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Filed on October 19, 2009, published the first business day after.
- New Dodd bill would set overdraft rules
- Congress: CFPA debate continues, vote pending
- CUNA nominates pair to Fed’s TIAC
- Inside Washington
- Lawmakers show support on ICU Day
- Pa. man charged with defrauding 3 CUs in ponzi scheme
- Additional nomination received for CUNA Board
- Pa. assoc. to explain Better Choice program to FDIC
- Two Kansas CUs seek merger
- Ecuador CU delegation visits Colorado CUs
- CU System brief
- Market News
- News of the Competition
- Fiserv drives paperless bill adoption
New Dodd bill would set overdraft rules
WASHINGTON (10/20/09)—Sen. Christopher Dodd (D-Conn.), who heads the Senate Banking Committee, unveiled his new bill Monday that would limit the fees financial institutions can charge on overdraft protection services.
According to a release from Dodd's office, The FAIR Overdraft Coverage Act would:
- Require financial institutions to get a customer's or member's consent before enrolling them in an overdraft protection program for ATM and debit card transactions;
- Limit the number of overdraft coverage fees that could be charged to one per month and six per year;
- Require fees to be proportional to the cost of processing the overdraft;
- Prohibit institutions from manipulating the order in which they post transactions in order to rack up extra fees;
- Require that accountholders be notified when they overdraw an account and be given the option of being notified by email, text or traditional mail; and
- Require a warning if an ATM or branch teller transaction will overdraw an account, and give the accountholder the option to cancel the transaction.
The Credit Union National Association (CUNA) has noted that overdraft protection plans are a service that is fully consistent with the credit union philosophy and mission to serve members' financial needs and to help them resolve short-term financial problems.
CUNA maintains that such programs, when used appropriately by members, serve as a valuable alternative to overdrawing share drafts. CUNA has said it would support new law or regulation that:
- Prohibits the manipulation of debits and credits with the intent of generating overdraft fees;
- Provides clear and conspicuous disclosure of all costs associated with these programs to ensure that credit union members have the ability to compare the costs and features of overdraft protection programs among the various types of financial institutions that offer them;
- Recognizes, consistent with the current Federal Reserve Board position, that funds accessed through overdraft protection programs are not loans and do not require that fees be calculated and disclosed as an "annual percentage rate" under the Truth in Lending Act;
- Permits, but does not require, credit unions to obtain a written agreement from members to participate in an overdraft protection program, while recognizing the need to allow members to decline participation in the program if they so choose; and
- Does not impose new burdensome requirements on credit unions with which compliance would be difficult to achieve. This would include, but is not limited to, requiring new disclosures on automated teller machine transactions.
The Federal Reserve Board is also drafting new rules on overdraft protection plans. However, some member of the U.S. Congress, Dodd among them, have expressed frustration with the regulators' efforts.
Congress: CFPA debate continues, vote pending
WASHINGTON (10/20/09)--The dominant credit union issue on the Hill this week is the continued debate over H.R. 3126, the Consumer Financial Protection Agency (CFPA) Act, and discussion of this legislation will resume in the House later today.
Rep. Barney Frank's (D-Mass.) House Financial Services Committee is scheduled to continue amendatory action on the CFPA legislation, with votes expected on Wednesday afternoon. The committee is also expected to vote on H.R. 3763, to amend the Fair Credit Reporting Act to provide for an exclusion from Red Flag Guidelines for certain businesses, and H.R. 3639, the Expedited CARD Reform for Consumers Act of 2009, on Wednesday.
A total of 37 amendments to the CFPA legislation were introduced last week, and seven of those were decided. One that was added to the bill would limit the proposed CFPA's examination and enforcement authority to credit unions over $1.5 billion in assets and banks with more than $10 billion in assets, while allowing institutions whose assets fall below those thresholds to remain under the enforcement authority of their prudential regulator.The Credit Union National Association has expressed its displeasure with this amendment, and on Friday met with Frank in an effort to find a mutually agreeable solution before the bill reaches the House floor.
While CUNA is not concerned over the shifting of regulation writing authority, such as the Real Estate Settlement Procedures Act or the Home Mortgage Disclosure Act, to the CFPA, CUNA Vice President of Legislative Affairs Ryan Donovan has said that the tasks of examination and enforcement regarding credit unions must remain in the hands of the National Credit Union Administration.
A manager's amendment offered by Frank also addresses remittances, and CUNA has communicated with Frank on this issue as well, expressing concern over the potential for increased remittance costs.
An amendment that would have exempted all credit unions and small banks from the terms of the CFPA was also offered by Reps. Jeb Hensarling (R-Texas) and Scott Garrett (R-N.J.), but the amendment failed on a recorded vote.
The housing market will also be discussed during the week, with Department of Housing and Urban Development Secretary Shaun Donovan testifying before the Senate Banking Committee on Tuesday. The status of the first-time homebuyers tax credit will also be discussed before the House Ways and Means Committee Subcommittee on Oversight on Thursday.
CUNA nominates pair to Fed’s TIAC
WASHINGTON (10/20/09)--The Credit Union National Association (CUNA) has nominated two credit union system veterans for membership on the Federal Reserve's Thrift Institutions Advisory Council (TIAC).
In a letter sent to Fed Governor Elizabeth Duke, CUNA Chairman Kris Mecham said that METRO Credit Union President/CEO Robert Cashman and US Federal Credit Union President/CEO William Raker "are highly articulate, well-regarded leaders within the credit union industry and their communities" who "possess great financial system experience and would bring significant expertise to the work of the Council."
Cashman, who currently serves on CUNA's Board of Directors and Governmental Affairs Committee, has also worked with the Massachusetts Credit Union League and served as Director of the nation's first corporate credit union, the Central Credit Union Fund. He has worked within the credit union movement for 26 years.
Raker has led US Federal Credit Union, which holds $800 million in assets from 76,000 members, for 12 of his 30 years in the credit union system, and previously served in other capacities at Fort Knox Federal Credit Union Control Data Credit Union Services.
The TIAC, an advisory group, was established by the Fed in 1980 and meets three times per year with the Fed's Board of Governors to discuss developments relating to thrift institutions, mortgage finance, and regulations.
Inside Washington
- WASHINGTON (10/20/09)--Reports by the Federal Deposit Insurance Corp.'s (FDIC) Office of Inspector General indicate the FDIC did not "enforce its own guidelines to rein in excessive commercial real estate lending by at least 20 banks that later collapsed" (Bloomberg Oct. 19). FDIC examiners didn't find the issue early enough and should have taken stronger action after seeing the banks had "dangerously" high loan levels before failing, the reports said. Ninety-nine financial institutions have closed this year--compared with a historical high of 179 in 1992 during the Savings and Loan crisis. The number of failed banks is expected to increase because of delinquency rates on commercial real estate (CRE) mortgages, said Matthew Anderson, partner, Foresight Analytics, a real-estate market consulting firm. FDIC Chairman Sheila Bair has said CREs pose the largest threat for banks ...
- WASHINGTON (10/20/09)--The House Financial Services Committee will vote today on a preemption measure that would allow state governments to protect bank customers by restricting the banks beyond federal laws. The measure, if approved, would roll back a preemption doctrine that has allowed banks to answer only to federal regulators (The Washington Post Oct. 19). The Obama administration supports the change because it views preemption as a cause of the financial crisis. If the change is approved, 50 additional regulators would oversee the nation's largest banks. The issue of preemption has gradually gained more attention. In 1999, when the Office of the Comptroller of the Currency said banks didn't need to comply with California ATM fee laws. In 2004, the OCC issued a blanket exemption that asserted sole authority to oversee national banks--a stance that has been consistently upheld by federal courts ...
- WASHINGTON (10/20/09)—The Federal Trade Commission has extended the comment period on its proposed changes to the Telemarketing Sales Rule (16 CFR part 310) to address concerns about debt relief services. Originally set to wind down Oct. 9, the FTC extended the comment period to Oct. 26. The FTC proposed rule, issued in July, is intended to fight deceptive and abusive telemarketing of debt relief services that hawk their ability to reduce consumers' credit card and other unsecured debt...
Lawmakers show support on ICU Day
MADISON, Wis. (10/20/09)--Lawmakers nationwide gathered to show their support of credit unions on Thursday for International Credit Union Day.
In Illinois, State Sen. David Koehler (D-Peoria) and State Rep. Joe Lyons (D-Chicago) read statements of support on Illinois Senate and House floors, according to the Illinois Credit Union League.
"Congratulations to all Illinois credit unions on your day," Lyons said while on the House floor.
Koehler and Lyons both serve on credit union boards--Koehler on the CEFCU board in Peoria, and Lyons on the board of Credit Union 1 in Rantoul.
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| From left: Missouri State Rep. Al Liese (D-79) meets with Treina Lind of St. Louis Community CU during a legislative reception in St. Louis to celebrate International Credit Union Day. (Photo provided by the Missouri Credit Union Association) |
"When I explained the cooperative structure of shared branching to State Rep. Chuck Gatschenberger, he seemed impressed by the convenience it offers members," said Charlie Waalkes, American Eagle CU president.
"In speaking with the legislators, it was obvious that they are concerned about the financial services industry and the impact to consumers," added Michelle Rosner, 1st Financial Federal CU vice president of marketing.
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| Wisconsin lawmakers gathered at Credit Union House in Madison, Wis., to celebrate International Credit Union Day. From left are: Rep. Jason Fields (D-11); Joanne Whiting, executive vice president and chief advocacy officer, Wisconsin Credit Union League; and Tom Liebe, Wisconsin league vice president of governmental affairs.(Photo provided by the Wisconsin Credit Union League) |
Attendees included:
- Rod Nilsestuen, secretary, Wisconsin Department of Agriculture, Trade and Consumer Protection;
- Catherine Haberland, executive assistant, Wisconsin Department of Financial Institutions;
- State Rep. Tom Nelson (D-5);
- State Rep. Jason Fields (D-11), Wisconsin Financial Institutions Committee chair;
- State Rep. Kelda Helen-Roys (D-81);
- State Rep. Christine Sinicki (D-20);
- State Rep. Jim Soletski (D-88);
- State Sen. Rob Cowles (R-District 2); and
- Darcy Luoma, Madison office director for U.S. Sen. Herb Kohl (D-Wis.).
Brett Thompson, Wisconsin Credit Union League president/CEO, spoke to guests about the league's involvement in the World Council of Credit Union's International Partnership Program, and the importance of educating legislators, public officials and consumers on the value credit unions provide to their members and communities.
"We find great value in sharing knowledge with our friends in the Dominican Republic," Thompson said. "It reminds us that we are part of a larger cooperative system that shares a common mission, and we must work together to protect peoples' rights to belong to a not-for-profit credit union."
Pa. man charged with defrauding 3 CUs in ponzi scheme
HARRISBURG, Pa. (10/20/09)--A Pennsylvania man has been charged with operating a $2 million ponzi scheme that defrauded three credit unions, according to the Pennsylvania attorney general's office.
Eugene D. Miley, 58, is accused of selling fictitious certificates of deposit (CDs) to Moonlight CU, Worthington; VANtage Trust CU, Wilkes-Barre; and Stanwood Area CU, New Stanton. Miley allegedly served as a financial broker for the credit unions, offering to locate and purchase various high interest rate CDs. Miley used the money he received from the credit unions for his personal use. He also generated fake statements about the purchase, interest rates and redemption information for the CDs.
"Miley claimed to be helping his clients earn a good return on their investments, but this was simply an illusion," said Attorney General Tom Corbett in a statement. "As with other ponzi schemes, the money received from new clients was used to pay off older investors, or siphoned off for personal use, until the flow of money stopped--causing the operation to collapse and leaving victims with nothing more than empty promises."
Miley is accused of selling $2.08 million in certificates between 2006 and 2008. He sold $1.3 million to Moonlight CU; $594,000 to VANtage Trust CU; and $99,000 to Stanwood Area CU, according to the attorney general's office.
Miley has been taken into custody and will appear for a preliminary hearing Nov. 20.
He will be charged with one count of securities fraud for creating a scheme to defraud, a second degree felony punishable by up to 10 years in prison and a $1 million fine; and one count of securities fraud for the sale of unregistered securities, a third-degree felony punishable by up to seven years in prison and a $250,000 fine.
Miley also will be charged with three counts each of theft by deception and theft by failure to make required disposition of funds--all third degree felonies, punishable by up to seven years in prison and $15,000 fines.
Miley is not licensed to operate as a financial investment company, financial adviser or financial products dealer. The funds for his fraudulent investments were funneled through PNC Bank accounts belonging to him and his business. The transactions were conducted using a PNC Bank branch in Cranberry Township, Pa., Corbett said.
Additional nomination received for CUNA Board
MADISON, Wis. (10/20/09)--The Credit Union National Association (CUNA) has received one final nomination for its 2009-2010 board elections.
The new nominee and district category is: Jon Hernandez, Cal Com FCU, Torrance, Calif., District 6, Class A.
Already nominated are:
- Dennis K. Tanimoto, Hawaii Credit Union League, Honolulu, Hawaii, District 6, Class D;
- Robert M. Cashman, Metro CU, Chelsea, Mass., District 1, Class C;
- Kris J. Mecham, Deseret First CU, Salt Lake City, Utah, District 5, Class B.
- Laida Garcia, Florida Central CU, Tampa, Fla., District 3, Class B.
- Dennis E. Pierce, CommunityAmerica CU, Kansas City, Mo., District 4, Class C;
- John A. Graham, Kentucky Employees CU, Frankfort, Ky., District 2, Class A;
- Marla S. Marsh, Kansas Credit Union Association, Wichita, Kan., District 5, Class D; and
- Susan Steifel, Woodstone CU, Federal Way, Wash., District 6, Class A.
The deadline for nominations was Oct. 16. Nominations were accepted in eight categories:
- District 1, Class C;
- District 2, Class A;
- District 3, Class B;
- District 4, Class C;
- District 5, Classes B and D; and
- District 6, Classes A and D.
Eligible candidates must be an employee or voting board member of the nominating credit union. Nominations must be in writing and seconded in writing by two other credit unions of the same size group from the district.
Only two seconds will be recorded for each candidate. Upon request, a list of credit unions by size group and district will be furnished to candidates to assist in obtaining seconds.
To be an eligible league candidate for a CUNA Director position, individuals must be a league president and be nominated in writing by their league, with a second in writing by at least one other league from the district.
CUNA's Corporate Governance Committee will verify eligibility of each candidate, the credit union's affiliation, size group and district, and date/time of receipt. Voting will begin Friday and close Dec. 18.
For more information, use the link.
Pa. assoc. to explain Better Choice program to FDIC
WASHINGTON (10/20/09)--Mike Wishnow, senior vice president of the Pennsylvania Credit Union Association (PCUA), will discuss the Credit Union Better Choice program Thursday at the Federal Deposit Insurance Corporation's (FDIC) Advisory Committee on Economic Inclusion's Strategic Planning Subcommittee meeting at the FDIC headquarters in Washington, D.C.
The meeting, which is closed to the public, will focus on how small-dollar loan programs can be scaled across mainstream financial institutions. As part of a panel, Wishnow will discuss the success of the Better Choice program and how credit unions have helped members with short-term loans rather than using payday lenders (Life is a Highway Oct. 19).
The Better Choice program, which grew out of a collaborative effort between PCUA and the Pennsylvania Treasury Department, offers short-term loans that help people make the transition away from high-cost payday loans to fairly priced credit union services (News Now April 10).
Several executives from other banks nationwide also will participate on the panel, which will be moderated by Rae-Ann Miller, special adviser to the director, Division of Insurance and Research for the FDIC.
This is the second presentation PCUA has made to the FDIC on the program. In March 2007, Norb Kaczmarek, CEO of Erie FCU and then board chairman of the PCUA, was joined by Wishnow to make a presentation on the payday lending alternative program to the FDIC Advisory Committee on Economic Inclusion.
The committee was established by FDIC Chairman Sheila C. Bair and the FDIC board of directors and includes high-ranking banking officials, regulators, educators, and business and community leaders.
Two Kansas CUs seek merger
TOPEKA, Kan. (10/20/09)--Two Topeka, Kan.-based credit unions have asked their members to approve a merger.
If the merger garners approval from members and state regulators, the $95 million-asset Credit Union 1 of Kansas and the $141 million-asset Credit Union United will combine under a new name (The Kansas City Star Oct. 17).
"This is a strong consolidation of two healthy credit unions," Vickie Hurt, president/CEO of Credit Union 1, said in an announcement. "By joining forces as one organization, members of the new credit union will be able to take advantage of the economies of scale that will promote efficiency, as well as favorable rates and fees."
Employees at both credit unions will keep their jobs, the announcement said.
On Nov. 4, members of each credit union will vote on the merger at a special meeting, the newspaper said.
Official at the credit unions expect the merger to be finalized in April, the paper added.
Ecuador CU delegation visits Colorado CUs
DENVER (10/20/09)--A delegation from CACPE PASTAZA credit union in Ecuador visited the Credit Union Association of Colorado (CUAC) and some of its member credit unions last week to examine how they continued to serve members in spite of economic challenges.
"Our Ecuadorian friends visited Colorado at a particularly important and busy period for the U.S. credit union movement," said John Dill,
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Credit Union Association of Colorado (CUAC) representatives recently met in Colorado with visitors from CACPE PASTAZA, an Ecuadorian credit union. From left are: Pablo Santos, Tim Dore, Karina Espín, Melia Heimbuck, José Miguel Acuña, Janeth Carrillo, CUAC President/CEO John Dill, Pietra Dávila, Carmita Medina and Naila Espín. (Photo provided by the World Council of Credit Unions) |
"Our credit unions are recovering from the challenges posed by the U.S. economy's meltdown, and we're in the middle of major legislative fights over interchange fees and member business loans while struggling with member growth," Dill said. "These are all good things for our South American partners to experience and understand."
The seven-person Ecuadorian delegation came to see the U.S. credit union movement, and CUAC's role and products and services. The Ecuadorians studied CUAC's financial education curriculum, its grassroots outreach and lobbying efforts, compliance products and other services provided to its members. Closer looks at the association's credit union service organization (CUSO) and its Credit Union Service Network also were on the agenda for the weeklong visit. "There are a few ideas we can already implement in Ecuador," said Naila Espín, manager of CACPE PASTAZA's risk management department. "Technology is what we need to introduce very quickly." The delegation visited several Denver credit unions, including Denver Community CU (DCCU), where the groups discussed ways in which DCCU can better attract and serve Latino members. The Ecuadorians also came to understand DCCU's successes to-date using "low-wealth" products, such as payday loans and financial education, to establish a strong Latino member base.
At Premier Members FCU (PMFCU), Boulder, the delegation shared an overview of Ecuador's credit union system, including the country's strict regulatory climate and the challenges that small, unregulated credit unions pose to the system as a whole. PMFCU staff members shared their strategies for managing risk and contingency planning.
At BCS Community CU, Wheat Ridge, discussions focused on how small credit unions can improve efficiency and thrive by utilizing the CUSO, something that enables the six-person staff of the credit union to provide services similar to those of institutions many times its size.
"No one should doubt that credit unions from thousands of miles away have more in common with each other than we do with a local banker around the corner," Dill added. "The long standing partnership between Colorado and Ecuador is proof positive that the ‘people helping people' philosophy knows no boundaries, no geography and no limits."
CU System brief
- WICHITA, Kan. (10/20/09)--Credit Union of America, Kansas' second-largest credit union, plans to open three new branches by the end of 2010. The openings will cost the credit union more than $2 million (Wichita Business Journal Oct. 15 and The Wichita Eagle Oct. 16). The credit union also plans to open a student-run branch Oct. 27 at a local high school that will be open for about two hours per day due to students' schedules. The three new branches will bring the credit union's branch network to 11, and create about a dozen jobs in the area. Strong member, loan and deposit growth over the past few years has allowed the credit union to expand despite a struggling local and national economy, Credit Union of America President Bob Thurman told The Wichita Eagle ...
Market News
MADISON, Wis. (10/20/09)
- The National Association of Home Builders/Wells Fargo sentiment index dropped to 18 in October from 19 in September--the first decrease since June. The index was expected to rise to 20 in October, according to economists surveyed by MarketWatch. The index hit a record-low of 8 in January. More than four years ago, the index peaked at 72. The reason for the October dip is the pending expiration of a government subsidy for buyers, which is causing U.S. home builders to become more pessimistic, the association said Monday (MarketWatch Oct. 19). However, in related news, September was a busier month for homebuilders and real estate agents, and the index of leading economic indicators rose, analysts said. These developments are adding to evidence that the next U.S. economic expansion has begun, they added. In September, construction started on 610,000 houses at an annual rate--the most since November, according to a median forecast of 53 economists surveyed by Bloomberg News before today's Commerce Department report (Bloomberg.com Oct. 18) ...
- The retail holiday shopping season should be better than originally forecast, analysts said. Intel Corp.--the largest computer chipmaker in the world--predicted Oct. 13 that robust consumer demand will spark fourth-quarter sales to the $9.7 billion to $10.5 billion range, compared with a $9.5 billion average prediction in a Bloomberg News survey. Also, TJX, which operates clothing store chains T.J. Maxx and Marshalls, increased its fourth-quarter comparable-sales estimate Oct. 8 to a 3% to 5% gain from an original estimate of an increase of 2% to 4%. "Consumers' bunker mentality is gradually giving way to more-familiar spending patterns," said Michael Feroli, an economist at JPMorgan Chase & Co. (Bloomberg.com Oct. 19) ...
News of the Competition
MADISON, Wis. (10/20/09)
- Federal investigators intend to file charges against a bigger assortment of insider trading networks--some of whom are connected with a criminal case made public last week against Raj Rajaratnam, a billionaire hedge fund manager, said sources familiar with the situation. The two-year-old investigation is targeting securities professionals, including hedge-fund managers, lawyers and others involved with Wall Street, the sources added. For years, investigators have struggled to compile evidence against large institutional investigators--such as hedge fund mangers--who often claim that suspiciously timed bets are statistical anomalies among their millions of trades, analysts said. Investigators now are taking more aggressive steps to sift through the maze of trading and accurately follow the flow of information, analysts said (Bloomberg.com Oct. 19) ...
- On Friday, federal regulators closed San Joaquin Bank in Bakersfield, Calif., moving the national tally of federally insured failed banks to 99 this year. The Federal Deposit Insurance Corp. (FDIC) was chosen as a receiver of the bank. As of Sept. 29, the bank possessed roughly $775 million in assets and $631 million in deposits. California-based Citizens Business Bank will assume San Joaquin Bank's deposits. The bank's failure will cost the FDIC about $103 million, analysts said (topnews.us Oct .19) ...
Fiserv drives paperless bill adoption
BROOKFIELD, Wis. (10/20/09)--Fiserv's Biller Direct HV, which integrates e-bill pay into company websites, has been enhanced with new delivery and alerting capabilities to drive paperless bill adoption.
Biller Direct HV now includes a "push e-bill" option to deliver secure PDF e-bills through e-mail and mobile alerts that let consumers know when a bill has been received. The e-bills and alerts can help billing organizations, such as credit unions, reach a bigger audience and appeal to consumers who have not yet switched to paperless billing, Fiserv said.
"There is a digital transformation underway and it can be challenging for billing organizations to keep up with payment trends, consumer wants and needs, government regulations and emerging technologies, on top of running their own business," said Adam Craig, Fiserv director of product management, Biller Solutions. "The key to maximizing e-bill adoption is delivering bills wherever consumers prefer, whether it is online at the biller's site, [financial institution] site, via e-mail or on a mobile device."
Biller Direct HV's PDF function allows consumers to receive and view a PDF version of their bill from any e-mail inbox. An encrypted PDF attachment is added to the bill reminder with a passphrase for added security.
The mobile alert system delivers text messages to a consumer's mobile device, notifying them about their billing account, a bill reminder and bill summary information. Fiserv has secured partnerships with several U.S. mobile carriers to make the upgrade available to consumers.
A report by Forrester Research indicates that incorporating mobile alerts to notify consumers of bills coming or past due will increase the utility and immediacy of bill payment services, particularly for younger consumers.
Fiserv provides payment technology solutions to financial institutions, including credit unions.
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