Wednesday, November 26, 2008

New Fed program may help CUs, members, says CUNA

WASHINGTON (11/26/08)—A new program unveiled by the Federal Reserve Board and U.S. Treasury Tuesday could be useful to credit unions by invigorating the market for mortgage-backed securities, according to Credit Union National Association President/CEO Dan Mica.

The program, announced Tuesday by the Fed, would make up to $500 billion available for the purchase of mortgage-backed securities over a period of "several quarters." A Fed release said the program would also make up to $100 billion available for purchase of the government-sponsored enterprises' (GSE's) direct obligations.

CUNA's Mica welcomed the Fed's announcement, saying it would be important news to some credit unions seeking an invigorated market for these assets now on their books.

"We urge the Fed to include credit unions in this program as soon as possible," Mica said.

In its statement, the Fed pointed out that purchase of GSE direct obligations under the program will be conducted with the agency's primary dealers through a series of competitive auctions, beginning next week. Purchases of the MBSs will be conducted by asset managers selected via a competitive process.

More operational details of this program, the Fed said, will be provided "after consultation with market participants."

CUNA Vice President of Economics and Statistics Mike Schenk noted that the potential overall impact of the MBS-purchase program on the mortgage market is important to credit unions and their members because it should make mortgages more affordable.

"The 30-year, fixed-rate mortgage has been priced 250-300 basis points over the 10-year Treasury recently, but historically that spread is normally 150-200 basis points," Schenk said.

He added, "The Fed plan should result in reducing the spread from its current high level to more normal levels allowing credit unions and other financial institutions to make loans with lower rates and improving affordability for purchasers."

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CUs mark 100th anniversary of nation's first CU

MADISON, Wis. (11/26/08)--Credit unions in North Carolina and in Florida were among those marking the 100th year anniversary Monday of St. Mary's Bank, Manchester, N.H., the first credit union in the nation.

Coastal FCU, a $2.019 billion asset credit union in Raleigh, N.C., decorated its headquarters and made refreshments available to all its branches. While the festivities were intended for members, the credit union's celebration attracted one big name to help celebrate, said Joe Mecca, Coastal's director of community and corporate relations.

Nationally syndicated radio host Clark Howard was in Raleigh Monday, and took time out of his schedule to make a surprise visit to Coastal, Mecca said. Howard, he added, is a "vocal supporter of credit unions."

Howard made a brief appearance at the credit union's St. Albans Drive building, pausing for a few handshakes and photos before helping to cut the cake served to members and employees throughout the day.

Power Financial CU in Pembroke Pines, Fla., reported that it is taking part in the year-long, industrywide celebration in honor of the first credit union's centennial.

"While Power Financial CU may only be celebrating its 56-year-anniversary, we pride ourselves in playing an invaluable role in the growth of the credit union movement here in South Florida by providing outstanding customer service, lower loan rates, higher dividend rates and fewer fees than our big bank neighbors," said Allan M. Prindle, president/CEO.

To celebrate the centennial, the $480 million asset credit union will educate the local community on the benefits of credit union membership through various marketing communication programs.

"In addition, we are offering complimentary financial checkups for members as well as non-members to assist them with their financial goals and evaluate their current plants to determine if any adjustments are recommended to weather any adverse or changing conditions," he said.

"At this time of the year when traditions play such an important part of our holiday celebrations, we want to remind the community that credit unions are also built on a tradition"--of people helping people, Prindle said.

St. Mary's Bank CU was organized in November 1908.

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What budgeting system is best for you?

MADISON, Wis. (11/26/08)--Budgeting is the last priority of a procrastinator.

Everyone knows--because of the experts' constant reminders--how important it is to track personal expenses, conserve income, and save the difference. Yet many people don't. The annual "America's Financial IQ" report from Consumer Action and Capital One consistently shows that one out of three U.S. consumers do not use a budget regularly.

"Creating a personal or family budget is usually near the bottom of people's to-do lists no matter how guilty we feel about it," says Philip Heckman, Credit Union National Association's director of youth and young adult programs. "Not everyone can marry a meticulous accountant. We need an incentive, a reward for doing the right thing. It helps to use a budget as a way to find the money to enjoy a favorite activity or treat without guilt."

It's also useful to look for the most painless system for managing personal finances. Here's what to consider when looking for the method that works best for you:

Budget manually. Budgeting by hand has worked since the invention of paper and pencil. A manual budget is cheap, infinitely adaptable, accessible whenever you have a few minutes, and lends itself easily to involving your spouse or children. Manual budgeting can generate a lot of clutter, however, and you'll need to organize and file your worksheets carefully. Your public library has dozens of budgeting guidebooks to assist you.

Budget electronically. Computerizing a task can make it more bearable, as well as ensure that you don't overlook important details.

Whether you choose stand-alone software or an online service, evaluate these areas:

Security. Software programs that store your financial data on your home computer behind a firewall are more secure than online programs that hold your data on a central server. Online budgeting can be safe with proper encryption and password protection, so read the vendor's security statement carefully. Avoid accessing your online account from a public or shared computer or using a public-access wireless connection.

Functionality. Ideally, budgeting software should be designed well enough to allow you to learn it as you go. Icons, labels, and navigation should be logical. You should be able to update information, such as account balances, with few steps. You should be able to analyze your data in several ways. And you should be able to modify worksheets and reports to match your lifestyle.

Expense. The cost of online budgeting ranges from free to a fee of a few dollars a month. One-time software charges range up to $40 or so. Cheaper usually means fewer features and less flexibility. And more expensive doesn't necessarily indicate easier or more effective.

But remember, choosing a particular budgeting method or tool is less important than finding the discipline to use it. Ultimately the best personal finance management system for you is the one that's most likely--for whatever reason--to become a habit.

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Monday, November 24, 2008

Nation's first CU turns 100 today

MANCHESTER, N.H. (11/24/08)--Today is the 100th anniversary of America's first credit union--St. Mary's Bank, located in Manchester, N.H.

We're balancing honoring our heritage and how we can continue to meet members' needs," said Elizabeth Stodolski, St. Mary's Bank director of marketing. "We have many activities planned. All of our employees feel like they're taking part in history."

The event is so historical that the governor of New Hampshire has proclaimed today as St. Mary's Bank Credit Union Day, Stodolski added.

The celebration starts Monday morning with a tour of America's Credit Union Museum, which is located in St. Mary's original site. The credit union has invited a group of fourth graders from a local elementary school to tour the museum and learn about New Hampshire history and the credit union movement.

Costumed characters depicting individuals such as St. Mary's founder, Monsignor Pierre Hevey, also will be present. St. Mary's Bank hired a historian to brief the characters on the history of the credit union and the credit union movement, so "they are well-prepared," Stodolski said.

This afternoon, St. Mary's will host a reenactment of its founding. The reenactment will be taped and broadcast on St. Mary's website. Afterward, the credit union will host an evening reception. Local businesses, the mayor, members and the general public are invited.

The credit union also will bury a time capsule. Members and the general public voted for items placed in the time capsule through the credit union's website.

St. Mary's Bank staff also traveled to New York City to invite Today Show host Meredith Vieira to the credit union. Credit union staff wore Meredith Vieira masks to get the host's attention, and brought a DVD with a video invitation to the credit union.

"It worked," Stodolski said. "We put the DVD into her hands."

The staff also gave Vieira token gifts, including silver dollars from 1908 and 2008.

St. Mary's Bank hosted member thank-you days Thursday and Friday, where staff handed out gifts and refreshments to members.

On Saturday, the general public was invited to America's Credit Union Museum. Horse and carriage rides were available. On Saturday night, the credit union staged its own show at the Palace Theater. The theater seats 900.

"We completely sold out," Stodolski said.

At the theater, viewers saw a history video about the credit union. The event also featured professional entertainers and singers. A reception held after the show honored the credit union's employees and board members.

On Sunday, St. Mary's Parish, which was the foundation for St. Mary's Bank, held a special church service to honor the credit union. Hevey was the reverend of St. Mary's Parish when he founded the credit union, which aimed to serve modest-earning millworkers and their families.

In the 100 years since St. Mary's opened, the credit union has undergone changes--such as moving to a new location and becoming more tech-savvy. The credit union launched mobile banking and e-statements this year, and gave away Garmin global positioning systems and iPods to members in contests, Stodolski said.

But although times have changed, the mission of St. Mary's Bank has not.

"We opened to serve people of modest means," Stodolski said. "We never strayed from that."

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CUs post asset, savings, loan and member figures

ALEXANDRIA, Va. (11/24/08)—Call Report data as of Sept. 30 shows credit unions remain financially sound but are not unscathed by repercussions of the country's current economic turmoil.

The credit union system posted asset, loan and share growth, as well an increase in membership, according to the National Credit Union Administration (NCUA). However, return on average assets declined and net income decreased.

The 15.7% net income decrease was primarily attributed to a 71.9% increase in provisions for loan and lease losses as credit unions reserve for possible losses.

The NCUA also noted that the credit union data reflects current stress in the financial industry by an increase in delinquency ratios in all loan types.

"Credit unions' continued high level of net worth will help them weather today's turbulent economy;" said NCUA Chairman Michael Fryzel in a release. "However, credit unions are not immune to financial stress, as noted in the delinquency increase in categories such as credit cards and mortgage loans."

Fryzel said the NCUA is "keeping a watchful eye on these adverse trends as part of a broader commitment to maintaining a safe and sound credit union industry."

Details of major balance sheet categories and membership growth in federally insured credit unions from Dec. 31, 2007, to Sept. 30, 2008, include:

Assets increased 6.4% to $801.7 billion from $753.4 billion;

Loans increased 6.3% to $560.0 billion from $526.9 billion;

Investments increased 15.5% to $164.5 billion from $142.5 billion;

Shares increased 5.8% to $668.9 billion from $632.4 billion;

Net worth increased 5.21% to $89.5 billion from $86.2 billion; and

Membership increased 2.0% to 88.5 million members.

The NCUA also noted the loan-to-share ratio increased to 83.73% percent. First mortgage real estate loans and lines of credit expanded 13.6%, used automobile loans grew 5.6%, and unsecured credit card debt increased 4.5%. New automobile loans continued to fall marking a 5.4% decline so far in 2008.

Regular shares increased 6.3% while money market shares increased 14.4%, share certificates increased 1.4% and IRA/KEOGH accounts increased 8.4%.

Loan growth slightly outpaced savings, therefore pushing up the loan-to-share ratio to 83.7% from the 83.3% at year-end 2007. The loan delinquency ratio increased 20 basis points, up from .93% to 1.13%, and the net charge-off ratio increased from 0.51% to 0.75% during the first nine months of the year. The return-on-average-assets ratio dropped from 0.64% to 0.51%.

Use the resource link below for complete details of third quarter 2008 data on the NCUA Consolidated Balance Sheet.

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Retailers revive layaway to counter credit crunch

NEW YORK (11/24/08)--This holiday season, national retailers, regional chains and stores have upped advertising for their layaway options, and many consumers are beginning to turn to this once-considered-obsolete payment method ( Nov. 10).

The widespread availability of credit cards is what put layaway to rest years ago, according to (Oct. 22). But with today's tightened credit limits, holiday shoppers are increasingly wary of using plastic and are turning to other options such as layaway.

Until recently, Kmart Corp. was the only major retailer regularly using layaway, but TJ Maxx Corp., Marshalls Inc., and Burlington Coat Factory have now followed suit.

How does layaway work? A retailer holds an item for a customer while she pays off the purchase price in installments, plus a small service fee, before taking it home. For instance, Kmart requires a $5 service fee and a $10 refundable cancellation fee upfront, or 10% of the item's cost, whichever is greater. If a customer fails to follow through, the transaction is cancelled and the customer receives a refund, less the $15.

If you put these purchases on credit and don't pay off your bill right away, your interest could be more than the layaway fee.

To buy from smaller retailers, visit, a website that organizes layaway services for more than 1,000 retailers nationwide. Representatives said traffic on the site almost doubled in the past year. The site charges a fee of 1.9% of the sale price. To help you boost your credit score, files a report with Fair Isaac Corp. every time you pay an installment on time.

Be advised: The only payment option on is a direct debit from your share draft/check account, so make sure you have funds available to cover the cost of installments. The company charges a $5 fee after the first unsuccessful payment and a $25 cancellation fee after more than one failed attempt.

For more information, read "Tough Times Series: Steer Clear of Credit Counseling Bad Guys" in Home & Family Finance Resource Center.

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Thursday, November 20, 2008

Consolidation is reshaping online banking market

SAN FRANCISCO (11/20/08)--Consolidation is rapidly reshaping the online banking market, according to an annual Online Banking and Bill Payment Report by Javelin Strategy & Research (BusinessWire Nov. 18).

As a result of recent acquisitions, three large banks--Bank of America, Wells Fargo and JPMorgan Chase--will control 39% of the online-banking market, up from 25%.

Javelin, a provider of research on financial services, forecasts that the growth rate for online banking adoption will increase 4.6% annually through 2013, and when 83 million households will be banking online.

However, the survey indicates that bank bill-payment services--which are at 49% penetration--are the pivotal opportunity for credit unions and other financial institutions to expand their online services. The survey predicts online services will grow 5.6% annually through 2013 and reach 45 million households.

In addition to the finding about consolidation, key findings and recommendations of the Javelin report are:

Market winners will design and promote online banking based on member-driven architecture. Benefits include a return-on-investment in terms of increased loyalty, reduced costs, fee income, cross-selling opportunities and fraud-prevention savings;

To gain share from third-party billers, financial institutions should upgrade bill-viewing and bill-payment platforms to make the online experience seamless for consumers. Online banking user experiences are key to preparing for a mobile future; and

Promoting electronic statements and making it easy to eliminate paper statements will save money and reduce fraud.

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Conserve capital, compete for deposits

NEEDHAM, Mass. (11/20/08)--The continuing uncertainty in the global economy and financial markets will force consumer financial institutions to sharpen their focus on conserving capital and competing for deposits in the coming year, says TowerGroup.

Credit liquidity will be a pervasive issue for financial institutions across all geographies, and economic growth in every region will be severely impacted, said new research from the Needham, Mass.-based firm.

TowerGroup predicts that developed markets in North America and Europe will suffer more than the emerging markets in Latin America, Africa and Asia.

In 2009, capital conservation will become critically important for financial institutions, said the firm. With credit likely to be tight throughout the year, financial institutions must determine how to lend funds to consumers profitably and allocate capital adequately given the global curtailment of securitization.

To improve risk management protocols and address lending operations' efficiency issues, financial institutions likely will implement improved analytics, business intelligence and performance-management solutions, said TowerGroup.

"The interdependencies among financial institutions will impact consumer banks in every region of the world as capital adequacy and liquidity concerns continue to permeate the global financial system," said Kathleen Khirallah, managing director and practice leader of banking research and advisory service at TowerGroup.

"With the strongest of banks under pressure to maintain earnings, growth will stagnate, banking consolidation will increase and discretionary information technology (IT) spending will decline," she said adding that institutions "will be forced to do more with less."

The research's key points include:

The pace of banking consolidation will accelerate throughout the first half of 2009, as distressed banks seek to be acquired and regulators close banks they consider too weak to survive.

For most retail banks, the most pressing outcome of the reduction in economic growth will be the necessity to reduce discretionary spending. Aside from pressure to cut personnel costs, consumer bankers will face significant reduction of their discretionary IT budgets in 2009.

The current environment will cause banks to divert IT resources from other projects to support loss mitigation. To curtail losses, consumer banks will upgrade collection and foreclosure software and use analytical software to detect potential problems in loans before they enter delinquency status.

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Wednesday, November 19, 2008

NCUA announces mortgage help plan for CU members

ALEXANDRIA, Va. (11/19/08)—National Credit Union Administration (NCUA) Chairman Michael Fryzel unveiled an initiative Tuesday to help credit union members, who are experiencing mortgage-related financial difficulties, preserve their homeownership.

The proposed new program, called Credit Union Homeowners Affordability Relief Program (CU HARP), would allow the NCUA, through its Central Liquidity Facility (CLF), to work with credit unions and their members to temporarily lower monthly mortgage payments.

In addition to NCUA Board approval, the agency said CU HARP must also receive sign off by the U.S Treasury Department and the Federal Reserve Board.

According to an NCUA announcement, the CLF would provide credit unions with funds, borrowed from the Treasury, at lower rates than otherwise available through private sources. In turn, credit unions are expected to pass the entire rate reduction to struggling low- and moderate- income borrowers.

The credit union, in exchange for the reduced likelihood of borrower default on the mortgage, would also match the rate break, doubling the benefit to struggling homeowners, Fryzel said of the plan.

The agency said CU HARP will be administered at no cost to taxpayers: CLF loans are made to credit unions on a fully secured basis, and all advances received by the CLF will be repaid to the Treasury's Federal Financing Bank, with interest. The program will receive initial funding of $2 billion.

A credit union would have the option of setting the period of the rate break, from three to five years, and would be able to create a 40-year maturity and/or reduce the principal balance to increase mortgage affordability, said the agency announcement.

"My principal reason for advancing CU HARP is simple: The consumer must not be left out of the broader government efforts to mitigate the housing and credit market dislocations," stated Fryzel.

"CU HARP is an effort to foster a solution whereby the NCUA and credit unions work together to assist distressed borrowers. It represents what I believe to be an innovative and practical use of federal homeowner assistance that will also benefit credit unions and the market.

"At the same time, the standards and requirements for CU HARP participation will be stringent and will enable NCUA to be responsible stewards of any public funds used. CU HARP will be a 'win-win' for all involved," the chairman added.

Borrowers participating in CU HARP would be subject to eligibility standards, including income level, default or danger of default, and required occupancy.

The Credit Union National Association (CUNA) welcomed the NCUA's proposed innovation.

CUNA President/CEO Dan Mica said, "Although credit unions did not make the kind of mortgages that have done so much harm to borrowers, many credit union members are suffering because of a weak economy and collapsing housing markets.

"This plan – a product of creative thinking -- is a welcome addition to the tools credit unions are already using to help their members face down financial challenges. In fact, some credit unions that many of these members belong to could likely benefit from assistance themselves."

He added that a further, welcome addition would be for the agency to adopt a 'troubled asset relief program' "for credit unions, by credit unions – to help those credit unions in distressed areas that are bearing the brunt of the collateral damage from the real estate crash."

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CUs get Paulson nod for lending efforts

WASHINGTON (11/19/08)—With all that is on his mind these days, U.S. Treasury Secretary Henry Paulson still managed to give credit unions the nod Tuesday for their continued lending efforts during the country's current credit squeeze.

Paulson was testifying before the House Financial Services Committee on the government's economic stimuli efforts under the Emergency Economic Stabilization Act. He appeared before the panel along with Federal Reserve Chairman Ben Bernanke and Federal Deposit Insurance Corp. Chairman Sheila Bair.

Rep. Tom Price (R-Ga.), during a question period after Paulson's testimony, said he had many smaller institutions in his district, such as credit unions and community banks, that would like to have access to TARP capital.

Although he did not address credit union access to the TARP plan, Paulson did reply that they, in part, are key and will do a lot of lending.

The Credit Union National Association (CUNA) has been asking federal lawmakers, as they consider additional economic recovery legislation, to increase credit unions' ability to be part of the solution for problems faced by consumers and small businesses.

In letters to the leaders of the Senate Banking Committee and the House Financial Services Committee, CUNA has highlighted several regulatory changes it urges should be considered as part of an economic recovery plan.

The letters recommend changes that would:

Allow the National Credit Union Administration to implement a risk-based capital system for credit unions—similar to that of banks-- to help credit unions to better manage unexpected circumstances;

Eliminate the 12.25 % of assets credit union business lending cap as a means to provide much needed credit to America's small businesses without costing taxpayers a dime; and

Permit all credit unions to accept secondary capital.
(See related story: CUNA keeps CU message before Congress.)

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CUNA keeps CU message before Congress

WASHINGTON (11/19/08)—As the U.S. Congress investigates the evolving nature of the Treasury Department's Troubled Asset Relief Program (TARP), the Credit Union National Association (CUNA) is keeping the message before key lawmakers that credit unions must be included in any assistance plan.

CUNA backs a plan under which the National Credit Union Administration would develop a "shadow TARP" program for credit unions that would purchase mortgage loans and mortgage-related assets from credit unions, but wants backup funding from the Treasury if necessary.

In advance of yesterday's House Financial Services Committee oversight hearing on the Bush administration's actions to restore economic stability, CUNA wrote to the panel's chairman, Rep. Barney Frank (D-Mass.), and its ranking member, Rep. Spencer Bachus (R-Ala.), to press the case for credit union inclusion.

Last week, Treasury announced it would abandon its plan to purchase of troubled assets from financial institutions in favor of greater emphasis on capital infusions into financial institutions. That shift, said the CUNA letter, causes credit unions concern.

"Although the Emergency Economic Stabilization Act explicitly includes America's credit unions among the institutions eligible to participate under the (TARP) plan, the implementation of the program thus far has not included credit unions, and the Treasury's announcement makes it unclear how credit unions will be included," wrote CUNA President/CEO Dan Mica.

Mica stressed, "We hope that no credit union will need to turn to Treasury or NCUA for assistance. However, should the need arise, it is critical that the mechanisms Congress has put in place through the enactment of the Emergency Economic Stabilization Act work for credit unions as well as banks and other entities."

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Wildfires affect CU's transaction volume

PASADENA, Calif. (11/19/08)--The California wildfires this past weekend affected transaction volume at some of Wescom CU's branches, the credit union said.

Susan McCready, Wescom senior vice president of branch services, told News Now that she talked with several branches who reported that business was "much slower than usual."

"It was a frightening day because of all the fires," she said.

Wescom, which is based in Pasadena, closed its Anaheim Hills branch at 1:45 p.m. on Saturday because of smoke. The credit union handed out masks to its members--a gesture they appreciated, McCready said.

Members who came into the branches didn't appear to be panicked, she added.

The fires affected California residents in Santa Barbara, Los Angeles, Orange and Riverside counties. The Orange County Fire Authority lifted the final evacuation order Tuesday for the Chino Hills area. The firefight is over, the California Department of Forestry and Fire Protection told The Los Angeles Times (Nov. 18).

Calif. Gov. Arnold Schwarzenegger declared a state of emergency during the fires and the California Department of Financial Institutions also ordered its institutions including credit unions to help consumers affected by the fires (News Now Nov. 17).

Some Wescom employees evacuated their homes because of the fires, but have since returned. "We are very happy that none of our employee's homes burned," McCready said.

Wescom had asked its employees to notify the credit union if they had suffered a loss. "Some employees who evacuated didn't get back into their homes until [Monday]," McCready said.

So far, two members have contacted Wescom about losses due to the fires. One came into the branch to talk to the credit union, and another contacted the credit union through its call center.

Wescom also will offer emergency fire loan assistance to members who suffered losses in the fire.

Wescom has $3.69 billion in assets.

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Promo results in 40% hike in new cardholders

FARMERS BRANCH, Texas (11/19/08)--East Texas Professional CU's summer promotion for its card products "really rocked." It brought in more than 500 new cardholders in July and August through its in-branch promotion.

The Mastercard "Roots of Rock" consumer card in-branch promotion was designed by TNB, and a number of credit unions participated, said the Texas Credit Union League (LoneStar Leaguer Nov. 18).

The $334 million asset credit union, based in Longview, saw a 40% increase in the number of new cardholders compared with an in-branch promotion it offered last year, Chris Graham, card services administrator, told the league.

The credit union used TNB's kit, which contained flashing guitar magnetic lapel buttons, window clings, tent cards, posters, and member giveaways. TNB also offered card information and training to ensure employees were comfortable marketing the card products.

An employee sweepstakes offered every employee a chance to win prizes such as MP3 players, T-shirts and music downloads. The grand prize was a $1,000 Mastercard gift card. East Texas Professional CU also provided rewards to two employees each week during the promotion.

The credit union decorated its seven branches with vintage rock music posters and inflatable guitars. Members were treated to rock-themed events each Friday, in which they received "Roots of Rock" simulated tattoos, root beer served in themed cups and popcorn bags carrying the Roots of Rock logo.

The events were used to solicit members to apply for the credit union's credit card and encourage existing cardholders to use their card for a chance to win a trip to meet Jon Bon Jovi, Eric Clapton or Kenney Chesney at a concert. The consumer promotion was sponsored by Mastercard.

Ruth Holden, senior vice president and loan officer for the credit union, won the grand prize. She had 62 entries in the contest, representing the number of approved card applications she generated during the promotion.

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New CSS alliance offers ID theft solution

MADISON, Wis. (11/19/08)--Credit unions now have a new consumer identity theft solution with varying levels of protection to offer their members and staff through the CUNA Strategic Services and Intersections Inc. alliance.

Intersections, a provider of consumer and corporate identity risk management services, is partnering with the Identity Theft Assistance Center (ITAC), a nonprofit supported by financial services companies, to jointly offer ITAC Sentinel.

The proactive identity theft protection is the only product that includes ITAC victim assistance, which has helped thousands of consumers and law enforcement fight identity theft.

ITAC Sentinel continuously monitors personal credit and data with credit reporting agencies and throughout the Internet to quickly spot changes that could indicate identity theft or unauthorized use.

Consumers are promptly alerted if changes are detected, so they can review and take immediate action if necessary. In the event of identity theft, ITAC Sentinel provides victim assistance and resources that are necessary for recovery.

"During our search for a comprehensive identity theft solution, we were impressed not only by the product, but also by the work done on the back end to catch and convict identity thieves," said Wes Millar, senior vice president of CUNA Strategic Services.

For more information, use the resource link.

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Switching to Roth may ease conversion taxes

NEW YORK (11/19/08)--For some investors who've taken a beating in recent months, converting from a traditional Individual Retirement Account (IRA) to a Roth IRA may yield significant tax savings (The Wall Street Journal Nov. 2).

Why act now? When you convert, you pay the income taxes right away on your account's value. With some accounts looking thin, converting now instead of later would reduce the taxes you pay as your IRA balance increases when the economy turns around.

Understand the basic differences between a Roth IRA and a traditional IRA. Roth IRA contributions are not tax deductible, but there are generally no taxes on future earnings and withdrawals, as long as you've held the assets for five years. In contrast, traditional IRA contributions are tax deductible, but you pay taxes on withdrawals. Unlike the traditional IRA, which requires you to begin withdrawing money at age 70 ½, the Roth has no such age requirement for withdrawals--the earnings can keep growing tax-free for as long as you like.

For tax-year 2008, you can contribute up to $5,000 a year to a traditional or Roth IRA (combined) if you are younger than age 50, and $6,000 if you are 50 or older.

For additional information, visit and search for Publication 590.

If you're thinking of converting from a traditional IRA to a Roth IRA, consider these guidelines:

Your income must be $100,000 or less--until 2010, when this income requirement goes away.

If you are age 70 ½ or older and wish to convert to a Roth IRA, you're still required to take this year's required distribution, although Congress soon may pass legislation suspending the required distribution rules for 2008 (USA Today Nov. 11). If the legislation passes, middle-income retirees who don't need the money now would be in a better position to make their savings last as long as possible.

To make penalty-free withdrawals from converted funds, you must wait five years or until age 59 ½, whichever comes first. However, any interest earned on those funds carries a five-year window before it can be taken out tax-free.

If you convert funds after age 59 ½, you can withdraw the actual assets you converted at any time, but again, you must abide by the five-year requirement on the earnings in those accounts.

It isn't necessary to separate converted funds from earnings--when you do withdraw from your account, money is drawn first from contributions, then from conversions, and last from earnings.

For more information, read "Avoid Conversion Confusion With Roth IRAs" in Home & Family Finance Resource Center.

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Tuesday, November 18, 2008

California DFI urges FIs to assist L.A. fire victims

SANTA BARBARA, Calif. (11/18/08)--The California Department of Financial Institutions has requested that the state's financial institutions, including credit unions, help families recovering from wildfires that destroyed more than 800 homes in the Orange County area.

Gov. Arnold Schwarzenegger declared a state of emergency in Santa Barbara, Los Angeles, Orange and Riverside counties. Tens of thousands of Californians were forced to evacuate their homes and major freeways have been shut down as the wildfires continue to burn (Sacramento Bee Nov. 14).

American First CU, La Habra, is contacting its members in affected areas. The credit union also will offer its American First Aid Program to affected members, Tina Ramos-Ingold, California Credit Union League public affairs coordinator, told News Now.

American First reported no damages to branches in the area.

The California league is contacting credit unions potentially affected by the fires. The league did not receive damage reports or news of affected credit union members by press time Monday night.

Wescom CU, Pasadena, told News Now that it closed its Anaheim Hills branch early on Saturday because of the fires. The branch has since re-opened.

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Reuters: CUs step up loans as banks retreat

NOVI, Mich. (11/18/08)--While many big banks are cutting back on their lending amidst a weak U.S. economy and a nationwide housing downturn, many credit unions are stepping up and offering loans to fill the void, reports Reuters.

Generally, credit unions are smaller than commercial banks, with average U.S. assets in 2007 of $93 million, compared with $1.53 billion for banks, according to the Credit Union National Association (Reuters Nov. 16).

Most banks in the Cleveland area have imposed a freeze on lending, which has resulted in more people turning to credit unions, Rita Haynes, CEO of the $10.5 million asset, Cleveland-based Faith Community CU, told Reuters.

When Jim Greenshields, a laid-off engineer with Ford Motor Company, found a job this summer, he had been in default on his mortgage since late 2007. In August, he had to relinquish his home after his proposed repayment plan was rejected by his bank because he had been in default so long.

Three months later, Community Financial Members CU, a $415.4 million asset, Plymouth, Mich.-based credit union, offered Greenhsields a car loan and a mortgage loan to buy back his former home from his old bank for $350,000. He paid $450,000 the first time.

Although credit unions historically are not the first place people go for an auto loan, times are changing, Cliff Rosenthal, CEO of the National Federation of Community Development Credit Unions, told Reuters.

While many credit union members are struggling with food and energy prices, credit unions' individual approach is helpful to members experiencing financial difficulties, Reuters said.

Faith Community tries to work out solutions for members with problems such as paying their mortgage, Haynes said, adding that the credit union does whatever it can to help members in its community.

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Scammers take advantage of financial crisis, holiday

PEWAUKEE, Wis. (11/18/08)--Scammers are taking advantage of the financial crisis and may earmark the upcoming holidays by launching new attacks to steal personal information for possible fraud.

According to the Wisconsin Credit Union League, consumers should be wary of e-mails or ads that ask them to update, validate or confirm account information (Wisconsin State Journal Nov. 14). Credit unions can help get the word out to their members about these claims.

One claim says that a company recently acquired the recipient's mortgage and asks for an update of personal information, the league said.

UW CU, Madison, Wis., warned its members about a "secret shopper" scam that sends recipients fake checks for consumer research and asks the recipients to deposit the checks and wire the money.

Members can expect more scams to take advantage of the holidays, similar to one that occurred last Thanksgiving Day in Manitowoc County, Wis., said the league.

That scam--timed to occur when financial institutions are closed--dialed 40,000 area residents and got 20,000 people to answer the phone. It claimed the recipients' bank account was frozen, provided a toll-free number to call to reinstate it and asked the recipients to verify their personal information.

Other scams reported recently:

In Columbus, Ala., TIC FCU reported that callers purporting to be from the credit union were taking a "shotgun approach," randomly calling numbers in hopes that a member would divulge credit card, debit card PINs ( Nov. 12).

Ypsilanti Area FCU in the Ann Arbor, Mich., warned residents that phishers are using a fake credit union's name to gain access to bank accounts in Ann Arbor. A number of the credit union's members received the e-mails and text messages. The e-mails direct recipients to a website while the text messages direct them to an automated phone line. The credit union warned members not to respond (The Ann Arbor News via Nov. 7).

In Valparasio, Ind., police warned the public about automated telephone messages that told consumers their accounts at Regional FCU and other local institutions were about to be canceled unless they provided an account number and PIN over the phone. The credit union said its members are well-educated on fraud prevention (Post-Tribune Nov. 12).

And outside the U.S., an e-mail purporting to be from the "Account Review Department" of the Irish League of Credit Unions claimed the recipients' account had experienced an unauthorized access or security alert. Recipients were directed to a website to reactivate their accounts by providing personal details such as card numbers (Irish Times via Nov. 14).

All the institutions warned that they do not ask for information that they already have on file and especially would never do so in unsolicited messages.

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Monday, November 17, 2008

CUs help borrowers buy cars in tight credit market

MADISON, Wis. (11/17/08)--The volume of car loans is dropping, captive finance companies are tightening credit, and interest rates have nearly doubled in third quarter. But consumers still can get a car loan at an affordable price through a credit union, according to several media sources.

During third quarter, the volume of car loans declined 6%, compared with third-quarter 2007. Average interest rates on car loans almost doubled from July to September with financing now as high as 39%, and borrowers are required to make larger down payments--averaging $2,000 down on a $20,000 car (Washington Post Nov. 13).

The 39% financing--offered by Nationwide Acceptance Corp. in Chicago to people with "perfectly awful credit"--is almost four times what local banks and credit unions charge, even for consumers with poor credit histories, reported The Seattle Times (Nov. 13).

Credit unions and banks still are lending to qualified buyers, the article said. It offered suggestions on how to get the best car deal. One suggestion: Shop for financing. "Talk to a credit union or bank, and compare those rates with what dealerships offer," the article advised.

In Jacksonville, Ark., Gwatney Cheverolet is one of several auto dealers turning to different sources--including credit unions--to finance cars after its captive finance company, GMAC, tightened its lending standards (Arkansas Democrat Gazette Nov. 13). The dealer is increasing its work with local credit unions and banks rather than GMAC.

In fact, Arkansas FCU is now its largest lender. Terry Vick, the credit union's chief lending officer, noted in the article that Arkansas FCU has lent 13% more in auto loans this year, compared with all of 2007.

She attributes the business to the volatile stock market. Members have pulled their funds from the market and deposited them in the credit union. As a result, there's plenty of money to lend out., an online resource for consumer automotive information, agrees it is possible to get a car loan in times of economic stress. It called media reports that consumers are unable to get auto loan financing as "often overstated" (BusinessWire via MarketWatch Nov. 14). pointed out several trends, which credit unions can help educate members about:

Consumers with average credit scores will be required to make a down payment as high as 20%;

Lenders are restricting the length of loans; six-year loans may no longer be an option for many consumers;

The minimum credit score required for an auto loan has risen to around 500;

The credit score required for the best loan rates has risen to at least 720, up from 700 a few months ago; and

Consumers with the best credit can expect an interest rate as low as 5.95%, while those with average credit may see rates as high as 12.5%.

Among the strategies outlines: "Look to credit unions, local banks and online lenders as alternative sources for auto loans."

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Even robber can't get satisfaction from bank

YORK, Pa. (11/17/08)--Even a bank robber can't get satisfaction from a bank. A miffed robber was so disgruntled that a bank had no cash that he threatened to file a complaint with the bank's management.

The branch of Susquehanna Bank in Springettsbury Township, Pa., had just opened at about 9 a.m. Thursday morning. Three tellers were waiting for their cash drawers to be filled, when the man entered and demanded money (Associated Press and and York Daily Record Nov. 13).

The first teller screamed and fainted. The second said she didn't have any cash and showed him the empty drawer. The third teller also showed him an empty cash drawer.

As he ran from the scene empty-handed, the robber vowed he would let bank managers know of his dissatisfaction.

A drive-thru customer followed the robber and contacted police, who arrested Joseph Goetz, 48, less than a mile from the bank.

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Shop now for best car deals

NEW YORK (11/17/08)--It's a buyer's market on automobile dealer lots right now, thanks to too many 2009s, too many leftover 2008s, and a glut of used vehicles. But if you wait too long, you may miss out on the short-lived perfect storm benefiting buyers (MarketWatch Nov. 5).

As automobile dealers struggle to stay in business during tough economic times, now is the time to bargain. Before you head to the lot, lay out your game plan:

Check your credit. A good bill-paying history and a credit score higher than about 720 will give you an edge over customers without them.

Understand your choices. If you want a small vehicle, you won't have much negotiating power--they're in short supply and the dealer has leverage. Large cars, on the other hand, will yield the best deals, but you'll pay at the pump for poor gas mileage.

Consider certified, pre-owned vehicles. These used cars have warranty protection, and they also have the most costly years of depreciation behind them.

Set your strategy. Once you decide on a model, use one dealer against another. J.D. Power & Associates recommends you get a price from Dealer A, then use that price to bargain with Dealer B (BusinessWeek TV Oct. 10). Be prepared to go back and forth between the dealers.

Understand financing options. Despite the lure of 0% financing and rebates, have a credit union loan officer run the numbers before you sign on any dotted lines.

For more information, read "Are You Ready for a Really Small Car?" in Home & Family Finance Resource Center.

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Friday, November 14, 2008

New urgency for CU-backed TARP, says CUNA

WASHINGTON (11/13/08)--After the U.S. Treasury Department yesterday said its Troubled Asset Relief Program would no longer seek to buy distressed mortgage-backed assets, the Credit Union National Association (CUNA) reiterated its call on the National Credit Union Administration (NCUA) to create its own credit union-funded troubled-asset relief program through the National Credit Union Share Insurance Fund.

After Wednesday's announcement by Treasury Secretary Henry Paulson, CUNA President/CEO Dan Mica expressed concern about the Treasury's change of direction in not using the $700 billion of congressionally mandated funds for purchase of troubled assets from U.S. financial institutions--including credit unions.

"Although the Economic Emergency Stabilization Act explicitly includes America's credit unions, the implementation of the program thus far has not included credit unions, and the Treasury's announcement makes it unclear how credit unions will be included," said Mica.

The CUNA leader pointed out that it has been CUNA's position that credit unions not be disadvantaged by the government's response to the nation's financial crisis.

Credit unions could have been covered under provisions of the original troubled asset purchase plan. But, because of the credit union capital structure, to date credit unions have not been eligible for the capital infusion.

"An asset purchase program would have helped to establish values for some of these troubled assets in today's dysfunctional markets," said Mica.

"We must be assured that the interests and needs of our 8,000 cooperatively owned financial institutions are addressed so they may help their 90 million members deal with this financial crisis," said Mica. "At the least, we urge the Treasury to consider a set aside of funds to be used by Main Street financial institutions--such as credit unions."

Mica said CUNA prefers that credit unions be able to turn to the NCUA for assistance, so that credit union funds can "help credit unions solve their own problems, with backup funding from Treasury if necessary."

"We again urge NCUA to implement a program for credit unions--by credit unions--that accomplishes the intent of the Emergency Economic Stabilization Act for the movement," he said.

During the Oct. 30 NCUA budget review meeting, CUNA urged the agency to consider such a program exclusively for credit unions. Use the resource link below to access the related story.

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100-year CU celebration website goes live

MADISON, Wis. (11/13/08)--Historical information and campaign materials for the 100-year anniversary of credit unions is now available on a new website from the Credit Union National Association (CUNA).

The year-long celebration marks the U.S. credit union movement's 100th anniversary, along with the 75th anniversaries of CUNA and the signing of the Federal Credit Union Act. CUNA recently launched a public relations campaign and media outreach effort devoted to the anniversary celebration, how far the movement has come in a century, and where it is headed in the future.

Campaign materials and additional resources were created for credit unions to use while promoting the celebration. At, credit unions will find:

History--Including an interactive timeline and highlights from the past 100 years credit unions;

Video clip--CUNA President/CEO Dan Mica talks about credit unions' 100 years of success;

Campaign materials--Credit unions can download free public relations and marketing materials, including a model speech, proclamation, celebration ideas, newsletter, press release, letter to the editor, logos, and ads to help promote the anniversary celebration;

Online store--Various promotional items and print materials for the celebration are available for purchase; and

Credit union stories and pictures--An area of the website was created for credit unions to share their pictures and stories.

"We couch the celebration in terms of the 100 years of growth and evolution that credit unions have undergone in order to continually improve service to members and further our tradition of People Helping People," Mica said. "The website is just one of a number of activities that CUNA has planned for the celebration."

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Wednesday, November 12, 2008

Filene studies consumer debit-credit behavior

MADISON, Wis. (11/12/08)--A new study from the Filene Research Institute aims to track transaction choices consumers make between using debit and credit and
information on consumer characteristics such as income and creditworthiness.

"Debit vs. Credit: How People Choose to Pay," by Victor Stango, University of California-Davis, and Jonathan Zinman, Dartmouth College, uses behavioral economics to try and understand how people make economic decisions.

The study found that:

Most people "single-home," using nearly all debit or all credit for retail purchases;

Purchase characteristics, such as transaction size, influence their payment choices, but there is a clear propensity to use debit, which varies across consumers and is stable over time. It also is easy to classify people as "debit" or "credit" users;

While there are only small differences in income and total spending, debit users tend to be less creditworthy than credit users, and their credit cards have higher interest rates.

Persistent debit card use is not fully explained by the most important economic factor that should affect the costs of debit vs. credit--carrying a credit card balance;

Credit users pay less in account fees than debit users; and

Debit is a useful way to moderate overall spending.

"Credit unions looking for ways to better understand member behavior will find this report extremely useful," said George Hofheimer, Filene chief research officer. "The findings give credit unions a lot to think about it terms of segmentation, member behavior, product development and the concept of consumer behaviors.

"Across demographic segments, many consumers rely on only one payment choice. This creates an opportunity for credit unions to broaden their thinking about how to segment their membership," he added.

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Wall St. Journal: Local CUs an option for borrowers

NEW YORK (11/12/08)--The Wall St. Journal Tuesday noted credit unions as an option for borrowers seeking small business loans.

The Journal told the story of Amy Loera, who wanted to expand her family's Mexican restaurant. After being turned down by nine banks for loans, Loera received a $643,000 loan from Arrowhead CU, San Bernardino, Calif.

Jon Parks, Arrowhead CU vice president, said Loera's loan was approved because the family showed it had experience managing restaurants and proved its restaurants were successful. The new location is being planned as an affordable family restaurant, which will help it succeed in today's economy, he added.

The credit union looks for strong credit scores, but cash flow often trumps that, he said.

Loera's business had a credit score of 750, was debt-free, and the restaurant was able to predict how much money it would make in the next year. These factors didn't matter to any of the banks--but it did matter to Arrowhead, Leora told the paper.

Parks said his institution looks at the outlook of the overall industry when approving loans. Some businesses may do well despite a tough economy because they offer a niche, he added.

Sandy Baruah, acting administrator of the Small Business Administration, told the paper that larger financial institutions rely on credit scores. Community institutions look at the business plan and make a decision based on their comfort level with the business plan and presentation, though credit scores still matter, Baruah said.

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Don't let fake check scams fake you out

NEW YORK (11/12/08)--Scam artists are using legitimate and familiar names--such as Publishers Clearing House, Martha Stewart Living, and Oprah Winfrey's O Magazine--to lure you into falling for a fake check scam, and you're left holding the bag ( Oct. 30).

How do fake check scams work? There are many variations, but all involve someone asking you to deposit a realistic-looking check and send money elsewhere in return.

In the Publishers Clearing House scam, the fraudster promised a $15 million sweepstakes award to one unsuspecting victim--as soon as she covered $5,889 in fees with the "advance check" the sweepstakes sent her.

She discovered the check was a fraud only after wiring the "fee money" and draining her bank account of nearly $6,000.

Federal law requires you to have access to funds from deposited checks or money orders within one to five days. The check processing, however, can take weeks or months, giving a thief ample time to take your money and run.

You are responsible for any transactions you make--whether you're wiring money or depositing money orders or checks. Many consumers have seen thousands of dollars in losses.

In addition to the "Sweepstakes Scheme," watch out for these phony offers, warns

Scheming suitor. Scammers find a way to your heart--by befriending you, using children, or employing the word "love"--and then ask you to cash a fake check as a favor. There's no reason the crooks couldn't use their own financial services provider to do so.

Overpayment offer. Crooks offer to buy something you are selling, but send you a check for more than you are asking. They then ask you to wire them or another party the difference. Some will claim they sent the wrong amount by mistake.

Work at home offer. Con artists posing as employers hire you to work from home, and ask you to help them "process payments for clients" as part of your job. You end up depositing bogus checks and sending the money back, minus your "pay." This isn't how legitimate companies do business.

Foreign business offer. Scam artists offering you a foreign business deal send you a check or money order and ask you to send back a portion for taxes, customs, bonding, processing, legal fees or other expenses that must be paid before they can send you the rest.

Remember: There is no valid reason for a person who is giving you money to ask you to wire some back. If you are doing business with strangers, have them write a cashier's check for the exact amount. Also, be wary of an offer arriving by regular mail, phone, fax, or e-mail. Legitimate checks will arrive via certified mail.

You can report fake check scams to the National Consumers League Fraud Center, at

For more information, listen to "What You Should Know About Fake Check Scams" in Home & Family Finance Resource Center.

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Survey: CUs still free checking leaders

MADISON, Wis. (11/11/08)--Credit unions are still the free checking leaders--so much so that many banks have switched to free-checking institutions to remain competitive--says the just-released 2008-2009 Credit Union Fees Survey from the Credit Union National Association (CUNA).

According to the survey, 80% of credit unions offering checking accounts provide at least one free checking account with no minimum balance requirement and no maintenance or activity fees, up from 65% in 2000. Another 7% offer free checking with other services or club memberships.

However, banks have increased their offerings in this area to remain competitive. In 2000, 28% of banks offered at least one free checking account compared with 68% in 2007, according to Bankrate's Checking Study.

While it may appear on the surface that banks have realized the importance of offering customer-centered products and services, many financial institutions have turned to no-fee checking to increase the number of checking accounts they hold, to increase their earnings from fee income.

Bank fees--including fees from commercial customers--represent nearly 50% of banks' total income, according to current estimates. In comparison, only 12% of credit union income came from fees in 2007, according to CUNA reports and National Credit Union Administration Call Reports.

"Traditionally, fees have been a point of differentiation between banks and credit unions as credit unions tend to focus on maintaining a minimum number and amount of fees in comparison to banks," said Kristina Grebner, CUNA director of research and advisory services. "These practices and the reputation credit unions have as consumer advocates provide them with a competitive edge--and the media has really zeroed in on credit unions' pro-consumer advantages in the current economic crisis."

Numerous fee types and account structures have been documented and analyzed for credit unions of all sizes in the following areas:

Share draft/checking programs;
ATM and debit cards;
ATM surcharges;
Non-sufficient funds/overdraft protection programs;
Automated clearing house;
Foreign and domestic wire transfers;
First-mortgage applications and closing costs;
Member business loan applications and commitments;
Commercial real estate commitments;
Non-member check cashing;
Credit cards, and
Internet banking and bill payments.

The report reveals the percentage of credit unions that offer a certain product and the overall percentage that charge a fee for that product, and distribution of fee income by source. Also, the report includes the average, maximum, and range of amounts charged by credit unions, along with the number of free transactions before a fee is charged. The data tables are broken down by asset size and by region for peer comparison purposes.

The report is available in both hard copy and PDF format. For more information or to order a copy of CUNA's 2008-2009 Credit Union Fees Survey online, use the link.

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CUs are well-capitalized safe harbors, paper says

FORT WORTH, Texas (11/11/08)--Credit unions nationwide have not been as severely impacted as other financial institutions by the economic problems hitting the U.S. this year, due to their conservative nature and relatively high levels of capitalization, according to a Monday article in the Fort Worth Business Press.

Because credit unions are not motivated by profits, they don't have the same pressures as stock organizations, Dick Ensweiler, president/CEO of the Texas Credit Union League, told the newspaper. Therefore, credit unions can take a long-range view as to what is in the best interest of their members and make future plans accordingly, he added.

In talking to member credit unions statewide, Ensweiler found they are doing well for the most part because they are well-capitalized at an average rate of 11%, he said.

Although a few credit unions in California and Florida went though some difficulties because real estate values are plunging, most credit unions are not heavily involved with mortgage loans, Ensweiler told the paper.

However, those credit unions that were funding mortgages experienced trouble, he added.

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'30 under 30' group shares 10 strategies

SAN FRANCISCO (11/11/08)--The Filene Research Institute's 30 Under 30 group of young professionals shared 10 strategies for credit unions at the California Credit Union League's annual convention last week to better serve young adults.

"The range of ideas and the rigor with which the groups prepared were absolutely fantastic," said Mark Meyer, Filene CEO.

The ideas were presented to executives and volunteers at the convention.

Best in Show was awarded to Dustin Allen, Weber State CU, Ogden, Utah; Robin Hickey, First Financial FCU, Wall, N.J.; and Matthew Prosneski, Travis CU, Vacaville, Calif., for "Change Your Savings."

"Change Your Savings" shows how a family can use a debit product to save for a child's college education and cross-sell credit union accounts.

Runners-up went to Mike Escudero, University of Southern California; Jill Jarman-Nowacki, Credit Union House, Washington, D.C.; Brandi Melo, Rocky Mountain CU, Helena, Mont.; and Chad Warneke, Oregonians CU, Portland, Ore., for "Cure Card."

Cure Card allows credit unions to offer one branded card that pays a portion of interchange income to a worthy cause.

All 10 of the plans will be available at

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Friday, November 7, 2008

Mica to address CU challenges in live Nov. 19 webinar

WASHINGTON (11/7/08)--The challenges presented to credit unions as a result of the financial crisis will be addressed in a special live nationwide webinar featuring Credit Union National Association (CUNA) President/CEO Dan Mica, Nov. 19 at 2 p.m. ET.

The Internet-based video conference--open to all CUNA-affiliated credit unions at no charge--will focus on the financial crisis and how credit unions can leverage their "white hat image" to help minimize the impact of the crisis on credit union members, as well as the nation itself.

"We are developing a vision for how credit unions can work for their members and the nation, through the Congress and the regulatory agencies, to help them through these difficult times," Mica said.

"The Congress will have a 'working majority,' meaning that if they decide to do something quickly, they can move very fast. We are going to need to be ready to act in any number of ways."

Affiliated credit unions can hear directly from Dan Mica about the Nov. 19 webinar, by clicking on the image below.

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Leagues analyze state election results

MADISON, Wis. (11/7/08)--Results are coming in after Tuesday elections, and credit union leagues are reporting their successes.

The Ohio Credit Union League reported that Democrats will take the majority in the state House of Representatives. Future legislation will require more bipartisan cooperation, said John Kozlowski, general counsel at the Ohio Credit Union League (eLumination Newsletter Nov. 6).

Credit union-backed candidates elected include: Denise Driehaus (D), Cheryl Grossman (R), Kris Jordan (R), Peggy Lehner (R) and Margaret Anna Ruhl (R).

State Treasurer Richard Cordray was elected Ohio Attorney General. The league has a good relationship with him, Kozlowski said.

"The Ohio Credit Union League looks forward to working with the leadership, general assembly and administration to make Ohio better for its citizens and the ability of our credit unions to make more of their products and services available throughout Ohio," Kozlowski said.

As Pennsylvania credit unions celebrated the re-election of credit union friend U.S. Rep. Paul Kanjorski (D), the original sponsor of the Credit Union Regulatory Improvements Act (CURIA), the Pennsylvania Credit Union Association (PCUA) also addressed credit unions' success in state-level elections.

Rob McCord, Credit Union Better Choice enthusiast, defeated Tom Ellis for state treasurer. Long-time credit union supporters state Reps. Dan Surra (D-75) and Vince Biancucci (D-15) were defeated by their Republican challengers (Life is a Highway Nov. 6).

PCUA also thanked credit union advocates for volunteering their time to support candidates.

Texas credit unions had a 96% success rate in the state elections. Results of the Texas races are preliminary--as of press time, 40 precincts were still due to report.

John Culberson (R-Houston), a CURIA co-sponsor, and Michael McCaul (R-Austin) were "candidates to watch," according to the Texas Credit Union League. Both retained their seats.

Unofficial results in Maine indicate 90% of the 88 candidates endorsed by the Maine Credit Union League were elected.

In the Senate, 27 of the league's 28 endorsed candidates won. In the House, 51 of 60 endorsed candidates were elected.

Two members of the legislature are also credit union board members--Rep. Herbert Clark, Katahdin FCU, Millinocket;,and Michael Lajoie, Lewiston Municipal FCU, Lewiston.

"We have great friends from both parties in the legislature so we anticipate strong support for our issues and positions in the upcoming session," said John Murphy, Maine league president.

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Malware steals log-on data to accounts

NEW YORK (11/7/08)--The log-ons to more than a half million bank, credit and debit card accounts have been stolen over the past two-and-a-half years by a single cyber crime group using a Trojan horse spyware that "morphs" to avoid detection.

News Now could not determine whether these included credit union members' accounts.

Researchers at RSA Security Inc.'s FraudAction Research Lab discovered the stolen data while they were tracking the Sinowal Trojan horse, also known as Mebroot and Torpig. They tracked the spyware to a drop server that contained the stolen data (Computerworld Oct. 31).

RSA investigators found more than 270,000 online banking account credentials, plus about 240,000 credit and debit account numbers and other personal information lifted from Microsoft Windows PCs ( Oct. 31).

According to Sean Brady, product marketing manager at RSA's ID and access assurance group, the length of time the spyware has been maintained by a single group and the scale of the theft is "very unusual."

The Trojan horse malware has been active since at least February 2006. Once on a system, the malware waits for the user to enter the address to an online bank, credit card company site or another financial URL. It then substitutes a fake address. The malware is triggered by more than 2,700 specific Web addresses, a much larger number than other Trojan horses, said Brady.

The fake sites collect the log-on usernames and passwords to banks and other financial institutions. They trick users into disclosing information legitimate financial institutions would never collect online, such as Social Security numbers. They transmit the pilfered data to the drop server.

RSA Security said it suspected the group responsible is based in Russia. The malware was distributed globally, but Russia was the one region that had no infections.

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CUs continue to report phishing scams

MADISON, Wis. (11/7/08)--More credit unions are reporting their members and nonmembers are being text messaged, phoned, and e-mailed with phishing scams seeking account information.

Gesa CU, Richland, Wash., and police in four area communities reported a number of complaints from people about cell phone text messages sent Nov. 1.

The messages, which went to members and nonmembers, said their credit union accounts had been closed and they needed to call a 509 area code number to provide personal information to reactivate the card.

Because it was a Saturday, Gesa sent extra staff to its call center to handle the volume, Christina Brown, president/CEO, told Tri-City Herald (Nov. 2).

The credit union and others have been periodically targeted by scammers since the beginning of the year. In previous scams, scammers called people randomly and claimed their credit or debit card had been canceled and needed reactivating.

Four credit unions in Ohio were targeted in phone scams and e-mails the past couple of weeks, according to the Ohio Credit Union League (eLumination Newsletter Nov. 5).

Two Heath, Ohio-based credit unions were targeted this week. Harvest FCU was flooded with reports about a phone scam Tuesday afternoon. Members and nonmembers received automated calls telling them their credit card account had been suspended because of third-party usage. The caller asked the recipients to input their card number (Newark Advocate Nov. 5).

On Wednesday, a phone scam purporting to be from Hopewell FCU began circulating. Recipients were told their accounts had been suspended and to call a phone number to reactivate their account.

On Oct. 29, a phishing e-mail purporting to be from Lagrange, Ohio-based Sun Center FCU told recipients their account was suspended temporarily due to a billing failure. They were to go to a bogus website and complete an account update to unlock the account.

An automated phone scam Oct. 23, targeted Kenton, Ohio-based Hardin Community FCU. Consumers called were told to call an 866-area code number to reinstate their accounts.

In Bowling Green, Ky., county residents received recorded calls on Sunday and Monday with a message that their credit card had been compromised and to "press one" to speak to the security department. The calls purported to be from Southeast Financial Credit Card Co. There is no such company, but there is a Southeast Financial CU in the neighboring state of Tennessee, said the Bowling Green Police Department (The Daily News Nov. 4).

All the credit unions told consumers they would not phone or e-mail asking for such information.

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Thursday, November 6, 2008

Leagues, CUs make difference in state elections

MADISON, Wis. (11/6/08)--Many credit unions and leagues Wednesday were assessing the successes of candidates they supported in their state's elections. The verdict: credit unions made a difference.

Gov. Christine Gregoire (D), supported by the Washington Credit Union League, was declared the winner in that state's gubernatorial race by media outlets. However, Gregoire's challenger, Dino Rossi, who lost the race four years ago by fewer than 150 votes, had not conceded by press time.

By Wednesday afternoon, Gregoire had 53.3% of the vote compared with 46.6% for Rossi, pretty much assuring a Gregoire victory, Mark Minichiello, league vice president of legislative affairs, told News Now. The league conducted fundraisers and gave financial support to Gregorie, Minichiello added.

Re-elected to a third term was New Hampshire Gov. John Lynch (D) over challenger Joseph Kennedy.

"The New Hampshire Credit Union League congratulates Gov. Lynch on his resounding victory [75% to 25%] on Tuesday," said Dan Egan, league president. He told News Now that Lynch "is a great friend of the movement, who clearly understands the important role that credit unions play in the financial life of the people of New Hampshire. He has been extremely supportive of credit union financial literacy programs and has gone out of his way to attend and spend time at credit union annual meetings throughout the state."

North Carolina Democrat Beverly Perdue became the state's first woman governor. Both Perdue and her opponent, Charlotte Mayor Pat McCrory, are well-versed on credit union issues, Mickey Fanney, grassroots/political action specialist, North Carolina Credit Union League, told News Now.

"Credit unions worked with both campaigns to make an impact on the candidates' views and perspectives on credit union issues in the state," Fanney said. The league "looks forward to working with Gov.-elect Perdue over the next four years."

In North Dakota, Republican Gov. John Hoeven, a former banker whose family owns and operates several state-chartered banks, soundly won re-election for a third term with 75% of the vote, Jeff Olson, political affairs/public relations director for Mid-America Credit Union Asssociation, told News Now.

"Gov. Hoeven's re-election is only the second time in the state's history that a governor was awarded a third term," Olson said. "However, he is the benefactor of Republican majorities in both chambers. He will enter the upcoming legislative session with a budget surplus of $1.2 billion. The North Dakota Governmental Affairs Committee supported Gov. Hoeven with a significant Credit Union Political Action Committee (CUPAC) contribution.

"The governor's race was the only constitutional race we supported. The rest of our CUPAC contributions went directly to legislative candidates," he added. "Gov. Hoeven addressed credit union professionals at our recent legislative forum in Bismarck this past October."

In Utah, Republican Jon Huntsman was easily re-elected to second term as governor with roughly 73% of the vote. The Utah League of Credit Unions did not participate in the gubernatorial race, instead focusing on supporting credit union-friendly candidates in the state House and state Senate, Steve Hunter, league director of government affairs, told News Now.

The Association of Vermont Credit Unions (AVCU) supported 88% of the candidates that were elected in the state, including incumbent Gov. Jim Douglas (R).

"We've had a pretty supportive state legislature in the last session," AVCU President/CEO Joe Bergeron told News Now. AVCU expects the same support--or more--in the next session, he added.

Delaware's Rep. Mike Castle (R) was re-elected. "He has been accepting of meeting with credit unions," Alice Smith, director of communications for the Delaware Credit Union League, told News Now.

Sen. Joe Biden (D-Del.) was elected vice president of the U.S., and so the Delaware governor will have to appoint a new senator. The league is looking to establish new relationships with that individual, Smith said.

"We'd love to have a meeting with Biden," she added. "We're very proud that Delaware has the vice president of the U.S."

The Missouri Credit Union Association (MCUA) endorsed eight candidates who were elected:

U.S. Rep. Todd Akin (R-District 2);
U.S. Rep. Roy Blunt (R-District 7);
U.S. Rep. Russ Carnahan (D-District 3);
State Sen. Tim Green (D-District 13);
State Rep. Cynthia Davis (R-District 19);
State Rep. Charlie Denison (R-District 135);
State Rep. Albert Liese (D-District 79); and
State Rep. Paul LeVota (D-District 52).

Clint Zweifel, a longtime credit union supporter, was elected as state treasurer. During his campaign, Zweifel said he is open to working with credit unions on legislation to allow credit unions greater flexibility in reaching out to consumers with alternatives to payday loans (The Missouri Difference Nov. 4).

State Rep. Judy Baker (D-Columbia), lost her bid in the Congressional District 9 race. Baker had pledged credit union support, saying "Your values are my values."

"We would have enjoyed having Baker in Congress," Amy McLard, MCUA vice president of public and legislative affairs, told News Now.

Jay Nixon was elected Missouri governor. MCUA met with Nixon's campaign staff before the election. "We look forward to working with him and building on that relationship," McLard said.

In Indiana, all incumbent congressmen won, and all support credit unions, said the Indiana Credit Union League.

"We were especially pleased to see that CURIA co-sponsors Brad Ellsworth (D-8) and Dan Burton (R-5) won their races with 65% of the vote," said league President John McKenzie. "The league and Indiana credit unions helped both campaigns by hosting fundraisers. In the instance of the Ellsworth campaign, Evansville Teachers FCU President Mike Phipps held a fundraiser at his home that raised more than $10,000 for the campaign."

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Arizona CUs help defeat payday lender proposal

PHOENIX (11/6/08)--The Arizona Credit Union System (ACUS) and credit unions succeeded in helping defeat Tuesday a payday-lender backed referendum that would have locked in exorbitant interest rates on payday loans.

Proposition 200 was defeated by a large 20-point margin, with 60% of voters against and 40% for the measure, said Austin De Bey, ACUS vice president of government affairs.

The measure was billed by the payday lending industry as a "reform," but it would have locked in interest rates on payday loans at 391% permanently, said De Bey. Currently payday lenders charge up to 450% on loans. "They wanted to remove the sunset," he said, referring to the fact the payday statute will sunset in 2010.

"All of Arizona credit unions can be proud of helping to defeat Proposition 200," he said.

"Our credit unions passed out handouts in branches and at ATM locations, and had graphics as well" urging defeat of the proposition, he told News Now. Thirty of the state's credit unions, representing 1.4 million of the 1.6 million members in the state, participated.

The credit unions helped raise $50,000 for radio ads, he said, adding the payday lending lobby spent about $15 million on the measure. The Durham, N.C.-based Center for Responsible Lending, also opposed the measure.

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CU damages in Hurricane Ike total $10.2 million

MADISON, Wis. (11/6/08)--Damage claims made by credit unions hit by Hurricane Ike in September total more than $10.2 million--the second largest total in the past eight to 10 years, said CUNA Mutual Group.

However, "this pales in comparison to Katrina in 2005" and Hurricane Andrew earlier, said Mike Retelle, claims manager with CUNA Mutual's property and casualty claims. Damages to credit unions in Katrina totaled $22 million.

Ike, which hit Galveston Island, Texas, was different in size and duration, Retelle told News Now. "It covered a larger area and stayed in the area longer. Damages weren't as severe, but we had claims from states as far away as Kentucky and Tennessee."

Ninety-five credit unions made damage claims for 256 locations. Roughly 90% of the claims were from Texas, Retelle said.

Ike's damage to credit unions mostly was from blown off roofs and downed trees. Houston Police FCU sustained the largest damage--$2.2 million in roof damage--and is operating from modular units.

In Ike, damages were more concentrated. "They were enormous and terrible, but focused," he said, while damages stemming from Katrina were due to a failure of the levees. Katrina's damages also included damages from Hurricanes Wilma and Rita.

"Surprisingly, we haven't had a lot of auto damage claims yet," Retelle said. Normally claims for auto damage, both for credit unions' vehicles and repossessed cars trickle in about 30 to 60 days after the disaster hits. "Credit unions concentrate first on getting back up and running."

Credit unions were well prepared for Ike, since the National Credit Union Administration (NCUA) mandates they have a disaster plan. The things credit unions need to do don't change from disaster to disaster. "It all comes down to planning. What will you do if you should have a disaster? Do you have flood insurance or the proper limits? Where will you go?"

However, credit unions do need to update their plans regularly, Retelle said, outlining areas credit unions can focus on during disasters:

Update the logistics in the plan. Say the credit union remodeled its basement recently and the space, which used to be part of a contingency plan, is no longer available. The plan needs to reflect that.

Update claim limits to reflect new expenditures, equipment or data processing. Otherwise, the costs may not be covered in the claim. Credit unions that have consolidated or grown through mergers also need to address this issue.

Spread the responsibility. "We ask credit unions to provide a main contact, but if that person's home is gone or a spouse dies, that person is no longer available. Boards have to take responsibility," said Retelle. "You have to have decision makers."

Keep the future in mind when planning. Do you really want to replace old equipment with the same old equipment, or do you want to update it if you have to replace it?

Retelle said planning can keep at bay these problems, which credit unions sometimes experience:

Keep communications with staff open. "This is the biggest issue. If you don't tell employees what to do, then a secondary disaster can occur." Staff might find other jobs, thinking the credit union is shut down permanently instead of closed for two weeks.

Remember that relationships are key in any industry. The worst time to go looking for contractors for a new building, repairs, data processing or security firm is during a disaster. During a disaster, credit unions may be tempted to treat every repair with the cheapest dollar. Hiring a cut rate plumber to fix a leak might not work if he doesn't know how to operate a sprinkler system, he said.

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