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3 leagues merge to form Cooperative CU Assn. effective Jan. 1

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MARLBOROUGH, Mass. (10/24/14)--Massachusetts credit unions voted unanimously to join with the credit unions of New Hampshire and Rhode Island in a merged credit union trade association. The result of that vote, together with similar votes taken earlier this month in New Hampshire and Rhode Island, means that the credit union leagues in the three states will merge to form the Cooperative Credit Union Association, effective Jan. 1 ( Daily CU Scan Oct. 23).
 
"This historic vote is a tremendous testament to the value our credit unions place on cooperation," said league President Paul Gentile. "The credit unions in our states and our trade associations have a long and proud history of working together. We can accomplish so much more when we work together. I want to offer my sincere thanks to the members of the Boards of all three leagues and our member credit unions for their careful and serious consideration of the merger, and the strong and committed support that they showed it."
 
Massachusetts Credit Union League Chairman David Surface said the governance structure of the merged association will serve the association well for years to come. "We wanted to be certain that large and small credit unions were represented and that no one state dominated the process. I am confident members will see us delivering more value in each of our three states," said Surface.
 
In each of the three states, local branding will be maintained with the names of "Massachusetts Credit Unions," "New Hampshire Credit Unions," and "Credit Unions of Rhode Island" being used on the local level for all facets of advocacy and social responsibility. The brands carry the common tag line of "Creating Cooperative Power."
 

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Mike Mercer recognized with NCUF's Wegner award

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MADISON, Wis. (10/24/14)--For his ground-breaking leadership, innovating contributions, personal commitment and unfaltering dedication to the advancement of credit unions, Mike Mercer, president/CEO of the Georgia Credit Union Affiliates (GCUA), has been named by the National Credit Union Foundation (NCUF) as the recipient of a 2015 Herb Wegner Memorial Award for Lifetime Achievement.

Mercer will receive the award alongside three other honorees at a special dinner hosted by the NCUF March 9 during the Credit Union National Association's 2015 Governmental Affairs Conference.

"Anyone who knows Mike knows he's an innovator and status quo challenger who has always pushed leaders to rethink old habits and consider new ways of doing things," said John Gregoire, chair of the NCUF Wegner Awards selection committee and president of The ProCon Group. "From his role at the Georgia Credit Union Affiliates, time as CUNA chairman, his work with the Polish credit union system and more, Mike always has displayed tremendous insight and innovation."

Among his accomplishments in serving members in the state of Georgia, Mercer was the creator of the Helping People Afford Life outreach campaign that positions members to make good decisions and to thrive financially.

It's also a program that played a part in helping Georgia credit unions save members more than $130 million last year.

"Throughout his career, Mike has preached the power of financial cooperatives, and their ability to empower individuals with the knowledge to succeed," said Doug Fecher, president/CEO, Wright Patt CU, Beaver Creek, Ohio, with $2.8 billion in assets. "He has directly impacted countless individuals across his state, nation and around the world."

No place internationally has felt the effects of Mercer's hard work more than Poland, where Mercer played a key role in creating and implementing a partnership between Georgia and the European country.

The partnership has allowed Polish citizens to improve their financial lives through credit union membership, with more than 62 credit unions now serving more than 1.8 million members.

In 2007, Mercer was awarded the "Order of the Knights Cross," the highest governmental award given to non-Polish citizens.

Additional highlights in Mercer's career:
  • Helping obtain critical support from then-Speaker of the U.S. House of Representatives, Newt Gingrich, for the Credit Union Membership Access Act in 1998;
     
  • Working his way up at a credit union to second in command in his 20s, up to a leadership role in the corporate credit union network, and finally to president of the Georgia league in 1985;
     
  • Serving on the board of the National Cooperative Bank, where he remains the only credit union professional to ever hold the position of chairman;
     
  • Acting as a mentor for instructional and collaborative training seminars within the GCUA Learning Journey program and the GCUA Idea Institute; and
     
  • Being recognized for his work on behalf of Georgia's credit unions with a Georgia Lifetime Achievement Award in 2005.
"Mike's career with credit unions is totally and fully associated with creative an innovative approaches for credit unions to grow and prosper," said Dan Mica, principal of The DMA Group and former president/CEO of CUNA. "To use Mike's own words, his personal vision and creativity make him a 'center of gravity' for all those interested in unique ways to preserve the best of the past and move forward to the cutting edge of the future."

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Prize-linked savings bill introduced in New Jersey

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HIGHTSTOWN, N.J. (10/24/14)--New Jersey Credit Union League-supported legislation to enable state-chartered credit unions and banks to offer prize-linked savings accounts has been introduced in the state Senate.
 
The legislation would authorize the offering of savings promotions, also known as "prize-linked savings accounts," which treat every deposit as a ticket in a prize-winning raffle ( Daily Exchange Oct. 23)

"Low-income people see lotteries as their best chance to pay their bills or to get out of poverty," said Senator Richard Codey (D-Livingston), who along with Sen. Ronald Rice (D-Newark sponsored the bill. "They don't believe they make enough money to maintain a savings account. This would offer the attraction of gambling without any risk because they don't lose any of their savings. They win even if they lose."
 
The legislation would authorize state-charted credit unions, banks and savings banks to conduct savings promotions in which a minimum deposit qualifies for a chance at winning a designated prize. The idea has been put into practice in a number of states by non-profits and credit unions.
With each deposit in an amount predetermined by the institution, a participant qualifies for a raffle that can win financial prizes while at the same time they build up their savings. The payments go to certificates of deposit managed by credit unions.
 
"The success other states have demonstrated with regards to prize-linked savings accounts in encouraging consistent saving by individuals who have not done so regularly in the past, is compelling," Greg Michlig, NJCUL president/CEO, told News Now . "By introducing an exciting element to the sound financial practice of saving, this program can stimulate a healthier financial environment for the people of New Jersey. We are encouraged by the introduction of this bill by Senators Codey and Rice and are hopeful that we will join the other states currently offering this tool to encourage savings habits amongst consumers." 
 
"This is a way for those with modest paychecks and little or no money in the bank to 'play to win'," Rice said. "It's an incentive to save, which can help provide a way out of poverty for those who haven't had the opportunity to put money away."
 
The bill would require all participants to be at least 18 years of age, that everyone has an equal chance to win, that all the rules and conditions are spelled out, and that interest rates and fees are approximately the same as other accounts.

Ten states--Connecticut, Indiana, Maine, Maryland, Michigan, Nebraska, New York, North Carolina, Rhode Island, and Washington--currently permit credit unions to offer prize-linked savings accounts.  Earlier this session Connecticut legislation to permit prize-linked savings and Oregon legislation to study the feasibility of the programs were introduced but not passed in the state legislatures.

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NYT: States lift subprime lending protections

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MADISON, Wis. (10/24/14)--An Oct. 22 article in The New York Times details how lawmakers in eight states have voted to increase the fees or the interest rates that lenders can charge on certain personal loans used for subprime borrowers.
 
The overhaul of the state lending laws, in part,  is the result of  lobbying  efforts by the consumer loan industry-those who make unsecured cash  loans  to consumers , according to the Times .  For example in North Carolina, the lenders and their lobbyists overcame fierce opposition from military commanders who wanted to stave off the increases to protect military servicemembers from potential abuses.   
 
A bill that would have raised the state's interest rate structure in 2011 initially died in legislature, but dogged lobbying efforts by lenders steered eventual passage of the legislation.
 
Under the previous law in North Carolina, lenders could charge 30% interest on loans up to $1,000 and 18% on a remaining balance of $6,500. The new law allows for rates of up to 30% on the first $4,000 of a loan and 24% on the next $4,000.
 
Similarly in Missouri, lawmakers passed a law last year that doubled the allowable origination fees to 10% of the loan's outstanding balance, to a maximum of $75. Indiana and Arizona allowed lenders to extend larger loans at higher rates.
 
The lenders that lobbied lawmakers have benefited from the changes. OneMain, owned by Citigroup, saw its profit increaseby 31% in 2013 from 2012. Subprime lender Springleaf Financial has seen its shares increase 78% since it went public in October 2013.
 
Credit unions, including those serving members of the military, take a more relationship-based approach to unsecured lending. AllSouth FCU, Columbia, S.C., with $693 million in assets, offers a standard unsecured loan product that can either be closed-end 24-month loan or open-end line of credit with a minimum payment of $25 or 2% of the balance monthly. Loan amounts start as low as $300 and go up to a maximum $10,000. Interest rates range from 9.9% to 18%. Interest rates and approval depend on creditworthiness.
 
Miramar FCU, San Diego, with $174 million in assets,  offers the Asset Recovery Kit (ARK), a low-cost alternative to predatory lending. ARK is an interest-free, short-term advance, through which borrowers pay only a $5 fee,  no interest for immediate cash advances of up to $500 (or 80% of net pay), and payable in one to six months.
 
Tinker FCU, Oklahoma City, with $3.2 billion in assets, offers a personal access loan at a 12% annual percentage rate for military personnel. With a $500 maximum, the loan amount cannot exceed 25% of the borrower's monthly income after taxes. The borrower must have the ability to repay the loan in full within the 30-, 60- or 90-day term allotted.
 
Fort Sill (Okla.) FCU's payday loan alternative product permits members to borrow up to $1,000 at an annual percentage rate, to be paid back within six months. There is no credit check or debt ratio calculated on the alternative payday loans offered by the $256 million-asset credit union. When the loan is disbursed, one-half of the proceeds is deposited into the member's savings account. Funds are frozen until the loan is paid in full. Once the loan is paid in full, member has a savings account to keep them out of the payday lending line.
 
The Pennsylvania Credit Union Association's (PCUA) Better Choice Program offers a payday loan alternative that includes financial counseling and required saving with a lower-cost, short-term loan. More than 87,000 short-term loans have been issued in Pennsylvania through "Credit Union Better Choice" since the program was launched in 2006---saving borrowers more than $27 million over using a traditional payday lending product, PCUA reported.

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Data, privacy take center stage at Cal./Nev. annual meeting

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LOS ANGELES (10/24/14)--A lively discussion about "big data" and its use by credit unions was one of the highlights of the California and Nevada Credit Union Leagues annual conference this week, as three industry leaders entertained and informed audience members about the subject ( In the News Oct. 22).

Karan Bhalla, managing director for IQR Consulting; Michael Josephson, founder and president of the Josephson Institute; and Michael Popp, vice president of real estate for Golden 1 CU, discuss "big data." (California and Nevada Credit Union Leagues Photo)
The key question raised during the discussion was: When is big data too intrusive?

With Alessandro Acquisti, public policy and information systems professor at Carnegie Mellon University, as moderator, the three panelists talked it out. They were Karan Bhalla, managing director for IQR Consulting; Michael Josephson, founder and president of the Josephson Institute; and Michael Popp, vice president of real estate at Golden 1 CU, Sacramento, Calif., with $8.4 billion in assets.

Big data is a popular term used to describe the exponential availability of data, which, when properly analyzed, may be used to inform business decisions.

"The question is how we should use it, and whether to keep collecting it," Josephson said, noting that while opportunities for utilizing such data could be valuable, the risks are also high depending on the organization's reach and focus.

The panelists agreed that large quantities of big data would be available for purchase in the future.

Josephson also said he believes that in the next five years, lawmakers will pass legislation that will restrict those who can access and use the data.

Before the panel discussion, Acquisti led a session called "The Economics of Privacy, and Why it Matters," where he covered how consumers feel about their personal data, and how credit unions can navigate the tricky world of collecting it ( In the News ).

Acquisti also covered identity theft and how identities can still easily be stolen without a data breach occurring. Through "data accretion," he said, fraudsters can take anonymous photos, and through various processes ferret out sensitive information about a person, including their name, social security number and credit score.

"Right now, this is not a significant issue," Acquisti said. "But 10 to 15 years from now, it may be a different story."

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Cash isn't king anymore, Boston Fed reports

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BOSTON (10/24/14)--Cash registers may be running a little thin lately, as a new report shows that cash usage is continuing to drop, making way for the growing popularity of debit cards ( Pymnts.com Oct. 23).

The report, administered by the Federal Reserve Bank of Boston, found that between 2010 and 2012, the number of cash payments fell by 10%, while the overall share of cash payments dropped by 26.8%.

Though, the number of cash withdrawals in addition to the dollar value of cash holdings by consumers increased in 2012, the report found.

While debit still appears the most popular choice for making payments, credit also seems to be gaining ground.

"Debit cards remained the most popular payment instrument among consumers in 2012, accounting for 29.9% of their monthly payments," according to the report ( Pymnts.com ). "But credit and charge card payments experienced the largest increase, reaching 21.6% share in 2012--surpassing its highest level recorded."

A new report by TSYS also details that debit-card use has actually dropped, in large part thanks to consumer fears over security ( News Now Oct. 21).

But cash hasn't been left for dead just yet.

Cash still remains the top payment instrument in several markets, with cash being used the most for retail purchases at 8.7 transactions per month, debit cards right on its heels at 8.2 transactions per month and credit cards at 5.6 per month. 

Also, after checks, the most bill payments made by mail, phone or in person were made with cash at 2.2 per month.

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New CU branch saves library

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SALINAS, Calif. (10/24/14)--A new credit union branch is a welcome addition to every community, bringing access to well-priced financial services.  But allUS CU's announcement of construction of a new headquarters this week was especially welcome because it also helped preserve a local library.
 
The $35 million-asset credit union's new building will be constructed on land leased from the city of Salinas, with the first 40 years paid in advance. The $1.4 million payment will be used to fund expansion of the town's library.
 
"We feel the role of the library is critical to our community and together with the city of Salinas, led by Mayor [Joe] Gunter, the credit union will play an important role in reaching the goal of funding a new library at the El Gabilan location," allUS CU President/CEO Patrick Redo said at a press conference announcing the plan.
 
"allU.S. Credit Union believes in private and public partnership and developed the idea to prepay its lease to the city of Salinas in order to help the library system, as we feel when the community prospers, we all prosper."
 
The new building gives the credit union a new identity, Redo said. A library is synonymous with community and education, which are compatible with the credit union's mission.
 
The new credit union building will feature a community room that the library and other nonprofits will be able to use for monthly events or educational forums. Previously, it was housed on the site of a former Sizzler restaurant.
 
A groundbreaking ceremony will take place in March with an anticipated opening date of October 2015, Redo said.

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