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Investors sue CU over brokerage advice

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HARRISBURG, Pa. (9/25/08)--Five members of a Harrisburg, Pa.-based credit union have filed a lawsuit in Dauphin County Court, claiming they lost money because of financial advice from a brokerage service offered by the credit union. Belco Community CU, a $268.6 million asset credit union based in Harrisburg, was named in the suit by five retired Verizon workers. The suit claims they lost part of their retirement savings by following advice from a financial planner with CUNA Brokerage Services Inc., which provides member financial services for the credit union. The retirees have also filed a complaint at the Financial Industry Regulatory Authority. “We take any consumer complaint seriously," said Rick Ullman, senior manager, media relations, at CUNA Mutual Group. "The cases filed against the credit union involve members whose investments were affected by the 2000-2003 market downturn, as many investors were, and they are looking for someone to hold responsible for their losses," Ullman told News Now. "We believe the suits are without merit, but respect the members’ right to pursue their claims,” he said. “This is a highly regulated industry and the business practices used by CUNA Mutual and Belco are sound and appropriate,” he concluded. Lonny Maurer, Belco president/CEO, could not comment on the lawsuit specifics. He noted that a local newspaper accurately reported his comments about a bear market. "We can't predict when bear markets occur. Bear markets do have a significant impact on what has happened in the market and their specific investments," he told the Patriot-News (Sept. 24).

Ike destroyed its branches but not its spirit

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FARMERS BRANCH, Texas (9/25/08)--Janna Achord, the new CEO of Firestone Community FCU, has her job cut out for her. The credit union, located in Bridge City, Texas, was among the 188 credit unions in Southeast Texas that crossed paths with Mother Nature on Sept. 13. Hurricane Ike left two of its three branches non-operational. Six of the credit union's 20 employees have lost everything. Many other employees face costly repairs to their personal property. Achord took over the helm of the $33 million asset credit union three months ago. Though they've been a team for just a short time, Achold says she and Firestone Community's 20 employees, as well as its board of directors, have pulled together to rise above the lingering aftereffects of Ike. "Many of us have been through this before," she said. "We persevered over Hurricane Rita, and we'll do the same with Hurricane Ike. I couldn't be more proud of how our staff has handled this situation. They've put aside their own personal hardships to be there for our members." For example: An employee of the Orange County Sheriff's department was unable to retrieve any personal items from his home before the hurricane hit. His home was demolished. He lost everything. When the credit union's employees learned of his plight, they all pitched in to buy him new clothes and his prescription medication. "These employees have suffered great losses themselves, and yet they had compassion to reach into their pockets to help one of their members in need. It was an incredible act of kindness," said Texas Credit Union League President/CEO Dick Ensweiler. "The employees of Firestone Community FCU are indicative of the credit union difference. We are, at our heart, a movement that puts people above profits. In time of need, credit unions have proven time and time again our capacity for caring," Ensweiler added. Firestone Community's Mauriceville branch escaped the brunt of the hurricane and is fully operational. Its Bridge City branch was submerged in about three and a half feet of water. Estimates are it will be six months to a year before it will be able to re-open. The credit union's Orange branch--its busiest--also took in a substantial amount of salt water and is non-operational. However, the credit union is setting up a mobile branch unit at the Orange location. The Mauriceville branch is operating under normal hours. Once the Orange mobile branch is operational, the credit union will offer extended service hours there. Although the Bridge City branch will not re-open for six to 12 months, no members of its staff are in danger of losing their job, said Achord. Achord emphasized that although there is damage to brick and mortar at two branches, members' money is safe, and the credit union is operating in a secure and sound manner. The credit union is making emergency loans available to members affected by Ike. On a case-by-case basis, it is allowing members additional time to pay an existing loan. "Our members have survived the storm and are now beginning the process of rebuilding. The last thing they need to worry about is whether their money is protected," Achord said. "Our focus is making sure our members' needs are tended to."

Shared branch assists member who lost house in fire

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LOUISVILLE, Ky. (9/25/08)--A credit union member who lost his home in a fire was able to get the funds he needed from his credit union through Shared Branching. Brook Asher, the son of Norman Asher, former president of the Kentucky Credit Union League, awoke to find his Lake Tahoe, Calif., home on fire. He jumped from a second-story bedroom window and watched his home burn to the ground, said the league (By the Way Sept. 25). Brook had lost everything, including his identification, and he needed funds. Norman knew that his son’s credit union was a Shared Branching participant, so he called Autotruck FCU, Louisville, to see what could be done to help. The next day, Autotruck FCU contacted Greater Nevada CU, Carson City, Nev., which agreed to have Brook come in to access his account without identification. “Shared Branching was a lifesaver in this situation,” Norman Asher said. “Within an hour, everything was in place to help my son. A disaster occurs when you least expect it. “Being able to communicate through Shared Branching network is a valuable service for any credit union,” he added.

Jersey league announces awards

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HIGHTSTOWN, N.J. (9/25/08)--The New Jersey Credit Union League honored several credit union professionals and credit unions with awards during its 74th annual league conference. Tom O’Shea, CEO of FAA Eastern Regional FCU, Clark, was awarded CEO of the Year. Robert Weir, director, Seaport FCU, Elizabeth, was awarded the Volunteer of the Year award. Other awards recipients:
*Raritan Bay FCU, Sayreville, the Desjardins Youth Financial Education award; * IFF Employees FCU, Hazlet, the Louise Herring Philosophy in Action award for asset sizes of less than $50 million; * Jersey Shore FCU, Cranford, the Louise Herring Philosophy in Action award for asset sizes of $50 million to $250 million; * Jersey Shore FCU the Dora Maxwell Social Responsibility award for asset sizes of $50 million to $100 million; and * CU of New Jersey, Ewing, the Dora Maxwell Social Responsibility award for assets sizes $200 million to $500 million.

NJCUL CEO outlines agenda

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HIGHTSTOWN, N.J. (9/25/08)--The 74th annual New Jersey Credit Union League (NJCUL) conference was also league President/CEO Paul Gentile’s first. Gentile discussed the league’s agenda for the upcoming year. The league is focused on two legislative areas: opening up municipal deposits for credit unions and enhancing the state charter, he told 785 attendees. It also opened a satellite office in Trenton and hired a contract lobbyist to improve governmental relations. Seven credit unions joined the league this year--including some that had not been active with the league for 15 years. “Getting more credit unions involved will always be a priority for me because it makes all of us stronger,” Gentile said. The league also branded itself in 2007 through a partnership with Rutgers University to advertise during sporting events. NJCUL has sponsored major events in the state, is running radio spots weekly on one of the state’s largest radio stations, and is using online media, Gentile added. Credit unions always will have political, regulatory and business challenges, but the credit union movement works best “when we work together,” Gentile said. He noted that the corporate credit union network needs cooperative support right now. “Cooperates have not been immune to the troubles on Wall Street,” he said. “While they can only invest in highly rated securities, all institutions have been affected. But the advantage corporates have is credit unions. “If credit unions stand tall now and support corporates by keeping their money in the corporate system, corporates will be just fine and this will go down as a great example of how cooperation can help the entire system,” Gentile added.

New Jersey league passes governance bylaws

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HIGHTSTOWN, N.J. (9/25/08)--During the 74th annual New Jersey Credit Union League conference, New Jersey credit unions approved three proposed bylaw amendments changing the league’s governance structure. Last year, the league appointed a governance task force to make recommendations on an appropriate governance structure. The board approved recommendations and presented them to the membership in bylaw amendments. The governance amendment:
* Reduces the league board’s size from 15 to 9; * Implements term limits of three consecutive, three-year terms; * Implements asset tiers for board representation with three seats for credit unions $25 million in assets and under, three seats for credit unions over $25 million and three at-large positions for credit unions of any asset size; * Requires board members to be either a president/CEO or director of a credit union in good standing with the league; and * Eliminates the geographical representation of the past governance structure. Board candidates can run for any of the three tiers from anywhere in the state. Beginning in October, all nine board seats will be up for election, with the new board seated in January 2009.
A second bylaw amendment changes the governance structure of the league’s service corporations by opening up board seats to individuals outside of the league board of directors, and creates a seven-person board with a chairman, vice chairman, and five at-large directors. Two of the directors will be league board members, and the other three will be from league-affiliated credit unions. A third bylaw amendment was amended from the floor to eliminate the need for a three-days’ notice for board meetings. Credit unions said the amendment would give the board flexibility to act on time-sensitive matters. An allowance for board meetings to be held every other month was approved.

Auto loan market shifting to used cars

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LOS ANGELES (9/25/08)--A sharp drop-off in new-car leasing programs may cause consumers to select a used car instead of a new car, and postpone their auto purchase for the present or purchase a less expensive car, according to a nationwide survey of 1,000 consumers. This will have an impact on credit unions, which traditionally rely on auto loans for a good part of their business. The survey by market researcher Synovate of Chicago for Global Debt Automotive, asked consumers: “The auto leasing business has experienced a shake-out of late: What do you plan to do if leasing becomes less available to you?” (BusinessWire Sept. 23). Thirty-seven percent of respondents said the recent sharp decline in new-car leasing programs would cause them to change their behavior:
* 19% of respondents would select a used car instead; * 11% would postpone their auto purchase for the time being; and * 7% would purchase a less expensive car.
Almost 40% of respondents said they were uncertain how the shake-out in auto leasing might affect their auto purchase plans. “The survey confirms what we’ve been hearing in the marketplace: that American consumers are uncertain how they will finance their next automobile and this uncertainty is causing them to consider a variety of options, including buying a less expensive new car, a used car, or postponing a purchase until conditions are more favorable,” said Michael Sheridan, founder and president of GDNAuto. He said the results are “bad news for car manufacturers and lenders who have discontinued popular leasing programs, and for the new car dealers who have relied on these programs to boost sales.” However, “there is a tremendous opportunity for used-car dealers and lenders to grow their business by introducing financing options that will have broad appeal to low- and moderate-income consumers being driven in growing numbers to used-car lots,” he added. Among the survey’s other key findings:
* Almost 20% of those 65 and older expect to postpone an auto purchase. At the opposite end of the age scale, consumers ages 18-24 are the least likely (11%) to buy the same new car they otherwise would have leased, and 14% of that age group say they probably will purchase a less expensive new car. * When it comes to buying vs. leasing the same car, household income is correlated with consumer expectations. Those with yearly incomes of less than $25,000 ruled out the purchase option (2.2 %), while that prospect grows as income rises. * Fully 47% of respondents from the South say they are uncertain about the best course of action, which may be why only 15% said they would be likely to purchase rather than lease a new car. Those in the Midwest are most likely to purchase rather than lease (27%), while Southerners are least likely to do so (15%). Those in the West are least likely to go the used-car route (14%) and most likely to forego the transaction entirely (15%). * Consumers employed full-time are most likely to purchase rather than lease the same car (25%)--but the self-employed are least likely to do so (14.5%). * The greater the level of education, the greater the likelihood that a consumer will purchase a new car when leasing isn’t an option.

Market crisis increases new accounts at Oregon CUs

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BEAVERTON, Ore. (9/25/08)--With the ongoing crisis in U.S. financial markets, Oregon’s credit unions are seeing an increase statewide in the number of people who are moving their money to perceived safer havens at credit unions. Troy Stang, president/CEO of the Credit Union Association of Oregon, said he’s hearing from CEOs around the state that significant numbers of people are moving their money to credit unions. “Credit unions in various parts of the state are seeing new members and old members alike coming in the door and asking about share insurance,” Stang told News Now. “Of course, the fact that Washington Mutual is in our backyard [Seattle] is causing concern among residents in our state.” Standard & Poor's downgraded the ratings of Washington Mutual (WAMU) and Washington Mutual Bank to junk status due to rising market turmoil. The Office of Thrift Supervision (OTS) largest institution, WAMU, could be acquired soon. WAMU has 20% of its assets under the OTS, and if the bank is acquired, the OTS could be forced to restructure (News Now Sept. 17). Stang was quoted in a Tuesday article in The Oregonian about people searching for a more secure place to put their money during the current financial crisis and after the failure of several large banks. “I’m glad The Oregonian took a look at credit unions as a viable alternative to other financial institutions,” Stang said.

Colombian government taps WOCCU to expand services

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MADISON, Wis. (9/25/08)--With backing from the Colombian government, the World Council of Credit Unions (WOCCU) has begun a US$1.5 million, two-year program to strengthen Colombia's credit unions and introduce technologies so they can provide financial services to the underserved.
A new World Council of Credit Union program will help Felix Arias Maldonado, a member of Coopesagua CU who owns a small watch repair stand in northern Colombia near the Venezuelan border, get access to financial services. (Photo provided by the World Council of Credit Unions)
The Colombian government, through its Banca de Oportunidades program, is funding the new program. WOCCU's program will work with Colombia's credit unions to develop strategic plans for financial strengthening and savings mobilization, and to implement new microcredit products and services to reach a broader membership. "The fact that the government of Colombia has noticed the significant financial, managerial and membership growth of these credit unions speaks highly of the level of technical assistance our projects provide to our credit union partners," said Mark Cifuentes, WOCCU senior vice president of technical services. WOCCU also will work with the existing WOCCU Services Group (WSG) office in Colombia, SumaRed S.A., to expand products and services to credit unions there. WSG offices are a new model of credit union service organizations that provide technical, operational and regulatory expertise to credit unions in countries where WOCCU has or had programs. They also assist credit unions in developing and implementing new technologies, products and services to reach underserved areas more efficiently and quickly. WSG offices currently exist in Bolivia, Colombia, Ecuador, Kenya, Mexico and Peru. Colombia's government reorganized the country's financial system following an economic recession that debilitated the credit union system more than a decade ago. It created a specialized supervisory unit and guarantee fund for the credit union sector. The country today has more than 200 credit unions, which serve 6% of the economically active population.

League on site at disaster location more funds needed

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FARMERS BRANCH, Texas (9/25/08)--The Texas Credit Union League is on site visiting credit unions in the East Texas coastal region ravaged by Hurricane Ike Sept. 13. League President/CEO Dick Ensweiler and a small team began touring the area Wednesday and will be there through Friday, according to Rick Grady, vice president of marketing, public relations and communications for the league. Today the group will visit members south and east of downtown Houston. Friday the team will visit on the west and north sides of downtown Houston. Return visits are being planned so the league's management team can address issues facing members, Grady said. The league's field team will remain in the area indefinitely, assisting members with rebuilding.
A trailer load of peanut butter--2,223 pounds of it--donated by Security Service FCU, San Antonio, is headed for ongoing disaster relief in Texas. The credit union presented the Food Bank of the Rio Grande Valley (RGV) Inc. with peanut butter collected at its South Texas branches. From left: Julie Balboa, assistant vice president of the credit union's South Texas District; Brian Epps. Food Bank RGV board members and credit union business development manager; Terri Drefke, Food Bank RGV executive director; Jim Bounds, credit union director of business development in South Texas; and Crystal Gomez, branch manager, Aransas Pass branch. (Photo provided by Security Service FCU)
The Texas Credit Union Foundation continues to receive large donations, which are being disbursed immediately to hundreds of applicants requesting assistance in the area. More than $135,000 in contributions was received as of Wednesday morning, and the foundation made $120,000 in grants to 247 individual applicants. The foundation said it has averaged 10 requests an hour since the process began, with the pace rapidly building. It indicated that additional donations will be needed. At sunup Wednesday, Galveston Island and the city of Galveston were permitting residents to return. Officials warned that the island remains a devastated place with few trappings of civilization and many serious health hazards. However, I-45 had a line of cars for 14 miles waiting for the reopening. It is estimated that 75% of homes will be uninhabitable. The African American Credit Union Coalition (AACUC) announced Wednesday it was donating $1,000 in response to the devastation and challenged credit unions, credit union organizations and leagues to "step up to the plate and contribute funds for the Texas recovery process." AACUC Chairperson Barbara Stephens, president/CEO of Houston Municipal Employees FCU, said the Texas league "has always offered a warm welcome to the AACUC. AACUC would like to extend a helping hand in return as they begin to rebuild their credit unions, homes and communities." Credit unions were creative in their donations as well. Security Service FCU, based in San Antonio, donated a trailer load of peanut butter, or 2,223 pounds, for ongoing disaster relief to a local food bank.

Study Debt stress increased as subprime crisis unfolded

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MADISON, Wis. (9/25/08)--Consumer debt stress increased from 2006 to 2007 as the subprime mortgage crisis unfolded, and those with the lowest household incomes are likely to endure the highest levels of debt-related stress, according to a new study by the Filene Research Institute. Consumer Debt Stress and Credit Cards, by Filene Executive Director and CEO Mark Meyer, explores debt-related stress with a focus on credit card debt. The study is based on information from Ohio State University’s Consumer Finance Monthly (CFM) survey. The CFM indicated that consumers in top stress categories who worry about overall debt Rose to 16.2% in 2007 from 14.7% in 2006. Consumers with lower household incomes experienced more debt stress than those with higher incomes. Those with prior bankruptcy filings also reported higher levels of debt-related stress, according to the study. Since 2005, the Center for Human Resource Research at Ohio State University has collected CFM data through monthly 25-minute telephone surveys using random-digit dialing and statistical weighting procedures. For more information, use the link.

CU System briefs (09/24/2008)

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* BOULDER, Colo. (9/25/08)--Boulder Valley CU (BVCU) has received approval from the Department of Housing and Urban Development (HUD) to offer members Federal Housing Administration (FHA) mortgage loans. The $169 million asset credit union is the only credit union in northern Colorado and one of the few to offer FHA mortgages, it said. FHA loans offer mortgage options for struggling homeowners and first-time home buyers. "BVCU's mission is to provide home buyer education and conduct responsible lending to the underserved within our community in order to promote responsible borrowing and home ownership," said Kimberley Morris, BVCU vice president mortgage lending … * HARAHAN, La. (9/25/08)--The Louisiana Credit Union League has promoted Jill Kitchens to director of education. Kitchens previously served as league government affairs specialist and was instrumental in advancing political advocacy fundraising and more. She has been in the credit union movement since 2002. In her new role, Kitchens will oversee the league's education department and assist credit unions in Louisiana with their education needs … * MUSKEGO, Wis. (9/25/08)--Corporate Central CU, located in Muskego, Wis., announced Wednesday it has hired Heather Paris as relationship development officer. Paris formerly served for five years as an assistant supervisor with Fort Community CU, Fort Atkinson, Wis. In her new role, Paris will meet with member credit unions and potential members to determine their needs and provide correspondent, investment and liquidity solutions. Corporate Central has 400 member credit unions nationwide … * ST. LOUIS (9/25/08)--Vantage CU has donated 16 personal digital assistant (PDA) SmartPhones to Cell Phones for Soldiers to help deployed soldiers call home for free. The phones, which were extras after a company-wide cell phone conversion, will be sold, with the proceeds used to purchase pre-paid calling cards for troops overseas. Matt Fagala of the $500 million asset credit union's information technology (IT) department coordinated the donation. From left are IT department staffers Leanne Doza, Ruben Bonales, Fagala, Rachel Shryock and Kelly Gillette. (Photo provided by Vantage CU) … * COLORADO SPRINGS, Colo. (9/25/08)--Ent FCU, based in Colorado Springs, was placed in the top 25 of tech-savvy mortgage lenders by Mortgage Technology Magazine, the $2.5 billion asset credit union announced Tuesday. Ent, a Prime Alliance client, implemented the Dexma Loan Origination Center and is adding Dexma Loan Fulfillment Center. Its use of technology enabled it to handle a 400% increase in Federal Housing Administration (FHA) loan volume during the past 15 months. Members can apply for the loans online at and check the status of their loan throughout the process …

Texas Sunset hearing goes well for state-charter CUs

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AUSTIN, Texas (9/25/08)--The Texas Credit Union Department (TCUD) presented a staff report Tuesday on state-chartered credit unions at the Texas Sunset Advisory Commission public hearing with good results, according to the Texas Credit Union League.
Dick Ensweiler, president/CEO of the Texas Credit Union League, testified before the Texas Sunset Advisory Commission on areas of concern for state-chartered credit unions.
The commission agreed that the TCUD should continue operating for another 12 years and discussed on two issues that had been of concern to credit unions and the league--continued consolidated filing of the Internal Revenue Service form 990s and the addition of monetary fines to the powers of the Texas Credit Union Commissioner. League President/CEO Dick Ensweiler testified on behalf of credit unions and was the only public witness before the commission. “We would like to commend the Sunset staff for the fine work they did in their review of the Texas Credit Union Department and the report they have issued,” Ensweiler said. Ensweiler then laid out the league's reasoning on two of the recommendations for continued filing of the consolidated 990. “Many credit unions have limited resources, both financial and in terms of personnel--often only a few employees work in a credit union,” he said. “Transferring this regulatory burden to each individual credit union will increase the cost and demands on the 218 credit unions who are included in the consolidated filing by the department. “With six different enforcement mechanisms available, the commissioner has had the tools needed. Clearly, the current system works,” Ensweiler continued.
Texas State Reps. Linda Harper-Brown (D-105) and Dan Flynn (D-2) listened to the Texas Sunset Advisory Commission state report and brought up issues with some of the recommendations.
The commission appeared to be receptive to league. There seemed to be no interest in consolidation, the league said. “I just want you to know that you have done an outstanding job,” said Commission member Rep. Dan Flynn. “The department is very well run and I appreciate the way you've protected members even though I've spent my entire career fighting credit unions.” Flynn is a former banker and former banking commissioner. State Rep. Linda Harper-Brown (D-105) focused on the 990 issue, questioning the burdens and costs to small credit unions by forcing them to file individual 990s when the joint filing runs $7,500 for the entire state.
Texas State Rep. Carl Isett (D-84), chair of the Texas Sunset Advisory Commission, invited testimony on the Texas Credit Union Department and the Sunset staff. (Photos provided by the Texas Credit Union League)
State Sen. Chuy Hinojosa (D-20) voiced a similar concern. “Won't that cost be borne by the members?” he asked. The public member of the commission, Charles McMahen, noted his concerns about recommendations on monetary penalties. The former president of Compass Bank suggested that monetary penalties could be misused. Flynn confirmed with staff of the Sunset Commission that the Banking Department has no such monetary penalty power either. “It was a good day for credit unions,” said Jeff Huffman, league vice president for governmental affairs. “Clearly the Sunset Commission understands our concerns, and we hope they will incorporate them into their final report.” The Commission's decision hearing will be held on Dec. 16-17.

PCUA CEO testifies on CUs financial conditions

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HARRISBURG, Pa. (9/25/08)--Jim McCormack, president/CEO of the Pennsylvania Credit Union Association (PCUA), testified on behalf of credit unions before the State House Commerce Committee about current financial market conditions and their effect on Pennsylvania.
Jim McCormack, president/CEO of the Pennsylvania Credit Union Association, testified before the State Commerce Committee that Pennsylvania credit unions are healthy and well-capitalized. (Photo provided by the Pennsylvania Credit Union Association)
Credit unions will be affected indirectly in the long term by the current credit crisis, but credit unions are well-capitalized and have healthy reserves, he explained to the committee (Life is a Highway Sept. 24). “Our deposits grow organically. We have healthy balance sheets, and we’re in the business of lending to consumers,” McCormack said. Also testifying were Steven Kaplan, secretary of banking; Robin Wiessmann, state treasurer; and representatives from the Pennsylvania Securities Commission, including: Robert Lam, acting chairman; Michael Byrne, chief counsel; and John Quinn, director, corporation finance. The committee will hold a future meeting after the U.S. Treasury unveils its proposal, PCUA said.