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CU Manager, Charged In Theft, Dies Of Natural Causes

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BROOKSVILLE, Fla. (9/12/13)--A former branch manager of Tampa, Fla.-based Suncoast Schools FCU, who was to plead guilty next week for stealing nearly $230,000 from the credit union's Brooksville branch, apparently died in her sleep Monday.
Jennifer Hoefler, 41, died at her Floral City home from what appeared to be natural causes.  Her husband checked on her at about 11 a.m. and discovered she wasn't breathing. She had been struggling with medical problems, and her problems began when she became addicted to pain killers, her attorney told the Tampa Bay Times (Sept. 11).
Hoefler signed a plea agreement and was set to formally plead guilty to one count of bank fraud on Sept. 19 in a U.S. District Court in Tampa. She faced up to 30 years in prison but likely would have not received the maximum time because she had no prior criminal record.  As part of the agreement, she was to pay nearly $229,755 in restitution.
The thefts occurred from January 2011 until her arrest on March 19 and involved unauthorized cash withdrawals and forged cashier's checks. She had been a model employee for nearly two decades, the credit union told the newspaper. The credit union reimbursed members and liability insurance will cover some of the losses.

CU System Briefs (09/12/2013)

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  • EASTPORT, N.Y. (9/12/13)--Willie Petteway of Brooklyn, N.Y., was charged with attempting to scam a Long Island credit union out of $60,000 by opening lines of credit with fake identities. Police say Petteway allegedly withdrew $20,000 on Aug. 27 from Suffolk FCU's West Babylon branch and then tried to do the same thing on Sept. 5 at the credit union's Medford branch (Long Island Business News' and Newsday Sept. 11). He was charged with grand larceny, possession of a forged instrument, attempted identity theft and more. He is also wanted by the New Jersey State Police Gaming Bureau in connection with a $60,000 theft ...
  • ST. LOUIS, Mo. (9/12/13)--The Missouri Credit Union Association has hired Maria Langston as vice president of events and Halley Hayden as vice president of communications to round out its member relations department, which supports the marketing and communication needs of its member credit unions. Langston will also act as the executive director of the Missouri Credit Union Charitable Foundation. She previously worked for 12 years at Children's Miracle Network Hospitals of Greater St. Louis. In her last position as executive director, she focused on fundraising events and logistics for events such as Miracle Treat Day and the hospitals' radiothons. In her new position she will coordinate and execute MCUA conferences such as the annual MCUA Convention and Exposition.  Hayden returned to MCUA after working for Schupp Co. as an account executive, where she worked on brands such as Miller Lite, Coors Light and Missouri Baptist University. Prior to her Schupp experience, Hayden held various positions at MCUA and has more than five years' experience working with Missouri credit unions ...

Rep. Perlmutter States Support Of CUs And Tax Status

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DENVER (9/12/13)--After working closely the past month with the congressman, the Mountain West Credit Union Association announced Wednesday that U.S. Rep. Ed Perlmutter (D-Colo.) has issued a public statement of support for credit unions and their tax status.
"Congressman Perlmutter has always had a vision for empowering credit unions with the ability to serve our members and communities," said MWCUA President/CEO Scott Earl. "He clearly understands the difference in the way financial institutions are structured, and how credit unions are an important part of the economic structure of their local communities. We are honored to have a strong financial champion for consumers in our congressional delegation."
A long-time supporter of credit unions and a strong advocate of establishing early relationships with lawmakers, Perlmutter developed his relationship with credit unions while working as an attorney before becoming a public official. In that role, he represented credit unions, which helped him understand issues unique to credit unions.  He said it is important to "plant a seed" with lawmakers because they have the power to rewrite laws and "you don't know when that seed is going to germinate," he told CUNA's Governmental Affairs Conference in 2012 (News Now March 21, 2012).
"Colorado credit unions and Mountain West Credit Union Association have enjoyed a long and valuable relationship with Rep. Perlmutter, and we appreciate his ongoing willingness to talk to us about key issues like the credit union tax status," said Christopher Kemm, MWCUA vice president of political affairs. "Ed has been an important ally on Capitol Hill. We look forward to continuing our work with the congressman and his staff."
Perlmutter gave his support to credit unions' tax status one day after the Credit Union National Association and state leagues conducted their second social media campaign, Don't Tax My CU Tuesday II, to deliver the "Don't Tax" message to members of Congress.
Don't Tax My CU Tuesday II was the second day-long round of social media activities by members, credit unions, leagues, and others in support of keeping credit unions' federally mandated tax-exemption on income tax.  (See related story, CUs' 'Don't Tax Tuesday' Ups Message Total To 850,000, in today's News Now).
The latest social media event was timed to coincide with the return of lawmakers to Washington after their August recess. Many credit unions across the country took advantage of the recess to meet with lawmakers in their districts and urge them to support credit unions' tax status.
Also, an opinion-editorial in Sunday's Miami Herald written by George Joseph, president/CEO of Dade County FCU in Doral, Fla.. noted that "this week, credit union supporters will make their case and tell lawmakers directly that they do not want their credit unions taxed. Citizens must reach out to their representatives and call on members in both houses of Congress to join the fight against repealing the tax exemption status of credit unions."

The editorial also noted that credit unions from throughout the country will be "Hiking the Hill" this week on behalf of the tax status.  For the full article, use the link.

Filene Study: Use Microloans To Boost Biz Lending

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MADISON, Wis. (9/12/13)--Many credit unions want to enter or expand business lending, and one opportunity to do so is through offering microloans, according to a new Filene Research Institute study.

"Microloan Feasibility Study: Can Small Business Lending Become Big Business For Credit Unions?" by Dave Grace, managing partner, Dave Grace & Associates, indicates that market conditions, borrower demand and lending characteristics suggest that microloans and credit  unions may be a good match.

The implication for credit unions is that microloans are exempt from credit unions' regulatory cap on business loans, and credit unions can develop win-win relationships with microborrowers.

"Microlending can be profitable, but like most new business lines it will take adjustments and understanding of the market to succeed," Grace said.

Microloans are small-business loans for up to $50,000. Micro loans are generally used for start-up cash but are sometimes given to newly launched small businesses for working capital.

To prepare for microlending, credit unions should partner with small-business development centers, other microlenders, the Small Business Administration or business chambers to drive loan demand.

The report said credit unions also should consider:
  • Building loan-loss reserve funds;
  • Forging partnerships with providers of business development and technical services to better ensure borrowers' success;
  • Developing special underwriting criteria and training lenders;
  • Implementing proactive loan referral efforts; and
  • Offering other businesses services--checking and credit card accounts, tax preparation--to generate new revenue streams.
Lessons from international microlending can help credit unions mitigate the higher risks of microloans, compared with traditional loan products.

Lessons learned include: 
  • Price high enough to compensate for risk.
  • Start borrowers on short loan cycles.
  • Begin with smaller loan amounts.
  • Collect on loans as soon as they go bad.
  • Have payment schedules that reflect cash-flow cycles.
For more information, use the link.

Economic Forum Speaker Urges CUs To Assess Impact Of QE Tapering

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PLANO, Texas (9/12/13)--Credit unions need to assess the impact of Federal Reserve policymakers preparing to taper their quantitative easing (QE) policy as the U.S. economy improves, according to an economist who will speak at an upcoming Catalyst Corporate FCU forum.
Ed Yardeni, an economist and president of Yardeni Research, will speak at Plano, Texas-based Catalyst Corporate FCU's 36th annual Economic Forum, Oct. 22-23 in Frisco, Texas.  
"Financial institutions need to assess not only the outlook for the federal funds rate, but also how the bond and mortgage markets will respond to the Fed's eventual tapering of QE and its ongoing forward guidance," said Yardeni. "Assessing these developments is bound to be especially tricky given the leadership transition at the Fed and the new composition of the Federal Open Market Committee."
Yardeni is referring to the completion of Ben Bernanke's term as chairman of the Federal Reserve and the rotation of new members onto the Federal Open Market Committee, the Fed's monetary policymaking group, in early 2014.
What does this easing mean for consumer credit?  said Yardeni. If the Fed does phase out QE by the middle of next year, as Bernanke has suggested, it will be because the U.S. economy is continuing to improve. More specifically, the unemployment rate would most likely be down to 7% in this scenario, he added.
"The good news for credit unions is that the quality of their consumer loan portfolios would improve significantly as delinquencies continue to decline," said Yardeni. "The not-so-good news is that competition will heat up among financial institutions to lend to consumers."
Yardeni has been following and forecasting the Fed's moves for investors since working for the Federal Reserve Bank of New York in the late 1970s, under Paul Volcker.

MCUA Monitoring State Lawmakers Veto Session

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ST. LOUIS (9/12/13)--The Missouri Credit Union Association was on hand  to monitor any activity when state legislators reconvened Wednesday in Jefferson City for the 2013 veto session.
"This veto session is a great opportunity for us to meet with lawmakers, to further enhance our relationships and discuss issues important to our credit unions across the state," said David Kent, MCUA director of state legislative affairs (Missouri Difference Sept. 11).  
Gov. Jay Nixon vetoed 29 bills passed by the Missouri General Assembly, and all 29 bills are expected to come up for a veto override vote. A two-thirds majority is required in both the Missouri House of Representatives and Missouri Senate to override the governor's veto.
No bill affecting credit unions is scheduled for debate during the veto session.
Under the Missouri constitution, veto sessions may last up to 10 calendar days. However, this veto session is only expected to last only two days, and ends today.

Duke FCU Teams With Grad School On Short-term Loans

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DURHAM, N.C. (9/12/13)--Duke University FCU, Durham, N.C., has partnered with the Duke University Graduate School to assist graduate students with short-term loans.
These loans help students avoid seeking loans from alternative financial providers such as payday lenders. About 8% of credit unions offer payday loan alternatives, said Credit Union National Association Director of Data and Statistics Marc Shafroth. In many instances, credit unions also reach out to members that take out these loans to offer financial counseling and encourage them to take on more stable sources of financial services.
Duke University FCU, with $111.2 million in assets, offers two loans programs to graduate students: A program for housing or computer loans, and an emergency loan program.
Graduate students are paid monthly stipends. The first is issued in September after Duke has confirmed that students are on campus and ready to start classes. This can be an inconvenience for incoming students who want to put down payments on a house or apartment but need the stipend money.
The Graduate Student Assistance Program (GSAP) offers students loans of up to $2,500 for up to one year. The current interest rate on the loan is 8.75%. Students can use the money to settle into a new home or purchase a new computer.
To qualify for a GSAP loan, graduate students who receive a stipend from Duke must be members of the credit union, with a minimum deposit of $25 in a savings account.  
Another loan program, the Helen & Gordon McKinney Emergency Loan, was created by the graduate school with funds from the Helen McKinney trust. The emergency loan was introduced and advertised at orientation during financial seminars.
So far, all five applications for the emergency loan have been approved.

CUNA Mutual Ranks 19th In InfoWeek Tech Innovators List

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MADISON, Wis. (9/12/13)--CUNA Mutual Group has been ranked No. 19 in this year's InformationWeek 500--a list of the top technology innovators in the U.S. The company was honored for its Retirement Radar mobile annuity planning application.
It is the 11th year CUNA Mutual Group has been named to the InformationWeek 500 and the second time it has ranked in the Top 20. It was the highest-ranked insurance company on the 2013 list, which was announced Monday. Use the link to access the full list.
"As a company, we are very focused on developing mobile products and services that not only deliver the best customer experience for credit union members, but also strengthen market share for credit unions," said Rick Roy, CUNA Mutual Group senior vice president and chief information officer.
"Applications like Retirement Radar help engage members in the complex process of retirement planning," Roy added. "Radar builds upon the credit union movement's principle of helping people reach their financial future, and delivers a new advantage for credit union financial advisory programs in the mobile arena."
Retirement Radar is a tablet/mobile-optimized Web application using gamification principles to create an improved engagement between customers and their financial adviser. The gamified approach illustrates a customer's retirement "radar" through life element icons, such as age and gender, asset size, risk tolerance and legacy plans to illustrate the best retirement revenue plan.
Launched in November, Retirement Radar is a key component of CUNA Mutual Group's strategy to grow lifetime annuity sales. The number of financial advisers regularly selling its lifetime annuity product line increased to 100 from 30 in one year, and the company will expand to 750 by 2016. Radar's design has quickly generated market "buzz," with potential new distribution partners and sales channels within the insurance and financial services industries.

A+FCU Simplifies Giving For Major Life Events

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AUSTIN, Texas (9/12/13)--To simplify gift giving for life's major events, A+FCU, based in Austin, Texas, has introduced three new registry accounts online:  myGrad, myWedding and myBaby.
Click to view larger image Click for larger view
The registries provide a convenient, secure way for friends and family to give monetary gifts, said the more than $1 billion asset credit union, which also provides members with focused, financial education worksheets and resources for each life event.
Gift registries have evolved since 1924, when Marshall Field's Chicago Department Store introduced its bridal registry. Today it is common for couples to sign up for multi-purpose registries to select items from multiple retailers or for honeymoon registries.
Several credit unions have offered wedding gift registries in the past.  In 2006, the Filene Research Institute examined how wedding gift registries could solidify the relationship between couples and their credit union, and reported on credit unions with wedding and newlywed gift registry programs (News Now April 21, 2006).  
In 2006, Mountain America FCU, West Jordan, Utah, began its program, which in two years had more than $400,000 in deposits and $700,000 in loans, and the Texas (now Cornerstone) Credit Union League touted gift-giving programs as a way to attract younger members to credit unions (News Now July 2, 2008).
In 2009, Water and Power Community CU, Los Angeles, began offering wedding registry savings accounts tied to financial management classes (News Now May 27, 2009).
A+FCU's registries go a step further, giving registrants the opportunity to receive monetary gifts to use as needed, whether helping furnish a nursery, footing the bill for a honeymoon or saving for college expenses.  The registries accept both debit and credit cards.
"These unique products allow us to better serve our members and ensure that we are providing them with relevant financial solutions throughout their lives," said A+FCU CEO Kerry A.S. Parker.

World Council, Irish League Meet With Basel Officials On Liquidity Rules

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BASEL, Switzerland (9/12/13)--Representatives from the World Council of Credit Unions and the Irish League of Credit Unions (ILCU) met Monday with representatives from the Basel Committee on Banking Supervision Secretariat to advocate for more favorable treatment under the Basel III Liquidity rules for credit unions' deposits in banks.

Click to view larger image World Council of Credit Unions' and Irish League of Credit Unions' (ILCU) representatives visiting the Basel Committee on Banking Supervision Secretariat included, from left, Ed Farell, ILCU head of finance; Kieron Brennan, ILCU CEO; Martin Sisk, ILCU president; and Michael Edwards, World Council vice president and chief counsel. (Photo provided by the World Council of Credit Unions)
Although credit unions are not subject to the liquidity rules, the rules will likely affect credit unions worldwide because credit unions' bank counterparties must be Basel III compliant and have told Irish credit unions that their deposits are classified as a form of "wholesale funding" that requires the banks to hold extra reserves under Basel III.

World Council Vice President and Chief Counsel Michael Edwards and ILCU's CEO Kieron Brennan, President Martin Sisk and Head of Finance Ed Farrell met with Basel Committee Deputy Secretary General Karl Cordewener and Neil Esho, a senior member of the Secretariat.

In the Republic of Ireland, early adoption of the Basel III liquidity rules has resulted in Irish credit unions' deposits at banks being reclassified from "retail" or "small business" to "wholesale funding provided by other legal entity customers," even though Irish credit unions did not withdraw their deposits from banks during the global financial crisis as the wholesale funding provided by other legal entity customers" classification assumes would occur during a stress period.

Irish banks have cited the increased cost of capital related to deposits that are "wholesale funding provided by other legal entity customers" as a reason to reduce the interest that they pay on credit unions' deposits from as much as 3% a year to as low as 0.6%. This reduction in yields will likely cost Irish credit unions about $79.9 million or more a year in lost interest income, unless European Union regulators clarify and grant credit unions more favorable treatment. Credit unions in other jurisdictions may experience a similar drop in yields on their bank deposits as Basel III is phased in.  (See Related News Now story, "CUs' European Network, EU Policymakers Talk Basel; FACTA, Inclusion").

"We will continue to engage international standard setting bodies at all levels until this matter is resolved in a way that allows credit unions to carry on their financial inclusion mission," said World Council President/CEO Brian Branch.

World Council also has brought the credit union movement's concerns about the Basel III liquidity rules to the attention of the European Banking Authority (EBA), the European Commission, the European Parliament, the Consultative Group to Assist the Poor and the World Bank.

In August, the European Network of Credit Unions--which is composed of World Council's European Union members, including ILCU--filed a comment letter with the EBA urging the agency to clarify that credit unions' deposits in banks should be placed in a category other than "wholesale funding provided by other legal entity customers."