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CU System briefs (10/07/2010)

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* BEAVERTON, Ore. (10/8/10)--The Credit Union Association of Oregon (CUAO) is supporting State Treasurer Ted Wheeler in his bid for election to the post. He was appointed to the position by Gov. Ted Kulongoski after the death of Ben Westlund in March. Pam Leavitt, CUAO vice president for governmental affairs, said the board was impressed with Wheeler's "interest in our issues and his understanding of the credit union movement." "Our board believes Treasurer Wheeler has a strong understanding of the financial marketplace and the role that credit unions play in it." Wheeler supported increasing financial literacy among the state's students, and CUAO is an advocate for legislation to increase financial literacy in the state's public school system. He also said he would be diligent in seeing that a public funds bill passed by the last legislature would be implemented in a manner consistent with the legislation's intent. Leavitt also praised Wheeler's opponent, State Sen. Chris Telfer, who has knowledge on key issues as a result of her career as a certified public accountant. Telfer is in the middle of a four-year term on the Senate ... * SOUTH BEND, Ind. (10/8/10)--A South Bend man was sentenced to 12 years in prison for robbing a branch of Teachers CU (TCU) in December. Dion Davis, 26, pleaded guilty in a U.S. District Court to aggravated bank robbery and brandishing a firearm during a crime of violence. Davis and two masked accomplices accosted a TCU employee arriving at work on Dec. 7. They pointed a gun at her and she led them into the credit union, where another employee was at work. The three robbers pointed the gun in each employee's face, ordered both to the floor and threatened to kill them before escaping with more than $65,000. Davis also is serving a four-year prison sentence for a 2008 burglary conviction. The sentences will run at the same time as the state burglary sentence. Two others, Armand White, 23, and Tremaine Grant, 26, pleaded guilty. White was sentenced to 10 years in prison, and Grant's sentencing is set for Nov. 23 (South Bend Tribune Oct. 5) ... * SPRINGFIELD, Ill. (10/8/10)--A Decatur, Ill., real estate broker, a real estate appraiser and a former credit union loan officer have been charged with nine counts each of mail fraud related to a real estate "flipping" scheme that defrauded Decatur-based Staley CU and area real estate buyers. The frauds occurred from 2002 to July 2005, said the Springfield, Ill, division of the Federal Bureau of Investigation. The broker, Terry Hart, 58, was convicted last week by federal jury on all nine counts. Diane Shelton, 62, the former loan officer, and Mark Brown, 45, of Moweaqua, Ill., the former appraiser, have pleaded guilty and will be sentenced Nov. 12. They allegedly participated in at least 40 fraudulent real estate and financing transactions totaling more than $3 million, creating a potential $1 million loss to the credit union, said the FBI in a press release. Each offense carries a maximum penalty of up to 30 years in prison and a $1 million fine ...

CU provides service to underserved

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RANCHO CUCAMONGA, Calif. (10/8/10)--Express CU of Seattle, Wash., has deployed four community service representatives (CMSR) to 12 local non-profit organizations to offer better access to financial services to the underserved. The nearly $10 million asset credit union is one of many continuing to provide services ranging from low-interest loans to financial literacy programs during a prolonged recession that left a growing segment of the U.S. population financially underserved. Express CU's CMSR program serves organizations dedicated to helping the homeless and entrepreneurs seeking to start businesses in financially distressed areas. "We want to offer people smarter options when it comes to managing their money," said Norma Hernandez, president/CEO of Express CU. "We have doubled our membership in the year since we initiated this program, with 40% of the new members signing up through our CMSRs. During the CMSRs' on-site office hours, visitors to the non-profits can open accounts, deposit checks, apply for loans and discuss financial matters. The CMSRs provide basic financial education and referrals to formal programs offered through their non-profit partners. Since cash transactions are not supported at the non-profit locations, the credit union teamed up with CO-OP Financial Services to offer ATM access and shared branching locations. As a result, Express CU now provides members access to more than 150 ATMs in Seattle, 1,000 in Washington and 28,000 nationwide, 9,000 of which access deposits. "About 90% of our new members would not be able to use our services without the convenient access they have to ATMs and branches provided by CO-OP Network and CO-OP Shared Branching," said Hernandez. About 25.6% of American households don't have a checking or savings account, according to the Federal Deposit Insurance Corp. The underserved includes the poor, the young, non-English speakers and small business owners who can't get loans despite creditworthiness.

Consumer bankruptcy filings up 11

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ALEXANDRIA, Va. (10/8/10)--U.S. consumer bankruptcy filings went up 11% during the first nine months of 2010 over the same period a year ago, announced the American Bankruptcy Institute (ABI). ABI clocked more than 1.165 million bankruptcies nationwide, compared with 1.046 million for the period in 2009. It was the highest total since 2005, when Congress enacted the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCAP), said ABI in a press release. "While the 2005 bankruptcy overhaul law aimed to reduce filings, overall consumer debt and continued financial stress have led to consumer bankruptcies climbing back to pre-BAPCAP levels," said Samuel J. Gerdano, ABA executive director. "We expect that there will be nearly 1.6 million new bankruptcy filings by year end." Overall September filings totaled 130,329--4.4% more than the 124,790 recorded filings in September 2009. The September total represents a 3.3% increase from August's filings, which totaled 127,028. Chapter 13 filings constituted 30% of all consumer cases in September, a slight increase from August, said ABI. The institute relied on data from the National Bankruptcy Research Center.

Community CU of the Year honors announced

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MADISON, Wis. (10/8/10)--Four credit unions were awarded CUNA Community Credit Union of the Year honors at the CUNA Community Credit Union & Growth Conference this week in Boston. Receiving first-place honors were:
* Latino Community CU, Durham, N.C., under $250 million in assets; and * HarborOne CU, Brockton, Mass., more than $250 million.
Merit honors were given to:
* St. Louis Community CU, under $250 million in assets; and * Rogue FCU, Medford, Ore., more than $250 million.
Community Credit Union of the Year Awards recognize and honor community credit unions that best exemplify the principles of the credit union movement while acting as a positive influence in the field of service. The distinction is reserved for community credit unions and/or multi select employee group credit unions that consistently excel in the advancing of the ideals of the credit union movement, are proactive in their community, and provide services for their diverse communities. The conference, which began Wednesday, ends Saturday.

WSJ Compliance costs have tripled for small FIs

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NEW YORK (10/8/10)--Regulatory compliance costs have tripled for small financial institutions, including credit unions, with the new financial overhaul law encompassed in the Dodd-Frank Act, The Wall Street Journal said Thursday. “In the aftermath of the financial crisis and the bailouts, the banking industry has become more polarized,” wrote David Weidner in an article titled, “Too Small to Fail; Banks Can Drive an Economic Recovery. No, Not Those Banks.” “Four banks control a combined $7.34 trillion in assets and $3.57 trillion in deposits--56% and 39% of all U.S. assets and deposits respectively, according to SNL Financial. “The rest is scattered about nearly 7,800 banks and nearly as many credit unions,” Weidner added. “Yet, those roughly 15,000 institutions must succumb to the bulk of the Dodd-Frank Act’s changes. Compliance costs have tripled for those smaller banks, according to Louis Hernandez Jr., CEO of Open Solutions Inc., a bank technology-consulting firm.” Hernandez argues against the old saws of bigger-is-better banking, in his new book, “Too Small To Fail: How the Financial Industry Crisis Changed the World’s Perceptions,” Weidner wrote. “Small banks, despite the 829 banks on the Federal Deposit Insurance Corp.’s problem bank list, are generally in good shape even though the vast majority of them didn't ask, take or qualify for bailout funds,” he added. A diminishing number of banks servicing small communities is hitting the West and Northeast areas of the U.S. especially hard. Community banks there control only 11% of assets, according to the Community Bankers Association. In those regions, a paucity of competition or incentive in lending is holding back growth, Weidner wrote. Therefore, small businesses and individuals in those regions have to depend on national and regional banks for credit, he added. Although large banks may be lending more, “the one-size-fits-all credit standards employed by national banks remains a high hurdle for many borrowers,” Weidner wrote. “We are stuck in a world where big banks set the course for the industry, and the smaller banks are forced to pay the price for their transgressions. Yes, the banking industry has changed since the financial crisis. It has become bigger and less competitive,” Weidner concluded. Credit unions want to raise their member business lending cap to 27.5% of total assets from the current level of 12.25%. CUNA statistics show that would inject $10 billion in new funding into the economy and create as many as 100,000 new jobs, at no cost to taxpayers.

Massive gas leak temporarily closes CU

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SOUTH BEND, Ind. (10/8/10)--A massive gas leak Thursday in downtown South Bend, Ind., temporarily closed more than a dozen businesses, including the main office of Teachers CU. Teachers CU CEO Richard Rice said that he was leaving the credit union to attend a meeting at 8:30 a.m. Thursday when he heard sirens. Rice said he often hears sirens in the area around the credit union, usually because of false alarms. However, the fire department was responding to a gas leak that occurred at a construction site about a block from Teachers CU. “You could smell the gas,” Rice said. The local police and fire departments used buses to evacuate everyone in the downtown area and took them to the University of Notre Dame. The leak closed all businesses downtown, including the County-City Building and the courthouse. Teachers CU was impacted by the evacuation, so the credit union shut down its main operations and switched to an offsite backup computer system to run its 45 other branches. A credit union helpline and call center also were switched from the main office to other branches, and tellers working at the downtown location were dispersed to other brances. At 1:30 p.m., Teachers CU was re-opened its offices after the gas leak was capped. “I give the city of South Bend kudos,” Rice said. “[The evacuation] was not haphazard. The fire department and police department handled it, and they had a good disaster recovery system.” Teachers CU has $1.9 billion in assets.

CUNA Board nomination submitted deadline Oct. 22

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MADISON, Wis. (10/8/10)--A fifth nomination has been received for a seat on the Credit Union National Association (CUNA) board of directors. The deadline for nominations is Oct. 22. Voting will take place from Oct. 27 through Dec. 17. The latest nomination was for Paul Gentile, president/CEO, New Jersey Credit Union League, Hightstown, N.J., for a District 1, Class D seat. Nominations also have been received for:
* Ed Williams, president/CEO, Discovery FCU, Wyomissing, Pa., for District 1, Class A; * Patricia A. Wesenberg, governmental affairs liaison, Marshfield (Wis.) Medical Center CU, District 4, Class A; * Wendell Lyons, president/CEO of the Kentucky Credit Union League, District 2, Class D; and *Maurice Smith, CEO, Local Government FCU, Raleigh, N.C., District 3, Class C.
Positions up for election are:
*District 1, Class A; * District 1, Class D; * District 2, Class B; * District 2, Class D; * District 3, Class C; * District 4, Class A; * District 5, Class C; and * District 6, Class B.
Those elected will take office Feb. 28 and serve a three-year term that will expire at the adjournment of the 2014 CUNA Annual General Meeting. There is one special election: CUNA’s current District 6, Class C director will step down from the board at the end of this year. The successful candidate in that election will be seated Jan. 1 and serve through the 2012 CUNA Annual General Meeting.

CUNA Mutual updates CUs on risk management

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MADISON, Wis. (10/8/10)--Representatives from more than 50 Wisconsin and Illinois credit unions met at CUNA Mutual Group Sept. 30 to discuss the latest emerging fraud exposures, robbery prevention tips from local law enforcement and best practices for fraud prevention. CUNA Mutual’s Risk Management Department hosted the half-day meeting to help credit unions understand and manage the most prominent, costly and growing risks and to provide executive-level guidance for key steps in managing those risks, said Brad Mundine, CUNA Mutual regional manager of risk management. “Regulatory and legislative dynamics combined with pervasive economic forces have redefined the boundaries of credit unions' risk exposures in 2010,” Mundine said. “Credit unions are facing new and changing risks from just about every direction imaginable.” “The power of collaboration can't be overstated in today's rapidly changing fraud environment,” he added. “Today's meeting called attention to several significant threats credit unions face and the resources available to manage those risks.” The free event was held exclusively for CUNA Mutual Bond policyholders. It featured four speakers, including:
* Julie Walser, manager of loss prevention at UW CU, Madison, Wis., who provided an overview of its Loss Prevention team and discussed shared incentive programs to increase employee awareness of deposit fraud. She also discussed system tools the credit union has developed to identify and control credit card fraud. * Brad Jobe, CUNA Mutual director of information technology, who focused on system intrusions, the impact they can have on credit unions and members, and shared resources to assist in blocking intrusions. * Frank Chandler, crime prevention officer with the Madison (Wis.) Police Department, who discussed robbery prevention tips for credit unions including the use of “No Hats, No Hoods, No Sunglasses,” proper surveillance for a credit union and post-robbery actions that should be taken. * Ann Davidson, CUNA Mutual risk manager, who discussed the biggest fraud threats facing credit unions in 2010.

Three CUs receive Tech Councils Best Practices awards

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MADISON, Wis. (10/8/10)--Affinity Plus FCU, Travis CU and Envision CU were honored as winners of the 2010 CUNA Technology Council Best Practices Awards at the Council’s 15th Annual Conference, Sept. 29-Oct. 2 in Las Vegas.
Click to view larger image Affinity Plus FCU, Travis CU and Envision CU won Best Practices Awards during the CUNA Technology Council’s annual conference. From left: Keith Malbrue, chief operation officers and Cary Tonne, vice president of information technology, Affinity FCU; Craig Beaudry, associate vice president of information technology development and operations, Travis CU; and Tyrell Baker, associate vice president of information technology, Envision CU. (Photo provided by the Credit Union National Association)
The council award recognizes outstanding approaches to technology challenges, with potential for universal application across the credit union movement, in four major categories. Affinity Plus FCU in St. Paul, Minn., won in the information security/privacy for their automated SAFE (System Access for Employees) process, which reduced the SAFE process time to completion from days to hours. In the member service/convenience category, Travis CU in Vacaville, Calif., won for its integration of a complete application foundation for the credit union, meeting the needs of each business area. This included leveraging Oracle’s Fusion Middleware in the areas of data warehouse and business intelligence, enterprise content management and business process management. Envision CU, Tallahassee, Fla., won in the miscellaneous category for developing tools to supplement customizable software applications’ base functionality for the CU’s specific needs. Affinity Plus FCU also received a miscellaneous award for its automated in-house statement solution, which automated the deployment of all statement and notice files from one system to another for printing.