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PCUA plans biz lending academy

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HARRISBURG, Pa. (12/6/07)--The Pennsylvania Credit Union Association (PCUA) announced that it is working to create a business lending academy not only for credit unions in Pennsylvania, but also for those in the Mid-Atlantic region. Molly Snody, director of business advisory services at the PCUA, is heading up the effort. “I’m sensing a big need for business lending training--for credit unions of all stages of implementing their lending programs,” Snody told News Now. Snody currently provides on-site training to credit unions who are considering the market of member business lending. “We’ve had great success,” she said. Through the academy, Snody hopes to educate credit unions about lending. Prolific credit union lenders are running against their member business lending caps, which are imposed by the National Credit Union Administration. They need outlets to sell loans to, she said. Snody is currently surveying credit unions to find out how the academy could best fill their training needs. The academy will be based on feedback from the survey, and Snody hopes to launch training in early spring. Four credit unions actively involved in lending have already responded to the survey. “We’re hoping to hear from credit unions just starting out,” she said. Snody initially thought of doing the academy in the form of a workshop over several days. She is using the survey to ask credit unions how the training should be offered. Her current training is in-person and customized to each credit union’s needs. Snody emphasized that the academy isn’t necessarily encouraging credit unions to get into member business lending, but rather to help those who are committed to it understand the process.

Wireless banking text messaging draws young members

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AUSTIN, Texas (12/6/07)--Golden 1 CU of Sacramento has found a way to connect with members under 30--by offering free wireless banking and text messaging. Mobile banking options have drawn 10,000 mobile banking users to Golden 1, said Paul Sidhu, Golden 1’s manager of electronic commerce at the Credit Union National Association’s (CUNA) Your Essential Strategies (YES) Summit in Austin. Forty-percent of Golden 1’s mobile banking users and 30% of its 1,600 text messaging users are under the age of 30. Golden 1 has offered text-messaging access since 2000, and wireless banking since 2002. Text messaging and wireless banking allow members to view account balances and transaction history, transfer funds and pay bills. Users also can look up loan rates, branch and ATM locations, and e-mail credit union staff. The credit union provides security for users by not allowing high-risk transactions or features. “There’s no way you can save your password on the phone,” Sidhu said. In 2001, Wells Fargo discontinued its wireless program, which was limited to Palm Pilot and Sprint users. Golden 1 learned from that, and chose to use a format that works with all cell phones, allows any carrier, is easy to maintain and includes text-messaging options.

Carolina CUs payday checking wins award

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CHARLOTTE, N.C. (12/6/07)--A program that makes automated clearing house payroll available two days early to U.S. Postal Service (USPS) employees has won an award. The $62 million asset, Charlotte-based Carolina Postal CU’s “Priority Payday Checking” program was bestowed a Best Practices Award by The Credit Union Journal. USPS employees who have a checking account and direct deposit can receive their paychecks on Wednesday, instead of the traditional payday Friday (North Carolina Credit Union League’s Weekly Update Nov. 26). “As a credit union solely serving USPS and federal employees, we look and listen to what our members’ needs are,” said Joy Watts, Carolina Postal CEO. “As with many people, time as one of the biggest concerns facing our USPS members.” From that need, the idea of Priority Payday Checking arose, she said. “Rather than just extend the hours on a payday Friday, like every other financial institution, we decided to think out of the ‘bank’ and we moved payday up by two days,” Watts concluded.

Preserve CUs ability to serve WOCCU tells G8 meeting

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MADISON, Wis. (12/6/07)--Better access to payment and settlement systems, appropriate levels of regulation, and continued tax-exempt status critical to helping credit unions worldwide effectively serve their members--were the recommendations the World Council of Credit Unions (WOCCU) made to ministers of finance for the G8 nations at last week’s outreach meeting on remittances in Berlin.
Click to view larger image World Council of Credit Unions Dave Grace, vice president of association services, addresses the G8 ministries of finance in Berlin, Germany last week.
WOCCU’s experience also shows that increasing remittances between countries have become a critical factor in global economic development, said Dave Grace, WOCCU vice president of Association Services, to an assembled audience of 80 attendees. The meeting included delegations from the G8 nations of Canada, France, Germany, Italy, Japan, Russia, United Kingdom and the U.S. Representatives from the European Commission, as well as other countries, international organizations, the private sector, civil society, and academia also participated. As a participant in “Reaching Out to the Unbanked,” a panel discussion featuring representatives of international microfinance organizations, Grace shared ways to broaden access to financial services, including improved access to remittances as one strategy to reach populations with limited or no financial resources.
Click to view larger image The official boardroom of Bundesministerium der Finanzen (German Ministry of Finance) hosted the G8 participants for a two-day meeting focused on increasing global remittance flows held in Berlin, Germany last week.
Physical, financial and environmental barriers still block some of the world’s population from financial services access. Surmounting those barriers may involve policy and procedure strengthening or changes at national and even local levels, he said. “Credit unions require direct access to national payment/settlement systems, card networks and deposit insurance programs in all markets in order to serve members,” Grace said. “Prudential and proportional regulatory supervision of credit unions also is critical to assuring a safe and sound operational environment. We encourage retention of tax-exempt status for financial co-ops to ensure that they can continue to serve the poor and reach unbanked populations.” During the two-day meeting, representatives from the World Bank, International Monetary Fund, Western Union, Citibank and others, led six panel discussions on topics including the recent trends and development impact of remittances. The meeting accomplished two main objectives, Grace said. Participants sought to revisit and assess the progress of measures to facilitate remittance flows agreed upon at the Sea Island (Georgia) Summit hosted by President Bush in 2004. During this meeting, the G8 launched its Global Remittance Initiative as part of the larger Global Poverty Action Plan.
Click to view larger image Representing the World Council of Credit Unions, Dave Grace (center) speaks on a panel whose topic was “Reaching out to the Unbanked” at the G8 meeting on Remittances in Berlin, Germany last week. (Photos provided by World Council of Credit Unions)
The Berlin meeting also served as a forum to initiate new dialogue and to promote other potential measures for facilitating remittance flows. As a result of the meeting, participants developed seven recommendations for the G8 countries which addressed challenges, policy and regulation issues of further improving global remittances flows. Remittances have grown to more than US$240 billion a year in 2006--two and half times more than the total annual aid paid from developed to developing countries, and two-thirds the amount of global foreign direct investment. In addition to this latest meeting with the G8, WOCCU has also testified before the U.S. Congress and was quoted in the London Financial Times on remittances in August 2007.

Filene study How much CU capital is enough

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MADISON, Wis. (12/6/07)--Credit union board members and employees are likely to measure their credit union using two metrics: asset size and capital ratio. There is a range of thought on what constitutes a reasonable capital level. Most credit unions have a general preference for more capital in the service of safety and soundness. The Filene Research Institute wanted to know whether the “more capital is better” preference has led to U.S. credit unions holding too much capital. The result is a newly released study by William E. Jackson III, professor of finance at the University of Alabama, and a Filene Research Fellow. In “Is the U.S. Credit Union Industry Overcapitalized? An Empirical Examination,” Jackson addresses two fundamental questions: Was the capitalization rate in 1990 reasonable given the risk profile of the credit union industry? And has the risk profile of the credit union industry increased to such an extent as to warrant an increase in capitalization to current levels? Jackson reports that the capital level of the U.S. credit union industry stood at 11.6% at the end of 2006, more than four percentage points higher than the legislatively mandated level of “well capitalized” and exactly four percentage points higher than U.S. credit union capital in 1990. Jackson concluded that the industry capitalization rate in 1990 was reasonable and perhaps too high; and that the credit union industry in 2006 was less risky than it was in 1990. These answers, coupled with an analysis of credit union regulatory capital regime and a comparison of credit union and bank capital requirements, lead Jackson to state that U.S. credit unions are “overcapitalized by an amount in the 30% to 40% range.” Translated into dollars, U.S. credit unions are overcapitalized between $8.8 billion and $11.7 billion. “The dramatic conclusions from this research may cause considerable debate in the industry,” said Filene Chief Research Officer George Hofheimer. “Credit unions need to balance their efforts to achieve safety and soundness with efforts to put their capital to best use. “To meet the challenges of the future, credit unions need to invest in new delivery channels, technology, innovative products, talent development, collaborative strategies, marketing, and many other capital-intensive activities. According to Jackson’s assessment, almost all credit unions are overcapitalized,” he continued. Hofheimer urges credit unions “to have an honest discussion about the most appropriate balance of safety and soundness versus reinvestment in the credit union. As credit unions move forward, an honest debate about the appropriate use of capital is warranted.” Copies of “Is the U.S. Credit Union Industry Overcapitalized? An Empirical Examination” and other Filene research reports are available free to Institute members; $125 to non-members. An electronic version is available. For more information, use the link.

CUs learn how to beat payday lenders to help young adults

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AUSTIN, Texas (12/6/07)--There are more payday lending stores in the U.S. than McDonalds and Burger King restaurants combined, according to Lois Kitsch, national program manager of Real Solutions at the National Credit Union Foundation. Kitsch shared some insight on how credit unions can help young adults avoid payday lenders by offering alternatives at the Credit Union National Association’s Your Essential Strategies (YES) Summit in Austin. Credit unions should think about the following when deciding to offer payday loans: target market, product mix and delivery system, education, finding Generation Y employees and resources. “Remember that not all of Gen Y are college students,” Kitsch said. “In this country today, only about 70% of high school seniors actually graduate from high school. This dramatically decreases their earning power over their life times.” Credit unions must be ready to offer low-cost financial products for this very diverse market niche, she said. As an example, Kitsch mentioned the Appleton, Wis.-based Prospera CU’s GoodMoney program. GoodMoney is a collaboration with Goodwill Industries and the Financial Information Service Center, which places credit union services in Goodwill retail stores. GoodMoney provides short-term loans at lower rates than those of payday lenders, as well as check-cashing, money orders, bill payments and international wire transfers (News Now Oct. 10).

Veterans Family Fund CD helps veterans CUs participate

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TACOMA, Wash. (12/6/07)--So far, two credit unions in the Northwest are involved in a program that allows participants who invest in a certificate of deposit to send part of their earnings to help war veterans and their families. Two Tacoma based credit unions--the $586 million asset Harborstone CU, and the Tacoma branch of the $242 million asset, Fort Lewis-based America’s CU--are two of 11 state financial institutions participating in the fund. The Veteran’s Family Fund certificate of deposit program was launched Wednesday at the Greater Tacoma Convention and Trade Center. The fund is the brainchild of Jane Jacobsen, a Vancouver, Wash. executive director of the Confluence Project--which places public art in the regional area (The News Tribune Dec. 4). The way the program works is: participants invest a minimum of $100 in a six-month CD. When the certificate matures, they keep half the interest, and the other half goes into a fund to help Afghanistan and Iraq veterans and their families who are experiencing financial hardships. The program needed the infrastructure to distribute the funds and a way to promote it statewide, so John Lee, director of the Washington State Department of Veterans Affair, agreed to help. The program organizers hope the fund will have $300 million in deposits by the 2008 and to eventually have a credit union or financial institution in every community in the state participating in the program.

Former database administrator pleads guilty to Fidelity data theft

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JACKSONVILLE, Fla. (12/6/07)--A former database administrator for Fidelity National Information Services in St. Petersburg, Fla., pleaded guilty this week to charges of conspiracy and fraud in connection with the theft and sale of consumer data that affected 8.5 million customer accounts. William Sullivan faces a fine of up to $500,000 and 10 years in prison. He made a plea agreement with prosecutors after admitting that he was involved with the access and sale of customer data at Fidelity and Certegy Check Services (Bank Technology News December 2007). Sullivan was not authorized to view the data that he sold to a second individual, who in turn sold the information to marketers. Debit card and credit card data was included in the information. Sullivan, who was fired from his position in July, made a $580,000 profit on the sale. He will pay restitution to Fidelity. The data has not been linked to additional fraud or account theft, according to Fidelity. The breach was discovered in July after a retail check processing customer alerted Certegy to a correlation between a small number of check transactions and the receipt by the retailer’s customers of direct telephone solicitations and mailed marketing materials (News Now July 5). In February 2006, Fidelity bought Certegy Card Systems from Equifax (News Now Feb. 27, 2006). Equifax had bought CUNA Card Services, based in Middleton, Wis., from what was then-called CUNA Service Group and renamed it Certegy in 1996. The Middleton office, which employed more than 500 people at one time, became a small satellite office, according to News Now.

CU System briefs (12/05/2007)

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* BEAVERTON, Ore. (12/6/07)--The Credit Union Association of Oregon (CUAO) will launch the Oregon Compliance InfoSight, an online compliance information system, in January. The free resource gives CUAO-affiliated state and federally chartered credit unions access to important compliance topics and the ability to access regulatory and compliance information specific to Oregon. The resource will go live on the CUAO’s website, www.cuao.org … * NEW YORK (12/6/07)--The National Federation of Community Development Credit Unions will hold a conference call Tuesday on issues relating to community development credit unions, community development financial institutions and the mortgage market crisis. These financial institutions are positioned to help consumers through the crisis and bring stability, the federation said. Those interested in joining the call should contact Daniel Apfel, program associate, at dapfel@cdcu.coop … * FITCHBURG, Mass. (12/6/07)--William E. Aubuchon, 91, of Fitchburg, Mass., died Nov. 26 at his home. He was the former president and chairman of the board of I-C FCU in Fitchburg. I-C has $322.6 million in assets. He was also involved in civic and religious causes, earning honorary degrees from Fitchburg State and Worcester State colleges …