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62 of CUs banks surveyed offer HSAs

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MINNEAPOLIS (1/24/08)--The majority of nearly 1,200 financial institutions, including credit unions, surveyed said they are offering Health Savings Accounts (HSAs) to their members/customers. Customer demand is the top reason that financial institutions are offering HSAs, according to a Wolters Kluwer Financial Services survey (PR Newswire Jan. 23). Of the survey’s respondents, most of whom were credit unions and community banks, 62% said they offer HSAs. More than one third who said they didn’t, plan to offer HSAs in the next three months. The top reason for institutions to offer HSAs was customer demand (80%). HSAs ability to give financial institutions a way to generate new accounts was second (58%). Other significant reasons were: increasing cross-selling opportunities (51%), and growing revenue (51%). About 24% of the total respondents said they had no plans to offer HSAs or were not sure, citing lack of understanding of HSAs, lack of management interest in offering HSAs, and lack of customer demand. “Banks and credit unions know HSAs present them with a significant business opportunity and additional way to better serve their customers,” said Dave Roy, vice president and general manger of banking at Wolters Kluwer Financial Services. “But it also is evident that this market is still relatively untapped, and the greatest potential lies ahead, especially as healthcare costs continue to climb, and consumers look for more effective ways to save and finance those costs.”

CU System briefs (01/23/2008)

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* (1/24/08)--Sarah Snell Cooke has been named editor-in-chief of CU Times, the newspaper announced Wednesday. Cooke joined the weekly newspaper's staff on Sept. 1, 2000, as a Washington reporter and became senior Washington reporter in October 2004. She has served as interim editor since December, when former editor/publisher Paul Gentile left for a position as president/CEO of the New Jersey Credit Union League. Tom Greve is serving in the publisher role. Before joining the Times, Cooke wrote for a weekly newspaper, Credit Union Regulatory Insider … * KALAMAZOO, Mich. (1/24/08)--Bronson Methodist Hospital's newly renovated North Pavilion and the Neonatal Intensive Care Unit will soon have a room named for the Kalamazoo Chapter of Credit Unions. The chapter donated funds the past two years from its annual charity golf outing for the project. Chapter members at a recent visit to the unit included, from left: Front row, Tammie Birdsall, First Community FCU; Cris Lytle, Kalsee CU; Lindsay Smith, Allegis CU; Amy Remmert, Citizens CU; and Carolyn Miller, Michigan Credit Union League; Back row, Jan Evenhouse, Allegis CU; Mike Bridges, Michigan league; Pat O'Connor, Consumers CU; Rudy Callen, Kalsee CU; John Sink, Allegis CU; and Ron Bigelow, Citizens CU (Photo provided by the Michigan Credit Union League) ... * PHOENIX (1/24/08)--Desert Schools FCU, based in Phoenix, has donated $300,000 to One Darn Cool School at Phoenix Children's Hospital, a $90,000 increase over last year's donation. The $3.092 billion asset credit union raised the funds in events such as change drives, a bowl-a-thon, employee barbecues and a golf tournament. The tournament raised $175,000 in a single day for the hospital (The Arizona Republic Jan. 19) … * WATERLOO, Iowa (1/24/08)--Christina Marie Anderson, 29, was sentenced Jan. 17 to probation for taking $20,500 while she was employed at Midwest Utilities CU, Waterloo. The former employee pleaded guilty to a single count of first-degree theft and was sentenced to 10 years in prison suspended to probation. According to court records, Anderson was accused of taking the amount between August 2005 and September 2006 by falsifying her daily ledger and pocketing the difference 17 times. She was arrested in August 2007. The credit union has $2.9 million in assets (Waterloo/Cedar Falls Courier Jan. 22) … * PEORIA, Ill. (1/24/08)--Adelle F. Herron, a former assistant manager at Peoria Hiway CU, pleaded guilty Friday to embezzling at least $525,000 from the credit union between 2004 and 2006. Herron, 30, admitted falsifying accounts and teller entries to make unauthorized loans, deposits, check disbursements and transfers for her own use. She also admitted destroying records to conceal the theft. Herron faces up to 30 years in prison and/or a fine of up to $1 million. Sentencing is scheduled for May 2. (YouNewsTV at Jan. 18) … * DAYTON, Ohio (1/24/08)--Two armed men robbed a branch of Wright-Patt CU shortly after noon Tuesday (Dayton Daily News Jan. 23). One man held a semiautomatic handgun on those inside the $1.2 billion asset credit union while the other jumped the counter and took cash from teller drawers, said Dayton police. They fled with an undetermined amount. No shots were fired and no one was hurt …

Brazil schools CUs teach cooperative spirit

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RIO GRANDE, Brazil (1/24/08)--A small group of U.S credit union executives participating in the World Council of Credit Unions (WOCCU)--sponsored Brazil Engagement Program this week visited a credit union and a school Wednesday.
Children at a rural Brazilian school perform a dance Wednesday that exemplifies cooperative ideals inherent in the credit union philosophy. The children performed for a small group of U.S. credit union executives, who are visiting the country this week as part of the World Council of Credit Unions' Brazilian Engagement Program. (Photo provided by World Council of Credit Unions)
At the credit union, in a rural part of the Brazilian state of Rio Grande, the group learned how Brazilian credit unions work with schools to attract students who may eventually become members of the credit union, Bill DeMare, president/CEO of Bay Gulf CU and a trip participant, told News Now. Bay Gulf CU is located in Tampa, Fla. “In the U.S., many of the schools put credit unions in the school and they are run by students,” DeMare said. “In Brazil, they are teaching the philosophy of the credit union.” The Rio Grande School focuses on ecology, culture and the arts, and the students “showed off” their garden and the crops they grew, he added. “The credit union is supporting these endeavors, so students in grades one through eight learn about the cooperative philosophy,” DeMare explained. “So then, when they are old enough to become a member, they will want to go to a credit union or a cooperative to become a member because they understand the philosophy of a cooperative. “It’s a unique way of attracting people into a credit union,” he concluded. The most impressive aspect of Wednesday’s excursion was how well-integrated the Brazilian credit union system makes the credit union in the lives of its members, said Lucy Ito, vice president of research, communication and public affairs for the California and Nevada Credit Union Leagues. Ito also is a trip participant. “The credit union system actually is forecasting what it needs to do for credit unions and the country--not just now--but 25 years from now,” Ito said. “It’s a very ambitious educational program. They are teaching citizenship, social responsibility and cooperativism. “The schools are educating kids about responsible citizenship and the cooperative spirit,” she added. Watch for further reports this week from News Now on the Brazil Engagement Program.

Missouri regulator OKs first FOM app under new law

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JEFFERSON CITY, Mo. (1/24/08)--The Missouri Division of Credit Unions has approved its first field-of-membership (FOM) expansion application since the state General Assembly passed a new FOM bill in 2007. The regulator approved an application Jan. 18 for Alliance CU in Fenton. The approval will allow the credit union to serve individuals who live or work in Jefferson County (CourierNet Jan. 23). Alliance’s application comes after the state passed a credit union FOM bill in August to allow state-chartered credit unions to expand geographically. “The Missouri Division of Credit Unions quickly and efficiently developed the necessary procedures to implement the new law,” said Rosie Holub, Missouri Credit Union Association president/CEO. “The statute clarified procedural requirements and we applaud the division’s diligence in developing procedures that take unnecessary burden off credit unions. Missouri credit unions can now get back to the business of serving members and reaching out to provide credit union service to the state’s consumers,” Holub added. Jefferson County is underserved by credit unions, according to Alliance President/CEO Dennis Sommer. “We can now move forward with our expansion plans, reaching out to potential members located in northern Jefferson County near our Fenton headquarters,” he said. The FOM bill is necessary to prevent state-chartered credit unions from converting to federal charters, said bill sponsor State Sen. Delbert Scott (R) during a hearing April 11. He estimated that the state would lose hundreds of thousands of dollars if state-chartered credit unions converted to a federal charter (News Now April 17).

Michigan league praises state action on foreclosures

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LANSING, Mich. (1/24/08)--Michigan Credit Union League President/CEO David Adams praised Michigan’s governor for publishing a document to help consumers avoid foreclosures. Adams wrote a letter to Gov. Jennifer Granholm pledging credit unions’ support, and also expressed a desire to find ways for credit unions and other depository institutions to become more active in programs implemented by state government (Michigan Monitor Jan. 22). Granholm and her administration published a document that explains eight ways to help consumers during the mortgage crisis. “The Michigan Protocol to Assist Homeowners Facing Potential Foreclosure” was issued after the governor and members of her administration met with some of the nation’s leading mortgage servicers “The Granholm administration has worked with urgency to find innovative ways to help homeowners facing possible foreclosure,” Adams said. “Most of the measures laid out in this protocol are a large part of the credit union mission, but we urge credit unions leaders to take a serious look at them to see how they fit into their own practices.”

Calif. league letter on T-report defends tax status

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RANCHO CUCAMONGA, Calif. (1/24/08)--California Credit Union League President/CEO Bill Cheney defended credit unions' tax-exempt status in a letter to the editor of a California business publication. The letter responded to an article about a recent U.S. Department of Treasury report on corporate tax reform. Cheney's letter appeared in the Jan. 18 issue of Silicon Valley/San Jose Business Journal and referred to a Jan. 11 article, "Credit union leaders' patience taxed by report recommendation." Credit unions "continue to seek clarification of statements from a recent U.S. Department of Treasury report on corporate tax reform about our well-deserved exemption from federal income taxes," Cheney wrote. The department "is right to require that a tax exemption granted to any organization or industry is good public policy and has value for consumers," Cheney said. "It is wrong to look to credit unions as an income stream, and Treasury should pay less attention to the hollow complaints from the banking industry about unfair competition." He outlined the history of the tax-exemption in Congress, starting with the decision in 1937 to exempt credit unions "because of our unique structure and role in the financial services industry." Congress confirmed the exemption in 1951 and 1998, he said, adding that every President in modern times has supported it. "Credit unions were created to 'promote thrift and provide loans for provident purposes,' and despite statements to the contrary by the banking industry, credit unions continue to provide these essential services to working Americans even as we evolve to meet growing consumer financial services needs," Cheney wrote. "The banking industry refuses to recognize that the credit union tax exemption is based on structure--not size," he said. "Their argument otherwise is laughable in the face of record-breaking banking industry growth year after year, and as more than 2,300 banks now operate under Subchapter S of the IRS Code and thus do not pay corporate taxes--a fact Treasury overlooked," he said. Credit unions provide healthy competition and encourage other financial institutions to work harder to keep customers satisfied. Otherwise, "banks could charge higher fees, pay lower interest on savings and increase loan rates," Cheney said. He cited the Credit Union National Association's studies indicating bank customers nationally save more than $4 billion annually because of credit union competition that forces banks to keep rates competitive. "That's good news for consumers, communities and businesses alike," he added. He also discussed the differences in how banks and credit unions generate capital. "Nothing stops banks from adopting the credit union model, yet not one bank ever has," Cheney said. "Maybe it's because bank directors are paid while credit union board members serve as volunteers.

CUNA Boards Streifel testifies for data breach bill

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FEDERAL WAY, Wash (1/24/08)--Credit Union National Association (CUNA) Board member Susan Streifel testified Tuesday for Washington state legislation that would make the costs associated with data breaches like the massive TJX Cos. breach the responsibility of the data breacher. Streifel is president/CEO of Woodstone CU, Federal Way. She told Washington state House and Senate committees that the credit union incurs significant costs to protect its members as a result of data breaches, even when there is no actual fraud. “Taking these aggressive steps to protect our members comes at a cost,” said Streifel. “If someone’s careless actions result in a financial loss, they should have to pay for it.” The hard cost of reissuing a plastic card is estimated at about $20; however, the cost of reissuance, member/customer care and maintenance, including soft costs, is estimated to be up to $100 and $180 per account. Two bills, SB 6425 and HB 2838, were introduced Jan. 8, during the opening days of the 2008 state legislative session. They are sponsored by Rep. Brendan Williams (D-22) in the House and Sen. Rosa Franklin (D-29) in the Senate. Written by the Washington Credit Union League (WCUL), the proposed legislation requires negligent data breachers to reimburse card-issuing financial institutions for costs associated with protecting their members or customers after a data breach. The bill would also deter financial fraud and identity theft in three ways:
* By requiring businesses accepting plastic cards to encrypt or dispose of sensitive consumer data promptly; * By making businesses that store sensitive consumer data but fail to meet basic security standards responsible for the costs of consumer notification and card replacement; and * By establishing a safe harbor for businesses that meet basic security standards.
“The league was delighted to have someone as passionate as Susan testify on behalf of this bill,” says WCUL President/CEO John Annaloro. “As a point of sound public policy, this proposed legislation provides a powerful financial incentive for data custodians to live up to generally accepted security standards.” SB 6425 and HB 2838 encourage all financial institutions to take steps to quickly re-issue compromised cards and monitor accounts, helping protect consumers from financial fraud and identity theft before then can occur. Washington state has enacted several statutes the past five years that help consumers protect themselves from identity theft and financial fraud. In 2005 the state legislature was one of the first to require data breachers to notify those affected by the breach. In 2007, the state passed credit freeze legislation allowing consumers to lock down their credit reports. Both bills were supported by WCUL. Bills similar to SB 6425 and HB 2838 were introduced in Minnesota, Massachusetts, Texas and California in 2007. However, the Minnesota bill was the only one enacted into law. Stacy Augustine, WCUL senior vice president and general counsel says that despite the uphill battle, the Data Breach Reimbursement Bill is showing promise of advancing in both the House and Senate. “We have some work to do as we move towards a compromise bill that will be accepted by all stakeholders,” says Augustine. “Nobody likes the idea of more liability, so we’ll do the best we can to make the bill as palatable as possible for retailers and small business. In the end though, we’re simply not going to agree on who should bear the burden for this type of negligence.” At least one more hearing in each house will need to take place before either bill makes it through the legislative process.

Nations oldest CU celebrates 100 years

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MANCHESTER, N.H. (1/24/08)--The nation’s oldest credit union will celebrate 100 years of operations in 2008. St. Mary’s Bank, a $615 million asset, Manchester-based institution, will unveil a new television ad that honors the credit union’s first century as a long-standing member of Manchester and New Hampshire. The new ad, which will feature people and images of the city, will premiere during Sunday’s television broadcast of “Extreme Makeover: Home Edition,” which was filmed in Manchester late last year. “We’re proud and excited to have our 100th anniversary ad air for the first time during a program featuring the city of Manchester,” said Ronald J. Rioux, St. Mary’s Bank president/CEO. “This really is the kickoff of our 100th birthday party.” When St. Mary’s opened it doors in 1908, it became the first credit union in the nation. The credit union’s purpose was to provide banking services to Manchester’s growing working-class populations. Today, St. Mary’s bank is still a member-owned, not-for-profit credit union dedicated to helping New Hampshire’s families and businesses. The credit union will host public events to commemorate the milestone throughout 2008, Rioux said.

Filenes Blueprints for Innovators released

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MADISON, Wis. (1/24/08)--The Filene Research Institute has released its latest edition of Key Findings: Blueprints for Innovation, which summarizes seven innovations that credit unions can use to help members simplify their finances and overcome financial obstacles. The edition, written by Denise R. Gabel, Filene chief innovation officer, presents ideas on: providing members with stress-free financial experiences, addressing credit union competition, using technology and media to deliver services to members, and allowing adaptation by individual credit unions or communities. The seven innovations, introduced by Filene’s Ideas, Innovation and Implementation (i3), include:
* Auto Savings, which outlines a new set of products to make saving easy and attractive by bundling consumption and savings. * The Savings Revolution, which takes saving one step further by tapping into the power of support, with support groups. This socially driven innovation uses reality television, online interaction and individual planning to help members reduce debt, increase savings, and get control of their financial lives. * Virtual Finance, which addresses the changes in ways generations interact with their financial institutions. It aims to provide young Internet users with financial education and information about credit unions. * LOT$A MOT$A, an interactive money laboratory intended to help make learning about finances fun for children. Its classes and exercises can help children develop money-management skills and stress the importance of developing a relationship with a credit union. * Women: A Strategy for Success, which aims to help women credit union members simplify their financial lives. * Community Impact Center, a centralized resource to help credit unions approach community economic development in underserved markets to create jobs, provide affordable housing, elevate the quality of medical care, and enhance educational opportunities. This innovation navigates the process of establishing the necessary legal entities; identifies funding sources; writes grant proposals; and accesses community impact consulting, foundation services, and public relations assistance. * Auto Resource Center, which helps members make auto purchases and manage vehicle-related tasks over the entire life of their auto with a set of Web-based tools.
For each innovation, the report provides marketplace opportunities; solutions credit unions can provide; target markets; marketing tactics; operational and other considerations; proof of concept; reports on the status of each; pilot tests; and how to get started.