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Storm closes leagues CUs in Midwest

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MADISON, Wis. (12/10/09)--Some leagues and many credit unions were closed Wednesday as a massive snow storm made its way through the Midwest Tuesday and Wednesday. The Madison, Wis., offices of the Credit Union National Association, and other entities such as the World Council of Credit Unions, were closed Wednesday, although some staff worked online. News Now's Madison-based staff worked from their homes to put out today's issue. CUNA had announced Tuesday night it would be closed during the blizzard. Madison saw a rash of snow blower injuries and stuck snow plows. And 3,000 students at the University of Wisconsin (as well as 900 students at UW in Milwaukee) participated in two massive snowball fights on their campuses. The Wisconsin Credit Union League also was closed Wednesday as were credit unions throughout the state. Gov. Jim Doyle announced a snow emergency throughout the state and asked government workers to stay home while the state cleared up to 18.5 inches of heavy, wet snow. The Iowa Credit Union League office in Des Moines was closed because of the snow and was working with a skeleton crew of 20 people, the league told News Now. Des Moines received more than 11 inches of snow. The Illinois Credit Union League said that it had talked with several credit unions but had not heard of any operational difficulties. In Minnesota, Minnesota Credit Union Network Director of Communications Rachel Kuenzel said she had not heard of any credit union closings in the state. Minnesota did get some snow, but not as much as Wisconsin, she told News Now. Wednesday night, the state's temperatures plunged, as did temperatures in several other northern states. The Michigan Credit Union League was open Wednesday, saying the state had just a couple of inches of snow. However, the league was bracing for more snow Wednesday night. The Indiana Credit Union League in Indianapolis also was open Wednesday. The area had high winds but just a little snow. As the storm moved east, more states were facing heavy snowfall and more closures, which could affect other leagues and credit unions.

Court reverses Centrix bankruptcy decision

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DENVER (12/10/09)--A U.S. Court of Appeals in Denver has reversed a decision by a lower court and remanded it back to that court for reconsideration of the Chapter 11 bankruptcy plan for Centennial, Colo.-based Centrix, a company that financed subprime auto loans for credit unions (Leagle.com Dec. 9). The bankruptcy plan was approved by the U.S. Bankruptcy Court in May 2008. The plan proposed to pay creditors with proceeds from any successful litigation and from the 2007 sale of its assets for $30 million to Kendrick CF Acquisition Inc., now known as Peak 5. Unsecured creditors' recovery depended on Centrix pursuing claims against its CEO, Robert E. Sutton, who helped establish Kendrick (News Now Jan. 22, 2008). Sutton and two companies--6762 S. Potomac LLC and Centrix Consolidated--appealed the rulings and final decisions entered by the bankruptcy court after it ruled their objections as "equitably moot," using a five-prong test. The appellants contended the district court erred in adopting the doctrine of equitable mootness, and, should the doctrine be deemed appropriate to the case, it erred in applying the relevant criteria. The appellant court formally adopted the equitable mootness doctrine in 2009 in another case but instead of a five-part test, it set forth a six-part test for determining whether an appeal is equitably moot. The sixth question in the test is whether appellants' challenge to the plan is legally meritorious or equitably compelling "based upon a quick look at the merits." The lower court had applied as one of the factors whether the relief requested would affect the success of the plan; however, the appellate court's test requires a court to analyze the likely impact of an appellant's challenge to the plan upon a successful reorganization of the debt. The appeals court committed the equitably moot matter to the lower district court's discretion. "This is not a case where we can affirm the district court's discretionary dismissal as a matter of law, on the basis 'that it would have been an abuse of discretion for the district court not to dismiss [the appeal],'" said the higher court. "Therefore, we conclude that a remand is appropriate in this case, to allow the district court to weigh and apply those factors in the first instance," the appeals court said in its ruling Tuesday.

Arizona FCU citing economy to close eight branches

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PHOENIX (12/10/09)--Arizona FCU, Phoenix, announced Tuesday it will close eight of its 23 branches by January to ensure “long-term success.” By Jan. 16, Arizona FCU will close a Buckeye, Ariz., branch inside a retail establishment; a Phoenix branch inside a YMCA; and a Peoria, Ariz., branch inside a Wal-Mart (Phoenix Business Journal Dec. 8). By Jan. 30, the credit union will close two Wal-Mart branches in Phoenix and one each in Chandler, Ariz., and Avondale, Ariz. It also will close another branch in Chandler, its website said. In a letter to members of the credit union, President/CEO Ron Westad said the move “continues our efforts to consolidate our branch resources to meet the economic reality we all face, and helps to position us for future success,” according to the Journal. All employees displaced by the closures will be relocated to other branches or departments within the Phoenix-based organization, the credit union said. Arizona FCU lost $5.6 million in the third quarter. Through the first nine months of the year, the credit union lost $41.9 million, largely attributed to a loan loss provision of $77 million, the Journal said. Arizona FCU has $1.8 billion in assets. Calls to Arizona FCU by News Now were not returned by press time.

TJX hacker to plead guilty to breaches

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BOSTON (12/10/09)--The man responsible for the TJX Cos. data breach in 2007 and 2008 has agreed to plead guilty to two of the largest data breaches in history--the Heartland Payment Systems and Hannaford Bros. grocery chain breaches--as well as breaches at 7-Eleven stores. According to a filing on Dec. 2 with the U.S. District Court in New Jersey, where the Heartland charges were brought in August, Albert Gonzalez, 28, of Miami, Fla., has entered into a plea agreement (Reuters Dec. 9 and wired.com Dec. 8). The hacking compromised millions of cards and accounts, and caused headaches and losses for thousands of credit unions and other financial institutions, spawning class action lawsuits against the companies breached. The breaches also raised questions about the effectiveness of payment card industry security standards and who should pay for losses incurred when financial institutions had to reissue cards to millions of consumers. A federal judge Tuesday transferred the New Jersey case to Massachusetts, where Gonzalez is seeking to merge the case with two others in which he already has entered guilty pleas. In the New Jersey charges filed in August, Gonzalez and two unnamed Russian hackers were accused of stealing more than 130 million debit and credit cards from Heartland, a card-processing company, and the retailers. A former Secret Service informant, Gonzalez was charged with 10 other suspects in May 2008 in New York and August 2008 in Massachusetts with hacking TJX, OfficeMax, Dave& Buster's restaurants, and others. Gonzalez pleaded guilty to the charges and was to be sentenced Dec. 21 in Massachusetts on both cases. He faces 15 to 25 years in prison on the earlier charges.

Foreclosures delinquencies up in Maine

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AUGUSTA, Maine (12/10/09)--Home foreclosures in Maine are modestly increasing, but they appear to be lower than other states, said the state Bureau of Financial Institutions. The foreclosures do not threaten the stability of Maine-chartered financial institutions, according to Lloyd LaFountain III, bureau superintendent. "Although the upward trend in home foreclosures is modest and does not threaten the solvency of Maine-chartered banks and credit unions, we recognize that too many individuals and families find themselves in very difficult situations," LaFountain said. "We are encouraged, however, that new mortgage activity has remained relatively strong through three quarters this year." During the third quarter of 2009, foreclosure proceedings were started on 76 first mortgages--0.16% of all outstanding first mortgages. However, foreclosure proceedings initiated on junior mortgages decreased, the bureau said. Completed foreclosures in the third quarter of 2009 totaled 55 mortgages, compared with 159 in 2008. Maine credit unions and banks had 85,248 mortgage loans at the end of September, with 48,538 first mortgage loans and 36,710 junior lien mortgage loans. Of the 85,248 loans, 271 were in process of foreclosure (IPF). IPF loans were at 0.32% during the third quarter--up from 0.30% during the second quarter of 2009, the bureau said. The data was obtained from 32 state-chartered Maine banks and credit unions from 2006 through September 2009. It does not include federally chartered credit unions.

TraceSecurity Search engines funnel fake sites

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SAN FRANCISCO (12/10/09)--Fake websites can trick search engines into giving them top billing so they can prey on consumers, according to a security expert from TraceSecurity, a CUNA Strategic Service. TraceSecurity Chief Technology Officer and co-founder Jim Stickley was recently featured by ABC News in a story on the fake sites. To illustrate the dangers posed by the fake sites, Stickley created a fictitious website purporting to be from Credit Union of Southern California. Stickley created a domain that appeared to be from the credit union--creditunionofsc.org--and placed several links on the site to give the appearance of depth, even though the links only led to pictures of the credit union’s front page (ABC News Dec. 8). Stickley was able to trick search engines Yahoo! and Microsoft’s Bing! into placing his fake site high on their search lists--even ahead of the Whittier, Calif.-based credit union’s real site. Google, however, did not place the site high in its search rankings. The search engine also placed a warning for users that the site may contain malicious content. The experiment caused Credit Union of Southern California to think about protecting its website more aggressively--by purchasing domain names that closely match its own, ABC said. Purchasing the domains would prevent scammers from creating a similar-looking website to harm the credit union’s members. To read the full article, use the link.

N.Y. association meets with congressman

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ALBANY, N.Y. (12/10/09)--The Credit Union Association of New York recently met with Rep. Paul D. Tonko (D-N.Y.) to discuss pending legislative issues critical to credit unions in New York and nationwide.
The Credit Union Association of New York recently met with Rep. Paul Tonko (D-N.Y.) in Albany, N.Y. From left are: Tonko, Amy Kramer, association vice president of governmental affairs; William J. Mellin, president/CEO; and Michael Lanotte, senior vice president and general counsel. (Photo provided by the Credit Union Association of New York)
Association President/CEO William J. Mellin, Vice President of Governmental Affairs Amy Kramer and Senior Vice President/General Counsel Michael Lanotte discussed Congress' proposed Consumer Financial Protection Agency, overdraft protections, credit unions' member business lending cap and a controversy surrounding interchange with Tonko. "The congressman listened to and is considering credit unions' point of view on the issues we reviewed, especially in relation to interchange," Mellin said. "We will continue to follow up with his staff on all matters to keep the credit union perspective front and center." "District meetings are extremely beneficial," added Kramer. "They present a unique occasion to capture the ear of our legislative leaders when they are away from the hectic daily routine they experience within the halls of Congress."

Mich. CUs report record growth in members deposits

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LANSING, Mich. (12/10/09)--Michigan’s 335 credit unions continue to show growth in loans, deposits and membership by adding a record 59,000 members in 2009--the most in five years, the Michigan Credit Union League (MCUL) said. In the third quarter, 11 new branches were opened, bringing the total of Michigan credit union branches to 1,043 with 59 shared branches. New-auto loans at Michigan credit unions grew 5.8% over the past 12 months preceding September 2009. Michigan credit unions now hold $2.33 billion in new-auto loans. Credit unions' “Invest in America” program, which has facilitated 215,000 vehicle sales, helped drive the growth in new-auto loans with discounts through General Motors and Chrysler, the league said. Used-vehicle loans grew 5.1% over the same period, equating to $3.9 billion. Deposits showed growth with an 11.8% annualized rate, leading to an 11.7% increase in credit union assets to $37.4 billion. “As other financial institutions have made it more difficult for consumers to get loans or added new fees on checking and savings accounts, credit unions have continued to offer consumer-friendly alternatives,” said MCUL President/CEO David Adams.