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Filed on September 8, 2009, published the first business day after.
- Schumer to back Sen. overdraft bill
- With Congress' return, reg revamp debate heats up
- Inside Washington
- CUNA: NCRC report needs close look
- National publications say ‘get credit cards at CUs’
- Half of parents confident about youth’s financial skills
- Hamburger stand built with CU financing
- Texans CUSO Insurance Group files for bankruptcy
- Former CU exec commits suicide during arrest
- Mystery shopper scam victimizes Pa. CU member
- CU System brief
- Market News
- News of the Competition
- Robocalls prohibited unless you opt in
- CUNA Mutual, CO-OP automate fraud claims
Schumer to back Sen. overdraft bill
WASHINGTON (9/09/09)—Sen. Charles Schumer (D-N.Y.) announced Tuesday that he wants to see more consumer protections associated with overdraft protection plans and that he will back legislation targeting abusive practices.
Speaking at The College of Saint Rose in his state's capitol, Albany, Schumer said overdraft legislation should:
- Require that consumers either must opt in, or have a chance to opt out, of financial institutions' overdraft protection programs;
- Increase disclosure of the fees and APR charges on overdraft loans to help consumers factor in that information when choosing a debit card provider;
- Require a warning to consumers that an electronic transaction may trigger an overdraft loan fee. The warning should be joined with a notice allowing the consumer to cancel the transaction after receiving this warning;
- Prohibit financial institutions from manipulating the order in which checks and other debits are posted if it causes more overdrafts and maximizes fees; and
- Require them to gradate fees proportionally so that a fee for a nickel overdraft is lower than a fee for a $100 overdraft.
Legislation that has been introduced in the House by another New York Democrat, Rep. Carolyn Maloney (H.R. 1456, the Consumer Overdraft Protection Fair Practices Act), carries the provisions listed above. Schumer said Tuesday that he will be an original co-sponsor for legislation being introduced in the Senate by Sen. Christopher Dodd (D-Conn.), who heads the Senate Banking Committee.
The Credit Union National Association (CUNA) has adopted policy positions supporting the ability of credit unions to offer overdraft privilege programs, but urging credit unions to avoid unfair or deceptive practices, which are inconsistent with credit philosophy and principles.
With Congress' return, reg revamp debate heats up
WASHINGTON (9/9/09)--Congress came back to Washington this week and lawmakers face a full slate of legislative activity at the start of this eight-week legislative work period, including a hearing on Community Reinvestment Act issues, perhaps as early as next week.
While the upcoming eight-week legislative period is expected to end on Oct. 30, there is speculation that work on Capitol Hill could continue beyond that deadline. Rep. Barney Frank (D-Mass.) recently stated that larger financial regulatory reforms could be passed by the House by October, with President Barack Obama signing the completed legislation by the end of this year. The House Financial Services Committee, which is chaired by Frank, today will open business with a hearing on the progress of the Obama administration's "Making Home Affordable Program."
There are a number of other issues that are of great importance to credit unions on the legislative calendar, but one of the first credit union-specific pieces of legislation should be the simplest of all, as the House this week is expected to discuss H. Res. 556, which recognizes the 75th anniversary of the enactment of the Federal Credit Union Act.
"This resolution not only recognizes the anniversary of the Act, but also the valuable service all credit unions provide their members as well as the economic stimulus credit unions are providing during the financial crisis," said Ryan Donovan, vice president of legislative affairs.
It is also thought that the committee may soon mark up H.R. 3216, the Consumer Financial Protection Agency (CFPA) Act. This legislation would seek to protect consumers of financial products through the creation of a powerful independent agency with extensive rulemaking, oversight, and enforcement tools. Debate and markup of this legislation was scheduled to occur before the recently ended summer district work period, but other business prevented the Committee from taking any action at that time.
Member business lending (MBL) is another important issue for credit unions, and Reps. Paul Kanjorski (D-Pa.) and Ed Royce (R-Calif.) in late July introduced legislation that would double the current statutory MBL cap of 12.25%, a move that CUNA believes could produce as much as $10 billion in new capital for investment in the first year of the change.
The Credit Union National Association (CUNA), the National Credit Union Administration, and member credit unions continue to explore a legislative remedy addressing the unintended consequences of the 21-day rule in the recently enacted Credit Card Accountability, Responsibility, and Disclosure (CARD) Act.
Legislation addressing interchange fees is not expected to be brought up during the fall session, but related measures were introduced on both the House and Senate sides in early summer, and similar legislation could be brought up during discussion of the CFPA. One such bill introduced by Rep. John Conyers (D-Mich.) would allow merchants to negotiate interchange with card issuers. However, federally chartered credit unions and all financial institutions with less than $1 billion in assets are exempted from the terms of the bill. Another bill from Sen. Richard Durbin (D-Ill.) would also provide for these sorts of negotiations.
National convenience retailers Circle-K and 7-11 have circulated and are expected to present petitions claiming that consumers support their position on interchange, but CUNA's Federal Legislative Affairs Director Michele Johnson has countered that argument, saying that changes to the current interchange fee structure would "give merchants an antitrust advantage in negotiations with card issuers, networks, and other payment system participants."
Inside Washington
- WASHINGTON (9/9/09)--Sen. Christopher Dodd (D-Conn.), chair of the Senate Banking Committee, has decided against succeeding the late Sen. Edward M. Kennedy (D-Mass.) as chair of the Senate Health, Education, Labor and Pensions (HELP) Committee, Washingtonpost.com reported late Tuesday. Dodd has scheduled an 11 a.m. press conference today to announce his decision. Dodd was overseer of the HELP Committee's health care legislatioin while Kennedy battled brain cancer for more than a year. According to a report in Roll Call earlier in the day, Dodd was being encouraged by some financial industry lobbyists to head the health panel. If Dodd had taken the position, Sen. Tim Johnson (D-S.D.) would have become chair of the Senate Banking Committee ...
- WASHINGTON (9/9/09)--Rep. Barney Frank (D-Mass.) would like to be in President Barack Obama's cabinet, according to Frank's new biography, written by Stuart Weisberg (The Hill newspaper Sept. 7). Frank said his departure from Congress is not imminent. He wants to pass more legislation on affordable housing and to have at least two years with Obama as president and a Democratic Senate, he said ...
- WASHINGTON (9/9/09)--Lenders are supporting the Small Business Administration's decision to increase the amount of goodwill value a lender can finance when making a loan to a borrower that wants to buy a small business. The change, which doubles the goodwill value to $500,000, was announced by SBA last week. The SBA is "addressing our issues, and seems to be taking steps" to attract new lenders, said Tony Wilkinson, president, National Association of Government Guaranteed Lenders ...
- WASHINGTON (9/9/09)--The Department of Housing and Urban Development (HUD) has confirmed a final rule attempts to improve the quality of HECM counseling. The rule amends the department's Home Equity Conversion Mortgage (HECM) program by establishing testing standards to qualify individuals as HECM counselors eligible to provide counseling to prospective borrowers. It also establishes an HECM Counseling Roster of eligible counselors. The rule is effective Oct. 2 ...
CUNA: NCRC report needs close look
WASHINGTON (9/09/09)—The Credit Union National Association (CUNA) said Tuesday that a National Community Reinvestment Coalition (NCRC) report unfavorably comparing credit union fair lending practices to that of banks needs a closer look because past analysis of Home Mortgage Disclosure Act data has shown NCRC to be off base.
"In fact," said CUNA Vice President of Economics and Statistics Mike Schenk, "both lower-income and minority applicants are more likely to have their loans approved at credit unions than at banks." He said CUNA will closely review the newest NCRC report, released late yesterday.
The NCRC said it analyzed several credit unions and compared them to bank service to working and minority communities. The report contends credit unions lag behind banks on 64% of the fair lending indicators that were examined.
National publications say ‘get credit cards at CUs’
MADISON, Wis. (9/9/09)--The Los Angeles Times and USA Today mentioned credit unions as a good place for consumers to obtain credit cards.
Credit unions are a potential source for low-interest-rate credit cards because they made "fewer costly mistakes in the credit heyday and now have money to lend," said personal finance writer Kathy M. Kristof in the Sunday Los Angeles Times.
Kristof also directed readers to check the Credit Union National Association's site, www.creditunion.coop, to locate a credit union in their area.
In an article about how college students can build a credit history amidst new federal legislation that restricts marketing of credit cards to those under the age of 21, USA Today financial columnist Sandra Block told readers Tuesday that "many credit unions offer secured credit cards with lower interest rates and fees."
To read the stories in their entirety, use the links.
Half of parents confident about youth’s financial skills
WASHINGTON (9/9/09)--About half of parents say their children will leave home knowing how to manage money, according to the results of a Consumer Federation of America (CFA) survey.
During a press briefing Tuesday, CFA presented results of a survey it conducted Aug. 27-31 of 553 representative parents, or guardians, with children under age 18 living at home.
About 53% of parents said they were "very confident" their children would leave home with personal financial skills. Nearly all parents surveyed--98%--said they felt "very" or "somewhat" responsible for teaching their children how to manage money and credit. Roughly 86% said they felt "very" responsible.
However, only 73% said they felt capable of instructing their children how to manage money, CFA said.
Jim Hanson, vice president of the Credit Union National Association's (CUNA) Personal Finance department, said there is a disconnect between the fact that only half of parents surveyed are confident their children will leave home with money skills, yet almsot all parents think it is their responsibility to teach money management skills.
"That's why credit unions stepped to the forefront of financial education so long ago," Hanson told News Now. "Teaching young people about the value of money, how to save, spend and borrow wisely can't start too young."
Phil Heckman, CUNA director of youth programs, agreed.
"Parents have a unique opportunity to influence the lifetime money management habits of their children by intervening early," Heckman said.
For instance, it's easier to guide preschoolers to make good decisions about small amounts of money than it is to correct bad spending habits and saving ignorance of teenagers. "By starting young, parents can learn with their children, and become personal finance experts in the process," he added.
Heckman suggested that credit unions should offer to help parents become good financial role models for their children.
"Parents who might otherwise deny they need money-management help are willing to seek it for their children," he said. "By training them to teach their own kids at home, credit unions can kill two financial literacy birds with one educational stone."
The CFA also released the top 10 myths held by 14- to 21-year olds:
- I don't have to worry about credit at my age;
- Bad credit can't keep me from getting a job;
- All loan companies have the same rates;
- All credit cards are alike;
- The job of financial advertising is to tell the truth;
- It's OK to bounce a few checks;
- It's OK to make minimum payments on a credit card;
- Paying late occasionally can't hurt my credit;
- Fine print isn't important; and
- Young people don't have credit scores.
CFA noted the struggles Rachel Silverman, 25, encountered when she attended music school at New York University. She racked up $130,000 in credit card and student loan debt, and is now struggling to keep her dream alive of being an opera singer, CFA said.
"It was terrible," Silverman told CFA. "I wasn't sure what I was getting into." No one, including her teachers and parents, prepared her how to manage credit and debt, she said.
"I probably wouldn't have been in this situation if I had simply known the basics about credit cards, student loans and interest calculations," Silverman said. "In hindsight, I was like a lamb being led to slaughter."
Also at the press briefing Tuesday, CFA announced the resources available through FoolProofMe.com, a website that offers free online tutorials to high school and college-age individuals about money management.
Will deHoo, 29, who founded FoolProofMe.com, said he recently spoke to a group of 60 seniors at the University of Colorado. One of four students said they knew poor credit could affect their job opportunities, and only three out of 60 knew their credit score. They said they had bounced checks and were borrowing on one credit card to pay another, he said.
Many young individuals had missed out on financial education because the medium in which the education was offered did not engage them, deHoo said.
Hamburger stand built with CU financing
PLYMOUTH, Mich. (9/9/09)--After years of crossing the U.S. in search of a diner, long-time restaurateur Alex (Vinnie) Altier located a 1955 Kullman diner for sale in Atlantic Highlands, N.J. His next challenge was finding the right piece of property to build his hamburger stand. That's when Community Financial Members FCU stepped up to help.
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| Dave Sanctorum of Community Financial Members FCU Business Services, Plymouth, Mich., congratulates Alex (Vinnie) Altier, at right, on his 1955 Kullman diner that will be refurbished and renamed "Vinnie's Hamburger Stand" when it is moved to its new location in Canton, Mich. (Photo provided by Community Financial Members FCU) |
The land Altier wanted was in Canton, Mich., only a few blocks from a former Vinnie's Italian Sub Shop. The site was owned by Community Financial, the $54.5 million asset, Plymouth, Mich.-based credit union that had opened a new Canton branch office.
When Altier met with Community Financial to inquire about purchasing the adjacent acreage, he was unfamiliar with credit unions or the services they offer. One of Altier's first questions was, "Do you make commercial loans?" When he learned that credit unions can finance members' commercial mortgage and business loans as well as personal loans, Altier decided to become a member.
"When we learned about Vinnie's dream of purchasing the land and building a hamburger stand that included the stainless steel diner, we were intrigued," said David Sanctorum, Community Financial director of business services "We help a lot of members who are small business owners, but this was not your conventional transaction."
Sanctorum and other credit union team members assisted Altier with the necessary paperwork to finance the purchase of property and building construction, and to also obtain a personal home equity loan on his house in Livonia, Mich.
Altier described the entire financing process as very smooth and without all the red tape he had experienced in past years with other financial institutions.
"When I walk into the credit union's offices, I can immediately tell that people enjoy their jobs, and I always receive exceptional service," added Altier. "In my business, I hire an attitude, because I can teach the rest."
Since the ground for "Vinnie's Hamburger Stand" was broken in July, Community Financial members and employees of the nearby branch have been watching the construction progress. The diner, which remains in storage at another location, is scheduled to be moved to the site in the fall and added to the front of the building after construction is completed.
Altier, a lifelong Michigan resident, has been asked what prompted him to open a new business in such a tough economy and quickly responds, "You can't wait for your ship to come in. You have to swim out to it. I'm not participating in this economy."
"Community Financial is well-positioned to arrange financing for small business owners like Altier," Sanctorum said. "We do our best to provide personalized service and find a way to help them achieve their goals."
Texans CUSO Insurance Group files for bankruptcy
RICHARDSON, Texas (9/9/09)--Texans CUSO Insurance Group, a subsidiary of Texans CU, filed for bankruptcy protection under Chapter 11 on Saturday in the U.S. Bankruptcy Court for the Northern District of Texas.
The group filed its case to resolve temporary operational and liquidity issues, according to a press release.
"The policyholders of Texans CUSO Insurance Group will not be affected by the filing," said Michael Sauer, president/CEO of Texans CU. "The filing will not impact any credit union member accounts or services."
Texans CU, based in Richardson, Texas, has more than $1.7 billion in assets.
Former CU exec commits suicide during arrest
MACON, Ga. (9/9/09)--A former manager of a Georgia credit union committed suicide when local authorities tried to arrest her on charges of embezzlement.
Linda Rice, 57, was accused of embezzling more than $354,000 from Brosnan Yard FCU from June 2007 to December 2008. She worked at Brosnan Yard CU as a director, loan officer and manager. The missing funds were discovered during an audit (Macon.com Sept. 5).
The money had been taken through fraudulent loans, misplaced credit union assets and check fraud, the newspaper said.
Rice shot herself after Jones County Sherriff's deputies entered her Gray, Ga., home Aug. 20. A deputy had been following her as she went to get a pair of shoes, but she ran away from him and locked herself in a room where she killed herself, the newspaper said.
Brosnan Yard FCU, Macon, has $4.4 million in assets.
Mystery shopper scam victimizes Pa. CU member
LANCASTER, Pa. (9/9/09)--A Lancaster (Pa.) Red Rose CU member became a victim of a mystery shopper scam that reportedly took his name from information provided to an online job search database.
The individual received a letter from FreePayingSurvey.com of Wichita, Kan., which included a check for $2,960.50, and instructions to deposit the check into its account and get "trained in financial transaction by sending an international Western Union transfer (of $2,320) to our training agent: Rachel Thomas in Valencia, Spain." A Western Union service fee was listed at $140 (Life is a Highway Sept. 8).
The letter also instructed the recipient to spend $50 at two of the listed retail locations, and offered a rate of $100 per hour for four hours of evaluations (mystery shopping).
It is unfortunate that the member--who is unemployed--fell for this scam, and as a result, now has a negative balance, Dave Kilby of Lancaster Red Rose CU, told the Pennsylvania Credit Union Association.
CU System brief
- DENVER (9/9/09)--Two Colorado credit unions have announced plans to merge (Boulder Daily Camera Sept. 4). Premier Members FCU, Boulder, and Colorado United CU, Denver, plan to combine with an expected closing date of Jan. 1. The resulting credit union would be Premier Members CU with $400 million in assets and 11 branches, the newspaper said. All jobs will be protected for one year, and no locations are expected to close, Rhett Bartley Rowe, CEO of Premier Members, told the newspaper. The merger will help Premier Members expand to northern Denver. Colorado United members also will receive more services, Rowe said. Colorado United's CEO Branda Abbott will remain as president/CEO ...
Market News
MADISON, Wis. (9/9/09)
- U.S. employers' hiring plans for the pending fourth quarter this year fell to their lowest level in the history of Manpower's Employment Outlook Survey, which began in 1962. In the fourth quarter, the Milwaukee-based company's survey of more than 28,000 employers indicated that a net -3% of employers said they will hire--down from -2% in the third quarter on a seasonally adjusted basis. Before 2009, the survey's previous low-point was in the third quarter of 1982 with a net 1% hiring outlook, analysts said. In 2008, a seasonally adjusted 9% of firms indicated they would hire in the fourth quarter. The survey measures the percentage of firms planning to hire minus the firms intending layoffs; it doesn't measure the number of jobs. In a separate issue, the economy lost 216,000 jobs in August--the 20th consecutive monthly decline, according to the U.S. Labor Department (MarketWatch Sept. 8) ...
- World stock markets and the price of gold rose Tuesday morning with gold prices hitting their highest level in a year and a half ($1,003 per ounce)--an indication that traders think an economic recovery could fuel inflation and ratchet up the demand for raw materials, analysts said. Also, prices of copper, crude oil and other commodities increased. Investors are anticipating that businesses and factories worldwide--especially in China--will start to order more goods to restock depleted inventory stockpiles, analysts said. As production increases and businesses need more supplies, prices of metal and other resources will go up, said Bart Melek, a commodity strategist for BMO Capital Markets (The New York Times Sept. 9) ...
News of the Competition
MADISON, Wis. (9/9/09)
- With more U.S. consumers gaining confidence in their personal finances and the economy, the Discover Financial Services Spending Monitor rebounded in August, increasing 3.5 points to 87 on a 100-point scale. Overall, 31% of consumers think economic conditions are on the upswing--a Monitor high and 7-point rise from July. Also, 21% of respondents said their personal finances were improving--the highest number since August 2008. Although an increase in economic and personal financial confidence could signal that consumers think the future will be brighter, it doesn't necessarily mean they will resume spending, analysts said. Heading into September, consumers intend to continue to maintain a tight hold on discretionary spending, the survey indicated (Reuters Sept. 2) ...
- Despite a recovery, credit availability is still depressed, according to August's Credit Management Index, said National Association of Credit Management economist Chris Kuehl. Although August's index inched up to 48.1 in August from 48 the previous month, other economic indicators weakened, including the amount of credit extended, new credit applications and dollar collections, the survey indicated. Lenders also are troubled about the upcoming G-20 meetings in which a premier topic will be the pulling back of stimulus and financial support programs. "We're not ready, we're just getting back on our feet," Kuehl said (USBanker Sept. 8, 2009) ...
Robocalls prohibited unless you opt in
WASHINGTON (9/9/09)--Say goodbye to annoying, prerecorded commercial telemarketing calls--commonly referred to as robocalls. As of Sept. 1, most robocalls are banned unless the telemarketer has your written permission to make them (Federal Trade Commission, Aug. 27).
The ban is part of amendments to the Federal Trade Commission's Telemarketing Sales Rule (TSR), and it applies whether or not you previously have done business with the seller. Telemarketers who violate the new rule will face penalties of up to $16,000 per call.
Note that some robocalls are not covered by the TSR. You still may receive robocalls associated with:
- Purely "information" recorded messages that don't try to sell you anything, such as flight cancellations, deliveries, and school delays;
- Debt collection;
- Politicians;
- Financial institutions;
- Telephone carriers;
- Most charitable organizations; and
- Health care.
If you receive a robocall covered by the TSR but you haven't agreed to it in writing, file a complaint with the Federal Trade Commission by visiting the donotcall.gov Web site or calling 888-382-1222.
For more information, see "Read Fine Print to Avoid Subscribing to a Scam" in Home & Family Finance Resource Center.
CUNA Mutual, CO-OP automate fraud claims
MADISON, Wis., and RANCHO CUCAMONGA, Calif. (9/9/09)--CUNA Mutual Group and CO-OP Financial Services are partnering on CUNA Mutual's Claims Automation Service, which eliminates the need for credit unions to manually submit card fraud claims. Credit unions who partner with CO-OP and CUNA Mutual can participate.
The service will automatically and securely transmit fraud claims data from CO-OP's data processing system to CUNA Mutual's claims processing system. It is expected to save an estimated 15-20 minutes of administrative burden per claim, streamline the data flow and eliminate misreporting caused by keying errors or missing data, CUNA Mutual said.
Record growth in plastic card use and expanding applications are causing credit unions to experience greater operating costs and tasks related to managing plastic card fraud. Due to the large number of data breaches, the incidence of fraud continues to grow at a rapid rate. According to a 2008 study by CyberSource, $4 billion in online revenues were lost to payment fraud last year.
A 2009 survey by the Association of Financial Professionals found that 71% experienced attempted or actual payments fraud in 2008, with the largest percentage reporting check fraud, followed by automated clearinghouse debit and consumer credit/debit cards.
CO-OP Financial Services is a credit union service organization based in Rancho Cucamonga, Calif.
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