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Equifax Card debt up new credit lags pre-recession

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ATLANTA (11/23/11)--Although total consumer debt is almost back to the level it was before the recession hit,  the amount of new credit issued is lagging behind the pre-recession levels by 45%, according to a new study from Equifax.

Total consumer debt in October was $2.38 billion, compared with $2.39 billion in October 2006, said the Equifax National Credit Trends Report, a monthly report based on data from more than 585 million consumers and 81 million businesses worldwide.

Bank credit card originations remained strong. The number of new bank credit cards issued from January through August  totaled $514 billion. That compares with $942 billion during the same period in 2006 and represents a 25% increase over that timeframe in 2010, said Equifax. Retail credit card originations, which bottomed out during the period in 2010 at 19.7 million,  rose 7% to 21 million issued for the period this year.

Michale Koukounas, senior vice president of special client services at Equifax,  noted the lending industry is experiencing mixed results, depending on sector. "Bank credit card and auto lending, in particular, have consistently performed strongly this year, providing some ground for optimism, but the severe retraction within home equity lending continues to underscore the level of impact that declining home values are having on the economy."

Other findings:

  • Home equity lending continued to retract.  In 2006-2007, the total number of new home equity lines exceeded the number of total new bank credit card originations. Now it's reversed. Home equity lines opened in January-August 2011 totaled 549,000--the lowest total for that time frame in six years--compared with 2.3 million in that period in 2006.
  • Consumer finance was slow to recover to pre-recession levels. The average consumer finance amount for August 2011 was $2,902--the lowest level in six years--compared with $4,133 in August 2006.
  • Total new auto loans in August were $34.4 billion--about equal to August 2007's $34.5 billion.
  • Student loans originated in January-August remained consistent over the past six years. In 2011, the number of loans totaled 9.5 million--the same as in 2006 and 2009.  The average loan amount decreased during that same time to $3,631 in 2011 from $5,934 in 2006.
  • Subprime borrowers receiving bank-issued credit cards grew dramatically--by 56% during January-August 2011 from the same period in 2010.

Southeast Corporate Town halls see merger support

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TALLAHASEE, Fla., and COLUMBUS, Ohio (11/23/11)--Southeast Corporate FCU, Tallahassee, Fla., announced Monday that member response for its merger with Corporate One, Columbus, Ohio, has been positive, based on a series of town hall meetings.

Eight town halls were held throughout Mississippi, Florida and Alabama, and ended last week in Jacksonville, Fla.

Brad Miller, Southeast Corporate's president/CEO and Lee Butke, president/CEO of Corporate One, presented the vision for the newly combined entity.

The merged organization will have a strong capital position in terms of the ratios and actual dollars. It will be a well-capitalized institution meeting the required permanent leverage ratios today and exceeding all long-term capital ratios under the new rule, Southeast Corporate said.

The merged corporate also will provide for continuity of services for Southeast's members, based on the synergies of the two corporates' products and services and system platforms.

Miller said he was heartened by the level of participation and support evident at meetings. "It's clear that our merger with Corporate One is the best and only remaining option to protect our members' $63 million in capital while preserving the franchise value built over the past 30 years of dedicated service to credit unions," he added.

Butke agreed. "Corporate One is in the best position to help preserve member capital while continuing to provide the same products and services along with additional products not currently offered by Southeast as well as a combined balance sheet of sufficient size to provide much needed liquidity to the system," he said.

"The No. 1 question at the town halls was about our ability to preserve the members' capital,' he added. "What I heard from the attendees is a huge sense of relief that a merger between Southeast Corporate and Corporate One will preserve the members' existing capital, but also provide real value to them for their ownership investment."

Butke and Miller said the merger plan and thorough due diligence process is continuing. "We expect to move through the process as quickly and diligently as possible," said Miller. "We have completed the regional town hall meetings and are now focusing on functions and processes such as system integration and ensuring service continuity to the members. Once all that is completed, we will finalize our merger application to the National Credit Union Administration."

CU System briefs (11/22/2011)

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  • FORT WAYNE, Ind. (11/23/11)--A man arrested for trying to hold up Freedom Financial FCU in Fort Wayne, Ind., Friday morning was a member of the credit union who allegedly  told police he tried to rob it because he was in debt and in danger of losing his house.  Michael Boester, 34, also allegedly said he had banked at the Fort Wayne-based credit union for much of his life and knew employees by name.  He allegedly said he saw the scared look of one teller and started to leave, police said.  The robbery was thwarted when another member saw a man enter, yell "Give me your money" and "Put the money in the bag," and elbowed the robber, knocking him down. The member then followed the fleeing suspect and got a license number of the getaway vehicle.  Boester and Molly Hutmacher, 23, were arrested as they arrived in their driveway.  Hutmacher's two-year-old daughter allegedly was in the van during the robbery, said police (The Journal Gazette Nov. 22) …

  • WILMINGTON, Calif. (11/23/11)--Dignitaries helped Family FCU, a low-income designated community development credit union, launch a remittance corridor with the Federal Reserve and Mexican Consulate on Nov. 12 to provide low cost remittance services for members with family in Mexico . (See News Now Nov. 15 for full story.) From left are Mexican Consul General David Figueroa Ortega; U.S. Rep. Janice Hahn (D-Calif.); Family FCU CEO Lucia Moreno-Linares; National Federation of Community Development Credit Unions West Coast Program Officer Rafael O. Morales; Family FCU Founder Father Luis Valbuena, OMI; Wilmington (Calif.) Honorary Mayor Lupe Lopez; and Federal Reserve Bank Director of FedGlobal ACH Payments Jorge Jimenez. Also attending were representatives from three cajas (credit unions ) in Mexico: Ignacio Macias Mercado from Caja Popular Agustin de Iturbide; Marco Estrada and Jaime Carrillo from Finamigo; and Alejandro Olvera Cano from Caja de la Sierra Gorda. (Photo provided by the National Federation of Community Development Credit Unions) …
  • MERIDEN, Conn. (11/23/11)--The Connecticut Credit Union Charitable Foundation presented donation checks totaling $25,000 to Connecticut Gov. Dannel P. Malloy's Care & Share Holiday Food Drive. The program benefits the Connecticut Food Bank and Foodshare. Food bank reserves in the state are seriously depleted because of a destructive hurricane in August, a severe snowstorm in October, and poor economic conditions, said the foundation.  From left are Tony Emerson, president/CEO of the Credit Union League of Connecticut; Nancy L. Carrington, president/CEO of Connecticut Food Bank; Kelly Fuhlbrigge, league vice president of government relations; Gov. Malloy; Joanne Todd, league board chair and president/CEO, Northeast Family FCU; Gloria J. McAdam, president/CEO, Foodshare; and Paul V. Dorner, foundation chair and chief administrative officer, First Bristol FCU. (Photo provided by the Connecticut Credit Union Charitable Foundation)  …

Consumers CU hosts citizenship workshop

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WAUKEGAN, Ill. (11/23/11)--Consumers CU (CCU), Waukegan, Ill., is hosting a workshop to assist eligible legal applicants in obtaining U.S. citizenship.

The workshop, set for 9 a.m. (CT), Dec. 10, is offered with the New American Initiative Program, North Suburbs Collaborative formed by the Fr. Gary Graf Center, HACES, Hebrew Immigrant Aid Society and Hanul Family Alliance.

"We believe those who've lived our entire lives in the U.S., or have already obtained our citizenship, have a responsibility to assist those coming to this country looking for a better way of life, to do the same," said Sean M. Rathjen, CCU president. "This program gives eligible applicants a step in the right direction by offering the critical tools necessary to achieve their citizenship."

The cost of the citizenship application has risen during the past few years, leaving many eligible legal permanent residents without the opportunity to apply to become citizens, said CCU. It costs $680 to file an application for citizenship, according to the City University of New York, To alleviate this situation and assist eligible legal permanent residents in fulfilling the dream of U.S. citizenship, CCU, with $550 million in assets, offers a Citizenship Loan program.

The loan application is completed after the New Americans Initiative collaborative has determined eligibility for citizenship. The program consists of a loan for the amount of the application fee, to be repaid in 10 monthly installments with minimal fees and a low rate of interest.

Banks adding in new fees to replace debit fee

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MADISON, Wis. (11/23/11)--Thanks to Bank Transfer Day and other consumer backlash against bank fees, big banks have backed down from charging debit card usage fees.  Or have they? Some sources are reporting a boost in other types of fees to make up for lost revenue.

Whatever the banks' new strategy, credit unions continue to make hay of the debit card fee debacle prompted by Bank of America's $5 a month fee to use debit cards. That fee has been rescinded, and other big banks that considered the fees abandoned them.

But as the eighth week begins since BofA unveiled the fee, media reports continued to stream in about credit unions gaining members who moved their accounts from banks to credit unions. Although not as frequent as the reports leading up to Nov. 5th's Bank Transfer Day and the week after, the reports are still going strong in national, regional and local media.

Still, credit unions and consumers should stay alert to new fees from the big banks. Credit unions can continue to promote their own no-fee or lower-fee policies to attract members fed up with high fees.

Just because the banks took certain fees off the table doesn't mean they have consumers' best interests at heart,  John Ulzheimer, credit specialist at, told CNNMoney (Nov. 21). Ultimately, a bank's bottom line comes first, he said, noting financial institutions constantly look for ways to grow revenue through fees, lower deposit rates or higher credit card interest rates. Ulzheimer also told CNNMoney that banks don't care what their customers think about them --so long as the customers  keep using their services. "Banks care when they lose money--that's about it," he said.

Money Magazine reported that despite the mass retreat of banks, they are "still looking to recoup the $7 billion a year they'll lose to new limits on the debit swipe fees that merchants pay" ( Nov. 17).

Banks are having to rejigger their business models," said Richard Barrington of "They'll start charging for things you took granted."

What kinds of fees are banks charging?

  • New or increased checking account maintenance fees. These  "seem to be sticking, so expect more action there," said Money.  For example, Citibank is raising both monthly charges and minimum balances.  US Bank doubled its monthly checking account fees to $2 a month.  The article suggested avoiding monthly checking fees by banking where the consumer's  mortgage is, using direct deposit, or meeting balance minimums in deposit or investment accounts.  But since interest rates on savings are low, it doesn't make sense to put thousands of dollars in a bank just to save $10 a month, said the article.  David Robertson, publisher of The Nilson Report, indicated that switching to another big bank won't help. He suggested trying credit unions or online banks instead. (The article also linked to credit unions' to find fee-free accounts. )
  • Increased replacement card fees. CBS News reported Nov. 15 that many banks are quietly increasing existing fees and creating new ones ( Nov. 16).  For example, BofA now charges $5 to replace a debit card. But, if the customer needs the replacement quickly, it charges $20 to FedExpress it.
  • New fees for wiring funds.  TD Bank, beginning in December, will charge $15 for cash wired to accounts, said CBS.
  • Higher fees for not meeting a new or higher  minimum balance. Some banks are raising the minimum balance required for a checking account. Many are increasing checking fees by $2 to $3 a month.  BofA charges $12 a month for personal checking. It also has a new menu of checking accounts--with fees of $6 to $25 a month--in some states that it plans to roll out to more states in 2012. And, Citigroup is charging $10 a month, and Chase, $12 a month, said CBS.
To avoid fees, consumers can consolidate all their accounts with the same financial institution; move checking and savings accounts to where they have their mortgage loan; and negotiate a free checking account if they are refinancing. And "take a look at credit unions and community banks, which aren't creating and raising fees," CBS News said.

Black Friday Cyber Monday bring out shopping scams

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MADISON, Wis. (11/23/11)--Black Friday is traditionally the biggest shopping day of the year. More recently, the Monday following Thanksgiving has been adopted as Cyber Monday, endorsed by the e-commerce industry as a day of sales and promotions without interfering with the traditional way to shop.

Because credit unions process and store transactions for their members, they are among the first places consumers turn to when they suspect fraudulent activity. As such, credit unions are in an ideal position to provide their members advice on avoiding fraud and how to shop safely.

The National Foundation for Credit Counseling offers five steps credit unions can share with their members before they hit the stores Friday:

  • Beware of special credit card offers. Issuers are tempting consumers by offering incentives such as no-interest balance transfers, extra perks by meeting certain spending levels, and increased cash back in specified categories. However, no deal is a good deal if the consumers can't afford it.  Responsible shoppers will commit to spending no more than what they can repay in full when the bill arrives.
  • Review all existing debt obligations. Consumers should review loans and credit card balances before they head to the stores, so they know what they are already committed to repay.  This reality check may put a temporary damper on the holiday mood, but it's better than digging a deeper financial hole.
  • Create a plan. Consumers should know what they are shopping for, and, most critically, what they plan to spend.
  • Find the best deals at home. Shoppers should compare prices online before heading out to stores. Be aware of time restrictions. Some prices may apply only during certain times throughout the day. Once the actual shopping begins, going directly to the store that has the item at a good price will save time, gas, money and frustration.
  • Limit spending to as few cards as possible. Spreading purchases across multiple cards can trick shoppers into overspending. Holiday shoppers should designate one card for holiday spending, and remove all others from their wallets. This will not only help shoppers stay within their budgets, it will also lessen the damage in case of loss or theft.
For consumers shopping online this holiday season, credit unions can offer their members these tips from the Internet Crime Complaint Center to avoid being victims of cyberfraud:

  • Do not respond to unsolicited (spam) e-mail
  • Do not click on links contained within an unsolicited e-mail.
  • Be cautious of e-mail claiming to contain pictures in attached files, because the files may contain viruses. Only open attachments from known senders. Always run a virus scan on attachment before opening.
  • Avoid filling out forms contained in e-mail messages that ask for personal information.
  • Log on directly to the official website for the business identified in the e-mail, instead of "linking" to it from an unsolicited e-mail. If the e-mail appears to be from the consumer's financial institution, credit card issuer, or other company he or she deal with frequently, statements or official correspondence from the business will provide the proper contact information.
  • Contact the actual business that supposedly sent the e-mail to verify that the e-mail is genuine.
  • If the member is requested to act quickly or there is an "emergency," it may be a scam. Fraudsters create a sense of urgency to get consumers to act impulsively.
  • If the member receives a request for personal information from a business or financial institution, always look up the main contact information for the requesting company on an independent source (phone book, trusted Internet directory or legitimate billing statement) and use that contact information to verify the legitimacy of the request.
  • If a deal looks too good to be true, it probably is.

Tips from Mich.s Financial Counseling Best Practices guide

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LANSING, Mich. (11/23/11)--Michigan credit union financial counselors have shared their best practices and financial counseling program tips in a guide called Financial Counseling Best Practices that is available on the Michigan Credit Union League (MCUL) website.

The guide was compiled by a working group of credit union financial counselors who are members of the MCUL & Affiliates' Financial Education Council. The best practices aim to assist credit unions in forming or improving a formal or informal financial counseling program.

The guide includes program details and the experiences of several Michigan credit unions. The information is geared to credit unions hoping to start a financial counseling program or those wanting to supplement their existing program.

The guide includes:

  • Best practices to establish a financial counseling program;
  • Best practices for training;
  • Best counseling practices for sessions;
  • Reporting results;
  • Other educational opportunities;
  • Advertising; and
  • Credit union financial counseling program examples.   

To determine the need for establishing a financial counseling program, a credit union should talk to its lending department--loan interviewers, underwriters, collection and member-service staff--and survey its members, MCUL said.

Once a need has been identified, a credit union should outline a strategic plan or expected outcome for its budget counseling program. The plan should include statistics on current delinquency, results from other credit unions of similar size and situation, and the desired outcome. A chart of projected savings as result of the program may be added to the plan, the league said.

The biggest challenge to the program for a credit union is identifying the right person to be a budget counselor. Financial counselor roles include advising, instructing and motivating. Counselors must have a clear understanding of money management and the elements of creditworthiness, the guide said.

Consumers need financial guidance but tight credit union budgets often restrict the number of staff able to train. MCUL offers a guided self-study financial counseling training program, and the Credit Union National Association offers a Certified Financial Counselor School. Use the link.

To see the MCUL Financial Counseling Best Practices guide, use the link.

CUNA closed ThursdayFriday no INews NowI

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WASHINGTON and MADISON, Wis. (11/23/11)--The Washington, D.C., and Madison, Wis., offices of the Credit Union National Association will be closed Thursday and Friday in observance of the Thanksgiving holiday.

News Now will not publish Thursday and Friday, but will resume regular publication on Monday.

National Desjardins fin ed winners unveiled by CUNA

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MADISON, Wis. (11/23/11)--The Credit Union National Association (CUNA) has announced the winners of the 2011 Desjardins Awards for Youth and Adult Financial Education. 

Entries from more than 30 states yielded 10 winners, along with several honorable mentions, in the two categories. 

Honored organizations will be recognized during a reception at CUNA's 2012 Governmental Affairs Conference (GAC), March 18-22 in Washington, D.C.

The awards are named for Alphonse Desjardins, the founder of the North American credit union movement, and honor credit unions for their commitment to youth and adult financial literacy.

"We congratulate this year's winners and honorable mentions for their admirable work educating youth and adults about financial education skills," said Vikki Kinsler, CUNA's program coordinator for the Desjardins Awards. "Credit unions, chapters and leagues from more than 30 states applied for the award, which shows the movement's increasing commitment to this type of service for members."

CUNA added the Desjardins Adult Financial Education Award in 2011 to its Youth Award to recognize credit unions' efforts to teach personal finance concepts and skills to members and nonmembers age 18 and older. The change brings all personal finance education activities under the Desjardins name, including the award for leagues. 

CUNA received 30 entries in the Adult category and 55 entries for the Desjardins Youth Financial Education Award.

"Part of the mission of credit unions is to promote thrift among our members," said Bill Cheney, CUNA president/CEO. "Financial education is a key component of accomplishing this mission--it's good for the members and differentiates credit unions from other financial institutions."

Winners for the Desjardins Youth Financial Education Award include (asterisks indicate repeat winners):

  • A+ FCU*, Austin, Texas;
  • Community CU, Lewiston, Maine;
  • CORE FCU, East Syracuse, N.Y.;
  • Credit Union Association of New York*, Albany, N.Y.; and
  • Service 1st FCU, Danville, Pa.;
Honorable mentions include:

  • Altra FCU*,  Onalaska, Wis.;
  • Arapahoe CU*, Centennial, Colo.;
  • Beach Municipal FCU*, Virginia Beach, Va.;
  • Greater Minnesota CU*, Mora, Minn.;
  • Knoxville TVA Employees CU, Knoxville, Tenn.;
  • Maine Credit Union League*, Portland, Maine;
  • Palmetto Citizens FCU*, Columbia, S.C.;
  • Public Service CU, Romulus, Mich.;
  • Virginia Educators CU*, Newport News, Va.
Winners for the Desjardins Adult Financial Education Award include:

  • CommunityAmerica CU, Kansas City, Mo.;
  • Community CU, Lewiston, Maine;
  • Financial Fitness Greater Austin Credit Union Facilitators,  Austin, Texas;
  • Greater Minnesota CU*, Mora, Minn.; and
  • Latino Community CU, Durham, N.C.
Honorable mentions include:

  • Credit Union 1*, Anchorage, Alaska;
  • Denver (Colo.) Community CU*;
  • Palmetto Citizens FCU,*  Columbia, S.C.;
  • Patelco CU, Pleasanton, Calif.; and
  • Tinker FCU, Oklahoma City, Okla.
In December, PDFs of the winning entries will be available for viewing on CUNA's website.

The winning entries will be on display at CUNA's 2012 GAC.