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CU System Briefs (08/19/2013)

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  • ELGIN, Ill. (8/19/13)--Kane County Teachers CU in Elgin, Ill., named Mike Lee as its new president/CEO. The appointment concludes a 16-month search for a new leader by the $175 million asset credit union. Lee assumed his role Thursday, replacing Craig Bradley, who retired after 35 years as president/CEO of the credit union (shawmedia.com Aug. 16) ...
  • SALEM, Ore. (8/19/13)--Oregon Employees FCU, with $98 million in assets, Salem, Ore., has rebranded itself as Heritage Grove FCU. The word "heritage" was selected to connect the credit union with the early pioneers who settled in the Mid-Valley, Ore., area, the heritage of the city of Salem as state capital, and the legacy of state employees, Heritage Grove FCU President/CEO Jim Mau told the Northwest Credit Union Association (Anthem Recap Aug. 13). The credit union's new positioning line is, "Stand Tall," reflecting deep community roots and its ability to "rise above all obstacles" ...

New Hampshire League Raises $160K For Make-A-Wish

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MANCHESTER, N.H. (8/19/13)--The collective efforts of the New Hampshire Credit Union League, New Hampshire's 20 credit unions, and other funding projects in that state have achieved a noble goal: Altogether, they have raised $160,000 for Make-A-Wish New Hampshire in 2013.

NHCUL Board Chairman Gerald Dumoulin praised the tireless work of these volunteers, credit union members and sponsors in Foster's Daily Democrat (Aug. 16), a local New Hampshire news source.

More than one-third of the $160,000 total was raised from the 13th Annual Richard D. Mahoney Credit Union Charity Golf Tournament. The remaining $105,000 was through credit union and member donations, fundraising sales and auctions.

This year's haul brought the group's 17-year Make-A-Wish fundraising total to around $1.8 million.

The Daily Democrat noted Make-A-Wish New Hampshire has helped build a basketball court, fund a trip to Disneyworld, and purchase an in-home golf simulator for children with life-threatening illnesses in the past year.

Dumoulin told the Daily Democrat his group is committed to fulfilling many more wishes in the coming years.

Leagues And CUNA Meet State Legislators At National Summit

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ATLANTA (8/19/13)--
Click to view larger image Brandee Bickle of the Georgia Credit Union Affiliates tells Rep. Lee Perry of Utah about credit unions at the booth GCUA co-hosted with the Credit Union National Association during the Annual Legislative Summit of the National Conference of State Legislators last week in Atlanta.
The Credit Union National Association and several state credit union leagues advocated for credit unions at the Annual Legislative Summit of the National Conference of State Legislators (NCSL) in Atlanta, Ga., last week.
 
CUNA hosted a display booth in the exhibit hall highlighting "America's Credit Unions" and directed attendees to the website aSmarterChoice.org to find out more about credit unions.  Georgia Credit Union Affiliates co-hosted the booth at the NCSL event, providing staff support and gifts for those visiting the booth.
 
CUNA and league staff also participated in working meetings of state legislators to advance and protect credit union interests, and educated attendees about the number of credit unions and their members in each state.
 
Click to view larger image Mark Minickiello (far left) of the Northwest Credit Union Association and Brandee Bickle (center) of the Georgia Credit Union Affiliates discuss credit unions with state legislators at the Annual Legislative Summit of the National Conference of State Legislators last week in Atlanta.  The credit union booth included a state-by-state display of where 95 million credit union members are located (at right).  (Photos provided by CUNA)
League staff from Arizona, Colorado, Georgia, Kentucky New Mexico, Oregon, Tennessee, Texas, and Washington joined CUNA staff at the NCSL event.  NCSL's Committee on Communications, Financial Services and Interstate Commerce debated policy proposals while CUNA and league staff ensured that credit unions would not be harmed by any resolutions approved by the group.

The NCSL meeting followed the previous week's meeting of the American Legislative Exchange Council (ALEC) in Chicago. CUNA and leagues represented credit unions at the ALEC meeting of state legislators as well, and the Illinois Credit Union League provided sponsorship at the ALEC event. (See related News Now story, CUNA, Leagues Participate In State Legislators Meeting by using the link.)

NEW: Illinois League CU Civil Penalties Bill Signed Into Law

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NAPERVILLE, Ill. (8/19/13 UPDATED 5 p.m. CT)--A measure that addresses interpretive issues involving the Illinois Department of Financial and Professional Regulations' (IDFPR) civil penalty process as it relates to credit unions was signed into law Friday by Illinois Gov. Pat Quinn.

HB 1572, now PA 98-0400, ensures that due process, fairness and objective standards are applied consistently, said the Illinois Credit Union League, which backed the measure.
 
Passage of the bill was unanimous through both chambers of the Illinois General Assembly (IGA) on May 22, with a vote of 55 to 0 in the Senate and a vote of 112-0 in the Illinois House on April 11.

The bill amends the Illinois Credit Union Act to ensure the civil penalty assessment process is fundamentally fair and consistently applied. The intent in establishing the process was that civil penalty orders would be reserved for extraordinary circumstances in which the credit union's conduct was egregious and constituted a willful and material disregard of applicable standards.  That was the reason for the procedural due process provisions regarding prior notice and an opportunity to cure, the league said.
 
In the short time since the civil penalty process has been in place, interpretive issues have arisen regarding key operative terms.  HB 1572 addresses those issues by adding substantive due process criteria to provide objective standards of materiality and quality assurance and a cure opportunity before any assessment of a civil penalty.
 
In consultation with State Rep. Lou Lang (D-16, Skokie), who sponsored the bill in the Illinois House, the league worked with IDFPR Acting Secretary Manny Flores and Division of Financial Institutions Credit Union Supervisor Francisco Menchaca to fully address the concerns of the credit union movement, said the league. As a result, the department, which oversees the banking and credit union divisions that regulate all Illinois-chartered financial institutions, including 271 credit unions, supported the legislation.
 
"We are very pleased the Illinois General Assembly concurred with the sentiment expressed by Acting Secretary Manny Flores that the issuance of civil penalties should be handled on a consistent and fair basis by all divisions within the Department," said Stephen Olson, ICUL general counsel and chief operating officer.

CUs Hit Paydirt With Media Coverage

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MADISON, Wis. (8/19/13)--The Credit Union National Association and credit union difference  were in the limelight nationally on several fronts last week, featured in 13 news stories in prominent national media such as The Wall Street Journal, Fox Business, U.S. News & World Report, Automotive News and the Chicago Tribune.

The articles addressed a range of topics, from credit unions' tax-exempt status, regulatory burden, interchange rule deadlines and nonpublic business entities, to creating a budget, customer satisfaction, auto loans, credit building and stock market activity.

"The stock market will recover from its concerns about the Fed tapering," CUNA Chief Economist Bill Hampel told The Washington Post (Aug. 15), referring to Thursday's dip in the stock market and the anticipated winding down of the Federal Reserve's quantitative easing plan of buying back bond assets. "In the long term, the stronger the economy, the better it is for everyone, including the stock market."

CUNA Deputy General Counsel Mary Dunn was featured in a question and answer article about compliance with regulations in The Wall Street Journal (Aug. 15). (See related News Now article, CUNA's Dunn Provides Compliance Tips in WSJ Interview.)

In FoxBusiness'  (Aug. 16)  "4 Tips to Get Your Spending Under Control," Paul Gentile, CUNA's executive vice president of strategic communications and engagement, recommended that consumers, when creating a budget, calculate current income and spending levels,  and decide how much they can afford to spend frivolously while still meeting their debt obligations and putting away savings. "Consider making a list of the things that you really need as opposed to the things you really want," he advised.

He was also featured discussing in The Chicago Tribune's "Banks vs. Credit Unions: You Make the Call" (Aug. 13) how credit unions consistently beats banks in overall customer satisfaction.

CUNA President/CEO  Bill Cheney in The Hill (Aug. 14) noted the aggressive deadline the Fed faces in regulating interchange and its impact on credit unions. Its fast turnaround "will eliminate any uncertainty about the future--but will also potentially mean an impact on credit unions sooner than later. It is a serious issue for credit unions and we are exploring a variety of options to ensure credit unions' interests are protected in any changes to the debit interchange regulation," he said.

Nearly one-third of people in the U.S. belong to a credit union, with many of those memberships starting with an auto loan, said Mike Schenk, CUNA's vice president of economics and statistics, in the  Automotive News (Aug. 14)  article, "What's the Credit Union Difference? Low Rates." On average, credit unions not only offer lower interest rates on auto loans than banks, but they also beat the captives' rates, he said.

To view the articles, use the links. Credit unions were also featured in U.S. News and World Report Aug. 16, Las Vegas Review Journal Aug. 12, Phoenix Business Journal Aug. 16, Moneyrates.com Aug. 15, NerdWallet Aug. 15, The Missouri Times Aug. 14 and The Southern Aug. 13.

Raising awareness about the value of credit unions to their members and communities is part of the Unite for Good campaign of CUNA, the state leagues and credit unions. The campaign strives toward a strategic vision where Americans choose credit unions as their best financial partner.

CUNA Mutual Files Six Lawsuits Against Banks Over RMBS

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MADISON, Wis. (8/19/13)--CUNA Mutual Group has filed six lawsuits in a federal court in Madison, Wis.,  against banks over losses from residential mortgage-backed securities (RMBS) sold to it prior to the 2007 financial crisis. It is seeking rescission of the purchase of the certificates it bought.
 
The suits were filed Thursday in the U.S. District Court for the Western District of Wisconsin against Morgan Stanley ($23 million); Bank of America/Merrill Lynch ($121 million); J.P. Morgan (Bear Stearns, Wamu, JP Morgan Chase) ($116 million); Nomura Securities ($8 million); UBS ($6 million); and Goldman Sachs ($12 million).
 
"These actions are to right a wrong and are being taken in the best interests of CUNA Mutual Group, credit unions and all policyholders," said Phil Tschudy, media relations manager at CUNA Mutual group. "The defendants falsely represented investment products they sold us between 2004 and 2007 and, as a result, we are seeking a recovery of our investment," he told News Now Friday.
 
The suits, which have similar allegations tailored to each defendant, seek to rescind or make the seller buy back the RMBS certificates purchased because the companies "induced CUNA Mutual to purchase those certificates by misrepresenting the fundamental attributes of, and thus the credit risk associated with, the pools of mortgage loans collateralizing the RMBS."
 
The 93-page complaint against Morgan Stanley & Co. noted that after CUNA Mutual made its purchases, the mortgage loans in the pools "began to default at high rates consistent with their true attributes" and caused "millions of dollars in losses."
 
Under Wisconsin law, said the insurance provider, the misrepresentations of material fact justify the rescission of the purchases, regardless of whether the banks made the misrepresentations intentionally, recklessly, negligently, or even innocently, said the complaint.
 
CUNA Mutual said that Morgan Stanley induced it to buy four RMBS certificates between 2005 and 2007 "by falsely representing that the loans backing the RMBS had been issued in compliance with the relevant originators' underwriting standards" and "by misrepresenting the quantitative characteristics of the loan pools" such as loan-to-value ratios, owner-occupancy rates and credit ratings. It said its reliance on the material misrepresentation was justified because the bank "marketed itself as an expert in RMBS that gave investors accurate information, as securities laws requires it to."
 
The complaint noted that CUNA Mutual was mistaken about a basic assumption underlying the transactions: that they were issued in compliance with the originators' underwriting standards. Earlier CUNA Mutual filed a similar $72 million lawsuit against RBS Securities in the same court, seeking rescission and alleging unjust enrichment (News Now April 8).
 
The lawsuits are similar to those filed by the National Credit Union Administration against Wall Street banks that sold RMBS to corporate credit unions, including U.S. Central FCU and Western Corporate FCU, which were liquidated in 2010.

African-American CU Coalition Elects Smith Chairperson

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SHREVEPORT, La. (8/19/13)--Lynette Smith, president/CEO of the $89 million Washington Gas Light FCU in Springfield, Va., was elected board chairman of the African-American Credit Union Coalition at the organization's annual conference earlier this month.

"I look forward to serving credit unions nationwide," Smith told News Now. "My top priority is to increase our presence through marketing and social media."

Other board officers include:
  • Vice chair--Mark S. Brantley, chairman, Municipal Employees FCU, New York;
  • Treasurer--Tim Anderson, president/CEO, Government Printing Office FCU, Washington, D.C.; and
  • Secretary--Tonita Webb, chief administrative officer, Seattle (Wash.) Metropolitan CU;
Also elected to the board was Ed Presnell, vice president of administrative services, SRP FCU, North Augusta, S.C.
Other AACUC board members include:
  • Sheilah Montgomery, president/CEO, Credit Union of Atlanta (Ga.);
  • Helen Godfrey-Smith, president/CEO, Shreveport (La.) FCU;
  • Barbara Stephens, president/CEO, Houston (Texas) Metropolitan FCU; and
  • Bert J. Hash Jr., president/CEO, MECU of Baltimore.

Georgia Poll: 52% Don't Have Savings Accounts For Kids

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DULUTH, Ga. (8/19/13)--More than 52% of respondents to the Georgia Credit Union Affiliates' Midyear 2013 Consumer Survey report their children do not have savings accounts at financial institutions. 
 
This provides credit unions with an opportunity to promote children's savings accounts with their members and also attract youth at an early stage to see the benefits of credit union membership.    
 
National statistics paint a bleak picture of financial literacy among young people. Only 27% of young adults possess basic knowledge of interest rates, inflation and risk diversification, according to the National Bureau of Economic Research.
 
Also, The 2012 Consumer Financial Literacy Survey indicates that 44% of Americans continue to learn about financial literacy primarily from their parents or at home.
 
GCUA's survey shows how parents can better equip their children to manage their finances responsibly. 
 
GCUA's tips to teach kids about managing money:
  • Provide an allowance. Children learn by doing. Base the amount of the allowance on a child's age, maturity and the cost of living in one's area. As children grow, increase the allowance and let them take over buying some necessities.
  • Let them do some of the research. Some parents require their children to find out how much money they need for something they want and to submit detailed "budget" requests in writing. These can become the basis for negotiating allowances. This practice works especially well when they go off to college and the amounts under discussion go from tens and hundreds, to thousands of dollars.
  • Don't penalize children for working. Reducing allowances when children get a job punishes them for taking the initiative.
  • Encourage (or require) regular saving. Open a credit union savings account in children's names. Then encourage them to put a percentage of what they earn or receive as a gift into savings. Use this to teach them how to put money aside for big expenses.
  • Teach by example. It's still the best teacher. Believe it or not, children do pay attention to what parents do, including how they manage money. So parents should make sure to practice what they preach.

Kansas Young CU Professionals Put Philosophy To Work

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WICHITA, Kan. (8/19/13)--More than 20 credit union leaders from six Kansas credit unions and
Click to view larger image The Kansas Credit Union Association CUnext Young Professional Council held its first Day of Service in two state cities Wednesday. From left, Wichita CUnexters Chris Wolgamott, Meritrust CU; Travis Colibert, Mid American CU; and Jessica Zumalt, Medical Communality CU, help paint a house for Habitat for Humanity.
the Kansas Credit Union Association (KCUA) donned T-shirts and jeans Wednesday to take part in the first KCUA CUnext Young Professionals Council's Day of Service.
 
The Kansas Credit Union Association CUnext Young Professionals Council held its first Day of Service in two state cities Wednesday. From left, Wichita CUnexters Chris Wolgamott, Meritrust CU; Travis Colibert, Mid American CU; and Jessica Zumalt, Medical Communality CU help paint a house for Habitat for Humanity. The event was organized to illustrate that credit unions are vital part of each and every community, the KCUA said.
 
"Our CUnexters wanted to get out and do something in the community that would benefit both the young professionals' group, as well as someone in need," said Travis Colibert, branch manager at Mid American CU, Wichita, and a member of the CUnext Leadership Committee.
Click to view larger image Members of the Kansas Credit Union Association's CUnext Young Professionals Council in Topeka boxed hundreds of boxes of food for seniors at Harvesters Community Food Network. (Photos provided by Kansas Credit Union Association)
 
"We wanted to illustrate that the philosophy of 'people helping people' is important to credit unions, and that we live it both inside and outside the credit union world."
 
Credit union staff from Medical Community CU, Meritrust CU and Mid American CU participated in Wichita, painting exterior trim and doors, hanging windows and putting a roof on a Habitat for Humanity house.
 
In Topeka, the group packed 453 boxes of food for seniors in northeast Kansas through Harvesters Community Food Network. Participating credit unions included Educational CU and Quest CU, both of Topeka, and Kansas State University FCU from Manhattan.
 
Community outreach initiatives like these are another way credit unions demonstrate the value of credit unions to their community and members. Raising awareness about the value of credit unions is a key component of the Credit Union National Association's and state leagues' Unite for Good campaign toward the strategic vision where "Americans choose credit unions as their best financial partner."  For more information, use the link.

Maine League, CUs To Sponsor World Acadian Congress

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PORTLAND, Maine (8/19/13)--The Maine Credit Union League Wednesday announced its sponsorship of the 2014 World Acadian Congress.

The sponsorship includes a $75,000 financial and in-kind commitment from Maine credit unions, including a check for $12,500 presented by league president John Murphy to the congress Wednesday (Weekly Update Aug. 16).

The event was attended by Maine league representatives, the Aroostook Chapter of CUs and representatives and organizers of the World Acadian Congress, which will take place in Aroostook County, Maine; northwestern New Brunswick, Canada; and southeastern Quebec, Canada in 2014.
Murphy recognized the historical relationship between the Acadian culture and Maine's credit unions. "Many Maine credit unions can trace their roots back to this heritage and our partnership reinforces our history," Murphy said.

The 17-day congress, which will be held Aug. 8-24, 2014, is expected to attract an estimated 50,000 visitors to the U.S. and Canada. The congress is held every five years.

In December, Maine credit unions became the exclusive retail distributor of state World Acadian Congress license plates, with $1 from each plate sold going to the Maine credit unions' Campaign for Ending Hunger.

CUs In Two States Report Scams

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MADISON, Wis. (8/19/13)--Several credit unions across Pennsylvania have reported they were approached by a company charging a fee for their records with a threat they would be put on a "bad standing" list if they didn't, and an Oregon credit union is alerting members to a merchant data breach.

In Pennsylvania, several credit unions reported they received a form in the mail from "Corporate Records Services" of Harrisburg, Pa., requesting a fee of $125, along with a list of the company's annual records, annual meeting minutes and a list of shareholders. If they don't respond, the records company threatens to put them on a "bad standing" list, said the Pennsylvania Credit Union Association (Life is a Highway Aug. 16).

This is a national scam, according to the Department of State and the company is not connected with state. The U.S. Postal Service is investigating.

Also in Pennsylvania, New Castle-based GNC Community FCU warned that fraudulent checks that contain the credit union's name and routing information are being circulated. Several checks were presented to the Saigon National Bank with the information, said PCUA. The checks for $79.99 are payable to Health and Wellness Services of Beverly Hills, Calif., and the memo accompanying the checks includes an inactive toll-free number.

In Beaverton, Ore., Rivermark Community CU, with $547.3 million in assets, said it is taking preventative measures and reissuing debit and credit cards of nearly 1,000 members after receiving a notice from Visa about a possible data breach at an undisclosed merchant. Cardholders at other financial institutions are also being warned their accounts may have been compromised by the breach (The Oregonian Aug. 14).

Visa sent an alert Aug. 7 indicating that the exposure occurred between June 14 and July 20, but it did not disclose where the breach may have occurred because the breach is under investigation, said the newspaper.  Last year, the card company changed how it alerts financial institutions to possible breaches.  Now it sends alerts earlier in the investigation but doesn't identify the specific location or circumstances until the investigation is completed.

New Mexico CU Helps Members Of Modest Means

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ALBUQUERQUE, N.M. (8/19/13)--U.S. New Mexico FCU in Albuquerque has 10 programs to help members of modest means (MOMS) or who have damaged credit ratings gain footholds in obtaining credit under good terms.

About a year ago, the $725 million asset credit union received a call from a former member who had moved to Alaska and bought a car. Because his credit rating wasn't stellar, he was forced to pay a 23.9% interest rate on the loan through the corporate credit arm of his vehicle's manufacturer (Albuquerque Business First Aug. 16).

In response to his plight, the credit union offered the man a car loan at roughly half the interest rate (12.9%) he was paying, through one of its MOMS programs, USNMFCU Marketing Manager Phil Forbert told the publication.

In the past three to four years, the credit union has assigned 30% to 40% of its loans to members with low credit scores--a practice that is part of the objectives and goals of the company, he added.

The Credit Union National Association awarded USNMFCU a national award for it MOMS work in November 2012. It was the one credit union in the nation to receive the Credit Union Excellence in Lending Low/Modest Means Lending Award, Forbert told the publication.

Some mainstays of the credit union's efforts include a skip-a-payment program started about four years ago and a Tiers 3-5 lending program. That program provides credit to members who lack credit histories, but who have strong employment records and no major derogatory payments and who have good payment histories, Forbert added.