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Forbes terms Eakes as subprimes Mr. Clean

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NEW YORK (2/22/08)--A North Carolina credit union CEO who has made a career of advocating against payday lending is the subject of an article in Forbes.com (2/21/08). Martin Eakes, CEO of Self-Help CU, based in Durham, N.C., and the Washington, D.C.-based Center for Responsible Lending is "to mortgage lenders what Ralph Nader was to the auto industry," says the article, entitled "Subprime's Mr. Clean." The article notes his work in persuading North Carolina legislature to ban high-interest payday loans and mortgage prepayment penalties, and to restrict fees by mortgage-brokers. It recognizes his work in helping with similar laws in other states. It also discusses Eakes' efforts toward bills in Congress that would change the mortgage lending procedures by banning prepayment penalties, requiring lenders to demand proof of income documents, and giving bankruptcy judges the authority to rewrite mortgage terms on a primary residence. He is quoted as saying half the people he knows would "take a bullet for me" and half would "be happy to provide the bullet."

Kansas Senate subcommittee hearing on FOM is today

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TOPEKA, Kan. (2/22/08)--A hearing before a Kansas Senate subcommittee on a banker-drafted bill that would limit field of membership for credit unions is scheduled for 10 a.m. (CST) today, says the Kansas Credit Union Association. The hearing is before the subcommittee of the Senate Financial Institutions and Insurance Committee. The banker bill, K.S.A. 17-2205, would limit credit union fields of membership to groups with a common bond of occupation or association or to groups residing within a well-defined neighborhood, community or rural district. KCUA supports House Bill 2676, which clarifies FOM language in the state credit union law and enables credit unions to define who their fields of membership should be. Late last month, credit unions swarmed the state Capitol to advocate consumer choice in conducting financial business.

NEW Beehive members approve conversion to thrift

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SALT LAKE CITY (2/21/08, UPDATED 6:50 a.m. MT)--Utah-based Beehive CU said 53% of its voting members approved the credit union’s proposal to convert to a mutual savings bank. According to the credit union, ballots were cast by about 36% of members who were eligible to vote on the proposal. Beehive has $187 million in assets and 22,000 members, according to the National Credit Union Administration (NCUA). Voting began in late January, with a special membership meeting held on Feb. 13. The credit union said at the meeting it would announce results this week. Beehive said once it submits the results of its vote to NCUA, the regulatory body has 30 days to make a final determination. The Office of Thrift Supervision and the Federal Deposit Insurance Corp. must also approve the change. The state-chartered credit union announced the conversion proposal last March. It applied for a bank charter with the Office of Thrift Supervision on Sept. 10, 2007 (News Now Oct. 5, 2007). The credit union says conversion would allow it to offer more branches, larger business loans and more competitive financial services. A state law passed in 1999 prevents the credit union from building another branch in Utah County. At a conversion meeting last year, the credit union's board told members the state's banks have attempted to limit credit unions' service and take away their tax-exempt status. Scott Jorgensen, CEO of the credit union, has told local newspapers there are no plans to take Beehive public after a conversion.

Man who abused IPO offerings of former CUs sentenced

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NEWARK, N.J. (2/22/08)--An Indiana real estate investor was sentenced to 20 months in prison and ordered to forfeit more than $2.8 million in profits from a scheme involving the stock offerings of banks that convert from mutual stock ownerships. Four former credit unions were among the banks whose depositors were defrauded. Mark Ristow, 65, of Indianapolis, Ind., was sentenced in a U.S. District Court in New Jersey. He had pleaded guilty in September to a charge to commit securities fraud (News Now Sept. 26, 2007). Two co-defendants--Andrew Crabb, 41, of Mechanicstown, Ohio, and Susan Gitlin, 49, of Norfolk, Va.--also were ordered to forfeit profits from the scheme. However, they received no jail sentences. Crabb, who is Ristow's cousin, will forfeit more than $98,000 in profits, plus interest and pay a penalty of $100,000. Gitlin, Ristow's sister-in-law, will forfeit nearly $165,000 in profits, plus interest, and pay a $75,000 penalty. According to the Securities and Exchange Commission, which filed the complaint, the former credit unions that were defrauded include:
* First Pactrust Bancorp. Inc. (formerly Pacific First FCU, which converted to a bank in 2002), Chula Vista, Calif.; * Synergy Financial Group Inc. (the former Synergy FCU, which converted in 2002), Crandon, N.J.; * Rainier Pacific Financial Group (Rainier Pacific FCU, which converted in 2003), Fife, Wash.; and * Citizens Community Bancorp Inc. (Citizens Community CU, which converted in 2001), Eau Claire, Wis.
The group deposited funds in the mutual savings banks, which Ristow, Crabb and Gitlin believed would then take the second conversion step from mutual savings organization to a full stock organization. According to SEC, the scheme circumvented limitations on stock purchases and evaded federal and state regulations designed to ensure that when a bank converts to stock ownership, each depositor has a fair chance to purchase stock before other interested investors can. It is illegal for depositors to transfer ownership of their purchase rights or enter into an agreement about the sale or transfer of shares that are bought in the offering.

Greylock urges affordable insurance for elderly

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Joan Garivalitis of Pittsfield, Mass., signs a letter of support at GreyLock FCU to keep auto insurance rates low for senior citizens.
PITTSFIELD, Mass. (2/22/08)--GreyLock FCU is spearheading a signature campaign urging Massachusetts lawmakers to prevent senior citizens from being forced to pay insurance rates equal to or greater than everyone else, as the state embarks upon a new system of managed competition for auto insurance. By statute, Massachusetts seniors have been receiving a 25% discount on auto insurance. “Seniors living on fixed incomes in our state are already facing significant financial burdens due to the escalating costs of energy and health care,” said Angelo Stracuzzi, president of the $943.5 million asset, Pittsfield, Mass.-based credit union. “The 25% discount on auto insurance is one way that the state has provided seniors with some relief from ever-increasing costs.
Greylock FCU President Angelo Stracuzzi displays more than a thousand signatures urging Massachusetts state officials to keep managed auto insurance rates low for senior citizens. (Photos provided by Greylock FCU)
“We urge state officials to maintain the original intent of the senior discount and help seniors benefit from any additional discounts that other drivers will be experiencing as the new rates are set,” he continued. The rate structures proposed for April 2008 are expected to increase an average 7.8%, according to preliminary estimates from the State Division of Insurance. “We all have a duty to make sure that these reductions of rates for the general public are not subsidized on the backs of our senior citizens,” Stracuzzi said. Greylock has undertaken an initiative called Massachusetts Senior Citizen’s Insurance Watch and is gathering signatures that will be delivered to state officials. “We put the word out in all of our branches, and in a matter of weeks we have gathered more than 1,000 signatures,” Stracuzzi said. The signatures and letter of support will be delivered to Insurance Commissioner Bonnie Burnes and Attorney General Martha Coakley.

CU System briefs (02/21/2008)

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* BOSSIER CITY, La. (2/21/08)--CLARIFICATION: In an article Thursday about the appointment of Rod Taylor as president/CEO of Barksdale FCU, News Now incorrectly reported the number of years he has served the credit union. Taylor has been with Barksdale FCU since 1992. He began service in the financial industry in 1983 and began his credit union career in 1986 … * CINCINNATI, Ohio (2/22/08)--U.S. Rep. Steve Chabot (R-Ohio) speaks to Cincinnati children about the importance of saving money during the Cincinnati launch of the Ohio Credit Union League's financial education initiative, MoneyAndStuff, Tuesday. Bill Herring, CEO of Cincinnati Central CU, helped conduct the press conference held at Oyler School. Also attending was Assistant Principal Lin Yates and several credit union leaders from Southwest Ohio (Photo provided by the Ohio Credit Union League) … * HAMILTON, Ohio (2/22/08)--Students at Hamilton (Ohio) Freshman School look on as the Ohio Credit Union League introduces MoneyAndStuff and the financial education program's website, www.MoneyAndStuff. Attending the press conference was Tim Boellner, CEO of AurGroup Financial CU and Hamilton City Schools Associate Superintendent Barb Fuerbacher, plus other credit union leaders from the area. (Photo provided by the Ohio Credit Union League) … * RICHARDSON, Texas (2/22/08)--Every day more than 100 soldiers arrive at the Dallas-Fort Worth (DFW) International Airport on their way home for a break. Texans CU employees recently joined supporters at the terminal to cheer and welcome the soldiers. From left are employees Marion Rogers, Christina Gutierrez, Jessica Allen, Estella Demings and Erin Ortiz. Texans CU also supports the USO's United Through Reading program to help deployed service men and women stay connected to their children by reading a book aloud for a DVD. The at-home parent or caregiver is encouraged to videotape or photograph the response of the child watching the DVD and following along with the book and send it to the reader. (Photo provided by Texans CU) …

Former NCUA Board member Robert Swan dies

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SALT LAKE CITY (2/22/08)--Robert Swan, a former board member of the National Credit Union Administration (NCUA) and lobbyist for Utah credit unions, died Tuesday of a stroke he suffered several days earlier. Swan was appointed to the NCUA Board by former President George H. W. Bush and served from 1990 to 1996. Prior to his position on the board, Swan managed Tooele (Utah) FCU from 1983 to 1990 (Salt Lake Tribune Feb. 21) Swan also served as the Mayor of Tooele City in 1969 and was a member of the Tooele City Council. He was employed as a lobbyist for Utah credit unions and Tooele County, and served as president of Swan Resources and Consulting Services when he died, the newspaper stated.

New York league testifies at state budget hearing

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LATHAM, N.Y. (2/22/08)--Amy Kramer, vice president of governmental affairs for the New York State Credit Union League (NYSCUL), presented testimony on behalf of the league and the New York credit union movement at a state public budget hearing Feb. 11.
Amy Kramer, New York State Credit Union League vice president, gives testimony on behalf of the league and New York credit unions at a recent state public budget hearing. (Photo provided by the New York State Credit Union League)
Kramer testified before the New York State Senate Finance and Assembly Ways and Means committees gathering information that would help facilitate legislative review of Gov. Eliot Spitzer’s 2008-2009 budget proposal. Credit unions are an important asset for New York’s consumers, Kramer testified. She requested actions on mortgage parity for state-chartered credit unions and funding for the new community development financial institutions (CDFI) fund--two key issues for credit unions and their members, the league said. “As for not-for-profit institutions, this tax to record mortgages is unfair, burdensome, and puts the New York State credit union charter at a disadvantage,” said Kramer. “The legislature has taken steps to make important legislative proposals to address the subprime mortgage crisis. Why then would the state make it more costly for credit unions to grant mortgages? “With savings from this tax, credit unions will grant more mortgages, create jobs, and expand financial services and investment in their communities,” she continued. Kramer asked that initial appropriations of $5 million for the new CDFI fund be part of the 2008-2009 budget. Also, she asked that the $1.5 million appropriation for the Empire State Development Corp.’s Women- and Minority-Owned Business Lending Program be continued. NYSCUL and the National Federation of Community Development Credit Unions partnered to advocate for passage and eventual formation of the fund in 2007.

Texas check-verification law takes effect March 1

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FARMERS BRANCH, Texas (2/22/08)--Starting March 1, Texas credit unions will be required to comply with a new law and rules requiring financial institutions to provide notice of identity theft and fraud to check verification companies, said the Texas Credit Union League. To comply, credit unions must submit information regarding fraud on accounts to the State Department of Banking (LoneStar Leaguer Feb. 21). The law, H.B. 2002, authored by State Rep. Helen Giddings (D-Dallas), stipulates that check verification entities will be notified when fraud occurs. The information will then be used to recommend that businesses reject checks written on the accounts to protect the account owner, or ID theft victim from being accused of writing a bad check.

No CUs affected by Nevada earthquake

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WELLS, Nev. (2/22/08)--A significant earthquake that struck Thursday morning in northeast Nevada did not cause any structural damage to area credit unions. The quake struck at 6:16 a.m., according to the U.S. Geological Survey and had a preliminary magnitude of 6.3 on the Reichter Scale (Associated Press Feb. 21). Five area credit unions--two in Elko, Nev., and three in Twin Falls, Idaho, near the Nevada border--contacted by News Now reported no structural damage and just minor effects from the quake. “Quite a few of us noticed it,” said Frances Schain, morning receptionist at the $61.5 million asset Elko (Nev.) FCU. “You could feel it shaking. Some people here had items falling off the shelves on their walls. But there was no structural damage.” At the $4.9 million asset Magic Valley FCU in Twin Falls, Idaho, no structural damage was sustained, but a few employees said they had items falling off their dressers at home during the early morning quake, said Cindy Lehrsch, assistant manager at the credit union. “We haven’t had any reports of any damage at all--it’s a sparsely populated area,” said LaRaye O’Brien, communications specialist for the Idaho Credit Union League. “But I noticed it. I was sitting in my chair, watching the news, and there was a tsunami in my fish tank.”

UN FCU first to sign up for CDIP

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LONG ISLAND CITY, N.Y. (2/22/08)--United Nations FCU (UNFCU) is the first credit union in the U.S. to participate in the Community Development Investment Program (CDIP) of the National Federation of Community Development Credit Unions, the federation said.
United Nations FCU (UNFCU) recently signed on to the National Federation of Community Development Credit Unions’ Community Development Investment Program. From left are: front row, Clifford Rosenthal, federation president/CEO; Michael J. Connery Jr., UNFCU president/CEO; Alice Greenwald, program director; and Pablo DeFilippi, federation associate director of membership development. In the back row, from left are UNFCU employees Christopher Sullivan, chief investment officer ; John Lewis, senior vice president of corporate affairs and general counsel; and William Predmore, executive vice president. (Photo provided by the National Federation of Community Development Credit Unions)
“Too few New Yorkers see a credit union in their daily lives,” said Clifford Rosenthal, federation president/CEO. “UNFCU is a visible symbol for the credit union movement in this city.” The $2.5 billion asset UNFCU is participating in the program to help community development credit unions (CDCUs) upgrade their operations and expand their services. “UNFCU wishes to support the federation in achieving its stated mission and to provide general support to the credit union community,” said UNFCU President/CEO Michael J. Connery Jr. The CDIP celebrated its 25th anniversary by launching a $25 million capital campaign to bring its investment portfolio in CDCUs. The program was launched last July and has raised $10 million. The federation has investments in 121 CDCUs and hopes UNFCU’s investment will encourage others to participate, said Alice Greenwald, program director.

Alabama league introduces data security legislation

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BIRMINGHAM, Ala. (2/22/08)--The Alabama Credit Union League (ACUL) has introduced a bill in the state legislature aimed at protecting consumers’ financial data. The legislation, introduced by State Rep. Tammy Irons (D) and State Sen. Parker Griffith (D), contains three provisions:
* Entities that experience a data breach would be required to notify consumers; * Sensitive consumer financial data, such as the content of a magnetic stripe on a plastic card, personal identification number or card validation code, cannot be retained; and * Any entity that experiences a breach and holds prohibited data must reimburse the issuing financial institution for the cost of reissuing cards or taking steps to protect accounts.
“The bill protects consumers and ensures a fair environment for everyone, because when someone other than the consumer’s financial institution stores all the keys to a person’s account, it creates problems,” said ACUL President/CEO Gary Wolter. “It is not a question of if there will be a serious breach, only when and how bad it will be.” “Credit unions go to great lengths to ensure the security of their members’ data and account information, but other parties also must take responsibility,” he added.