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Filed on October 26, 2009, published the first business day after.
- Data security debate returns
- CUNA reloads interchange postcard efforts
- Congress this week: Overdraft on the agenda
- NCUA sends CU 'Letters' on premium assessments, signage
- Inside Washington
- Cumorah CU shuttered by state regulator
- New Yorker: Move to CUs to deal with megabanks
- Members United Corporate reserves $281.5M for more losses
- CU shout out on Today Show
- Film director: Take your money out of a bank, put it into a CU
- New insurance stems from rising employment liability risks
- Kenyans flock to rural CU branch
- Minn. biz mag notes CUs’ willingness to lend
- Robbery stops ICU Day event at CU
- CU System briefs
- Market News
- News of the Competition
- Coopera, TMG offer prepaid reloadable cards for Hispanics
- CUSO: Exercise care with mortgage documents
Data security debate returns
WASHINGTON (10/27/09)--The data security debate returns to Congress this week as the Senate Judiciary Committee has scheduled for Thursday a markup session on S.1490, the "Personal Data Privacy and Security Act of 2009"; and S.139, the "Data Breach Notification Act."
S. 1490, introduced by Sen. Patrick Leahy (D-Vt.) earlier this year, would "prevent and mitigate identity theft, to ensure privacy, to provide notice of security breaches, and to enhance criminal penalties, law enforcement assistance, and other protections against security breaches, fraudulent access, and misuse of personally identifiable information."
S. 139, introduced by Sen. Diane Feinstein (D-Calif.), would "require Federal agencies, and persons engaged in interstate commerce, in possession of data containing sensitive personally identifiable information, to disclose any breach of such information."
Similar legislation has been active in the House, with H.R. 2221, the Data Accountability and Trust Act, which would require businesses to notify affected customers when outside parties gain access to sensitive information due to a security breach, passing the House Energy and Commerce Committee by voice vote earlier this month.
Credit Union National Association (CUNA) President/CEO Dan Mica commented at the time that while entities that have experienced data breaches in recent years may not have the necessary contact information to reach the individuals whose accounts may have been compromised, the financial institutions of affected accountholders do. CUNA supports allowing financial institutions to charge retailers for any costs incurred by the financial institution that is forced to notify its accountholders following a data breach.
Data security has long been a hot topic on the Hill, and several data security bills worked their way through the House and Senate in 2005, 2006 and 2007, although lawmakers never completed debate on the issue, and legislation remains pending.
However, data security is still an increasingly important issue, and TJX Cos. was at the center of 2007 data breach that resulted in an $8 million gift card and electronic goods scam that used credit card data stolen from the retailer.
Also, Heartland Payment Systems announced earlier this year that millions of credit card accounts from credit unions nationwide may have been compromised following a data breach. Visa and MasterCard also fell victim to a less serious data breach earlier this year.
CUNA reloads interchange postcard efforts
WASHINGTON (10/27/09)--The Credit Union National Association's (CUNA) interchange postcard campaign continues apace, and CUNA has ordered 100,000 postcards in addition to the 250,000 already distributed to meet the demands of the grassroots communication effort.
The postcards, which feature the iconic credit union little guy pictured on a credit card, have been distributed to natural person credit unions by the state credit union leagues. The postcards are then handed out by employees, such as tellers, to credit union members as they do business at their local branches.
CUNA announced that it hoped to have credit union members mail all 250,000 individual postcards to the Senate by the end of November, and, as noted, CUNA has already ordered another 100,000 pieces in response to requests for more from league nationwide.
As Christina Mihalik, vice president of governmental affairs of the Pennsylvania CU Association said in her re-order communication to CUNA, "They're going like hot cakes!"
Mihalik said Monday, "We appreciate the response and support of all Pennsylvania's credit unions that made contacts electronically or by postcards. The voice of credit unions and consumers--that interchange hurts us all--has been heard loud and clear by Pennsylvania's Congressional delegation."
The interchange outreach effort has also resulted in over 60,000 emails being sent to Congressional representatives.
CUNA has fiercely opposed merchant proposals that would affect interchange fees. Interchange reflects a merchant's fair share of the costs of the convenient card system and supports everything from re-issuing cards compromised by merchant data breaches to providing a call center to contact if a card is lost or stolen.
Credit union leagues have also used CUNA's Hike the Hill program, the 2009 version of which concludes this week with a visit from the Iowa Credit Union League, to communicate with Congressional representatives on interchange and other issues central to credit union success.
Congress this week: Overdraft on the agenda
WASHINGTON (10/27/09)--The most noteworthy Washington news for credit unions may not happen until the end of the week as the House Financial Services Committee has scheduled a hearing on H.R. 3904, "The Overdraft Protection Act of 2009," for this Friday.
The legislation, introduced by Reps. Carolyn Maloney (D-N.Y.) and Barney Frank (D-Mass.), would, according to www.thomas.gov, "amend the Truth in Lending Act to establish fair and transparent practices related to the marketing and provision of overdraft coverage programs at depository institutions."
The bill is cosponsored by Reps. Luis Gutiérrez (D-Ill.), Gary Ackerman (D-N.Y.), Michael Capuano (D-Mass.), Keith Ellison (D-Minn.), Anna Eshoo (D-Calif.), Rubén Hinojosa (D-Texas), Paul Hodes (D-N.H.), Walter Jones (R-N.C.), Paul Kanjorski (D-Penn.), Daniel Maffei (D-N.Y.), Brad Miller (D-N.C.), Gwen Moore (D-Wisc.), Jackie Speier (D-Calif.), and Maxine Waters (D-Calif.).
Similar legislation has been introduced in the Senate and the Federal Reserve is also reportedly working to address overdraft protections. House Financial Services Chair Rep. Barney Frank (D-Mass.) has also indicated that the Consumer Financial Protection Agency, the plan for which could come to the House floor within the next month, could itself create new overdraft rules.
The Committee had not announced a witness list for the hearing at press time.
Another issue of interest to credit unions will be discussed on the Senate side on Thursday, with the Senate Judiciary Committee holding a markup session on S.1490, the "Personal Data Privacy and Security Act of 2009"; and S.139, the "Data Breach Notification Act."
The House later today will consider H.R. 3854, the Small Business Financing and Investment Act. The Credit Union National Association has touted credit unions' ability to help small businesses in a tightening market through offering business loans to their members.
The House will also discuss H.R. 2996, the Interior Appropriations Bill, and begin work on a continuing resolution to fund the government until December 15, 2009.
The Senate also began consideration of H.R. 3548, the Unemployment Compensation Extension Act of 2009, on Monday.
NCUA sends CU 'Letters' on premium assessments, signage
ALEXANDRIA, Va. (10/27/09)--In the first of two letters to credit unions published on Monday, the National Credit Union Administration (NCUA) reminded credit unions, as it did at last month's board meeting also, that an assessment of 0.15% of insured shares will be collected from federally insured credit unions during the fourth quarter.
The NCUA has taken this action to aid the National Credit Union Share Insurance Fund's (NCUSIF) as it works to recapture its equity and repay $310 million in funds the Corporate Credit Union Stabilization fund has borrowed from the U.S. Treasury.
"Maintaining the NCUSIF at 1.30% will promote confidence in the NCUSIF and give NCUA maximum flexibility to address troubled institutions," the NCUA added in the letter.
"The invoice for the assessment will be sent in the fourth quarter of 2009 with payment due within 30 days of the invoice date," the letter added.
The NCUA has also notified credit unions of a change in its signage requirements.
According to the letter, the NCUA has altered its "official insurance sign and official advertising statement" to "permit federally-insured credit unions flexibility in advertising."
To see the NCUA letters, use the resource link.
Inside Washington
- WASHINGTON (10/27/09)--Members of the New Jersey Credit Union League (NJCUL) recently hiked Capitol Hill in Washington, D.C., to discuss with their constituents the proposed consumer financial protection agency; the Credit Card Accountability, Responsibility and Disclosures (CARD) Act; and other legislation involving overdrafts, interchange and member business lending.
There was a high level of interest in the CARD Act and the effects the law would have on credit unions, according to NJCUL (The Weekly Exchange Oct. 19). "It was clear that Congress is looking for real-world examples of how these laws will affect credit unions and ultimately affect consumers," said Paul Gentile, league president/CEO. Before hiking the Hill, the group started its day at Credit Union House with a regulatory briefing from the National Credit Union Administration and a legislative briefing with staff at the Credit Union National Association. (Photo provided by the New Jersey Credit Union League) ...
- WASHINGTON (10/27/09)--House Financial Services Committee Chairman Barney Frank (D-Mass.) could introduce legislation that would affect how the government deals with financial institutions slated to be "too big to fail" (The New York Times Oct. 26). Frank's bill would make it easier for the government to take over troubled institutions, eliminate management and shareholders, and change the terms of loans held by the institution. Treasury Secretary Timothy Geithner was expected to endorse the changes to the bill during a House Financial Services Committee hearing Tuesday. The Obama administration's "too big to fail" plan would already make it more expensive to be a large financial company whose failure could endanger the financial system and economy. The companies would be required to keep more money in reserves and would have more difficulty borrowing against their assets ...
- WASHINGTON (10/27/09)--The director of the proposed consumer financial protection agency--approved by the House Financial Services Committee last week--would have extensive power. The director would be under advisement from two oversight panels but would not have to follow recommendations. Instead, the director would have the ability to address unfair or deceptive practices. Elizabeth Warren, professor at Harvard University, is perceived by industry observers to be the top candidate for the position. The financial services industry has balked at the agency, saying it could damage the industry. Rep. Barney Frank (D-Mass.), author of the consumer protection agency bill, supports it. During a press conference last week, Frank said a "top-heavy governance structure" could leave a consumer vulnerable without protection ...
- WASHINGTON (10/27/09)--Consolidating bank supervisors into one agency would lead to failure, Rep. Barney Frank (D-Mass.) said. He told reporters at a press conference that there is "no remote chance of it happening." The idea of a single regulator has been pushed by Senate Banking Committee Chairman Christopher Dodd (D-Conn.), who plans to make consolidation a part of an upcoming reform bill ...
Cumorah CU shuttered by state regulator
LAS VEGAS (10/27/09)--Nevada state regulators closed Las Vegas-based Cumorah CU Friday night and announced that Rantoul, Ill.-based Credit Union 1 will assume Cumorah's deposits and assets.
Cumorah is the third credit union in Las Vegas to fail this year and the first privately insured Nevada credit union to be closed since the nation's financial crisis began (Las Vegas Review Journal Oct. 24). American Share Insurance, a private share insurance company based in Ohio, is the liquidating agent.
Credit Union 1 CEO Paul Simons was appointed interim CEO before the announcement was made that the $574 million asset Credit Union 1 would take over the deposits and assets. He said Cumorah's problems began with delinquencies in its commercial real estate loans.
Cumorah, with $147 million in assets and $129 million in deposits, has 60 employees, two offices in Las Vegas and two in Henderson (Las Vegas Sun Oct. 23).
According to the Nevada Financial Institutions Division, the credit union had inadequate capital and mounting loan losses. In the past 18 months, former CEO Tony Mook said the credit union had laid off 42 of its 101 employees to cut expenses. He resigned Oct. 5 after 19 years as CEO.
Members can conduct transactions as usual, with their deposits insured up to $250,000, said the regulator.
Other Nevada credit unions to fail this year include Community One FCU, Las Vegas, which was assumed by America First CU, Ogden, Utah, on Aug. 12, and Clearstar Financial CU, Reno, which went to United CU, Mexico, Mo.
Three banks also have failed since the year began. In all, nine financial institutions in Nevada have failed since July 2008.
Cumorah served 15,000 members of The Church of Jesus Christ of Latter-day Saints. It was established in 1965.
New Yorker: Move to CUs to deal with megabanks
NEW YORK (10/27/09)--Consumers will have to rise up "en masse" and move their money to credit unions before the market will deal with megabanks' problems, according to a recent article in the New Yorker.
The author, James Surowiecki, noted that big banks--like Wells Fargo, Citigroup, Bank of America and JPMorgan Chase--have even gotten larger, controlling nearly 40% of the country's total banking deposits and two-thirds of credit cards (The New Yorker Oct. 26).
Banks' growth isn't because of their customer-friendly philosophy. Instead, they've done the opposite by charging higher fees than other institutions. But many customers and clients haven't moved on because switching from one financial institution to a credit union is often considered a hassle.
"A 2001 study showed that the cost of switching a loan came to about a third of the loan's annual interest rate," Surowiecki wrote. "Even if people are dissatisfied with their bank, it's usually cheaper not to fight than switch."
Still, he encouraged consumers to move their money to credit unions. Only then will the market have to deal with the problem of megabanks, which means Washington will then have to deal with them, he wrote.
Members United Corporate reserves $281.5M for more losses
WARRENVILLE, Ill. (10/27/09)--The September financial statements for Members United Corporate FCU, based in Warrenville, Ill., are much as expected, with the corporate indicated it is recording $281.5 million in capital shares to be available for weathering more potential losses.
Members United Corporate released its financial statements for Sept. 30 on Friday. The $7.5 billion asset corporate eliminated its retained deficit that existed in the previous financial statement at the end of August.
In accordance with guidance from the National Credit Union Administration (NCUA), the corporate depleted 100% of paid-in-capital and recorded a 40.1% depletion in membership shares.
The corporate noted that "both U.S. Central and Members United have not completed their respective investment OTTI (other than temporary impairment) reviews." The report added that results from reviews in process are not incorporated into the financial performance report.
"Both reviews are expected to generate additional investment losses which will be recorded and reported in the October financial statements," the report said. "Assuming that these reviews result in a new retained deficit, it is likely that additional depletion will be charged against the remaining membership capital share balances in the month of November 2009," it added.
"While the results of the investment OTTI review that is in process are not final and ready for release, management does not anticipate that losses from this review will exceed the remaining $281.5 million of membership capital shares," the report said.
Members United, like other corporates, is following NCUA guidance as outlined in Rules and Regulations 704.2 and Letters ot Credit Unions No. 09-CU-10 regarding depletion of capital from the impact of U.S. Central FCU and corporates' own investment OTTI.
To access the financial statement, use the resource link.
CU shout out on Today Show
NEW YORK (10/27/09)--Consumers were encouraged by a finance expert to find credit cards at credit unions on The Today Show Monday during a segment on credit card fees.
During the show, Today Show host Matt Lauer interviewed a financial expert--Carmen Wong Ulrich--about credit card fees. Some major credit card companies--such as Bank of America and Citibank, plan to begin charging cardholders fees for inactivity. Lauer asked Ulrich how consumers can avoid paying the fees.
Ulrich responded: "About 80% of companies aren't charging these new fees--especially credit unions. Go to NCUA.gov and you can search Find a Credit Union. No fees and great rates."
To see the video, use the link.
Film director: Take your money out of a bank, put it into a CU
DETROIT (10/27/09)--A Michigan filmmaker is encouraging consumers to take their money out of banks and put it into credit unions.
Michael Moore, film director, has released a list of 15 things every American can do to fix what Moore considers "a broken system" (The Examiner Oct. 25).
Moore just released, "Capitalism: A Love Story." Since the release of his film, Moore told the newspaper he has been asked by viewers what they can do to help.
At the top of Moore's list of five things Americans can do to protect themselves and their loved ones was to deposit money at a credit union. "Take your money out of a bank if it took bailout money and place it into a locally owned bank or credit union," Moore said.
The controversial film maker has directed movies such as "Roger and Me," "Fahrenheit 9/11," "Bowling for Columbine," and "Sicko."
New insurance stems from rising employment liability risks
MADISON, Wis. (10/27/09)--A 30% spike in employment liability claims paid in 2008 is the catalyst for CUNA Mutual Group's new Employment Practices Liability (EPL) coverage and risk management offering.
Employment Practices Liability insurance is a key part of CUNA Mutual's new Management and Professional Liability (MPL) policy, which covers credit unions and their staff against alleged violations of federal, state, local and common law related to past, present or prospective employment.
These allegations may include discrimination, wrongful termination or workplace harassment, said John Wallace, CUNA Mutual bond and MPL product executive.
"Typical compensatory awards range from $100,000 to $500,000, which is conservative because it does not include punitive damages or other awards," Wallace added. "The recent spike in frequency and severity of employment-related lawsuits is driven primarily by higher unemployment rates."
A prevention-oriented approach combined with modern insurance coverages can help safeguard credit unions from potentially severe financial losses resulting from employment practices litigation, Wallace said. "Our new online risk management resources are prepared by employment litigation specialists and can help credit unions avoid such losses," he added.
CUNA Mutual's Employment Practices Risk Management program features Web-based resources, including:
- Articles and news briefs;
- Employment-practices training modules for credit union staff;
- A reference library with papers, checklists, self-assessment tools and links to government websites; and
- Model forms and policies.
These online resources will be available after Jan. 1 at no additional cost for credit unions purchasing EPL coverage with their MPL policy.
"These specialized risk management tools provide protection beyond the policy for credit unions in response to a very significant and growing loss category for our industry," Wallace said.
MPL is part of CUNA Mutual's Credit Union Protection insurance and risk management portfolio designed exclusively for credit unions to manage their financial, operational and personal risk exposures. The Credit Union Protection program includes:
- Bond;
- Plastic card;
- Management and professional liability;
- Property and business liability;
- Business auto;
- Workers' compensation; and
- Plus, additional policies.
Kenyans flock to rural CU branch
NZAIKONI, Kenya (10/27/09)--The Universal Traders savings and credit cooperatives (SACCO)--UTS--credit union branch in the mountaintop community of Nzaikoni, Kenya, has experienced a groundswell of interest from members in a community that never had access to financial services.
However, the steady member growth over the past 90 days was nothing like the rush during the branch's official grand opening Wednesday, when a member of Kenya's parliament pledged her support of the branch by joining UTS and offering to sponsor the initial fees to enroll 20 new members.
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| Wavinya Ndeti, a member of Kenya's parliament, encourages citizens of Nzaikoni, Kenya, to join the new Universal Traders savings and credit cooperatives (SACCO) branch, which is supported by the World Council of Credit Unions. |
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| A staff member from the Nzaikoni branch of UTS lines up men interested in enrolling in the SACCO. (Photos provided by World Council of Credit Unions) |
UTS opened the Nzaikoni branch after several years of support from World Council of Credit Unions' (WOCCU) SACCO Growth Program in Kenya, funded by the Bill & Melinda Gates Foundation. With WOCCU's assistance, the small credit union was turned into a regional powerhouse that has attracted involvement from the Kenyan government to administer its agricultural lending program, and establish additional branches, WOCCU said.
The rapid rise of membership in the Machakos-based UTS's fifth branch proved to be a surprise. Residents of the poor community appeared at the small branch during the past few months with jars of money that had been buried in the ground so long that the contents smelled musty.
Members hid their funds at home because they lacked the means to take public transportation down the mountain to other SACCOs.
"People say it is a miracle that a financial institution has opened here," said Isaiah Mutungi, chairman of the UTS board.
During the grand opening, several officials spoke, including Jesus Chavez, who manages the Kenya SACCO Growth Program.
Wavinya Ndeti, an assistant minister in Kenya's parliament who represents the Kathiani Constituency in which Nzaikoni is located, officially opened the SACCO. She congratulated both the credit union and the community on coming together to provide affordable financial alternatives to people who need them the most.
"Thank you for bringing UTS here," Ndeti said. "These people are the lowest of the low and don't have much. We will judge you by the changes you bring to our people. If I see good results, I promise I will give you 101% support in your efforts."
As a show of faith, Ndeti became a UTS member. She also agreed to sponsor 10 female members and 10 youth members, paying the 100 Kenyan shillings (about $1.20) each to enable them to join.
"You can see that the people really need this office," said Stephen Kisili, UTS general manager. "It has come out very clearly how critical that need is."
Minn. biz mag notes CUs’ willingness to lend
MINNEAPOLIS (10/27/09)--A Twin Cities Business article recently explored Minnesota credit unions' willingness to lend and serve their members despite a tight economy.
The article, "Extra Credit," also included comments from Minnesota credit unions CEOs; Mark Cummins, president/CEO of the Minnesota Credit Union Network; and Mike Schenk, Credit Union National Association senior economist.
The overall tone of the article focused on credit unions' willingness to lend to small businesses and consumers who have been turned away by other financial institutions.
"We get a lot of members who say they're being shut out for business loans," Jeff Schwalen, Hiway FCU president/CEO, told the magazine. "They may be too small for many banks, or maybe they don't qualify. We'll take a look, and for the most part, we're able to do the loan, assuming they can meet our requirements."
Cummins told the magazine that the state's credit unions are experiencing deposit growth and continuing loan activity. Credit unions also remain at near-record levels for capital ratios, added Schenk.
Credit unions in Minnesota have experienced a drop in net income--to $16.4 million last year from $80.2 million in 2007--because of the housing collapse. However, credit unions' lending increased by 1.65% in 2008, and total shares and deposits surged 6.85% to $12.2 billion, the magazine said.
"We're not immune to what's happening in the economy, but in a relative sense, we're doing very well," Cummins added.
The "really surprising thing to me is, given the heightened correction in housing in the Twin Cities, is that both banks and credit unions seem to be doing pretty well there," Schenk said.
Other statistics the article noted include:
- Real estate loans--mortgage and equity lending--made up 57% of Minnesota credit unions' total lending of $9.96 billion in 2008;
- Credit unions showed an annualized write-off rate on all loans of 0.94%, compared with rates of 1.11% for all U.S. credit unions and 1.94% for banks;
- Credit unions had a write-off rate of 1.63% compared with 4.88% of U.S. banks; and
- Credit unions' capital ratio was 10.2% as of March. Seven percent is considered "well-capitalized" by the state.
Robbery stops ICU Day event at CU
HARRISBURG, Pa. (10/27/09)--An armed man robbed the Lebanon (Pa.) FCU (LFCU) on International Credit Union (ICU) Day, Oct. 15, stopping its ICU Day events.
However, the credit union donated hundreds of spray hand sanitizers--originally purchased for members as part of the ICU Day celebration--to local elementary schools, according to the Pennsylvania Credit Union Association (Life is a Highway Oct. 26).
The robbery occurred at 9:21 a.m., when a man entered the $136.6 million asset credit union, displayed what appeared to be a handgun and demanded cash from the tellers (Pennlive.com Oct. 16). He placed the cash in a duffle bag and fled on foot. Several members were in the credit union at the time, but no one was injured, according to police (Lebanon Daily News Oct. 15).
The robbery closed the credit union, ending all its ICU Day events, which included a live radio broadcast, Italian Ice cart, autographed footballs from Bill Bergey and "lots of food."
The credit union board decided area schools could use the hand sanitizers to help fight cold and flu germs.
"This is taking an unfortunate event that happened to our credit union and using it to benefit our community," Pat Hain, CEO, said. "Keeping kids and families safe and making our community a stronger and better place is LFCU's goal."
CU System briefs
- PUEBLO, Colo., and COLORADO SPRINGS, Colo. (10/27/09)--Members of Pueblo, Colo.-based Pueblo City Employees FCU (PCE) voted Friday night to merge with Colorado Springs-based Aventa CU (Gazette Oct. 24). The merger will take place March 1 and result in a combined credit union with nearly $150 million in assets and 18,000 members. PCE will retain its name. It handles accounts, payroll checks and loans for city employees and community members. Aventa CU said the vote was for better financial stability, products and services. Aventa was established in 1957 as Colorado Springs Employees CU ...
- SARASOTA, Fla. (10/27/09)--Sarasota (Fla.) Coastal CU members were to vote last night on whether to merge with Achieva CU, based in Clearwater, Fla. Sarasota Coastal has $215 million assets while Achieva has $666.8 million in assets.(HeraldTribune.com Oct. 23). Sarasota Coastal has struggled with bad loans and to stay the course would require cuts in service levels and member offerings, while merging with a larger credit union will provide members with what they deserve. Sarasota Coastal board Chair Janet C. Cantees told the Herald Tribune. Achieva said longtime Sarasota Coast CEO Thomas J. Randle would retire and that it will select two Sarasota Coastal directors to join its board. It does not plan to close any of the Sarasota Coastal's five offices but there may be layoffs in duplicated jobs ...
- WINSTON-SALEM, N.C. (10/27/09)--Winston-Salem (N.C.) City ECU Chief Financial Officer Don Wolford, will take to the skies Wednesday to accompany three World War II veterans--ages 87, 89 and 90 years old--to Washington, D.C., to the World War II Memorial on the Mall, which honors the sacrifices of the "Greatest Generation." Wolford was selected as part of the Triad Flight of Honor, a series of three trips. "I'll be responsible for making sure that the veterans assigned to me have a good trip and have all their needs met," he told the North Carolina Credit Union League, adding that the trio the trip "is an emotional experience for everyone, both at the memorial and then coming back to the airport." More than 1,000 people in Greensboro, N.C. welcomed home a flight earlier this month. The event is part of the Honor Flight Network, conceived by Capt. Earl Morse (USAF-Ret.) in 2005 and has received widespread publicity. Check out the video about the flight ...
Market News
MADISON, Wis. (10/27/09)
- With the U.S. preparing to sell a record $123 billion of notes to fund its stimulus program program and record deficits, Treasuries dropped Monday with 10-year note yields hitting their highest level in the past two months. Government securities dropped for a fourth consecutive day before Monday's offering of $7 billion in five-year Treasury Inflation Protected Securities, constituting the first of four note auctions this week. The Federal Reserve likely will end its $300 billion debt buyback Thursday, analysts said. The 10-year yield will rise to 3.56% by year-end, according to the average forecasts of analysts in a Bloomberg survey (Bloomberg.com Oct. 26) ...
- U.S. retail gas prices are jumping to summer driving-season levels, engendering fears that consumers might cut back on holiday spending, analysts said. On Monday, for the 13th consecutive day, the average price for a gallon of regular gasoline increased--adding six-tenths of a cent to $2.671, according to several industry sources. The 20-cent, two week jump in prices--although below what drivers paid this time last year--could cause consumers to spend less during the holidays because they already are coping with rising unemployment, falling home prices and troubled 401(k) accounts, said Ryan Sweet, a senior economist with Moody's Economy.com. "If they're spending more money at the pump, they're going to be less willing to go out to the malls to spend frivolously," he added (The New York Times Oct. 26) ...
- As market strains abate, borrowing has continued to decline at most lending facilities that the Federal Reserve launched to mitigate the impacts of the financial crisis, the Fed said Friday in a monthly report. "Continued improvements in financial market conditions have been accompanied by further declines in credit extended through many of the Federal Reserve's liquidity programs," the Fed said in its 35-page report, titled "Federal Reserve Credit and Liquidity Programs and the Balance Sheet." In the meantime, purchases of Treasuries and mortgage-related securities to help ameliorate transitions in those markets have continued to marginally increase, analysts said. This resulted in the Fed holding roughly $2.1 trillion in assets as of Sept. 30--up $66 billion from the previous report Aug. 26, and from $1.5 trillion one year earlier, analysts said (Dow Jones Newswires Oct. 26) ...
- Federal restrictions on executive compensation at seven U.S. companies receiving extraordinary government help would eliminate roughly $879 million from their compensation, according to documents filed by Kenneth Feinberg, the special master for Troubled Asset Relief Program (TARP) executive compensation. The documents indicate how much pay would be slashed for the top 25 employees at each of seven companies. The companies are: GMAC Inc.; American International Group, Inc., Citigroup Inc., Bank of America Corp., General Motors Co., Chrysler Group LLC and Chrysler Financial. Auto lender GMAC Inc. will have the largest reduction in compensation with pay for its top 25 employees reduced by $413.3 million from last year's level. The companies have 30 days to ask Feinberg to reconsider (Dow Jones Newswires via American Banker Oct. 26) ...
News of the Competition
MADISON, Wis. (10/27/09)
- Seven banks failed Friday, raising the number of failed banks so far this year to 106. The failed banks include Partners Bank, Naples, Fla.; American United Bank, Lawrenceville, Ga.; Flagship National Bank, Bradenton, Fla.; Hillcrest Bank Florida, Naples, Fla.; Bank of Elmwood, Racine, Wis.; Riverview Community Bank, Otsego, Minn.; and First Dupage Bank, Westmont, Ill. The Federal Deposit Insurance Corp. estimates that the failures will cost the Deposit Insurance Fund $356.7 million (Bankinfosecurity.com Oct. 24) ...
- ING Groep NV, a Dutch financial services company, plans to break up and sell its insurance and banking businesses, and also raise $7.5 billion euros ($11.3 billion) in a stock issue. ING reached a deal with the Dutch government to repay ahead of schedule half the funds it received in a bailout last year, analysts said. In 2008, ING stayed afloat with 10 billion euros in emergency funds issued from the Dutch government last October. Since then, the company has been divesting itself of assets in Asia, Europe and North America to raise capital and restructure, analysts added. ING's divestiture also aims to appease European Union regulators who are investigating the Dutch government's aid to the company through an asset guarantee program that the two agreed to in January (The New York Times and Bloomberg.com Oct. 26) ...
- Porter Bancorp, Louisville, Ky., said Friday it has begun an exchange offer to acquire all the outstanding common shares of Citizens First Corp. for $9 per share. The offer is scheduled to expire Dec. 22. Porter Bancorp announced Oct. 15 that it had entered into option agreements to purchase roughly 15.8% of Citizens First common stock, raising its beneficial ownership to 19.7% of the outstanding Citizens First common stock. On that date, Porter Bancorp also renewed its offer to Citizens First to consider a possible business combination, analysts said (Reuters Oct. 23) ...
Coopera, TMG offer prepaid reloadable cards for Hispanics
DES MOINES, Iowa (10/27/09)--Coopera Consulting and The Members Group (TMG) have partnered to provide Affinity CU of Des Moines, Iowa, with prepaid reloadable cards to serve the Hispanic market.
The reloadable card program (ATIRAreload) will help Hispanics access cash and build a credit history, the companies said in a release. TMG plans to work with Coopera to launch an outreach program for the pilot, which will include grassroots marketing, financial education and community development efforts.
TMG and Coopera also will create a culturally relevant prepaid reloadable card website, Spanish marketing materials and disclosures, and a Spanish text balance feature for card users. TMG recently introduced a new short message service to ATIRAreload so cardholders can elect to receive a text message alert for low balances, value load or purchase transactions. They also can send a text to TMG to check account balances.
Affinity partnered with Coopera earlier this year for a Hispanic outreach initiative. Coopera specializes in helping credit unions grow by serving Hispanics. Both Coopera and TMG are affiliates of the Iowa Credit Union League.
Affinity also was awarded $40,000 through an innovation grant from the National Credit Union Foundation to launch the pilot program with Coopera and TMG.
Affinity CU has $61 million in assets.
CUSO: Exercise care with mortgage documents
MIDWAY, Utah, and GRAND RAPIDS, Mich. (10/27/09)--Credit unions need to exercise care when relying on electronic images of mortgage loan documents, according to eDoc Innovations, a credit union service organization.
eDOC advises credit unions to retain note and disclosures, titles and stock certificates. Supplemental documents--like appraisals--can be destroyed.
Last week, the Washington State Department of Financial Institutions issued a bulletin reminding credit unions that electronic documents may not resolve all legal issues in litigation. Judges nationwide have declined to grant foreclosure proceedings unless parties involved could produce original loan documents.
Many credit unions have begun retaining electronic images of their documents instead of paper copies, which is consistent with some state and federal laws. The Electronic Signatures in Global and National Commerce Act of 2000 provides that a signature, contract or other record may not be denied legal effect because it was signed electronically.
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