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Scam targets unemployment benefits prepaid cards

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SAN FRANCISCO (12/6/12)--People receiving unemployment benefits in California through a prepaid Bank of America debit card reported last week they have received phone calls trying to trick them into revealing their personal information.

Credit unions that have members with unemployment benefits cards may need to educate their members about the scam in case similar instances pop up in other states.

The phone calls target jobless Californians whose benefits are automatically replenished on the BofA card. California's Employment Development Department (EDD) switched to the cards during last summer.

The caller tells recipients that their EDD card has been temporarily blocked and to press No. 1 to be transferred to a security department. Once the recipients do so, they are told to enter their personal account information to reactivate their card. 

EDD spokesman Dan Stephens told the San Francisco Chronicle (Dec. 2) that it's unlikely that the callers have specific information about recipients' records with the agency and added no evidence exists indicating hacking of EDD's records. He attributed the phone calls to random dialing. Some have received the calls on their cell phones.

More than 1.4 million people in California have been issued the cards, he said. It is one of 41 states that issue unemployment benefits through prepaid debit cards, said the article.

CUs still getting their day in the sun

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MADISON, Wis. (12/6/11)--Credit unions were still getting their day in the sun in media reports last weekend.  CNNMoney reported on their  member business lending (MBL) efforts, a league opinion in a state newspaper touted the benefits of credit unions, and consumers' continued movement to credit unions from banks garnered attention in several media.

In the Worcester (Mass.) Business Journal (Dec. 5), an opinion editorial written by Dan Egan, president of the Massachusetts Credit Union League, told about the influx of new members into credit unions as a result of the Bank Transfer Day events prompted by debit card fees introduced (but later rescinded) by mega-banks and how credit unions are structured differently than banks..

"I've traveled around the state for the last 30-plus years touting the benefits of joining a credit union. Thankfully, people have been fairly receptive to my message. But nothing can top the response we've seen over the last two months. And we've only just begun," Egan wrote.

He estimated that at least 20,000 consumers in Massachusetts have joined a credit union, adding more than $136 million in new deposits. He wrote that Digital FCU, the largest credit union in New England,  reported signing up 133 new members on Nov. 5. That's a 56% increase from the 85 account openings the $3.8 billion asset, Marlborough-based credit union averages on Saturday.

Another article, "Credit unions bank on consumer backlash," in Friday's Pacific Coast Business Times told about California credit unions that experienced increases in membership from the consumer backlash. It featured CoastHills FCU, a $632 million asset credit union in Lompoc;Ventura County CU, a $543 million asset credit union in Ventura.; and SESLOC FCU, with $530 million assets in San Luis Obispo.

CoastHills didn't see a dramatic increase in members as a result of Bank Transfer Day largely because it already has a strong foothold in its markets. Ventura County, however, added more than 1,100 members since the beginning of October. It typically averages about 420 new members a month.  In October, it added 750, with 315 of those on Nov. 5, Bank Transfer Day, the article said.  About 90% of people who came in on Bank Transfer Day opened new checking accounts and many brought along their other banking relationships, including lines of credit, savings accounts and direct deposits from employers.

SESLOC FCU said it noticed more people wanted to learn more about credit unions.  The article also featured membership statistics from the Credit Union National Association (CUNA).

Small business loans were also in the news.  In a Friday article entitled "Small biz loans: Credit unions to the rescue?" CNNMoney noted how credit unions, seeing an opening in the credit crunch for small businesses, expanded their offerings to entrepreneurs declined by banks. The article featured three credit unions' programs: Brooklyn (N.Y.) Cooperative FCU; Greenwood Village, Colo.-based Bellco CU; and Amplify CU, based in Austin, Texas.

CUNA and credit unions continue to urge Congress to raise credit unions' MBL limit to 27.5% of assets from 12.25%, which would produce $13 billion in new small-business loans to help boost the economy. Lifting the cap could generate about 140,000 new jobs created by small businesses through these loans.

CU System briefs (12/05/2011)

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  • ST. PAUL, Minn. (12/6/11)--Mary Cunningham, former board member with the Credit Union National Association, has joined the board of directors of FoolProof, a turnkey consumer advocacy initiative for credit unions.  Cunningham was instrumental last summer in setting up meetings with movement leaders nationwide to learn about FoolProof and as a volunteer attended meetings in Florida, Indiana, North Carolina, California and Wisconsin.  According to FoolProof founder/CEO Will deHoo, the initiative's mission is to "make credit unions the 'go to' source for true consumer advocacy in America's communities." Cunningham, during her 36-year career with credit unions, also has served as chairman of the National Credit Union Foundation (NCUF) and the Credit Union Executives Society. Other board members include Remar Sutton, nationally recognized credit union advocate; Pat Sterner, former executive director of NCUF; Malcolm Kirschenbaum, treasurer of the Newseum, Washington, D.C.; and Roberta Baskin, who served as director of the Center for Public Integrity …
  • ST. PAUL, Minn. (12/6/11)--In anticipation of the 2012 International Year of Cooperatives, the Minnesota Credit Union Network is welcoming six Paraguayan credit union representatives for a visit through this Saturday. The week-long event will immerse the international visitors into Minnesota and credit union culture through legislative meet-and-greets; visits at Hiway FCU, St. Paul; SouthPoint FCU, Sleepy Eye; SPIRE FCU, Falcon Heights; and St. Paul (Minn.) FCU; and tourist and social activities. The international visitors will gain insight into Minnesota politics and credit union advocacy activities during a visit to the State Capitol. The group will meet with Minnesota Speaker of the House Kurt Zellers (R-Maple Grove) and the state Commerce Department's Deputy Commissioner of Administration Steve Carlson. The visitors also will tour the State Capitol …
  • HERMISTON, Ore. (12/6/11)--HAPO Community CU, Richland, Wash., opened its 12th branch, and its first in Oregon on Friday. Mayor Robert E. Severson and members of the city Chamber of Commerce attended a ribbon-cutting ceremony in Hermiston, Ore. Members have asked for a branch in Hermiston because many work in the area, said Steve Anderson, HAPO executive vice president and the chief operating officer. "We have had so many people ask us, 'When are you coming to Hermiston? When are you coming to Hermiston?' It's been really unusual," Anderson said. "I've never seen this level of excitement." The new branch is full service and open from 9 a.m. to 6 p.m. (PT) Monday through Friday.  It will also include 24-hour drive up and walk-up ATMs. HAPO plans to open its 13th branch in Walla Walla, Wash., within the next year …

Poll 40 will spend zero on holiday purchases

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WASHINGTON (12/6/11)--Forty percent of consumers surveyed do not intend to spend any money on holiday purchases because they anticipate experiencing further financial distress in the future, said a November poll hosted by the National Foundation for Credit Counseling (NFCC) website.

The poll indicates that despite the increase in sales during Black Friday and Cyber Monday, a significant number of people lack enough confidence in their financial future to begin spending, even on traditional holiday expenses, NFCC said. 

"Historically, consumers have put aside their financial concerns during the holidays, even if to their detriment, and spent at some level," said Gail Cunningham, NFCC spokeswoman. "These figures provide a snapshot of the desperate situation in which consumers find themselves, and how seriously they are taking their situation."

Of note is the statistically significant increase reflected in the year-over-year trend in polls between November 2010 and November 2011, there was a six percentage point increase in the number of consumers who indicated they will spend zero dollars during the holiday season, evidence of the depth of the financial despair in the country, said NFCC.

Also, slightly more than half of all poll respondents indicated they would cut back on holiday spending, because their financial situation is worse this year than last. Combining those who will cut back on spending with those who will not spend at all, 91% of consumers are concerned enough about their financial circumstances to remain on the spending sidelines this holiday season.

For the two categories with the lowest responses, 7% revealed that they will spend as they did in 2010, and just 3% will spend more than they did last year.

For professional assistance with financial questions, consumers can contact a certified consumer credit counselor at an NFCC member agency.

Consumers answered these questions in the November poll, noting that this holiday they would:

  • "Spend as I did last year because my financial life is stable"--7% (2010--7%);
  • "Cut back on spending, since I am worse off financially this year"--51% (2010--57%);
  • "Spend more than last year because I am in a better financial position"--3% (2010--2%); and
  • "Not spend at all, because I anticipate further financial distress"--40% (2010--34%).
The NFCC's November Financial Literacy Opinion Index was conducted via the homepage of the NFCC website from Nov. 1 through Nov. 30, and was answered by 1,232 individuals.

Earlier this month, a Consumer Federation of America (CFA)/Credit Union National Association (CUNA) nationwide survey indicated 8% of respondents plan to spend more on gifts and holiday items, with 41% of respondents saying they would spend less this holiday season. The results, announced Nov. 21, are nearly identical to the two groups' 2010 consumer predictions, when the CFA/CUNA survey found that one in 10 consumers would increase their holiday spending, and 41% at that time said they would cut their holiday spending (News Now Nov. 22).

Occupy San Francisco plans to create a CU

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SAN FRANCISCO (12/6/11)--The Occupy San Francisco movement has announced plans to create a new credit union that will allow city residents, businesses, and nonprofit and city agencies to keep their money out of big banks and redistribute that money locally.

The credit union name--People's Reserve CU--was registered in California before Thanksgiving ( and Dec. 3).

The first charter meeting is slated for Saturday. People's Reserve is being created with assistance from San Francisco Supervisors Eric Mar and John Avalos, and Glide Church.

The organizational group said the credit union plans to cultivate community projects, offer microloans of $5,000 or less to the working poor and homeless, and subsidize student loans at low interest rates.

People's Reserve intends to start with 500 members and increase its size to 2,000 members in one year. By the end of 2012, it aims to accumulate $7 million in capital assets from members and organizations.

Organizers plan to open two branches in San Francisco, with each branch containing a cafe and a commercial kitchen available to rent. The credit union will employ students and homeless people, creating 60 part-time jobs.

Plans also are in the works to establish and finance a food co-op big enough to serve a local neighborhood.

Contest to win two Wegner Award dinner tickets

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MADISON, Wis. (12/6/11)--The National Credit Union Foundation (NCUF) and CUinsight have launched a two-week promotion to give away two tickets to NCUF's Herb Wegner Memorial Awards presentation dinner.

The awards dinner will take place March 19 at the Grand Hyatt, Washington, D.C., during the Credit Union National Association's 2012 Governmental Affairs Conference (GAC).

Individuals from credit union organizations can enter the contest at through Dec. 16. Contest rules are posted on the entry page. The winner of the two tickets will be chosen by a random drawing after Dec. 16.

"This is the first time that we've done a contest for dinner tickets," said Christopher Morris, NCUF director of communications. "It's such an inspiring event, and this gives a few more people a chance to attend."

Individual tickets for the three-course dinner are $275 each.

Michigan foreclosure extension bills move from committee

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LANSING, Mich. (12/6/11)--The Michigan Credit Union League (MCUL) is advocating for reforms to the state's foreclosure process. A package of Michigan bills that would extend the 90-day foreclosure law for an additional three years is moving on to the full state House after being voted out of the state's House Banking and Financial Services Committee.

The changes to the framework for the 90-day delay include clearer timelines on which actions must occur at certain points during the process for lenders and borrowers. That will allow a lender to proceed immediately to foreclosure if a borrower is unresponsive to requests for certain documents, MCUL said (Michigan Monitor Dec. 5)

Other changes include: holding borrowers responsible for damaging the property during the redemption period; and reducing the redemption period for properties larger than three acres to six months from one year, if the property is not for agricultural use. MCUL supports those changes in three House bills.

MCUL also is advocating in the package a shortened redemption period for loans held in portfolio. HB 5176, introduced by State Rep. Rick Olson (R-Saline), will help offset the burden of adding 90 days to the foreclosure process by reducing the redemption period on portfolio loans by 90 days. It's part of the four-bill package approved by the House committee Wednesday.

The Michigan Foreclosure Taskforce, representing housing counselors and consumers in the foreclosure process, is opposed to HB 5176. The taskforce claims the bill is unfair to homeowners because it will create two different redemption periods for homeowners based on whether they have a portfolio or non-portfolio loan, MCUL said.

The redemption periods differ for portfolio loans versus non-portfolio loans, but MCUL said that lenders who hold the loan in portfolio will engage in more communication early in the pre-foreclosure process to avoid foreclosure. Additional time is not necessary when a modification cannot be made and all avenues have been exhausted to try to keep a borrower in the home, MCUL said.

Also, the current foreclosure process has several different redemption periods depending on if a property is abandoned, and is or more or less than three acres. Having different timelines for people to redeem their property is not a new concept, MCUL said.

Filenes Crash Network builds momentum

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MADISON, Wis. (12/6/11)--In less than two years, Filene Research Institute's Crash Network has evolved from a gathering of 25 young credit union professionals at the Credit Union National Association's Governmental Affairs Conference (GAC) in 2010 to a group comprising more than 270 members and six league partners.

Filene Research Institute's Crash Network, a group of young credit union professionals, has grown to more than 270 members and six league partners. Kevin Kindschi, sales executive, CUNA Mutual Group, talks to the California-Nevada Credit Union League members of the Crash Network about how the economy affects credit unions in their states. (Photo provided by the Crash Network)
"Crash gives young credit union professionals a place to network," said Theresa Hilinski, Crash Network community manager. "We're helping the next generation of credit union professionals to learn, grow and develop, and we've really gained some momentum over the last year."

In 2011, the Crash Network partnered with the California-Nevada, Indiana, Iowa, Louisiana, Michigan and Pennsylvania credit union leagues to provide events at their annual meetings. After the events, Crash Network participants were encouraged to build upon what they learned at the event by keeping in touch via its online network.

"The Crash Network was developed to help young credit union professionals connect outside of events," Hilinski said. "It allows them to get involved where they typically wouldn't be invited."

The Crash Network was the brainchild of Brent Dixon, Filene's young adult adviser. The 25 young professionals who crashed CUNA's GAC in 2010 wanted to fight for the future of the credit union movement alongside industry veterans, Dixon said.

"Little did we know at the time that our initial 'Crash' would be only the start of things to come," Dixon said.

The Crash Network's 2011 activities are sponsored by CUNA Mutual Group, which has provided both support and the mentoring that the network was formed to promote.

Kristen Christian to discuss BTD success on CUNA webinar

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MADISON, Wis. (12/6/11)--Kristen Christian, the tactician behind the enormously successful National Bank Transfer Day (BTD), will be a featured panelist for a Credit Union National Association (CUNA) webinar, "Consumers are Fee'd Up With Banks: Let's Help Them Make a Change," from 2 p.m. to  3 p.m. CT Wednesday.

The social engineer behind the Nov. 5 BTD, Christian will share her insight on how credit unions can continue to generate positive support moving forward.

Christian lives in Los Angeles where she works as a social media strategist and entrepreneur.

The "Consumers are Fee'd Up With Banks: Let's Help Them Make a Change!" webinar is designed to address the widespread consumer frustration displayed in movements such as Occupy Wall Street and National Bank Transfer Day, and to discuss strategies on how to connect to the positive support generated by these events. The session will explore how credit unions can help potential members make the switch from banks and what consumers truly want from their financial institutions.  

Also speaking will be 2011 CUNA Marketing Professional of the Year Amy McGraw. An industry leader in social media marketing, McGraw will provide insight into effective ways credit unions can use social media to keep up the positive momentum from BTD and discuss how social media campaigns for credit unions differ from other organizations. McGraw, vice president of marketing at Tropical Financial CU, Miramar, Fla., is the Twitter voice for the CUNA Marketing and Business Development Council.

Moderating the panel will be Kelley Parks, a former CUNA Marketing Professional of the Year and a creative catalyst for gira{ph}, a company that helps small- to mid-sized credit unions differentiate themselves in the market. For nine years, Parks served as the vice president of marketing and business development for Call FCU in Richmond, Va. She is also a blogger for, and an editor for, two sites that offer advice for credit union marketers.

Catalyst Corp. hits well-capitalized status early

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PLANO, Texas (12/6/11)--Catalyst Corporate FCU, which has been in operations less than two months, has already hit the "well-capitalized" status,  earlier than the projected 2013 date.

In a letter to its membership, Catalyst President/CEO Dianne Addington said the corporate had reached a 5.01% leverage ratio and that its first two months of operations "far exceeded expectations."

During September, Catalyst's return on assets was 0.35%, compared with 0.04% forecast. Its coverage ratio, or net fee income divided by operating expense, was 102.9%, greater than the 82.9% the corporate had forecast. Addington attributed the numbers to "efficient operations and member support.

Catalyst was formed by the merger of two corporates--Georgia Corporate FCU, based in Duluth, Ga.,  and Southwest Bridge Corporate FCU, based in Plano, Texas. The combined corporate has 890 capitalized members with more than $95 million in perpetual contributed capital. It also has verbal commitments from seven credit unions in the process of completing paperwork that would provide an additional $986,000 in perpetual contributed capital, and 31 other credit unions are in the process of evaluating the corporate.

The corporate plans to roll out mobile banking, mobile capture and lockbox processing services early next year, Addington said. "The leadership team of Catalyst is working purposefully to execute the business plan that was presented during webinars and town hall meetings over the past year," she said. To continue its commitment to transparency, Catalyst will start posting soon on its website a special report comparing 28 target ratios that were listed in the business plan and Catalyst's actual performance.

The corporate also will include updates on non-statistical commitments that were made and were fulfilled, she said.

Catalyst opened its doors Sept. 6, with 880 member credit unions and $93 million capital---representing 74% of previous shareholders capital (News Now Oct. 3).  The merger made Southwest Bridge Corporate the first corporate to come out of bridge status--in advance of the two-year timeframe established by the National Credit Union Administration in fall 2010, , when the corporate was placed under conservatorship (News Now Aug. 31).

Credit card charge-off rates declined in October

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NEW YORK (12/6/11)--Credit card charge-offs in the U.S. in October fell six basis points to 5.21% from 5.27% in September and 8.79% in October 2010, according to Moody's Credit Card Indices.

October's charge-offs were at their lowest level since 2007. Moody's said it expects charge-offs to continue to decline well into next year and push the rate to below 4% by year-end 2012.

"Following the sizeable, 75-basis point decline in the charge-off rate in September, driven in part by seasonal trends, the continued improvement in October is notable," said Jeffrey Hibbs, assistant vice president at Moody's. "Earlier in the decade, sharp charge-off improvements in September were typically followed by increases in October, a pattern that has been broken now for the past three years," he added.

The charge-off rate measures credit card account balances written off as uncollectible as an annualized percentage of total outstanding principal balance, said Moody's Investor Service in a release late last month.

The delinquency rate--which measures the portion of account balances that a monthly payment is more than 30 days late as a percent of total outstanding principal balance--continued to hold steady at an all-time low of 3.04%, said Moody's.  Early stage delinquencies were one point lower at 0.86%, near where they have hovered the past seven months.

That means the pace of further improvement likely will be muted, said Hibb, who noted, "the calendar is moving into a period that suggests seasonal declines in the early-stage delinquency rate in the coming months."

The payment rate,  a measure of the average amount of principal that cardholders repay each month as a percentage of total outstanding principal balance,  slipped below 21%  for the first time since April. The October payment rate was 20.91%, or one percentage point below the all-time high reached in August.

"Historically, low delinquencies and high payment rates reflect the improved borrower mix in credit card trusts today as weak borrowers have charged off at record levels in the recent recession and originators have added few new accounts to the securitizations," Hibbs said.

In credit unions, loan delinquency also continued its year-long decline, with the rate in October at 1.57%. That is a decrease from 1.59% in September and 1.76% in October 2010, according to the Credit Union National Association's Monthly Credit Union Estimates for October, which was released Monday.