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State regulators to discuss UBIT other topics at summit

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ARLINGTON, Va. (7/10/08)--The unrelated business income tax (UBIT) and other topics and their impact on state-chartered credit unions will be a discussion focus at the 2008 National Association of State Credit Union Supervisors (NASCUS) State System Summit. The summit meets Aug. 21-23 in Seattle. Catherine Tierney, president/CEO of Appleton, Wis.-based Community First CU, will join a member of the UBIT Steering Committee to discuss her credit union's UBIT litigation against the Internal Revenue Service (IRS). The lawsuit was filed Jan. 15. Since then, another lawsuit has been filed and the steering committee expects more. In a second session, Kevin Fincher, CPA and partner at Clifton Gunderson, will provide updates on UBIT and credit union filing requirements. He will address recent IRS developments, rate arbitrage and specified payments from controlled entities, and the use of unrelated business losses to offset unrelated business income. Other topics include: charitable contributions, royalty income, debt cancellation income, methods for reasonable cost allocations and ideas to reduce UBIT liability. Fincher also will review reporting requirements under FIN 48 and the newly revised IRS Form 990, Return of Organization Exempt From Income Tax. For more information, use the resource link.

Pennsylvania treasurer commends Better Choice loans

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HARRISBURG, Pa. (7/10/08)--Pennsylvania Treasurer Robin L. Wiessmann issued a press release Tuesday commending the Pennsylvania Credit Union Association (PCUA) for winning a national award for the marketing of the Credit Union Better Choice program. The program, which provides a short-term loan alternative to payday lending, was developed through a public-private collaboration between the Pennsylvania Treasury Department and the PCUA (Life is a Highway July 9). "I applaud the staff at PCUA who work diligently to ensure that every Pennsylvania family learns how to make the better choice when seeking short-term loans,” Wiessmann said. “Even more importantly, PCUA has worked hard to promote the savings and financial literacy components of the program, which allow consumers to make an important investment in their futures.” The program won first place in the Best Community Relations Program category, and earned the PRO Best of Show. The awards were announced at a recent luncheon in Washington, D.C., during the Communications/Government Affairs Professionals Conference, sponsored by the American Association of Credit Union Leagues. Since the program’s launch in late October 2006, 72 credit unions with 193 locations have agreed to offer Credit Union Better Choice loans, with additional participants continuing to sign on, PCUA said. Among the participating credit unions, 50 made 5,706 loans totaling $2.7 million dollars in volume.

Mission SF survey City must work together on youth savings

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SAN FRANCISCO (7/10/08)--The entire city of San Francisco needs to work together to ensure that all youth who earn wages or stipends have an account at a financial institution and financial training. That’s the main recommendation of a survey conducted by Mission SF FCU. Members of the Mission SF Community Financial Center’s Youth Credit Union Program (an affiliate of the credit union), its Action Research Committee (ARC), and its training arm--Youth Trainers for Economic Power (YTEP)--presented their findings and recommendations in a special meeting with city officials and community organizations. The findings and recommendations are a culmination of a four-month study of low-income youth and immigrant parents throughout San Francisco. From October 2007 through February 2008, teens from the Center’s Youth Credit Union Program, ARC and YTEP conducted focus groups and surveys. They found half of the young people surveyed do not have accounts, even though half earn a paycheck. And many use check cashers to cash their paychecks. On the plus side, many of these teens and their parents expressed interest in financial training and college preparation. Adult attendees brainstormed ways to collaborate toward achieving the main recommendation. “I loved how adults were actually listening to youth [at the meeting],” said Diane Tello, a 17-year-old youth researcher. “People came up to us saying, ‘Great job’ or ‘do you want to present to us?’ so I know they liked it,” said 17-year-old Luisa Sicairos. The adults were influenced by what they heard. About 95% reported--after hearing the presentation--that they thought accounts for youth that earn money were more important than before, Mission SF FCU said. The same percentage expressed interest in taking steps with staff and/or a board to determine how their agency or department could do more to support youth in these two areas. Mission SF FCU sponsors the youth program. YTEP is partially funded by a grant from the Richard Myles Johnson Foundation--the foundation for California and Nevada credit unions. Other supporters include San Francisco-based Patelco CU, and the National Credit Union Foundation.

Bay Federals flagship program targets youth

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CAPITOLA, Calif. (7/10/08)--Bay Federal CU’s youth financial program has helped create a company-wide awareness that educating people about their finances empowers them to lead more secure and fulfilling lives, according to Carrie Birkhofer, Bay Federal president/CEO. Angelica Reyes developed the Capitola, Calif.-based Bay Federal’s youth program in 2004 when the credit union joined Santa Cruz Community CU in a Bridge Project Grant. The grant was sponsored by the Ford Foundation and the National Federation of Community Development Credit Unions. The grant provided seed money for Bay Federal to create a program for economically disadvantaged youth in the area. Bay Federal serves Santa Cruz, San Benito and Monterey counties. After conducting a needs assessment in the area, Reyes created more than 80 hours’ worth of PowerPoint presentations in English and Spanish with lessons tailored from a curriculum offered free by the National Endowment for Financial Education. Subjects include the importance of general education, the importance of saving, money math, balancing checkbooks, managing credit, retirement savings, needs versus wants, how kids can make money and budgeting. She has delivered the presentations in English and Spanish to more than 5,000 students and 5,000 adults. The program is free to teachers of grades five through 12, parents and community groups. “Discussion with kids about wants and needs really hits home,” Reyes said. “I want kids to understand that money won’t buy happiness, but it opens up a world of opportunities.” Reyes also began teaching adults because she saw that her young students were losing interest in good money habits if their families weren’t serving as good role models. “Money is not the problem--they work very hard and they have the money,” she said. “The problem is what they do with the money.” The emphasis on youth has paid off. At the end of Youth Week, held April 21-26, new youth account deposits at the credit union totaled $196,861. “Our employees were especially motivated because they like helping children in our community, and Youth Week gave them an opportunity to help create a brighter future for kids,” Birkhofer said. Bay Federal has more than $600 million in assets.

MCUA research Subprime loans not the real problem

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ST. LOUIS (7/10/08)--Missouri shouldn't blame subprime mortgage problems on subprime loans, but on institutions that mismatch people's income and ability to repay with the amounts borrowed, says a credit union researcher.
Nancy Pierce, right, president of Tipton Research Group, outlines the findings of a Missouri subprime mortgage lending study to, from left: Virgil Mueller, Anheuser-Busch Employees' CU; Missouri State Reps. Pat Yaeger (D-96) and Jeff Roorda (D-102), and Jill Schupp, Democratic state representative candidate for District 82. (Photo provided by the Missouri Credit Union Association)
The Missouri Credit Union Association (MCUA) commissioned a study, "The Subprime Mortgage Impact on Missouri Consumers," by Nancy Pierce, president of Kansas City-based Tipton Research Group, and Robert O. Weagley, department chairman for personal financial planning at the University of Missouri. Pierce presented the survey's findings Tuesday in St. Louis at the first of three statewide subprime mortgage impact meetings (I>CourierNet July 9). Roughly 25 credit union leaders and state lawmakers participated in meeting, where Pierce presented information focused on the subprime mortgage crisis, how it affected Missourians and suggested responses by lawmakers, credit unions and consumers to the crisis. Pierce told The Kansas City Star (July 9) that she found that the state's subprime loan problems had much to do with mismatches between buyers' income levels and the amount of money they were borrowing, not the kind of loan itself. Some lenders improperly qualified buyers based on temporary low interest rates that held down house payments. When interest rates jumped and house prices rose, they went delinquent because many subprime loans carried adjustable rate mortgages, the article said. "Credit unions need to be good advisors," said Pierce in CourierNet. "If you don't offer home mortgage loans, partner with another credit union or credit union service organization (CUSO) so you can direct your members to a reputable source." Missouri's foreclosure rate at the end of 2007 was up 91.4% from one year ago, according to Realtytrac. The mortgage delinquency rate is above the national average. "We have a responsibility to educate our members so that they have the power to say 'no' to the persuasive talk of the mortgage broker who doesn't necessarily have our member's best interest in mind when they go to the closing table," Debora Atherton, attendee and vice president of real estate lending at Anheuser-Busch Employees' CU, told CourierNet. Attendees at the session included Rep. Jeff Roorda (D-102), Rep. Pat Yaeger (D-96) and Jill Schupp, Democratic state representative candidate for District 82. Representatives from nine credit unions also attended.

CU System brief (07/09/2008)

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* FARMERS BRANCH, Texas (7/10/08)--The Texas Credit Union League is reminding state credit unions that their support is needed for the Texas Credit Union Commission, which is up for Sunset review in 2009. The commission is an independent regulator and comes up for review every 12 years. “This is standard,” Buddy Gill, the league’s chief advocacy officer, told News Now. “It’s not unusual.” He also noted that “so far, things are going smoothly” with the regulator and the standard Sunset review process. The league thanked a number of credit unions who have already written letters to the Sunset commission voicing their support for the Texas Credit Union Commission and Department (LoneStar Leaguer July 9) ...

One prison area two CUs A forced-merger vote pending

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COXSACKIE, N.Y. (7/10/08)--About 500 employees of two adjacent correctional facilities in one New York state location--Coxsackie, N.Y.--have asked a second credit union to take over their credit union. The members are dissatisfied with the services provided by their credit union and are asking another area credit union if it is willing to step in and assume control, according to a credit union executive. Chris Langley, president/CEO of Naponoch, N.Y-based Eastern New York FCU, told News Now that a group of members said the Coxsackie Correctional Employees FCU is not meeting their needs. The employees work at the adjacent Greene Correctional and Coxsackie Correctional facilities. New York allows only one credit union to be located on a defined area of state-owned land, Langley said. “They asked us to get involved,” Langley said. “They’re circulating a petition to call for a special meeting. That’s the lion’s share of the situation.” Virginia Magee, manager of Coxsackie Correctional Employees FCU, said she had “no comment” about the situation when contacted by News Now. Only 25 members’ signatures are needed to hold a special meeting of the 500-member Coxsackie Correctional Employees FCU, Langley said, adding that he believes the membership will “force the hand” of the credit union and decide to remove the credit union’s current board of directors. Members are questioning the services of the Coxsackie FCU, which is open four hours a day for five days a week, and doesn’t offer any cash services--no checking accounts, ATMs or debit cards, Langley said. “All it offers are consumer loans and savings accounts,” Langley explained. “If a member gets a loan they are given a voucher by the credit union and they have to take it to a bank where they get charged. The prison guards have to go to a local bank to cash their paychecks; they can’t do it on site. The credit union there has a profit orientation.” Eastern New York FCU has a Trade, Industry and Professional (TIP) charter that serves a nine-county area with full-service branches, Langley said. “There’s been misrepresentation [in the media] that Eastern is trying to beat up on and take over a small credit union,” Langley said. “That’s not the case. The only ones who can push for a merger vote are the members themselves. Credit unions are a democratically controlled institution. The members should be able to drive and decide this situation. “I’ve tried to talk to Coxsackie [FCU], but we’ve been stonewalled,” Langley added.

WOCCU stats Global CU movement expanding

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MADISON, Wis. (7/10/08)--Credit unions worldwide are expanding at a stable pace, with more members served in 2007 than in 2006, according to new statistics from the World Council of Credit Unions (WOCCU). Ninety-six countries reported that 49,134 credit unions served more than 177 million people worldwide in 2007, according to the just-released WOCCU 2007 Statistical Report, an annual survey.
Click to view larger image View the PDF version.
In 2006, roughly 46,377 credit unions served slightly more than 172 million members in 97 countries. Credit union assets around the globe grew by 8.2% over the previous year, totaling US$1.2 trillion in 2007. Credit unions managed more than $900 billion in savings. Africa led asset growth last year with a 37.3% increase. Capitalization levels, a measure of financial soundness, remained strong at 9.8% of total non-risk-adjusted assets in 2007--demonstrating that the international credit union movement is on solid financial footing, said WOCCU. Global membership in credit unions grew by 3.1% in 2007 compared with the previous year, with Africa again leading the growth curve with 15.1% growth. WOCCU has collected annual statistics on the international credit union movement for the past 35 years to produce its annual Statistical Report. To download a free copy of the current report, use the resource link.

Governor signs five mortgage bills in Pa.

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READING, Pa. (7/10/08)--Pennsylvania Gov. Ed Rendell Tuesday signed five bills to protect homebuyers, strengthen oversight of the mortgage industry and end key lending practices that leave
Pennsylvania Gov. Ed Rendell noted that the mortgage process "needed tougher oversight. We're going a long way toward putting that oversight in place today." (Photos provided by the Pennsylvania Credit Union Association)
homeowners vulnerable to foreclosure, said the Pennsylvania Credit Union Association (PCUA). He also urged current homeowners worried about meeting their mortgage obligations to call the state for help (Life is a Highway July 9). A representative of PCUA--Christina Mihalik, assistant vice president of governmental affairs--attended the signing ceremony in Reading. The new laws:
From left, Christina Mihalik, assistant vice president, governmental affairs at the Pennsylvania Credit Union Association, meets with officials who played key roles in the state's mortgage reform legislation, including Dave Callen, majority executive director of the House Commerce Committee; Rep. Peter Daley, chairman of the House Commerce Committee; and Lesley Crozier, legislative assistant to Sen. Patrick Browne.
* Require loan salespeople to be licensed by the state Department of Banking (H.B. 2179); * Allow the department to more quickly inform the public about enforcement activities against mortgage companies (S.B. 484); * Restrict prepayment penalties (S.B. 483); * Increase fines for misconduct by real estate appraisers (S.B. 485); and * Require mortgage companies to notify the state when they intend to foreclose (S.B. 486).
Also attending were: Secretary of Banking Steve Kaplan and Executive Assistant to the Secretary Paul Wentzel; State Rep. Peter Daley, chairman of the House Commerce Committee; Rep. David Kessler; Rep. Dante Santoni; Rep. John Siptroth; Rep. Curtis Thomas; Sen. Michael Brubaker; Sen. Christine Tartaglione; Sen. Michael O’Pake; and Brian Hudson of the Housing Finance Authority.

Federations youth group makes a difference

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DALLAS (7/10/08)--Twenty-four middle- and high-school youth representing six Community Development Credit Union (CDCU) Youth Credit Union Programs (YCUP) gathered in Dallas for a youth conference during the National Federation of Community Development Credit Unions’ 34th Annual Conference on Serving the Underserved.
Click to view larger image Youth representing six Community Development Credit Union Youth Credit Union Programs gathered in Dallas for a conference during the National Federation of Community Development Credit Unions’ 34th Annual Conference on Serving the Underserved.
“These youth are at their CDCUs on a regular basis learning the skills they need to succeed and become important stakeholders in their communities,” said Federation President/CEO Cliff Rosenthal. The conference opened with youth spending their first full day at the Jubilee Center, a revitalization project in Dallas. “We helped them prepare classrooms for the summer, and then we got to participate in activities with some of the same kids we were helping,” said Andi Ball-Meza, one of four attendees from Women’s Southwest FCU, Dallas. One highlight of the conference was a presentation by Elsa Ramos and Stephanie Lopez, two youth from Mission SF FCU, San Francisco, who work as youth trainers for economic power. They taught youth how to run peer training programs. “Ramos and Lopez teach like seasoned trainers,” said Pamela Owens, Federation director of education and training. “Their program is an incredible resource.” Other workshops included Building Cooperative Leadership 101, where youth learned about cooperatives from Tom Decker, national program director, Credit Union Center for Social Impact Management. Virginia Trevizo-Wells, a trainer from the PLAN fund, a peer lending institution in Dallas, taught a workshop on entrepreneurship and micro lending.
Click to view larger image During the conference, youth participated in a Mad City Money simulation game, donated by the Credit Union National Association. At right is Shreveport FCU's Tarsha Williams, stationed at "Really Realty." (Photos provided by the National Federation of Community Development Credit Unions)
Youth also participated in Mad City Money, a simulation game donated by the Credit Union National Association. One participant said afterward that she learned to “make a budget, go to the credit union first and be sure to put money away for emergencies.” “It’s great to see all these youth who are excited about credit unions and financial literacy,” said Dan Apfel, fderation youth program coordinator. “We love having them at the conference every year and hope to attract even more credit unions to participate next year.” The fderation has hosted yearly CDCU Youth Conferences during its annual conferences for more than 10 years. CDCUs in the federation’s Youth Credit Union Network offer youth savings accounts, financial literacy and leadership development programs. The 15 CDCU programs have $1.5 million in assets and more than 3,000 youth members nationwide.