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PCUA regulator banks agree on apps procedures

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HARRISBURG, Pa. (1/29/08)--The Pennsylvania Credit Union Association (PCUA), the state's Department of Banking, and state banking trade associations have negotiated language for an amendment that would address administrative procedures during the applications process for credit unions and banks. "Pennsylvania law has always had a 'notice and comment' process on applications and other laundry list type items" where credit unions and banks can comment during the other's applications process, said Rick Wargo, PCUA executive vice president and general counsel. During recent field of membership litigation involving the three parties, however, the parties disagreed over procedures about what proprietary documents could be made available, Wargo said. The amendment, which has not been finalized yet, would be in one of four bills designated under the state regulator's mortgage reform package. The state regulator had opened up its administrative code to solidify its powers against licensed lenders to make it easier for licensed lenders to become part of a national database. Since Thanksgiving of 2007, PCUA, the regulator and the banking trade groups have been negotiating the language so that the final amendment would be fair to all parties while still protecting proprietary information, Wargo told News Now. "The banks had wanted to beef up the notice and comment procedure and codify the scenarios where, if a party submits information to the department, the department would designate proprietary information as confidential. It also would codify procedures to request confidential documents," Wargo said. Before, it was left to the state's regulator's discretion. Late last week, PCUA, the regulator and the banking trade groups came to an agreement on possible language for the amendment. They will have informal meetings with the chair of the Senate Banking Committee to move the amendment. The mortgage reform package, Senate Bill 484, was introduced in March 2007.

CU System briefs (01/28/2008)

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* NEWPORT NEWS, Va. (1/29/08)--Members and nonmembers of Langley FCU with Hampton Roads, Va., cell phone prefixes were targeted in a text-message phishing scam attempt Friday afternoon (Daily Press Jan. 26). The scam attempted to get recipients to divulge personal financial information on a fake website. The credit union received 100 to 200 phone calls between 3:30 p.m. and 5 p.m. Friday from people who received the messages. The credit union, working with the Federal Bureau of Investigation, shut down the fraudulent site by 5 p.m. Langley emphasized to its 160,000 members to never give out personal information when asked to do so in an e-mail or text message … * WESTBROOK, Maine (1/29/09)--Credit unions were recognized for their success in raising the most funds ever for the Maine Credit Unions' Campaign for Ending Hunger during 2007. They raised more than $366,575, a 15% increase over 2006 fundraising. On hand to acknowledge the accomplishment at the January Thaw to End Hunger Celebration Event was Maine First Lady Karen Baldacci, shown with Luke Labbe, president/CEO of PeoplesChoice CU and chair of the Maine Credit Union league's Social Responsibility Committee. Baldacci assisted in distributing the checks to representatives from credit unions across the state. They will present the checks to their local area food pantries and hunger organizations. Since 1990, Maine credit unions have raised more than $2.7 million to end hunger in the state (Photo provided by the Maine Credit Union League) … * HARRISBURG, Pa. (1/29/08)--A letter to the editor of The Patriot-News (Jan. 27) from Pennsylvania Credit Union Association President/CEO Jim McCormack responds to a Jan. 13 article, "Do You Pay for Cash," and touts the CU$ selective surcharge-free alliance for credit union members. The alliance is through a joint effort between PCUA and Pennsylvania State employees CU (Life is a Highway Jan. 28) … * HARRISBURG, Pa. (1/29/08)--The Pennsylvania Credit Union Foundation awarded its 300th grant to Money Management International through CTCE FCU in Reading, Pa. (Life is a Highway Jan. 28). The grant will provide financial education and counseling to more than 600 underserved people in three Pennsylvania counties. Accepting the $6,760 check from Joe Wambach, foundation executive director, is Carolyn Tarrant, director of communications and education at Money Management International. The foundation has awarded grants valued at nearly $1.3 million since its inception in 1996. (Photo provided by the Pennsylvania Credit Union Association) … * STAFFORD SPRINGS, Conn. (1/29/08)--A Hartford, Conn., man charged in Wednesday's holdup of Workers' FCU, Stafford, served five years in prison for a similar heist at a bank in Manchester in 1998, police said (The Hartford Courant Jan. 26). In the 1998 robbery, Antwan Byrd, 32, fled the scene and led a state trooper on a car chase to Hartford before crashing the getaway car. In Wednesday's heist, a state trooper spotted the stolen getaway truck and gave chase to Hartford, where Byrd was arrested. An accomplice escaped. Byrd also has served five years in prison for two other robberies in Hartford. He was released last August … * NORTHVILLE TOWNSHIP, Mich. (1/29/08)--Dick Francis, former commissioner of the Michigan Financial Institutions Bureau, the predecessor of today's Office of Financial and Insurance Services, died Jan. 14. He was 75. Francis helped spearhead electronic banking legislation in Michigan in the 1970s, according to the Michigan Credit Union League (Michigan Monitor Jan. 28). He served as commissioner from 1973 until 1980. During his tenure, he promoted legislation on ATMs that became a model for the nation and helped lead efforts against redlining of poor and urban residents. He was also general counsel to the Michigan Life Insurance Co. Most recently he served as a consultant to Royal Oak Community CU and on the Sterling Bank board …

U.S. Centrals IDR rating affirmed Fitch adjusts outlook

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NEW YORK and LENEXA, Kan. (1/29/08)--U.S. Central FCU's long-term issuer default rating (IDR) has been affirmed at AAA, Fitch Rating announced Friday. Fitch also adjusted the "outlook" rating from stable to negative, a move that comes as no surprise in today's economy. “U.S. Central is pleased by the reaffirmation of ‘AAA’ by Fitch Ratings, especially given the severity of the dislocation of today’s fixed income markets, and the fact that a significant majority of major financial institutions in the U.S. are on watch or have already been downgraded by rating agencies," Francis Lee, U.S. Central president/CEO, told News Now. "The 'negative' outlook that accompanied the reaffirmed Fitch rating does not come as a surprise to U.S. Central, in light of the trend in market events," Lee said. Lee noted that "U.S. Central continues to be a strong, healthy institution with $2.4 billion in capital and access to significant funding sources of liquidity.” Fitch said the AAA rating reflects U.S. Central's "solid credit fundamentals, as well as its franchise strength and its important role within the credit union industry." It added that U.S. Central's balance sheet "has a low risk profile, and its funding and liquidity positions remain quite strong." It also affirmed the short-term IDR at F1+. Fitch, in adjusting the outlook, said U.S. Central has "exposure to the troubled mortgage market, particularly non-prime mortgage-backed securities." It noted that losses have been absorbed through earnings, and management has taken steps to reduce its mortgage exposure. "Aided by its strong liquidity position, should USC manage through current market pressures without incurring meaningful additional losses and continue to reduce incremental risk in the investment book, Fitch would likely revise USC's Rating Outlook to Stable," Fitch said.

Wisconsin CUs back personal data security bill

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PEWAUKEE, Wis. (1/29/08)--Wisconsin credit unions are supporting a state bill that would allow for the safekeeping personal information stored on debit and credit cards. The legislation has been introduced by State Rep. Brett Davis (R-Oregon) and State Sen. Bob Wirch (D-Pleasant Prairie). The bill would prohibit merchants from retaining personal identification numbers or security codes after processing debit or credit card transactions. If a merchant were to ignore the law and collect and keep that information, and if the information were lost, the party responsible for losing the information would be required to pay for the costs to close the consumers’ accounts and re-issue cards. The party responsible for the loss also would be required to pay for steps to prevent fraudulent use of a consumer’s personal information and cover certain costs to continue financial services to the card holder. Costs include notifying customers or crediting accounts for fraudulent transactions. “Due to recent breaches of consumers’ personal identification involving payment cards, legislators and consumers have a heightened awareness of the extremely important matter of data security,” said Brett Thompson, president/CEO of the Wisconsin Credit Union League. “We hope this common sense proposal will win bi-partisan support and be signed into law this session.” About 75% of Wisconsin consumers surveyed in a January telephone poll conducted by the league supported measures that require the party responsible for a data breach to bear restorative costs. Consumers may spend up to 60 hours to fix damage caused by a breach and fraud attempts, Thompson said. Credit unions have a more difficult time offering attractive rates on savings and loans to members when they must bear the costs related to breaches of personal information, Thompson said.

Maryland lawmakers introduce two CU-backed bills

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ANNAPOLIS (1/29/08)--The Maryland and District of Columbia Credit Union Association (MDDCCUA) has introduced two pieces of legislation in the Maryland Senate and House of Delegates involving credit union-backed municipal deposits and financial education. The first bill is SB-79, “Deposits of State and Local Government Money,” introduced by State Sen. Delores Kelly Jan. 14. State Del. Michael Vaughan is introducing the bill in the State House. The legislation would allow credit unions to accept and hold unexpected or surplus funds from local governments and allow credit unions to act as depositories for state funds (FOCUS Newsletter Jan. 28). The Maryland Bankers Association is opposing the legislation. A committee hearing for the bill is slated for Jan. 30. The second bill proposes a task force to study mandatory financial literacy education in Maryland schools. It is in the drafting process and will be introduced by State. Sen. C. Anthony Muse and State Del. Dan Stein. The proposed task force would include representatives from various community groups, educational agencies and groups, and financial institutions. MDDCCUA CEO Mike Beall and Chief Administrative Officer Jennifer Porter Gore will meet this week with legislators to discuss the bills and other credit union initiatives.

Filene addresses P2P lending in IWall Street JournalI

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NEW YORK (1/29/08)--Some comments by the Filene Research Institute, a Madison, Wis.-based research firm for the credit union industry, on peer-to-peer (P2P) lending were mentioned in the Sunday edition of The Wall Street Journal. People need to understand the P2P models being used because each model has its own nuances and differences, Mark Meyer, director of the Filene Research Institute, told the newspaper. The most distinct feature of all P2P sites is that the traditional financial institution is removed in the lending process. Because of this, overhead is reduced, which results in better rates for borrowers and lenders, the sites claim, according to the article. Zopa, which is affiliated with credit unions nationwide, requires a 640 FICO score--a proprietary credit scoring formula created and used by Fair Isaac Corporation--and a credit union membership to apply for the loan, according to the article. With Lending Club, a consumer seeking a loan needs a FICO score of 640 to apply for a loan. A borrower’s debt-to-income ratio cannot exceed 30%. Conversely, Prosper--another P2P lender--allows the market to determine which borrowers can obtain funds regardless of credit score, the article said. Virgin Money facilitates loans between friends and family members, so participants know each other, the newspaper said.

CUNA Mutuals revenue up for 2006

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MADISON, Wis. (1/29/08)--CUNA Mutual Group (CMG), which provides financial services for credit unions nationwide, has seen its revenue go up for 2006. In 2006, CMG’s revenue was $2.85 billion, up from $2.42 billion in 2003, the year before new President/CEO Jeff Post arrived, according to figures provided by the company (The Wisconsin State Journal Jan. 26). Financial results from 2007 are not yet available. Fitch Ratings, which rates the financial strength of insurance companies, gave CMG another AA- (very strong) rating for 2007. CMG has made several fundamental changes that will reap benefits in the long-term, Bruce Cox, a Fitch Ratings analyst who tracks the company, told the newspaper. Another ratings service--A.M. Best--described the company as “stable” and confirmed CMG’s A (excellent) rating, the newspaper said. CMG has become more competitive in the pricing of its insurance services, Paul Kundert, president//CEO of Madison, Wis.-based UW CU, said in the article. Post, who previously worked at Novato, Calif.-based Fireman’s Fund, told the newspaper he had two major goals when he became CEO: to improve financial performance, and to change the culture. Regarding the latter goal, he has removed barriers between company divisions and streamlined operations, although more work needs to be done, Post added. The streamlining has worked and results in a credit union dealing with just one CMG sales representative, instead of one for each product, Kim Sponem, Madison, Wis.-based Great Wisconsin CU CEO, told the newspaper. While the number of credit unions nationwide it serves has declined at a rate of about 500 per year, CMG has grown, Post told the newspaper. Citing company officials, the newspaper said that nationally CMG has a 95% share of the credit union bond market, an 88% share for casualty and property insurance coverage, 65% of the credit insurance market, and 55% of the retirement fund market. Post outlined several items on CMG’s 2008 to-do list:
* Continue to focus on a crop insurance program started last year, which generated $130 million in revenue in its first year; * Develop a program to initiate student loans and sell the first 20 years of payments to credit unions; * Offer CUNA Mutual’s 401(k) retirement plan this year to small businesses that aren’t credit unions; and * Consider a program that would provide auto loans to people who don’t qualify for conventional auto credit loans.

CUs outline IT priorities in new study

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BOSTON (1/29/08)--Credit unions are early adopters of technology and tend to be more technologically savvy than banks of similar size, according to a new research report. The report, “The Information Technology Priorities of U.S. Credit Unions,” by Aite Group, indicates that during the next year, 35% of credit unions surveyed plan to deploy business lending solutions. Other technologies to be adopted include: member analytics, 33%; online cash management solutions, 27%; core banking systems, 27%; and customer relationship management, 27%. “Credit unions’ attitudes toward technology place them at an advantage over many banks, especially community banks, which tend to be more cautious technology adapters,” said Christine Barry, report author. “In today’s environment, where technology can help to level the playing field, an aggressive technology strategy is key to survival.” The study also indicated that online account opening, online member service tools, and customer analytics are top priorities. Only 8% of credit unions surveyed said they will offer remote deposit. Aite surveyed 101 credit unions with more than $100 million in assets.

Al Franken tours US FCU talks CU issues

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ST. PAUL, Minn. (1/29/08)--Minnesota credit union representatives met with U.S. Senate candidate Al Franken Friday as he toured the St. Paul branch of US FCU with more than 20 people and took part in discussion about current credit union issues.
U.S. Senate candidate Al Franken, left, discusses the Credit Union Regulatory Improvements Act and other credit union issues with Minnesota credit union representatives, including Bob Stowell, senior vice president/chief operations officer for US FCU, at a tour of the credit union Friday. (Photo provided by the Minnesota Credit Union Network)
The group included representatives from seven credit unions, the Minnesota Credit Union Network (MnCUN), and organizations partnering with US FCU, a $735.2 million asset, Burnsville, Minn.-based credit union. The credit union’s new St. Paul branch is part of the Eastside Financial Center--a partnership among US FCU, Thrivent Financial for Lutherans, and Lutheran Social Services. The goal of the center is to serve members of the community who are not currently served by traditional banks. The center offers products and services such as cash checking, salary advance loans, and a savings development program. Franken strengthened his knowledge and understanding of credit union issues through a group discussion that followed the tour. Franken asked questions about the Credit Union Regulatory Improvements Act of 2007 (H.R. 1537), known as CURIA. Credit union representatives responded by outlining various provisions of the bill and illustrated how CURIA would allow them to better serve their members. Franken expressed his desire to learn more about credit unions. “I admire what you’re doing because its community-based, which we’ve lost in this country, and it’s allowing people to get credit for their homes and businesses,” Franken said. He said he would look “forward to working in partnership with you and helping you serve the people of your community.” Mark D. Cummins, MnCUN president/CEO, said the meeting with Franken was productive. “Our meeting allowed us to share with him the difference that credit unions make in our communities, and he seems very supportive of our mission,” Cummins said. “I am pleased that he understands the importance of credit unions to his campaign.” Franken is one of four Democratic candidates challenging freshman incumbent Sen. Norm Coleman (R-Minn.). Franken is an author, radio talk show host, comedian and 20-year writer/actor on the TV show “Saturday Night Live.”