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CU System briefs (12/08/2010)

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* SASKATOON, Saskatchewan(12/9/10)--Two men who robbed a Canadian credit union Tuesday in Saskatoon, Saskatchewan, used an unusual weapon: bear spray. The masked men entered a branch of Affinity CU just before noon Tuesday and demanded money,according to Saskatchewan police. One of the two men sprayed bear spray in the building, but no one injured. The two fled on foot with an undisclosed amount (CBC News Dec. 7) … * SAN DIEGO, Calif. (12/9/10)--The San Diego County Credit Union Poinsettia Bowl, a college football game played on Dec. 23, is one of two San Diego bowls that would benefit from the launch of a social media campaign by the San Diego Bowl Game Association. The other game is the Bridgepoint Education Holiday Bowl on Dec. 30. The association implemented a multi-faceted social media program to generate Internet awareness, highlight key sponsors and community partners, and elevate the games' profiles. It plans promotions on Foursquare.com for discounts from San Diego businesses; Facebook so fans can express team pride and access discounts; tweets on Twitter by the Holiday Bowl's unofficial mascot, Sully the weiner dog; and a video blog on YouTube …

Man with hostage exchanges gunfire at CU drive-thru

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MONONA, Wis. (12/9/10)--A man who held another man hostage in a car while trying to withdraw funds from the hostage's account outside a Monona, Wis., credit union Wednesday was injured after ramming a police car and exchanging gunshots with police, said Monona police. The incident occurred at about 1:45 p.m. CT in the drive-thru lane at a branch of Madison-based UW CU (Wisconsin State Journal Madison.com and WXOX.com (Dec. 8). Police confirmed that they received a call from someone inside the credit union about a suspicious vehicle in the drive-thru. The hostage, who did not know the suspect, was in the car with the suspect and the suspect was attempting to withdraw the funds. When police arrived, the suspect rammed the police car and a gunfight broke out between the suspect and police. The suspect, the only person hurt, was taken to a hospital with unspecified injuries, and a gun was found in the car, police said. UW CU issued this statement at about 3 p.m.: "The Monona Police Department is at our Monona UW CU branch responding to an incident that occurred at our drive-up. The Monona branch location has been closed for the day and is expected to reopen [Thursday] at regular business hours. We have no additional comments to share at this time."

New York CUs help launch anti-fraud program

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ALBANY, N.Y. (12/9/10)--The Credit Union Association of New York and the state's credit unions Tuesday joined other organizations in launching an anti-fraud program to educate consumers in the state about fake-check scams. Twenty credit unions and two banks have signed up to participate, said the association. Other organizations involved in the "Don't Become a Target" program are the New York State Consumer Protection Board (CPB), the Consumer Federation of America (CFA), the New York Bankers Association and the Independent Bankers Association of New York State. Participating credit unions and banks will hand out a "Don't Become a Target" brochure created by CFA to every consumer who deposits checks or money orders of $1,000 or more or who withdraw $1,000 or more. In a fake check scam, the consumer receives a genuine looking check or money order often associated with an "advance" of sweepstakes or lottery winnings or with pay for working as a "mystery shopper." The consumer is asked to deposit the check and then wire funds somewhere else. Victims lose an average $3,000 to $4,000 when the fake check bounces. "Fake check scams are a serious problem for consumers," said William J. Mellin, president/CEO of the Credit Union Association of New York. "Credit unions want to do all they can to educate their members," he added. CFA is working with credit unions and banks and organizations in 12 states to launch the program in their states.

European CUs launch lobbying day

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BRUSSELS, Belgium (12/9/10)--Credit unions from seven European countries got a taste of political lobbying--some for the first time--as World Council of Credit Unions' (WOCCU) European Network of Credit Unions met with legislators at the European Parliament in Brussels Wednesday.
Click to view larger image Nearly 50 credit union representatives from eight countries met Wednesday in Brussels for the first "lobbying day" aimed at educating lawmakers in the European Parliament about the strength of credit unions.
Nearly 50 credit union and trade association professionals met with 30 European parliamentarians in multi-national delegations to spread the word about the services credit unions provide throughout the European Union (EU). The primary purpose of the visits was to introduce credit unions to parliament representatives unfamiliar with them and lay the groundwork for ensuring favorable legislation for credit unions. Participants from Estonia, Ireland, Macedonia, Moldova, Poland, Romania, the United Kingdom and the U.S. discussed issues such as the global economic crisis and the growing need for deposit insurance among emerging movements with lawmakers. Even Latin America was represented, with WOCCU First Vice Chair Manuel Rabines, president/CEO of Federación Nacional de Cooperativas de Ahorro y Crédito del Perú, participating. "Lobbying day is an important way to raise awareness among legislators and show our uniqueness compared to other financial service providers," said WOCCU Second Vice Chair Grzegorz Bierecki, who led an eight-member delegation representing the National Association of Cooperative Savings and Credit Unions, the Polish credit union trade group. Bierecki serves as president and CEO of the group. "Our efforts will create a positive view of credit unions." Most EU member countries have cooperative banks, but relatively few have credit unions. This can create recognition problems when it comes to exercising EU-wide legislation involving financial institutions, according to Marian Harkin, a parliamentarian representing Ireland and a credit union champion who welcomed the group. Effective lobbying efforts are critical to credit unions' continued growth and influence throughout the "Euro zone," Harkin said. "Credit unions are strong in just a small number of European countries, and that creates an issue when you are not a force in a particular state," Harkin explained. "Credit unions need to create networks of alliances with other cooperatives or similar institutions throughout the EU to expand their message to a wider audience."
Click to view larger image Fiona Cullen, head of lobbying for the Irish League of Credit Unions, makes a point to Pat "the Cope" Gallagher, who represents Ireland in the European Parliament. (Photos provided by the World Council of Credit Unions)/td>
Fiona Cullen, head of legal and lobbying activities for the Irish League of Credit Unions and part of a six-member Irish delegation to Brussels, agreed. "It's a process of education," Cullen said. "We don't have anything specific today that we're lobbying for. Our process is simply to open doors." Although WOCCU helped form the European Network in 2009, it has helped its European members lobby on their own behalves for the past five years. For lobbying novices like Efim Lupanciuc, general director of Moldova's Central Association of Savings and Credit Associations, WOCCU's experience will be an effective force in helping with the emergence and regulation of Moldova's credit unions. "We want the European Parliament to keep in mind that we are Europe-oriented and at the very beginning of our efforts," said Lupanciuc, from one of the newest credit union movements in a country on the cusp of joining the EU. "As credit unions, we want to be part of the global movement and up to the standards of other WOCCU members."

Interchange reg has CU implications--Filene study

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MADISON, Wis. (12/9/10)--A recent Filene Research Institute study looks at how federal regulation of interchange fees on debit card transactions will affect credit unions. “Interchange Regulation: Implications for Credit Unions,” written by Adam Levitin, associate professor at Georgetown University Law Center, examines how the Durbin Amendment to the Dodd-Frank Act that Congress passed this summer will lessen the roughly $17 billion in debit interchange paid to issuing financial institutions every year. Key findings of the study are:
* Growing credit union debit: Debit card activity at credit unions has grown briskly in the past four years. Median debit transaction dollar volume grew at an average rate of 12% from 2006 to 2009, while the median number of transactions grew at a rate of 9% during the same period. * Curtailed interchange will hurt: Debit interchange accounts for between 4% and 5% of credit unions’ gross revenue, while credit interchange is in the range of 1.5% to 2.5%. A 50% or greater decline in debit interchange revenue is possible for institutions larger than $10 billion, with 20 to 40 basis points (bps) a realistic possibility--down from 75 to 125 bps. * Reasonable and proportional: The true cost of the Durbin Amendment will become clear once the Federal Reserve rules on which charges are reasonable and proportional to the cost incurred by institutions to process debit transactions. Institutions may include the cost of fraud but not the costs of overhead or marketing. * Multi-homing: Institutions with less than $10 billion in assets may be shielded from the “reasonable and proportional” interchange standards, but they will still be subject to “multi- homing”--the requirement that each card be capable of processing a transaction on more than one network. Competition among networks will allow merchants to route transactions to the network that saves them the most money, which will push down income for issuers.
What are the implications for credit unions? Any regulatory movements will affect profitability, especially in a core product like debit cards, Levitin said. But the Durbin Amendment is particularly noteworthy for its likely middle- and long-term implications, he added. They are:
* Competition for small issuers: It is likely that competitive pressures will encourage networks to adopt separate interchange schedules for smaller institutions, which could leave small issuers’ debit interchange revenue largely untouched by the Durbin Amendment. If a two-tiered interchange structure emerges, it will help make credit unions more competitive in the card issuance market, Levitin said. * Mobile advances: Regulatory reform will likely encourage payment card networks to push aggressively into new--and less regulated--markets, particularly mobile commerce. If so, credit unions generally will have to look to license customizable mobile software platforms and piggyback on network-negotiated deals to gain a foothold in mobile payment transactions. * Threats to fees abound: The Durbin Amendment highlights the difficulties that credit unions face from an increasing reliance on fee-based revenue. Credit unions may find it necessary to adjust the bundle of services they offer with deposit accounts, possibly re-emphasizing credit cards that maintain attractive interchange rates.
“The $10 billion exemption may salvage debit interchange revenue for most credit unions. But expect it to hasten the move into new technologies and encourage the issuance of more credit cards as large banks and payment networks seek to win back lost income,” Levitin wrote. For more information, use the link.

Several CUs donate big bucks to special projects

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MADISON, Wis. (12/9/10)--It’s the season for giving, and credit unions nationwide are contributing funds to build their communities. Credit union pledges include:
* Alaska USA FCU, Anchorage, Alaska, pledged $50,000 to support redevelopment of the Anchorage Veterans’ Memorial located on the Delaney Park Strip. The Anchorage Veterans’ Memorial was developed 23 years ago with help and funding from the community, including Alaska USA FCU. The current project will include improved access for the disabled, new plants and landscaping, added lighting and security systems, and increased relevance to veterans and those who would honor them. * BECU, Tukwila, Wash., marked its 75th anniversary by pledging $80,000 to four Puget Sound area housing agencies. BECU requested and accepted proposals for grant consideration from nonprofit organizations. After a comprehensive review process, Housing Hope, Vision House, Plymouth Housing Group and South Sound Outreach Services were selected. * Northwest FCU Foundation, the charitable arm of Northwest FCU, Herndon, Va., recently granted a total of $20,000 to four Fairfax County public schools for staff professional development and technological advances for the classroom. The grants were made during a reception to celebrate its Fairfax County Public Schools business partnerships with Dranesville Elementary, Louise Archer Elementary, Rachel Carson Middle and Herndon High schools, the recipients of the donated funds. * American Eagle FCU, East Hartford, Conn., donated $45,567 to the United Way of Central and Northern Connecticut. American Eagle FCU employees pledged $28,572, while the credit union contributed an additional $14,286. Employees also raised $2,709 through internal fundraisers, including e-mail bingo, gift basket raffles and wear-jeans-to-work days. * Mountain American CU, West Jordan, Utah, donated $10,000 to the Utah Jump$tart Coalition to continue its work in training Utah teachers on financial education for youth. Mountain America CU was a founding member of the Utah Jump$tart Coalition, which was formed in 2000.

Visa to make contactless chips a standard feature

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PARIS, France (12/9/10)--Visa Inc. is making mobile payments a commercially available standard feature commercially available for its partner financial institutions in the U.S--including credit unions. Following 18 months of technology development in partnership with Texas-based DeviceFidelity, and trials with financial institutions in the U.S., Europe and Asia, Visa has tested and supports commercialization of In2Pay microSD for use with smart phones. Smartphone models compatible for use with this landmark technology include the BlackBerry Bold 9650, the iPhone 4, the iPhone 3GS, iPhone 3G, and the Android-based Samsung Vibrant Galaxy S. Visa said it also expects to add additional phone models, including phones based on the Symbian and Windows operating systems. “In addition to issuing plastic magnetic stripe or chip-enabled payment cards, financial institutions can now consider offering their account holders a new technology that enables them to transform their existing phones into fully functional mobile payment devices,” said Bill Gajda, head of Visa Mobile. The microSD payment technology was previously available only to financial institutions participating with Visa in mobile payment trials that included some of the largest financial institutions in the U.S., such as JP Morgan Chase, Wells Fargo Bank, US Bancorp and Bank of America. Now Visa issuers can obtain the technology under Visa’s standard contract terms and can load the Visa mobile payment application to microSD cards. Issuers who choose to adopt the technology can provide their account holders with a microSD card that can be inserted into the phone’s existing memory slot to enable the device for payment. The technology is compatible with existing contactless payment terminals already installed at retail outlets worldwide and enables account holders to hold the phone in front a payment terminal to pay. “This is a significant step towards the next generation of payments, loyalty and rewards, allowing banks and retailers to build entirely new business models,” said Nick Holland, a senior analyst with Yankee Group. “Visa’s announcement clearly illustrates that the future of payments will be mobile.”

Guatemala CU system launches private insurance fund

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GUATEMALA CITY, Guatemala (12/9/10)--Guatemala’s national credit union association, Federación Nacional de Cooperativas de Ahorro y Crédito (FENACOAC), and 19 of its affiliated credit union members made history last week when they launched one of the few private savings guarantee funds for credit unions in the world.
Click to view larger image Brian Branch, World Council of Credit Unions (WOCCU) executive vice president and chief operating officer, spoke of WOCCU’s longstanding relationship with Guatemala's national credit union association and congratulated members of the Guatemalan guarantee fund during a Dec. 2 launch.
Effective Jan. 1, the fund will guarantee up to $12,500 per person, per institution, a significant competitive advantage over Guatemala’s commercial bank offering of $2,500 per person (All amounts are in U.S. dollars). World Council of Credit Unions (WOCCU) designed the fund in collaboration with FENACOAC, a WOCCU member. FENACOAC and its participating credit unions deposited a collective $5.5 million dollars to capitalize the “MICOOPE savings guarantee fund,” named after Guatemala’s credit union network brand. The fund represents 1.5% of the system’s now-guaranteed $365.3 million in savings deposits. The capital level of the savings guarantee fund is expected to rise to 3% from 1.5% of guaranteed deposits over the next five years. Though small by U.S. standards, the guarantee will protect 98.9% of all members with savings and share accounts in Guatemala. A savings guarantee fund has been the dream of many cooperative leaders in Guatemala since WOCCU completed a cooperative strengthening program there in August 1994, said David Richardson, WOCCU senior manager and longtime adviser to FENACOAC. “It has taken more than 16 years to realize this dream, with many obstacles to overcome, but it has finally happened,” said Richardson, who acted as WOCCU project director in Guatemala for the former cooperative strengthening program, funded by the U.S. Agency for International Development (USAID). “It comes at a time when many people are worried about the safety of their money and the soundness of the financial institutions in Guatemala.” WOCCU’s PEARLS monitoring system, which is an international standard for measuring credit union financial performance, grew out of the Guatemalan credit union movement 20 years ago. In 2008, WOCCU completed a complementary risk monitoring tool, which is a key component used to measure risk in the MICOOPE savings guarantee fund. In developing the tool, WOCCU representatives consulted with staff from Fondo de Garantías de Entidades Cooperativas (FOGACOOP), a savings guarantee fund in Colombia, to learn about its risk evaluation system.
Click to view larger image Experts answered questions last week about the new Guatemalan savings guarantee fund, future challenges and how it compared to the banks’ fund. From left, are: David Richardson, World Council of Credit Unions (WOCCU) senior manager; Victor Manuel Mancilla Castro, superintendent of banks in Guatemala; Brian Branch, WOCCU executive vice president and chief operating officer; Evamarie Reta, CEO of El Monte (Calif.) Community CU; and César Augusto Avendaño Castro, director of risk management for a savings guarantee fund in Colombia. (Photos provided by World Council of Credit Unions)
Through WOCCU’s International Partnerships Program, the California and Nevada Credit Union Leagues also supported FENACOAC’s endeavor by sharing their member credit unions’ experiences with private deposit insurance in the U.S. Brian Branch, WOCCU executive vice president and chief operating officer, was at the official launch in Guatemala City on Dec. 2 to congratulate the founding members of the guarantee fund. “The Guatemala credit union system’s savings guarantee fund is an enormous achievement, especially at a time when consumer protection is a key focus in the financial services industry,” he said. WOCCU is working with FENACOAC and credit unions in Guatemala on a USAID-funded program to create and test agricultural and financial tools to improve rural and financial sector development, livelihoods and food security. The program will expand upon the network of Guatemalan credit unions to create and document the use of new financial products, services and delivery mechanisms for value chains and rural producers.