Friday, March 27, 2009

Radio guest explains RMD waiver for 2009

WASHINGTON (3/27/09)--Retirees taking a required minimum distribution (RMD) from tax-deferred retirement plans get a break for 2009--if they want it, and only if they proactively request it. CUNA Mutual Group's compliance manager explains the benefits as well as the rules for requesting an RMD suspension on Sunday's H&FF Radio show.

Home & Family Finance airs Sundays at 3 p.m. EDT on the Radio America Network. The show also is carried on American Forces Radio Network. The one-hour program devoted to consumer finance issues is brought to you by America's credit unions and their 90 million members, and is presented by CO-OP Network.

The Credit Union National Association (CUNA) and Radio America are podcasting Home & Family Finance through iTunes, Podcast Alley, Odeo, and other popular podcast library sites, as well as on Radio America and CUNA's websites.

Sunday's show, which you also can hear later via the Internet, features Paul Berry, Washington, D.C., journalist and broadcaster, discussing these topics with special guests:

"Landscape Your Home to Save Energy and Money," with Michael Weishan, former host of America's oldest and most popular gardening TV show, PBS's Victory Garden, Southborough, Mass.;

"Check Your Car's History Before You Buy," with Maxine Sweet, vice president of public education, Experian, Allen, Texas;

"2009 Required Minimum Distribution Waiver--What It Is and Why You Should Care?" with Dennis Zuehlke, compliance manager, CUNA Mutual Group, Madison, Wis.; and

Your Questions Answered: Co-signing for a loan; routine vehicle expenses; appealing property tax assessments.

Home & Family Finance is a resource center for personal finance information at CUNA. The radio show is sponsored by CO-OP Network, the national credit union ATM network; Cabot Creamery Cooperative, maker of award-winning cheddar; Western Corporate FCU (WesCorp) and its member credit unions; and the Defense Credit Union Council and member credit unions, serving those who serve the country worldwide.

For more information, read "Nest Egg Withdrawal Rules Change--But Only for 2009" in Home & Family Finance Resource Center.

courtesy of

Army Navy FCU grows by being 'lender of choice'

CORPUS CHRISTI, Texas (3/27/09)--Army Navy FCU has built its growth model based on being able to lend money and becoming the "lender of choice" in the area it serves.

The $780 million asset, Corpus Christi-based credit union experienced 11% membership growth in 2008. It usually grows more than 10% each year, Wayne Vann, Army Navy CEO, told News Now.

Army Navy has been a community credit union since 2003 and serves a six-county area with a population of about 400,000. In January 2003, the credit union had about 40,000 members. Today, it has more than 68,000.

The population of Corpus Christi and the surrounding area is nearly 70% Hispanic--not first generation, but an established Hispanic population, Vann said.

"Corpus Christi is one of the weakest credit areas in the nation with an average FICO (financing corporation) score of 578," Vann said. "To serve those people we have decentralized loan approval, versus the usual centralized approval process at most credit unions. We have more than 40 lenders at our 10 branches. We decentralized it, because with a centralized process most of our members wouldn't make the cut.

"All our growth revolves around our ability to lend money," he added. "Our loan to-share percentage is 92% to 97% generally. We try to stay north of 90%."

About 50% of Army Navy's loans consist of C-paper (600 to 639 FICO scores) and D- paper (below 600 FICO scores). The credit union's A-paper consists of FICO scores of 680 and above, and its B-paper is in a FICO score range of 640 to 679.

"We have to build a model that will fit our audience," Vann said. "Our growth philosophy is based on building relationships."

Army Navy uses five rungs to establish a lending ladder with members: capacity, stability, relationship, credit score and collateral.

"We look at a member's capacity to make loan payments; are they stable in terms of having a job; our relationship with the member--consisting of how many deposits and services they have with us--how well we know them; and their FICO score," Vann explained. "So based on the first four rungs, we decide whether to give out a loan. We look at the collateral piece last."

About 55% of all the credit union's loans are automobile loans. Of that, 60% are for used cars and 40% are for new ones. "Because our members have mostly low- to moderate- incomes and marginal credit, they mostly buy used cars," Vann explained.

About 35% of the credit union's loan portfolio is real estate, he added.

Although Army Navy does a lot of print and media advertising, its biggest source of business is referrals. "Once referrals start, then there is some pressure on the referring persons to make their loan payments and maintain good credit," Vann said.

Many Hispanics refer family members and "throw out a wide net" with referrals because often times they cannot obtain loans at other financial institutions, Vann said.

As for the future, "there is plenty of business out there and it all revolves around relationships," Vann said.

"Most of our employees start as tellers and learn their knowledge base internally," he added. "We're service-oriented and listen to our members to see if we can make the service fit somehow in term of their needs.

"We've built this whole [growth] model off of being able to loan money. We're known in this area as the lender of choice. You need a stomach for risk and need to know your audience. Then you train your staff appropriately," he concluded.

courtesy of

Thursday, March 26, 2009

Young adults stung by bankruptcies

WASHINGTON (3/25/09)--The nation's youngest adults--many of whom admit they wish they'd learned to manage their money before leaving home--are among an increasing number of individuals filing for bankruptcy in these tough economic times.

During 2008, bankruptcy filings in U.S. courts increased 30% over fiscal year 2007 ( March 17). Compared with the same period in 2008, bankruptcy filings have increased 33% in the first quarter of fiscal year 2009 ( March 5). And despite bankruptcy filings by adults of all ages, more than 25% of filers since 1991 are between ages 18 and 34, according to the report, "Generations of Struggle" (AARP June 2008).

Take steps to get your spending under control and avoid bankruptcy:

Chop credit card spending. Stop using credit cards until your finances are back on track. Pay with cash or a debit/check card. Keep track of what you spend--particularly with debit purchases--by writing down the amounts or keeping receipts. That way you won't withdraw more money than you have in your account.

Trim unnecessary "wants." Identify monthly expenses that aren't necessary for survival and eliminate them or cut back. For example, replace going out to dinner with renting a movie, cancel some magazine subscriptions, and consider downgrading or cancelling cable TV.

Snip variable expenses. Find ways to cut back on necessary expenses. Unplug electronics when not in use, turn off lights when you leave the room, keep your thermostat at or below 68 degrees, combine trips to save on gasoline, and buy generic items instead of brand name goods at the grocery store. Find more energy-saving ideas at the Department of Energy's Energy Savers Web site:

For more information, read "Tough Times Series: When Times Are Tough We Can Help" in Home & Family Finance Resource Center

courtesy of

Wednesday, March 25, 2009

New leadership appointed for U.S. Central, WesCorp

LENEXA, Kan., and SAN DIMAS, Calif. (3/24/09)--U.S. Central FCU and Western Corporate FCU (WesCorp) have new leaders to see them through the conservatorships imposed Friday by the National Credit Union Administration (NCUA).

Jim Nance, who oversaw U.S. Central's asset and liability management from 1993 to 1996, has been named president/CEO of U.S. Central, effective yesterday. He most recently was chief administration officer of Icap Capital Markets, based in Jersey City, New Jersey.

Nance told Reuters that credit unions will handle their problems on their own without having to turn outside the credit union system. He stressed that the credit union industry remains extremely well capitalized and will not likely need a bailout from taxpayers (Reuters March 22).

Nance replaces Francis Lee. All other senior management remains intact, but the board has been replaced by NCUA, said Lyle Niedens, director of communications at U.S. Central.

Philip R. Perkins has been named president/CEO of San Dimas, Calif.-based WesCorp, replacing Bob Siravo. Chief Investment Officer Bob Burrell also is no longer with the corporate, according to its website.

Perkins brings more than 25 years of experience in the financial services industry, according to the website.

Most recently, Perkins served as senior vice president, senior portfolio manager at Delaware Instruments, where he was responsible for asset allocation and sector decisions for a $5 billion Multi-Sector Fixed Income Mutual Fund complex. He also was with Deutsche Bank for five years as managing director of global markets in London, and as director, emerging markets in Moscow. Prior to that, Perkins was CEO of Dinner Key Advisors, a registered broker-dealer founded to trade derivative mortgage-backed bonds with institutional clients. He was a mortgage/collateralized mortgage obligation trader at Salomon Brothers from 1985 to 1990.

In a letter to members on Friday, Perkins said WesCorp "will continue uninterrupted and members will not experience any disruption of services."

NCUA Executive Director David Marquis told a webinar Monday afternoon that both Nance and Perkins "have extensive capital markets backgrounds."

courtesy of

CUs an emergency first responder in economy

MANCHESTER, N.H. (3/24/09)--Credit unions in New Hampshire have taken on the role of emergency first responders in the ongoing economic crisis, according to a local newspaper.

By offering higher interest rates, more mortgage refinancing programs and continuing consumer education to help members and the general public, credit unions are doing a better job than banks, said the Nashua Telegraph (March 23).

The 23 credit unions headquartered in the state are making substantial efforts to help consumers, Rob Kimmett, senior vice president of marketing for the New Hampshire Credit Union League, told the newspaper.

By "sticking with the basics," credit unions have remained successful, even during the Great Depression, Kimmett added.

The basics, seasoned with some incentives, have created a credit union recipe for success, the paper said.

Some examples:

Triangle CU, Nashua, offers an online savings account that was introduced in October and yields a return of 3.25%;

Bellwether CU, Manchester, encourages its members to call whenever life's challenges--sickness, divorce, death--happen, or else the credit union contacts its members directly, said President/CEO Mike L'Ecuyer, adding that deposits at the credit union have been going up;

Granite State CU, Amherst, has been "hauling in mortgages," the past few months, said Jody Ducharme, marketing communications liaison. She cited the non-profit credit union model for providing an edge over banks during tough economic times; and

St. Mary's Bank, Manchester, the nation's first credit union, is experiencing business as usual, said Steven Macek, director of retail lending. In the second quarter of 2008, the credit union recognized that members were facing difficulties, so it went through alternatives, modifications and short sales to help raise awareness and educate members about foreclosures.

courtesy of

NCUA to consider corporate CU issues Thursday

ALEXANDRIA, Va (3/24/09)—A special closed meeting has been called for Thursday morning by the National Credit Union Administration (NCUA)to look at possible plans to spread out the cost to natural person credit unions of the agency's corporate credit union stabilization efforts.

The Credit Union National Association (CUNA) has been strongly advocating such action.

An agenda states matters to be considered are:

Consideration of supervisory activities. Closed pursuant to Exemptions (9)(A)(ii) and (B); and

Consideration of Proposed Legislation. Closed pursuant to Exemptions (9)(A)(ii) and (B).

The agency made clear that the items address corporate credit unions and actions taken to stabilize the liquidity in the corporate system.

CUNA, through its Corporate CU Task Force, has been exploring options to mitigate the cost to natural person credit unions of the NCUA's recent actions regarding the corporates. CUNA staff also has been pressing this point with the agency, as recently as at a meeting yesterday morning that CUNA initiated with NCUA Executive Director David Marquis, Examination and Insurance Director Melinda Love, and Central Liquidity Facility President Owen Cole.

At that meeting CUNA General Counsel Eric Richard, Deputy General Counsel Mary Dunn and Chief Economist Bill Hampel urged the NCUA to go to Congress immediately to seek assistance in mitigating the costs of its action to credit unions by spreading out the costs over several years. Senior regulatory staff of the National Association of Federal Credit Unions also were in attendance.

The agency also indicated it plans to approach the U.S. Treasury Department to see how credit unions may fit into the public-private asset acquisition plan announced yesterday by Treasury Secretary Timothy Geithner. (See "Inside Washington" for more details.) That is also in line with what CUNA has recommended to NCUA.

On Friday, the agency announced it had places two of the corporates—U.S. Central FCU and Western Corporate FCU (Wescorp)—into conservatorship.

Also, in January the NCUA announced a three-pronged initiative to bolster and enhance the liquidity positions of the corporates. The agency declared a premium assessment to restore the National Credit Union Share Insurance Fund (NCUSIF) equity ratio to 1.30%, and announced the premium would be collected in 2009.

During a webinar on corporate credit union issues Monday, NCUA Executive Director David Marquis said the agency "remains committed" to finding a way to mitigate the costs.

NCUA Chairman Michael Fryzel concurrently announced he had directed NCUA staff to explore two new avenues to augment NCUA's Corporate Stabilization efforts.

First, Fryzel said, the NCUA has held preliminary discussions with federal lawmakers regarding the creation of a "corporate Stabilization mechanism", as an adjunct to the National Credit Union Share Insurance Fund (NCUSIF).

The new mechanism would replenish the NCUSIF through an arrangement with the U.S. Treasury Department, while providing additional flexibility for credit unions to make their required contributions over a period of time, Fryzel said. Details of the proposal will be available pending the Board's review and decision at Thursday's closed meeting.

The second NCUA action is to evaluate the latest Treasury initiative to deal with troubled assets—the program announced Monday. The new 'Public-Private Investment Program,' Fryzel said, "appears to hold some promise for corporate credit union holdings."

courtesy of

Tuesday, March 24, 2009

Laid-off workers urged to explore insurance options

NEW YORK (3/23/09)--A pink slip doesn't have to mean you or your family go without health insurance. There are options--if you act quickly ( March 18).

Since the recession began, about 4.4 million workers have been laid off, and the average worker remains unemployed for about five months ( March 16). Even if you haven't received a pink slip, it's a good idea to prepare for the possibility.

Take swift action to make sure your health coverage doesn't lapse:

Get answers. Ask exactly when your current health coverage expires.

Get on a working family member's plan. If your spouse or another working family member has insurance, this may be the least expensive option for health coverage, and you don't have to wait for an open enrollment period.

Sign up for COBRA. If you can't get on another working family member's plan, this government mandate gives you the right to choose to continue coverage under your employer's group plan for a limited time. A typical monthly COBRA premium is $300 for individual coverage and $1,000 for family coverage. But the new stimulus package signed by President Barack Obama provides assistance--through Dec. 31, 2009--to pay about 65% of your premium cost for COBRA.

Sign up the kids for a CHIP plan. If the COBRA plan is too expensive, put your children on the State Children's Health Insurance Program (SCHIP). Check on state income requirements. Recent legislation extends the program to cover an additional three million children, to 11 million children. And some states allow adults to enroll in SCHIP program, too, depending on household income.

Ask about your flexible spending account. Some companies allow you to use your account balance for a short time after you've been laid off.

Take advantage of prescription assistance. Organizations such as Partnership for Prescription Assistance may be able to arrange for discounts of as much as 20% off your prescription drug costs if you lose your income.

Negotiate with your physician. Many doctors are giving patients a price break during these tough economic times ( Feb. 5). It pays to ask.

For more information, read "Tough Times Series: Steps Before, During Layoff Make It Easier to Cope" in Home & Family Finance Resource Center.

courtesy of

CU Day attracts 100 Vermont lawmakers

SOUTH BURLINGTON, Vt. (3/23/09)--Vermont credit unions' Credit Union Day in the Vermont Statehouse attracted more than 100 state legislators, who stopped by the Association of Vermont Credit Unions' (AVCU) display Thursday.

AVCU management and its lobbying team spent the day chatting with lawmakers, answering questions, distributing informational handouts, and registering legislators for a random drawing for a Garmin GPS navigation system. The winner will be presented at AVCU's annual Legislator Appreciation Reception in late April.

According to AVCU President Joe Bergeron, advocacy for Vermont credit unions is the association's primary mission. "This day in the Statehouse, and our upcoming Legislator Appreciation Reception, are integral components of our overall effort to make sure legislators understand what credit unions are all about," he said.

"Connecting lawmakers with credit union leaders, and maintaining a positive dialogue with the legislators who ultimately determine the regulatory landscape under which we operate, is one of our most important functions," Bergeron added.

Throughout the day, conversation focused on the state and national economies, said AVCU. Legislators expressed their understanding that credit unions played no part in causing the turmoil and continue to act responsibly to help their members. In its display, AVCU used graphics from the Credit Union National Association's "Credit Unions Look Out for the Little Guy" campaign to reinforce the message.

"We heard many legislators speak positively about credit unions and the efforts they've made during these adverse economic times," said Bryan Kent, AVCU vice president. "Several of the legislators we spoke with expressed their appreciation for all that credit unions are doing to help consumers weather the storm."

courtesy of

Scots angry at banks boost CUs' membership 38%

GLASGOW, Scot. (3/23/09)--Glasgow's City Council reported that applications in western Scotland to join some credit unions have risen by about 38% in the past six months, as potential members seek a financial institution they can trust.

West of Scotland NHS Employees CU saw a 38% increase in applications for new memberships during that time period because people are uncertain about the current banking situation and are placing more trust in credit unions, Robert Kelly, general manager, told BBC News March 20).

Scotwest CU CEO Rod Ashley told BBC that his credit union has recruited more than 3,000 new members--a 12% increase since January 2008--from throughout western Scotland.

Over the past six years, Glasgow's 35 community and industrial credit unions increased six-fold in membership and managed assets. They now have 110,000 members combined.

Around one in five people in Glasgow are believed to be credit union members, the highest urban membership rate in the United Kingdom.

courtesy of

Invest in America grows in February

LANSING, Mich. (3/23/09)--The Invest in America campaign closed about 32,000 vehicle sales in February, on top of 25,000 in January, for a total of 57,000 sales in the two months since the program went national.

Invest in America is credit unions' auto loan discount program with auto manufacturers General Motors Corp. (GM) and Chrysler Corp. The program started in December with a four-state pilot program for GM and a 12-state pilot for Chrysler.

The campaign includes contractual credit union member incentives from GM and Chrysler. GM is offering supplier pricing, which averages about $1,500 per vehicle, with its Credit Union Member Discount, and Chrysler is offering $500 or $1,000 rebates through its Credit Union Member Cash program.

The nationwide program is on a 90-day pilot with GM and a 180-day pilot with Chrysler. All 7,800 U.S. credit unions are eligible to participate in and market the program to their nearly 90 million credit union members. Collectively, U.S. credit unions have about $160 billion in capital to lend.

About 70% to 80% of the 57,000 sales were financed by credit unions, estimated David Adams, CEO of CUcorp and president/CEO of the Michigan Credit Union League, in a conference call Friday.

"Those sales are coming during the toughest months of the year," Adams said. "We're confident that credit unions are making a significant impact in the auto industry when it really matters."

So far, support for the program has come from more than 1,000 credit unions nationwide, and 40 state credit union leagues and associations support it. Credit unions' share of auto loans rose to about 25% in January, compared with 14.8% in March of 2008, Adams added.

Invest in America is a "natural" due to the collective customer bases of credit unions and General Motors (GM), Mark Degnan, GM director of local advertising and marketing, said during the conference call.

"Credit unions have loyal customer bases and that has helped us gain customers through Invest in America," he said. "It's been a [beneficial situation] for GM, credit unions and dealers by adding additional credit capacity for consumers."

A strong percentage of the program participants appear to be first-time buyers. About 66% are either buying a GM vehicle for the first time, or are former GM customers who left and now have come back to purchase a GM vehicle through the program, Degnan said.

Also, five of the 10 largest U.S. credit unions have begun to market the program, including: Navy FCU, Vienna, Va.; Suncoast Schools FCU, Tampa, Fla.; The Golden 1 CU, Sacramento, Calif.; Ent FCU, Colorado Springs, Colo.; and State Employees CU, Raleigh, N.C.

courtesy of

Friday, March 20, 2009

Balance is key to consumer protections, says CUNA

WASHINGTON (3/20/09)—Balance, the Credit Union National Association (CUNA) testified Thursday, will be the necessary key to successful legislation addressing overdraft protection programs and credit card practices.

Doug Fecher, who is president/CEO of Wright-Patt CU in Fairborn, Ohio, gave what he termed "the perspective of Main Street," on behalf of credit unions, on current bills drafted to improve consumer protections for both the services. He was testifying before the House Financial Services subcommittee on financial institutions and consumer credit.

Fecher said credit unions back the intent of legislation to protect consumers from abusive and deceptive practices. But, he insisted any law must create an equitable balance between those protections and the needs of service providers to be fairly compensated for the service and not subjected to unnecessary regulatory burdens.

Legislation that does not go far enough does not really help the consumer, Fecher said. But, he warned federal lawmakers, legislation that goes too far will have unintended consequences that could have the opposite effect than that intended.

For instance, Fecher said, as drafted the Consumer Overdraft Protection Fair Practices Act (H.R. 1456) could drive consumers into the grasps of the very "high-cost services" the legislation is intended to eliminate.

The proposed bill would classify overdraft protection products as lending products under the Truth in Lending Act (TILA) and include a service fee for the program to be within the APR calculation.

Therefore, Fecher testified, H.R. 1456 could force federal credit unions out of offering the bounce-protection plans, highly favored by consumers, by forcing them to bump up against their statutorily prescribed 18% usury ceiling.

The bill also has the potential to present significant operational issues for credit unions, Fecher noted, by requiring written agreement with the member prior to the extension of any overdraft coverage--even for those already used to being covered by protection plans.

Just as with overdraft legislation, Fecher said balance must be achieved under the Credit Cardholders' Bill of Rights Act (H.R. 627), which has been re-introduced this year after failing to be passed by the 110th Congress.

CUNA recognizes there are legitimate concerns about abusive credit card practices and backs efforts to end discriminatory, predatory, deceptive and abusive lending practices engaged in by some lenders.

But, the CUNA witness told the subcommittee, lawmakers must be vigilant to assure their action avoids unintended consequences that are ultimately adverse to consumers, including making credit more expensive and less available.

Sheila Albin, associate general counsel, National Credit Union Administration, also testified.

She cited results of a 2005 Woodstock Institute research that found federally insured credit union credit card products tend to have fewer fees, lower fees, and clearer disclosures. That study concluded there is a clear difference between credit cards issued by banks and those issued by federally insured credit unions.

"Federally insured credit union credit card programs show credit card lending is sustainable without exorbitant penalties and misleading terms and conditions," Albin said.

Other witnesses included:

Sandra Braunstein, director, division of consumer and community affairs, Board of Governors of the Federal Reserve System;
Montrice Yakimov, managing director, compliance and consumer protection, Office of Thrift Supervision;
Kenneth Clayton, senior vice president/general counsel, American Bankers Association Card Policy Council;
Linda Echard, president/CEO ICBA Bancard, on behalf of the Independent Community Bankers of America;
Ed Mierzwinski, senior fellow, Consumer Program, U.S. PIRG; and
Travis Plunkett, legislative director, Consumer Federation of America.

Use the resource links below to read CUNA's complete testimony on H.R. 1456 and H.R. 627, as well as to access NCUA's remarks.

courtesy of

CU sees change in members defaulting on auto loans

FORT COLLINS, Colo. (3/20/09)--Norbel CU, Fort Collins, Colo., has noticed a change in the kinds of members that have come into the credit union to give up their car keys.

"Good members are having problems," Ed Bigby, Norbel CEU CEO, told News Now. "My biggest fear is when a good member loses his job and the ability to pay."

Norbel has had five vehicle repossessions this year. However, its delinquency rates remain low, because the credit union has lended very conservatively, Bigby said.

To help out "good" members who have endured financial hardships, such as a job loss, Norbel is offering a temporary forgiveness program.

The program is offered on a case-by-case basis to members who have defaulted on loan payments. Under the program, Norbel will accept a loan payment from a member--anything he or she can afford--and put "everything back to principle," Bigby said. "We forgive the interest."

About 12 members are using the program, which is offered "judiciously" because the credit union doesn't want half of its loan portfolio on it. But although the credit union gives up some revenue by forgiving interest on loan payments, it's creating member loyalty and gaining public relations, he said.

A field examiner from Colorado recently asked Norbel to send a copy of the program to him. This could indicate that there are other credit unions in the area that could use a similar tactic, added.

Norbel has 6,500 members and $115 million in assets.

courtesy of

Predatory loans, breaches: Protect yourself, fight back

WASHINGTON (3/20/09)--H&FF Radio show guests focus their financial tips on three timely topics this Sunday: fighting back against predatory companies, protecting yourself from data breaches, and saving money despite fluctuating income.

Home & Family Finance airs Sundays at 3 p.m. EDT on the Radio America Network. The show also is carried on American Forces Radio Network. The one-hour program devoted to consumer finance issues is brought to you by America's credit unions and their 90 million members, and is presented by CO-OP Network.

The Credit Union National Association (CUNA) and Radio America are podcasting Home & Family Finance through iTunes, Podcast Alley, Odeo, and other popular podcast library sites, as well as on Radio America and CUNA's websites.

Sunday's show, which you also can hear later via the Internet, features Paul Berry, Washington, D.C., journalist and broadcaster, discussing these topics with special guests:

"Predatory Companies: How to Avoid Them, How to Fight Back," with Ron Burley, author, consumer advocate, AARP columnist, Eugene, Ore.

"Data Breaches: What You Can Do to Protect Your Personal and Financial Information," with Scott Mitic, CEO, TrustedID, San Mateo, Calif.

"How to Save on a Fluctuating Income," with Ethan Ewing, president,, San Mateo, Calif.;

Listener Q&A.

Home & Family Finance is a resource center for personal finance information at CUNA. The radio show is sponsored by CO-OP Network, the national credit union ATM network; Cabot Creamery Cooperative, maker of award-winning cheddar; Western Corporate FCU (WesCorp) and its member credit unions; and the Defense Credit Union Council and member credit unions, serving those who serve our country worldwide.

For more information, read "Crooks Use High-Tech Scams to Commit Fraud" in Home & Family Finance Resource Center.

courtesy of

CUNA delivers CU perspective to Hill today

WASHINGTON (3/19/09)—The Credit Union National Association (CUNA) is scheduled to testify twice today, detailing credit union positions on deposit insurance issues and also on changes to credit card and overdraft protection plan programs.

This afternoon, Terry West, chairman of CUNA's Corporate Credit Union Task Force, is scheduled to testify at the Senate Banking subcommittee on financial institutions' hearing entitled, "Current Issues in Deposit Insurance." West is CEO of Vystar CU, Jacksonville, Fla.

Also a scheduled witness at this hearing, National Credit Union Administration (NCUA) Executive Director David Marquis will present his agency's remarks.

Earlier in the day, the full Banking Committee will launch a series of hearings on "Modernizing Bank Supervision and Regulation." NCUA Chairman Michael Fryzel is scheduled to testify along with federal and state bank and thrift regulators.

At the second in this series of hearings, scheduled for March 24, CUNA will testify.

Meanwhile, also this afternoon, CUNA's views on bills to address unfair and abusive practices as relating to overdraft protection plans and credit card terms will be presented by Doug Fecher, president/CEO of Wright-Patt CU, Fairborn, Ohio.

Fecher is scheduled to appear before the House Financial Services subcommittee on financial institutions and consumer credit, which is conducting a legislative hearing on H.R. 627, the Credit Cardholders' Bill of Rights Act, and H.R. 1456, the Consumer Overdraft Protection Fair Practices.

NCUA Associate General Counsel Sheila Albin is also a scheduled witness.

Copies of CUNA's written testimony will be posted on the CUNA Legislative Affairs Website when available.

courtesy of

Fed pulls out all stops, CUs brace for refinancings

MADISON, Wis. (3/19/09)--"The Fed has pulled out all the stops in its attempt to revive a contracting economy," said Steve Rick, Credit Union National Association (CUNA) senior economist. And that will impact credit unions' net margins and may boost bottom lines.

The Federal Reserve announced Wednesday that it will purchase up to $300 billion in longer-term Treasuries over the next six months, and it will purchase an additional $750 million in mortgage-backed securities, in a move designed to lower mortgage rates (The Wall Street Journal Online March 18).

The additional mortgage-backed securities purchases will boost mortgage-related facilities to as much as $1.25 trillion.

As expected, Fed policymakers took no action on interest rates, holding the target for the fed funds rate at a range of zero to 0.25%. The discount rate was unchanged at 0.5%.

" The purchase of up to $300 billion in long-term government bonds over the next six months is tantamount to monetizing part of the record $1.75 trillion 2009 federal budget deficit," Rick told News Now, adding, "Shortly after the announcement, the 10-year Treasury yield dropped nearly one-half a percentage point to 2.533%.

"That action, along with the Fed's announcement that it would purchase an additional $750 billion of government-sponsored enterprise (GSE) guaranteed mortgage-backed securities, will flatten the yield curve and lower the yield on credit union assets going forward. This will reduce credit unions' net interest margins," Rick said.

"Offsetting this 'rate effect' will be a 'mix effect' as credit union assets shift from low-yielding investments to higher-yielding mortgage loans as lower interest rates stimulate home demand and refinancings," he said.

"Moreover, if these actions are able slow the decline in house prices and reverse the upward trend in home foreclosures, credit unions will experience fewer loan losses than would otherwise have occurred, boosting their bottom lines. For the near term, credit unions should brace themselves for a surge in mortgage refinancing activity," Rick said.

In a statement following Wednesday's meeting, the Fed explained its move. "Information received since the Federal Open Market Committee met in January indicates that the economy continues to contract. Job losses, declining equity and housing wealth, and tight credit conditions have weighed on consumer sentiment and spending. Weaker sales prospects and difficulties in obtaining credit have led businesses to cut back on inventories and fixed investment."

The Fed also noted that U.S. exports have declined as the nation's trading partners have fallen into recession. "Although the near-term economic outlook is weak, the committee anticipates that policy actions to stabilize financial markets and institutions, together with fiscal and monetary stimulus, will contribute to a gradual resumption of sustainable economic growth."

The central bank said inflation is tame. "Moreover, the Committee sees some risk that inflation could persist for a time below rates that best foster economic growth and prices stability in the longer term."

courtesy of

More consumers underwater on auto loans

MADISON, Wis. (3/19/09)--As the economy continues to struggle, more credit unions are reporting an increase in vehicle repossessions, as members discover they owe more than the car is worth.

MidFlorida CU, Lakeland, Fla., this week opened MidFlorida Wholesale Auto Sales to sell some of its repossessed vehicles. The credit union had previously run an auto sales service that was opened one day per week, but expanded to five days a week.

The credit union sees about 40 to 50 repossessions per month, up from about 30 to 40 last year, Kevin Jones, MidFlorida CEO told News Now.

Jones said he frequently talks with the credit union's collection manager, and says the cars are repossessed because of divorce, death, or lost jobs.

"Our repo numbers are pretty modest for our asset size," he added. MidFlorida has $1.2 billion in assets.

MidFlorida is not having many problems with delinquent home loans, so it's not seeing as much spillover from the mortgage market's assets on the auto loan side, Jones said.

Colorado's Norbel CU and Public Service CU told The Coloradoan that the number of cars they have taken back has increased this year. Norbel took back 15 cars last year, and had five repossessions in January and February, Norbel CU CEI Ed Bigby told the newspaper (March 16).

Public Service CU, Denver, also has experienced a spike in repossessions. But credit unions are still making loans, which is good news, Public Service CU President/CEO David Maus told the newspaper.

He added that auto dealers may have to close their doors if there weren't credit unions to finance vehicles.

Jim Craft, director of lending, Oregon Community CU, told the Associated Press that the credit union created a car lot recently for repossessed vehicles. Many members have lost their vehicles because of the recession, and many were "great members," he told the AP (March 7).

SELCO CU Director of Lending Jim Mau told the Associated Press that the credit union's auto loan defaults were 0.5%, but the figure increased to 0.72% last year. Though defaults have risen, it's expected with the economy, he said. The credit union still wants to make loans, he added.

The AP also noted a statistic from the American Financial Services Association that says credit unions or other lenders lose about $8,000 on each repossessed vehicle.

According to Trans-Union, the national 60-day auto delinquency rate edged up between the third and fourth quarter of 2008 to 0.86% from 0.80%. However, 14 states experienced a drop in year-to-year rates, compared with a national 8.86% increase.

courtesy of

Tuesday, March 17, 2009

Mica reminds White House: CUs can help

WASHINGTON (3/17/09)—Credit Union National Association (CUNA) President/CEO Dan Mica Monday delivered credit unions' message directly to the White House: they are ready to help the country's small businesses jumpstart the economy.

Mica and CUNA Deputy General Counsel Mary Dunn attended President Barack Obama's unveiling of his administration's small business initiatives.

Mica said the president made it clear he firmly believes an economic recovery will be driven in large part by America's small businesses, with their creation of new jobs.

But President Obama noted, Mica said, that as the flow of credit has dried up during this recession, small business owners—even those who were prudent and responsible--have been set back by the behavior of others in our financial system who were not.

"CUNA's Mary Dunn, greeting the President, told him that credit unions want to help small businesses, too," Mica said, adding he advocated for credit unions to work with senior White House staff. Mica reiterated that credit unions could lend up to $10 billion if a statutory 12.25% cap were lifted from their member business lending authority.

Obama announced his program "Unlocking Credit for Small Businesses." Under some of the program's provisions:

The U.S. Treasury Department will help provide a secondary market for small business loans by purchasing up to $15 billion in securities, and be prepared to purchase securities Pooled from the Small Business Administration's (SBA) flagship 7 (a) guaranteed lending program;

The SBA will temporarily raise guarantees to up to 90% in the 7 (a) program, and temporarily eliminate certain SBA loan fees to reduce the cost of capital; and

The Treasury would require new reporting on lending to small businesses and promote greater efforts to extend small business loans.

courtesy of

Wall Street Journal: CUs are safe havens

NEW YORK (3/17/09)--Credit unions are gaining new stature as reliable sources of lending in the tempest-tossed credit market, says an article headlined "Safe Havens: Credit Unions Earn Some Interest" in Sunday's The Wall Street Journal.

"Big banks have become wards of the government while smaller banks are failing at a rate of about one a week," says the article. However, "more and more savers and borrowers are finding a safe harbor in the sleepiest, most unexciting corner of the financial world: credit unions."

The article discusses rates on one-year certificates of deposit, home-equity lines of credit and fixed-rate mortgages for both credit unions and banks and provides charts and statistics provided by the Credit Union National Association (CUNA).

Mike Schenk, CUNA senior economist, also provides statistics on credit unions' robust loan growth in first mortgages and used-auto loans.

In an interview with Stephen Birkelbach, who joined Community First CU in Jacksonville, Fla., three years ago to finance a truck, Birkelbach talks about how he was so impressed with the customer service at the credit union that he moved all his financial business, including the accounts of his local carpet-cleaning business, to the credit union.

The article also discusses today's economic environment and notes that although feeling pinched, credit unions have maintained stability.

courtesy of

CU takes lead in older-homes-renovation loans

KANSAS CITY (3/17/09)--CommunityAmerica CU is sponsoring a low-interest, fixed-rate home equity loan program for older homes in Kansas City's Lee's Summit area, as part of an expanded MARC Home Remodeling Loan Program.

Any house in the area would be eligible as long as its value doesn't exceed $250,000, according to Mark Dunning, city director of codes administration (The Kansas City Star March 14).

The loans for homes in the Lees Summit area should be of particular benefit because many homes are smaller and older, leading residents to seek improvements such as a remodeled kitchen, Dunning added.

When the MARC program began several years ago, it asked financial institutions for proposals to improve housing in Kansas City's inner-ring suburbs, the newspaper said. There was minimal response--except for CommunityAmerica, a $1.636 billion asset, Lenexa, Kan.-based credit union, Jody Ladd Craig, public affairs directors for MARC, told the paper.

CommunityAmerica has been very easy to work with, and MARC's alliance with the credit union has created "a very good partnership," Craig added.

The program made 130 loans totaling nearly $2.3 million during its first two years, the paper said.

courtesy of

Monday, March 16, 2009

"Invest in America" Deals from the Dealers

Invest in America – A Huge Success!

Both our members’ bottom line and our country’s economy have been boosted thanks to Invest in America’s discounts. More than 20,000 cars have been sold through the Credit Union Member Discount From GM and Chrysler’s Credit Union Member Cash program.
Your opportunity for saving on your next car has gotten even better!

Chrysler and GM both have additional promotions going on right now that you can add to the above discounts. Chrysler’s Employee Pricing and GM’s President’s Sale can help you save thousands more on your purchase.

And don’t forget, when you finance your new vehicle with credit union name here, you’ll save even more with our low loan rates!

Talk to a member representative to learn more about Invest in America or to get approved for an auto loan. You can also go to for more details on these great discount programs.

Fed reports 4Q personal saving rate spike

WASHINGTON (3/16/09)--It took a worldwide economic crisis, but U.S. consumers have finally become serious about saving again, socking away 3.2% of disposable personal income in fourth quarter 2008, according to the Federal Reserve Board of Governors (Mar. 12).

This is the highest quarterly saving percentage since 2001. Since then, the personal saving rate even went negative for one quarter.

"At times like this, I take whatever silver linings I can find," said David Mancl, director of the Office of Financial Literacy for the Wisconsin Department of Financial Institutions and a member of the President's Advisory Council on Financial Literacy. "We Americans have neglected saving recently. And when our incomes haven't kept up with our desires, we've borrowed to keep spending. I'm glad to see people setting money aside again, no matter what their motives, because saving increases your future opportunities, giving you more choice, more security, and more flexibility."

Mancl's advice is founded on bedrock principles of personal finance. But while many experts say that only renewed consumer spending will revitalize the troubled economy, consumer confusion is justified from conflicting messages. Here's how the Credit Union National Association's Center for Personal Finance resolves the apparent contradiction:

Saving is a survival skill. Families with no financial reserves cannot respond to emergencies or take advantage of opportunities. They have no margin for error if job loss or illness reduces household income. At a minimum, you should build a liquid emergency fund equal to at least six months' expenses. You also should save for periodic predictable expenses such as insurance payments. Finally, you should save for big goals such as education, housing, and transportation.

Saving cuts the cost of credit. Borrowing for big-ticket items is a necessity of modern life. But the bigger the down payment you amass before you buy, the smaller your loan, your monthly payment, and your total financing cost.

There are safe, productive ways to invest your savings. Deposit insurance from the federal government's National Credit Union Administration insures money in credit union deposit accounts up to $250,000 or more, depending on how it's distributed. Diligent investors can find other investments that are increasing in value, even in today's market.

There are productive ways to spend. If you have adequate reserves, a secure source of income, and a budget, there's nothing wrong with going shopping. Eager retailers are now offering ample discounts, and smart consumers are seizing the day.

For more information, read "Tough Times Series: Gen X: Ditch Your Debt and Become Smart Savers" in Home & Family Finance Resource Center.

courtesy of

Carolina DMV halts used-car sales at CU

NORTH AUGUSTA, S. C. (3/16/09)--A community used-car lot held weekends at the parking lot of SRP FCU has been closed by the South Carolina Department of Motor Vehicles, which says the sales are affecting vehicle sales of used-car dealers.

However, the case is different from one that occurred earlier in Wisconsin, where auto dealers closed a credit union's auto sales lot (News Now April 10 and Dec. 11, 2008). In this case, the North Augusta, S.C.-based SRP FCU isn't selling or financing the cars. It's just providing a spot for the community to barter.

According to SRP FCU President Ed Templeton, every weekend for years, between 6 p.m. Friday and 8 a.m. Monday, people in the community took their used-cars, boats, motorcycles, travel trailers and more to the credit union's Silver Bluff Road branch parking lot. They slapped a For Sale sign on their vehicle with their contact information.

"It started out with one or two, and over the years, it just grew. We have 75 parking spaces and every weekend, the lot will have 50-75 cars," and other vehicles, Templeton told News Now, noting that the credit union is closed during the weekend. Other branches occasionally get one or two vehicles, but this lot was "a mecca."

Templeton said used-car dealers complained to the DMV that the sales were taking away their business. DMV sent an agent several weekends to the lot to gather tag numbers and vehicle identification numbers, and last weekend the lot was officially closed.

"They told us we were violating the law. The code has benign language about 'affecting the sale of vehicles' in cases where we might lend money to a buyer. The code says we'd need a dealer's license, which we don't want and aren't qualified for under the regulations."

Technically, the DMV is correct, according to the credit union's lawyers. The only recourse is to go to the state legislature to change the code to allow "tent sales." However, that won't happen. "We're not ready to take that on. There is so much going on right now, that we have to pick our battles," Templeton said.

The credit union doesn't conduct the sale, and if a buyer of a car on the lot happens to come into the credit union Monday morning to get financing, the credit union has no way of knowing where the car is purchased, he said.

"It's a disappointment to me, a disappointment to the community. We were the only place available where people could offer their cars. The one beacon was our parking lot." The credit union has signs up on the lot informing sellers and buyers the lot is under police jurisdiction and they could be towed for trespassing. "It's the epitome of stupid," he said, adding that "towing would be a last resort."

People aren't happy about the change, said Templeton. Some members have fired off e-mails to the DMV and a new-car dealer suggested it would help if the credit union wants to change the law. "It's gratifying when people rally around you," he added.

And then, there's the irony: The DMV agent's son complained when he found out he couldn't use the credit union's lot to sell his motorcycle.

courtesy of

Thursday, March 12, 2009

Apology extended by CU in head-scarf incident

WASHINGTON (3/12/09)--A Muslim woman who wore an Islamic head scarf received an apology Tuesday from a credit union that made her leave the teller line and conduct financial business in a back room because of the credit union's new "no hats, no hoods, no sunglasses" policy.

Kenza Shelley received the call from Navy FCU's senior vice president for security, who apologized and said the credit union's new security policy should have allowed Shelley to be served by tellers at the front counter of its branch in Southern Maryland. The credit union is headquartered in Vienna, Va.

The religious scarf left Shelley clearly identifiable, the credit union told The Washington Post (March 10), adding that its policy does not prohibit religious head gear.

The credit union implemented the policy in December as a deterrent to robberies and identity theft. It is in the process of training employees.

The Maryland incident is the second at a branch of the credit union within a month. In February the credit union issued an apology after another woman in an Islamic head scarf experienced the same situation at a branch in Mission, Calif. (News Now March 11).

courtesy of

'30 Under 30' reports young adult financial habits

MADISON, Wis. (3/12/09)--The report of Filene Research Institute's '30 Under 30' group about young adult financial habits and needs is now available.

Because credit unions need to attract younger members, professionals and volunteers, Filene created the "30 Under 30" group to focus on research regarding young adult financial habits and needs.

The group's final report is "10 Young Adult Innovations: From the 30 Under 30 Group," edited by Filene's driver of the CU Tomorrow project, Ben Rogers.

The research, funded in part by PSCU Financial Services, Credit Union Executives Society, Fiserv, and the Corporate Credit Union Network, highlights 10 business plans that align facets of young adult life with credit union needs.

The business plans fall into three categories.

"Plans for Younger Members" has the following features:

Change Your Savings: Harnesses the power of debit to fund worthy goals;
CUre Card: Members improve their communities with a credit union debit card;
GrassHopper: Life planning meets credit union products;
Mortgage Down Payment Accelerator: Rewards those who are saving for a home;
Win-Win Savings: Prize-based savings for young adults; and
What's Next? A responsible way to build credit and save.

"Plans for Talented Young Professionals" has:

Shared Staffing: Short-term sabbaticals for professional development;
Gen Y Fast Track: Mentorships and job rotation for superior retention; and Credit union career paths and improved recruiting.

"A Plan for Younger Volunteers" features a "Member Advisory Panel (MAP): Connecting young adult volunteers with credit union leaders."

Each business plan details the product's overall aim, outlines its benefits for the member and the credit union, explains how to put the product into practice at a credit union, and shows what further considerations apply to each.

"The aging of credit union membership is a challenge for the credit union system," Rogers said. "Engaging ambitious young professionals and giving them enough room to improve and innovate is essential for credit union success over the next 10 years."

courtesy of

Wednesday, March 11, 2009

Excessive Internet use harmful to teens

ROCKVILLE, Md. (3/11/09)--Parents face daunting challenges when guiding their children's study and work habits. Today, when you can carry the Internet in your pocket, a virtual smorgasbord of online activities is tempting.

While recent studies indicate that teenage social networking leads to higher quality friendships that buffer them from stress, there's more to the story (Science Daily March 3). A 24/7 Internet connection easily can overstimulate and overstress young minds. The result is interference with important relationships, sleep patterns and grade point averages.

Clinical psychologist Dr. Maressa Hecht Orzack, director and founder of the Computer Addiction Study Center at Harvard's McLean Hospital in Belmont, Mass., compares excessive Internet activity to drug use. Rena Crispin, managing editor of the Credit Union National Association's Googolplex offers parents guidelines for raising children to be teenagers with healthy Internet habits:

Make Internet use a family affair. Place your computer in a common area where you can monitor activity. While your youngsters are still children, ask them to teach you the games they play and share their favorite websites. That way, you'll establish your authority to monitor their online activity later.

Set house rules. Decide on the number of hours per day your children and teenagers are allowed online. (Don't count legitimate online homework against the recreational limit.) And don't merely forbid them to go online. Be alert for new ways to engage them in a variety of fun offline activities.

Resist using the Internet as a babysitter. Avoid using it to keep young children occupied while you do housework. Instead, involve your kids with housework sometimes, and be firm about giving them "alone time" to play and dream at other times. Consider bartering non-Internet play dates with other families, giving both sets of parents regular free time.

Seek help. The National Cyber Security Alliance at and Computer Addiction Services at offer valuable tips.

For more information, read "Keep Kids Safe Online" in Home & Family Finance Resource Center.

courtesy of

Robbery suspect dies in getaway crash

HARVARD, Ill. (3/11/09)--A man who allegedly robbed the Harvard Community CU died Monday in a single-vehicle crash while fleeing police officers.

Robert Menk of Brookfield, Wis., entered the $9.3 million asset, Harvard,, Ill.-based credit union at about 9 a.m. and demanded money, according to Harvard Police Chief Dan Kazy-Garey. No one was injured. At the credit union, police would not say whether Menk was armed (Northwest Herald March 9).

Menk left with the money on foot, but dye packs hidden with the cash activated outside the credit union, and the money was recovered, police said.

When Harvard police officers arrived on the scene, they spotted a man, who was leaving a business establishment that was closed at the time, driving a Toyota Prius.

When police tried to stop the vehicle, the driver fled. The vehicle then crashed into a tree, killing Menk.

courtesy of

Picatinny sues Fannie Mae, wants mortgages back

MORRISTOWN, N.J. (3/11/09)--Picatinny FCU has sued mortgage giant Fannie Mae, seeking the return of more than $14 million in mortgages that the credit union says were sold without authorization by its former mortgage loan servicer to Fannie.

The lawsuit was filed Monday in a state court in Morristown, N.J. , by the Dover, N.J.-based credit union ( March 10).

The action was just a week and a half after Picatinny filed a response to a Chapter 11 bankruptcy filed by its former mortgage loan servicer, U.S. Mortgage Corp., doing business as CU National Mortgage. The bankruptcy was filed in the U.S. Bankruptcy Court in Newark, N.J. (News Now March 2).

Picatinny's lawsuit said U.S. Mortgage Corp., based in Pine Brook, N.J., sold 58 mortgages without the credit union's consent to Fannie. On Feb. 24, the credit union asked Fannie Mae to return the mortgages, but the government-run agency declined, its attorney told the Record.

The lawsuit states that Michael J. McGrath, president/CEO of U.S. Mortgage, pretended to be the credit union's assistant vice president when he brokered the sales to Fannie Mae. The suit said McGrath was not an assistant vice president and was not authorized to perform such transactions on behalf of the credit union.

According to lawyers in the case, the credit union is negotiating with U.S. Mortgage in bankruptcy court and reached an agreement Monday that bars the company from having control over any of the credit union's mortgages. The agreement, however, must be approved by a judge, said the article.

courtesy of

CUs get accounting guidance for corporate plan costs

WASHINGTON (3/11/09)—The American Institute of Certified Public Accountants (AICPA) yesterday issued guidance on how credit unions may account for costs associated with the National Credit Union Administration's (NCUA) Corporate Stabilization Plan.

On Jan. 28, the NCUA announced a $1 billion capital infusion for U.S. Central FCU, and a deposit guarantee on uninsured shares at all corporates through February. For those corporates signing a supervisory agreement with the NCUA, it would continue the deposit guarantees through 2010.

The agency's initial estimate of the insurance liability as a result of the guarantee was $3.7 billion, based on corporate credit unions' holdings in impaired asset-backed securities.

As a result, the NCUA announced that credit unions would be required to replenish .51% of their National Credit Union Share Insurance Fund (NCUSIF) deposit and pay a premium to bring the NCUSIF's equity level back to 1.3%.

The good news in the AICPA opinion comes regarding credit union treatment of the replenishment of the 1% deposit and premium costs associated with the agency's corporate stabilization efforts.

The AICPA is providing flexibility on how to report both the impairment and the premium costs by offering different accounting approaches and no clear directive favoring one over the others.

AICPA said credit unions have flexibility to work with their accountants and auditors to determine whether it is more appropriate to:

Adjust their 2008 financial statements to reflect the insurance premium and deposit costs;

Adjust their 2008 statements for the deposit impairment only and report the premium in 2009; or

Reflect the premium and insurance costs on 2009 statements.

The AICPA guidance also provided advice to corporate credit unions with investments in U.S. Central FCU, and natural person credit unions with capital in those corporates.

It described how to evaluate whether they need to write down such capital as a result of U.S. Central's other-than-temporarily-impaired (OTTI) charges of $1.2 billion for 2008, announced on Jan. 28.

While the AICPA Technical Practice Aid is not an official ruling from the Financial Accounting Standards Board, it is guidance that accountants and practitioners may rely on in advising credit unions and other clients how and when to report financial issues.

The Credit Union National Association (CUNA) Accounting Task Fork was among the interested parties that weighed in with the AICPA on the issues addressed in the AICPA aid.

CUNA President/CEO Dan Mica sent a summary of these documents to leagues and credit unions last night.

courtesy of

Congress update: Status of spending, cramdown bills

WASHINGTON (3/10/09)—Unable to complete consideration of the FY 2009 Omnibus Appropriations Act last week, the U.S. Congress passed a continuing resolution through March 11 to keep the government going.

The Senate resumed consideration of the spending bill Monday and is expected to cast its final vote on it Wednesday. Important to credit unions, the legislation includes language that removes a cap on the Central Liquidity Facility lending authority through Sept. 30.

The appropriations bill also includes language to expand the mortgage lending rule-making authority of the Federal Trade Commission, a move that is opposed by the Credit Union National Association (CUNA). A CUNA-supported amendment to strip this provision from the spending bill was withdrawn last week, but only after key lawmakers agreed to address this issue on the next available piece of legislation.

CUNA also continued to work on the Senate side on compromise language to H.R. 1106, the Helping Families Save Their Homes Act, approved 234-191 in the House. This legislation includes language permitting bankruptcy courts to modify the terms of loans secured by a debtor's principal residence, and CUNA strongly advocates a narrowing of the courts' "cramdown" authority.

H.R. 1106, however, also includes language that would make permanent the $250,000 share and deposit insurance limit. It also would extend the amount of time the National Credit Union Administration (NCUA) has to replenish its share insurance fund when it drops before 1%, and would increase the NCUA borrowing authority. Those provisions have CUNA's strong support.

Also of note, Reps. Paul Kanjorski (D-Pa.) and Ed Royce (R-Calif.) continue to design a House bill comparable to Senate legislation being drafted by Sen. Charles Schumer (D-N.Y.), to lift the cap on credit union member business lending.

Last week Schumer announced his intention to introduce legislation raising the MBL cap as a way to provide additional credit to America's small businesses.

Schumer said that credit unions have a long track record of scrutinizing borrowers, and have low delinquencies as a result. "Because deposits have been on the rise as people move their savings from the stock market to savings accounts, (credit unions) have cash on hand to loan to small businesses," he noted.

The current MBL cap is set at 12.25% of assets. CUNA estimates that credit unions could lend $10 billion to small businesses in the first year after the cap is lifted.

courtesy of

Rise in savings, assets halts capital accumulation

MADISON, Wis. (3/10/09)--While the recession is causing credit union members to save more--increasing credit unions' assets--it is having a halting effect on credit unions' capital accumulation, according to Steve Rick, Credit Union National Association (CUNA) senior economist.

The movement's overall capital-to-asset ratio has decreased to about 10.5% in January from 11.0% in December, according to the January CUNA monthly sample of credit unions.

"The severe recession has brought the era of credit union capital accumulation to an abrupt end," Rick told News Now. "Total credit union capital reached $89.5 billion in January 2009, only 0.6% higher than one year earlier. The credit union movement's capital-to-asset ratio fell to 10.56% in January 2009, from 11.40% in January 2008. The ratio hasn't been this low since July 2004," he said.

"Over the past 12 months, the low capital growth was dwarfed by an 8.5% asset growth," he continued. "The recession reduced credit union earnings while inducing credit union members to save more.

CUNA Chief Economist Bill Hampel predicted a banner year for savings growth. "People aren't spending and they are afraid to put their money anywhere else," Hampel said.

"CUNA's economists are forecasting double digit asset growth in 2009, with little-to-no capital accumulation," Rick said. "This would push capital-to-asset ratios down to the low 9% range by year-end, the lowest since 1994."

January statistics indicate that credit union savings balances increased 1.5%, to $711 billion in January 2009 from $700 billion in December 2008. Share drafts led savings growth, rising 6.2%, followed by money market accounts (2.1%), one-year certificates (1.4%), and individual retirement accounts (0.8%). Regular shares decreased 0.2%.

Credit union loans outstanding went up 0.25% during January, compared with an increase of 0.03% during the same period last year. Adjustable-rate first mortgages led loan growth, rising 2.3%, followed by home equity loans (2.0%) and used-auto loans (0.87%). New-auto loans declined 0.17%, credit card loans decreased 1.0%, unsecured personal loans declined 1.03%, and fixed-rate mortgages dropped 1.7%.

The loans-to-savings ratio decreased slightly, to 82.5% in January from 83.5% in December. The liquidity ratio increased to 17.3% in January from 16% in December.

Regarding asset quality, credit unions' 60-plus-day delinquencies edged up to 1.5% in January from 1.4% in December.

courtesy of

'Are CUs relevant?' asks CUNA Council white paper

MADISON, Wis. (3/10/09)--Credit union professionals can learn ideas and receive advice to ensure that credit unions remain relevant in the current marketplace in a new all-CUNA Councils white paper.

"Are Credit Unions Relevant?" explains that one of the best ways for credit unions to stay relevant is by being member-centric and fully understanding each member's individual needs. It also addresses the three factors to help create relevance: do the right thing, know your markets, and differentiate.

The paper also offers a caveat to its credit union readers: "If you're not offering competitive products and services, you can talk about the credit union philosophy all you want, but it won't bring people in, or keep them."

"The public doesn't really care if you are a credit union or a bank--what they care about is, 'Can you meet my needs? Can you facilitate my dreams?'" said D.G. Markwell, senior vice president of marketing and business development at MAX FCU, Montgomery, Ala. "It's too easy to wake up every day and do the same thing we did yesterday, last week, last month, last year and last decade."

courtesy of

Monday, March 9, 2009

Steer clear of foreclosure rescue scams

WASHINGTON (3/9/09)--With one of five mortgages underwater--where mortgage debt is greater than what the home is worth--more families are struggling to avoid foreclosures. But foreclosure isn't the only reason people are losing their homes: Reports of foreclosure rescue scams are on the rise.

Victims are targeted via the Internet, phone, direct mail and door-to-door solicitation (Board of Governors of the Federal Reserve System, March 5). Scam artists use public information--foreclosure filings--to zero in on unsuspecting victims.

In one reported case, a desperate homeowner signed a contract with Foreclosure Solutions for $695, and then paid another $1,400, which supposedly was being forwarded to the lender (CBS Feb. 19). Instead of forwarding the mortgage payment to the lender, Foreclosure Solutions allegedly pocketed the money. The victim discovered the scam a few days before her home was to be auctioned off.

The Federal Reserve offers tips to spot a phony pitch:

Be suspicious of "guarantees." If someone promises to take care of everything and insists, "Don't worry, we do this all the time," don't just back away--run in the other direction.

Don't rely on someone else to contact your lender or servicer. If someone approaches you and offers to negotiate with your lender on your behalf, or offers to send your payments to your lender, just say no. Don't hand over a mortgage payment to a stranger, no matter how convincing the person sounds.

Take time to read what you sign. If someone is in a hurry to get your signature, the person probably doesn't want you to read the fine print. But the fine print may mean the difference between keeping your home and losing it.

Consider high up-front fees a red flag. You shouldn't have to pay hundreds--or thousands--of dollars for housing assistance. Most reputable counselors provide free or low-cost counseling services.

If you think you've been the victim of a foreclosure rescue scam, contact your state and local consumer protection agencies immediately. Visit the Consumer Action website at for the nearest office.

For more information, listen to "Find Foreclosure Counseling" in Home & Family Finance Resource Center.

courtesy of

Hampel: Everything falling but government spending

WASHINGTON (3/9/09)--With the exception of government spending--all other economic drivers such as business investment--are falling, Bill Hampel, chief economist for the Credit Union National Association (CUNA), told the Associated Press Thursday.

CUNA's affiliated credit unions are reporting record increases in deposits, Hampel said.

The national savings rate rose to 5% in January from 0% last spring, according to government figures. January's rate is the highest since 1995 and constitutes a much faster savings increase than expected, Hampel told the news service.

Consumer spending accounts for about 70% of the total U.S. economy. Spending maxed out at 71% in 2005, but it will likely drop just two-to-three percentage points over the next few years, Hampel added.

courtesy of

Wednesday, March 4, 2009

Teenagers: Start looking now for summer jobs

MADISON, Wis. (3/4/09)--The new federal stimulus package includes $1.2 billion to create up to one million summer jobs for youth. But even with that boost, there may not be enough jobs.

Andrew Sum, director of the Center for Labor Market Studies at Northeastern University, Boston, predicts in "Out With the Young and In With the Old: U.S. Labor Markets 2000-2008 and the Case for an Immediate Jobs Creation Program for Teens and Young Adults" (December) that teenage employment will dip to about 30% this summer, down from 32.5% last summer.

Sum's report is based on the Current Population Survey, a national household survey conducted by the U.S. Census Bureau for the U.S. Department of Labor's Bureau of Labor Statistics.

So what's a teenager to do? Start early and be prepared. One job site designed by teenagers to help other teenagers is It includes resources such as an interactive resume builder and these tips for job seekers:

Visit your high school guidance office. Ask counselors to help you complete job applications and obtain references. Take names, addresses and phone numbers to your meeting.

Look locally. Watch for help-wanted signs or ask if a company intends to hire summer help. Remember to check with summer camps, amusement parks, and other seasonal businesses.

Visit online sites. Go and search other teen job sites to see what's available. Some sites require registration, but be on guard if you're asked for a name or phone number. Make sure the URL has an "s" (https://) if you're supplying personal information.

Make your job search known. Tell everyone--family, friends, coaches, teachers--that you're looking for a job and what your interests are. Sometimes the best connections are right next door. Many adults credit their networks for finding out about job openings and getting that first interview.

Create a resume. If you've never had a "real" job, don't hesitate to include babysitting, pet care, lawn mowing and other paid activities, along with volunteering and school activities. Prospective employers are likely to be impressed with your professional approach to a job search.

For more information, read, "Tough Times Series--Speaking of the Economy...What Do You Tell Your Kids?" in Home & Family Finance Resource Center.

courtesy of

Monday, March 2, 2009

Paying taxes with plastic could backfire

NEW YORK (3/2/09)--Although the convenience of charging your tax bill may be tempting, fees and interest could end up costing a bundle ( Feb. 19).

By paying your taxes with plastic, you commit to pay an additional 2.49%--the fee merchants usually pay credit card companies when you charge purchases. The Internal Revenue Service (IRS) isn't interested in doling its revenue to card companies, so you must foot the charge.

If you're thinking of putting your 2008 tax bill on a credit card, understand the costs:

Paying a $14.94 fee to charge a $600 tax bill may seem worth the convenience to some. But if that tax bill climbs to $3,000, or $4,000, you're looking at fees between $75 and $117. And, unless you pay off your credit-card balance in full the next month, any one of these tax bills will begin to pile on interest.

Some more financially sound options include a personal loan from a friend or family member, a signature loan from your credit union, or an installment plan with the IRS ( video Oct. 1). The $52 installment setup fee and the 0.667% monthly interest rate (8% annual percentage rate or APR) is lower than most credit cards. Even if your card carries a lower APR, the installment plan can help you make quicker and more regular payments. File IRS Form 9465 to get started.

If you decide to use plastic to gain credit card reward points, frequent-flier miles, or other benefits, make sure you're able to pay off the balance in full right away. Accumulating interest on a very large tax bill can quickly wipe out the benefit of those rewards.

Even if you can't afford to pay your tax bill, be sure to file on time. The monthly interest rate for not paying a bill that has been filed is 0.5%, but jumps to 5% for those who simply chose not to file. On a $1,000 tax bill, that amounts to $10 and $50 a month, respectively.

You can find more information about payment options at

For more information, read "Don't Miss Out on Tax Breaks" in Home & Family Finance Resource Center.

courtesy of