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HELOC scam tapped 220000 from members equity

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PHILADELPHIA, Pa. (10/20/10)--A lawsuit over coverage of $220,000 of home equity line of credit (HELOC) funds that went missing from a credit union member’s account has provided some details on the methods used by international fraudsters in a dozen similar cases in the eastern section of the country. According to the Sb1 FCU, Philadelphia, Pa., in its suit against its bond insurer, identity thieves tapped into a member’s HELOC account and stole private information to use later to convince the credit union to wire $220,000 from the member’s account to an account in Hong Kong. The unidentified member provided his address, Social Security number, telephone number, date of birth and other personal identifying information, as well as an example of his signature, to the credit union when he joined it on Aug. 31, 1999, said court documents. On Feb. 26, 2008, he opened a HELOC and used his line of credit through electronic transfers. As of January, 2010, his credit line was $345,000, of which $222,000 remained available to borrow. On Jan. 13, the credit union’s call center received a call from a person identifying himself as the member, and after providing accurate responses to security questions, the caller succeeded in getting the member’s telephone number changed on his membership file, said the suit filed. On Jan. 14, a person purporting to be the member requested that $220,000 be accessed from his credit line and deposited into his checking account. The credit union required a wire transfer request and free agreement form, which provided the correct member identification number, account number, an e-mail address indicative of his spouse’s account, and a signature matching the signature on file. The request was also accompanied by a copy of the member’s passport with a signature, also matching the one on file. A representative of the credit union twice called the telephone number of record to confirm the instructions and both times the request was verified, Sb1 FCU said in its complaint. On Jan. 21, the member discovered the unauthorized access and the credit union immediately tried to recover the funds with a wire transfer recall and retention of counsel in Hong Kong, the document said. On April 28, the bond insurer, CUMIS Insurance Society, denied the credit union’s claim, saying the credit union did not perform a proper callback verification and there was no commercially reasonable security procedure set forth in a written funds transfer agreement signed by the member” that “governed the transaction or instruction.”

U.S. Central auditors records subpoenaed

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BIRMINGHAM, Ala. (10/20/10)--Corporate America CU has subpoenaed all the records of BDO Seidman, the auditor of U.S. Central FCU, in its suit against the officers and directors of U.S. Central. According to court documents, the subpoena on behalf of the Birmingham, Ala.-based Corporate America asks for all work papers, correspondence, research, spreadsheets, drafts and investment valuations provided by the Las Vegas-based auditing firm for the Lenexa, Kan.-based U.S. Central in 2008. Other organizations receiving subpoenas in the case are Riskspan, Vienna, Va.; Callahan & Associates, Washington, D.C.; Clayton Financial Services, Topeka, Kan.; and Pacific Investment Management Co. (PIMCO), Newport Beach, Calif.; and Andrew Davidson and Co., New York. The suit claims that Corporate America CU and 26 other corporate credit unions that were members of U.S. Central were misled when U.S. Central converted $450 million of temporary capital to permanent capital just before the nation’s financial crisis erased all of the capital during the fall of 2008.

Wisconsin banks trim branches CUs branches sprout

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MILWAUKEE (10/20/10)--The economic downturn and changing transaction patterns are trimming the number of Wisconsin bank branches, even as credit union branches continue to grow. Federal Deposit Insurance Corp. (FDIC) data show bank branches in Wisconsin decreased by 37 to 2,351 branches as of June 30, 2010 (Marketplace Magazine Oct. 17). Nationally, there were 98,505 bank branches in 2010, down from 99,540 in 2009. Expert observers said banks eliminated branches to reduce costs and preserve capital. Shifting transaction activity was also a factor. While consumers still enter branches to open accounts, they increasingly use online banking and other options for transactions such as check cashing and withdrawals, prompting a 35% to 50% decrease in these transactions inside branches. As not-for-profit cooperatives, credit unions have generally been able to remain healthy despite the economic downturn, allowing them to preserve their branch networks, the magazine said. The Wisconsin Credit Union League said state credit unions operated 670 branches in June, a gain of 10 branches since 2009. Nationally, credit union branches increased from 21,341 in 2009 to 21,477 in 2010. In some cases, Wisconsin credit unions acquired new branches from banks that were retrenching. Earlier this year, AnchorBank sold 11 branches in northwestern Wisconsin to Royal CU, Eau Claire. UW CU, Madison, bought a branch property from Amcore Bank in Milwaukee shortly before that bank failed and bought a Waukesha branch from Equitable Bank.

One-third of consumers using online banking

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WESTLAKE VILLAGE, Calif. (10/20/10)--More than one-third of American consumers use online banking services offered by their credit union or bank to manage their finances, according to the Third Annual Intuit Financial Services Online Financial Management Survey. The survey by Intuit, a CUNA Strategic Services provider, also showed that online banking is a competitive differentiator. Among all survey respondents, 52% said they would leave their current financial institution for another that offered better money management capabilities. In addition, nearly half said they had recently switched banks or credit unions, with one-third of them making the change because their financial institution lacked satisfactory online banking. Among online banking users, the survey reported that:
* 84% said the most important feature is the ability to pay bills and manage all financial tasks in one place; * Almost half expressed an interest in using tax preparation tools offered by their financial institution website; and * Approximately one in five banking customers are also current users of mobile banking solutions.
Slightly over one-quarter of survey respondents have reduced their visits to their local branch to once per month. The Intuit survey also found that half of Americans surveyed still rely primarily on spreadsheets and checkbook registers to manage their finances.

Government drops its appeal on Bellco UBIT case

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DENVER and WASHINGTON (10/20/10)--The U.S. Department of Justice has abandoned its plans to appeal a federal judge’s favorable credit union ruling related to Bellco CU’s challenge of the Internal Revenue Service’s (IRS) policy toward unrelated business income tax (UBIT) and its application to credit unions. “We consider this fantastic news because it means that the government did not see enough merit in its own position to push it further in the courts,” said Credit Union National Association (CUNA) President/CEO Bill Cheney. “Now we will be solidifying a strategy that will, we hope, put the UBIT issue to rest with the IRS and others for a long time to come.” The government had filed a notice of intent to appeal this summer after Judge Christine M. Arguello ruled in November 2009 that investment and insurance products that Bellco sold to its members, including credit life and disability insurance and some other products, stocks, bonds, mutual funds and annuities, were "substantially related" to Bellco's tax-exempt purposes, and therefore the income from those activities was, under the law, exempt from UBIT. What this most recent action in the Bellco case means to the credit union is that the IRS must honor its agreement to pay the full tax refund of $199,293 sought by the credit union on three of its products. The UBIT Steering Committee, comprised of CUNA, the American Association of Credit Union Leagues, the National Association of State Credit Union Supervisors, and CUNA Mutual Group, while not giving tax advice, has suggested that the Bellco case may be helpful to state-chartered credit unions' legal, tax, and accounting professionals in determining whether the decision constitutes "substantial authority" for their credit union to not pay, or to seek a refund of, UBIT paid on income from sales of brokerage or annuities products.

CUNAVerse blogs its way to growth after six months

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MADISON, Wis. (10/20/10)--CUNAVerse, the official blog site of the Credit Union National Association (CUNA), was accessed 32,701 times by 15,849 individual computers or cell phones since it was launched on May 3, 2010. As the blog written by CUNA staff approaches its six-month anniversary, it continues to combine insights on credit union issues with behind-the-scenes glimpses of operations at CUNA, according to Joshua Jones, CUNA manager of new media & communications. The blog currently offers 74 posts on 21 topics, drawing 319 comments from blog followers. Popular topics include compliance, credit union history/philosophy, marketing, operations, personal finance education, conferences and training. The top five posts accessed by readers so far are:
* “Components of a credit union social media plan”; * “What credit unions can learn from Pizza Hut”; * “Worried that CUs aren’t focused enough on upcoming truth in lending changes”; * “Turnover increase on the horizon for credit unions”; and * “A culture of fear or a culture of love.”

Students call shots at 109 Wis. school CU branches

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PEWAUKEE, Wis. (10/20/10)--Students from elementary grades through high school are learning money management skills by operating 109 credit union branches inside Wisconsin schools, said the Wisconsin Credit Union League. Youth-run branches account for 16% of the offices operated by the state’s 230 credit unions. More than 5,600 young savers have stashed more than $2 million in deposit accounts, or an average of $357 per student. “The youth-run credit union phenomenon has swept our state for two reasons,” says Brett Thompson, league president/CEO. “Young people are more committed than ever to volunteerism and want to use their talents in ways that also benefit their communities. Second, teachers know that credit unions’ motivation is in people, not profit-making, so they have parlayed their trust in credit unions as a best practice for schools statewide.” The state Department of Public Instruction has defined competencies for personal finance that students should acquire by grades 4, 8 and 12. Schools with limited resources have used credit union support to advance their own financial education efforts at no additional costs to taxpayers. Because the branches focus primarily on saving, not lending, they don’t drive profits for credit unions. Instead, they’re offered as an investment in youth and the community, the league said. The money the students save comes from allowances or part-time jobs. Some youth branches make small loans to teach responsible use of credit. And most provide students free financial education, either through the branch or in class. All youth-run branches are adult supervised and state-regulated. Student volunteers run the branches to learn leadership skills as well as good financial habits. Some go on to paid employment with credit unions. Development of youth run-branches earned Wisconsin credit unions a 2009 Governor’s Financial Literacy Award. The trend typifies credit unions’ REAL Solutions initiative, which serves members and communities without regard for profit. “REAL” stands for “Relevant, Effective, Asset-building, Loyalty-producing” Solutions. The program works through state credit union leagues to help credit unions offer services for people of modest means and “low wealth.”

International CU Day activities have begun

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MADISON, Wis. (10/20/10)--Many activities related to International Credit Union (ICU) Day, to be celebrated Thursday, have begun, including governors’ proclamations, state credit union leagues’ events and individual credit union celebrations. This year’s theme is “Local. Trusted. Serving You.” Pennsylvania Gov. Ed Rendell issued a Credit Union Day Proclamation, declaring Oct. 17-23 as Credit Union Week in the state, and Thursday as Credit Union Day in connection with the worldwide celebration of ICU Day (Life is a Highway Oct. 18). Rendell commended credit unions for “their continuing interest in the welfare and development of credit union members and for the many contributions credit unions make to the larger community.” Indiana Gov. Mitch Daniels declared Oct. 17-23 as Cooperative Week in Indiana with the support of several cooperative organizations, said the Indiana Credit Union League. Daniels said that “the cooperatives in Indiana generate significant income, employment and revenue and function as engines of economic growth for local communities and the economy of Indiana.” Daniels’ proclamation will be on display throughout the week in the Indiana Farm Bureau Building in Indianapolis, which is home to several cooperative organizations that provide financial services, insurance products, energy exploration and other services. Minnesota Gov. Tim Pawlenty signed a proclamation this week declaring Thursday as Credit Union Day in the state. It said, “Credit unions develop strong alliances that transcend political and geographical boundaries, making financial democracy possible in many countries around the world.” It goes on to proclaim, “Credit unions encourage a regular habit of saving, foster the desire to repay loans so members have access to credit when needed, and empower individuals to improve their financial standing.” More than 180 volunteers from Ohio credit unions will celebrate ICU Week by educating nearly 1,000 high school students on the importance of budgeting, saving, and differing wants from needs at financial education “reality games” in Dayton, Toledo and Columbus, said the Ohio Credit Union League (OCUL). Credit unions understand the financial health of Ohio’s youngest citizens is at risk, and are working to make financial education an important aspect of a well-rounded education, OCUL said. “International Credit Union Week is a time when we reflect on how credit unions are different, and this is a prime example of the credit union difference,” said Paul Mercer, OCUL president. “Financial education, especially key concepts like budgeting and saving, is crucial to the financial future of our youth. Credit unions’ believe it is our duty to share our financial education expertise, to help educators fulfill this need, and serve as a conduit to financial success for Ohio youth.” The Maine Credit Union League is joining with Maine’s credit unions in celebrating and highlighting the credit union difference. In his Credit-Union-Week message to the staff and officials at Maine's credit unions, league President John Murphy praised their commitment and dedication (Maine Credit Union League’s Weekly Update Oct. 15). “While many segments of the financial services sector have come under intense scrutiny for putting profits above people, credit unions have remained steadfast in focusing on doing what is in the best interests of the members and, in many cases, going above and beyond to serve members,” Murphy said. Throughout the week, most Maine credit unions are marking the occasion with special events and activities. Some credit union events and festivities to celebrate ICU Day include:
* Wright State University in Dayton, Ohio, invited about 100 students Monday to play a hands-on “game of life,” called Life After High School, created by Universal 1 CU, Dayton, and funded in part by the Ohio Credit Union Foundation. Students made important decisions during the game that impacted their financial futures: job selection, higher education, living choices, car purchases and everyday monthly expenses. The Ohio Credit Union League donated the 25 Life After High School board games used during the event to area high schools. * ICU Day is an annual tradition at Belco CU, Harrisburg, Pa., with events including a free hot dog lunch, prize drawing for a $100 Visa gift card, free giveaways and an employee bake sale at all branches, with 100% of the proceeds going to the Susan G. Komen Foundation for Breast Cancer Awareness. * Educational CU, Topeka, Kan., is asking members what they would do if they were given $20 dollars to “pay it forward.” In honor of International Credit Union week, the first 25 people who answer the question will get $20. Their intentions will be videotaped and uploaded to Facebook so the community can vote on them ( Oct. 18). * Service 1st FCU, Danville, Pa., is celebrating the grand opening of its new Corporate Center during ICU Week. Throughout the week, employees and members will volunteer their time at six local service organizations, including the Danville Child Development Center, Ronald McDonald House, Hope Enterprises, Inc., Montour Area Recreation Commission, House of Care, and the Gate House Shelter (Life is a Highway Oct. 18). * The employees of Wildfire CU, Saginaw, Mich., have chosen October as “Month of Giving Back to the Community” in conjunction with ICU Week. October is the credit union’s kick-off for United Way and the Making Strides Against Breast Cancer Walk. To raise awareness and have some fun, the employees also donated money to wear blue jeans to work in exchange for supporting United Way, among other fundraisers.

Council speaker Weak recovery means modest gains in 2011

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LAS VEGAS (10/20/10)--The U.S. housing market has likely reached the bottom of this housing cycle and is trending upward, but this third consecutive jobless recovery in U.S. history means few gains for the market or the overall economy in 2011, U.S. economist David Berson said Monday. Berson’s remarks were made in Las Vegas Tuesday at the General Session of the 2010 CUNA Lending Council Conference. Delegates from credit unions nationwide attended as he presented his “Outlook for the Economy, Housing and Mortgage Markets.” “This is the third consecutive jobless recovery,” Berson said. “Not literally jobless, but weak in comparison to recoveries before 1990, resulting in unemployment rates higher than desired, for too long.” The nature of the recovery is having a direct impact on future prospects for the housing market and overall economy, Berson said. “We are probably at the bottom of the housing cycle. Although we expect gains going forward, they’re likely to be modest, at least initially,” he added. Berson is chief economist and strategist at PMI Mortgage Insurance Co., where he is the author of PMI’s monthly Housing and Mortgage Markets Review and the quarterly Economic and Real Estate Trends. He was previously chief economist for Fannie Mae. Conference attendee CMG Mortgage Insurance Company (CMG MI) is a corporate joint venture between PMI and CUNA Mutual Group, and a provider of mortgage insurance products and services to credit unions in the U.S. “Successful residential real estate lending requires an understanding of the trends in job growth, Federal Reserve monetary policy and the direction of interest rates. David’s presentation at the CUNA Lending Council will be helpful in the decision-making process of many credit unions,” said Joe Dillon, CMG MI senior vice president and general manager. Sponsored by the Credit Union National Association, the annual CUNA Lending Council conference focuses exclusively on credit union lending sectors.