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CU saves injured vets family home from foreclosure

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UXBRIDGE, Mass. (2/16/11)--Worcester (Mass.) CU went to bat for the family of a recuperating Iraq veteran after Countrywide Home Loans foreclosed on their Uxbridge, Mass., home. The result: the credit union helped save their home. The family, Lisa and Michael Damon and their children, Max, 6, and Abby, 9, learned that California-based Countrywide Home Loans was foreclosing on their home in late January 2008. Their story and the help it received from the credit union were featured in the Telegram & Gazette (Feb. 11). Michael Damon, who had been injured while on duty in Iraq, could not work and could not take care of the children while recuperating at home in 2007. That meant Lisa Damon couldn't work full time. That was the year the adjustable rate mortgage they took out in 2004 soared to 10%, doubling the monthly mortgage. Even though the family had paid off their vehicles and had no credit card debt, and even though Lisa Damon persistently tried to talk to Countrywide officials about their circumstances, the company foreclosed on the home in January 2008. She worked with a lawyer Andrea M. Park, and a newspaper ran a story about the foreclosure. "I read the story and said, 'This is not right,'" said Karen E. Duffy, president/CEO of $79 million asset Worcester CU. "I just thought it was so wrong that someone who was serving this country, and this family, were having this terrible problem," she told the newspaper. Duffy and Park took over the case, working closely with the Damons. The credit union stepped up to ensure that the couple received what a solidly underwritten and affordable 30-year, fixed-rate mortgage at 5.1% interest--the best rate available at that time, said Duffy. That effort led to the Damons repurchasing their home in December 2009. "Karen Duffy saved my life," Michael Damon told the newspaper. To read the full article, use the link.

CDCU growth outpaced CU industry at large--Federation analysis

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NEW YORK (2/16/11)--Community development credit unions' (CDCU) growth outpaced the overall credit union industry, according to the National Federation of Community Development Credit Unions' semi-annual analysis of trends among credit unions serving predominantly low-income communities. The report for the period through June 30, 2010, notes three forces shaping the movement in general: unabated recession, redoubled regulatory pressure and regulatory fees charged to credit unions, and positive media coverage urging consumers to "move your money" from large banks to community-based institutions. "Resilience amid stress" best captures the condition of CDCUs, according to Cliff Rosenthal, federation president/CEO and co-author of the study with Cathi Min Kyung Kim, assistant director of community development investments at the federation. Indicators of CDCUs' growth noted in the study:
* CDCU assets rose at an annual rate of 6.38%, compared with overall credit unions' 4.37% increase; * Their loan portfolio rose modestly, at an annual rate of 0.92%, compared with an annualized decline of 2.14% for the overall industry loan portfolio; and * Their collective return on assets (ROA) was 41 basis points, roughly the same as that of all federally insured credit unions.
However, said the federation, economic stress took a toll:
* The typical CDCU was marginally unprofitable with an ROA of -0.07%, due in part to deposit insurance charges of 22 basis points imposed by the National Credit Union Administration; and * Thirteen CDCUs were either merged or liquidated, a higher proportion than the overall credit union industry. Four of these credit unions were merged into other CDCUs, ensuring continued service to low-income communities, said the federation.
"The profile of the CDCU movement began to change dramatically in the first half of the year," Rosenthal said. "The announcement of the Treasury Department's Community Development Capital Initiative (CDCI) brought a major influx of credit unions into the federation's ranks," he added. Collective assets of federation member CDCUs more than doubled to $11.3 billion from $5.25 billion. Combined membership rose by 60% to 1.688 million members from 1.072 million. Credit unions that joined the federation early in the year were excluded from the mid-year trend analysis to ensure consistency of analysis, said the federation. "We expect the picture at year-end 2010 numbers to show major changes reflecting the impact of these additional CDCUs and the investment of $69.9 million in secondary capital from the Treasury Department's CDCI program in September 2010," Rosenthal said. For the complete report, use the resource link.

U.S. bankruptcy rate declines in 4Q for sixth time

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WASHINGTON (2/16/11)--Bankruptcies filed in the U.S. rose 8% during calendar year 2010, according to data released Tuesday by the Administrative Office of the U.S. Courts. However, the rate of growth of bankruptcies filed during fourth quarter 2010 declined for the sixth consecutive quarter for business filings and for the second quarter in personal filings. During fourth quarter, roughly 370,080 bankruptcies were filed, down from 372,203 filed for the same period in 2009. In 2010, 1.59 million bankruptcies were filed. That is a five-year high and up from 1.47 million filed in calendar year 2009. "These bankruptcy filing numbers roughly track credit union loan loss data," said Bill Hampel, chief economist at the Credit Union National Association (CUNA). "Household financial conditions deteriorated dramatically from 2007 to the first part of 2010. Since then, conditions have stabilized with the result that although high, bankruptcy filings are at least beginning to recede," he said. "We have a way to go, and it will take quite a while to get there, but at least we are moving in the right direction," Hampel told News Now. Filings have increased steadily since 2006, when they totaled 617,000 for the first 12-month period after the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 took effect. In 2005 more than 2 million bankruptcies were filed in the rush to beat the more restrictive requirements from the act. Most of the 2010 filings involve non-business debts, which totaled 1.536 million, up 9% from 1.4 million filed in 2009. Business filings totaled 56,282, down 7% from 60,837 in 2009. Chapter 7 bankruptcy filings totaled 1.139 million in 2010, with Chapter 13 the next highest, at 438,913 filings, followed by 13,713 under Chapter 11, and 723 under Chapter 12. The recession's end is finally bringing the expected improvement in consumer and business finances, said Moody's However, it cautioned that business and personal filings "are on different paths." Business bankruptcy filings have fallen for a year and a half, while personal filings have been slower to begin to drop. Business filings remain highly elevated by historic standard, above levels seen leading up to the bankruptcy reform legislation in 2005. "By contrast, the level of personal filings has only briefly returned to levels seen in the early part of the last decade and is slipping below them again. This is true despite high unemployment and high levels of defaults including credit card chargeoffs and foreclosures," Moody's said. For more detail, use the link.

Survey Debit card rule means higher costs restrictions

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MADISON, Wis. (2/16/11)--If a proposed Federal Reserve regulation goes into effect, people who use debit cards issued by community banks will have higher costs and increased restrictions, according to a new survey by community bankers. The regulation also would impact credit unions. Government price-fixing as proposed in the Federal Reserve rule that would implement the Durbin amendment of the Dodd-Frank Wall Street Reform and Consumer Protection Act will cause the higher costs and restrictions, the Independent Community Bankers of America (ICBA) said (ENP Newswire Feb. 15). Merchants will see $12 billion in windfall profits if this new rule is implemented, the news service said. Key findings in the ICBA survey:
* 93% of community banks say they will be required to charge their customers for services that are currently offered for free because of the new law and the Federal Reserve rule; * 72% say they will have to implement annual or monthly charges for use of a debit card; * 61% say they will have to impose a minimum balance requirement; * 50% say they will have to impose a charge each time customers use their debit card; * 65% say they will have to raise their qualification standards, either by strengthening debit card qualification thresholds or closing higher-risk transaction accounts; * Nearly 20% say they will have to eliminate jobs or halt plans to open new bank branches; * 72% of community banks say they will no longer be able to afford free checking accounts because of the new law and the Federal Reserve rule; * Nearly 70% say they will have to charge for services that are now free, such as online or mobile banking; and * Nearly half say the rule will harm their customers because it will make it difficult for them to continue offering competitive rates on deposits and loans.
Credit Union National Association President/CEO Bill Cheney recently urged the Fed to take the time to study the new interchange law, rather than forging ahead with new rules, so everyone wins, including consumers, merchants and financial institutions. The Fed should be given time to consider all interchange-related costs and set a reasonable interchange rate to avoid unintended consequences such as elimination of debit card programs by credit unions, he said. Credit unions also may be forced to impose new fees on members’ debit accounts to keep their card programs afloat, he said. In addition, he challenged retailer claims that any savings gained from the interchange fee cap would be passed on to consumers. The Fed proposal will be open for comment until Feb. 22. The U.S House Financial Institutions and Consumer Credit subcommittee has a hearing scheduled Thursday on interchange.

Green America Sends CDFIs a Valentine

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WASHINGTON (2/16/11)--Consumers not feeling the love from big banks were encouraged to break off their relationships and turn to community development financial institutions (CDFIs), including credit unions, through a Valentine’s Day campaign sponsored by the nonprofit group Green America. The campaign highlighted the ethical abuses carried out by many large financial institutions and urged fed-up consumers to “break up” with their mega-banks on Valentine’s Day (PR Newswire Feb. 14). Green America, which provides tools and strategies for solving social and environmental problems, took aim at the questionable lending practices of big banks and large bonuses paid to their executives. The organization urged consumers to opt for CDFIs instead. CDFIs are banks, credit unions, and other financial-services organizations, such as community development loan funds, that measure their returns both in terms of financial profitability and social impact. CDFIs help the hardest hit communities and consumers in the U.S., said Green America. In the campaign Green America Corporate Responsibility Director Todd Larsen urged dumping big banks with these words: “Tired of being abused by your polluting and fee-addicted mega-bank? Not willing to stay in a bad relationship where you give and give … and all your bank does is take and take? Then, it's time for you to think about dumping your mega-bank and getting into a healthy financial relationship with a community development financial institution.”

Wis. employers vie for free staff training tested by CUs

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PEWAUKEE, Wis. (2/16/11)--Wisconsin companies are rapidly enrolling employees in the Investor Education In Your Workplace program, a grant-funded program that offers 10 hours of self-paced, online training on money and investing. Several thousand Wisconsin credit union employees received training in the program, and some are certified educators, offering the same online program statewide, said the Wisconsin Credit Union League. As many as 4,000 Wisconsin workers could soon become more financially fit because of the program that, in addition to offering $400,000 in free training value to Wisconsin firms, may offer improved bottom-line results for participating companies, said the league. “When employees are financially fit, that can help the companies they work for,” said Brett Thompson, league president /CEO. “Studies have proven that financially savvy employees are less stressed, happier and more productive. And companies that help their staff achieve peace of mind with their pocketbooks often see fewer workplace distractions, improved employee morale, reduced absenteeism and decreased turnover.” More than 3,500 employees from 80 credit unions completed 30,000 hours of investment education in 2009--the year the program was developed and piloted in the U.S. Twenty-two received advanced training in 2010 to become Certified Financial Educators (CFEds)--a nationally recognized designation by the Heartland Institute. This year, they will offer the same basic online program to employers across the state. The CFEds will help recruit participating companies, coordinate the training for firms in their area and coach participants. They do not promote specific financial products, partners or services, making them a valuable third party and objective “coach” to help employees and employers alike. The coursework focuses on investing concepts including goal setting, planning for educational needs and financial emergencies, distinguishing among investment vehicles, managing risk, diversifying a portfolio, maximizing tax advantages, understanding mutual funds and working with investment professionals. Credit union employees who completed the program earned an average passing grade of 87.69% on coursework and an average 23.31% improvement in knowledge. The number of participants who created a family budget, set goals and contribute to retirement savings programs increased 5% to 50%. “The goal is to debunk a common fallacy that has prevented most Americans from doing the basic investing they’ll need to secure their futures,” Thompson explained. “Workers often mistakenly believe that they can never get ahead financially because they have too few dollars to invest and that common expenses will derail those efforts. But that’s not true. Every person with income, no matter how modest, can turn small contributions to investment accounts into significant assets while at the same time planning for life’s inevitable financial emergencies.” Wisconsin credit unions called their pilot program Real Progress & Pathways to Prosperity (or RP3). Credit unions in Pennsylvania and North Carolina also have enrolled in hopes of replicating Wisconsin credit unions’ success. Credit unions are participating in the project as part of a REAL Solutions initiative, which helps people of all incomes build wealth.

Three named finalists for CO-OP THINK PRIZE

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RANCHO CUCAMONGA, Calif. (2/16/11)--Three finalists have been named for the inaugural CO-OP THINK PRIZE, which offers $10,000 in seed money for an innovative idea to reshape the credit union industry. Judging is based on the entry’s potential positive impact on the industry, its creativity and its ability to be shared and implemented by all credit unions. The three finalists are:
* Shari Storm, senior vice president and chief marketing officer, Verity CU, Seattle. Her entry is a business plan for the Squirrel smartphone application. * Candace Vogelsong, marketing specialist, Community Powered FCU, Newark, Del. Her business plan addresses social media. * Matt Weidler, information technology asset coordinator, Evangelical Christian CU, Brea, Calif. His business plan centers on cellular ATM access.
They will present their ideas at the THINK 11 Conference on May 17 in Anaheim, Calif. Voting will be conducted by a panel of judges from CO-OP Financial Services and the Filene Research Institute, and conference attendees. Credit union industry employees--even those not attending THINK 11--can view the entry videos and cast votes on-line at from April 15 through May 6. The CO-OP THINK PRIZE was introduced last April at CO-OP’s THINK 10 Conference. Initial entries were required by Oct. 15, and from these, 25 semi-finalists were asked to provide business plans by Dec. 31. All semi-finalists received a $150 gift card from MasterCard, a sponsor of both the CO-OP THINK PRIZE and the THINK 11 Conference. Storm, Vogelsong and Weidler will work with a video production company provided by CO-OP Financial Services to present their plans online and at the conference. The $10,000 in seed money is being awarded to help bring the winning idea to reality for the benefit of winner’s credit union and the entire movement. Biographies of the finalists, capsule descriptions of their entries, and video presentations can be found online starting April 15. Registration for the THINK 11 Conference is free to credit union employees.

Mich. Senate boards delay debit interchange train

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LANSING, Mich. (2/16/11)--The Michigan State Senate Monday approved a resolution backing a delay in implementation of the Federal Reserve's proposed interchange regulation. The state House approved the resolution last week. "We appreciate the strong message sent by the Michigan state Legislature on this very bad debit interchange legislation," said Michigan Credit Union League CEO David Adams. "In an economy like Michigan's we can ill afford any regulation that so severely restricts income for lenders." The U.S. House Financial Institutions and Consumer Credit Subcommittee has scheduled a hearing Thursday on interchange issues. The Credit Union National Association has urged the Fed to take time to study the new interchange law to consider all related costs and set a reasonable interchange rate to avoid unintended consequences on credit unions' debit card programs.

N.M. CU Day attracts 100 CUs lawmakers

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ALBUQUERQUE, N.M. (2/16/11)--More than 100 credit union advocates and state legislators attended the New Mexico Governmental Affairs Conference in Santa Fe, N.M., earlier this month.
Click to view larger image New Mexico State Rep. Jane Powdrell-Culbert (R-44) presents the proclamation declaring Feb. 9 as Credit Union Day to Credit Union Association of New Mexico Vice President of Governmental Affairs Juan Fernández. (Photo provided by the Credit Union Association of New Mexico)
The lawmakers addressed CEOs and other credit union professionals who attended the conference, hosted by the Credit Union Association of New Mexico, despite single-digit temperatures, snow and icy roads. Special guest, as portrayed by David Landis, was the late, former Nebraska U.S. Sen. George Norris, the author of the 20th Amendment and lifelong credit union supporter. Feb. 9 was declared New Mexico Credit Union Day through a House Memorial introduced by New Mexico State Rep. Jane Powdrell-Culbert (R-44). The proclamation recognizes the state’s credit unions for helping members improve their economic status, teaching financial literacy to the state’s young people and improving their communities through numerous projects for more than 75 years.

CU System briefs (02/15/2011)

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* PAWTUCKET, R.I. (2/16/11)--Thomas Flannery, 36, was arrested at a hotel in downtown Providence, R.I., Monday morning on a warrant out of Massachusetts in connection with a series of robberies there. He was charged later with the robbery of Pawtucket (R.I.) CU, which occurred at about 10 a.m. Monday. The robber passed a note to a teller there and left with an undetermined amount of cash. Seized during the arrest were money, a demand note, gloves, and clothing used in the robbery, said the Rhode Island State Police. Flannery also is accused of three robberies in Brookline, Mass., on Jan. 26, Feb. 4 and Feb. 7, and is a suspect in a bank robbery Feb. 10 in South Attleboro, Mass. ( Feb. 15 and Feb. 14) … * KANKAKEE, Ill. 2/16/11)--Three Kankakee men are in custody after an apparent attempt was made to rob Riverside CU's branch in Bourbonnais, Ill. Names of the three were not disclosed. They were picked up by police Friday after tellers at the branch noticed two men making their way across the credit union's parking lot. The tellers locked the front doors and triggered an alarm at 1:51 p.m. (The Daily Journal Feb. 14) … * FORT WAYNE, Ind. (2/16/11)--Britain K. Flowers, 25, a former employee of Three Rivers FCU, was charged Friday in Allen Superior Court with four felonies related to the misappropriation of $47,900 from two members and the credit union (News-Sentinel Feb. 12). The incidents allegedly occurred between Sept. 1 and Oct. 12. Flowers was suspected of making unauthorized withdrawals of up to $36,400 from a member's money market account, $7,000 in unauthorized withdrawals from another account, and $4,000 from the teller drawer … * LANSING, Mich. (2/16/11)--Michigan's Downriver Chapter of Credit Unions sponsored its first legislative breakfast of 2011 in S
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outhgate with 30 credit unions and two lawmakers attending. The event was hosted by Monroe County Community CU. Lawmakers attending were Sen. Hoon-Yung Hopgood (D-Taylor), left, and Rep. Doug Geiss (D-Taylor), third from right. They are pictured with attendees. Among the topics discussed include these industry specific topics: raising the zero dollar threshold for reporting requirements for political action committee contributions, a bill Geiss has introduced, and shortening the redemption period for foreclosed properties. Michigan has one of the longest redemption periods in the nation. Twenty-five states have no redemption period. (Photo provided by the Michigan Credit Union League) … * DUBLIN, Ohio (2/16/11)--BMI FCU President/CEO Sharon Custer has announced plans to retire in May, 2012. The Dublin, Ohio-based credit union's board of directors has selected Bill Allender as her successor, she said. Allender is currently executive vice president and will move into the position of president on March 1, 2011. He has been with BMI FCU for eight years and served previously as vice president of finance. Custer will keep the title of CEO until her retirement. After May 2012, Allender will become president/CEO …