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NCUAGoldman Sachs hearing set for today

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LOS ANGELES (3/15/12)--A hearing has been set for today in the lawsuit filed by the National Credit Union Administration (NCUA) against Goldman Sachs & Co., one of the banks it is suing for selling residential mortgage backed securities (RMBS) that caused losses to U.S. Central FCU and Western Corporate FCU.

The hearing will be in the U.S. District Court for the Central District of California--Western Division, Los Angeles, the same court in which NCUA has brought suit against RBS Securities and against Wes Corp officials related to losses stemming from RMBS.

That court has tentatively ruled in favor of RBS Securities in a similar case, but NCUA in its court documents said its allegations in the Goldman case are stronger than those upheld in other RMBS cases in other courts.

In the lawsuits, NCUA maintains that loan originators "systemically disregarded their stated underwriting standards and routinely made loans where no or insufficient compensating factors existed."

NCUA has sued five banks seeking to recoup $2 billion lost by the corporates when they were sold the RMBS. In addition to the Goldman Sachs case, NCUA has filed two suits against RBS Securities, one against J.P. Morgan Chase, and one against Wells Fargo Securities LLC (formerly Wachovia Capital Markets LLC). 

The agency, which is acting as liquidating agent for the failed corporates, also has settled three other other lawsuits.  HSBC, which sold RMBS to five failed corporates, agreed to pay $5.25 million without admitting fault  (News Now March 13).  Last year the agency collected a combined $165.5 million after it settled its suits against Citigroup and Deutsche Bank, with neither bank admitting fault (News Now Feb. 14).

Comments due today from HarborOne members on conversion

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BROCKTON, Mass. (3/15/12)--Today is the deadline for members of HarborOne CU, Brockton, Mass., to weigh in on the credit union's plan to convert to a savings bank. Members must have their comments in by the end of the day, according to the credit union's website.

Directors of the nearly $1.9 billion asset credit union announced  Feb. 16 that they were considering a possible charter conversion to a Massachusetts-chartered mutual cooperative bank.  On Wednesday, after reviewing members' comments, the board of directors will consider adopting the plan.

The Credit Union National Association (CUNA) and the Massachusetts Credit Union League maintain that the credit union charter is the best option for members of a credit union and that any decision should ultimately be in the interests of the members  (News Now Feb. 17).

HarborOne, in a notice on its website, said converting  to a bank would provide  more flexibility to expand its customer base; increase lending authority, particularly in business lending; and provide access to additional capital such as sale of stock, not currently available to credit unions.

It noted members would become depositors who would retain the same voting rights under its one-member, one-vote principle; the institution would not change fees or rates; directors would be compensated instead of volunteering; and it would pay federal and state income tax.

If the board decides Wednesday to pursue a conversion, it will file materials with the regulators for a review of conversion-related materials to be sent to members about the conversion plans.  HarborOne cautioned members they would not receive materials until after the regulatory review, which can take months.  After the review, the conversion proposal will be submitted to the membership for a vote after a notice period of at least 90 days.

Co-op summit to feature women of distinction

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QUEBEC CITY, Canada (3/15/12)--To celebrate International Women's Day last week, the Quebec International 2012 Summit of Cooperatives announced it will feature women ambassadors speaking at the Summit, Oct 8-11.

Innovative and creative in their management approach and in their strategies for promoting the cooperative business model, they offer a value-added perspective that will enrich the Summit.

Speakers confirmed for the 2012 Summit include:

  • Kathy Bardswick, president/CEO, The Co-operators (Canada);
  • Dame Pauline Miller, president, International Co-operative Alliance (Switzerland);
  • Rachel Griffiths, co-founder, Reputation Consultancy (Great Britain);
  • Geneva Guerin, director, Sustainability Solutions Group (Canada);
  • Rebecca Kemble, president, U.S. Federation of Worker Cooperatives (U.S.);
  • Monique F. Leroux, chair of the board, president/CEO, Desjardins Group (Canada);
  • Judy Lipp, executive director, TREC Renewable Energy Co-op and TREC Education (Canada);
  • Sylvia Okinlay-Paraguya, CEO, National Confederation of Cooperatives, (Philippines);
  • Tracy Redies, president/CEO, Coast Capital Savings CU (Canada);
  • Antoinette C. Roxas, youth sector representative, MSU-IIT Multi-Purpose Cooperative (Philippines);
  • Robyn Shrader, CEO, National Cooperative Grocers Association, (U.S.); and
  • Helene Simard, president/CEO, Conseil québécois de la coopération et de la mutualité (Canada).
For more information about the speakers, use the link.

In total, more than 130 speakers will share their expertise, accomplishments and vision for the future of the cooperative and mutualist model. They will discuss how the cooperative approach can solve the challenges presented by the major economic upheavals in the world.

WesCorp officials motion for indemnification costs dismissed

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LOS ANGELES, (3/15/12)--A federal judge in Los Angeles has rejected motions by Western Corporate FCU officials seeking payment of legal costs and indemnification from the National Credit Union Administration (NCUA) during the agency's lawsuit against them over the failure of WesCorp. But he is allowing the officials to amend their indemnification claim based on state law.

U.S. District Judge George H. Wu, in an opinion filed Monday, dismissed the counterclaims of the officials seeking to have NCUA pay their costs during the lawsuit, saying they must submit administrative claims with NCUA after their cases are concluded.

NCUA had argued that an advancement or reimbursement order "would directly interfere with the NCUA's exercise of its powers as a liquidating agency of WesCorp."  The judge's ruling said that instead, the WesCorp officials "must follow the route of judicial review of the denial of their administrative claims for damages."

The agency had asserted the best WesCorp officials could get would be "the issuance of a certificate for claim in liquidation entitling [them] to a pro rata share of the liquidation assets available to the class of general creditors….Any judgment ordering payment of any fees to which the officer defendants might otherwise be entitled as damages would therefore run afoul of  [U.S. Code]  section 1787 (g) given the NCUA's role as liquidating agent of WesCorp," said the court document.

Wu wrote that "it would indeed appear that any relief this court might fashion actually ordering the NCUA to pay the officer defendants--whether by virtue of an 'advancement' or 'reimbursement' order or by way of declaratory relief determining that the officer defendants have a right to such payment--would 'restrain or affect' the NCUA's exercise of its powers."

The judge also denied that the WesCorp officers have a right to indemnification based on a California labor law provision, but is allowing them to amend their counterclaims by April 14 to add indemnification claims under the California corporate code.  The WesCorp officials claimed that WesCorp's Policy 21 "maximum extent" provision transforms the provision for permissive indemnification under California law into a provision for mandatory indemnification.

However, NCUA argued that recently enacted regulation in section 701.33 of the Federal Credit Union Act "precludes any mandatory indemnification because it provides for discretionary expense payments and, even in that situation, requires that certain findings be made which have not yet been made."  The defendants "have no right to indemnification or reimbursement of defense costs until the Court renders judgment in their favor on the NCUA's claims (or, presumably, unless and until the NCUA makes the necessary findings and exercises its discretion in the officer defendants' favor.)

"The only way in which the officer defendants' claim to indemnification rights would be ripe for adjudication now--albeit with the issuance of any relief delayed until later would be if they were correct in reading of Policy 21 that it effective requires indemnification regardless of whether they are the prevailing parties on the NCUA's claims against them…If they are incorrect in that view, their indemnification claim is not ripe because they have not yet prevailed," said the judge.

WesCorp was hard hit by losses related to mortgage-backed securities.  NCUA's lawsuit had alleged that senior WesCorp executives were negligent in monitoring the investments of the corporate and that there was a breach of fiduciary duty and fraud related to investments that resulted in $6.8 million in portfolio losses (News Now Jan. 24).  The executives filed counterclaims and affirmative defenses against NCUA, alleging the agency was aware of WesCorp's investment strategies and approved of and encouraged the strategies.

The former WesCorp executives named as defendants in the lawsuit are: CEO Bob Siravo; Chief Financial Officer Todd Lane; Chief Investment Officer Bob Burrell; Chief Risk Officer Timothy Sidley and Human Resources Director Thomas Swedberg.  NCUA and  Sidley entered into a settlement agreement last week.

SECU of Maryland to acquire Anne Arundel Co. EFCU

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LINTHICUM, Md. (3/15/12)--Anne Arundel County Employees FCU will merge into SECU of Maryland, the two credit unions announced Tuesday.

SECU, with $2.1 billion in assets and 246,257 members, is the second largest credit union in Maryland behind only Tower FCU, which has $2.24 billion in assets (Baltimore Business Journal March 14).

Anne Arundel County Employees FCU, based in Annapolis, Md., has $81.6 million in assets and 14,320 members.

The merger will give Anne Arundel members access to more services than they currently have, Rick Stoll, Anne Arundel, and Rod Staatz, SECU's CEO, said in a letter to members.

Anne Arundel has four branches, all in Anne Arundel County. SECU has 15 branches throughout the state. SECU also has ATM machines in 16 Mars supermarkets.

CUNA provides analysis on FOMC action for IBloombergI

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WASHINGTON (3/15/12)--A Credit Union National Association (CUNA) economist offered some analysis for Bloomberg Business Week about Tuesday's announcement by Federal Reserve Chairman Ben S. Bernanke that additional quantitative easing would be an option, even after he raised his assessment of the U.S. economic expansion.

The Federal Open Market Committee (FOMC), the Fed's policymaking body, met Tuesday and upgraded its outlook for growth, which diminished expectations that the Fed would start a third round of buying bonds, Bloomberg said.

However, the FOMC emphasized in a statement issued after the meeting that the unemployment rate is "elevated" and "significant downside risks" still exist.

Several analysts told Bloomberg that FOMC meetings in April and June would be a prime time for the Fed to take action if more fiscal stimulus is needed.

"They want to keep their powder dry in case they need to take further action later in the year," Bill Hampel, CUNA chief economist, told Bloomberg. "In case they need to do a QE3 [third round of quantitative easing], this is giving them leeway to do it if they think it's necessary later in the year."

To read the article, use the link.

New April Fin Ed effort piloted by NCUF state foundations

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MADISON, Wis. (3/15/12)--The National Credit Union Foundation (NCUF) and the Texas Credit Union Foundation have developed a new outreach initiative that offers credit unions an additional resource for National Financial Literacy Month in April.

"Credit Unions Support Financial Education: Leading the Way to Financial Freedom" is being piloted in California, Illinois, Louisiana, Nevada, New York, North Carolina, South Carolina and Texas by credit union foundations in each state.

To join the initiative, credit unions in participating states must commit to collecting pledges for supporting financial education and hold a "Financially Fit Day" event April 4, including fundraising among staff and members. Fundraising could be as simple as a jeans or casual day for staff, but additional ideas are included in a toolkit at financialeducation.coop, the website created for the new initiative, said NCUF. Also included on the website are pledge forms and other campaign resources, such as sample newsletter articles, a sample flyer and statement stuffer, and web buttons.

The purpose of the effort is two-fold:

  • To raise awareness of credit unions' financial education activities and the significance of financial education; and
  • To raise funds for NCUF and state credit union foundations in support of their financial education initiatives.
Donations from the new initiative will be split between NCUF and the state credit union foundation where the donation was made.

CUs campaign generates mystery for a new branch

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HERNDON, Va. (3/15/12)--Northwest FCU (NWFCU), based in Herndon, Va., has answered the question: "Guess What's Next on Webb?" after several weeks of placing teaser ads on billboards, postcards and in newspapers around its local community. It is opening a new credit union branch in Gainesville, Va.--and its location is 7500 Webb Drive.

Gainesville resident and contest winner Jim Aram, in front of the "What's on Webb" campaign sign at Northwest FCU's new branch in Gainesville, Va.  (Photo provided by Northwest FCU)
The campaign was created to introduce the credit union to the Gainesville community and build excitement for the expansion, according to Gerrianne D. Burks, president/CEO of the $2 billion credit union.

"This is our third de novo Northern Virginia branch opening within three years and we wanted to do something out of the ordinary," Burks said. "Our campaign was designed to attract attention and the response has shown that we did."

NWFCU launched its What's on Webb campaign Nov. 1, inviting local residents to answer a series of clues, such as "Our mascot is a dog," and "We're 100,000 strong." With each clue, a winner was drawn from all entries to receive $250. 

Nearly 400 participants sent in answers to the clues on the website, www.whatsonwebb.com, with more than half correctly solving the mystery.

Gainesville resident and NWFCU member Jim Aram was among the contest winners.

"I'm always curious when it looks like we're going to have a new neighbor," said Aram, who works near the new branch and saw the 'What's on Webb?' sign leaving his office each day. "Who wouldn't like to win $250? I visited the website hoping to gain insight and provide my educated guess as to who we'd be welcoming to the neighborhood. Several weeks later to my surprise, I received a call and I won. Thanks to Northwest FCU, and welcome to Gainesville."

NWFCU also invited residents to join Club Webb, the credit union's new member fan club, which offered T-shirts and other giveaways, along with special e-mail offers, to members. To date, Club Webb has attracted 150-plus members. 

The Gainesville branch will open for business by April 1, with the grand opening planned for mid-May. NWFCU operates five other branches in surrounding communities, and serves more than 111,000 members.

CO-OP launches consumer ad campaign

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RANCHO CUCAMONGA, Calif. (3/15/12)--CO-OP Financial Services has launched "Credit Unions Do," a consumer advertising campaign to promote credit union membership.

Campaign materials are free to all credit unions--regardless of their affiliation with CO-OP Financial Services--and can be customized by individual institutions.

The campaign is the next phase of the CO-OP's "Banks Don't Like You" consumer advertising CO-OP Financial Services initiated in November. Moving from "Banks Don't Like You," the new effort stresses "Credit Unions Do" wonderful work on behalf of their members.

"While credit unions have a huge opportunity right now to gain new members, many don't have the necessary resources to create the kind of high-end marketing materials that will get them noticed," said Caroline Lane, CO-OP Financial Services senior vice president of business development and marketing. "This integrated campaign will allow credit unions of all asset sizes to share in a unified brand message that highlights the benefits of switching to a credit union." 

CO-OP Financial Services will display the campaign March 18-20 in booth 401 at the Credit Union National Association's Government Affairs Conference in Washington, D.C.

The campaign is humorously based on the trials and tribulations of earning a living, and features the tag line, "Making Money is Hard. But Putting It in the Right Place Doesn't Have to Be."

The ads can be customized to include an individual credit union's logo and Web address. Initially, materials will be offered in the form of print ads and Web banners. 

"These ads are designed to educate a whole new generation of potential members about what 'Credit Unions Do'--from offering better rates and friendly member service to the convenience of a network of shared branches and surcharge-free ATMs," Lane said.