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State regulators warn against scams tied to economy

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OLYMPIA, Wash., and COLUMBUS, Ohio (1/31/08)--Investors should be wary of economic scams promising high returns with little-to-no risk, the Washington State Department of Financial Institutions (DFI) and the Ohio Department of Commerce’s Division of Securities warned this week. Many investment scammers use negative economic news to coerce investors into high-risk investments, according to DFI Director Scott Jarvis. “Investment scam perpetrators stay current on economic news in order to seem more legitimate and believable to their victims,” Jarvis said. “These predators use investor fears to promote illegitimate schemes with promises of high return with little-to-no risk that often leave investors holding nothing but empty wallets.” Kimberly Zurz, Ohio Department of Commerce director, agreed. “A get-rich quick promise is a common sign of investment fraud,” she said. Both departments supervise state-chartered credit unions. Investment scheme perpetrators who promise high returns especially target those nearing retirement. “We’re concerned that in trying to build a more comfortable cushion for retirement, entire retirement savings built over a lifetime of working could be cleaned out,” Jarvis said. “Hasty decision making could potentially stamp out any chance of retirement for some consumers, or financially ruin a retiree.” Investors should hang up on aggressive cold callers and delete unsolicited e-mails promoting investment opportunities. Legitimate financial professionals generally do not recommend changes to investment portfolios based on short-term economic news, said Brian Misencik, acting securities commissioner at the Ohio Department of Commerce. “Investors should view with great skepticism any recommendation to liquidate a well-structured, well-diversified investment portfolio to purchase an alternative investment product that may expose them to high commissions, high fees and undue risk,” he said. Zurz also warned against high-pressure sales tactics for unregistered securities and non-traditional investments such as foreign currency, oil and gas investments, or offers to send money offshore to “safe havens.” Both the Washington DFI and the Ohio Department of Commerce encouraged investors to contact their DFI’s securities division or the Division Investor Protection hotline to make sure that the investment and seller are licensed and registered, and to see if any enforcement actions have been taken against the seller.

Regulator praises Washington CUs flood efforts

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FEDERAL WAY, Wash. (1/31/08)--The Washington State Department of Financial Institutions (DFI) issued a letter Monday commending the credit union industry for the assistance it is providing to those affected by the severe flooding in December storms in Western Washington. DFI is the state credit union regulator. The examples of local credit unions working with borrowers who are experiencing difficulty confirms that the state’s not-for-profit financial institutions are meeting the critical financial needs of their members and their communities, said DFI Director Scott Jarvis. “The individual outreach and community assistance provided by Washington credit unions in the wake of December flooding is a testament to our commitment to service,” said Washington Credit Union League President John Annaloro. Linda Jekel, state Divisions of Credit Unions director, Tuesday touted credit unions’ post-flooding recovery efforts in testimony to members of the state Senate Financial Institutions and Insurance Committee. Each affected credit union implemented its disaster recovery and business resumption plans and provided help to citizens and communities, she said. “Credit unions provided this help both on the personal service level and on a personal community level,” Jekel said. “We found that credit unions and their employees, who were themselves troubled with floods, were able to provide services.” Jekel also mentioned examples of credit union efforts, including providing unsecured signature loans, allowing some members to reduce or skip scheduled payments, and offering needed home improvement funds to repair flood damaged property.

CUs gear up to help consumers with taxes

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MADISON, Wis. (1/31/08)--With tax season underway, credit unions are helping members and low-income individuals prepare their returns. Texas Gov. Rick Perry has proclaimed today as EITC (Earned Income Tax Credit) Awareness Day (LoneStar Leaguer Jan. 30). “The EITC can be a first step toward financial stability, enabling working families to save for college, develop a small business, or put a down payment on a home,” he said. “Many eligible Texans do not claim almost $1 billion each year in EITC funds due to limited community awareness and lack of access to free tax preparation sites.” Pacific Service CU, Fresno, Calif., is partnering with the United Way of Fresno County to offer free tax preparation assistance for individuals with low-to-moderate incomes. The Fresno branch of the credit union will host United Way volunteers to work with individuals on their returns and applying for EITC. Volunteers will work Saturdays at the credit union from Feb. 2 to April 12. “Working with the United Way will help low-income individuals navigate through the process and they won’t have to pay the fees associated with commercial tax preparers,” said Steve Punch, Pacific Service CU president. AmeriChoice FCU, Mechanicsburg, Pa., also is helping low-income individuals with its “Money in Your Pocket Campaign,” which offers free tax assistance to low-income families. The program, sponsored by the credit union and the Community Action Commission, starts Friday and will end April 11. Participants can have their electronic returns prepared at no cost by United Way and Community Action Commission volunteers (Life is a Highway Jan. 29). Wisconsin credit unions are offering free tax preparation for individuals with low-incomes, the disabled, the elderly, and those with limited English proficiency, according to the Wisconsin Credit Union League. Credit union volunteers will assist individuals at free tax preparation sites around the state that are operated with the Internal Revenue Service, the American Association of Retired Persons (AARP) and the Wisconsin Department of Revenue. Michigan credit unions launched the 2008 Just File It! program. More than $700,000 in tax credits and refunds have been provided to Michigan residents through 140 participating credit unions. The program is available through online software that many credit unions, including United Educational CU, Battle Creek, Mich., have linked to their websites (Michigan Monitor Jan. 28). The Maryland and District of Columbia Credit Union Association announced two fax fairs for those who cannot afford tax services. U.S. Rep. Eleanor Holmes Norton (D) will host her eighth annual Tax and Information Fair Feb. 9, and the Baltimore CASH Campaign Money Power Day 2008 is scheduled for Feb. 16. The Baltimore event provides consumers with money management workshops, credit counseling and free tax preparation, according to the association (Focus Jan. 28).

League CU Resources team up to cut CUs energy costs

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FARMERS BRANCH, Texas (1/31/08)--CU Resources, a wholly owned subsidiary of the Texas Credit Union League (TCUL), has partnered with Affiliated Power Purchasers International (APPI) to reduce member credit unions’ energy costs through consulting services. Energy prices have increased annually at 15% for the past 12 years, according to the TCUL. Based on the current market, Texas credit unions should consider fixed-price supply contracts with terms of two-to-five years, the league advised (LoneStar Leaguer Jan. 30). The contracts reduce risks of price volatility, price increases and seasonal changes, with significant savings, the AAPI said. Since the mid-1990s, energy prices have been volatile. Wholesale and retail energy prices change throughout the day as energy commodity contracts are traded on national energy exchanges, the league said.

CEO testifies for Colorado financial literacy bill

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ARVADA, Colo. (1/31/08)--The CEO of Denver Community CU testified Monday before the Colorado State House Education Committee in support of legislation promoting financial literacy in elementary and secondary schools.
Carla Hedrick, CEO of Denver Community CU, speaks to the Colorado State House Education Committee in support of legislation promoting financial literacy in elementary and secondary schools. (Photos provided by the Credit Union Association of Colorado)
House Bill 08-1168 is sponsored by Reps. Rosemary Marshall (D-Denver) and Ken Summers (R-Jefferson), and Sens. Chris Romer (D-Denver) and Josh Penry (R-Mesa). The bill underscores the value of including financial literacy in the curriculum of the state and state board of education, and challenges school districts to add financial literacy standards to the state's mathematics content standards. It pioneers financial literacy standards as an integral part of the state's assessment in math under the Colorado student assessment program, according to the Credit Union Association of Colorado (CUAC). According to Timothy Dore, senior vice president for government affairs at CUAC, "This legislation gets to the heart of the issue and sends a message that financial literacy begins in childhood and continues throughout a person's life all the way to retirement and beyond." He added that the legislation is "an important step to ensuring all children develop and strengthen their financial literacy skills." In her testimony on behalf of CUAC and credit unions, Hedrick said she has heard many people say their parents never taught them about finances and money. Kids are excited to receive tools and knowledge they haven't been exposed to before and can take home to their parents, she said, adding kids become the teachers and share the information.
Representing credit unions at a Colorado State House Education Committee hearing and supporting House Bill 08-1168 were, from left: Peter Kirchhof, lobbyist; Carla Hedrick, CEO, Denver Community CU; and Timothy Dore, senior vice president of government affairs at the Credit Union Association of Colorado.
Kids are the best way--maybe the only way--to break the generational cycle of financial illiteracy, she told the committee. Also testifying were representatives from the banking industry, Colorado Division of Real Estate and others. The committee tabled the bill until today to review some of the issues raised. Denver Community CU's bilingual program, offered through schools and community organizations, is presented internally at the credit union for members and nonmembers, and externally through community partners. It offered more than 100 classes the past year through community organizations. The $206 million asset credit union also provided a financial literacy education program to departments of Denver Health. The credit union said the program was well-received. "The bottom line is that not only do many adults not have a grasp on financial literacy but kids are not learning these vital skills at home or anywhere else," said Hedrick. "It is generational and does not respect income or education levels. We can all help, but the schools reach all of our children and can have the greatest impact." She noted that the program is already developed and is free.

NASCUS kicks off regional regulator meetings in California

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SAN FRANCISCO (1/31/08)--Regulators from six states gathered in San Francisco Jan. 29 for the first in a series of National Association of State Credit Union Supervisors (NASCUS) Regional Regulator Meetings. Hosted by NASCUS and the California Department of Financial Institutions, the meeting addressed emerging regional and state-specific issues. The states represented at the meeting were California, Idaho, Nevada, Oregon and Utah. Attendees discussed examination and supervision issues, unrelated business income tax (UBIT), interstate branching, member business lending, examiner education and capital reform. “It’s very important for NASCUS to provide opportunities for regulators to exchange information and collaborate on ways to improve examination and supervision in our individual states and collectively across the country,” George Reynolds, NASCUS chairman and Georgia regulator, said. In its fifth year, this year’s series of NASCUS regulator meetings will continue in Boston, Feb. 8; Chicago, June 11; and Nashville, Tenn., Sept. 18. The state agencies in event locations are co-hosting the meetings. “NASCUS places great emphasis on ensuring the state regulatory system is constantly improving through innovation and best practice sharing,” said NASCUS President/CEO Mary Martha Fortney. “The regional regulator meetings and NASCUS’ other networking opportunities help the association achieve this goal and strengthen our focus on enhancing the safety and soundness of the state credit union system.”

PCUA Treasurer respond to WSJ payday loan editorial

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HARRISBURG, Pa. (1/3108)--Pennsylvania Credit Union Association (PCUA) President/CEO Jim McCormack and Pennsylvania State Treasurer Robin L. Wiessmann submitted a letter to the editor responding to a Jan. 24 editorial in The Wall Street Journal editorial about payday loans. The letter discusses the collaboration between the PCUA and the Pennsylvania Treasury Department in developing the Credit Union Better Choice program, a payday lending alternative offered by 64 Pennsylvania credit unions. The editorial, “Beyond Payday Loans,” advocated affordable financial services for the unbanked. Credit unions were noted for participating with community groups and other agencies to offer affordable financial services to communities nationwide. The piece was written by former President Bill Clinton and California Gov. Arnold Schwarzenegger.