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April 18, 2014

Ky. latest state to enact data breach protection

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WASHINGTON (4/18/14)--As the Credit Union National Association continues to work on data security issues at the federal level, states are making progress with laws to protect and inform consumers about data security.
Last week, Kentucky Gov. Steve Beshear signed H.B. 232 into law, making Kentucky the 47th state to enact data breach notification legislation. With Beshear's signature, there are only three states left--Alabama, New Mexico and South Dakota--that do not have laws requiring companies to inform consumers about data breaches.
Under Kentucky's new law, companies that conduct business in the state and maintain consumer data of state residents are required to disclose data breaches involving the unauthorized acquisition of residents' unencrypted computerized data. Companies are required to disclose the breach in the "most expedient time possible" and "without unreasonable delay." Additionally, companies are required to notify consumer reporting agencies and credit bureaus if the breach affects more than 1,000 individuals.
Iowa Gov. Terry Branstad recently signed S.F. 2259 into law, which amended the state's Personal Information Security Breach Protection statute (JD Supra April 17). It requires written notice be provided to the Iowa Attorney General's office regarding a breach of security affecting 500 or more Iowa residents no later than five business days after notice of the breach. It also expands the term "breach of security" to include unauthorized acquisition of personal information "maintained by a person in any medium, including on paper, that was transferred by the person to that medium from computerized form."
A dozen more states have pending legislation that would amend and enhance existing state laws regarding security breaches.
During its recent Government Relations Rally, the California Credit Union League focused on the Consumer Data Breach Protection Act (See Wednesday's News Now: Card, member protection headline Calif. league rally.) A.B. 1710 has similar notification and retailer liability provisions to Iowa and Kentucky's newly enacted laws, but it adds mandatory credit monitoring services for those affected and civil penalties of up to $500 per violation or $3,000 for a willful or reckless violation (National Law Review April 17).
The Credit Union National Association found that credit unions incurred $30.6 million in costs directly related to last year's Target data security breach--not including fraud costs--and is pressing federal lawmakers to address data security relative to merchants, who are not held to the same standards of security as credit union and other financial institutions.
One of the reasons why the pre-trial activities for the Target class action lawsuits have been consolidated in Minnesota is because of state statutes that prohibit merchants or businesses from retaining magnetic-strip information captured during a transaction, require reimbursement to financial institutions for reissuing cards, and communicate "in the most expedient time possible and without unreasonable delay" if a breach occurs. ReadMore

Mercer: Ohio CUs need to be tougher to sell a powerful idea

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COLUMBUS, Ohio (4/18/14)--While Ohio credit unions are doing an "amazing" job in serving their memberships, they must market better to sell their "beautiful, powerful idea," Ohio Credit Union League President Paul Mercer told the annual Invest 48 audience last week.
Mercer noted that Ohio credit unions had gained less than 2% market share in the state in 19 years, to 7.6% in 2013 from 5.9% in 1994 (eLumination April 16). "That's not good enough," Mercer said. The cooperative credit union model is an ideal fit for consumers, communities and small businesses, he noted. "You are places where people do matter more than money, and when people understand that, we will win more market share," he added.
A briefing with State Rep. Lou Terhar (R-Cincinnati), co-sponsor of House Bill 221, which would give credit unions authority to serve as public depositories and access loan programs through the Ohio Treasurer's office, was attended by more than 80 credit union representatives. In subsequent meetings with legislators, credit union officials urged lawmakers to support the legislation. Many legislators said they supported credit unions and would vote for the bill. Others expressed reservations, which provides league staff an opportunity to follow up.
Ohio Department of Commerce Director Andre Porter outlined three major concerns for credit unions to navigate in today's economic environment. First, credit unions must continue to plan and manage the risk associated with their changing loan portfolios. Porter also encouraged credit unions to find more ways to participate in today's digital age. He also said that succession planning is critical to keeping the industry strong in the long term. As a regulator, Porter pledged that his department is "here to help with these challenges."
Changes to the OCUL's board structure and code of regulations were approved by affiliated credit unions at the league's annual meeting. Thirty-three percent of eligible credit unions voted, and 95% favored the changes, which take effect Jan. 1. The key changes included:

  • A decrease in the size of the league board to nine directors, with a seat dedicated to small ($0-$50 million in assets), medium ($50 million to $250 million), and large ($250 million or more) categories and the others elected at-large;
  • "Interlocking" seats reduced to maximize the number of credit union leaders engaged in league leadership;
  • Officers streamlined to three positions--chair, vice chair and secretary/treasurer;
  • Uniform director eligibility requirements and customized qualifications;
  • League board empowered to direct the governance and oversight of the organization and its affiliates;
  • Committee structure designed to foster effectiveness and expand engagement opportunities; and
  • Board Succession Planning Committee leveraged to proactively monitor representational interests and recruit high-quality candidates.

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Low-income CU financially empowers N.Y. neighborhood

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LONG ISLAND CITY, N.Y. (4/18/14)--The credit cycle, especially for the impoverished, can pull people and their finances down into what seems like an inescapable abyss.

One New York-based organization, with its very own credit union, has decided to replace that downward cycle with a system of its own, one that is helping some of the most economically disadvantage climb out of those deep holes ( April 17).

The cycle is orchestrated by Urban Upbound, a nonprofit based out of Long Island City, that aims to position residents of public housing neighborhoods to achieve economic mobility and self-sufficiency, and to break the cycle of poverty.

To accomplish this, the organization bundles together and offers residents five types of services, including financial counseling, employment services, youth development and college access, community revitalization, and finally financial services through Urban Upbound FCU, Long Island City, N.Y., with $780,000 in assets.

Together, the programs teach residents how to improve their financial health, help them secure employment and advise them on how to manage their income once they've landed that new job, among other services. 

"And it makes sense," says Lenese Vergara, director of the Urban Upbound Workforce Development Program. "We're seeing more and more employers are checking credit, screening our candidates because of their credit."

Often, residents with rougher credit scores start at the organization's Financial Empowerment Center, where they receive free one-on-one counseling on how to budget and reduce debt.

From there, the individuals are sent just around the corner to Upbound FCU, where they can apply for a credit consolidation loan; a program that already has demonstrated tangible results.

"(Members' scores can rise) 100 points higher in just one month, just from that one loan from the credit union," Robin Wilson, director of the Urban Upbound Financial Fitness Program, told, adding that people aren't able to access that kind of product through a mainstream bank.

With improved credit, then, the individuals are rerouted back to the workforce development program, which has found hundreds of people new places of employment.

"Our average wage is about $11 an hour, so that's excellent for the people we are working with, with only a high school diploma," Vergara said.

The next step in the cycle directs the residents back to the credit union where they not only can obtain checking and savings services--often an unreachable goal for the impoverished in this community, as 30% of the residents are unbanked--but they also can learn how to manage their income through the free one-on-one consultation.

Thanks to the availability of the credit union, the residents can avoid check-cashing outfits, which often charge high fees for their services, while also learning healthy financial habits.

"In a six-block radius, there is no financial institution around," said Ash Exantus, Urban Upbound FCU CEO. "Most people are used to going to the check-cashing place. They don't go to the check-cashing place because they want to. They were going to check-cashing places because they had to.

"We want to see elevation, and as we see the city around us and the tide rising, all small ships have the capacity to rise together, and that's what we want to see," Exantus said. ReadMore

Mass. commissioner urges comment on RBC proposal

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BOSTON (4/18/14)--Massachusetts Banking Commissioner David Cotney advised the state's credit unions to comment on new regulations, including the National Credit Union Administration's risk-based net worth proposal.
Metro-Boston and Tri-County North Chapters of the Massachusetts Credit Union League held a question-and-answer session with Cotney Wednesday.
The session was moderated by Massachusetts Credit Union League President Paul Gentile (Daily CU Scan April 17).
The Massachusetts Banking Division has asked NCUA to extend the comment period for the risk-based net worth proposal beyond the May 28 deadline, Cotney said. The division will send its comments as part of a broader comment letter filed by the National Association of State Credit Union Supervisors.

The Credit Union National Association and the National Association of Federal Credit Unions Thursday jointly sent a letter to the NCUA urging an extension for the risk-based net worth proposal comment period (See related story: CUNA, NAFCU jointly repeat urging for RBC comment extension).
Regarding last week's Heartbleed incident, Cotney noted that each individual credit union must make its own decision on how and whether to notify members, but he cautioned that going forward more security issues are likely. He suggested that credit unions develop guidelines so they don't overwhelm members by alerting them to every attack. 
Cotney said four Massachusetts mutual savings banks have filed applications to convert to stock-owned--the most applications the division has received since the early 1980s.  He also encouraged credit unions to evaluate whether they can become low-income designated, as it has a number of advantages.
The meeting raised $700 for the Massachusetts Coalition for the Homeless. ReadMore

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Weokie CU battens down hatches with new storm shelters

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OKLAHOMA CITY (4/18/14)--An Oklahoma-based credit union hasn't only promised to keep its members' money safe, it's also pledged to keep the members themselves safe as well (The Journal Record April 11).

The board of directors at Weokie CU, Oklahoma City, with $929 million in assets, recently voted to install storm shelters at nearly all of the credit union's branches to protect members in an area quite vulnerable to tornadoes.

Brent Taylor, Weokie president, said the idea to build the shelters was spurred by the events of last May when a tornado ripped apart a Tinker FCU branch building, while eight credit union members and 14 employees took cover inside the safe deposit box vault.

Tinker, with $3.1 billion in assets, is also based out of Oklahoma City.

"The board was pleased that we were doing that type of work to provide protection for our staff and customers," Taylor told The Journal Record. "Based on what I saw last year, all the devastation in Moore, it really makes you think: What's going to happen with your team if something like that comes through?"

Taylor wouldn't divulge how much it will cost the credit union to fix its Oklahoma City area branches with the shelters.

Nine of the branches that will receive the renovations will have doors upgraded to meet storm shelter standards, while the credit union's two smaller "express" locations with drive-thru lanes will be equipped with above-ground storm shelters.

Weokie leaders had considered building the shelters in spaces separate from the safe deposit boxes and cash safes, but ultimately they decided the vault would be the most appropriate place.

"We won't turn people away in a storm situation," Taylor said in The Journal Record. "We won't lock the doors." ReadMore

KCUA notes 2013 success at 79th annual meeting

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WICHITA, Kan. (4/18/14)--The Kansas Credit Union Association (KCUA) celebrated inspiration, creativity and innovation at its 79th annual meeting and convention last weekend in Wichita.

The following honors were awarded:

Henry Peterson Professional of the Year James Holt, president/CEO, MidAmerican CU, Wichita, center, with Don Homan, board chair, Kansas Credit Union Association, and Marla Marsh, KCUA president/CEO. (Kansas Credit Union Association photo)

Angie Reed, marketing/business development manager, Kansas State University FCU, Manhattan, won the KCUA innovation contest for credit unions that have created, inspired or innovated in their communities. The $65 million-asset credit union partnered with Flint Hills Community Clinic, a volunteer-supported clinic that serves low income and uninsured people in Riley County. The credit union's efforts increased awareness of the clinic and raised more than $8,500.
Bill Cheney, president/CEO, Credit Union National Association, and U.S. Rep. Mike Pompeo (R-Wichita) were invited speakers.
The executive committee and board members were elected at the business meeting:

  • Henry Peterson Professional of the Year: James Holt, president/CEO, MidAmerican CU, Wichita, with $219 million in assets;
  • John Michener Volunteer of the Year: Ronald Kelley (posthumously), Catholics United CU, Hutchinson, with $173,000 in assets;
  • Political Involvement Award: Greg Winkler, president/CEO, Educational CU, Topeka, with $185 million in assets;
  • KCUA Hall of Fame: John Michener (1894-1986), co-founder and president of the Kansas Credit Union League, and founder of Wichita City Teachers CU; and Henry Peterson (1893-1984), co-founder of the Kansas Credit Union League, founder of CU of Dodge City and organizer of more than 200 credit unions in Kansas, Oklahoma, New Mexico and Colorado.

Other board members are Garth Strand, president/CEO, Hutchinson CU, ; James Nastars, president/CEO, Meritrust CU, Wichita; Jim Holt, president/CEO, MidAmerican CU, Wichita; Denise Bonner, manager, Wakarusa Valley CU, Lawrence; Brenda Kliewer, manager, McPherson CO-OP CU; and Rosa Saenz, senior vice president, Golden Plains CU, Garden City.
Homan also is chair of Shared Financial Solutions' board.
Tied to its annual meeting, KCUA shared its 2013 annual report that noted the league offered more than 190 training opportunities, provided nearly $9,400 in scholarships, launched a redesigned website, created an Innovation and Implementation Lab, and recognized 137 credit union staff and volunteers who earned 497 certifications from CUNA's self-study programs.

  • Chair: Don Homan, Frontier Community CU, Leavenworth;
  • Vice chair: John Beverlin, president/CEO, Mainstreet CU, Lenexa; and
  • Secretary/treasurer: Vickie Hurt, president, Quest CU, Topeka.

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CU System briefs (04/18/2014)

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  • SEATAC, Wash. (4/18/14)--Financial institutions should seek legal advice, assess their staffing capability and anti-money-laundering expertise, consider the practicalities of handling more cash than usual, and think about the possible reputational risks involved before deciding to provide banking services to marijuana businesses, Scott Jarvis, director of Washington's Department of Financial Institutions, and Linda Jekel, DFI's director of credit unions, said at the Northwest Credit Union Association's (NWCUA) Leadership Symposium in Portland, Ore., the NWCUA reported on its blog. Guidance issued earlier this year by the Financial Crimes Enforcement Network (FinCEN) does not change federal law, Jarvis and Jekel said. But "there is a difference between a law and a decision whether to enforce it," they said. The DFI noted that its position on basic banking services for Liquor Control Board-licensed marijuana producers, processors and retailers is a public safety priority to prevent large amounts of cash being subject to armed robbery and money laundering for racketeering purposes ...
  • HARRISBURG, Pa. (4/18/14)--The Pennsylvania Credit Union Association has agreed to be a supporter of the 2014 Reinventing Older Communities Conference: Bridging Growth and Opportunity, presented by the Federal Reserve Bank of Philadelphia (Life is a Highway April 17). The national conference will be held May 12-14 at the Loews Philadelphia Hotel. More than 450 professionals from financial institutions and community development programs will attend. Credit unions can attend sessions such as "Oh, How the Housing Market Has Changed;" "Entrepreneurs Reinventing Cities;" "Innovations to Promote Financial Inclusion;" New Partners, New Roles;" "Innovations in Funding and Financing" and "New Lending Opportunities in the Changed Mortgage Market." Speakers include representatives of the Federal Reserve, Harvard University, the Annie E. Casey Foundation, Brookings Institution, Ford Foundation and Moven  ...

  • ALBANY, N.Y. (4/18/14)--State Sen. Terry Gipson (D-Rhinebeck) met with members of the Credit Union Association of New York's Catskill-Hudson Chapter Tuesday. The group discussed prize-linked savings accounts, the importance of strong state credit union charters, municipal deposits and the significant role of community development financial institutions (The Point April 17). Gipson encouraged attendees to continue to advocate on behalf of New York's credit unions as the league readies for its upcoming state Governmental Affairs Conference. "The senator expressed his strong support for credit unions and indicated that he would support many of these bills when they are brought before the Senate," said Rick Mantey, chapter president and president/CEO of Ulster FCU, Kingston, with $104 million in assets. From left, Lisa Morris, director of marketing, Hudson Valley FCU, Poughkeepsie, with $3.6 billion in assets; Ron Flaherty, president/CEO, TEG FCU, Poughkeepsie, with $200 million in assets; Mantey; Gipson; Michelle McCourt, president/CEO, Bridgeway FCU, Poughkeepsie, with $74 million in assets; Mike Ciriello, president/CEO, Hudson Heritage FCU, Middletown, with $301 million in assets; and Kathy Ferrusi, senior community relations coordinator, Hudson Valley FCU. (Credit Union Association of New York photo) ...
  • JACKSON, Miss. (4/18/14)--Mississippi FCU, a $94 million-asset credit union in Jackson, announced its replacement for outgoing president Marilyn Hobson (CU Connection April 16). Hobson will retire this summer after 20 years at the credit union. Mike Lightsey, who has been a credit union member for nearly 30 years, was appointed by the board to be the new president. Lightsey has been on the board for 13 years, including three stints as board chairman. He recently retired as chief financial officer from the University of Mississippi Medical Center, Jackson ...

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