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CEOs urge discussion about single CU association

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WASHINGTON (9/30/08)--The slow legislative progress of a risk-based capital system for credit unions was the final impetus for one group of CEOs to urge dialogue about creating a single national credit union trade association. Kirk Kordeleski, president/CEO of the $3 billion-asset Bethpage FCU in Bethpage, N.Y., and five other CEOs feel so strongly about the issue that they have unveiled a new white paper called, “A Stronger and More Effective Single Trade Association for Credit Unions: The Time is NOW.” “This effort was borne of a small group of credit union folks, frustrated over the lack of movement of the Credit Union Regulatory Improvements Act (CURIA), business services and capital reform,” said Kordeleski in an interview yesterday. Kordeleski said the group believes credit unions would benefit by bringing the National Association of Federal Credit Unions (NAFCU) and the Credit Union National Association (CUNA) together. “Our intent is to encourage meaningful and productive dialogue” toward that goal, he said. In addition to Kordeleski, the other five collaborating credit union CEOs include:
* Nader Moghaddam, Financial Partners CU, Downey, Calif.; $741 million in assets; * Teresa Freeborn, Xceed Financial CU, El Segundo, Calif.; $799 million in assets; * Gordon Dames, Mountain America FCU, West Jordan, Utah; $2.7 billion in assets; * Mary Cunningham, USA FCU, San Diego, Calif.; $692 million in assets; and * John Bommarito, Western FCU, Hawthorne, Calif.; $1.4 billion in assets.
“Ultimately, there were deeply held concerns that the infighting between CUNA and NAFCU didn’t allow for a strong stance on risk-based capital, among other issues,” said Kordeleski. Coordination between CUNA and NAFCU just hasn’t work, he explained. “Even during H.R. 1151, both trades wanted to go their separate ways until we forced them to work together,” said Kordeleski. “That effort was eventually very successful because both trades understood that no amount of petty bickering would be tolerated and there were credit unions reviewing each of the steps taken.” In that case, “one trade association would have been as effective as two,” he said. “And when they don’t work together, particularly on major bills or regulations, we all lose.” Kordeleski explained the quickening pace of credit union consolidation and increased expense of supporting separate trade associations support the concept of one entity. Other credit unions recently have joined Kordeleski’s effort, including 30 aerospace industry credit unions and large credit unions in California and Nevada. “So far, 90 of the largest 300 U.S. credit unions support the white paper in principle,” he said. According to Kordeleski, the biggest challenge so far has been simply getting both groups to the table. He said CUNA, via Board Chairman Tom Dorety, was open to discussions. NAFCU is disinterested, said Kordeleski. In a statement, CUNA’s Dorety said CUNA endorsed the concept of the group and expressed CUNA’s willingness to talk. He added that CUNA believes continuing a “coordinating council” between the two trade groups is insufficient and will not address the valid issues raised by these credit unions. Further, Dorety said in the statement, the initiative by the CEOs is entirely theirs--CUNA has had no hand in the effort. Kordeleski said his group of CEOs is asking right now for the boards of both trade associations to simply sit down and talk about solutions. “We want them to take into serious consideration the white paper’s six core principles and to act in good faith on them,” he said. Kordeleski underscored that his effort was not about CUNA or NAFCU winning or losing, because “each association has many leverage points.” “This is about speaking consistently and capably for credit unions,” he pointed out. Moving forward, Kordeleski said his group of six will meet next week to draft a communication about the white paper to large U.S. credit unions. The CUNA and NAFCU boards also will receive another letter urging a dialogue about the paper’s principles. The white paper will be posted next week on a neutral website. In the meantime, credit unions also can obtain the white paper by emailing Kordeleski at

P-and-A arranged for Kaiperm FCU

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ALEXANDRIA, Va. (9/30/08)—The National Credit Union Administration (NCUA) negotiated a deal for Alliant CU of Chicago to purchase the assets and assume the members of Kaiperm FCU of Oakland, Calif. as the least costly way to address Kaiperm’s flagging position. In June, Kaiperm announced it was working to negotiate a merger with $5.7 billion-asset Alliant. Kaiperm decided to pursue the merger after its research concluded a merger was the best way to improve and enhance financial services for its members. It was reported that during the first three months of this year, the credit union posted losses of $2.2 million. The NCUA Monday announced its decision to liquidate Kaiperm and discontinue its independent operation after determining the credit union was insolvent and has no prospects for restoring viable operations. At the time of liquidation, Kaiperm FCU had approximately $91 million in assets and served 18,000 members. An NCUA release noted that the new Alliant CU members will continue to receive convenient, uninterrupted service. It reminded that credit member accounts in Alliant are insured up to at least $100,000 by the National Credit Union Share Insurance Fund (NCUSIF), an entity of the federal government operated by NCUA. Certain retirement accounts, such as IRA and KEOGH accounts, are insured up to $250,000. Alliant is a state-chartered, federally insured chartered in 1935 to serve employees of United Airlines. It is a full-service credit union with more than 216,000 members located throughout the United States. Alliant CU has 10 service centers nationwide and no-fee ATM service at over 75,000 locations. The NCUA chartered Kaiperm in 1957 to serve employees of Kaiser Foundation medical facilities in the East Bay area of Northern California and over time the field of membership expanded to include numerous select employee groups. The NCUA has emergency supervisory field of membership authority for credit unions in danger of closing. The agency can use the authority both in mergers and purchase and assumption arrangements.

CUNA Whatever passes must include CUs

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WASHINGTON (9/30/08)—As the House failed to approve a $700 billion rescue of the financial industry Monday, the Credit Union National Association (CUNA) continued to encourage credit unions to assure their members that their deposits are safe and insured. News that the House rejected 228-205 the rescue package—legislation that had appeared poised to be approved by both the House and Senate Monday—sent the stock markets plunging from already depressed levels. “Credit unions have widely differing views about this legislation,” said CUNA President/CEO Dan Mica after the vote. He added, “Our major concern is that, whatever package ultimately comes forward, it should not in any way disadvantage credit unions. Further, while we are working to ensure that credit unions are eligible for what the package offers, we are also working just as hard to ensure credit unions never have to use the provisions of this legislation.” Ryan Donovan, CUNA vice president of legislative affairs, acknowledged that the situation is turbulent. “Congress is facing the toughest of decisions. And while the administration and our federal lawmakers grapple with the issues, credit unions can fill an important role reminding members that the credit union system is safe and sound,” said Ryan Donovan, CUNA vice president of legislative affairs. Reiterating comments made by CUNA in a letter to lawmakers Friday, Donovan said of the rescue package, “Inaction at this critical time is unacceptable. The consequences of inaction may have devastating effects on the financial system and American consumers." The proposed legislation would establish a program within the Department of Treasury to acquire troubled assets from financial institutions and the resell them at a later date, presumably at a higher value. Credit unions are included in the definition of financial institutions eligible to participate in the program. The bill also favorably deals with two issues that CUNA raised in letters to Congress last week. The Emergency Economic Stabilization Act of 2008 (EESA) does not include any mortgage bankruptcy cram down language. Also, the bill restates the authority of the Securities and Exchange Commission to suspend FASB's mark-to-market accounting standard if it determines that it is in the public interest and protects investors. "In this case, we were able to ensure credit unions would be eligible to participate and we successfully kept the mortgage bankruptcy cram down provisions out of the bill, not to mention that the final version bill included the mark-to-market language which we found favorable. "We believe that the House may try to take this or similar legislation up again later this week. We are hopeful that nothing relevant to credit unions will change," Donovan said.

Inside Washington (09/29/2008)

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* WASHINGTON (9/30/08)--Last week’s failure of Washington Mutual (WaMu) could eventually close the Office of Thrift Supervision (OTS), according to observers (American Banker Sept. 29). WaMu made up about 20% of the OTS’ budget. The agency says that it has a contingency plan to ensure funding through next year and that it would take legislation to eliminate OTS. The Treasury Department has recommended that OTS merge with the Office of the Comptroller of the Currency. However, OTS Director John Reich said last week that multiple federal banking regulators is necessary and said the agency doesn’t want WaMu to be purchased. WaMu was placed on a problem bank list the week before it failed ... * WASHINGTON (9/30/08)--The Treasury Department adopted a report with more than 30 recommendations to improve audits of public companies. Recommendations focused on three specific areas: improving accounting education and strengthening human capital; enhancing auditing firm governance, transparency, responsibility, communications, and audit quality; and increasing audit market competition and auditor choice ... * WASHINGTON (9/30/08)--The Treasury Department Monday opened its temporary guarantee program for money market funds. The Treasury will guarantee the share price of any publicly offered eligible money market fund that applies for and a pays a fee to participate in the program. The money market mutual funds are regulated under the Rule 2a-7 of the Investment Company Act of 1940. They maintain a stable share price of $1 and are publicly offered. Those registered with the Securities and Exchange Commission will be eligible to participate ...

Strong CUNA insurance message noted in Hill paper

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WASHINGTON (9/30/08)—In a publication that reaches a Congressional and Administration audience, the intensity of the Credit Union National Association’s (CUNA’s) ongoing push to assure credit union members that their share deposits are safe and federally insured was called “the lobbying equivalent of a rampage.” “Remember that speech President Bush gave to the nation last week to press for passage of his bailout plan and to reassure the country that the money in federally insured banks is absolutely safe? “Dan Mica sure does,” opened the Sept. 29 article in Roll Call, talking about CUNA’s president and CEO. The article recounts just some of CUNA’s effort to get the word out that credit unions, through the National Credit Union Administration, have parallel and equal federal deposit insurance to Federal Deposit Insurance Corp/-insured institutions. Noted was CUNA’s letter to President George W. Bush prior to his national address last week urging him to clarify that the nation’s credit unions are also backed by the full faith and credit of the U.S. government. Mica was quoted that CUNA had “an indication at the staff level” that the message would be included in the President’s address and when it wasn’t CUNA received feedback saying it was an oversight. “Mica’s not backing down. He said he has penned a letter to Bush and is reaching out to administration officials tasked with the bailout. He is also beating down the doors of Members of Congress,” Roll Call said. The complete article is available through the resource link below (For Roll Call subscribers only.

Fryzel NCUA vigilant on CU health

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ALEXANDRIA, Va. (9/30/08)—National Credit Union Administration (NCUA) Chairman Michael Fryzel said he was “extremely pleased” by recent congressional action to increase the agency’s Central Liquidity Facility’s lending limit. Fryzel said the NCUA’s pursuit of authority to lend to the CLF’s full statutory level—currently at around $41 billion—gives the agency another tool that could assist credit unions withstand the market turbulence gripping the country. "Overall, the actions of Congress this week will play a major role in determining the health of the financial institutions for decades to come," Fryzel said, referring to effortst to approve the Emergency Economic Stabilization Act. "The magnitude of the asset repurchasing legislation being considered, regardless of the final product, will impact all financial institutions, including credit unions," the chairman noted, He added: “Credit unions comprise a significant component of the financial system. My goal is to make certain that they remain safe, sound and well-positioned to deal with the uncertainties presented by problems in the broader markets. “Credit union members rightfully depend on NCUA's strong and vigilant oversight, and I am confident that, working closely with Congress, we will find solutions to put in place the kinds of safeguards that achieve that goal."

Data retrieval fee increase a good move CUNA

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WASHINGTON (9/30/08)—The Credit Union National Association (CUNA) believes the Federal Reserve Board should move ahead with its updates that would increase fees that may be charged by a financial institution for costs incurred in producing consumer financial records in response to government requests. The Fed’s proposal would amend its Regulation S, which implements Right to Privacy Act provisions. The changes are intended to modernize the fee structure by reflecting increased cost in producing records, as well as changes in the technology used. The changes include a new “per electronic production” charge of $5, instead of the previous “per diskette” charge, that will cover the cost of all electronic media or email transmissions. In its comment letter to the Fed, CUNA said that the Fed proposal meets its goals. CUNA advised, however, that the Fed not pursue its idea to eliminate current fees for microfiche duplications. These fees should not be eliminated at this time as we believe there are credit unions that still retrieve and produce records in this manner. We anticipate that this method of producing records will eventually end for all financial institutions over time, but we do not believe this will occur in the near future. The Fed proposal also would implement a mechanism to update all the reimbursement rates periodically, based on changes in the Bureau of Labor and Statistics (BLS) survey data. CUNA supports the periodic updates, but recommends that each position description in the proposal add the term “or equivalent” as this should eliminate the requirement to amend these rules if the BLS changes these position names and descriptions in the future. To view CUNA complete comments, use the resource link below.