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Oregon credit histories bill exempts FIs

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SALEM, Ore. (2/24/10)—Oregon’s state legislature has passed a bill that will bar many employers from checking the credit history of job seekers. However, banks, credit unions, and law enforcement agencies are exempt. According to the bill’s backers, thousands of people have bad credit because of events beyond their control—such as layoffs and medical bills—and their credit has nothing to do with their job qualifications (StatesmanJournal.com Feb. 23). Opponents say the legislature should not interfere with business personnel decision. More than half the nation’s businesses use credit histories in hiring decisions. The measure also exempts employers if the credit information is “substantially job-related” and the applicant receives disclosure of the credit check. The bill passed in the House Monday on a 33-26 vote. It had cleared the Senate earlier. The billis on its way to Gov. Ted Kulongoski.

Irish Central Bank New standard would affect CUs

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DUBLIN, Ire. (2/24/10)—The Central Bank and Financial Services Authority of Ireland have raised questions over the impact of proposed new accounting standards on credit unions, saying the cost of the extra requirements would not lead to benefits for members. The Central Bank made the statement in a letter to the Accounting Standards Body (ASB), which proposes to expand the use of the International Financial Reporting Standards (IFRS) (Sunday Business Post Feb. 21). The Central Bank questioned whether the extra requirements would “improve financial reporting for credit unions.” Credit unions also are seeking to be excluded from the definition of public accountability in the proposed rules. The Irish League of Credit Unions in a comment letter said that the “vast majority” of credit unions are very small and often rural organizations. Credit unions should be exempt because they are democratic, not-for-profit bodies with strict limits on loans, and are, by their very nature, different from other financial institutions, said the league.

Hong Kong CUs fighting tax battle

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HONG KONG (2/24/10)—China’s Inland Revenue Department is requiring credit unions in Hong Kong to pay tax for the first time in four decades, reports South China Morning Post (IHS Global Insight Daily Analysis Feb. 13). Some credit unions would be forced to pay millions of dollars in back taxes for the past seven years. The Credit Union League of Hong Kong said its member credit unions received the payment requests in March 2000 and that they have appealed. However, they received tax return forms for the current year last month. Total assets of the 42 credit unions were HK$5.3 billion (US$502.8 million) with a police credit union alone accounting for HK$3 billion (US$284.6 million). The Inland Revenue Department said credit unions don’t fit the definition of a club outlined by law and that they should be viewed as businesses and subject to tax on any profits from sale of assets or property. The league argued that credit unions only gather deposits from members to provide loans for “provident or productive purposes.” They cannot charge interest rates above 1% per month on loan balances.

NY City Council committee hears league on deposit choice

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NEW YORK (2/24/10)—The Credit Union Association of New York (CUANY) testified Monday before the New York City Council’s Committee on Community Development, calling on the council to join Mayor Michael Bloomberg and Gov. David Paterson in support of municipal depository choice. Municipal depository choice would allow government entities such as cities, towns, counties, public schools, fire districts and public libraries the option of depositing public funds in local credit unions or community savings institutions. While most states, including Connecticut and New Jersey, allow municipal deposit choice, and the Federal Credit Union Act authorizes federal credit unions to accept local government deposits, commercial banks in New York State own a monopoly on such deposits, said CUANY. “Credit unions have the potential to help state and local officials in a way that doesn’t cost state or local taxpayers a dime, but instead will save them money and increase the range of financial options available to elected official in New York City and throughout the state as they deal with the great recession and the growing budget crisis,” said Linda Levy, CEO of the Lower East Side Peoples’ FCU (LESPFCU), while testifying on behalf of CUANY and 4.3 million credit union members in the state. “Municipal deposit choice allows these public funds to stay local, allows for more reinvestment in our communities, helps local governments increase revenue, and creates savings for the taxpayers,” continued Levy. “In short, municipal deposit choice puts more public dollars back into Main Street.” Councilman Albert Vann is sponsoring City Council Resolution 17, which calls upon the state legislature to adopt and the governor to sign legislation allowing credit unions, savings banks, and savings and loan associations to accept and secure municipal deposits. Vann’s resolution builds on the support recently demonstrated by Paterson and Bloomberg. Paterson included the expansion of municipal depository choice in his proposed 2010-11 budget, and Bloomberg proposed an investment of up to $25 million in New York City credit unions to foster investment in low-income areas. “It is time for New York State to allow the city to invest its money in these community development financial institutions (CDFIs). While major commercial banks have decreased their amount of lending, these local CDFIs have provided lending opportunities in neighborhoods throughout New York City,” said Vann, who represents the city’s 36th District in Brooklyn. “Many of these institutions have given a lifeline to New York City’s small businesses that are struggling to find capital, while also offering opportunities to individuals traditionally without bank accounts or banking and financial services,” Vann added. In her testimony, Levy noted that LESPFCU serves the Lower East Side and Central Harlem, employees and volunteers of several non-profit organizations and local businesses, and low-income residents throughout the five boroughs. Credit unions make a larger percentage of loans to low- and moderate-income borrowers than banks and thrifts, according to Home Mortgage Disclosure Act data. Ninety-six percent of members in federal credit unions have household incomes of less than $100,000 per year, according to the National Credit Union Administration. “Allowing these institutions to accept municipal deposits will only strengthen the communities they serve by offering competition and an alternative to commercial banks, who often have no significant relationship to the communities they serve,” continued Vann. He urged the state legislature to adopt and the governor to sign “this much-needed change into law so that the economic vitality of communities throughout New York City can be improved and strengthened by community-based financial institutions.” William J. Mellin, CUANY president/CEO, said that “in recent months, a variety of publications and organizations have been urging consumers to ditch their ‘big banks’ in favor of credit unions or community banks. This broad support confirms that the credit unions’ member-owner operating model works, and I’m confident that local government entities, like more and more consumers, will soon be jumping on the credit union bandwagon as long as they are given the freedom to do so.” Levy added, “The governor’s proposal simply gives those localities that wish to deposit funds in credit unions or savings banks the authority to do so. While the big banking special interests are lobbying hard to deny local governments that option on the grounds that credit unions are non-profits and don’t pay corporate taxes, the fact is the banking industry constantly misrepresents the true tax status of credit unions. The simple truth is that credit unions do pay taxes, including payroll taxes and local property taxes, to the very local entities looking for help through municipal deposit freedom.” Access to municipal deposits would allow credit unions to further reinvest in their local communities, via loans to members and local small businesses, said CUANY. In the year ending September 2009, credit union loans grew by nearly 3%, while banks reduced their loans by nearly $575 billion, a decline of 7.2%, according to the Federal Deposit Insurance Corp. and NCUA.

Several vendors at GAC get media coverage

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WASHINGTON (2/24/10)—While most of the media attention garnered by credit unions this week is related to new credit card rules and member business lending, several vendors exhibiting at the Credit Union National Association’s (CUNA) Governmental Affairs Conference (GAC) in Washington this week were featured in numerous articles. A new alliance between CUNA Strategic Services (CSS) and Fynanz Inc., a private student loan provider, was announced Monday. It also was reported Monday’s editions of St. Louis Business Journal and IT News Online. Panini, which has partnered with CSS to provide check scanners, announced it will launch an initiative aimed at rolling out Check 21 to credit unions during the GAC. That news was reported by Cox News Service Monday, as well as Dayton Daily News and Finextra. It also made news in the Spanish language Document Management. A Personal Teller Machine—a so-called super ATM—being promoted at the GAC by Sandy, Utah-based uGenius Technology was the topic of a number of articles. The machines let a motorist talk to a teller at a remote location 24/7. The company has sold almost 50 of the machines to credit unions and banks in Michigan, North Carolina, New York and Pennsylvania, said the reports. So far the company and its demonstration at the GAC have been reported in: Monday’s issue of BostonHerald.com, Yahoo! Finance Canada , Daily Finance Blog, LocalNews8.com, and MyFox Utah, and Tuesday’s issue of Deseret Morning News (Feb. 23).

New Mexico Association rebates CUs dues

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ALBUQUERQUE, N.M. (2/24/10)--The Credit Union Association of New Mexico (CUANM) board of directors announced that a dues rebate from CUANM will be sent back to its affiliated credit unions. After completing CUANM’s 2009 end-of- the-year financial report, the rebate--calculated from CUANM’s remaining adjusted net income for 2009--equals about 20% of the credit unions’ normal dues it was determined. “Associations such as ours were built to support the credit union world and that means more than just collecting dues,” said William Jacobs, chairman of the CUANM board and CEO/president of White Sands FCU, Las Cruces, N.M. “The role of the association is to know when it is time to give back and that’s exactly what we have done,” he added. “This rebate represents years of hard work that put us in the financial position to accomplish this. I am very proud of what that association is doing for the good of the credit union world.”

CUs cards featured in INY TimesI ICBS NewsI ICNNI

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MADISON, Wis. (2/24/10)--The advantages of credit union-issued credit cards were the subject of several national media-outlet reports Monday, including CBS News, The New York Times and CNNMoney.com. Ondine Irving is a credit card consultant who works with credit unions nationwide to develop a fair and ethical credit card program for consumers. Her work with First Community FCU in Kalamazoo, Mich., was the subject of a report on Monday’s CBS Evening News with Katie Couric. The $405 million-asset First Community sold it credit card portfolio in 2001-2002, but after some concern was expressed by its members, it decided to take back its card business. The credit union realized it could run a credit card program better, more ethically and more effectively than a bank, Irving told CBS. At credit unions, “profits go back to members in terms of lower loan rates and better savings rates,” she said. Meanwhile, bank profits go to pay banks’ “enormous marketing expenses and huge bonuses to CEOs and executive staff,” Irving added. While only about 50% of U.S. credit unions issue credit cards, credit unions generally keep their interest rates under 18%, charge late fees of $25 and under, have no penalty pricing, and no balance transfers charged, Irving said. Credit unions do all that and make money; banks also could do that, but they choose not to, she added. To see the video, use the link. In a Monday article about banks pressuring customers on overdraft fees as provisions of the Credit Card Accountability, Responsibility and Disclosure Act take effect, The New York Times ends with a favorable contrast of a credit union’s consumer-friendly approach compared with some other financial institutions. “At least one credit union is using the new Fed rules to try to differentiate itself from its competitors,” the Times said. “On its website, the UW CU in Madison, Wis., says, ‘While we expect some financial institutions may aggressively market the idea of a consumer opt in within the boundaries of this regulation, we have no such plans.’” To read the article, use the link. Credit unions tend to have lower fees and better rates, CNN.Money.com said Monday, specifically citing Pentagon FCU, Alexandria, Va., for terms of its Visa Gold card and Navy FCU, Vienna, Va., for its CashRewards card. To read the article, use the link.

CU System briefs (02/23/2010)

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* RIDLEY, Pa. (2/24/10)--A former executive vice president and marketing director of Boeing Helicopters CU, based in Ridley, was sentenced Monday to 28 months in prison and ordered to pay restitution totaling $1.25 million for taking kickbacks to arrange loans for unqualified applicants. According to the U.S. Attorney's Office, Anthony Forte, 43, of Glen Mills, pleaded guilty to charges of conspiracy, loan fraud and bank bribery. His brother, David Forte, 39, Prospect Park, who has a malignant brain tumor, was sentenced to one day in prison and ordered to pay more than $178,000 in restitution. The Fortes allegedly received about $100,000 in kickbacks from more than $2.2 million in fraudulent loans. David Forte was not an employee of the $106 million asset credit union but was recruited to find applicants for the loans (Associated Press and Philadelphia Business Journal Feb. 22) ... * PONTIAC, Mich. (2/24/10)--Genisys CU President/CEO Dianne Addington has announced she will retire April 15 after a 37-year career. She spent 22 years as CEO of T&C FCU, then Genisys CU after a 2008 merger with USA CU (Michigan Monitor Feb. 22). Addington was inducted into the Michigan Credit Union Hall of Fame and recently was presented the Glenn H. Friedt Sr. Business Medal of Honor by Cleary University. Jackie Buchanan will succeed her as CEO. Buchanan has worked with Addington for 19 years at both T&C CU and Genisys as executive vice president and chief information officer. Tom Alter, who has spent 15 years with USA CU and Genisys CU, will be appointed as president/chief operating officer ... * LONGVIEW, Texas (2/24/10)--Telco Plus CU President/CEO Diane Hollis will retire Friday after 45 years in the credit union industry (News-Journal.com Feb. 21) . She had served in the position since 1988. Her career began as a bookkeeper at LeTourneau FCU. Succeeding Hollis as president/CEO will be Betty DeWeese, who has been executive vice president of Telco Plus since 2006. DeWeese began her career in August 1983 at East Industrial Employees CU and began working for Telco when East Industrial merged with East Texas Telco CU in 1998. Telco Plus CU has $52 million in assets and is based in Longview, Texas ... * LANSING, Mich. (2/24/10)--Bobby J. McCulley, chairman of the board of OMNI Community CU, died Feb. 14 in Kalamazoo, Mich., according to the Michigan Credit Union League (Michigan Monitor Feb. 22). He was 72. McCulley served in a variety of roles as a volunteer with the credit union the past 20 years, including board vice chairman and board chairman. He also was on the board of directors at Ralston Purina CU and elected to the credit committee when Ralston and the Battle Creek, Mich.-based OMNI merged. He was elected to OMNI's board in 1988. He is survived by his wife, two sons, four grandchildren, two great-grandchildren, a brother, two sisters, and two nieces ...