credit unions. They are:
* Phishing (e-mail), smishing (texting) and vishing (telephone); * I.D. fraud; * System intrusion; * Cyber crime; * Data breaches; * Transaction fraud; * Mortgage fraud; * Internal fraud; * External fraud involving numerous and varied scams; * Other emerging risks, involving compliance and regulation, and new account, existing account and check image home banking fraud.
The best way to thwart fraud by preventing it is “Education, education, education,”--educating employees and members, Davidson said. Identifying root causes and using a fraud management system can prevent or minimize risks. She offered these preventative tips:
* Implement best practices that engage all employees; * Measure savings by the effectiveness of the loss-prevention tool; * Share information to help other credit unions and members; * Be proactive--it pays off; * Ensure prevention processes and tools are in place and delivering intended results; * Find the critical balance between risk management and member service for the credit union; and * Implement a cross-channel fraud prevention solution on all transactions and at the member account level.
ACUC is presented by the Credit Union National Association. It ends Wednesday. Check out further coverage in News Now’s blog and at Credit Union Magazine’s website. Use the links for more.

Mica notes young members are most optimistic

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BOSTON (6/23/09)--
Credit Union National President/CEO Dan Mica welcomed attendees at the America’s Credit Union Conference in Boston, saying that despite the tough year for the nation’s financial institutions, credit unions can be optimistic. He discussed the optimism of younger consumers--76% of 18 to 29 year olds say their personal financial situation will improve. “That’s optimism,” he said. The movement projects it will have 100 million members in the next few years. "Young people need it (financial services) and want it. We can stand tall in this." (Photo provided by CUNA)

Credit Union National Association President/CEO Dan Mica welcomed attendees at the America’s Credit Union Conference in Boston Monday saying that despite the tough year for the nation’s financial institutions, credit unions can be optimistic about the future. Credit unions’ capital is at 10%. “Every other financial institution would love to have 10%,” he noted. Banks have regulatory hearings on their backs, shareholders on their backs and more “but we don’t have a single group in that situation.” Credit unions are No. 1 in trust, he said citing a survey released May 26 by Forrester Research Inc. He noted the optimism of future credit union members, those in the 18-29 age bracket Pew Research Center has found that this age group may be among the most optimistic. Thirty-five percent of this age group are having trouble paying the rent or mortgage, and 36% have lost their job or know someone who has, he said. Forty percent have cut their spending, and 33% have changed their cell phone plans. However, 76% still say their personal financial situation will improve. “That’s optimism,” Mica said. He ended on the note that the movement projects it will have 100 million members in the next few years. “Young people need it (financial services) and want it. We can stand tall in this.”
Chief executive optimist Bert Jacobs, co-founder of Life is good in Boston, brought the empowerment of optimism to America’s Credit Union Conference and Expo. The keynoter for Monday’s general session told how one T-shirt character, “Jake,” served as a magnet for optimism (Photo provided by CUNA)
On another note of optimism, the conference heard from the chief executive of optimism, Bert Jacobs, whose Life is good T-shirt enterprise went from selling from the back of a van 15 years ago to a multimillion dollar enterprise that now raises millions of dollars for children’s causes. Jacobs’ message is simple: Be optimistic. Be open to new things, to meeting new people. Be open to the notion that anything is possible. He told how friends came up with the cartoon character, Jake--a nerdy-looking, smiley stick man who “looks like he has life figured out.” When Jacobs and his brother John sold 48 of the T-shirts in 45 minutes, they knew they were on to something. Soon the enterprise expanded Jake. He was shown eating ice cream, playing golf, cooking in the back yard or just relaxing. The tall, laid-back Frisbee-throwing T-shirt clad Bostonian said that after 9/11, people couldn’t get enough of Jake’s messages of hope and joy. “Americans work way too hard,” he told the assembly’s hard-working credit union volunteers and professionals. After the session, credit unions waited in line for nearly two hours, queuing up to buy his “Life is Good” book.
Massachusetts Credit Union League President Dan Egan noted that in the State House, near the entrance is a plaque honoring Pierre Jay, the first banking commissioner of Massachusetts. Jay, along with Boston’s Edward A. Filene, ushered in the first general charter for credit unions after the founding of St. Mary’s Bank CU in New Hampshire. Filene put up $1 million of his own money to promote credit unions, Egan told America’s Credit Union Conference Monday morning. (Photo provided by CUNA)

Follow ACUC live via blog

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BOSTON, Mass. (6/23/09)--Credit unions can get instant online coverage of the latest happenings during America's Credit Union Conference and Expo (ACUC) here via blogs, twitter, and daily stories in News Now and Credit Union Magazine's website. The Credit Union National Association (CUNA) conference kicked off Sunday and will end Wednesday afternoon. Leigh Gregg, CUNA online editorial director, will provide frequent convention updates on the America's Credit Union Conference blog produced by News Now. She also will tweet shorter tidbits on News Now's LiveWire, a service through Twitter, as well as provide stories daily to News Now. Watch for the ACUC Daily and ACUC icons appearing on CUNA's website at

CDFI advocate Why CUs dont want to be banks

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NEW YORK (6/23/09)--During closing remarks at the National Federation of Community Development Credit Unions' 35th Annual Conference on Serving the Underserved, Ellen Seidman, community development financial institutions (CDFIs) advocate, explained why credit unions don’t want to convert to banks.
Ellen Seidman, community development financial institutions advocate, explained why credit unions don’t want to convert to banks during remarks at the National Federation of Community Development Credit Unions' 35th Annual Conference on Serving the Underserved June 12 in Phoenix. (Photo provided by the National Federation of Community Development Credit Unions)
The federation’s conference took place June 11-13 in Phoenix. “Why do you not want to become a bank?” Seidman said. “Well for one, our banking regulators are increasing their premium assessments across the board; so financially, it might not make a lot of sense. Our regulators are also very tough, especially on the smaller institutions; institutions that don’t tend to fight as well as the larger players, and thus are easier to close. “Another major factor to consider,” Seidman continued, “is that bank insurance premiums are rising, and this generally disadvantages the smaller institutions. We also have higher requirements on capital and return on assets, which are generally much tougher than those of credit unions. Of course there's always the issue of taxation, both as a for profit institution and under CRA [Community Reinvestment Act]. While your institutions would have no issue meeting CRA requirements, why on earth would you want yet another complicated exam to deal with?” Seidman addressed more than 250 community development credit union representatives, credit union organizers, regulators and government officials during her speech. She also discussed the importance of local financial institutions in addressing the current economic environment, and emerging opportunities for CDFIs under the new administration. Seidman acknowledged the challenges that CDFIs and nonprofit institutions nationwide are facing and provided some recommendations to address those challenges and strengthen those institutions, the federation said.

Financial literacy will help economy recover says CU CEO

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CHICAGO (6/23/09)--Financial literacy will help the economy recover, according to David Mooney, president/CEO of Alliant CU in Chicago. “Helping consumers become more financially literate will promote economic recovery,” he said last week at the first annual Global Financial Literacy Summit in Washington, D.C. The summit was headlined by Federal Reserve Board Chairman Ben Bernanke and sponsored by Operation HOPE, a nonprofit organization dedicated to financial literacy empowerment. Alliant CU is an Operation HOPE partner. Mooney spoke about the benefits of financially literate consumers, not only as “better” borrowers and savers, but also as a means to temper business and credit cycles--specifically reducing excessive consumer borrowing, defaults and bankruptcies. Alliant has invested in a charitable foundation whose primary focus is financial literacy, free financial education and counseling. Also, Alliant employee volunteers have conducted more than 250 free financial literacy classes attended by 2,000 middle school students in the last three years, he said. Alliant has more than $6 billion in assets.

Members United elects board officers

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WARRENVILLE, Ill. (6/23/09)--Members United Corporate FCU elected its board officers and directors for 2009-2010. Board officers include:
* Chair: John T. Fenton, president/CEO, Affinity FCU, Basking Ridge, N.J.; * Vice Chair: Kyle Markland, president/CEO, Affinity Plus FCU, St. Paul, Minn.; * Treasurer: Louis H. Jimenez, CEO, Montauk CU, New York City; and * Secretary: Lloyd M. Fredendall, president/CEO, NorthStar CU, Warrenville, Ill.
Directors include:
* Bruce Beaudette, president/CEO, Sunmark FCU, Latham, N.Y.; * Terry R. Brahm, president/CEO, DHCU Community CU, Moline, Ill.; * Donald H. Briggs, president/CEO, NorthEast Alliance FCU, Bardonia, N.Y.; * John R. Caulfield, president/CEO, St. Mary’s CU, Marlborough, Mass.; * Gary E. Furtado, president/CEO, Navigant CU, Smithfield, R.I.; * Andrew L. Jaeger, president/CEO, CU of New Jersey, Ewing, N.J.; * Nancy Kasprzak-Whitmore, president/CEO, Niagara County’s FCU, Lockport, N.Y.; * Ron Linstromberg, CEO, DeKalb Financial CU, Auburn, Ind.; and * Michael Phipps, president/CEO, Evansville (Indiana) Teachers FCU.
Members United’s supervisory committee for 2009-2010 is:
* Mooney; * Steve Ahlness, president/CEO, Greater Minnesota CU, Mora, Minn.; * Leo Ardine, president/CEO, United Teletech Financial FCU, Red Bank, N.J.; and * Rick Rice, president/CEO, Teachers CU, South Bend, Ind.
Members United, based in Warrenville, Ill., has $9.5 billion in assets.

Conference discusses key factors shaping U.S. economy

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MADISON, Wis. (6/23/09)--Credit union professionals can hear about key factors shaping the U.S. economy from several economic experts at the Credit Union National Association’s Economics and Investments Conference, Aug. 2-5, in San Diego. Lawrence Yun, chief economist and senior vice president of research for the National Association of Realtors (NAR), will discuss current trends in the housing market to help attendees determine a strategic plan for the future. Yun, who has previously made USA Today’s list of top 10 economic forecasters in the country, regularly writes columns on real estate market trends, creates NAR forecasts, and participates in economic forecasting panels nationwide. Former Chrysler corporate economist Paul Traub will overview the current state of the U.S. economy and its impact on the auto industry. Traub, who was responsible for tracking the economy and forecasting its impact on North American auto sales for the bulk of his nearly 25-year career with Chrysler, will compare the current economy to past recessions and explain what the future might hold for auto sales after the economy recovers. He also will discuss the drivers behind new vehicle sales that make up the potential long-term sales trends for the U.S. auto industry. Finally, he will answer the question: Will the U.S. ever see its auto industry sales in the 17-million-unit range again? Don Ratajczak, former director of the economic forecasting center at Georgia State University in Atlanta, will provide an overview of the U.S. economy. Ratajczak will discuss the lessons that have been learned from the worst financial meltdown since the Great Depression and the implications for the future. He also will review current indicators, statistics, and insights to forecast the economic climate. Also, attendees will discover asset-liability management techniques and gain practical tools for managing the finances of their credit unions. They also will learn competitive investment strategies and discuss current regulatory issues that impact investment options.

WOCCU helps South Africa develop deposit insurance

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NORTHWEST PROVINCE, South Africa (6/23/09)--At the invitation of South Africa's National Treasury, the World Council of Credit Unions (WOCCU) has taken steps to make sure that South African Savings and Credit Co-operatives (SACCO) members nationwide do not lose their deposits. SACCOs--or credit unions--and banks have historically lacked any type of deposit insurance.
A teller at Ditsobolta Savings and Credit Co-operative in rural South Africa describes services to a member. World Council of Credit Unions is helping South Africa develop legislation to create deposit insurance. A 2008 International Credit Union Day poster is visible on the back wall. (Photo provided by World Council of Credit Unions)
WOCCU’s initial work with South Africa’s government eight years ago to develop legislation specific to financial cooperatives culminated in January 2008 with the passage of the Cooperative Bank Act. Last week, Dave Grace, WOCCU vice president of association services, led a workshop in Pretoria for representatives from South Africa Reserve Bank, Cooperative Bank Development Agency and the National Treasury, outlining a government-backed deposit insurance plan to protect consumer savings. “South Africa's Cooperative Bank Act calls for deposit insurance,” Grace said. “Right now, South Africa has no deposit insurance for any of its financial institutions. Thanks to passage of the cooperative bank law, the path has been cleared so that South Africa's SACCOs will be the country's first financial institutions with deposit insurance to protect their members.” Despite 15 years of political freedom from apartheid, much of South Africa's population is still marginalized from sharing in the country's wealth. South Africa's SACCOs have made some inroads rebalancing economic power, but slow growth has raised concerns among government officials. Enacting deposit insurance among the country's financial cooperatives will increase the depositor confidence and enable the SACCOs to grow, according to Omega Shelembe, the National Treasury's director of banking development. “Having deposit insurance introduces a complementary element in the financial safety net,” Shelembe said. “This element, together with improved regulation and supervision will increase both the attractiveness and accountability of the SACCO sector and bode well for the growth of the movement.” During the WOCCU workshop, Grace stressed the importance of protecting the savings of small- and medium-level depositors as a way to help stabilize not only SACCOs, but the country's economic system as a whole. A deposit insurance structure that covers the majority of depositors, rather than focusing the amount of funds on deposit, would provide the best possible protection to individuals and institutions alike. The program also should be on par with that of commercial banks once bank deposits also are covered by deposit insurance, WOCCU said. “The protection provided by deposit insurance enhances the level of public confidence in South Africa's SACCOs,” Shelembe added. “Over time, we believe SACCOs will build their credibility and ultimately compete with the commercial banking sector for the mobilization of savings and provision of loans.”

CUNA Mutual Humana join to offer Medicare products

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BOSTON (6/23/09)--Credit union members will soon be able to turn to their credit union to purchase products related to Medicare. CUNA Mutual Group is announcing a new Medicare suite of products designed to help credit unions retain the growing ranks of retiring baby boomers. Medicare Suite will be offered this year through CUNA Mutual’s MemberCONNECT direct-to-member distribution channel. Targeted members of participating credit unions are able to take advantage of the remaining 2009 enrollment period for the Medicare product, which is Nov. 15 through Dec. 31. “Partnering with Humana to provide the Medicare suite of products to our credit union customers is the right decision with the right company at the right time,” said Andy Napoli, senior vice president and product group leader of consumer products at CUNA Mutual. “Competition for baby boomers’ business is heating up among financial institutions, and with good reason. Within credit unions, more than 24 million members are over 55. This is also a tough group to retain.” As baby boomers--defined as those born between 1946 and 1964--begin the retirement process, competition for their financial business is building. Research conducted by CUNA Mutual indicates credit unions have had trouble retaining this generation as it ages into retirement, primarily because it doesn’t view credit unions as providing all the products they need or seek in retirement. For the unprepared boomer retirees, Medicare will be welcomed as a safe haven of coverage. As the most widely available health care solution for retirees, traditional Medicare currently insures more than 45 million Americans. Clearly, this is a core product among older adults, CUNA Mutual said. Traditional Medicare can leave a person with large out-of-pocket expenses. To handle these additional expenses and provide other choices for coverage, private health-care companies also offer Medicare Advantage, Medicare Supplemental or Gap and Part D prescription drug coverage, CUNA Mutual said. “By providing additional Medicare insurance products to our credit union customers, CUNA Mutual is getting in on the ground floor of offering Medicare options to the next generation of retirees, the baby boomers,” Napoli said. “We know millions of Americans place a tremendous amount of trust with their credit unions, and relationships such as this new Humana--CUNA Mutual relationship are vital to Humana’s continued success as one of the nation’s leading Medicare Part D health-benefit plan sponsors,” said Lance Hoeltke, vice president of strategic alliances with Humana. Humana Inc., headquartered in Louisville, Ky., is a publicly traded health and supplemental benefits companies, with about 10.3 million medical members.