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Mad City Money teaches real world to Calif. students

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ONTARIO, Calif. (10/7/11)--Twenty-eight students from a Santa Ana, Calif., high school received a taste of the financial realities of paying mortgages, buying cars and paying for groceries during a "Mad City Money" financial simulation event Sept. 24.
Click to view larger image Representatives of Orange County, Calif., credit unions served as "merchants" during the Orange County Chapter-sponsored Mad City Money financial simulation event in Santa Ana, Calif., where students from Century High School got a lesson in the basics of finances.
Century High School student Neleyda Sanchez speaks with Leticia Mata, assistant vice present of community education at Orange County's CU, Santa Ana, Calif., during a Mad City Money financial reality simulation game sponsored by credit unions. Mata acted as a grocery store merchant during the event. (Photos provided by the California and Nevada Credit Union Leagues)
Mad City Money is the Credit Union National Association's simulation game where students are "transported" into a future and must manage all the financial responsibilities. The event, which took place at Century High School's Business Academy in Santa Ana, was sponsored by credit unions in the Orange County Chapter of the California and Nevada Credit Union Leagues. For Sandra Alvarez, who plans to be a Google executive, the two-hour game was eye-opening, especially upon learning the consequences of credit card debt. "The biggest thing I learned today is that I need to go to college, and look for a job to support myself and my family," she said. Another student, William Sanchez, also was taken aback by the amount of debt one can accumulate so quickly. "(I learned) to keep better track of the money I spend and keep better track of my debt," he said. "It was a really good thing to go through all of this." Seventeen volunteers from four credit unions acted as merchants and business people--including the staff of a credit union. "Not only did we as 'merchants' get to see the students in action as they considered their options, but we had a chance to learn their perspective on how they view the world and the many challenges they face," said Marina Miller, Orange County Chapter president and SchoolsFirst FCU internal service center manager. "It was very rewarding and encouraging to see that we have a great group of upcoming leaders." The chapter helps facilitate the league's goals of providing education, advocacy and information.

CU System briefs (10/06/2011)

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* WEST MONROE, La. (10/7/11)--(Corrected version.)John Larry Gathright, 38, a financial adviser in West Monroe, La., was arrested and charged with bank fraud and money laundering of funds possible exceeding $1 million in thefts from 11 clients (The News-Star Oct. 5). He was arrested after a man who holds the power of attorney for his 75-year-old mother, reported allegedly suspicious activity in his mother's retirement account. The victim's son alleges more than $200,000 was taken. According to court documents, more than $250,000 had been withdrawn from the victim's checking account between July 2010 and March 2011. According to court records, Gathright was already under investigation at the request of Ouachita Valley CU for allegedly depositing suspicious third-party checks into the credit union … * BARTLETT, Tenn. (10/7/11)--Frank Buckley III, 38, of Arlington, Tenn., was charged with robbing First South Financial CU's Cordova, Tenn., branch on Sept. 27 after a teller recognized him while shopping in the area the next day. The teller's husband wrote down Buckley's license tag number, and gave it to police. Buckley, a fast-food cook, allegedly entered the credit union and slid her a note that said, "No bait, no dye. I have a gun and I will shoot." The robber then lifted his shirt to indicate a pistol stuck in his waistband. When the teller began handing the gunman money from her drawer and reached for a dye pack, the robber raised his eyebrows and again lifted his shirt. The next day, the woman spotted him at a local store, and he left. The teller also identified him from a photo spread, said the court records (The Commercial Appeal Oct. 4) … * GRAND RAPIDS, Mich. (10/7/11)--A former assistant branch manager at Lansing, Mich.-based Case CU was sentenced by a U.S. District judge to two years and three months in a federal prison for embezzling $236,000 from accounts at the $201.3 million asset credit union. Marcie Graham, 31, of Mulliken, Mich., had pleaded guilty to embezzling the funds between 2008 and 2010. Court records indicated she allegedly selected accounts with large balances believing the accountholder of large accounts would be less likely to notice missing funds. One account belonged to a relative, the records indicated. Graham also was ordered to pay $256,333 in restitution (LansingStateJournal.com Oct. 5) … * DUNCAN, Okla. (10/7/11)--Halliburton Employees' FCU (HEFCU), based in Duncan, Okla., announced that as of the end of July, it has reached the $100 million asset milestone. Since 2008, HEFCU has increased its assets by $30 million, the credit union said in a press release. CEO Chris Bower attributed the growth to an increase in share accounts and loans …

CUs reach out with no-debit-fee promos

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MADISON, Wis. (10/7/11)--Banks' new debit card fees have become the last straw for many outraged consumers. Credit unions are jumping at the opportunity to let consumers know they can get a better deal at credit unions through a variety of no-fee promotions and anti-fee advertisements. For example, Raleigh, N.C.-based Coastal FCU took advantage of "active social media monitoring, brilliant staff execution, $35, a bale of hay, and a healthy dose of public anger" to buy a public relations coup in the wake of the Bank of America's (BofA) announced debit fee increase last week, said the North Carolina Credit Union League (Weekly Update . The $2 billion asset credit union decided in August to increase the dividend rate on its Go Green Checking Account to 2.51% for 30 monthly debit swipes, effective Oct. 1. It had announced the change to members and scheduled television ads to announce the change this month. "Other than television ads, we hadn't thought about doing a media announcement on the rate change," Joe Mecca, Coastal's marketing/advertising manager, told the league. The thinking changed when BofA's $5 a month fee on debit transactions was announced Sept. 29. That evening, Mecca and Lauren Stranch, Coastal's PR/networking specialist, monitored Twitter to gauge public reaction. "We noticed that people [on Twitter] were really angry about the bank fee, and our members were actually replying back to them to let them know about Coastal's account and including us in the tweet," Mecca said. Sensing an opportunity, the credit union jumped. It sent local media a press release announcing the increased swipe dividend on debit purchases and scored several hits, including WRAL-TV and the Raleigh News & Observer. It also brainstormed its new ad, "the last straw," and produced it the same day, Mecca said. Coastal Advertising Lead Paul Styron bought props for it: a bale of hay, some trash bags and a downloaded sound effects file. Total cost: $35 and staff time to edit the spot in-house. The ad hit the area's airwaves Tuesday and the credit union doubled up on its planned ad buy for the next two weeks. (To view it, click on the embedded video above.) Although it's too early to demonstrate any movement by the general public toward Coastal's checking account, Mecca said the nimble response was warranted in the competitive checking arena. "Checking is a cornerstone product. We know that a good, solid checking relationship leads to a broader relationship." Coastal's new Go Green product has been a major hit for Coastal. Members currently receive 1.01% annual percentage yield for a minimum of 12 debit transactions, and 2.51% for a minimum 30 transactions. The only qualifier: the rate is limited to the first $50,000 on deposit in the account. Other efforts in the wake of the BofA fees:
* Co-op Services CU, Livonia, Mich., launched a challenge to bank customers to go "ShredMyCard" and receive $105 to do so (MarketWire Oct. 6). Consumers can take their bank debit card to any Co-op Services location, open a free checking account with direct deposit, shred the old bank card, and receive $105. "There's a major difference here," said Anthony Carnarvon, president/CEO of the $401.5 million asset credit union. "The big banks will take your money for just having a checking account and debit card; we give you money." * CommunityAmerica CU, a $1.8 billion asset credit union in Kansas City, Mo., is seizing the opportunity to market itself with its Escape Your Bank promotion. Consumers fed up with their banks' fees can receive $75 for opening a new Free-ing Checking Account. "When you can have a Free-ing Checking account with no minimum balance, no monthly charges, free online bill pay and a free debit card, you'll start to see banks as pretty confining," said the credit union's website. "And no one likes confining." * Mission FCU, San Diego, announced Thursday it does not plan to charge monthly debit card fees (BusinessWire Oct. 6). "The credit union wants to reassure its 150,000+ members that these fees will not be heading to their pocket-books." "As a not-for-profit, member-owned community-based credit union, we answer to our members, not to shareholders or Wall Street," said Debra Schwartz, president/CEO of the $2.1 billion asset credit union. "One of the many benefits of credit unions is that we are able to pass those savings onto our members in the form of lower or no fees." * The Golden 1 CU, based in Sacramento, Calif., renewed its commitment to continue providing debit cards free. "Golden 1 is well known for providing value-oriented services such as free checking accounts and free debit cards," said Donna Bland, president/CEO. "Consumers who are affected by these new bank fees should recognize that they have a choice. They can choose to accept and pay these new fees, or they can send a message to their banks by taking action and moving to a financial institution such as Golden 1" with free services. Golden 1's Free Checking account has no minimum opening balance requirement and no monthly service charge. Accountholders receive a free debit card and have free use of online, mobile and text banking, and bill payment and online deposit services. * State Employees' CU, Raleigh, N.C., told WRAL.com (Oct. 6) it has seen an increase in new accounts in the past week, which could be a result of banks' new debit fees. "As a credit union, we are not in the business to make money. We are a not-for-profit cooperative," said Leigh Brady, SECU's senior vice president of education services. "Credit unions tend to be a better value for members…in terms of offering lower fees and better interest rates."

Consumer bankruptcies drop 10 in first nine months

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ALEXANDRIA, Va. (10/7/11)--U.S. consumer bankruptcy filings fell 10% during the first nine months of the year, according to the American Bankruptcy Institute (ABI), citing data from the National Bankruptcy Research Center. Credit unions saw fewer loan delinquencies and loan net chargeoffs through the first half of 2011, according to the Credit Union National Association (CUNA). Consumer filings totaled 1,044,722 nationwide during the first nine months of 2011, from the 1,165,172 filings during the same period a year ago. September consumer bankruptcies declined 17% nationwide from September 2010. The overall consumer filings total for September reached 108,517, down from the 130,329 filings recorded in September 2010. “The trend of declining filings has been consistent with consumers continuing to reign in their spending, household debt, and an overall pull back in consumer credit,” said ABI Executive Director Samuel J. Gerdano. “Total consumer filings for 2011 will be less than 2010.” The September filings also represented a 4% decrease from the August total of 113,432 bankruptcy filings, a slight change that could be the result of one less day in the month, ABI said. The percentage of chapter 13 bankruptcy filings for September was 30%, a 1% increase from August. Credit unions’ consumer loan delinquencies inched down as of June to 1.09% of total loan outstanding from 1.15% in March, according to CUNA’s U.S. Credit Union Profile. Also, credit unions’ consumer loan net chargeoffs decreased as of June to 1.25% of average loan dollars outstanding from 1.48% in March, CUNA said.

Tucker Carlson CUs do things the right way

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FREEPORT, Maine (10/7/11)--Political commentator Tucker Carlson had high praise for an audience of 120 credit union representatives at the Maine Credit Union League’s Legislative Forum Tuesday.
Click to view larger image Keynote speaker and political commentator Tucker Carlson said “the future is bright for credit unions” at the Maine Credit Union League’s Legislative Forum on Tuesday. From left, Jon Paradise, league governmental & public affairs manager; Carlson; John Murphy, league president/CEO; and Quincy Hentzel, league director of governmental affairs. (Photo provided by Maine Credit Union League)
“I hate dealing with banks and, the circumstances of the past three or four years have proven that credit unions do things the right away so I think the future is bright for credit unions,” Carlson said. Carlson was the keynote speaker at the forum. He spent the morning discussing the 2012 U.S. presidential elections, offering insight on the Republican field of candidates and President Barack Obama’s re-election prospects. “The power of an incumbent president is very difficult to beat,” Carlson said. “Everywhere the president goes gets attention, as does everything a p resident says. That is quite an obstacle to overcome. That being said, President Obama is vulnerable; however, the candidate most capable of beating the president in a general election may not be the nominee.” When asked about the country’s financial woes, Carlson said the nation’s biggest problem is that neither party is honest about Medicare. “Everyone loves Medicare, myself included, but we simply cannot afford it in its present form,” he said. That is a fact, and until we get to the heart of it, we will continue to struggle financially as a country.” In the afternoon, the forum featured two Maine political analysts, former state Sens. Ethan Strimling and Phil Harriman, who discussed the state legislature, Gov. Paul LePage, and the 2012 legislative elections. Buddy Gill, senior strategic communications and external relations advisor to National Credit Union Administration (NCUA) Board Chairman Debbie Matz, concluded the program with a regulatory update. Gill encouraged Maine credit unions “to let your voices be heard on rules, regulations and the operating environment. NCUA really does want to hear from you.” League President John Murphy noted that the forum “reinforces the interest and involvement level that Maine’s credit unions have in the political process.”

Enhance CUs investment portfolio--Online Discovery

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MADISON, Wis. (10/7/11)--Credit unions should set aside personal investment biases and change their investment style to use all investment tools allowed by their charters and investment policies to build a solid investment portfolio, credit union leaders at CUNA Mutual Group’s second annual, daylong Online Discovery Conference were told.
Click to view larger image MEMBERS Capital Advisors’ Jeremy Whitish, left, senior analyst-investment risk, and Ed Meier, director and senior fixed-income portfolio manager, spoke at CUNA Mutual Group’s Online Discovery Conference Tuesday. (Photo provided by CUNA Mutual Group)
Online Discovery is CUNA Mutual Group’s Web-based equivalent of a face-to-face conference. The free event attracted an international audience of more than 1,800 credit union and league staff. Ed Meier, director and senior fixed-income portfolio manager, and Jeremy Whitish, senior analyst-investment risk, both with MEMBERS Capital Advisors, gave attendees a history lesson to understand the change in investment strategy over the years. “Many of us have personal investment biases that need to be justified in today’s economic environment,” Meier said. “For example, in the early 1990s many investors swore off investing in CMOs (collateralized mortgage obligations). While that may have made sense at the time, it doesn’t today. CMOs are typically underutilized,” Meier added. Today, investors must consider all of their options and quantify their risks. “You have to ask yourself the question: ‘How does this optimize my credit union’s portfolio?’ If it doesn’t, then move on,” Meier said. This can be a challenge, especially for investors with a conservative investment style, but the gain to the credit union’s bottom-line can be substantial. Meier and Whitish urged credit union leaders to consider their credit union’s funding needs, asset liability management (ALM) model output and economic outlook before ruling out a particular type of investment. “Just because an executive investment manager doesn’t like a particular investment doesn’t mean it isn’t a good investment for the credit union,” Whitish said. Credit union leaders need to think about their investment strategy differently today than they did 20 years ago. Most portfolios are excessively short in duration, Meier said. Credit unions must build in cornerstone securities, which have a potential for a higher yield and longer duration but maintain top-tier quality. “It’s critical for investors to understand their credit union’s ALM model because if you don’t have loans on your books, then you must have investments that match or reach longer term than your liability stream,” Meier said. “We propose having a core group of cornerstone investments in your portfolio--no matter if it’s good times or bad times, rising rates or lower rates--because it acts as a hedge that you can rely on despite the times or rates,” Meier added. To achieve a balanced approach to investing, credit union leaders should reduce their liquidity and invest in slightly longer-term securities to protect against economic uncertainties and adopt a flexible investment style that limits personal investment biases, said Meier and Whitish. “The best way to build a strong investment portfolio is to use all of the investment tools your credit union’s charter and investment policy allow,” Whitish said. “If you don’t, you will continue to struggle to build a solid investment portfolio for your credit union.”

Speaker Risk inherent to all CUs--big and small

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MADISON, Wis. (10/6/11)--The future sustainability of small credit unions in today’s challenging economic environment will require improved decision-making strategies, proficient and proactive risk assessment, and more efficient operational execution, a CUNA Mutual Group risk manager told Online Discovery Conference attendees Tuesday. Online Discovery is CUNA Mutual Group’s free Web-based conference. The one-day event attracted a national and international audience of more than 1,800 credit union and league staff. Risk can be managed effectively in all credit unions, and smaller ones are not necessarily at a disadvantage, said Joette Colletts, regional manager of credit union protection risk management. “In fact, smaller credit unions have several advantages in managing risk,” Colletts said. “With fewer employees and close relationships, their culture readily promotes open communication and a willingness to share suggestions. This agile atmosphere lends itself well to reviewing, re-evaluating and upgrading planning to promote a healthy risk culture.” Credit unions must assume some risk to innovate and grow. That means having a culture that aligns risk with goals and properly managing the process to optimize return, she said. “Too little risk taking hinders innovation, which can threaten a credit union’s survival, while too much risk taking can be just as crippling by uncontrollably expending resources, leading to losses,” she added. Colletts focused on two challenges facing credit unions: employee dishonesty and vendor fraud. “The common denominator in my 27 years as a risk manager has been that the credit union either lacked the controls to help prevent the fraud from occurring in the first place, or became more relaxed about its controls over time,” Colletts said. “If you think you don’t need to implement controls or tighten existing controls, please think again. I assure you, you’re providing the ideal environment for a dishonest employee.” Among the best practices for thwarting employee fraud:
* Implementing dual control for currency shipments and cash replenishments; * Controlling access to data, information, checks and cash; * Maintaining an active supervisory committee; * Conducting surprise audits, and * Performing bondability verification and background checks.
Third-party vendors play an increasingly important role in helping credit unions compete and expand member services. While outsourcing generally creates member value and improves the bottom line, it can create significant risk if due diligence is improperly performed when selecting and managing vendor relationships, Colletts noted. Understand a third-party’s organization, business model, financial health and program risks, she added. “Remember due diligence never stops. It’s an ongoing process,” she said. Colletts recommended implementing an enterprise risk management (ERM) program to improve strategic decision making and risk communication. “ERM integrates risk management with strategic planning and is a systematic approach to managing all your credit union’s key risks,” she said. ERM can be implemented in any size credit union and can be scaled down if needed and implemented in incremental steps.

No INews NowI on Monday--federal holiday

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WASHINGTON and MADISON, Wis. (10/7/11)--Although Monday is a federal holiday, with many credit unions, leagues and government offices closed, the Credit Union National Association's Washington, D.C., and Madison, Wis., offices will remain open for business. News Now will not publish an issue Monday, but will resume its regular publication schedule on Tuesday.