News Now Archive

Filed on October 30, 2009–November 1, 2009, published the first business day after.

Survey consumers: CUNA to legislators on overdraft changes

WASHINGTON (11/02/09)--Speaking before the House Financial Services Committee hearing on overdraft protection plan, Credit Union National Association (CUNA) witness Rodney Staatz advised members of the panel to conduct an "independent, unbiased" survey of consumer opinions on overdraft before they act on any legislation. Staatz is president/CEO of SECU of Linthicum, Md.

In fact, Staatz told the panel, consumer protections to overdraft plans, should be addressed through regulation, not legislation.

CUNA supports credit unions' ability to offer overdraft protection plans to members and considers it an important member service that can help with short-term financial issues. Staatz told the assembled committee members that CUNA opposes H.R. 3904, The Overdraft Protection Act of 2009, because it could make it impossible for credit unions to offer the service to members.

He warned legislators if credit unions drop the so-called "courtesy pay" programs, it would ultimately harm consumers, in part, by driving them to higher-cost alternatives.

Testifying on his own behalf, former National Credit Union Administration Chairman Dennis Dollar concurred that H.R.3904 could eliminate credit unions' ability to offer overdraft protections altogether. Dollar also indicated that the issue of overdraft fees could best be handled by individual regulators, and should not be treated on a statutory level.

While many banks promote overdraft programs and make them mandatory parts of their checking account programs, Staatz said that although his credit union does offer a courtesy pay overdraft program, "SECU does not market Courtesy Pay because we do not want to encourage members to live beyond their means" by viewing it as available funds.

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CUNA Summary: Overdraft


Compliance Questions about the 21-day CARD Fix

WASHINGTON (11/02/09)-Passage by the House and Senate of the CARD Act Technical Corrections Act is raising some questions by credit unions on what steps to "uncomply" with the former terms of the 21-day mailing provision. President Obama is expected to sign that bill, H.R. 3606, at any time and the Credit Union National Association (CUNA) has urged him to act quickly.

As a "technical correction" to the May 2009 law—known now mostly as the Credit CARD Act--to make clear that a 21-day late notice mailing requirement only applies to credit card accounts, "it's like the requirement never existed for the rest of open-end loans," explained Mike McLain, CUNA's Senior Compliance Counsel and Assistant General Counsel.

"The Federal Reserve Board doesn't have to amend its interim regulation because there's no longer a statutory basis for the 21-day mailing requirement as it applies to open-end loans other than credit cards."

Credit unions, however, spent the summer struggling to comply with the requirement to provide at least 21 days after mailing the periodic statement for any open-end loan before assessing late payments fees or imposing other penalties. Numerous compliance problems were identified affecting consolidated periodic statements, bi-weekly payment plans, existing due dates, and more.

"We know that credit unions expended a lot of time and resources to come up with a variety of ways to comply with this burdensome requirement, and now are asking what should they do next," said McLain.

Some credit unions simply followed a temporary solution permitted by the Fed in its interim rule to put a special notice on their periodic statements: Your Payment will not be considered as late for any purpose if it is made within 21 days of the date your statement is mailed or delivered, regardless of the due date that is reflected on the statement. "These credit unions can just stop putting this special notice on their periodic statements," McLain said.

Other credit unions decided to comply by listing several upcoming due dates on the current periodic statement to make sure that the member had plenty of notice. They also can just discontinue printing outward due dates on their periodic statements, noted McLain.

Once it was clear in July that the Fed would not resolve credit unions' problems with the 21-day mailing requirement by a regulatory interpretation, CUNA established as a high legislative priority to amend the CARD Act to resolve this problem. However, since no one could predict in August if and when a technical corrections bill would pass, many credit unions decided to make more comprehensive changes to their open-end lending terms and practices.

"Credit unions that took actions such as changing due dates to the end of the month or altering bi-weekly payment plans will have to make their own business decisions on whether they want to revert to what they did prior to August 20," said McLain. "As the Fed made clear this summer, changing a loan's payment due date is not an action that requires compliance with Regulation Z's change-in-terms rules."

However, McLain emphasized that there are certain situations where the 21-day notice will continue – beyond of course credit card programs, which are definitely subject to the 21-day notice.

"Some credit unions apparently provide a grace period for repayment before charging any finance charge on certain open-end loans they offer. If there is a grace period on any type of open-end loan, the credit union must give the member 21 days to take advantage of the grace period," McLain emphasized. "Congress was unwilling to change this aspect of the 21-day rule."

Anytime a lender decides to eliminate a grace period, a change-in-terms notice is required. If the loan is a credit card, the change-in-terms notice must be provided 45 days in advance (a rule that became effective August 20). If the loan is any other type of open-end loan, the change-in-terms notice must be given 15 days in advance – but starting July 1, 2010, all open-end loans will require a 45-day advance notice similar to the new credit card rule.

"Credit unions are also asking about potential liability between May 22 – the date the CARD Act became law -- and today if there were any issues about their compliance efforts with the now-repealed 21-day notice requirement," said McLain. "There isn't any potential liability, because the technical correction made clear that the 21-day notice provision in the CARD Act was always intended to only apply to credit card accounts."

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Mica asks president to sign CARD fix

WASHINGTON (11/2/09)—The Credit Union National Association (CUNA) Friday sent a letter to President Barack Obama encouraging him to sign the CARD Act Technical Corrections Act (H.R. 3606) into law.

The bill was approved mid-October by the House and by the Senate late Thursday. The bill corrects section 601 of the original Credit Card Accountability, Responsibility and Disclosure (CARD) Act and declares that a 21-day late-notice rule would apply only to credit cards -- and not open-end credit in general.

Mica noted in the CUNA letter that the original bills inadvertent omission stating that the 21-day rule applies only to credit cards has set credit unions "reeling from an unintended consequences."

Under the legislative fix, Mica has noted, "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."

"We hope you will agree that a technical correction is appropriate and sign this measure into law," Mica penned the president.

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House approves SBA financing act

WASHINGTON (11/02/09)--H.R. 3854, the Small Business Financing and Investment Act, passed the House of Representatives by a vote of 389-32 late Thursday.

Of particular interest to credit unions are portions of the legislation that would temporarily extend increased Small Business Administration loan guarantees that were enacted in recent Federal stimulus bills.

The legislation, as currently written, also increases eligibility for, and loan limits under, the SBA's Microloan program which provides small-scale loans to startup, newly-established, or growing small businesses for working capital or the acquisition of materials, supplies, or equipment.

The bill would also establish an SBA program to help finance "early-stage small businesses in specified targeted industries."

The bill will now move on to the Senate.

In comments delivered on the House floor, Rep. Nydia M. Velázquez (D-N.Y.) praised the bill as "a bipartisan product" that "addresses a key concern for small firms, and ensures they have the resources to help grow our economy."

Velázquez in her statement also cited portions of the bill that would open "new avenues for seed capital and microloans" for "the aspiring entrepreneur," provide "fresh funds for investment" for mid-market ventures, and create "room for targeted risk and innovation" for "the established business."

"Through innovation and ingenuity, small businesses have created enormous wealth for our nation. But America's economic engine doesn't run on good ideas alone. Small firms need capital to not only get off the ground, but to operate and grow. That's why H.R. 3854 delivers better funding options to small firms at every stage of development," Velázquez said.

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Sens. Dodd, Isakson push homebuyer tax credit extension

WASHINGTON (11/02/09)--Senate Banking Committee Chairman Christopher Dodd (D-Conn.) and Sen. Johnny Isakson (R-Ga.) have collaborated to extend access to first-time homebuyer tax credits that were set to expire at the end of the month.

"Every economist will tell you we have to steady the housing market before the economy will turn around," Dodd said in a statement, adding that "we can't afford to let this tax credit expire now."

"We need to be fighting with everything we've got."

According to the release, the agreement extends the $8,000 first time Homebuyers Tax Credit and also creates a new $6,500 tax credit for homeowners that purchase a new home between December 1, 2009 and April 30, 2010.

The tax credit will be made available to single homebuyers with up to $125,000 in income and joint income tax filers with up to $225,000 in total income, but will not be available for home purchases totaling more than $800,000.

The agreement also extends the tax credit to individuals that are in the market for a new home but have owned their current home for five years or longer.

Over 70% of existing homeowners will be eligible for the tax credit, according to the statement.

The tax credit extension legislation will be attached to an unemployment insurance extension bill that will come up for a Senate vote this week.

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Regulators adopt CRE workout guidance

WASHINGTON (11/2/09)--The National Credit Union Administration (NCUA), in coordination with the Federal Financial Institutions Examination Council (FFIEC), is adopting a policy statement on commercial real estate (CRE) loan workouts.

The statement will help financial institutions, including credit unions, who are working with CRE borrowers who have diminished operating cash flows, depreciated collateral values, or prolonged delays in selling or renting commercial properties.

The guidance stresses that performing loans--including those that have been renewed or restructured on reasonable modified terms--made to creditworthy borrowers will not be adversely classified solely because the value of underlying collateral is declined.

NCUA does not require credit unions to adopt a uniform regulatory classification schematic of loss, doubtful, substandard or special mention. A credit union should apply an internal loan grade based on its evaluation of credit risk.

The guidance also details risk-management practices for loan workouts that support prudent and pragmatic credit and business decision-making within the framework of financial accuracy, transparency, and timely loss recognition. Financial institutions that implement prudent loan workout arrangements after performing comprehensive reviews of borrowers' financial conditions will not be criticized for engaging in these efforts, even if the restructured loans have weaknesses that result in adverse credit classifications.

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CRE guidance


Inside Washington

  • WASHINGTON (11/2/09)--Overdraft policies may change the way financial institutions offer free checking programs, according to financial industry observers (American Banker Oct. 30). Legislation proposed last month by Senate Banking Committee Chairman Christopher Dodd (D-Conn.) to control overdraft fees may mean that financial institutions will have to find other ways to earn noninterest income. Financial institutions have offered free checking for some time as a way to gather deposits, but the product may have to be retooled. Hank Israel, director of payments and checking at Novantas LLC said financial institutions will still tout the product as free, but it "will become a damaged item. Banking companies could be "pinched," added Kevin Jacques, former Treasury Department economist. Many banks have become too dependent on noninterest income, he said. The fee changes also could harm proactive banks, noted Robert E. Marling Jr., CEO of Woodforest National Bank. The company has allowed its customers to opt out of overdraft protection and has refunded overdraft fees, he said ...

  • WASHINGTON (11/2/09)--House Financial Services Committee Chairman Barney Frank (D-Mass.) said publishing a public list of systemically important financial companies constitutes a moral hazard because once individuals find out their institution is on the list, they'll think their deposits are protected (American Banker Oct. 30). Frank, who opposes publishing a list, is working on legislation with Treasury Secretary Timothy Geithner that would increase supervision of large financial companies and create a system to help them if they are in trouble. Geithner has said it would be too difficult to keep a "too big to fail" list. Federal Reserve Board Gov. Dan Tarullo agreed, saying that because of some disclosures to analysts and shareholders, it's likely the institutions would be known. Rep. Spencer Bachus (R-Ala.) said it's "foolish" to keep the list a secret. Market participants would be able to quickly figure out who is on the list based on regulatory constraints placed on each systemic firm, he said ...

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U.S. Central posts 3Q results

LENEXA, Kan. (11/2/09)--U.S. Central FCU Friday posted its financial report for the third quarter ending Sept. 30 on its website, recording a net loss of $308.5 million for the quarter. The loss is the result of other-than-temporary impairment (OTTI) charges, which totaled $320.1 million for the quarter.

That compares with a net income of $16.3 million for the same period in 2008.

Year-to-date through September, net losses totaled $1.3 billion, compared with net income of $45.9 million for the same period in 2008.

OTTI charges totaled $1.3 billion through the first nine months of 2009. Excluding OTTI charges, U.S. Central recorded net gains on financial instruments of $0.5 million for third quarter, compared with losses of $3.9 million for the same period in 2008.

Assets as of Sept. 30 totaled $28 billion--up $0.9 billion or 3.2%, from $27.1 billion as of Dec. 31, 2008. The increase reflects primarily an increase of $5.9 billion in cash, offset by a $2.3 billion decline in the fair value of U.S. Central's investment securities and a $2.5 billion decrease in loans.

Net interest income during the quarter totaled $17.1 million, compared with $42.5 million for third-quarter 2008--a decrease of $25.4 million or 59.7%.

Fee income totaled $5.2 million, compared with $4.6 million for third-quarter 2008, an increase of $0.6 million or 13%. Operating expenses totaled $11.3 million, a decrease of $4.4 million, or 27.9% over the same quarter last year.

Total funding, excluding capital accounts, was $36.2 billion as of Sept. 30, compared with $36.9 billion as of Dec. 31, a decrease of 1.8%. Borrowed funds dropped by $6.2 billion, and members' share and certificate accounts increased by $5.5 billion. Member accounts remain U.S. Central's primary source of funding, averaging $28.9 billion for third quarter of 2009 and equaling $25.2 billion at Sept. 30.

The corporate noted that as delinquencies for consumer loans, especially mortgages continued to mount, "the market for non-agency residential mortgage-backed securities remained illiquid, although the prospect of the Public-Private Investment Program brought some renewed interest to this sector. This further deterioration caused loss projections for some of U.S. Central's non-agency residential mortgage-backed securities."

For the full report, use the link.

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Resource Links
U.S. Central FCU Third Quarter Report
NCUA's Corporate Stabilization Plan


Does your brand offer what members want?--Survey

NEW YORK (11/2/09)--Consumers want to stay informed, and credit unions who want to make the most of their brand should keep that in mind, according to new research on actions that brands can take that are most relevant for Internet users.

The "Global Web Index" from Lightspeed Research, a Princeton, N.J., company that provides research in communications services, indicates that the top characteristic U.S. consumers want from a brand is to improve their knowledge. The least desirable characteristic: having your brand "only be visible in store" (eMarketer Oct. 27).

That fits in well with most credit unions' philosophies and their efforts to educate members and others about financial issues and money management.

Helping consumers keep up to date on topics important to them was also key, followed by being entertaining, becoming part of a daily routine, and informing consumers about the product/service and the credit union or company. Consumers were not interested in brands that tried to act like their friends, Lightspeed said.

So what can a credit union do that will enhance its brand with the online consumer? The top action was to offer discounts--especially in today's economy.

That was followed by "provide me with relevant news and analysis," "provide me with new ideas and thinking," "create useful online applications that provide a benefit," and "provide free downloads to content that I like." These topped various social and creative efforts such as online communities and brand-created video or TV programs.

Word of mouth was the No. 1 purchase driver among the consumers surveyed, with face-to-face recommendations having significantly more weight with respondents than TV ads, advice from online friends, e-mails or websites. The most trusted source of brand information is no surprise: family, then a close friend, and then an expert in the field. The last source is especially important for credit union brands. They can use staff expertise in the personal finance field.

These beat out social networking, neighbors, blog authors, store assistances and journalists. Even lower on the trusted source totem pole were a TV-news reader, a radio presenter, and microblogs such as Twitter. Well-known people--such as a CEO of a well-known company, a presenter on a popular TV show, a country's leader/politicians, and well-known celebrities--were at the bottom of the trusted sources list.

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Study: Bad online ad campaign worse than no campaign

MADISON, Wis. (11/2/09)--Poorly conducted online advertising campaigns not only fail to get the message across, they could negatively impact the brand of a company, such as a credit union, according to research by Dynamic Logic, a marketing research company.

The bottom 20% of online ad campaigns negatively impacted opinions of Internet users exposed to the ads, the company said (The e-Marketer Daily Oct. 29).

Also, "purchase intent" was reduced the most--among the five factors measured--by a bad campaign by 4.1 percentage points. Other factors measured included: "aided brand awareness," "online ad awareness," "message association," and "brand favorability."

Conversely, top-performing ad campaigns heightened online awareness, message association, and brand awareness by more than eight percentage points each, the company said.

"When it comes to digital advertising, a lot of time is spent choosing websites, ad sizes, formats, targeting and other factors," said Ken Mallon, Dynamic Logic's senior vice president of custom solutions. "However, not enough time is spent producing and testing high quality ads."

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Resource Links
Dynamic Logic study


CUs absent from Bankrate ‘financial horror tales’

NORTH PALM BEACH, Fla. (11/2/09)--Credit unions were notably absent from a list of 12 financial horror tales published recently on Bankrate.com.

Readers submitted stories about some of their most hair-raising financial experiences, some of which were self-inflicted. The stories ranged from a consumer who co-signed on a private student loan that later defaulted, to a couple who thought they had accidentally thrown away some receipts proving they had paid for repairs on their car (Bankrate.com Oct. 26).

Specific financial institutions and credit card companies mentioned in the article included MasterCard, Chase and IndyMac Bank. One reader had deposited money into IndyMac before it failed last year.

Another reader reported that after a balance transfer to a Chase credit card account on the promise of a fixed 3.99% interest rate, the rate hiked to 5%--meaning that the accountholder's minimum balance increased to $440 from $165 a month. The reader said she and her husband "went into survival mode" to save enough money to pay off the card.

The mother of one reader had a MasterCard account that had $43,000 in fraudulent charges. The card company did not contact her regarding the charges even though she had a $40,000 credit limit and "special monitoring," the reader said.

Another individual submitted a story about an interest rate hike she received when she made a mistake entering her bill payments online. Instead of paying the card company $243, she accidentally transposed the numbers and paid $234. She was hit with a $36 late fee, and her 2.9% interest rate hiked to 27%.

The reader contacted the credit card company about the hike, and the company said it would drop her interest by 1% if she made good on future payments. However, because the reader had a revolving balance on the card, she scrambled to find the money she needed to pay off the card to avoid more charges.

To read the horror tales, use the link.

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Resource Links
12 Hair-Raising Money Tales
Your Credit Union: What's in it for you? folder and insert
There's Nothing Like a Credit Union statement stuffer


Three N.M. CUs tout youth activities at summit

ALBUQUERQUE, N.M. (11/2/09)--Three New Mexico credit unions shared how they are reaching out to youth during a recent Governor's Education Summit in Albuquerque, according to the Credit Union Association of New Mexico.

New Mexico Educators FCU, Albuquerque, is opening a branch at Atrisco Heritage Academy that will serve students and the community, said Sharla Reinhart, vice president of membership development. The branch will provide hands-on training for students. The academy credit union program is expected to begin in January with a grand opening in September.

Financial Security CU in Carlsbad created a focus group to determine which financial services it should offer youth. CEO Judy Carrasco created a teen advisory board to help the credit union design products and services for youth ages 13 to 18. Carrasco said the teen board's response has been "prolific" and "occasionally surprising." The teens said they want to learn about loans, earning interest and fees, and suggested the credit union offer workshops.

With the help of the teen board, Financial Security created a savings product with rewards on gifts, a college fund that rewards savers with a new computer when they start higher education, checking, a loan program and a certificate of deposit product.

High Plains FCU, Clovis, has reached out to youth with a summer lemonade stand project and a Rock Band video game competition, said Kym Moore, education specialist. The credit union also has its Gear Up youth program to reach out to youth through music. The credit union created a rap song, "Stash Yo Cash," which will premiere on its website with a video. The credit union also plans to open a branch for students at Clovis Freshman Academy.

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Resource Links
CUNA Youth and Young Adults resources


'Prestigious award' is vanity scam, says N.J. league

HIGHTSTOWN, N. J. (11/2/09)--Recent e-mails notifying credit unions and other businesses that they have won prestigious awards from a national association appear to be part of a widespread scheme to get companies to pay for "vanity" awards and plaques, says The New Jersey Credit Union League.

The group behind the "awards" program is the U. S. Commerce Association of Washington, D.C. The association sent out e-mails and news releases in recent months to businesses nationwide, telling them they have been selected as "outstanding local businesses" and offering them an opportunity to buy one or more awards to mark the honor (The Daily Exchange Oct .30).

An e-mail recently sent to Healthcare Employees FCU, Princeton, N.J., said: "I am pleased to announce that Healthcare Employees FCU has been selected for the 2009 Best of Princeton Award in the Credit Unions category by the U.S. Commerce Association. In recognition of your achievement, a 2009 Best of Princeton Award has been designed for display at your place of business.

"You may arrange to have your award sent directly to Healthcare Employees FCU by following the simple steps on the 2009 Best of Princeton Award order form," the e-mail continued. "Simply copy and paste this link into your browser to receive your award."

The e-mail also has a link to the association's own website to a press release that announces the recipient credit union has won the award, the league said.

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Resource Links
CUNA’s Fraud & Security resources


CU System briefs

  • OREM, Utah (11/2/09)--Faith prompted a man to surrender and admit his role as a getaway driver in the Dec. 23rd robbery of Alpine CU, said Orem, Utah, police (The Salt Lake Tribune Oct. 29). The Pleasant Grove man, whose name was not disclosed, approached the police after confessing the crime to his Church of Jesus Christ of Latter-day Saints bishop. His accomplice was arrested, but prosecutors had not decided yet what charges the getaway driver would face. Alpine CU has $138.1 million in assets and is based in Orem ...

  • MADISON, Wis. (11/2/09)--A Madison, Wis., man was sentenced to 11 years in prison for robbing a Verona, Wis., bank in May. Reginald J. Ballard, 38, pleaded guilty in August to robbing Capitol Bank--the third financial institution he said he had intended to rob that day, he told police. He lost his nerve outside two other institutions, including Heartland CU. Heartland reported his suspicious activity to police, which were nearby by the time Ballard left the bank he'd just robbed. A suspect believed to be a getaway driver, Thurman M. Wyatt, 29, Madison, was charged with illegal gun possession and is awaiting trial (The Capital Times and Wisconsin State Journal Oct. 29) ...

  • SOMERVILLE, Mass. (11/2/09)--Cambridge Portuguese CU (CPCU CU) was voted 2009 'Best Bank' by readers of The Somerville News for the second consecutive year, according to the $85 million asset credit union. In the past year, CPCU increased its community involvement by partnering with local community non-profit organizations, entering the business lending arena with business products and services, and reaching out to new membership. "It was great news last year when we won the Best Bank award, but to win two years in a row shows that CPCU is making a difference in the community. We pride ourselves on the service we provide to everyone who walks through our doors," said Rui Domingos, CPCU CU CEO ...

  • WHITE RIVER JUNCTION, Vt. (11/2/09)--Vermont VAF Employees FCU, which was chartered in 1939 as the first Vermont credit union, has changed its name to Vermont VA FCU. The name change was made to more accurately reflect the credit union's membership, its board said. Vermont VA FCU's new logo reflects the values that form the basis of its commitment to its membership of war veterans, the credit union said (Newlines Express Oct. 30) ...

  • ONTARIO, Calif. (11/2/09)--The California and Nevada Credit Union Leagues recently launched their "Help You Thrive" website--a free WebMD-styled database for consumers to find resources for their financial needs. The site, http://helpyouthrive.ccul.org, provides basic information and guidance on topics, ranging from managing debt and protecting personal data to buying a home and payday lending. Information also can be found on lending products--such as mortgages--as well as how to avoid scams, and how to teach young people about finances. Also, the site features calculators and worksheets. Although the site was started and is being managed by credit unions, it is not limited to use by or for credit unions, said the leagues ...

  • PARCHMENT, Mich. (11/2/09)--First Community FCU, Parchment, Mich., recently
    Click to view larger image Click for larger view
    hosted a First Community Fall Harvest Festival where youth received treats and a chance to learn about money. The festival incorporated an "EARN-SAVE-SPEND" component where each youth received a treat bag with cash bucks that could be spent at the event any way they wished as long as it was within a budget. Youth received a budget worksheet, a Rockin Cash coloring page that teaches the difference between coins and dollars, and a "How Can I Earn Money?" page listing ways they could earn money at home and in the community. The event also had two games, "Watch Your Money Grow," and "Rock The Facts...Beat the Fiction." The credit union plans to host another festival next year. First Community has $404 million in assets. (Photo provided by First Community FCU) ...

  • FAIRBORN, Ohio (11/2/09)--Wright-Patt CU has announced five families who will compete in its second annual Savings Race. Ten semi-finalists were selected by the credit union through an application and interview process in September. The five finalists were selected from that group in an online vote. During the race, the families will be challenged with finding innovative ways to increase their savings and reduce debt. They will be given specific savings and debt-reduction goals to achieve by the end of the race with the help of Wright-Patt coaches. Their success in meeting or exceeding the goals, along with the results of public online voting, will determine the winner--who will receive $10,000. The race concludes in May. Last year's challenge resulted in five families collectively increasing their net worth by $145,000, the credit union said ...

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Market News

MADISON, Wis. (11/2/09)

  • For the first time in five months, U.S. consumer spending dropped in September, as consumers confronted a poor job market, tight credit and the loss of a popular government auto-rebate subsidy, analysts said. The 0.5% spending decline was the largest since December when the recession was at its peak. Most of the drop in spending occurred in consumer goods--which includes autos, analysts said (The Wall Street Journal Oct. 30). The September decrease follows a 1.4% jump in August, according to Commerce Department figures released Friday. Consumer incomes remained unchanged, while the savings rate rose, the department added. Consumers "went out spending in August, but once that incentive was taken away, they didn't have the same reason to spend as much," said Jonathan Basile, an economist at Credit Suisse. "Consumers are going to be selective and not necessarily aggressive going into the holiday season," he added (Bloomberg.com Oct. 30). The September decline was consonant with expectations, analysts said. In September, spending adjusted for inflation dropped 0.6%--also the biggest decline since December--after increasing 1% the prior month, the department said. Consumer spending normally constitutes more than two-thirds of overall U.S. economic activity (The New York Times Oct 30) ...

  • The University of Michigan consumer sentiment index for October dropped to 70.6 from an upwardly revised 73.5 in September. A modest firming trend is in place, analysts said, keeping the index above August's 65.7 mark. The October decline was propelled by a 4.9-point decline in the expectations component. The current conditions component increased 0.3 points. Also, short-term inflation expectations increased steeply from September, analysts said. Although consumer sentiment is stuck at low levels, it appears to be gradually improving, according to the University of Michigan. The inconsistent upward trend in consumer expectations is expected to continue. Consumer fundamentals are still weak, but are slowly improving, analysts said (Moody's Economy.com Oct. 30) ...

  • U.S. employer costs increased 0.4% in the third quarter, meeting expectations and repeating a second-quarter gain, according to the Bureau of Labor Statistics Employment Cost Index. During the third quarter, wages and salaries advanced 0.4%, while benefits-cost growth was 0.4%. The wages and salaries growth matched the second-quarter growth, while the benefits-cost growth was up from a 0.3% increase in the prior quarter. The third-quarter flat trend in employer costs reflects the general pattern of slow wage expansion, analysts said (Moody's Economy.com Oct. 30) ...

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News of the Competition

MADISON, Wis. (11/2/09)

  • Still coping with bad investments in mortgage securities, the U.S. Federal Home Loan Banks reported a combined $165 million net loss for the third quarter. Write-downs of $1.04 billion in the value of private-label mortgage securities were reflected in the loss, analysts said. Five of the 12 banks nationwide had losses in third quarter, including those in Boston, Chicago, Pittsburgh, San Francisco and Seattle. The other seven were in the black. In the third quarter 2008, the 12 regional banks had combined net income of $506 million. Although the banks are separately owned, run as cooperatives and report individual results, they also produce combined quarterly results for the convenience of debt investors. The banks are collectively liable for debt issued by any of them (The Wall Street Journal Oct. 30) ...

  • The U.S. Federal Reserve's balance sheet contracted slightly for the week ending Oct. 28. The Fed's balance sheet liabilities--which are a broad measure of its lending to the financial system--dropped to $2.144 trillion Wednesday from $2.183 trillion a week earlier. Overnight direct loans to banks through the Fed discount window in the week ended Oct. 28 averaged $107.63 billion, compared with $108.17 billion in the week ended Oct. 21 (Reuters Oct. 29) ...

  • CIT Group Inc.--the commercial lender giant trying to avoid bankruptcy--made a deal with Goldman Sachs Group Inc. to amend a $3 billion loan to $2.13 billion and also keep the line of credit open if CIT should file for bankruptcy, analysts said. As part of the deal, Goldman Sachs receives $285 million in termination fees, according to a Friday filing with the Securities and Exchange Commission. Under terms of the original agreement between the two companies, Goldman Sachs would have been entitled to a $1 billion termination payment to close the credit line in case of a CIT bankruptcy, analysts said (Bloomberg.com and The Wall Street Journal Oct. 30) ...

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Companies start to hire, not fire

McLEAN, Va. (11/2/09)--A new survey by the National Association for Business Economics, Washington, D.C., finds that economic recovery is slowly under way. For the first time since the recession began, more companies are planning to add staff than to cut jobs (USA Today Oct. 26).

This may be good news for the future, but if you're unemployed, you're probably wondering how you're going to stay afloat until your personal situation improves (Marketwatch.com Oct. 27).

If you've experienced a job loss, the Credit Union National Association's Center for Personal Finance gives this advice to help you get back in the job market:

  • Get the word out. The most important thing to do is communicate. Let everyone know you're looking for a job.

  • Network. The more people who know you're looking for work, the better. Don't forget former co-workers. Consider using professional online networking tools such as LinkedIn to stay in touch with former colleagues and business acquaintances.

  • Consider temp work--especially if you need to work now. Some income is better than none, and you never know when something temporary may turn into a permanent position.

  • Revamp your résumé. Focus on achievements rather than descriptions; edit, cut, and condense your information; list your successes by showing your accomplishments, committees you've joined, and quantifiable results.

  • Think about nontraditional job options. Using your talent and skills from a previous job and working from home can make freelancing or starting a small business a lucrative option.

For more help in surviving a job loss, see the "Get Back in the Game After Losing a Job" Turning Point in Home & Family Finance Resource Center.

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Resource Links
Home & Family Finance Resource Center
Your Survival Guide for Tough Times handbook
National Association for Business Economics survey
U.S. Labor Department Employment & Training Administration


Jack Henry announces purchase of PEMCO

MONETT, Mo. (11/2/09)--Jack Henry and Associates announced its acquisition of Pemco Technologies, a subsidiary of PEMCO Corp., which provides payment processing solutions for the credit union industry.

Terms of the transaction were not disclosed. Pemco offers services including debit signature processing; personal identification number-based processing; ATM services; cardholder awards programs; fraud management, detection and prevention solutions; personalized cards; and prepaid card programs.

The acquisition supports Jack Henry's expansion in the electronic payments industry, according to Jack Prim, the company's CEO.

"This acquisition expands our presence in the credit union space and enables us to broaden our reach outside our core client base," he said. "We can sell these solutions to any credit union, regardless of core processing system, that has an in-house credit card program and needs a third-party getaway service to pass credit card transactions to Visa and MasterCard for processing."

PEMCO Corp. decided to divest the Pemco Technologies business line to focus on its primary insurance business, Jack Henry said in a release.

Jack Henry, Monett, Mo., is a provider of computer systems and ATM, debit card and automated clearinghouse transaction processing services for financial institutions, including credit unions.

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Wright-Patt acquires Select Mortgage Group

FAIRBORN, Ohio (11/2/09)--Wright-Patt CU and its wholly owned subsidiary have acquired Select Mortgage Group (SMG) to bolster mortgage services to credit unions and their members.

SMG President Rodger Merkel and Vice President of Sales David Mills will continue to lead the company, which has 12 employees, under the current business name.

The acquisition will boost Wright-Patt's myCUmortgage processing and underwriting services, the credit union said.

"As our mortgage business has grown, we were looking for a way to expand," said Tim Mislansky, Wright-Patt senior vice president and president of myCUmortgage.

"SMG's infrastructure and credit union client base offer us the opportunity to expand. Over time we expect to create synergies to lower the cost of home financing to credit union members, enhance how we help credit unions serve their memberships' mortgage needs, and help credit unions keep more of the revenue generated by mortgage lending," Mislansky said.

Wright-Patt CU, Fairborn, Ohio, has $1.6 billion in assets.

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