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Va. CU-bank battle on merger bill in the news

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RICHMOND, Va. (2/2/10)--The battle between credit unions and banks over a bill in Virginia's state legislature that would allow banks to merge with credit unions--and vice versa--is attracting media attention in the state. Sunday's Richmond Times-Dispatch included a column, "Bank bill triggers quiet war," by writer Jeff E. Schapiro, who wrote that "banks plotting--maybe plodding--for post-recession profits have a new target: credit unions." At issue are identical companion bills, House Bill 482 and Senate Bill 440, which were introduced in January by Del. Mark Sickles (D-43) and Senate Commerce and Labor Committee Chairman Richard Saslaw (D-35) (News Now Jan. 22). The Virginia Credit Union League opposes the bills, as written. "We view it as a one-way street, an effort by banks to make it easier to consolidate with credit unions," league President/CEO Rick Pillow had told News Now last month. In his column, Schapiro wrote that credit unions see the bill as a "dead-end bill," allowing banks to consume credit unions, while not too many banks become credit unions. Schapiro wrote that though the state's banks and credit unions have a common interest--managing and investing in billions of dollars--they function within entirely different templates. Banks, particularly smaller banks, he wrote, "covet the loyal customer base of credit unions." "The credit unions have a bigger worry: Could the banks, navigating the rubble of a deep recession, only be hunting for capital, attempting to hoover up the few dollars available in the credit market?" Schapiro asked. To do so will require tweaking the law and eliminating a technicality that stopped a state-chartered bank in Northern Virginia from merging with a credit union, he said. Banks already have balked at the credit unions' proposal that a merged bank and credit union operate as a mutual savings bank, with depositors as shareholders, he wrote. To read the article, use the resource link.

Arizona league CEO to appear on local PBS tonight

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PHOENIX (2/2/10)--Arizona Credit Union League President/CEO Scott Earl is scheduled as a guest tonight on Arizona's local PBS program, "Horizon," hosted by Ted Simons. Earl will discuss business lending as it relates to credit unions and member business lending, and job creation. Horizon is a widely watched and respected program covering issues that affect the community, said the league. Interviews typically discuss politics, the economy, arts and culture. The episode will air at 7 p.m. MT today on PBS local channel 8. The episode also will be available on demand online.

WOCCU coordinating CU comments for Basel committee

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MADISON, Wis. (2/2/10)--The World Council of Credit Unions (WOCCU) is making sure the global credit union movement's voice is heard by the Basel Committee on Banking Supervision, which is considering adjusting its capital adequacy and liquidity requirements of financial institutions worldwide as part of its revisions to the Basel II Accord. The Basel Committee released the revised documents for public comment in December. The new guidelines, adapted with guidance from the Group of 20 (G-20) nations in response to last year's global economic meltdown, recognize for the first time differences between large for-profit financial corporations and non-joint stock companies, which include mutuals, cooperatives and credit unions. Credit union response to these differences and other factors that favorably affect financial cooperatives is critical to ensure that those standards appear in the final guidelines, according to Dave Grace, WOCCU vice president of association services. "This is the first time the Basel Committee has recognized that financial cooperatives are different," said Grace. "We want to make sure these and other standards that enable credit unions to better serve their members appear in the final version. WOCCU in the past has submitted its ideas and suggestions for consideration by the Basel Committee. On April 5, Grace and WOCCU President/CEO Pete Crear traveled to Amsterdam to meet with committee Chairman Nout Wellink, president of The Netherlands Bank, to make the case that credit unions should not be penalized by tougher capital requirements than those faced by larger, riskier institutions that present systemic risk to the global financial system. "We didn't want credit unions and financial cooperatives to pay an unfair price as part of the solution to a crisis they had no hand in making," Crear said. "Chairman Wellink was very receptive to our comments and assured us that he would bring our concerns forth to his fellow committee members." Partly as a result of that visit and WOCCU's work with the committee during the past decade, the current amendments to the Basel II Accord reflect a greater understanding of the different structure and nature of financial cooperatives, said WOCCU. The reform package covers two key areas of interest to credit unions:
* Raising the quality, consistency and transparency of the capital base. The new guidelines seek to ensure that financial institutions move to a higher capital standard that promotes long-term stability and sustainable growth, enabling the banking system to better absorb losses on existing banks and banks that have gone out of business. As for capital quality, the committee proposes that Tier 1 capital be defined as common shares and retained earnings and tailored accordingly for credit unions' structure. Innovative hybrid capital instruments will be phased out. Tier 2 capital instruments must be better aligned and Tier 3 capital instruments should be eliminated. The committee also proposes to enhance capital base transparency by requiring institutions to disclose capital elements in reported accounts. * Reducing procyclicality and promoting countercyclical buffers. A countercyclical capital framework will contribute to a more stable banking system than a procyclical one, which will help dampen rather than amplify economic and financial shocks. To this end, adequate capital buffers at individual institutions should be established. The committee also is promoting more forward-looking provisioning based on expected losses that captures actual losses more transparently and is less procyclical than the current incurred-loss provisioning model.
WOCCU has asked its member organizations worldwide for input on the current revisions to the Basel II Accord as outlined in two consultative documents. (To access these, use the resource link.) WOCCU will aggregate responses to present to the Basel Committee. Comments should be submitted by April 2 to Grace at WOCCU will work with the Basel Committee throughout the year as it completes impact assessments and finalizes the standard by year end. [Editor's note: U.S. credit unions work under the Generally Accepted Accounting Principles (GAAP), and it would take a change in the Federal Credit Union Act to fall under the Basel requirements.]

Southwest Corporates December losses total 103M

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DALLAS (2/2/10)--Southwest Corporate FCU reported Friday an additional $103 million of investment impairment losses in its unaudited December financial statements. The additional amount brings the corporate's total net loss for 2009 to nearly $226.5 million. The $226.5 million figure is made up of net losses on investments of $260 million partially offset by operating earnings prior to investment losses of $34 million. That compares with a net loss of $691.9 million in 2008. The December $103 million figure is comprised of a $19 million impairment of Southwest Corporate's remaining membership capital shares investment in U.S. Central FCU, and $84 million of impairments of Southwest Corporate's mortgage-backed securities. The amounts reflect continued increases in loss projections over the second half of 2009. Southwest had reported to its members that it will deplete $134.6 million of members' capital accounts in January to cover the retained deficit as of Dec. 31. This will result in a cumulative 72.68% depletion of the original members' capital account. "Southwest Corporate has and will continue to reduce expenses to conserve capital and to support revisions already made to its business model," said a letter from Melissa Wardell, senior vice president/chief financial officer, accompanying the financials. "While actively seeking to lower operating expenses, Southwest Corporate is also mindful to balance any future operating expense reductions with the need to maintain high service quality levels for our members," she wrote.

Bill prompts tax debate in Massachusetts

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WORCESTER, Mass. (2/2/10)--Pending federal legislation in Washington, D.C., that would relax restrictions on credit union member business lending--to 25% of assets from 12.5%--is prompting debate in Massachusetts between credit unions and banks about lending and credit unions’ tax-exempt status. However, Dan Egan, CEO of the Massachusetts Credit Union league, told the Worcester Business Journal (Feb. 1) that “Banks contend that [credit unions] were set up for people of limited means, but that was never the case. They were set up for all consumers.” Since Massachusetts chartered credit unions in 1909, the institutions have acted as a check and balance for the banking industry, he added. Small businesses are turning to credit unions in greater numbers now because they’re finding they can’t get the loans they need from banks, or can’t meet banks’ new, stricter credit requirements, Egan told the publication. “The only ones who don’t want this are the banks,” Egan added. The tax-exempt structure is designed to help credit unions serve the underserved, Michael Lussier, president/CEO of Webster First FCU, Worcester, told the Journal. “We’re helping those people in the community, those blue-collar workers that are sick of being taken advantage of by high fees and lower interest payments,” he added. To read the article, use the link.

CU System briefs (02/01/2010)

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* WASHINGTON (2/2/10)--A former supervisory employee at Department of the Interior FCU (DOI FCU) pleaded guilty to taking property in the care, custody and control of a credit union. The charges are related to a $25,110 theft of member deposits in 25 incidents from 2006 to 2008, said the U.S. Attorney's office for the District of Columbia. Monica Michals, 36, Oxon Hill, Md., entered her plea in a U.S. District Court and will be sentenced on May 21. She faces up to 10 years' imprisonment. As part of her plea agreement, Michals has agreed to pay full restitution. The funds were taken from the accounts of at least three members, two of whom were elderly (Targeted News Service Jan. 11) ... * DULUTH, Minn. (2/2/10)--Stephanie Richards, right, poses with a $1,000 check she
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received from Tammy Heikkinen, president/CEO, and Ralph Hamann, vice president finance/chief financial officer, of Members Cooperative CU, Duluth. Richards was randomly selected to receive the check as a result of a project MCCU launched last fall to encourage account holders to save in an Emergency Fund Account by building their savings each month through automatic transfers. In 2009, MCCU awarded monthly $250 winners and a $1,000 winner at the end of the year. "This is perfect timing to receive this money," said Richards, who does not have health insurance coverage and opened an account to start building a savings cushion. She recently had emergency medical bills and plans to use the money to cover those expenses. "It's really cool that my credit unions started this program," Richards said. (Photo provided by Members Cooperative CU) ... * ONTARIO, Calif. (2/2/10)--Bonnie Kramer, executive vice president/ chief operating officer of Financial Service Centers Cooperative Inc. (FSCC) has been selected as VIP Woman of Year by the board at the National Association of Professional Women (NAPW). The board selects a handful of women each year to honor for their involvement in their communities, professional achievements and contributions in their field. Kramer has been active in the credit union movement for nearly 42 years. She began working at FSCC in 1993 as its CEO, then transitioned to her current position to focus on the shared branching network's operations. As a pioneer of the first Shared Branching locations in the U.S., Kramer helped transform the network, creating locations that served as outlet-owned access points operated by credit unions. She also was honored for her philanthropic work with Credit Unions for Kids through Children's Miracle Network, World Council of Credit Unions supporting women around the world, and Tender Mercies ministries supporting children in Uganda ... * FARMERS BRANCH, Texas (2/2/10)--Jim Vest, former Texas Credit Union League employee died Thursday, according to the league (LoneStar Leaguer Feb. 1). His credit union career began in 1950 when he managed the Postal Transportation Service FCU, Fort Worth. In 1952 he became a league field representative, and in 1954 he returned to managing the Fort Worth Quartermasters FCU. He joined the league again in 1956, where he held a number of positions, including assistant managing director. In 1972, the league launched the Technical Assistance Division, which West led. Today that service has been expanded as Financial and Technology Resources with the league affiliate, Credit Union Resources Inc. Funeral services were held Monday ... * HEATH, Ohio (2/2/10)--Clarence L. Love, 80, died Thursday in Heath, Ohio. Love, who worked 40 years at Owens-Corning Fiberglas and then as superintendent at Mid-Ohio Warehouse, served many years as president of Fiberglas FCU, based in Newark, Ohio. Survivors include his wife, four children, 17 grandchildren and six great-grandchildren (The Advocate Jan. 30) ...

INPRsI Weekend Edition features student CU

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WASHINGTON (2/2/10)--National Public Radio’s Weekend Edition Saturday featured a story about a student credit union and also cited Credit Union National Association (CUNA) statistics about student credit union branches in schools. The story, “Cafeteria Credit Unions Teach Students Money Skills,” focused on Allegacy FCU’s student branch at R.B. Glenn High School in the Winston-Salem, N.C., area. NPR interviewed one of the branch’s tellers, Austin Dodd, 17, who said he’s learning to save his money instead of spending it. Dodd is taking a class that goes along with his teller responsibilities. He said he is learning about credit scores, the stock market and mortgages. About 700 student credit union branches are located in schools and youth clubs in 34 states, according to CUNA. Since 2007, the numbers have increased by one-third. Allegacy FCU, based in Winston-Salem, N.C., has $1 billion in assets. To read the article or listen to the audio version, use the link.

NACUSO conference keynoters announced

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NEWPORT BEACH, Calif. (2/2/10)--The National Association of Credit Union Service Organizations (NACUSO) has confirmed the keynote speakers scheduled to address credit unions and credit union service organization (CUSO) executives attending the 2010 NACUSO annual conference April 25-28 in Las Vegas. New this year will be “Hot Food/Hot Topics” to address specific credit union subjects. The luncheon sessions will reveal ideas on how to grow credit unions and CUSOs, operate them in new ways, leverage shared resources and create scalable platforms. “Thought Leaderships Sessions” will be presented in the afternoons, highlighting experts to speak about the latest issues and opportunities. Topics and speakers at NACUSO’s general sessions will be:
* “USAA: Innovative Collaboration and Lessons Learned”--Jack M. Antonini, former vice chairman, president/CEO, USAA Federal Savings Bank; * “Discover, Unlock, and Unleash Innovation”--Joe Batista, director and chief creatologist, Hewlett-Packard Company; * “Collaboration: How Panthers, Lions, and Tigers All Share the Same Cage at the Zoo” --Michael Taylor, cofounder/CEO, SchellingPoint; * “Principles of Collaboration: Creating the Networked Organization”-- Gary L. Mangiofico, practitioner faculty member of Organizational Theory and Management, Pepperdine University; * “Using Innovative Social Media and Networks to Drive Your Business Model”-- George Pohle, founder/CEO, Suasoria, and former vice president/senior partner, IBM’s Global Business Services Group; * “Is the Legislative and Regulatory World Spinning In Sync (and how Do CUSOs Fit onto Today’s Axis as it Spins)?--Dennis Dollar, principal partner, Dollar Associates LLC; * “Credit Union Differentiation”--George Hofheimer, chief research officer, Filene Research Institute; * “CUSO 2.0--The next generation of CUSOs--Guy Messick, NACUSO general counsel, and attorney, Messick & Weber PC; and * “Who Are Those Guys? How Do They Do That? How Can I Use That?”--Thomas C. Davis, NACUSO CEO, business strategist, and industrial psychologist.
For more information, use the link.

Minnesota league promotes jobs through MBL

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ST. PAUL, Minn. (2/2/10)--Minnesota Credit Union Network (MnCUN) President/CEO Mark D. Cummins, who is a regular columnist for Finance & Commerce newspaper, wrote on the benefits of credit union member business lending in his latest commentary. His article, titled “Community involvement fundamental for credit unions,” was published in the publication’s “Association Update” section Friday. The article outlined the credit union philosophy and called community involvement an “intrinsic” part of credit unions since they were founded in the U.S. more than 100 years ago. He acknowledged credit unions as “central contributors” to the overall economy because of their work with local businesses. “One way that credit unions support ‘Main Street Minnesota’ is through small business lending, which is especially important in a time where many businesses owners are finding it increasingly difficult to access credit and obtain financing for their operations,” Cummins wrote. Credit unions can be a solution to this challenge, he told readers. Cummins said credit unions have been taking part in member business lending since the early 1900s. He explained the 12.25% arbitrary cap currently restricting credit unions’ member business lending and promoted congressional proposals that would raise the cap to 25% and help create jobs. Cummins said Minnesota credit unions could lend more than $176 million to small businesses this year alone, thus helping to create nearly 2,000 new jobs “without costing the taxpayer a dime.” The estimates were from the Credit Union National Association. To read the column, use the link.

Bail set at 1 million in TwinStar CU hostage-robbery case

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CENTRALIA, Wash. (2/2/10)--Bail for a suspect in the TwinStar CU hostage-robbery case has been set at $1 million, according to local media reports. Michael Anthony Lar, who is suspected of attempted robbery at the Centralia, Wash., branch of TwinStar CU, appeared in court Friday to face charges of burglary, kidnapping and attempted robbery (The Daily News Jan. 30). He arrived at the hearing in a wheelchair because of two bullet wounds he suffered in the elbow and buttocks when a police officer shot him during the incident. Lar’s arraignment is scheduled for Thursday. According to The Seattle Times archives, Lar admitted to six bank robberies in Arizona and Washington in 1996 after being captured in Las Vegas. He also pleaded guilty to a heist at a community bank in Tumwater and two other robberies in Puget Sound. On Jan. 25, a man entered TwinStar CU through a window as employees were arriving to work. He grabbed a female employee and held a gun to her head. When police responded, an officer walked up to the employee entrance where the gunman and employee were standing and pulled the woman to safety. The officer also fired two shots (News Now Jan. 26). After the shots were fired, police engaged in a standoff with the gunman holed inside the credit union. However, when police entered the credit union several hours later, they found nobody inside. Later that day, police arrested Lar after receiving reports of a suspicious man who appeared to be wounded. He was booked into the county jail Thursday after his release from the hospital.

N. M. CUs host town hall meetings with lawmakers

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ALBUQUERQUE, N.M. (2/2/10)--New Mexico's credit unions had a chance to share their concerns and issues with state lawmakers at town hall meetings hosted by the Credit Union Association of New Mexico (CUANM) before the current legislative session began.
Click to view larger image New Mexico Rep. Brian Egolf, left, discusses issues facing the 2010 New Mexico Legislature during a town hall meeting hosted by the Credit Union Association of New Mexico.
Click to view larger image At a town hall meeting in Albuquerque, N.M., state Sen. Cisco McSorley talks with First Financial CU CEO Ben Heyward about credit unions and other issues. (Photos provided by the Credit Union Association of New Mexico)
The events attracted 16 representatives and seven senators. They indicated that the legislative session would focus on the state budget. Most agreed they are facing the worst fiscal situation they have ever dealt with, said CUANM. Ideas they are considering include cutting state employees' salaries, raising taxes including taxes on alcohol and cigarettes and cutting state jobs (CUANM Network January). Because of widespread dissatisfaction among constituents and legislatures over mega-banks nationwide that received taxpayer money while cutting credit and raising fees, one bill being introduced would pave the way for transferring state money from megabanks. Many of the credit unions told lawmakers at the town hall meetings that credit unions are actively working to help their members weather the difficult financial climate. CUANM President Sylvia Lyon noted that credit unions have come through the toughest times without taking any taxpayer money and remained committed to their members' financial needs. CUANM is working to ensure parity with local community banks in the deposits legislation and to find ways for credit unions to insure multimillion dollar deposits and to handle a large infusion of capital. CUANM is also monitoring legislation that would set usury limits and set new unemployment insurance taxes as well as proposals to enhance revenues.

Top 10 INews NowI stories for January

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MADISON, Wis. (2/2/10)--A compliance story focusing on a Truth in Savings disclosure requirement for overdraft services led January’s list of the top 10 stories in News Now. The second most-read article spanned the top 10 events that changed credit unions the most in the past decade. Two stories about financial guru Suze Orman touting credit unions in various media outlets also made the list. Orman appeared on Larry King Live and CNN this month, where she further discussed the benefits of being a credit union member. Here are January’s top stories: 10. Bankruptcies up, CUs in ‘maintenance phase’: CUNA MADISON, Wis. (1/6/10)--Personal bankruptcy filings hit 1.41 million last year--an increase of 32% over 2008. And credit unions can expect more chargeoffs during the post-recession, say Credit Union National Association (CUNA) economists. 9. Info on variable rate rules coming, Fed tells CUNA WASHINGTON (1/26/10)--A Federal Reserve representative informed the Credit Union National Association (CUNA) that the Fed is formulating its thoughts on recently introduced variable rate credit restrictions, and expects to provide CUNA with further guidance by the end of this week. 8. Craig's List ad targeting CUs is pulled HARRISBURG, Pa. (1/7/10)--Craig's List has pulled an advertisement that sought to recruit current credit union members to solicit others to join the credit union through them. 7. Suze Orman to Larry King: CUs have great rates WASHINGTON (1/14/09)--Credit unions offer better rates on credit cards, personal finance guru Suze Orman told Larry King on Larry King Live Thursday. 6. ABC features: Switch to CUs NEW YORK (1/12/10)--The media kudos for credit unions continues this time with ABC’s Diane Sawyer Friday noting on ABC’s World News Tonight that many consumers are trading their financial institutions on Wall Street to the ones on Main Street. 5. NCUA session features frank talk on corporate plan WASHINGTON (1/25/10)--At its first town-hall style meeting of the new year, the National Credit Union Administration shared some frank thoughts about its plans to revamp the corporate credit union system. 4. CBS Moneywatch, Suze Orman: Time to join a CU NEW YORK (1/13/10)--It's time to say goodbye to banks and join a credit union, according to CBS, which touted credit union's lower fees, better rates and the Credit Union National Association's credit union locator. Also this week on CNN, financial guru Suze Orman encouraged consumers to obtain credit cards from credit unions. 3. Fed issues final CARD Act rules WASHINGTON (1/13/10)--The Federal Reserve Board on Tuesday approved amendments to Regulation Z, Truth in Lending, which implement provisions of the Credit Card Accountability, Responsibility and Disclosure Act of 2009. The rules go into effect Feb. 22. 2. Ten events that changed CUs in the past decade MADISON, Wis., and WASHINGTON (1/5/10)--A decade has ended and in the tradition of newshounds everywhere, the Credit Union National Association's News Now staff took time out to mull the impact the first decade of the 21st century presented credit unions. Staff sniffed out 10 events of the decade that changed the way credit unions operated and their strategies. 1. Compliance: All CUs must report NSF fees monthly WASHINGTON (1/7/10)--Credit unions have inquired whether a new Truth in Savings disclosure requirement for overdraft services applies to institutions that do not offer overdraft protection services to their members but do charge returned-item fees.