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Ban on nationwide CUs proposed in Ukraine

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KYIV, Ukraine (11/12/09)--The Ukraine's financial services regulator is proposing a ban of credit unions with a field of membership encompassing the entire country. The State Commission on Regulation of Financial Services Markets said that such establishments turn into small banks and have the most problems with payments during the economic crisis, according to the Ukrainian National News Agency (Nov. 6). The commission's draft amendments to the credit union law would require members be either individuals residing in one territory--such as a village, settlement, district or region--or those having a common place of work or studying. The commission also said it will toughen the responsibility of officials at credit unions. The Ukraine has 26 credit unions with an all-Ukrainian status, and all had problems during the economic crisis. They accounted for almost half of the share market's assets.

SW Corporate Forum speaker Economic recovery underway

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DALLAS (11/12/09)--Economic recovery, albeit in the early stages, is underway, a former CNBC chief economist told a packed house at Southwest Corporate FCU's recent Economic Forum. Marci Rossell told credit unions she is "absolutely confident in the real recovery of the global economy" and pointed to three signs of an improving economy: a rapid rise in the household savings rate, a dramatic drop in housing prices, and the nation's opportunity to increase exports, she said (eFACTS Nov. 10). Some say the economy won't grow until consumer spending returns, but savings has to come first, Rossell said. "This recession is fundamentally about the savings rate going from zero to 5%. People are now saving for unexpected expenses and for retirement. It is the best thing that ever could have happened. Yes, it's painful in the short run, but it is absolutely necessary for the long-term health of the economy," Rossell told the group. "Houses have been overvalued for about 10 years. The rule-of-thumb is that consumers can afford a house valued at 2 1/2-3 times their income. The median household income is $55,000 per year, but the median home price had been running about $212,000--above what the median household could afford. The market appears to have stabilized some now, and the median home price has dropped to $170,000," Rossell said. Exports will lead economic growth in 2010, Rossell told attendees. The declining value of the dollar gives the U.S. a competitive advantage in world markets, she said. Also, emerging countries such as China, India and Brazil have a portion of their population moving into a middle class and "they want to buy our goods." The recession, like the Great Depression, has altered the way people view risk. Ultimately, however, consumer spending will depend on income, which means job creation is necessary to get the economy back on track, Rossell said. Rossell predicted that in the next three months, the nation will see the unemployment rate stabilize at 10% and start declining. "That's when we'll get recovery in consumer spending," she concluded.

Bull Bear Report CUs continue growth during crisis

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NEW YORK (11/12/09)--U.S. credit unions continue to grow during the financial crisis by using a conservative, risk-averse approach that has resulted in a slow increase in the number of credit union industry workers and an uptick in member deposits, wrote a columnist Wednesday in the “Bull Bear Report” for fins.com--part of The Wall Street Journaldigital network. “In the 12 months ended in June, 1.6 million Americans joined a credit union, boosting the industry’s assets by 8.2%, according to the Credit Union National Association,” wrote Kyle Stock. “Consider this, only 12 of the almost 8,000 U.S. credit unions have failed this year, according to the National Credit Union Administration, a federal regulator,” Stock added. “At the same time, 120 of the 8,100 or so of the traditional banks in the U.S. have been shuttered this year by the Federal Deposit Insurance Corp. “While the number of credit unions in the U.S. has decreased overall in the past 10 years, consolidation and not failure is the reason--and membership has steadily increased,” Stock wrote. Several credit union CEOs interviewed said they were hiring more staff. What’s driving the growth? Two factors cited in the article are a flight to safety by consumers and the introduction of new products and services by credit unions, such as business loans. “Members go to the credit union and say, 'I’ve got a great car loan from you, I’ve got a great mortgage loan with you. Why can't I get a loan from you for my business?’” Pat Keefe, CUNA vice president of communications and media outreach, told Stock. To read the article, use the link.

Brokerage exec pleads guilty to 2.5M stock theft from CU

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RYE, N.Y. (11/12/09)--The former chief financial officer of a Rye, N.Y.-based credit union's brokerage firm has pleaded guilty to embezzling more than $2.5 million in stocks from the firm over nine years. John Walsh, 54 of Yonkers, pleaded guilty to first-degree grand larceny in the state Supreme Court in White Plains, N.Y. He was chief financial officer of Affina Brokerage Services, a subsidiary of the $773 million asset USAlliance FCU (lohudblogs.com Nov. 11). The thefts, which allegedly occurred from June 17, 1999, to Jan. 27, 2008, involved transferring shares of stock from the credit union into accounts he managed, then selling them for cash. He also created phony stocks and used them as collateral for loans, police said. Walsh faces three to nine years in state prison and restitution of the funds stolen. Sentencing has been set for Jan. 14.

Mortgage portfolio heads up 5 plan to buy home in 2010

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MADISON, Wis. (11/12/09)--Only 5% of Americans say they intend to buy a home in the next year, according to a survey conducted by Move.com. In a similar vein, the Filene Research Institute has just released a report about the future of home ownership and related business opportunities for credit unions. The survey by the real estate listings site indicates that roughly 25% of potential buyers said the No. 1 reason they would purchase a home now is because prices seem to have bottomed out, beating out other factors that include: a wide selection of homes, worries about rising interest rates, and the availability of bargain-priced foreclosures (USA Today Nov. 11). A Filene report, titled “Reimagining the Dream: The Future of Home Ownership,” addresses the “American dream” of buying, owning and maintaining homes and provides credit unions with advice on changes and trends in the housing market (LoneStar Leaguer Nov. 6). Included in the report--by Denise Gabel, Filene chief innovation officer, and Robert Manning from the Rochester Institute of Technology--are historical perspectives, current conditions and idea-generating topics concerning home ownership. Filene is conducting a webinar on the topic Dec. 2. For more information on report and webinar, use the link.

British regulator tightens CU rules

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LONDON, England (11/12/09)--The Financial Services Authority (FSA), the regulator of all providers of financial services in the United Kingdom, intends to tighten rules for England’s credit unions by increasing their minimum capital requirements. Increasing capital and liquidity requirements will offer better protection for members and help credit unions avoid failures and defaults, analysts said (Reuters via The New York Times Nov. 11). Under the changes proposed Wednesday, smaller credit unions need to meet a minimum capital-to-assets ratio of 3%. Currently they only need to be solvent. The National Credit Union Administration’s standard is 7% in the U.S. The changes also would raise start-up capital requirements to about $16,500 for small credit unions and about $83,000 for large credit unions. The changes also would raise the minimum liquidity requirement to 10% of total liabilities for credit unions. The rules changes also aim to bolster governance standards. The FSA cites poor governance as a key reason for the failure of credit unions. The changes would go in effect during the second quarter 2010 and be phased in over two to three years.

Eight indicted in 9 million international ATM heists

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WASHINGTON (11/12/09)--Eight Russian and Eastern European people have been indicted on charges that they are part of an international crime ring that hacked ATMs in hundreds of cities worldwide and stole $9 million within 12 hours. The group is one of two major cyber gangs targeted by law enforcement officials for creating havoc on U.S. financial companies (The Wall Street Journal Nov. 11). It is considered the more sophisticated of the two rings. The other gang is well known to credit unions. It was responsible for online attacks at Heartland Payment Systems, TJX Cos. and others. Credit unions and other financial institutions ended up replacing millions of credit and debit cards to avoid fraud. Those attacks spawned a series of lawsuits and legislative measures about protecting consumers' personal information. The gang's alleged ringleader, Albert Gonzalez of Florida, was indicted in August with his co-conspirators. The newly indicted group is allegedly responsible for a synchronized maneuver that began on Nov. 4, 2008, when four hackers broke into a computer system at RBS WorldPay Inc., the Atlanta, Ga.-based U.S. payment processing division of Royal Bank of Scotland PLC, said the U.S. Justice Department. Between Nov. 4 and 8, they extracted debit card numbers and personal identification number (PIN) codes from RBS's network. Ringleaders then distributed about 44 card numbers and their PINs to a world-wide network of cashers who used cloned prepaid ATM cards to withdraw cash from 2,100 ATMs in 280 cities, including cities in the U.S. The cybercriminals allegedly targeted payroll debit cards that companies issue employees for withdrawing their salaries. Once in the systems, the hackers increased the maximum withdrawal allowed and tried to destroy data on the systems to cover up the break-in, said prosecutors in Atlanta. The cashers who withdrew funds from the ATMs were permitted to keep a share of the amount withdrawn and return the balance to the hackers. After the withdrawals, the hackers allegedly tried to destroy data on RBS's network to conceal the thefts. Indictments included:
* Viktor Pleshchuk, 28, of St. Petersburg, Russia, who allegedly developed a method used to reverse-engineer PINS from encrypted data on RBS WorldPay's network, and is considered by law enforcement authorities as the leader of the gang; * Sergei Tsurikov, 25, of Tallinn, Estonia, who is awaiting extradition to the U.S. from Estonia in what would be the first extradition of a cybercriminal from Eastern Europe, considered a haven for the cyber underground; and * Oleg Covelin, 28, of Moldova, who allegedly distributed account information to others to withdraw money from the ATMs, according to the indictments.
RBS WorldPay detected the breach on Nov. 10 and disclosed it publicly on Dec. 23. The breach compromised roughly 1.5 million cardholders' accounts.

Seventeen CUs servicing Treasurys HAMP plan

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WASHINGTON (11/12/09)--Seventeen credit unions are participating in the Treasury Department’s Home Affordable Modification Program (HAMP). The program aims to help struggling homeowners by modifying their mortgages. As of Sept. 30, participating servicers performed 650,994 trial modifications, offered 919,965 trial period plans and sent about 2.78 million requests for financial information (MortgageOrb.com Nov. 11). Seventy-one lenders are participating in the program. Participating credit unions are:
* Bay FCU, Capitola, Calif.; * Central Florida Educators FCU, Orlando; * Jersey FCU, Cranford, N.J.; * DuPage CU, Naperville, Ill.; * Glass City FCU, Maumee, Ohio; * Great Lakes CU, Chicago; * IBM Southeast Employees FCU, Marietta, Ga.; * IC FCU, Fitchburg, Mass.; * Mission FCU, San Diego; * Oakland (Calif.) Municipal CU; * ORNL FCU, Oak Ridge, Tenn.; * Purdue Employees FCU, Lafayette, Ind.; * Schools Financial CU, Sacramento, Calif.; * SEFCU, Albany, N.Y.; * Stanford FCU, Palo Alto, Calif.; * Technology CU, San Jose, Calif.; and * Wescom Central CU, Pasadena, Calif.
DuPage CU and IC FCU are the most recent additions to HAMP’s list of servicers.

IABC NewsI reports good source for good rates CUs

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WASHINGTON (11/12/09)--Credit cards from credit unions are a good alternative for consumers looking to avoid the high rates and fees charged by some large credit card issuers, ABC News reported Tuesday. The article, “Find a Credit Union with Lower Interest Rates and Fees,” cited a Pew Charitable Trusts study that indicated credit unions’ interest rates on credit cards are about 20% lower than bank rates. “It’s not as difficult to qualify for membership in a credit union as it used to be,” ABC News said. In the comments section of the article, one reader wrote: “I switched everything from #### to my local credit union after #### raised my interest rate. I’m another good customer (paid on time, good credit score) that absolutely refuses to play with what amounts to legalized loan sharking.” The Pew study cited in the article also has garnered coverage in The Wall Street Journal and several regional broadcast news outlets. To read the article, use the link.

Alabama CUs league meet with Rep. Bachus during recess

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BIRMINGHAM, Ala., and TALLAHASSEE, Fla. (11/12/09)--The League of Southeastern Credit Unions and Alabama credit union officials from the 6th Congressional District met Tuesday with U.S. Rep. Spencer Bachus (R-Ala.), ranking minority member of the House Financial Services Committee, to discuss overdraft protection legislation under consideration by the committee.
Click to view larger image U.S. Rep. Spencer Bachus (R-Ala.) ranking minority member of the House Financial Services Committee, reviews hundreds of letters from credit union members in favor of overdraft protection. A group of Alabama credit unions met with him to discuss overdraft protection legislation. From left are Bachus; Linda Cencula, CEO, Alabama Telco CU, Birmingham; and Steve Swofford, CEO, Alabama CU, Tuscaloosa. (Photo provided by the League of Southeastern Credit Unions)
Legislation removing the overdraft protection services option is not the consumer-friendly proposal that its proponents claim, the group told Bachus. Many members rely on the service to help bridge the financial gap at the end of the month or pay period, said Joe McGee, CEO, Legacy FCU, Birmingham. Linda Cencula, CEO, Alabama Telco CU, Birmingham, said members use overdraft protection plans to avoid insufficient fund fees and the "domino effect that results in a declined check." Steve Swofford, CEO, Alabama CU, Tuscaloosa, presented hundreds of letters signed by members in favor of overdraft protection. "Either they use the service and do not want to lose that option, or they do not use it but fear that if this legislation passes, all financial institutions will no longer be able to offer free checking accounts due to the revenue shortfalls created by this bill," he said. Also in the group was Bill Connor, executive vice president/chief financial officer, America's First CU, Birmingham. "Having leaders from credit unions taking the time to meet with elected officials to explain the practical effects and consequences of legislative action is absolutely necessary to maintaining the environment in which credit unions can serve their members' needs," said league President/CEO Patrick La Pine. The Credit Union National Association (CUNA) recently testified on Capitol Hill in favor of credit unions' ability to offer members overdraft protection services. CUNA supports the programs as a way credit unions can serve members' financial needs and to help them resolve short-term financial problems. CUNA promotes "best practices" standards to distinguish credit union overdraft services from many bank programs that have been marketed to boost fee income without regard for the best interests of consumers.

CU System briefs (11/11/2009)

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* LANSING, Mich. (11/12/09)--Twenty-one attendees from Michigan's Metro East Chapter of credit unions met with seven state lawmakers Oct. 30 for a legislative breakfast, said the Michigan Credit Union League (Michigan Monitor Nov. 9). Credit unions received updates and weighed in on the state budget, account error notification, elder abuse, a zero-dollar political action committee reporting law, business lending, credit unions' tax exempt status and financial literacy. Lawmakers present included State Sens. Dennis Olshove (D-Warren) and Mickey Switalski (D-Roseville), and State Reps. Kim Meltzer (R-Clinton Township), Jennifer Haase (D-Richmond), Phil Pavlov (R-St. Clair Township), Jon Switalski (D-Warren) and Lesia Liss (D-Warren). In the photo, Sen. Mickey Switalski, left, talks with Michigan Schools and Government CU President/CEO Peter Gates. (Photo provided by the Michigan Credit Union League) … * PORTLAND, Ore. (11/12/09)--Johnathan D. Singleton, 43, of Portland was sentenced Tuesday in a U.S. District Court to 12 years and seven months in prison for robbing the Northwest Resource FCU, an $86 million asset, Portland-based credit union, on the morning of May 26. Singleton also was sentenced to three years of post-prison supervision. The robber entered the credit union, asked a teller for a business card and indicated he had a gun. He fled with $4,840 but was caught by police after he disembarked from a cab. All but $50 of the money was recovered. He has four prior convictions for robbery as well as convictions for assault and burglary (The Oregonian Nov. 10) … * PHOENIX (11/12/09)--Jorge Gutierrez, 31, of Tempe, Ariz., was sentenced Monday to nearly five years in prison for charges related to a string of bank and credit union robberies (Associated Press Newswires Nov. 10). Gutierrez was sentenced to 57 months after pleading guilty in August to robbing banks and credit unions in Phoenix, Tempe and Chandler. In each case the robber covered his face and presented notes to tellers demanding money and indicating he had a gun. He was arrested March 24 as he fled the Chandler branch of Desert Schools FCU, a Phoenix-based credit union, with about $2,300 … * MUSKEGO, Wis. (11/12/09)--Corporate Central CU based in Muskego, Wis., has promoted Jennifer Woznicki to manager member relations, announced the corporate. She joined the corporate in September 2000 as marketing and education director and in 2008 became the director of implementations and service support. In her new position, she is responsible for leading and providing oversight for member relations staff and enabling superior service to members and future members. She also is responsible for new and future accounts and implementation of new service conversions …