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Filed on October 29, 2009, published the first business day after.
- Senate fixes 21-day CARD Act problem
- CUNA to testify vs. arbitrary overdraft-protection limits
- NCUA liquidates Second Baptist Church CU in Calif.
- Regulators testify on financial services oversight
- A second House committee approves CFPA legislation, with changes
- Inside Washington
- September CU loans rise less than expected
- Forbes, media broadcast positive CU card study
- Sarasota Coast members back a merger
- Spike in fraud alerts is no Halloween prank
- Grant implements payroll card program for unbanked
- StretchPay now offered at 170 branches
- CU takes steps to protect staff from germy cash
- Four CUSOs discuss back-office collaboration
- CU first in Michigan to allow e-mortgage closings
- Altura CU reports good 3Q in hard-hit Inland Empire
- Mississippi announces Maxwell, Desjardins winners
- CU System briefs
- Market News
- News of the Competition
- H&FF Radio guests discuss recession tactics
- Products and Services briefs
Senate fixes 21-day CARD Act problem
WASHINGTON (10/30/09)—Just two weeks after House members approved H.R. 3606, the CARD Act Technical Corrections Act, by voice vote, their colleagues in the Senate voted by unanimous consent to ratify the bill. Next stop for the measure: The president's desk to be signed into law.
Credit Union National Association President/CEO Dan Mica hailed the House and Senate actions calling the votes "a crucial accomplishment." The correction to section 601 of the original Credit Card Accountability, Responsibility and Disclosure (CARD) Act declares that a 21-day late-notice rule would apply only to credit cards -- and not open-end credit in general.
"Our thanks to the Senate today, and particularly to Majority Leader Harry Reid (D-Nev.), for quickly bringing this vital measure to the floor for action. Credit unions have been absolutely reeling from the unintended consequences of this section of the Credit CARD Act," Mica said after the Senate vote Thursday.
CUNA has worked closely with lawmakers and their staff, Mica noted, warning that the CARD Act, as originally written, was problematic. It would prevent credit unions from granting biweekly payment plans to their members, from sending members consolidated billing statements, and would force them to change payment due dates for members that had previously chosen due dates based on their specific financial circumstance. The situation was particularly knotty for Home Equity Lines of Credit (HELOC) because the due date of a HELOC is often a contractual term.
"Once this measure is signed into law credit unions may continue the practices of sending members consolidated billing statements, changing payment due dates for members who had previously chosen a due date based on their specific financial situation, and continuing bi-weekly payment plans -- all essential tools consumers use to manage their finances in the ways that best suit their needs," Mica noted.
The CUNA leader also commended Rep. Peter Welch (D-Vt.) for bringing the original measure to the House floor and thanked state leagues for their support with many key Senate and House leaders.
CUNA to testify vs. arbitrary overdraft-protection limits
WASHINGTON (10/30/09)—Although sympathetic with congressional intent to ban abusive practices connected with overdraft protection plans, the Credit Union National Association (CUNA) will testify today that pending bill H.R. 3904 is not the way to go.
At a 9:30 a.m. (ET) House Financial Services Committee hearing today, CUNA witness Rodney Staatz will warn that The Overdraft Protection Act of 2009 could well force credit unions to drop courtesy pay programs to the detriment of consumers. Staatz is president/CEO if State Employees Credit Union (SECU) of Maryland.
Staatz intends to tell the committee that while credit unions have several concerns with H.R, 3904, primary among them is its proposed limit on the number of overdrafts that can be provided by a credit union to a member. H.R. 3904 prohibits credit unions and other financial institutions from charging more than one overdraft fee per month and no more than six in a calendar year per transaction account.
CUNA strongly supports the ability of credit unions to offer overdraft protection plans as a means to help their embers resolve short-term financial problems. Such programs, CUNA maintains, when used appropriately by consumers, serve as a valuable back-up to overdrawing checking accounts or relying on payday lenders or check-cashing businesses, and are fully consistent with the philosophy and principles of the credit union system.
Staatz will use credit unions'members stories to illustrate to lawmakers how overdraft protection plans can make a positive difference in peoples lives.
Also scheduled to testify are: Jim Blaine, president, North Carolina State Employees CU; Dennis Dollar, Dollar Associates, LLC; Mark A. Colley, president/CEO, Tulsa Postal and Community FCU, on behalf of National Association of Federal Credit Unions; Jean Ann Fox, director of financial services, Consumer Federation of America; Nessa Feddis, vice president and senior counsel, center for regulatory compliance, American Bankers Association; Eric Halperin, director, Washington office, Center for Responsible Lending; Pamela Banks, senior policy counsel, Consumer Union; Richard Hunt, president, Consumer Bankers Association; and, R. Michael S. Menzies, Sr., president/CEO, Easton Bank and Trust, on behalf of Independent Community Bankers Association.
NCUA liquidates Second Baptist Church CU in Calif.
ALEXANDRIA, Va. (10/30/09)—Former members of Los Angeles-based Second Baptist Church CU will now be served by Rancho Dominguez, Calif.'s Prosperity FCU after the National Credit Union Administration (NCUA) on Thursday announced that it is liquidating the failed credit union, Second Baptist.
The NCUA was appointed liquidating agent by the California Department of Financial Institutions earlier in the week. In a separate release, the California Department of Financial Institutions cited "insolvency and failure to obey an order" as reasons for the credit union closure.
Prosperity FCU, which currently holds $14.4 million in assets from 2,900 members, will now serve the 340 former members of Second Baptist.
Second Baptist is the 12th federally insured credit union to be liquidated in 2009, according to the NCUA.
Nevada state regulators closed Las Vegas-based Cumorah CU late last week, and Rantoul, Ill.-based Credit Union 1 has assumed Cumorah's deposits and assets.
Regulators testify on financial services oversight
WASHINGTON (10/30/09)--In testimony delivered before a House Financial Services hearing on Systemic Regulation, Prudential Matters, Resolution Authority and Securitization, U.S. Treasury Secretary Timothy Geithner plainly stated that "the current rules in place for our financial system are inadequate and outdated."
The draft legislation would bring the current regulatory framework "into the 21st century, granting the government carefully constrained power to contain damage to the economy while managing the failure of large, complex financial institutions," Geithner said, adding that it "represents a comprehensive, coordinated answer to the moral hazard problem posed by our largest, most interconnected financial institutions."
In a statement, Rep. Barney Frank (D-Mass.) said that his draft legislation would seek to "establish federal ‘resolution authority' which would make it possible to wind down very large, failing firms without using taxpayer funds."
"We are going to reform securitization with some risk retention," Frank said, adding that the draft legislation would also restrict "irresponsible subprime loans," would regulate derivatives, and would end the existence of unreported, unregistered large enterprises.
In her own prepared testimony, Federal Deposit Insurance Corporation Chairman Sheila Bair cited the need for improved resolution authority, improved supervision and regulation, and a comprehensive financial services oversight council to help "impose greater market discipline on systemically important institutions."
Any new regulatory structure should address "the industry's excessive leverage, inadequate capital and over-reliance on short-term funding," Bair said, adding that the structure should also "ensure real corporate separateness" and prevent banks from participating in "risky activities" such as "proprietary and hedge fund trading."
Additionally, the costs of winding down "large, systemically important firms" should not be borne by taxpayers, according to Bair. Rather, she said, "losses should be borne by the stockholders and bondholders of the holding company, and senior management" of failing firms should be replaced.
In her testimony, Bair called for the establishment of a Financial Company Resolution Fund "that is pre-funded by levies" on financial firms with at least $10 billion in assets.
Federal Reserve Board Governor Daniel Tarullo emphasized the importance of moving forward with the "administrative and legislative reform agenda" discussed during Thursday's testimony, saying that the reforms, "taken together, will enhance financial stability" and "reduce both the probability and severity of future crises."
However, Rep. Scott Garrett (R-NJ) said he was "struck" by the amount of power given to the Federal Reserve under this draft plan.
Garret added that he was "uncomfortable" with the "sweeping, unchecked power" that, under the draft legislation, could be granted to "an entity that failed to effectively regulate many of the large bank holding companies already under its purview."
A second House committee approves CFPA legislation, with changes
WASHINGTON (10/30/09)--The House Energy and Commerce Committee on Thursday approved H.R. 3126, the Consumer Financial Protection Agency (CFPA) Act of 2009, by a recorded vote of 33 to 19.
The committee also attached a managers' amendment, introduced by Rep. Henry Waxman (D-Calif.), which would shift CFPA authority from a single executive to a five-member commission of presidential appointees.
The committee also approved a separate amendment that would require the Comptroller General to examine the effects that any regulations issued by the CFPA have had on small businesses.
Commenting on the managers' amendment, House Financial Services Chairman Rep. Barney Frank (D-Mass.) said that these changes would "weaken the capacity of the agency to provide consumer protection."
"The director will have the benefit of an oversight board of bank regulators and consumer groups as well as a diverse advisory board to provide broader input. But that input should be provided without diminishing the capacity to act promptly and effectively which is best done by a single regulator," Frank added.
The CFPA legislation, which passed the House Financial Services Committee last week by a vote of 39-29, would seek to protect consumers of financial products through the creation of a powerful independent agency with extensive rulemaking, oversight, and enforcement tools.
The Energy and Commerce Committee oversees the Federal Trade Commission, which, as reported in The Wall Street Journal, would be strengthened by the CFPA legislation and would "craft regulations more quickly" and have a greater ability to "impose civil penalties on companies."
Although the goal of consumer protection is a worthy one, Credit Union National Association President/CEO Dan Mica said that he has "significant concerns about the impact that elements of this legislation will have on credit unions and their members."
CUNA is working with Frank to modify the bill before it moves on to the full House.
To see the managers' amendment in full, use the resource link.
Inside Washington
- WASHINGTON (10/30/09)--The Federal Reserve Bank will likely benefit the most from a bill introduced by House Financial Services Committee Chairman Barney Frank (D-Mass.) that addresses systemic risk. The bill would give the Fed the ability to overrule regulators, break up firms and force undercapitalized companies into involuntary bankruptcy (American Banker Oct. 29). The committee scheduled a hearing for Thursday on the role of the Fed. Banking regulators and Treasury Secretary Timothy Geithner are slated to testify. The Credit Union National Association (CUNA) has said that Frank's bill will likely not affect credit unions. Credit unions don't pose a systemic threat to the overall financial system, CUNA said ...
- WASHINGTON (10/30/09)--Banks have commented that they would rather pre-pay their assessments over the next few years to boost the Deposit Insurance Fund (DIF) instead of paying another special assessment. The Federal Deposit Insurance Corp. (FDIC) has proposed the prepayment plan to beef up the DIF's reserves (American Banker Oct. 29). The FDIC's prepay proposal was released Sept. 29 and banks could comment on the plan until Wednesday. John Lund, chief financial officer of Rockville Bank, said the plan is the "least painful" of all options. Chris Scribner, vice president, Regions Financial Corp., said the prepayment is the "right step at this time." The plan would allow the industry to be responsible for the DIF balance while minimizing the impact on lending at banks, he wrote in his letter. The American Bankers Association supports the proposal, but warned it would come with a cost, because some banks may not have the liquidity for the request ...
- WASHINGTON (10/30/09)--Federal Deposit Insurance Corp. (FDIC) Chair Sheila Bair said U.S. financial companies should prepay into a fund that the government could use to help large failed banks. Bair spoke at a House Financial Services Committee hearing Thursday (Bloomberg.com Oct. 29). Congress should create a Financial Company Resolution Fund that would require institutions with more than $10 billion in assets to pay before a firm fails, she said. Investors in the failed companies also should absorb losses, she added. The fund is more beneficial than an ex-post funded system because it allows all large firms, instead of just the survivors, to pay the assessments. It also avoids a pro-cyclical nature of requiring payments after a systemic crisis, she said. House Financial Services Committee Chairman Barney Frank (D-Mass.) and the Treasury agreed on a compromise bill that would recover taxpayers' costs in helping the failed companies ...
- WASHINGTON (10/30/09)--The Federal Reserve Thursday was expected to complete its $300 billion Treasury purchase program while signs prevailed that the seven-month program stabilized the housing market and staved off increases in borrowing costs (Bloomberg.com Oct. 29). The benchmark 10-note, which determines the rates on corporate bonds and mortgages, never moved above 4% after the Fed bought the debt. The rates are less than a half percentage point more than the day before the program was announced in March. The U.S. sold $1.25 trillion in bonds and notes, which is more than double of those sold last year. George Goncalves, chief fixed-income rates strategies in New York at Cantor Fitzgerald LP, said the Fed's purchases likely kept rates from rising faster in April through June, when 10-year notes were at 4% ...
September CU loans rise less than expected
MADISON, Wis. (10/30/09)--Credit union loan balances rose a less-than-expected 0.09% in September, down from last year's pace of 0.53%, according to a Credit Union National Association (CUNA) economist's analysis of CUNA's monthly sample of credit unions.
"Consumer credit demand remains weak in the face of serious adverse economic headwinds," Steve Rick, CUNA senior economist, told News Now. "Job insecurity, stagnant wages, falling employment and high debt levels will weigh on loan growth into the first half of 2010.
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"Credit union fixed-rate, first-mortgage loan balances rose 1.1% in September, buoyed by low mortgage interest rates and the first-time homebuyer tax credit," he added. "For the first nine months of the year, loan balances rose only 1.9%, down from 5.7% for the similar time period last year."
Following were unsecured personal loans (0.6%), other mortgages (0.5%), used-auto loans (0.3%), and credit card loans (0.2%). Home equity loans decreased 0.2%, and adjustable-rate mortgages and new-auto loans declined 0.4% and 0.7%, respectively.
Credit union savings balances increased 0.1% in September and 8.6% during the first nine months of 2009. Individual retirement accounts for the month increased 2.1%, followed by regular shares (0.9%) and money market accounts (0.7%). One-year certificates and share drafts decreased 1.0% and 4.6%, respectively.
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"With loan growth so far this year less than half last year's pace, deposit growth is almost double last year's pace," Rick said. "Credit union savings balances are up 8.6% in the first nine months of 2009, up from 4.8% last year. Credit union members are parking funds in money market accounts--18.2% growth year-to-date--and regular share accounts--9.8% year-to-date--rather than reinvesting their funds in certificate of deposits at the current low market interest rates.
"This is helping to reduce credit union funding costs and boost net interest margins as higher-cost certificates of deposit roll into lower-cost core deposits," he added.
The movement's overall capital-to-asset ratio increased to 10% in September. The total dollar amount of capital is $89 billion.
Credit union 60+ day delinquencies increased to 1.8% during the month.
"Credit quality continued to deteriorate with credit union loan delinquency rates rising over 1.77% in September, up from 1.69% in October and 1.01% last September," Rick said. "With the economy still shedding a couple hundred thousand jobs each month, we can expect the delinquency rate to remain on its upward trajectory for the next few quarters."
The loan-to-savings ratio increased to 78.1%. The liquidity ratio--the ratio of surplus funds maturing in less than one year to borrowings plus other liabilities--remained constant at 19%.
Forbes, media broadcast positive CU card study
NEW YORK and BOSTON (10/30/09)--Forbes and the Boston Globe are among the media that have broadcast positive news about credit unions' credit card behaviors from a study by Pew Charitable Trusts.
Forbes asked in a headline, "Want a Better Credit Card? Consider a Credit Union, Study Says" (Forbes.com Oct. 28).
The article begins: "Sick and tired of high credit card fees? A piece of credit union-issued plastic may be the answer. That's because credit unions offer cards on terms that are significantly better for consumers than those issued by big banks, according to a newly released study..."
The Boston Globe reported that in contrast to banks' procedures: "Pew found that the 12 largest credit unions, which have just 1% of the market, have lower interest rates, lower fees, and less punitive policies Most still have contracts that allow them to change the terms at will or take other actions the law will prohibit. But even when credit unions use such practices as penalty rates or overlimit fees, they tend to be less expensive than banks, the study said. For instance, credit unions offer cards with average late and overlimit fees of $20, versus $39 for banks."
The study gathered information on about 400 credit cards issued by the 12 largest banks and the 12 largest credit unions. It concluded that credit cards offered by credit unions provide their members with more reasonable annual percentage rates, cash advance fees, late fees, and other fees. It also found that penalty fees at the largest credit unions were nearly half of those assessed by the larger banks (News Now Oct. 29).
Credit Union National Association President/CEO Dan Mica noted that the study "is another example of an independent third party which has confirmed that credit unions, on their own and without prompting from regulators, provide their members with honest, fair deals." It also is evidence, he said, "that all the new regulations coming down on financial services are unlikely to change the behavior of credit unions since they are already doing the right things."
Sarasota Coast members back a merger
SARASOTA, Fla. (10/30/09)--Members of Sarasota (Fla.) Coastal CU voted Sunday during a special member meeting to merge with Achieva CU, Largo, Fla., on Monday. More than 86% of members voted in favor of the merger.
The resulting credit union will have more than $800 million in assets and more than 90,000 members in seven counties--Pinellas, Pasco, Hernando, Hillsborough, Manatec, Sarasota and Charlotte (Herald Tribune Oct. 28).
The contributed strengths of Achieva and Sarasota Coastal will provide even greater benefits to members, Gary Regoli, Achieva president/CEO, told the newspaper.
The credit unions' operations will begin merging early next year, with completion expected by the third quarter.
Achieva and Sarasota Coastal have been discussing a merger since April. The two signed a letter of intent to merge July 31.
Spike in fraud alerts is no Halloween prank
WASHINGTON (10/30/09)--This week saw several government warnings and alerts about financial frauds as well as several credit unions reporting other scams that could spook some accountholders. But these are no Halloween pranksters.
Keesler FCU reported that at its base in RAF Mildenhall, England, about 100 members saw fraudulent charges on their accounts this month (Stars and Stripes Oct. 28). All affected accountholders had visited Spain sometime this year, Michelle Foster, a loss prevention manager for Keesler told Stars and Stripes.
The losses were from Visa debit cards. Visa said it is aware of a possible security issue in Spain but said the investigation was ongoing and it couldn't comment. Visa Europe contacted several affected banks and credit unions when the fraud was discovered.
One Keesler member reported charges of $539.16 from boutiques in Chicago suburbs. She said the only time she used her debit card while in Spain was at a mom-and-pop store near the beach.
Another credit union , Service CU, which has 15 locations in Germany and 17 in the U.S., saw less than one-half of 1% of members' cards compromised by the breach, the newspaper said.
In another situation, the Federal Deposit Insurance Corp. (FDIC) Thursday issued an alert warning financial institutions of an increase in schemes to recruit individuals to receive and transmit unauthorized electronic funds transfers (EFTs) from deposit accounts to individuals overseas.
The recruitees or "money mules" are solicited on the Internet by criminals who have gained unauthorized access to the online deposit account of a business or consumer. The criminal will originate an EFT from a victim's account to a money mule's deposit account. The money mule is told to quickly withdraw the funds and wire them overseas after deducting a "commission" of 8% to 10%.
The schemes often occur in the context of online job posting websites, advance fee scams, mystery shopping jobs, and social networking sites. Some hesitant money mules have been threatened by their criminal "employers" if they don't make the transactions quickly and secretly, said the FDIC. The personal identifiable information provided by the money mule may be used later to commit identity theft or account takeover.
FDIC cited several examples of events may indicate money mule account activity:
- A deposit account opened with a minimal deposit soon followed by large EFT deposits.
- Deposit customers who suddenly begin receiving and sending EFTs related to new employment, investments, business opportunities or acquaintances (especially opportunities found on the Internet).
- A newly opened deposit account with an unusual amount of activity, such as account inquiries, or a large dollar amount or high number of incoming EFTs.
- An account that receives incoming EFTs and then shortly afterward originates outgoing wire transfers or cash withdrawals about 8%-10% less than the incoming EFTs; and
- A foreign exchange student with a J-1 Visa and fraudulent passport opening a student account with a high volume of incoming/outgoing EFT activity.
Other frauds noted:
- Credit unions in Western Pennsylvania opened accounts for a man who deposits bad checks into the new account and withdraws the funds before they are returned as a "closed account." Sandy Shenk, PaCUSC state coordinator, has warned credit unions on the shared-branching network to establish procedures for allowing new members access to shared branching services. "This is a perfect example of why we suggest that credit unions require new members establish a relationship with them before allowing them to use other locations (Life is a Highway Oct. 29).
- The FDIC issued a warning Tuesday about fraudulent e-mails appearing to be from the FDIC. The e-mails ask recipients to download and open a "personal FDIC insurance file" to check their deposit insurance coverage. The subject line includes the wording, "check your Bank Deposit Insurance Coverage." The message asks recipients to "visit the official FDIC website" by clicking on a hyperlink that appears to open forms. The hyperlink instead downloads an executable file that may try to obtain personal and confidential information, the FDIC said.
- A debit/credit card scam has targeted shoppers at Hancock Fabrics in Stevens Point and Marshfield, Wis., and the account information has been used for unauthorized transactions at ATMs in the Milwaukee area (Stevens Point Journal Oct. 17). Police said the scam might be traced to old credit card readers at the fabrics stores.
Grant implements payroll card program for unbanked
COLUMBUS, Ohio (10/29/09)--The National Credit Union Foundation (NCUF) awarded a $15,525 Innovation Grant to Seven Seventeen CU of Warren, Ohio, to implement a payroll card program for unbanked workers, says the Ohio Credit Union League.
The $759 million-asset credit union will offer the outreach program through its business partners, who can directly disburse wages onto Visa-branded prepaid cards for its employees (eLumination Newsletter Oct. 28).
The payroll card will provide workers who lack depository relationships with financial institutions benefits that are similar to direct deposit.
The goals of the project are to provide unbanked consumers with:
- A low-cost alternative to check-cashing outlets;
- A convenient way to access their funds; and
- A way to encourage member savings.
StretchPay now offered at 170 branches
COLUMBUS, Ohio (10/30/09)--StretchPay, the short-term loan program offered by credit unions as a salary-advance alternative, is now offered at 170 branch locations in six states and in Washington, D.C.
Collectively, credit unions offering StretchPay have made 66,000 advances totaling more than $24 million through Sept. 30--a slight increase over the same period last year, said the Ohio Credit Union League (eLumination Newsletter Oct. 28).
Credit unions made 85,090 StretchPay advances totaling $32.4 million through year-end 2008, the league added.
Changes have been made to the program to make it compliant with the federal Credit Card Accountability, Responsibility and Disclosure (CARD) Act of 2009. As of Sept. 15, StretchPay no longer is a 30-day, short-term loan product. It now is a short-term revolving loan with repayment due dates, ranging from 28 to 60 days, said the league (News Now Sept. 18).
CU takes steps to protect staff from germy cash
HARRISBURG, Pa. (10/30/09)--With as many as 5.7 million Americans infected with the H1N1 virus between April and late July and many more cases expected, some credit unions are taking precautions. One credit union in Pennsylvania was featured Wednesday on a local television station discussing its flu strategy.
Staff at First Capital FCU, West Manchester Township, Pa., were interviewed by Fox 43 WPMT-TV about what it is doing to avoid handling germy money during the flu season.
Its employees are wearing latex gloves when they handle cash or pay slips, said the station. The credit union also has made available antibacterial wipes and increased cleaning schedules.
Human Resources Manager Linda Thompson told the station she sees how easily germs can spread. "It's on cash, withdrawal slips, everything. Especially at the end of the week when we are dealing with a high amount of transactions. We're taking steps to keep our employees and members healthy."
Money is considered a fomite--a material that can hold onto germs and transfer them. The fact that money isn't washed and changes hands frequently make cash especially germy.
Even ATMs are covered in germs, according to Dr. Jonathan Schwab of Northampton, Mass. (wwlp.com Oct. 29). He advises washing hands frequently and carrying a small bottle of hand sanitizer when one can't get to a sink.
The U.S. Centers for Disease Control and Prevention researchers used computer models to estimate the number of people who have contracted the swine flu. They don't have an update beyond July 24 (Reuters Oct. 29).
They estimated that 1.8 million to 5.7 million Americans had the virus between April and July 23, sending between 9,000 to 20,000 people to the hospital. About 6% of people who were hospitalized with the virus died, researchers said.
For information about stopping germs at work and planning for a pandemic, use the resource links.
Four CUSOs discuss back-office collaboration
GRAND RAPIDS, Mich. (10/30/09)--Four credit union service organizations (CUSOs) recently gathered to discuss back-office collaboration and a cross-network approach to servicing credit union owners and clients.
The group, which met in Grand Rapids, Mich., discussed standardizing product offerings, sharing workflow best practices, and identifying new a la carte service opportunities, including back-office consulting. The meeting was hosted by CUSO Xtend Inc. in Grand Rapids.
Besides Xtend, participants included CU*Northwest, Spokane, Wash.; CU*South Inc., Mobile, Alabama; and CUbyDesign, Portland, Ore.
Each CUSO performs back office services for credit unions, but each provides a different scope. The group said they thought that an opportunity exists for the group to benefit from a brainstorming session. The CUSOs also use the CU*BASE core data processing suite from CU*Answers Inc., and seek to identify new software enhancements to the system during the meeting.
CU first in Michigan to allow e-mortgage closings
EAST LANSING, Mich. (10/30/09)--Michigan State University FCU is the first credit union in Michigan to allow members to close on their mortgages electronically, says the Michigan Credit Union League.
Members of the $1.7 billion, East Lansing-based credit union can apply for a mortgage online and share their documents with attorneys and family members through a secure website (Michigan Monitor Oct. 26).
The members then complete the process on a touch screen computer at the credit union, where they receive a flash drive or CD containing all the documents to take home and store for future use.
"Giving our members electronic access to online applications, closing documents and the convenience of an e-closing all enhance our members' experience with the credit union," said Jeffrey Benson, MSU FCU vice president of operations. "We want to be the first lender our members think about when it comes to financing their homes, vehicles and other things necessary to their lifestyle. Being a leader in electronic services enhances our relationship with our members."
The credit union offered a demonstration Thursday at its headquarters.
Altura CU reports good 3Q in hard-hit Inland Empire
RIVERSIDE, Calif. (10/30/09)--Altura CU, located in the Inland Empire, Calif., an area hit hard by the economy, reported Thursday a significant improvement in its bottom line results for third quarter 2009, compared with the third quarter of 2008.
Altura's assets total $889.7 million and it has $1.8 million in net income, a substantial increase, the credit union said.
While still reporting a loss from operations through the first nine months of the year, the third-quarter results suggest economic conditions in the region are beginning to show improvement, said Altura CEO/President Mark Hawkins.
"While we remain in a very tough environment, we are pleased with our third quarter results and believe we are positioned for success in the coming year," Hawkins said.
The credit union raised its capital ratio from 7%--considered "well capitalized" by regulators--to 7.42%.
"The key to protecting our capital is preserving the safety and soundness of our real estate portfolio. We have been enduring the worst loan losses in our history; a national phenomenon that has been particularly bad in the Inland Empire where our unemployment rate (14.5%) is far higher than the national average," Hawkins said.
However, the credit union took steps to help members through the troubled times, with "an aggressive program of loan modifications and debt workouts for our members to help them stay in their homes. We have extended the hours of our loan servicing staff, and we're working closely with members to help them understand their options." The result, he said, shows in the third quarter performance results and the increase in the capital ratio.
Altura also reported a 12.2% growth in total member share/deposits in the past 12 months, and it reduced its operating expenses for third quarter by 8.1% from third quarter 2008.
Hawkins is cautiously optimistic about fourth quarter. "Although I believe the Inland Empire isn't out of the woods yet, I think better times are coming." He noted that the credit union's focus on the needs of its members through the "economic cataclysm" has helped protect Altura.
Mississippi announces Maxwell, Desjardins winners
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| Keesler FCU received the Mississippi Credit Union Association's Dora Maxwell Social Responsibility Award for its participation in the American Cancer Society's Relay for Life. The credit union created a special t-shirt for the event and raised $16,000. |
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| The Mississippi Credit Union Association awarded Keesler FCU, Biloxi, Miss., with the Desjardins Youth Financial Education Award for its MoneyTalks program, which teaches high school students about money. The program has gone international, with a debut in the United Kingdom. (Photos provided by the Mississippi Credit Union Association)
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The awards were sponsored by MSCUA and the Credit Union National Association.
The Dora Maxwell award recognizes a credit union for its community involvement in an activity that helps others or strengthens the structure of the community. The Desjardins award recognizes credit unions that support youth financial education.
Keesler was recognized for its participation in the 2009 American Cancer Society's Relay for Life. The credit union created a special T-shirt for the event and was recognized as the top fundraising team for raising $16,000. Keesler also was recognized for its four-week MoneyTalks program, which teaches high school students how to manage their money, and other financial education programs, including classroom presentations to youth in the Mississippi Gulf Coast area.
Keesler has $1.8 billion in assets.
CU System briefs
- ALBUQUERQUE, N.M. (10/30/09)--Representatives of the Credit Union Association of New Mexico (CUANM) met earlier this month with U.S.
Rep. Ben Ray Lujan (D-N.M.) to discuss some issues of concern to credit unions (CUANM Network October). Lujan was knowledgeable about the credit union position on interchange fee legislation, Community Reinvestment Act extension to credit unions and the proposed Consumer Financial Protection Agency, said the association. He said he is opposed to interchange fee legislation. He also sees a need for data security legislation. Credit unions are advocating on the national and state levels to require merchants to discard any personal or credit card information gathered from consumer. From left are Juan Fernandez Ceballos, CUANM vice president of governmental affairs; Scott Connely, CUANM Governmental Affairs Committee chairman and CEO of Sandia Area FCU; Sylvia Lyon, CUANM CEO; and Lujan. (Photo provided by the Credit Union Association of New Mexico) ...
- ONTARIO, Calif. (10/30/09)--The California Credit Union League's Mt. Diablo, San Francisco, North Bay and Wine Country Chapters
raised more than $36,000 for Children's Hospital & Research Center Oakland and UC Davis Children's Hospital at their Third Annual Golf Tournament in Vallejo. Helping sponsor the event were CO-OP Financial Services, Visa, Financial Service Centers Cooperative, the Credit Union National Association, Travis CU, Redwood CU, CUDL, Executive Compensations, the Moore, Brewer, Jones, Tyler & North firm; San Francisco Fire CU, Pacific Funding, San Francisco FCU and American Home Life. Holding the check are Redwood CU CEO Brett Martinez (middle front) and other tournament coordinators Karen Introcaso, Spectrum FCU; Samantha Paull, Redwood CU; Steve Stapp, San Francisco FCU; Rob Greaff, Delta Schools FCU; Jeanie Widemann, lst Pacific CU; Andy Anderson, Travis CU; and John Pamer, Diablo Valley FCU. They are shown with representatives of Children's Miracle Network and the two hospitals. (Photo provided by the California Credit Union League) ...
Click for larger view - SANTA ROSA, Calif. (10/30/09)--Redwood CU has been selected for
the fourth consecutive year as one of the "Best Places to Work" in the North Bay, Calif., area by the North Bay Business Journal, a weekly business publication for Sonoma, Napa and Marin counties. Winners were based on several criteria including an employer questionnaire, employee survey ratings, number of employee responses and employees' written comments. Pictured are, from left: Redwood CU employees Lyn Ly-Spelman, Richard Calenius, President/CEO Brett Martinez, Senior Vice President of Employee Relations and Development Kristina Derkos, Karen Boudrie and Bob Browne. (Photo provided by Redwood CU) ...
Click for larger view
Market News
MADISON, Wis. (10/30/09)
- For the first time in more than a year, the U.S. economy expanded in the third quarter because of a rebound in consumer spending. Gross domestic product increased by a seasonally adjusted 3.5% annual rate for July through September--which was higher than expected, the Commerce Department said Thursday. However, weakness in the labor market is expected to result in a subdued recovery, economists added. This was the first quarter of growth since the second quarter of 2008. Growth resulted from consumer spending in several areas, including autos--largely due to the "cash for clunkers" program--as well as exports, inventory investment, home building, federal government spending and a smaller decline in business investment, analysts said. This is the most obvious indication to-date that the U.S. economy is out of recession, economists added (The Wall Street Journal and Moody's Economy.com Oct. 29) ...
- For the week ending Oct. 24, initial claims for unemployment benefits dropped by 1,000--to 530,000, according to a Labor Department report. However, that number was higher than anticipated and indicates the job market is slow to recuperate, even as growth is picking up, analysts said. Continuing claims for unemployment dropped by 148,000 to nearly 5.8 million for the week ended Oct. 17. In total, the report is consistent with a gradual improvement in the labor market, analysts said. California was the only state that reported an uptick in claims of more than 1,000 for the week ending Oct. 17. New York, Pennsylvania and Wisconsin led the states reporting decreases in claims of more than 1,000 (Moody's Economy.com and Bloomberg.com Oct. 29) ...
- Visa Inc. set a new 52-week high in trading Wednesday because of financial results that exceeded analysts' expectations and because the company proclaimed that a year-long downturn in consumer spending has ended, analysts said. The largest global payments network posted net income of $514 million--or 69 cents a diluted share--for the fiscal fourth quarter ended Sept. 30. This compares with a year earlier loss of $56 million or 45 cents per share tied to the settlement of an antitrust lawsuit lawsuit, the company said. Also, U.S. payment volume--a gauge of total spending on Visa's network--dropped 1% in the quarter, compared with the 3% decline in the quarter ended June 30. This constituted a "solid" improvement, said Byron Pollitt, Visa chief financial officer. U.S. spending rose 1% in September and 3% in the first three weeks of October--the first positive growth this year, he added. "While we draw some encouragement from this data, it is still not enough for us to call an inflection point in the U.S. economy," Pollitt said (Bloomberg.com Oct. 28) ...
News of the Competition
MADISON, Wis. (10/30/09)
- Midsize U.S. banks are not happy with the most recent industry proposal that would require them to help pay for the bailout of big banks to deal with systemic risk, analysts said. The crux of the matter is the proposal for the Federal Deposit Insurance Corp. (FDIC) to assess a fee from all institutions with more than $10 billion in assets whenever a systemically important institution fails. The Treasury Department and House Financial Services Committee released a draft bill Tuesday that proposes new regulatory oversight of the largest U.S. financial services companies. The bill proposes that if any systemically important institution is considered to be a failure, the FDIC will intervene just as it does now with banks, analysts said. The $10 billion asset cutoff could cause companies approaching that level to pull back on lending, said Jeff Davis, an analyst at First Horizon National Corp.'s FTN Equity Capital Markets Corp. "I think if it passes, there will be less lending," Davis said. "It will certainly encourage any bank that doesn't have really large aspirations to stay put" (American Banker Oct. 29) ....
- American International Group (AIG) has recouped some of the billions of dollars it doled out last year on souring trades due to a turnaround in the same securities that helped caused the insurer to implode, analysts said. The company was forced to go under government control. In recent months, billions of dollars from banks have poured into AIG, said sources familiar with the matter. The figure may have exceeded $3 billion for the second quarter, according to public filings. Goldman Sachs has sent back at least $1 billion, said the sources. The money flows--which follow a bounce-back in the financial market, including bonds tied to subprime mortgages--are coming while AIG is still struggling under the auspices of government control, analysts said (the Wall Street Journal Oct. 29) ...
- Struggling lender CIT Group turned down a loan from financier Carl Icahn, instead accepting a $3.5 billion loan from a group of investors that included some of CIT's biggest bondholders, analysts said. Arranged by Bank of America Merrill Lynch, the bondholder loan will supplement a $3 billion loan CIT received in April from several large investors, analysts added. The loan was announced one day before a large debt exchange--designed to keep the company out of bankruptcy--expired. If that should fail, CIT has been soliciting votes to pass a prepackaged bankruptcy, analysts said (The New York Times Oct. 29) ...
- U.S. banks are becoming more dependent on debit transactions as a part of their payment mix--a fact that is not likely to change, even after the economy recovers, analysts said. Consumers have shifted from using credit cards, and debit transactions have steeply risen this year at Fiserv Inc. Also, younger consumers--who have grown up using debit cards and other forms of electronic payments--will begin to constitute a bigger share of the country's purchases, analysts said. This will result in younger people becoming more important debit customers for banks. That means current changes in the payments market are going to have a long-term impact, analysts concluded (American Banker Oct. 29) ...
H&FF Radio guests discuss recession tactics
WASHINGTON (10/30/09)--Sunday's H&FF Radio show will feature policy experts tackling recession issues facing families. They include: tips if you are falling behind on car payments, how to handle intergenerational wealth planning, credit score advice, and techniques to manage your personal cost of living.
Home & Family Finance airs Sundays at 3 p.m. ET on the Radio America Network. The show also is carried on American Forces Radio Network. The one-hour program devoted to consumer finance issues is brought to you by America's credit unions and their 90 million members, and is presented by CO-OP Network.
The Credit Union National Association (CUNA) and Radio America are podcasting Home & Family Finance through iTunes, Podcast Alley, Odeo, and other popular podcast library sites, as well as on Radio America and CUNA's websites.
Sunday's show, which you also can hear later via the Internet, features Paul Berry, Washington, D.C., journalist and broadcaster, discussing these topics with special guests:
- "Five Tips if You Are Falling Behind on Car Payments," with Eric Hoffman, spokesman, AWARE, Washington, D.C.;
- "Intergenerational Wealth Planning: New Ways to Handle an Age-Old Process," with Eric Aanes, founder and president, Titus Wealth Management, San Mateo and Larkspur, Calif.;
- "Financial Fitness: More Than a Good Credit Score," with Brad Stroh, co-founder and CEO, Bills.com, San Mateo, Calif.; and
- "10 Techniques to Manage Your Personal Cost of Living," with Kathy Kristof, senior writer, Los Angeles Times.
Home & Family Finance is a resource center for personal finance information at CUNA. The radio show is sponsored by CO-OP Network, the national credit union ATM network; Cabot Creamery Cooperative, maker of award-winning cheddar; Western Corporate FCU (WesCorp) and its member credit unions; and the Defense Credit Union Council and member credit unions, serving those who serve the country worldwide.
For more information, read "Debt Settlement Sets a Costly Trap" and "Tough Times Series: Gas, Groceries on Credit a Slippery Slope" in Home & Family Finance Resource Center.
Products and Services briefs
- NEW ORLEANS (10/30/09)--myEZ Car Care, a vehicle care and records maintenance company that specializes in serving credit union members, announced that it now offers member discounts from more than 5,000 auto service providers. The company also launched a new website. New Orleans-based myEZ Car Care offers its members discounts on auto maintenance, ranging from oil changes to preventative maintenance. Members can choose from the VIP Discount Card or VIP Plus-Complete Care Plan. Both aim to save members money on auto-related services. Some of myEZ Car Care's service providers include Jiffy Lube, Meineke and Valvoline. The new website, myezcarcare.com, can help members find auto service providers in their area. It also automatically uploads VIP service records for members so they can track their maintenance. Using the website, members also can upgrade their accounts and view demos about each VIP plan ...
- PHILADELPHIA (10/30/09)--PHH Corp., a Mount-Laurel-Pa. mortgage lender and fleet vehicle management firm that services credit unions, announced that it hired Jerome J. Selitto as president/CEO (Philly.com Oct. 27). Selitto also was named to PHH's board. Selitto was previously employed at Ellie Mae, which provides mortgage-industry software. He was vice chairman of Amerin Guaranty Corp. from 1992 to 1999. PHH's acting president/CEO, George Kilroy, will continue to lead the company's fleet management business as a director ...
- MADISON, Wis. (10/30/09)--Decision Strategies International (DSI) announced the launch of the DSI Growth Stability Index, which provides growth and performance metrics for 1,200 U.S. credit unions with assets above $100 million. The index matches the growth data with stability indices that reflect the reserve and financial health of the credit union. The data has a five-year range and could help a credit union's board and management address how the credit union is balancing the need for growth with the need for reserves. DSI is a management consultancy, executive education and software firm for clients, including credit unions ...
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