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More distressed consumers are ignoring debts says NFCC

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SILVER SPRINGS, Md. (2/8/10)--More U.S. consumers experiencing financial difficulties are ignoring their debts, according to a national poll. The National Foundation for Credit Counseling’s (NFCC) January online poll, which received more than 11,000 responses, revealed that 10% of respondents selected “ignoring their debt” as the first action they would take if in financial distress. This number closely mirrors the current unemployment rate of 9.7% and credit card charge-off rates, NFCC said. “At first glance, the response makes perfect sense,” said Gail Cunningham, NFCC spokesperson. “After all, if you are out of work, you’re worried about keeping a roof over your head and food on the table. However, simply ignoring the situation is possibly the worst possible decision a consumer can make. Not only does it not resolve the problem, it exacerbates it.” The results from the survey, called the Financial Literacy Opinion Index (FLOI), indicated that the largest number of respondents, 38%, said their first action would be to seek help from a legitimate credit counseling agency if they were in financial distress. This shows that consumers are aware that substantive help is available to them, and that they understand reaching out for help sooner rather than later is the first step to take, NFCC said. Since credit counseling and debt settlement are two different options, the survey also tested consumer responses related to debt settlement. Thirty-three percent knew that talking directly to their creditors to arrange a settlement was the right thing to do. However, 14% said that reaching out to a debt settlement company would be their first step--a troubling number, NFCC said. Many state attorneys general, as well as the Federal Trade Commission, have launched investigations into the debt settlement industry, often finding that consumers receive little, if any, assistance from such firms, said the foundation. Personal bankruptcy filings nationally are trending upward. However, only 5% of consumers said bankruptcy would be their first choice if in financial distress. Bankruptcy can be the right answer for some, but other options should be thoroughly considered before opting to file, and consumers appear to understand this, said NFCC. “It can be argued that proper choices are never more critical than when in financial distress. Although it is encouraging that more than two-thirds of respondents knew to seek legitimate credit counseling or reach out to their creditor as their first step, those who chose other options are on a slippery slope, one which could lead to a full-blown financial disaster,” Cunningham said. When asked what their first action would be if they couldn’t manage their debt, consumers answered:
* Ignore the debt(10%); * Seek help from a legitimate credit counseling agency (38%); * Consider debt settlement through a debt settlement company (14%); * Talk directly to the creditor(s) about debt settlement (33%); and * File for bankruptcy (5%).
The Silver Springs, Md.-based organization said more than 200 lenders--many of them credit unions--had signed up with its network to assist consumers in need of financial counseling and education (News Now Jan. 29). For more information, use the link.

First hearing held on Ohios public deposits bill

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COLUMBUS, Ohio (2/8/10)--The first hearing on state legislation to allow Ohio credit unions to accept public funds was held Wednesday in the Ohio Statehouse, according to the Ohio Credit Union League.
Click to view larger image The first hearing on state legislation to allow Ohio credit unions to accept public funds was held Wednesday in the Ohio Statehouse, said the Ohio Credit Union League. Pictured are credit union people who attended the hearing and the two sponsors of House Bill 317 on Public Funds, Ohio State Reps. Peter Ujvagi (D-47)--front row, right, and Tracy Maxwell Heard (D-26)--front row, second from right. (Photo provided by the Ohio Credit Union League)
Ohio House Bill 317 would authorize credit unions to be eligible public depositories, make credit union loans eligible for certain economic assistance programs, and permit certain public investments to be made through credit unions. The bill was sponsored by Ohio State Reps. Tracy Maxwell Heard (D-26) and Peter Ujvagi (D-47), and presented before the House Committee on Financial Institutions, Real Estate & Securities. While this was the first hearing, there will be more with numerous witnesses both in favor of and in opposition to the bill. The league said it anticipates the hearings will be held on Wednesdays. Heard said the legislation would remove “unnecessary restrictive language” that currently prevents the use of credit unions as public depositories under Ohio's Uniform Depository Act. She reported that credit unions, under their respective credit union acts, are empowered to accept the funds and do accept public funds from federal public units. However, state public units are not permitted to deposit funds due to state banking restrictions. “As the numbers of traditional depositories continue to decrease, there is less choice by the public entities as to where they can deposit their funds, thereby making it increasingly difficult for local officials to find locally based entities with whom to do business,” Heard said. “This results in less competition, less choice, lower interest paid on deposits and higher rates on loans.” Ujvagi said Ohio credit unions have performed a critical financial role for decades in all communities and stepped up when redlining and disinvestments were widespread in certain communities. With the refusal of traditional banks to extend credit, credit unions again provided reasonable loans when “predatory lending and loan flipping attacked our communities from another direction,” he added. “Enabling local governmental institutions to utilize credit unions as eligible depositories simply recognizes the critical and appropriate role credit unions play in our communities, particularly at a time of increasing mergers and globalization of our banks and lending institutions,” Ujvagi said. Ujvagi told committee members those who oppose public depository choice for Ohio’s communities would raise the issue of banks and credit unions not having the same tax structure. Traditional banks have and will claim the differing tax structures somehow provide credit unions with an unfair advantage in the market, he added. If true, he questioned why then do credit unions have only .81% the total assets when compared to state-chartered financial institutions and hold only about a 6.7% share of total deposits in the state? Also, Ujvagi noted that--unlike banks--credit unions face certain operational restrictions, such as having the ability to raise outside capital.

Va. House committee passes leagues sub for merger bill

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LYNCHBURG, Va. (2/8/10)--Virginia's House Commerce and Labor Committee Thursday unanimously voted in favor of substitute language for a bank/credit union merger bill, transforming it from a merger and acquisition bill into a charter choice bill for state-chartered credit unions. The substitute House Bill 482 was drafted by the Virginia Credit Union League in response to the original bill offered by state bankers. It gives state-chartered credit unions considering conversion to a mutual savings bank the same guidelines that federal credit unions must follow in similar conversion processes. The new substitute bill now heads to the full House for consideration, perhaps as early as today. The league said it expected the Senate version of the bill--SB440--would be heard today by the Senate Commerce and Labor Committee. "I think this is a positive result for what was a desperately flawed bill," said league President Rick Pillow. "The original language in this bill would have been disastrous for credit union member-owners in Virginia, because it failed to protect member rights in cases of a conversion or acquisition to or by a for-profit bank," Pillow said. "Now the bill offers state-chartered credit unions a clear path for conversion to a mutual savings bank charter, if that is the will of the members, while providing the same member safeguards currently in place at the federal level for such conversions." He made two points:
* "This wasn't our bill originally, but we think the substitute we brought to the table is a vast improvement over the language originally offered," he said. * Parity between the state and federal charters has long been a commitment of the Virginia league. We believe that credit unions and their member-owners should have charter options."
He noted that as originally drafted, the legislation "was nothing more than a merger and acquisition bill, allowing stockholder-owned, for-profit banks to merge with or acquire member-owned, not-for-profit credit unions. The bill is now a credit union conversion bill, offering state-chartered credit unions the same charter conversion opportunities afforded federally chartered credit unions." "Charter options are an unfortunate necessity due to an always uncertain economic and regulatory environment," Pillow said. "The substitute bill allows choice while protecting member interests through full disclosure and notice, which was always our priority in negotiating with lawmakers and bankers." Pillow thanked Virginia's credit unions "for their grassroots work this past month in educating lawmakers about the potential impact of" the original bill. "I don't think there's any question that the visits, phone calls and e-mails from credit union supporters strengthened our hand at the negotiating table. I think lawmakers saw clearly that their credit union constituents could not abide the original language of this legislation," he said.

CU System briefs (02/05/2010)

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* PORTLAND, Ore. (2/8/10)--A woman was sentenced to more than 10 years for her role in an identity theft ring that operated in the Portland, Ore., area from 2004 through early 2007. Carol Crane, 47, the sixth person to plead guilty in the case, was sentenced to 124 months in prison and ordered to pay nearly $200,000 in restitution to a credit union, banks and individuals, said the Federal Bureau of Investigation's Portland field office. Crane and the accomplices obtained money by stealing identification and documents from unsuspecting victims and using them to obtain money from banks and Portland Teachers CU (now OnPoint Community CU) (Targeted News Service Feb. 3) ... * BEAVERTON, Ore. (2/8/10)--More than 45 credit union staff and
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advocates met with Oregon Rep. Earl Blumenauer (D-3) last month at Advantis CU in Milwaukie, Ore. Credit union advocates used the opportunity to discuss member business lending, interchange fees and mortgage modification (Oregon Outlook February). Blumenauer said he intends to sign H.R. 3380, the “Promoting Lending to America’s Small Business Act,” which would raise the member business lending cap to 25% of assets from 12.25%. In the photo, Ron Barrick, left, president/CEO of Advantis CU, is shown welcoming Blumenauer to the Town Hall meeting. (Photo provided by the Credit Union Association of Oregon) ... * BEAVERTON, Ore. (2/8/10)--Oregon Rep. Greg Walden (R-2) visited
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John Day, Ore., for the Oregon State Snowmobile Convention (Oregon Outlook February). Old West FCU board member John Bastian is involved with the sport, and Walden’s visit to the convention provided the credit union with an opportunity to discuss credit union issues such as interchange fees and overdrafts. From left are Old West FCU President Ken Olson, Walden, John Bastian and Lindy Bastian. Old West FCU is based in John Day, (Photo provided by the Credit Union Association of Oregon) ... * WESTBROOK, Maine (2/8/10)--Maine's credit unions raised more than
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$375,923--a record--in their Campaign for Ending Hunger, the Maine Credit Union League announced Thursday during its Thaw to End Hunger Celebration Event. This year’s total was an increase of nearly $700 over last year’s record. Holding the ceremonial check presented at the event are, from left, Luke Labbe, president/CEO of PeoplesChoice CU, Biddeford, and chair of the league’s Social Responsibility Committee; Maine’s first lady, Karen Baldacci; and John Murphy, league president (Photo provided by the Maine Credit Union League) ... * NEW BRUNSWICK, N.J. (2/8/10)--New Jersey credit unions, sponsor of
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Rutgers University athletics, showed their support Wednesday at the men’s basketball game against St. John’s. From left, Kevin Mac Connell, Rutgers’ deputy athletic director, met with Paul Gentile, president/CEO of the New Jersey Credit Union League, before the game. Mac Connell presented Gentile a signed basketball as a token of appreciation of the league’s support. Rutgers, the largest university or college in the state, is located in New Brunswick, N.J. Credit union representatives manned a table in the sponsor's section offering information on how to join a New Jersey credit union. (Photo provided by the New Jersey Credit Union League) ... * LAWRENCEVILLE, Ga. (2/8/10)--Gwinnett FCU will fund $63,500 in educational scholarships this year. They include: nine $2,500 student scholarships to high school seniors who will attend college to pursue an education degree and plan to return to Georgia to teach; 13 $2,000 scholarships for career advancement to eligible members enrolled in an accredited study program at a college, university or technical institute; three $2,500 lifetime achievement scholarships; and two new scholarships. The new ones include a $2,500 scholarship in memory of Janet Pomeroy, founding member of Clarke Community FCU, and a $5,000 annual scholarship at Georgia Gwinnett College for students majoring in early childhood education, special education or another major leading to teacher certification ... * KALAMAZOO, Mich. (2/8/10)--Educational Community CU, Kalamazoo, will offer 21 scholarships, totaling $23,000, this year. They include 19 $1,000 scholarships and two $2,000 scholarships. The $2,000 scholarships are in honor of Donna vanWestrienen and Robert E. Treloar, both board members at the $330 million asset credit union for more than 20 years ...

HFOT registration brings crowd kudos for CUs

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COLUMBIA, Mo. (2/8/10)--Credit unions and the Missouri Credit Union Association (MCUA) helped more than 100 community members in Columbia, Mo., register their services to help build Army Staff Sergeant Robert Canine a specially adapted home in a Home for Our Troops project.
Click to view larger image From left, Dave Tate and Dan Vogler, both of Anheuser-Busch Employees CU, St. Louis, review blueprints for a new home from Homes For Our Troops for Staff Sergeant Robert Canine, a wounded veteran, with a local contractor.
Click to view larger image Posing with an illustration of the home being built for SSG Robert Canine as a Homes For Our Troops project are, from left, Jim Schepers, Missouri CU, Columbia; Tammy Parks, Missouri Credit Union Association; Doreen Lewis, HFOT; Sen. Kurt Schaefer (R-19), and radio host Uncle Scotty.
Click to view larger image From left, a local contractor registers for a Homes for Our Troops project with help from Adam Fox and Ben Blunt of River Region CU, Jefferson City, Mo. (Photos provided by the Missouri Credit Union Association)
Credit union representatives worked shifts throughout the 14-hour day to inform the public about Canine at the event, held at a Lowe's, said MCUA (The Missouri difference Jan. 29). Canine lost both legs during his second stint in Iraq when an explosion hit his vehicle. "The community support and volunteerism from Missouri credit unions was phenomenal," said Doreen Lewis, HFOT project facilitator. "Everyone back at HFOT is very proud of the group working in Missouri." Registration Day brought in electricians, general contractors, subcontractors, painters, brick layers, landscapers and plumbers, among others. During the day, HFOT announced it had closed on a lot for the project in Thorn Brook subdivision. "I was happy to learn that most people had already heard about Homes for Our Troops from our radio ads," said Margaret McDermott, senior vice president of Columbia-based Missouri CU. "Even those who only took a brochure often read it in the store and came back to sign up." Sen. Kurt Schaefer (R-19) and Rep. Chris Kelly (D-24) stopped by the event to support Missouri credit unions. "This is a great project, and it's exciting that the first home in the state is being built in Columbia," Schaefer said. "I'm proud that Missouri credit unions have stepped up and put this together." The project has received attention from Missouri's state legislature, said MCUA. Twenty state lawmakers signed on to be legislative honorary Build Brigade members after MCUA visited legislative offices to explain the effort and solicit support. They will be invited to participate in the three-day build brigade to construct Canine's home. Credit unions have similar projects in other states. Credit unions' involvement with HFOT began in 2008 when the Credit Union National Association and state leagues in Colorado and Minnesota teamed up with HFOT and the Democratic and GOP presidential convention committees to build two specially adapted homes for veterans injured during the Iraq war in Denver and St. Paul, where the presidential conventions were held. Since then, credit unions have joined HFOT efforts in their own states, with leagues acting as title sponsors. The Massachusetts and New Hampshire Credit Union Leagues and the Credit Union Association of Rhode Island have teamed up to build a specially adapted home for Army SSG Michael Downing and his family in Middleboro, Mass. Downing lost his legs during combat in Afghanistan in 2008. Credit unions braved freezing temperatures in December's "Build Brigade" and volunteers are working on the home this winter. Downing and his family plan to move in this spring. HFOT has built 50 homes for severely injured veterans since 2004 and has nearly 30 more projects in progress.

Technology helps rural Mexico CUs double-digit growth

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CORDOBA, Mexico (2/8/10)--Caja Yanga, a credit union located in rural Mexico, is realizing double-digit monthly membership growth rates after installing new technologies last year. Membership grew 15% per month last year and the credit union reached members in remote areas. It has 40,000 members.
Click to view larger image Brian Branch, (right) World Council of Credit Unions executive vice president and chief operating officer, meets with Francisco Perez Armas, Caja Yanga’s director of marketing development, and other credit union managers prior to the January launch of the credit union’s first ATMs.
Click to view larger image A Caja Yanga member (left) from the remote village of Miahuatlan deposits money into her savings account with the help of a credit union field officer, who uses a personal digital assistant to access her account and process the transaction. (Photos provided by the World Council of Credit Unions)
In December, the credit union installed four IBM blade servers and moved its principal data center from its headquarters in Yanga to a branch office in Cordoba. The move improved data transfer efficiency and is providing the capacity to support projected membership growth during the next five years. “With the previous system, data transfer was relatively slow, but the new system makes it much faster,” said Alejandro Rodriguez Penuela, Caja Yanga information systems assistant. “We now have the switches in place that will provide for better data administration as we grow.” The credit union also began using handheld transaction devices such as personal digital assistants (PDAs). It is one of 53 credit unions in Mexico that is implementing new technology into its outreach strategy. Caja Yanga works closely with the World Council of Credit Unions’ (WOCCU) development program in Mexico. That program is funded by the Mexican Ministry of Agriculture, Livestock, Rural Development, Fishing and Food through its Proyecto de Asistencia Tecnica al Microfinanciamiento Rural project to expand financial services to marginalized areas. Caja Yanga implemented the WOCCU-developed Semilla Cooperativa (Cooperative Seed) outreach model to reach rural members. As part of the model, credit union field officers bring savings-focused financial services to groups of 10-30 members in communities within 19 miles of existing branch offices. Twenty-eight field officers from Caja Yanga’s 13 branches visit 317 communities on foot or motorcycle and use PDAs to conduct transactions and transmit data. During 2009, field officers performed 80,960 PDA-based financial transactions for remote members, a capacity that's increasing along with Caja Yanga's member growth. “Caja Yanga demonstrates the commitment not only to reach the very poor and marginalized of the economy, but also the commitment to provide these people with the best quality and transparency of financial services through applications of technology,” said Brian Branch, WOCCU executive vice president and chief operating officer. One of the challenges that Caja Yanga has faced is members’ lack of confidence in financial institutions, a fear often fueled by predatory lending practices and pyramid-type schemes that have characterized financial transactions in rural Mexico and other developing economies. Implementing these technologies in the field has helped increase confidence by providing access to real-time data amd proof of financial transactions with mobile printers, and creating a professional and innovative image, according to Caja Yanga field officers. Caja Yanga also is WOCCU's partner credit union in implementing the MatchSavings.org program, an online donor match program that helps Mexico's rural poor learn to save by matching small member deposits made for objectives such as housing, healthcare, education and microbusiness development needs.