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CU System Archive

CU System

Bill would have fewer restrictions on Utahs CUs

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SALT LAKE CITY (2/26/08)--A bill that would result in some legislative changes to ease restrictions on Utah’s state-chartered credit unions passed a state Senate committee last week, but still must pass the state House and Senate. Senate Bill 296, sponsored by State Sen. Curt Bramble (R-Provo), would create several changes to the state charter. It would:
* Increase the amount a credit union can loan to its members to 4% of assets from the current 1%; * Eliminate a requirement that borrowers must be members of a credit union for six months before receiving a business loan, and make them eligible immediately after joining; and * Maintain the current $250,000 cap on business loans, but allow the cap to increase with inflation--pegged to the Consumer Price Index--beginning May 5 with an increase each year on Jan. 1 (Deseret Morning News Feb. 22) .
Originally, credit unions had wanted the business loan cap to be raised to 10% of a credit union’s capital and surplus, and the $250,000 business lending cap to be lifted to 12.25% of a credit union’s loan portfolio--similar to the cap for federally chartered credit unions. “I’m encouraged that several members of legislative leadership have been willing to provide meaningful relief for our state-chartered credit unions,” Scott Simpson, president of the Utah League of Credit Unions, told News Now. “It’s a step in the right direction for credit unions. It rolls back some setbacks sustained in prior state legislation in 1999.” The league and the Utah Bankers Association (UBA) have promised Bramble and leaders of both houses of the state legislature not to return to the legislature seeking changes to the law for five years, the newspaper said. While not supporting the change for credit unions in the bill, the UBA pledged not to oppose the bill, as part of the compromise solution, Howard Headlee, UBA president, told the paper.

Americans report mixed progress on savings efforts

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WASHINGTON (2/26/08)--About half of U.S. households report adequate progress in their savings attempts, says a study released Monday in conjunction with America Saves Week, an annual event to encourage saving. Roughly 53% of those surveyed save at least 5% of their income, while 57% of those not retired say they are saving enough for retirement with a "desirable standard of living," said the report. The national survey was commissioned by the American Savings Education Council (ASEC) and America Saves, a group of 80 organizations participating in America Saves Week, which is this week. Many credit unions and the Credit Union National Association are participating. Nearly three-fourths (73%) of consumers surveyed said they "spend less than their income and save the difference." Although 53% save at least 5% of their income, only 28% save at least 10%--the amount experts urge people to save. Seventy-one percent of respondents reported they have sufficient emergency savings to pay for unexpected expenses such as car repairs or a doctor's visit. Yet, 57% said they are saving enough for retirement with a desirable standard of living. One key reason for inadequate retirement savings: a failure or inability to "save for retirement at work through a 401(k) or other contributory plan." Only 55% of the non-retired respondents said they have such a plan. Self-reporting savings habits also help account for inadequate savings progress:
* 62% have a savings plan with specific goals; * 49% have a spending plan that allows them to save enough money to achieve the goals of their saving plan; * 42% save automatically through regular, preauthorized transfers from checking to saving or investments; and * 41% save a portion of tax refunds, gifts, bonuses or other financial windfalls.
Few reported serious debt problems: 21% said their consumer debt is growing or remains at the same level, and 76% will pay off all mortgage debt before retirement. The findings are sobering, given the tendency of people to report savings habits and progress as positively as possible. "Hard data about savings behavior suggest that responses to several questions were buoyed by the personal optimism of respondents," said Stephen Brobeck, executive director of Consumer Federation of America and a leader in America Saves. Income differences influence savings more strongly than other factors such as age, gender, ethnicity and education, said the report. A large majority of households with at least $75,000 (high-income group), about half of those with incomes between $35,000 and $75,000 (middle incomers); and a small minority of those with less than $35,000 (low-income group) were adequate savers. Other findings:
* 81% of the high-income group and 34% of the low-income group reported saving at least 5% of their income; * 90% of high-incomers and 48% of the low-incomers reported adequate emergency savings; * Among those not retired, 85% of high-incomers and 28% of low-incomers said they are saving adequately for retirement; * Among the non-retired population, 77% of the high-income group and 24% of the low-income group reported participating in a retirement plan at work; * 85% of the high-income group and 36% of the low-income group reported having a savings plan; and * 72% of the high-income group and 29% of the low-income group said they have a spending plan.

New Michigan regulator has league experience

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LANSING, Mich. (2/26/08)--Ken Ross, a former Michigan Credit Union League (MCUL) staff member, has been appointed as Michigan’s chief regulator of state chartered financial institutions. Michigan Gov. Jennifer Granholm announced Ross’ appointment Friday. Ross will serve as Office of Financial and Insurance Services (OFIS) Commissioner, effective immediately. “To our knowledge, this is the first time that an individual with a credit union background has ever served as the state’s chief regulator of financial institutions,” said MCUL President/CEO David Adams. Ross joined MCUL in October 2000 as regulatory affairs director, and was later named regulatory and legal affairs vice president. He played a role in modernizing the Michigan Credit Union Act, the league said. Ross left MCUL in December 2003 to join OFIS as chief of staff to the former commissioner. Granhom signed an executive order earlier this month, which renames OFIS as the Office of Financial and Insurance Regulation, effective April 6. The order establishes the position of a new state insurance consumer advocate to work on behalf of Michigan consumers’ interests in obtaining affordable and reliable home and car insurance.

Young lawmakers provide advice to young CU pros

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ST. PAUL, Minn. (2/26/08)--Five young legislators shared their experiences and perspectives with participants of the Minnesota Credit Union Young Professionals (MYCUP) Wednesday.
Minnesota legislators under the age of 35 met with young credit union professionals Wednesday about their legislative careers. From left are: Reps. Aaron Peterson (DFL-Appleton), Brad Finstad (R-Comfrey), Andy Welti (DFL-Plainview), Kate Knuth (DFL-New Brighton) and Larry Hosch (DFL-St. Joseph). (Photo provided by the Minnesota Credit Union Network)
More than 30 credit union professionals under age 35 attended. The panel included five legislators under the age of 35:
* Rep. Brad Finstad (R-Comfrey); * Rep. Larry Hosch (DFL-St. Joseph); * Rep. Kate Knuth (DFL-New Brighton); * Rep. Aaron Peterson (DFL-Appleton); and * Rep. Andy Welti (DFL-Plainview).
All said they wanted to spur change in various areas of government through their personal involvement. “As young legislators, we bring a fresh, new perspective to the legislative process,” Finstad said. The representatives have earned respect by having informed opinions, they said. Their opinions and positions are taken seriously when they have research to back up their position, Peterson added. The panel encouraged MYCUP attendees to educate their elected officials about the issues important to them. Welt recommended sending legislators short e-mails with concise bullet points and contact information. Constituents also are valued when they volunteer on legislative election campaigns. The elected candidates remember volunteers and make it a priority to listen to them when they have issues to discuss, Knuth said.

Utah Beehive conversion confused with Idaho Beehive

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REXBURG, Idaho (2/26/08)--When Utah-based Beehive CU announced last week its members had voted to convert the credit union to a mutual savings bank, the news confused many people in East Idaho. They assumed their credit union--Beehive FCU (BFCU)--was now a bank. "Nothing could be farther from the truth," said BFCU CEO Shane Berger, whose BFCU is a $117 million asset federal credit union based in Rexburg, Idaho. The converting Beehive CU in Salt Lake City is a state-chartered credit union. "The converting Utah credit union has no relationship whatsoever with Beehive FCU in Idaho," said Berger. "We want everyone to know clearly that BFCU has no plan now, or in the future, to convert to bank status. "We believe deeply in the philosophy, principles and structure of the credit union movement," he said citing the differences in structure and organization that make credit unions different from other financial institutions. Berger is chairman of the Idaho Credit Union League board and said he will travel to Washington, D.C., next week to help Congress understand the importance of credit unions and the benefits they offer to members.

Hearings begin today on Maryland fin lit task force

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ANNAPOLIS, Md. (2/26/08)--The Maryland and District of Columbia Credit Union Association (MDCCUA) advocacy team is working to secure passage of two state bills that would implement a statewide task force to study the level of financial literacy in Maryland. The bills--Senate Bill 533, sponsored by State Sen. C. Anthony Muse (D-26), and House Bill 1242 sponsored by State. Del. Dan M. Stein (D-11), would create a statewide task force composed of representatives from the state’s General Assembly, credit unions, banks, teachers’ unions and the state superintendent of schools (Focus Newsletter Feb. 25). The task force’s mission would be to gauge the average level of financial literacy held by Maryland citizens, and to make recommendations to the General Assembly on how to raise the average Maryland citizen’s awareness in the area of financial literacy. Senate Bill 533 will be heard today in the Senate Education, Health and Environmental Affairs Committee. House Bill 1242 will be heard March 4 by the House Ways and Means Committee.

Kansas banker-backed FOM bill in Senate subcommittee

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TOPEKA, Kan. (2/26/08)--Kansas credit union supporters answered the last questions of a Senate subcommittee Friday in response to SB 535, a bill introduced by the Kansas Banking Association (KBA) that would change how credit unions are regulated and whom they can serve. The subcommittee will begin work on the bill Wednesday. The bill or a modified bill would then proceed to the full Senate Financial Institutions and Insurance Committee for consideration, said the Kansas Credit Union Association (KCUA). In a press release, KCUA said it could only speculate about the specific impacts the banker-backed bill will have on the state's credit union industry but added the bill is clearly directed at reducing consumer access to Kansas credit unions. "At this time, the process is in full swing, and we have placed our faith in the legislative process in Kansas," said Jerel Wright, assistant vice president of governmental and public affairs at KCUA. "We are asking that legislators make the right decision for credit unions and consumers in Kansas." If the bill were passed without revisions, it would fundamentally change the way Kansas credit unions have operated and been regulated over the past 80 years. It also would dramatically increase the regulatory burden placed on state-chartered credit unions by requiring extensive public notification and appeals processes for branching, merging and field of membership changes, said KCUA. "In effect, this bill would effectively eliminate the benefits of being a Kansas-chartered credit union because the bill adopts federal law regarding field of membership and state banking law for branching and mergers," said KCUA. "This is truly a consumer issue, and consumers should have the right to choose where they conduct their financial business," said Marla Marsh, president/CEO of KCUA. "When consumers are facing an economic and credit crisis, would we want to restrict or constrict access to a consumer-friendly alternative?" Marsh asked.

CU System briefs (02/25/2008)

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* NORTHVILLE TOWNSHIP, Mich. (2/26/08)--The Paul Bunyan Chapter of credit unions traveled to Lansing, Mich., and lunched Feb. 19 with five state lawmakers: State Reps. Darwin Booher (R-Evart); Goeff Hansen (R-Hart); Gary McDowell (D-Rudyard); Joel Sheltrown (D-West Branch) and Howeard Walterk (R-Traverse City). They were joined by Michigan Credit Union League President/CEO David Adams; Executive Vice President Patrick LaPine; Legislative Affairs Director Andrew Doerr and Political Affairs Manager Nancy Short. From left are: Marc McKellar of Members CU; Fred Schuster of Wexford Community CU; Bob Raden of Forest Area FCU, and Booher. (Michigan Monitor Feb. 25). (Photo provided by the Michigan Credit Union League) … * FARMERS BRANCH, Texas (2/26/08)--Shell FCU is flying the juntos avanzamos flag, indicating the credit union has a long-term commitment to serving the needs of Hispanics. In a ceremony Thursday at the Deer Park-based credit union's Pasadena branch, Miguel Reyes, a member since 1997, assisted Texas Credit Union League President/CEO Dick Ensweiler and Shell FCU CEO Chris Lindelof in raising the flag (LoneStar Leaguer Feb. 25) …

Maryland league asks for wild card laws on loan costs

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ANNAPOLIS, Md. (2/26/08)--The Maryland and District of Columbia Credit Union Association (MDDCUA)--along with the Maryland Bankers Association--has asked the state regulator to invoke Maryland’s “wild card” laws on loan costs. The two groups made the application to State Financial Regulation Commissioner Sarah Bloom Raskin. Invoking these laws would allow Maryland state-chartered credit unions and savings banks to, in certain cases, temporarily continue to charge closing costs on loans and lines of credit (Focus Newsletter Feb 25). MDCCUA also is backing Maryland’s Senate Bill 347 and House Bill 852, which would allow credit unions and saving banks to legally continue the practice of charging closing costs on loans and lines of credit, in certain instances. Both efforts are aimed at reversing the Maryland Court of Appeals Bednar decision. In September 2006, in the case Andrew Bednar v. Provident Bank of Maryland, Inc., the court of appeals reversed a Baltimore Circuit Court ruling granting summary judgment to a bank that collected closing costs from the borrower (Bednar) solely because the borrower prepaid his loan. “Recapturing closing costs are a good deal for consumers [and such a practice] as it has been done, is good for consumers,” Michael Beall, MDDCUA president/CEO, told the Maryland House Economic Matters Committee.

NASCUS State System Summit to meet Aug. 21-23

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ARLINGTON, Va. (2/26/08)--The National Association of State Credit Union Supervisors (NASCUS) Summit will be held Aug. 21-23 in Seattle. The summit will address member business lending, unrelated business income tax (UBIT), the mortgage crisis, compliance and volatility in financial markets. Speakers include:
* Jeff Thredgold, economic futurist; * Jim Devine, Hipereon Inc., who has trained NASCUS’ examiners on member business lending. He is co-creator and lead faculty member for the California Bankers Association Commercial Lending School, Oregon Bankers Lending Institution, and Credit Union Executives Society School of Business Lending; * Dennis Dollar, former National Credit Union Administration (NCUA) chairman and partner in Dollar Associates; * Franklin Drake, a partner with Smith Debnam, Raleigh, N.C., who focuses on creditors’ rights, creditors’ bankruptcy and commercial litigation; and * Richard Hagar, a mortgage fraud expert, real estate agent, and appraiser and instructor for the Appraisal Institute.

Pa. payday loans alternative saved 2 million in 07

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HARRISBURG, Pa. (2/26/08)--Credit Union Better Choice loans saved Pennsylvania residents about $2 million in 2007, the Pennsylvania Credit Union Association announced. Since the program’s launch in October 2006, roughly 64 credit unions have agreed to offer the loans. Of the credit unions, 50 made 5,706 loans, totaling $2.7 million in volume (Life is a Highway Feb. 25). Pennsylvania consumers saved 80 cents in loan fees for every dollar borrowed through the program. Borrowers also placed a total of $273,432 into savings accounts. The association recently released first-year results from the program, which was developed in conjunction with the Pennsylvania Treasury Department.