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CUs incentive plan helps Vermont immigrants save

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BURLINGTON, Vt. (1/27/09)--A Vermont credit union is helping recent immigrants learn to save with an incentive--with free movie tickets. Opportunities CU, a $27.4 million asset credit union in Burlington, Vt., says that everyone is feeling the negative effects of the economy but recent immigrants are especially vulnerable, reported WCAX-TV News (Jan. 24). The station interviewed three teens, new to this country, who opened their first savings accounts at the credit union. They brought their instructor, who teaches English as a Second Language at a local high school, to assist in the paper work. They plan to save for college while learning English. Members who make a savings deposit each month of any amount--be it one dollar or $10-- will get two movie tickets to a local theatre every three months, Jeremy Brown of the credit union told the station. The credit union serves low-wealth individuals.

Citadel FCU offers reward against arson spree

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HARRISBURG, Pa. (1/27/09)--A Thorndale, Pa., credit union is contributing to a reward fund set up for the town of Coatesville, which has experienced 15 fires caused by arson since the year began. Citadel FCU, Thorndale contributed $1,000 to the Coatesville Reward Fund, as a reward to anyone offering information that leads to the arrest of those responsible. The credit union has also set up an account for additional contributions. The latest fire, last weekend , destroyed 15 row homes in Coatesville, Pa., leaving dozens of families homeless and City Council declaring a state of emergency, according to the Pennsylvania Credit Union Association (Life is a Highway Jan. 26). "Many members of our credit union have been affected by both the physical destruction of these meaningless fires, as well as the continuing fear that they have caused," said Jeff March, president/CEO of the $1.086 billion asset credit union. "Firefighters are exhausted, neighborhoods are constantly on watch, and there is a mounting frustration that is hitting us all," he told PCUA. He encouraged local businesses and citizens to "lend a hand during this time of need."

Maryland fin lit ed task force to make its case today

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COLUMBIA, Md. (1/27/09)--Members of the Maryland Governor's Task Force on Financial Literacy today will petition the Maryland State Board of Education in Baltimore to require all public schools in the state to include financial literacy education in their K-12 curriculum. Credit unions have two representatives on the task force: Bert Hash, president/CEO of MECU, Baltimore, and Thom Beck, president/CEO of Montgomery County Teachers FCU, Rockville. Hash is also a board member with the Maryland and District of Columbia Credit Union Association (MDDCCUA) (FOCUS Newsletter Jan. 26). The task force will make a presentation to the board today and ask for additional teacher training as well as a means of assessing the effectiveness of the delivery of financial literacy content in schools, said MDDCCUA. The task force plans to ask the board to act on the request before the end of the school year. Most school systems in the state give students the option to choose financial literacy as an elective. Of those, about 2% to 10% of students select that option. At least 90% of graduating students in those systems have little or no exposure to financial literacy programs, said MDDCCUA.

IN.Y. TimesI advertorial features CUs CUNA

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NEW YORK (1/27/09)--Over the past decade on average, credit unions have charged about 1% less on loans than have banks and paid out on average 1% more in interest on certificates, Dan Mica, president/CEO of the Credit Union National Association, said in a three-page advertorial published Monday in The New York Times. The reason, he added, is that credit unions are not about boosting share values for stockholders and paying them dividends, but about serving members. "We talk about the 'credit union movement.' There is a philosophy behind what credit unions do. We are about helping people," Mica said. Nationally, about 8,000 credit unions serve 90 million members. "We are Main Street, not Wall Street. Credit unions are financial services' best-kept secret," Mica told the Times. The advertorial, "Rock-solid credit unions hunt for more borrowers," hit home the point that credit unions don't make risky loans and have plenty of money to lend and that they do make mortgage loans. Richard Maxstadt, chief operations officer of CUC Mortgage, an affiliate of the Credit Union Association of New York, pointed out that the prevailing credit union approach is to lend on the basis of personal knowledge of the borrower. As a rule, credit unions are conservative in their lending, Maxstadt said. "Our loans tend to be plain vanilla, primarily 20- and 30-year fixed rate. Too many consumers forget that credit unions do make mortgages," he said adding credit unions offer some of the best rates around. Stan Hollen, CEO of CO-OP Financial Services, based in Rancho Cucamonga, Calif., noted that its network "underlines the cooperative nature of credit unions. It is the biggest ATM network in the country--no bank has anywhere near our number of locations--and for our individual members, there are no fees." "Big banks like to talk about their convenience, but when you look into it, credit unions offer a lot more convenience than any bank does," Hollen said. He noted the cooperative nature of the industry means there's a relative lack of competition between particular credit unions. "Often they work together to benefit everybody." Bob Siravo, CEO of WesCorp FCU, San Dimas, Calif., in discussing services, noted credit unions are pushing into new territory with many looking at how to provide service over cell phones. Credit unions are poised for a hugely successful run amidst the turmoil in financial services in 2009 because consumers are fleeing to safety and looking at credit unions, said Jeff Russell, vice president, The Members Group, based in Des Moines, Iowa. CUNA Mutual Group Vice President Jim Buchheim agrees that in difficult times, people turn to who they trust--"and for many Americans, that will mean credit unions." The full page advertorials was surrounded by paid ads from CO-OP Financial Services, CUC Mortgage Corp., CUNA Mutual Group, WesCorp, and four credit unions.

Deadline for Wegner dinner extended through Friday

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WASHINGTON (1/27/09)--Credit union leaders and supporters have until Friday to register for the 21st Annual Herb Wegner Memorial Awards Dinner, presented by the National Credit Union Foundation (NCUF) Feb. 23 during the Credit Union National Association’s 2009 Governmental Affairs Conference (GAC). The ceremony will present four of the credit union movement’s highest national honors:
* Lifetime Achievement Award: Bill Sterner, late president/CEO, Elevations CU, Boulder, Colo. Sterner traveled internationally to help credit unions learn to serve the underserved; * Individual Achievement Award: Rita Haynes, treasurer and manager of Faith Community United CU, Cleveland. Haynes assisted members who have filed for bankruptcy; * Individual Achievement Award: Tom Sargent, president/CEO, First Tech CU, Beaverton, Ore. Sargent’s leadership on the Credit Unions for Kids campaign helped credit unions gain visibility worth hundreds of millions of dollars in paid advertising; and * Outstanding Organization Award: Montana Credit Unions for Community Development in Billings, Mont. The five-year-old organization already has helped more than 50,000 people avoid predatory loans, keep more of their earned income, and open their first savings accounts.
NCUF Awards and Recognition Chairman Bob Schumacher, CEO of MountainCrest CU, Arlington, Wash., will be Master of Ceremonies at the event. Seats can be reserved online through the NCUF website. Use the resource link.

Washington state CUs introduce data breach bill

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FEDERAL WAY, Wash. (1/27/09)--In the wake of the Heartland Payment Systems data breach announced last week, Washington state's credit unions once again have introduced legislation to encourage financial institutions to take "extraordinary proactive steps" to protect consumers from identity theft and financial fraud after a breach.
Click to view larger image Washington State Rep. Brendan Williams, the prime sponsor of the Washington Credit Union League's data breach bill HB 1149, introduces the proposed legislation to the state House Financial Institutions and Insurance Committee. (Photo provided by the Washington Credit Union League
Receiving its first hearing before the Full House Financial Institutions and Insurance Committee hearing Thursday, HB 1149 is sponsored by State Reps. Brendan Williams (D-22), Dan Raoch (R-31), Geoff Simpson (D-47), Steve Kirby (D-29), Hans Dunshee (D-44), Sharon Nelson (D-34) and Timm Ormsby (D-33). Like a similar proposal last year, the bill would allow credit unions and other financial institutions to sue negligent data breachers for the cost of aggressively protecting Washingtonians' personal and private information. Some of the state's financial institutions have reported that more than half their card base is affected by the breach of Princeton, N.J.-based Heartland Payment Systems, a company that completes about 100 million transactions per month for more than 250,000 merchants. According to the Washington Credit Union League, most credit union leaders believe that the breach's effect during the initial days is just the tip of the iceberg, and they've begun to notify members, block accounts, reissue cards and numbers, and provide ongoing fraud monitoring--standard operating procedures after a breach. "The state's credit union community is appalled, but unfortunately not very shocked by the immense size of the Heartland data breach," said league President/CEO John Annaloro. "In far too many cases, negligent data breachers do business as if they were immunized from liability when they fail to protect their customers' personal information. In our view, if someone's careless actions result in a financial loss to others, they should have to pay it." Taking aggressive steps to protect members from financial fraud and identity theft is becoming cost prohibitive, the league said, because the frequency and size of data breaches is skyrocketing. A financial institution pays roughly $20 per card, depending on the extent of the action taken. The total doesn't include costs associated with staff time, which can be as much as 30 minutes per card, or the negative impact a breach has on a financial institution's reputation. "While there are processes that are supposed to provide some reimbursement for fraud losses, the truth is that these processes only recoup pennies on the dollar," said Stacy Augustine, league senior vice president in charge of government relations. "More important, the costs that are recouped don't pay anything toward costs associated with a financial institution's proactive steps to protect consumers from fraud and identity theft," she said. Rep. Williams, the bill's prime sponsor, stated in a letter to colleagues last year that financial institutions--as opposed to negligent actors who breach their customers' security--end up footing the bill after a data breach is reported. He noted there should be some sanction for gross negligence that compromises credit and debit card information. Last year's bill died when it didn't come out of committee. It was opposed by a number of industries, including the Washington Bankers Association and the Community Bankers Association of Washington. "Credit unions hope that our for-profit banker counterparts will take a pro-consumer position on this new legislation," said Annaloro. "I have no doubt that had this consumer protection legislation made it to a vote on the floor of the Senate, the state's financial institutions would be aggressively and proactively protecting all of our state's consumers from financial fraud and identity theft in the wake of the Heartland data breach."

N.Y. CUs A lifeline for mom and pop businesses

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NEW YORK (1/27/09)--Four New York City credit unions are participating in Affordable Loans for Immigrants, which offers business loans to immigrants who live or work in the city, while big banks are cutting loans to “mom and pop” businesses because of the financial crisis. The program makes business loans, ranging from $500 to $500,000, available to immigrants in the city’s five boroughs (New York Daily News Jan. 25). Brooklyn (N.Y.) Cooperative FCU approved a $15,000 loan for emergency repairs so Esmeralda Valencia could reopen Esmeralda’s Restaurant. The $7.4 million asset credit union approved the loan in three days after the restaurant’s exhaust fan broke. Other New York City credit unions participating in the program include: the $22.6 million asset Lower East Side Peoples FCU, the $8.2 million asset Union Settlement FCU, and the $7.5 million asset Neighborhood Trust FCU. While some immigrants fear going to banks because they don’t have Social Security numbers, the credit union will work with them if they qualify for loans and obtain Individual Taxpayer Identification Numbers, the newspaper said. The credit unions have money to lend. Most of the money Lower East Side People’s lends belongs to members, Linda Levy, credit union CEO, told the paper.

Minn. foundation gives 155000 to kids hospital

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ST. PAUL, Minn. (1/27/09)--Minnesota Credit Union Foundation representatives presented Gillette Children’s Specialty Healthcare a check for more than $155,000 Jan. 20.
Representatives from the Minnesota Credit Union Foundation present a check to Gillette Children’s Specialty Healthcare for more than $155,000. From left, are: Marty Kelly and Katie Grindeland, CU4Kids co-chairs; Nick Nelson, patient at Gillette Children’s Hospital; Kristi Mukomela, chair of the Minnesota Credit Union Foundation; and Mark D. Cummins, president of the Minnesota Credit Union Foundation. (Photo provided by the Minnesota Credit Union Foundation)
The money was raised in 2008 by the Minnesota Credit Union for Kids (MnCU4Kids) committee, which is a subcommittee of the Minnesota Credit Union Foundation. In 2008, MnCU4Kids worked with credit unions statewide to raise money for Gillette, Minnesota’s Children’s Miracle Network-affiliated hospital. The volunteer committee coordinated large- and small-scale fundraisers including: a summer golf tournament, Bowl-O-Rama, Chain of Hearts, and an interactive basketball contest involving bungee cords. Individual credit unions also coordinated their own fundraisers such as cookouts, candy bar and popcorn sales, and casual days. “Through the cooperative efforts of the Credit Union for Kids committee and credit unions across the state, the committee surpassed its fundraising goal and donated more than $155,000 to the hospital,” said Kristi Mukomela, chair of the foundation. “Minnesota credit unions’ active support of the Children’s Miracle Network demonstrates their commitment to helping people in the communities they serve.” MnCU4Kids also received support from several local and national companies that work with credit unions, including CO-OP Financial Services. CO-OP Financial Services matched $20,000 in funds raised at the committee’s golf tournament and its basketball fundraiser held at the Minnesota Credit Union Network’s annual meeting. Supporting MnCU4Kids in 2008 was one part of CO-OP Financial Services’ broader efforts. It also donated $1 million to Children’s Miracle Network hospitals through its Miracle Match program. All money raised through the MnCU4Kids program supports Gillette Children’s Specialty Healthcare, which helps children with disabilities and chronic conditions. Gillette is based in St. Paul, with clinics located statewide. Credit Unions for Kids is a national program, and is endorsed by nearly all 50 state credit union leagues.

S. Korean CUs collaborate on IT to expand growth

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MADISON, Wis. (1/27/09)--South Korea's 994 credit unions began using a single, centralized information technology (IT) system at year-end 2008 to serve their combined five million members.
Participants in World Council of Credit Union’s (WOCCU) December visit to South Korea included, from left, CUNA Mutual Group’s Paul Treinen, National Credit Union Federation of Korea Training Center Director Kwangtaek Choi, WOCCU’s Dave Grace and Motorola Employees CU Kris Kim.
The unified approach to technology, a daunting proposition for many credit union movements, is the latest step in a collaborative approach that characterizes South Korea's credit unions, says the World Council of Credit Unions (WOCCU). “Credit unions have grown on the basis of co-existence, faith, honesty and trust for nearly half a century,” said Oh-man Kwon, president and chairman of the National Credit Union Federation of Korea (NACUFOK), the country's credit union trade association and central liquidity facility that houses the IT system. “We have made ceaseless efforts to improve the social and economic status of common people and Korea's middle class since the movement began in 1960.” The first credit unions migrated to the new IT system in early December during a visit from Dave Grace, WOCCU vice president of association services, and Kris Kim, vice president and controller for Motorola Employees CU (MECU), Schaumberg, Ill. Shared technology is just the latest collaborative effort that has helped South Korea's credit union movement grow, said Grace. “Credit unions in many countries are looking for ways to centralize operations and gain national brand recognition common within the banking industry without sacrificing local ownership and the member service touch,” Grace said. “South Korea has done that and is serving its members with great success.”
Common signage and bright colors identify South Korean credit union branches. (Photos provided by World Council of Credit Unions)
The most visible byproduct of the credit unions’ efforts is a unified marketing program that positions the cooperatives under one common brand. South Korean credit unions still operate as individual, member-driven financial cooperatives, but their position in the markets they serve rival those of the largest banks. With common signage and similar products and services, the credit unions maintain a distinct member-service approach. Credit union collaboration helps the institutions to capture greater market share without sacrificing their traditional “personal touch,” Grace said. South Korea's credit union movement, which will celebrate its 50th anniversary in 2010, has grown to serve 13.5% of the country's population. The country ranks third in size of membership (five million), after the U.S. (90 million members) and Canada (10.9 million members), according to WOCCU's 2007 Statistical Report. The growth can be credited both to the nature of the South Korean family and the credit union movement's collaborative efforts, Kim said. “Koreans are very family-oriented,” said Kim, who was born in South Korea in 1959 and emigrated to the U.S. in 1972. “If the father joins the credit union, chances are the entire clan will follow suit. Once they're members, Koreans are not likely to change institutions.” South Korean credit unions have followed a similar unified approach in their development, which will give the movement strength and reach that otherwise would not be available. Kim added that credit union strength will only increase now that all institutions operate from the same centralized IT location. "Each individual credit union operates almost like a service center that's part of the larger credit union system,” Kim explained. “The movement has gained tremendous operational and strategic efficiency through continued collaboration. U.S. credit unions may be too individualistic to ever cooperate at such a high level, but I think there are components we could adopt from the Korean model.”

CU System briefs (01/26/2009)

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* HARRISBURG, Pa. (1/27/09)--A former CEO of the now-defunct Greater Harrisburg (Pa.) Community CU was sentenced Friday to five months in federal prison and five months' house arrest. Carl Payne, 67, who also was CEO of the Harrisburg Housing Authority until his indictment in 2007, pleaded guilty to making false statements to the U.S. Department of Housing and Urban Development with intent to defraud and conspiracy to make the false statements. He also was ordered to pay a $10,000 fine plus $50 in fees. U.S. Middle District Court Judge John E. Jones III noted that this was the only blot on Payne's 35-year career of helping low-income people (Life is a Highway Jan. 26 and Jan. 23) ... * MONTPELIER, Vt. (1/27/09)--NorthCountry FCU, South Burlington, Vt., and Vermont FCU, Burlington, are the first Vermont institutions to join the CO-OP Network's national shared-service center program (Newslines Express Jan. 23). "This is a landmark event in Vermont's financial services industry," said Association of Vermont Credit Unions President Joe Bergeron. He added, "You won't find this cooperative spirit and collaboration anywhere else in the financial services industry." The two credit unions already have begun processing shared-branch transactions on a limited basis, with full service expected in the upcoming weeks. Pictured are Vermont FCU President/CEO Bernard Isabelle, left, and NorthCountry FCU President/CEO John Benoit. (Photo provided by the Association of Vermont Credit Unions) ... * WICHITA, Kan. (1/27/09)--Boeing Wichita CU will change its name to Meritrust CU, effective Feb. 1. The credit union had considered changing its name since 1994, when it first opened membership to non-Boeing employees. When Boeing sold its commercial division and became Spirit AeroSystems, people were confused. To combat that confusion, the credit union became known as BWCU. The change to Meritrust was announced earlier this year, but the credit union decided to take advantage of a tie-in with media attention surrounding this weekend's Super Bowl, President/CEO Bob Corwin told The Wichita Eagle (Jan. 25). The $587.5 billion asset, Wichita-based credit union started as Stearman Employees CU in 1936 Jan. 25) ... * LUTHERVILLE, Md.(1/27/09)--First Financial of Maryland FCU plans to open its third student-run high school branch, this time at Eastern Technical High School in Baltimore County, said the Maryland and District of Columbia Credit Union Association. The Maverick Branch, named for the school's mascot, will open at the start of the 2009-2010 school year. The school recently was deemed a Silver Medal School by U.S. News & World Report in an article, "America's Best High Schools." The student run branches operate in an off-line environment with final processing of transactions taking place at the main office of the credit union. The credit union's other student-run branches are in Dundalk High School and Lansdowne High School (FOCUS Newsletter Jan. 26) ...