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Media roundup Positive press for CUs continues

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MADISON, Wis. (3/17/10)--Credit unions popped up in the press this week--in articles ranging from helping small businesses in California and Michigan, to Suze Orman's advice on where to go for a credit card, to looking at credit unions for all banking needs, and even to The Wall Street Journal's description of credit unions as among the "winners" in the proposal advanced Monday by Senate Democrats to overhaul financial markets. The articles included:
* Michigan Gov. Jennifer Granholm's promotion of the Michigan Small Business and Technology Development Center Mid-Michigan which will offer a 10-week training session to foster entrepreneurship .Granholm said the Michigan Credit Union League has become a partner with the small business and technology development centers to provide as much as $43 million in small-business loans (The Morning Sun March 9). * A report about Mission SF FCU, a $7 million asset credit union based in San Francisco, which assisted Ernest East of Miz Lynn's Pies when the recession cooled sales of his sweet potato pies before the business' 10th anniversary. East ran from big banks to non-profit business loan programs for cash to tide him over. Mission SF FCU helped him get a loan for $6,500 with an interest rate he could handle, and helped him repair his credit rating. Since then, he has hired two employees, bought more equipment and added two store partnerships (SFGate.com March 8). * A speech by financial advisor, author and TV host Suze Orman at Club Nokia in Los Angeles, in which she advised those with a credit card balance to transfer the balance to a credit union credit card. She noted the interest rate at a credit union caps out at about 18% while traditional cards rates can be as high as 28% (Whittier Daily News and San Gabriel Valley Tribune March 15). * An article advising readers to "look into options of local credit unions for your banking needs as many offer better rates on things like mortgages, savings accounts and checking accounts." One area "that big banks suffer in is they are simply too large," said the article (Red, White and Blue Press March 11). Many big lenders are unable to provide one-on-one service in a way that is helpful to the vast majority of customers because there are too many, the article said. * The Wall Street Journal's article on the draft bill of the financial market overhaul proposed Monday by Senate Banking Committee Chairman Christopher Dodd (D-Conn.). It noted: "Among the winners, community banks and small credit unions would be financially able to compete, for perhaps the first time, against large competitors reined in by new restrictions on capital, complexity and size" (The Wall Street Journal March 16).

CUs service reps respond faster than big banks

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WASHINGTON (3/17/10)--Credit unions and community banks respond to member-customers faster than big banks, according to a survey of the time it takes to contact a member or customer service representative via phone. Robert Rubin, CEO of Facilitas, a company that helps consumers switch to new financial institutions, and creator of FindABetterBank.com, decided to measure how long it takes big banks, community banks and credit unions to route a caller to a service rep, he wrote in Huffington Post (March 15). The group called 75 banks, nine credit unions and five online banks each three times--in the morning, during lunch time, and at the end of the day. Callers conducted the calls from March 3 to March 15. The result is Time2Talk (T2T), the average time of the three phone calls, Rubin wrote. The findings:
* It took 36 seconds longer to speak to customer services reps at big banks than at credit unions and community banks. Rubin noted there were many examples where pressing zero didn't connect to an operator. * Roughly 76% of credit unions and community banks managed to route the caller to a service rep in under two minutes. Only 56% of the big banks managed to do so. Rubin said under two minutes is a "reasonable expectation." * Twenty-nine percent of the credit unions and community banks routed the callers to a rep in under 30 seconds. "No big banks did," said Rubin.

Robbery suspect pleads guilty in shooting member

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KANSAS CITY (3/17/10)--A man pleaded guilty Monday in a Kansas City federal court to robbing CU of Johnson County, Lenexa, Kan., and shooting a 71-year-old member who pursued him in 2009. Nicholas E. Kamphaus, 26, pleaded guilty to one count of armed bank robbery, one count of discharging a firearm during a crime of violence and one count of attempted murder of a witness, said federal authorities (The Kansas City Star via Kansas City.com March 16). The member, who was shot several times, survived (New Now April 27). Kamphaus entered the credit union on March 28, 2009, jumped the counter, took money from tellers and fled with an undisclosed amount of cash, the newspaper said. Once he left the building, Kamphaus was spotted by an elderly man who trailed him. A short time later, police found the man in his minivan with the hazard lights flashing, the paper said.

TJX-hacking co-conspirator sentenced to 46 months

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BOSTON (3/17/10)--A former Barclays information technology programmer was sentenced to 46 months in prison by a court in Boston for his role in several data thefts, including a big security breach disclosed in January 2007 at retailer TJX, based in Framingham, Mass. Humza Zaman also was sentenced to three years’ supervised release and levied a $75,000 fine after pleading guilty to one count of conspiracy last April (Finextra.com March 15). The 33-year-old Zaman is believed to have assisted Albert Gonzalez, head of the criminal ring responsible for the TJX hacker attacks, by laundering up to $800,000 (Bobsguide.com March 16). Gonzalez is facing a minimum sentence of 17 years after pleading guilty to a series of attacks on several firms--including TJX and Heartland Payment Systems. The data breaches affected thousands of credit unions, whose members’ credit and debit cards were compromised. Zaman laundered between $600,000 and $800,000 for Gonzalez, using ATM cards linked to bogus accounts to withdraw and repatriate Gonzalez’ funds from a bank account in Latvia, according to court documents (Finextra.com).

MBLs in IMotley FoolI Boston Milwaukee spotlight

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MADISON, Wis. (3/17/10)--Credit unions’ lending to small businesses and the bill to increase credit unions’ member business lending cap were recently in the spotlight of three publications across the nation. U.S. Rep. Paul Kanjorski (D-Pa.) has a solution to the difficult problem small businesses face procuring loans they once readily obtained to expand their businesses and create jobs, he told The Motley Fool (March 9). The solution is “lifting the cap on credit unions’ loans to small businesses, allowing them to extend more loans to help the economy grow,” he told Jennifer Schonberger in an article titled “One Congressman’s Solution for Boosting Small Businesses’ Loans.” “When I spoke with Rep. Kanjorski about his proposal, he told me that credit unions lent wisely before the crisis, and are lending more now,” Schonberger said. “Credit union business lending grew by more than 11% in 2009. Now credit unions are facing a statutory cap on lending. To fill a void in business lending, Rep. Kanjorski says credit unions need Congress’ help.” “It seems eminently clear to me that would be the right thing to do: allow these credit unions to participate in the recovery program of the American economy,” Kanjorski told the publication. Increasing the cap on credit unions’ loans to small businesses is one of the top issues facing the credit union industry, Daniel F. Egan, president of the Massachusetts, New Hampshire and Rhode Island Credit Union Leagues, told the Boston Business Journal Monday in an article titled “Credit Unions Push to Lift ‘Artificial’ Cap.” “Initiatives in the House and Senate to boost the cap to 25% of assets, however, won’t be soon enough for the Community CU of Lynn (Mass.),” reporter Tim McLaughlin wrote. “In a rare move, the Lynn credit union began pursuing a state bank charter three years ago after maxing out its business lending. The credit union has the highest ratio of business loans, 11% of total assets, among Massachusetts credit unions, according to data from the National Credit Union Administration. The article also mentions business loans at Digital FCU, Marlborough, Mass., the largest Massachusetts credit union, which would like to see more room under the business cap to meet member needs. Brett Thompson, president/CEO of the Wisconsin Credit Union League, wrote an opinion piece Friday in a Milwaukee publication, The Business Journal. “Congress must lift arbitrary restrictions--currently capped at 12.25% of assets--that prevent credit unions from making more small business loans,” Thompson said. “If the current cap were raise to just 25% of assets, credit unions could offer $355 million of new business credit and add 3,865 jobs in Wisconsin in the first year alone,” he added. The Credit Union National Association (CUNA) is a big proponent of boosting the cap, The Business Journal said. CUNA says credit unions have been making business loans to members since the early 1900s. A statutory cap on business lending activity didn’t appear until passage of the Credit Union Membership Access Act of 1998, according to CUNA’s website, the Journal said. “There was no economic rationale for this limit in 1998 and there is no rationale now,” CUNA said. To read the articles, use the links.

Audio conference addresses CU business lending

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MADISON, Wis. (3/17/10)--The Credit Union National Association (CUNA) will host an audio conference March 25 on credit union business lending, with updates on the Small Business Administration programs. The conference, “Credit Union Business Lending: Working with the Small Business Administration (SBA) and the National Credit Union Administration (NCUA) to Make More Business Loans,” will be offered at 1 p.m. CDT. Tuition for the conference is $49. Speakers include: CUNA President/CEO Dan Mica, NCUA Chairman Debbie Matz, SBA Administrator Karen Mills, and Mary Dunn, CUNA senior vice president and deputy general counsel. The conference will discuss how credit unions can make SBA loans, how to expand SBA loan programs, and updates on SBA loan developments. It is geared toward credit unions already involved in business lending and those considering involvement. According to CUNA, credit union member business loan portfolios grew $3.1 billion in 2009--a one-year increase of 10%. That growth was more than consumer and mortgage loan portfolios, and made business loans the fastest growing segment of credit union loans in 2009. SBA lending, as a subset of total credit union member business lending, grew 15% in 2009, CUNA added. For more information, use the link.

Virginia legislature passes conversion bill

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RICHMOND, Va. (3/17/10)--A bill giving Virginia state-chartered credit unions the ability to convert to mutual savings banks if they choose was passed by the state’s general assembly last week. Under the bill, state credit unions have the same powers as federal credit unions. House Bill 482 and Senate Bill 440 passed both state chambers unanimously (Capital News Service March 15). The Virginia Credit Union League worked to turn the legislation into a charter-choice bill from an acquisition bill. The original version of the bill was drafted by bankers. The league’s and credit unions’ efforts resulted in a compromise bill, which was a substitute bill that the league drafted. “Obviously, we’re pleased with the final version of this legislation and we believe it represents a victory for the member-owners of Virginia’s credit unions,” said Virginia League President Rick Pillow. “We viewed the original version of this legislation as nothing less than an acquisition bill, designed to give for-profit banks the authority to buy up not-for-profit credit unions, without providing adequate safeguards for member-owners. “The original language would have put for-profit banks in the driver's seat; the substitute bill we drafted, and which passed the legislature, puts charter choice firmly in the hands of credit union member-owners, where it belongs,” he said.

MSU FCU hosts governor for debt settlement forum

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PLYMOUTH, Mich. (3/17/10)--A press conference calling for the regulation of debt-settlement agencies was conducted by Michigan Gov. Jennifer Granholm, Office of Financial and Insurance Regulation Commissioner Ken Ross and GreenPath CEO Jane McNamara March 5 at Michigan State University FCU in East Lansing.
At a press conference about debt settlement at Michigan State University FCU are from left: Ken Ross, Office of Financial and Insurance Regulation commissioner; Jane McNamara, GreenPath CEO; and Michigan Gov. Jennifer Granholm. (Photo provided by the Michigan Credit Union League)
The three promoted the work of debt management organizations, including GreenPath Debt Solutions. MSU FCU is one of several credit unions that works with GreenPath and other state-licensed organizations to provide debt-management consulting to members (Michigan Monitor March 15). The leaders want to regulate debt-settlement agencies that push consumers toward paying money upfront to the company and ignoring creditors. Working with unregulated debt-settlement agencies can contribute to poor credit scores and it can become harder for reputable organizations to help individuals with their debt, said the Michigan Credit Union League’s newsletter. “Protecting Michigan citizens from unregulated debt-settlement programs is part of my administration’s ongoing effort to safeguard consumers and their pocketbooks,” Granholm said. “As consumer debt grows, the number of unregulated and financially dangerous debt-settlement companies is increasing dramatically. It’s now more important than ever for consumers to be aware that safe and sound debt-relief assistance is available.”