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Holiday spending survey just in time for Black Friday

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MADISON, Wis. (11/29/10)--Holiday spending analysis and advice offered by the Credit Union National Association (CUNA) were featured in media outlets around the world in the days leading up to Black Friday--the mother of all shopping days, when consumers need the advice the most. CUNA's analysis circulated through more than 111 broadcast stations affiliated with major networks--NBC, ABC, CBS, FOX, CNN, CLTV, Bloomberg, NPR, Hearst TV, and CLTV in Chicago, among others--in at least 32 states and Washington, D.C., as of Wednesday. The broadcast reports aired in major cities such as New York City; Los Angeles; Washington, D.C.; Chicago; Dallas and Houston, Texas; Orlando; San Francisco; Salt Lake City; Phoenix; Honolulu; and New Orleans, as well as smaller cities. Associated Press and Dow Jones and print media such as The Wall Street Journal also featured articles. The Journal quoted CUNA Senior Economist Mike Schenk, as did many of the reports. In its article, "Consumers Intend to Spend A Little More This Year: Report," Schenk said spending like will increase but "we expect the increase in holiday spending this season to be modest." Other media fast to cover the news were The Huffington Post, Consumer,, and, among others. CUNA expected that even more print media would pick up the story for their weekend editions. The advice was provided during CUNA's press conference with the Consumer Federation of America (CFA) on Nov. 22 in Washington, D.C. Nearly 20 media outlets covered the press conference, and the story quickly spread to global media outlets such as CNN International. Canadian press and press in the United Kingdom also picked up the story. The conference centered on good news for the economy: Roughly 10% of consumers responding to a recent CUNA/CFA survey said they would spend more this year, compared with 8% who said so last year. Schenk and Stephen Brobeck, director of CFA, noted that 23% of respondents saw an improvement in their finances this year, indicating an uptick in spending for the holidays. However, 41% of consumers surveyed said they will cut back spending, compared with 43% last year. They provided tips for consumers to better managing their holiday spending.

Iowa CUs thriving despite economy says report

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WATERLOO, Iowa (11/29/10)--Despite the recent economic downturn, Iowa credit unions have thrived, according to an Iowa Department of Commerce annual report published by the state’s Division of Credit Unions. Combined total assets of Iowa credit unions have grown by nearly 18% from 2008 through 2009 to $8.04 billion, the report said (Waterloo Courier Nov. 22). Credit unions collected more capital and put additional capital into circulation. The number of net loans also rose, the report indicated. Credit unions’ conservative economic policies helped them weather the economic downturn, Jim Niederhauser, director of credit union growth for the Iowa Credit Union League, told the newspaper. “I think it is that conservative approach that has allowed us to expand,” he added. Even with the recent growth, Iowa credit unions constitute less than 10% of all insured investments in the state, Niederhauser said. “Iowa credit unions have a 9.2% market share,” he said. “Our charge is to increase that.” The article also mentioned that Veridian CU in Waterloo, the state’s largest credit union by assets, grew its assets by $250 million to $1.22 billion in 2009. To read the article, use the link.

CUs can avoid work-schedule snafus during holidays

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HIGHTSTOWN, N.J. (11/29/10)--Workplace scheduling for the holidays--and making sure everyone stays in the spirit of the season--can be a challenge. Here are some guidelines from for keeping the credit union adequately staffed during the holidays. (New Jersey Credit Union League The Weekly Exchange Nov. 15).
* Establish ground rules before the holiday season. Clearly spell out holiday work requirements and scheduling practices. Without a firm policy, employees may feel they are entitled to take time off whenever they feel like it. * Put your holiday policy in writing and distribute it to every employee. * Be careful when granting permission to roll over time to next year. Consider stipulating that only a limited amount of unused vacation time can be moved into the next year. * Specify blackout dates. Conflict can usually be avoided by communicating blackout dates, in which attendance is required of everyone, at the time of hiring and providing regular reminders. * Plan for conflict. Conflicts may arise if the number of employees requesting vacations exceeds the minimum coverage threshold. Establish a fair process for resolving such matters. * Consider a compressed workweek. Instead of scheduling five eight-hour days, give employees the option of working four 10-hour days. * Send them all home. If you can, consider closing for a week. * Respect diversity. Most religions have some sort of year-end celebration. Vacation policies should allow for some manager discretion. * Be flexible. Recognize that when dealing with people there are no absolutes. Time-off policies should allow for some manager discretion. * Keep it upbeat. Take a positive approach when discussing the time-off policy with employees. Emphasize the consideration that went into establishing a system that is fair and functional.

Pew study More students borrowing more for college

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MADISON, Wis. (11/29/10)--Undergraduate U.S. college student borrowing has increased dramatically in recent years, and credit unions are poised to help with several programs.
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Graduates who received a bachelor’s degree in 2008 borrowed 50% more--in inflation-adjusted dollars--than their counterparts who graduated in 1996. And graduates who earned an associate’s degree or undergraduate certificate in 2008 borrowed more than twice what their counterparts in 1996 had borrowed, according to a new analysis of National Center for Education Statistics data by the Pew Research Center’s Social & Demographic Trends project. Pew said increased borrowing by college students has been driven by three trends:
* More college students are borrowing. In 2008, 60% of all graduates had borrowed, compared with about half (52%) in 1996. * College students are borrowing more. Among 2008 graduates who borrowed, the average loan for bachelor’s degree recipients was more than $23,000, compared with slightly more than $17,000 in 1996. For associate’s degree and certificate recipients, the average loan increased to more than $12,600 from about $7,600 (all figures in 2008 dollars). * More college students are attending private for-profit schools, where levels and rates of borrowing are highest. Over the past decade, the private for-profit sector has expanded more rapidly than either the public or private not-for-profit sectors. In 2008, these institutions granted 18% of all undergraduate awards, up from 14% in 2003. Students who attend for-profit colleges are more likely to borrow, and they typically borrow larger amounts.
Credit unions have several programs available, including one from a CUNA Strategic Services provider, to help students and their families with financing the costs of college and to provide a way to attract younger members.
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Fynanz, Inc.--a CUNA Strategic Service provider--is a technology provider of custom private student lending programs and turnkey solutions. The company’s technology puts credit unions in the private student lending business without the need to purchase or install any software. The solution includes complete origination, underwriting, servicing and marketing. Fynanz also powers, a private lending marketplace. Since launching in 2008, Credit Union Student Choice has helped nearly 90 credit unions nationwide enter the private student lending market. The program will begin offering private consolidation and graduate business loan programs to its credit union clients in 2011, according to a company announcement earlier this month (News Now Nov. 5). CampusDoor, a provider of student loan solutions, systems and processing to lenders, offers Credit Union (CU) Student Help Smart Option Loans made by Sallie Mae. Through the program, students make payments while in school and graduate with less debt, compared with other longer-term private loan alternatives in which payments aren’t made until after graduation, the company said. For more information, use the links.

Filene study Consumers pay cards before mortgages

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MADISON, Wis. (11/29/10)--Consumers are paying off credit cards before their mortgages, according to the newest report from Filene Research Institute, indicating that the stigma once associated with foreclosure is disappearing.
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These findings come as credit unions throughout North America seek new ways to measure repayment risk. In the report, “Consumer Credit Delinquencies: Why do Some Choose Credit Cards Over Mortgages,” Professor Ethan Cohen-Cole, of the Robert H. Smith School of Business at the University of Maryland, demonstrates that the disappearing stigma of foreclosure is coupled with a rational consideration by consumers to maintain liquidity during tough financial times. The delinquency data indicate:
* A large percentage of consumers choose delinquency on mortgages or credit cards, but not both--and a large fraction of that group chooses delinquency on mortgages while continuing payment on credit cards; * Areas with large declines in home prices show stronger patterns of borrowers paying their cards first in an effort to protect liquidity; * Debt patterns before delinquency are dramatically different than before bankruptcy; and * The tendency to protect credit cards is strongest among those with the least available credit, including the young, those with low credit scores, those with low income, and minorities.
The findings could lead to new, member-friendly lending practices, according to the Filene Research Institute. For example, credit unions that provide lines of credit or credit cards to stressed borrowers may find some improvement in the performance of these loans in the event of a mortgage delinquency. For more information about the report, use the link.

SW Bridge Corp. committee recommends teaming with Ga. Central

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PLANO, Texas (11/29/10)--Southwest Bridge Corporate's Member Advisory Council's Executive Committee has reviewed six potential business models and will recommend its final business model to the full council on Tuesday. According to the committee's update on Southwest Bridge Corporate's website and the bridge corporate's newsletter, eFacts (Nov. 23), the final business model objectives are:
* Provide a full menu of services to reduce the impact on the bridge corporate's members; * Require a minimum level of capital by member credit unions; * Keep credit union ownership and control; * Ensure competitive pricing with high quality service; and * Maintain the capacity for ongoing aggregation.
The committee's final recommendation to the council will have four components:
* Consolidation with Georgia Central CU, likely by July 2011 with capital raised in May or June 2011. Governance would be determined primarily by the bridge corporate's members. The new board would select the new CEO. Headquarters and operations of the consolidated corporate would remain in Plano, Texas. * Capital formula of 0.25% of assets with a maximum cap of $750,000, a cap of $600,000 for credit unions between $240 million and $750 million in assets, and a proportional threshold for those with assets of $50 million on less. Use the resource link for more detail on the formula. The required capital would be perpetual, with no annual adjustment, and would be an investment that pays a dividend. * Continuation of all critical products offered, at the same pricing structure. These include payment and correspondent services, lines of credit, overnight PTA and Cash Management accounts, ALM, investment advisory, broker/dealer and SimpliCD. * Reduction of the consolidated balance sheet to between $2.5 billion and $3.2 billion to minimize the amount of required perpetual capital and ensure provision of sufficient lines of credit to meet settlement and access to contingency lines of credit. There will be a daily maximum cap on deposits in the PTA, but most credit unions will maintain full access. Southwest Bridge Corporate will assist credit unions with investing excess funds using a sweep account from PTA to various short-term investment options. The balance sheet will be managed with a significantly lower risk profile with strong liquidity. The reduced balance sheet does not impact other services, restrict product development initiatives or result in higher fees to credit unions.
The full Member Advisory Council will review the recommendation Tuesday, said Kerry Parker, chair of the executive committee and president/CEO of A* FCU, Austin, Texas. For more information, use the link.