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Kansas CUs Altered CARD Act costs time money
WICHITA, Kan. (10/16/09)--Credit unions in Wichita, Kan., and the Kansas Credit Union Association say that late changes to the federal Credit CARD Act cost local credit unions time and money, but they hope relief is on the way. This week the House of Representatives passed a bill that would undo provisions of the Credit Card Accountability Responsibility and Disclosure (CARD) Act that made it more costly for credit unions to provide open-end lending, according to The Wichita Eagle (Oct. 15). A last-minute provision slipped into the act before it was approved by Congress has affected credit unions' ability to offer open-end loan because they would be required to provide 21 day's notice in advance of the payment due date--a problem for credit unions that have members making weekly or biweekly payments on their loans. The Wichita-based credit unions said their members already know when their payments are due and how much they will have to pay as part of their open-end loan agreements. Bob Corwin, CEO of Meritrust CU, a $637 million asset credit union based in Wichita, told the newspaper that the law meant Meritrust had to conform with issues that aren't really relevant for open-end loans. It cost the credit union time and money to have staff manually preparing the required 21-day notices. "That was a big scramble and quite an expense we didn't have before," he told the Eagle. Meritrust doesn't have the capability to prepare the notices through an automated system. Central Star CU President/CEO Lee Williams noted that to comply with the new law, her $82 million asset credit union had to convert about 3,800 of its 4,000 open-end loans to closed-end loans. That took a full week of staff time devoted to nothing but transferring the loans, and Williams said it cost about $20,000 in man-hours and notifications to members. "This is not a year where you need that kind of impact," she said. The act also changed the payment due dates for members with open-end loans who chose their original dates based on their financial situations. Marla Marsh, CEO of the Kansas Credit Union Association, was also quoted in the article, saying she hoped the House bill, CARD Act Technical Corrections Act, would be passed by the Senate. That would remove open-end loans from the Credit CARD Act and allow credit unions to follow their usual processes.
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