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NEW: Governor Signs Oregon CU Act Improvement

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SALEM, Ore. (FILED 1:55 p.m. CT  6/28/13)--Oregon Gov. John Kitzhaber signed legislation this week that updates the Oregon Credit Union Act, as he acted quickly to acknowledge strong legislative support for the bill, said the Northwest Credit Union Association.

NWCUA backed the bill because of recommendations by the Oregon State Model Act Subcommittee, chaired by Scott Burgess, president/CEO of Rivermark Community CU in Beaverton (NWCUA's The Anthem June 27).

"The sub-committee put a tremendous amount of work and analysis into the legislation signed by the governor, and we're very pleased with the outcome," Burgess told NWCUA. "As the chairman of the sub-committee, I know I speak for the group in saying that we're all particularly proud that, in Oregon, we routinely open up the Credit Union Act to seek out legislative changes that will help credit unions better serve their members in these challenging times."

The updated Oregon Credit Union Act will:

  • Broaden Oregon's parity authority by allowing Oregon credit unions to invoke parity with out-of-state credit unions and streamline the process for invoking parity with federally chartered credit unions.
  • Clarify the role of the supervisory committee in governance-related matters.
  • Extend additional liability protection to credit union directors and officers.
  • Remove wording in Oregon law that requires a board to "perform other duties as the members of the credit union from time to time direct and perform or authorize any action not inconsistent with this chapter and not specifically reserved by the bylaws for the members."
  • Remove language in Oregon law that permits a credit union to employ a chief operating officer/president and a security officer.
  • Make the declaring of dividends a power that can be delegated under Oregon law; and increase the loans-to-one-borrower limit to the larger of $100,000 or 15% of a credit union's equity.
The updates will take effect Jan. 1.

NEW: CUs Come Out On Top In GoBankingRates.com Savings Rate Study

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LOS ANGELES (6/28/13, UPDATED  2:30 p.m. CT)--A just-released savings rate study comparing credit unions and community banks rates has found that "it is credit unions that do, in fact, come out on top," according to GoBankingRates.com (June 28).

Credit unions offer an average 0.20% annual percentage yield (APY) savings account rate, while local banks provide a slightly lower 0.18% APY, said GoBankingRates.com. Its data averaged rates from 5,000 community banks and credit unions. 

In the top 10 credit unions with the highest rates, two credit unions--Pioneer Muslim FCU, Sugar Land, Texas,  and Rutherford Postal District Employees FCU, Lakewood, N.J.--tied for the highest savings rate of 2.52%.  In the banks' Top 10 list, the two top banks--Atlas Bank and Bank of Bolivar--offered 1.01% rates.

All of the top 10 credit unions had rates of 1.25% and above, as of May 31.  The banks' top 10 list rates ranged from 0.85% to 1.01%.

A similar study in April found that the average savings rate at credit unions was 0.21% APY, while banks' rates averaged 0.19% APY.  Big banks in that study averaged 0.04% (News Now April 25).

The study based the rates on online published rate sheets belonging to the financial institutions for a $10,000 opening deposit. For more information, use the link.

ACUC Kicks Off Sunday In The Big Apple

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NEW YORK (6/28/13)--More than 1,200 people from throughout the U.S. credit union industry will gather in New York City Sunday for the start of the 2013 America's Credit Union Conference (ACUC), June 30-July 3, said the Credit Union National Association.

ACUC will have more than 100 booths from 90 companies at the convention hall at the New York Hilton Midtown.

The convention will feature keynote speakers, thought leadership sessions and 18 breakout sessions in which CUNA is partnering with CUNA Mutual Group.

There also will be some high-profile live events, including a visit Wednesday by CUNA and credit unions hoping to spread awareness on the Today Show.

ACUC keynote speakers include:

  • Sunday: Lt. Col. Robert Darling, retired White House military officer and author of a book about developments in the White House during the terrorist attacks on Sept. 11, 2001. 24 Hours Inside the President's Bunker, 9/11/01: The White House, chronicles a minute-by-minute account of that day's events. Darling now is president of the Military Officers Association of America Heritage Chapter in Quantico, Va., and vice president for business development for Zenetex, an information technology service-management company in Herndon, Va.
  • Monday: Malcolm Gladwell, staff writer for The New Yorker magazine and author of four New York Times best-selling books. They include The Tipping Point: How Little Things Make a Big Difference, Blink: The Power of Thinking Without Thinking, Outliers: The Story of Success, and What the Dog Saw: And Other Adventures. He often writes about applications of research and new ideas in the social sciences, making frequent use of academic work in sociology, psychology and social psychology.
  • Tuesday: Lyn Heward, director of creation for Cirque du Soleil, whose presentation and book, "The Spark: Igniting the Creative Fire that Lives Within Us All," draw on her experience as former president and chief operating officer of Cirque's creative content division, where she helped create Cirque masterworks. She will help credit unions attending explore the nature and origins of creativity.
  • Wednesday: Adam Grant, an award-winning professor, researcher and author. Grant is the youngest-tenured and highest-rated professor at Wharton, where he teaches organizational psychology--the study of workplace dynamics. He was named one of the world's 40-best business professors under age 40 and has received the Excellence in Teaching Award for every class he has taught. Grant has presented solutions for leaders of organizations including Google, the National Football League, IBM, Merck, the World Economic Forum, Goldman Sachs, Estee Lauder and the U.S. Army, Navy and Air Force. He wrote a new book, Give and Take: A Revolutionary Approach to Success, and was recently profiled in a New York Times Magazine cover story, "Is Giving the Secret to Getting Ahead?"
For more information, use the link.

CU System Briefs (06/28/2013)

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  • MIDDLETOWN, Pa. (6/28/13)--Mid-Atlantic Corporate FCU's 2013 Charity Golf Tournament June 20 hit a hole in one for Children's Miracle Network Hospitals. Member credit unions and various business partners participating in the annual charity event at Mid-Atlantic's annual meeting raised $11,500 for the hospitals. That amount, combined with past proceeds, brings total financial support to more than $67,000 since the event began in 2008.Children's Miracle Network is affiliated with 170 children's hospitals across the country, and is a favorite cause among credit unions. The proceeds from the tournament will help support the Janet Weis Children's Hospital at Greisinger Medical Center in Danville, Pa.; The Children's Hospital of Philadelphia; Saint Vincent Health Center in Erie; Children's Hospital of Pittsburgh; and Penn State Hershey Children's Hospital ...
  • BISMARCK, N.D. (6/28/13)--The Credit Union Association of the Dakotas has awarded $5,000 in scholarships to 10 credit union members in North and South Dakota. The graduating high school seniors each received $500 each toward furthering their education. Recipients included members of Dakotaland FCU, HB Telco FCU, Palace City FCU, Service First FCU, Western Cooperative CU, Prairie FCU, Hometown CU, United Savings CU, and Dakota West CU.  Recipients were selected from applicants who were members of a CUAD-affiliated credit union for at least one year and who planned to attend a postsecondary university or technical/vocational school. They wrote essays on one of two topics:  "How, through your involvement in the community/school activities, events, or volunteer efforts, have you shown the cooperative spirit?" and "What can your credit union do to continue providing you with financial solutions for a lifetime?" ...
  • PHOENIX (6/28/13)--Arizona State CU will be celebrating 237 years of U.S. independence July 1-7 by displaying the most common Independence Day symbol--the American flag--in all 27 congressionally approved versions at its Phoenix headquarters. During that week, the $1.4 billion asset credit union will offer a special 36-month auto loan, with annual percentage rate as low as 2.37%  ...
  • GRAND RAPIDS, Mich. (6/28/13)--Two credit union CEOs have been elected to serve three-year terms on the CU*Answers board of directors. Incumbent Jeff Jorgensen, CEO of Sioux Empire FCU in Sioux Falls, S.D., and Linda Bodie, CEO of Element FCU in Charleston, W. Va., were elected at the Grand Rapids, Mich.-based credit union service organization's annual stockholders' meeting last week. Four candidates ran for two open board seats ...

CUs To Storm Today Show With Money Rules

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MADISON, Wis. (6/28/13)--A group of Credit Union National Association representatives will "storm" the set of the Today show Wednesday in conjunction with CUNA's America's Credit Union Conference, spreading credit unions' "Unite for Good" message to a nationwide television audience.

"Unite for Good is about action," said Paul Gentile, CUNA executive vice president of strategic communications and engagement. "It's about coming together to help build a better future for credit unions. While in New York we will give credit unions the ability to take action and show their cooperative spirit."

Gentile noted that for those not coming to ACUC, they can still participate by sharing how they are helping Unite for Good on the Uniteforgood.org web site. The site has recently added a new feature that will allow credit unions everywhere to share their stories.

CUNA is inviting conference attendees to meet in the lobby of the Hilton New York at 6:15 a.m. on Wednesday, to join the audience outside the Today show studios. At the studios, the group will hand out hundreds of copies of the book "Money Rules: The Simple Path to Lifelong Security."

ACUC kicks off Sunday at the Hilton New York in New York City. It ends Wednesday.

The first 50 attendees who show up for the Today event will be provided with a Starbucks gift certificate and free coffee, compliments of CUNA.

Wednesday is T-shirt Day at the ACUC. All registered attendees, including those attending the Today show event, will be provided with Unite for Good T-shirts. CUNA will take a group photo of attendees in their T-shirts during a conference general session on Wednesday.

"Money Rules" author Jean Chatzky will appear on the Today show Wednesday. Chatzky spoke at CUNA's Governmental Affairs Conference in Washington, D.C., in February.

"Money Rules" contains a set of actionable rules that, if followed, will allow readers to enjoy a lifetime of financial security and eliminate their stress about money.

Within the past six months, the National Credit Union Foundation distributed more than 80,000 copies of the book to credit union members and employees through a special initiative by the National Credit Union Foundation.

Some ICU Day Materials Are Already Available

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MADISON, Wis. (6/28/13)--Drive-up envelopes and statement stuffers celebrating the "Unite for Good" theme of 2013 International Credit Union Day (ICU Day), Oct. 17, are available.

More materials, including promotional clothing and this year's poster will be available next week, the Credit Union National Association said.

ICU Day has been celebrated on the third Thursday of October since 1948. The day is recognized to reflect upon the credit union movement's history and to promote its achievements. It is a day to honor those who have dedicated their lives to the movement, recognize the hard work of those working in the credit union industry and show members our appreciation.

Creating awareness about credit unions is part of CUNA's Unite for Good campaign to rally credit unions to support the system's strategic vision in which "Americans choose credit unions as their best financial partner." For more information about United for Good, use the link.

For more information about materials, use the link.

Michigan League Responds On ICBA Tax 'War Of Words'

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LANSING, Mich. (6/28/13)--The Michigan Credit Union League says claims by a letter from the Independent Community Bankers Association to Congress calling for a hearing on credit unions' tax status are "misleading, erroneous, and intended to simply improve the profits of banks."

League CEO David Adams sent a letter to U.S. Reps. Dave Camp (D-Mich.) and Sander Levin (D-Mich.)--the chair and ranking member of the House Committee on Ways and Means, respectively--and Sen. Debbie Stabenow (D-Mich.), a member of the Senate Committee on Finance, as well as every other member of the Michigan congressional delegation.

Adams noted that if banks convinced Congress to remove credit unions' tax status, "it would be extremely likely that most credit unions would cease to exist or would convert to bank charters, at a huge cost to consumers and small businesses." The letter was in response to a letter ICBA sent to the leadership of the House Ways and Means Committee.

Credit unions' not-for-profit cooperative structure has not changed, Adams wrote. The only way they can build capital is through retained earnings, he said, adding that federal credit unions and state-chartered credit unions in Michigan have volunteer boards of directors, every member has a single and equal vote, and credit unions are driven by member service, not shareholder profits. He called on Congress to dismiss the banks' request.

On Wednesday, in letters to President Barack Obama and leaders of the Senate Finance Committee and House Ways and Means Committee, Credit Union National Association President/CEO Bill Cheney  deemed as "offensive"  the tactics of  banks and thrifts going to top policymakers to complain about credit unions' tax status, especially since "time and time again [banks and thrifts]  have needed taxpayer-funded bailouts."

CUNA's letters were an immediate response to letters ICBA send the congressional policymakers and to letters that the American Bankers Association sent to Obama.

Cheney noted the tax status has positive benefits to everyday Americans, with evidence overwhelmingly indicating that credit unions fulfill the purpose of their tax exemption. They offer higher returns on savings, lower rates on loans and low or no fees--resulting in more than $8 billion in direct financial benefits each year to 96 million Americans who belong to credit unions. (See related story, CUNA Refutes Banks' Tax Attacks In Hill, White House Letters.)

Both CUNA letters include a white paper with more detail about the benefits consumers receive because credit unions exist in the marketplace. For more on the CUNA letters, use the link.

Evolving Ohio Budget Has Sales Tax, Preserves CU Tax Status

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COLUMBUS, Ohio (6/28/13)--Ohio credit unions would pay 0.25% more for certain goods and services under the latest version of the state's proposed compromise tax plan, but they are in a better position than they were under Gov. John Kasich's original tax proposal, the Ohio Credit Union League said.

"The league has been influential in working to ensure credit union's best interests are protected" in the state budget negotiations, Patrick Harris, the league's director of media and public relations, told News Now Thursday. "The version in conference committee, the latest version, would have an impact on credit unions, but very minimal compared to what the original version would have done."

The commercial activity tax would be changed to an incremental scale based on gross receipts under the latest plan (eLumination Newsletter June 26). The sales tax would increase to 5.75% from 5.5% for credit unions on goods and services subject to the tax. However, to the benefit of credit unions, the latest proposal does not expand the sales tax base. All currently exempt services would not be taxed.

The latest plan is composed of parts of the original budget proposal and the House and Senate versions.

Under the original tax expansion proposed by Kasich, all credit unions that provide or charge fees for services would have been required to collect and remit sales taxes for some services they provide to members (News Now April 12). These included "bank service fees," debt counseling, investment services, and sale of amusement park tickets and entertainment books.  Credit unions would also have been considered "vendors" and would have been required to obtain a vendor's license, plus collect and remit sales taxes to the state for these services. These are not part of the current budget proposal.

Additional changes are possible while the conference committee continues to negotiate, said Harris. The state budget must be finalized by Sunday.

Average Student Loan Amount Up 11% In March

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ATLANTA (6/28/13)--New credit for student loans for first quarter totaled $15.6 billion, a 20% hike over the $12.9 billion borrowed a year earlier, with the average loan amount increasing 11%, said Equifax's National Consumer Credit Trends Report, which covers March 2012 to March 2013.

New student loans originated rose 3.9%--to 2.8 million from 2.7 million--while the average loan amount increased to $6,242 from $5,518.  Consumers who took out  at least one student loan in Marched borrowed 6% more--$9,123--compared with $8,636 in March 2012.

"The total number of student loans outstanding has doubled since 2009, and balances owed have nearly doubled," said Equifax Chief Economist Amy Crews Cutts. "This trend was primarily driven by large increases in college enrollments and middle-aged adults going back to school due to the scarcity of available positions," she said.

Students who borrow to fund college also are increasing the amount they owe because of deferrals of interest payments  that occur when they leave college without a job or one that doesn't pay enough, she said. "They end up in an income-based repayment plan that doesn't cover the total monthly interest owed."

Federal student loan rates will increase to 6.8% from 3.4% if Congress doesn't intervene by July 1. Those who see their rates rise should consider contacting a credit union for advice on how to limit the impact or to possibly refinance their debts, said the Wisconsin Credit Union League.

"Many credit unions offer private student loans because students deserve reasonable rates as well as an institution that will work with them to manage their short- and long-term finances," said league President Brett Thompson.

"Prudent underwriting and financial guidance to borrowers help credit unions' private student loans perform better than other student loans with a far lower default rate--around 1.6% compared to less than 6% for all private student loans and more than 12% for federal loans," the league said.

The Credit Union National Association's first annual High School  Student Borrowing Survey found that more than half of high school seniors have no idea what they will need for college costs. Roughly 83% did not know the rates, and 77% did not know the duration of their expected or existing college loans. Three-fourths of those who planned to go to college said they would need federal and private loans, family money and jobs to support their tuition. One-fourth expected to take out two or more student loans.

The total balance of student loans outstanding increased more than 16% between May 2012 and May 2013, to more than $879.1 billion, Equifax said.  Write-offs totaled $9.3 billion last month, a 60.3% increase from one year earlier.

New Zealand Bill Would Give CUs Legal Status

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WELLINGTON, N.Z. (6/28/13)--A member of New Zealand's Parliament announced he will introduce a bill aimed at providing legal status to credit unions in that country.

Credit unions operate under the Friend Society and Credit Unions Act of 1982 and are unincorporated entities without their own legal status, said Peseta Sam Lotu-liga, who represents Maungakiekie in Parliament (Scoop Independent News June 27).

The assets of a credit union must held in a trust by credit union trustees, who are also members of a credit union's board, Lotu-liga said, noting that is unusual for a modern financial institution. This adds unnecessary compliance costs, reduces responsiveness of the organization and confuses members of the credit union and public, he said.

The bill would give credit unions their own legal status and would mean they could invest more of their funds in assisting members instead of on compliance.

He noted that the issue was brought to him by the New Zealand Association of Credit Unions, which is a member association of the World Council of Credit Unions.  According to World Council statistics, New Zealand has 22 credit unions serving 195,245 members.

Pa. Foundation Grant Helps Disabled With Money Management

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HARRISBURG, Pa. (6/28/13)--The Pennsylvania Credit Union Foundation has teamed with the Pennsylvania Assistive Technology Foundation (PATF) and the Widener University School of Business Administration to develop a specialized guide to money management for people with disabilities.

The guide, Cents and Sensibility, is available in booklet and PDF format through the PATF, according to the Pennsylvania Credit Union Association's Life is a Highway (June 27).  The foundation provided a $10,000 grant to help publish the booklet and said it is the first publication of its kind in the U.S.

"This segment of the population often gets overlooked," said Joe Wambach, foundation executive director, "and this booklet will enable people with disabilities to have a better understanding of smart ways to save money without jeopardizing their government benefits."