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Student loan bill overall wont affect private lending

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NEW YORK (3/23/10)--A student loan bill passed with the health care reform bill by the House Sunday won't affect private student loan providers overall, says a company that offers private student loan programs. "The bill overall doesn't affect private student lending, and even if it does, it helps the borrower, so it is a positive for the industry," said Chirag Chaman, chief operating officer of Fynanz, a New York, N.Y.-based provider of custom private student loans. Fynanz has a new alliance with CUNA Strategic Services to help credit unions in the private student loan market. It has 23 credit unions on board and 16 to be implemented in the next nine months, he said. "If [the bill] helps the students, it helps the customers of the credit union, and by helping them, it helps the credit union" meet members' needs, he told News Now. The bill revamps the federal student loan programs and eliminates fees paid to private banks to act as intermediaries in student lending. Instead, the government will expand a direct lending program and use the $61 billion that taxpayers would save over 10 years to increase Pell grants for students (The New York Times March 21). The bill sets automatic annual increases in the maximum Pell grant, scheduled to increase to $5,975 by 2017 from $5,350 this year. It also includes $13.5 billion to cover a shortfall caused by a steep increase in the numbers of students enrolling in college and seeking financial aid during the recession, said the Times. Chaman noted there are few changes from earlier versions of the bill. "There's nothing thrown in that's new," he told News Now. The Pell changes will provide aid, and "Need-based aid for students is important. The funds hadn't been growing the past few years and [the increases] were needed," said Chaman. He noted that the average student takes out a private student loan as a last resort. "They will take the federal loan aid, state grants, scholarships first. A private student loan is the last thing they should look at," he added. Private lending can still be among the options schools can present to students with their information, although schools cannot recommend one over the other. "And the bill has no extra regulatory burden other than what's already come down the pike" when Congress introduced Title X changes in loan forms, he said. The Credit Union National Association (CUNA) closely monitors student financial aid and loan consolidation matters. Many credit unions, particularly campus credit unions, are heavily dependent on federal subsidies so that they can offer student loans at reasonable rates. This issue has taken on added importance as the national credit crunch has dried up many lending pools for college students. In addition recent federal legislation has decreased federal student lending subsidies to financial institutions in favor of direct government to student loans, said CUNA. Student lending helps credit unions build their current and long-term lending base by reaching out to the college-student market, which is expected to reach record levels in coming academic years. Student lending helps credit unions attract members age 18-24 where credit union membership is weakest.

CU System briefs (03/22/2010)

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* YUMA, Ariz. (3/23/10)--AEA FCU said it will try to “strengthen its bottom line” by closing the lobby of its central office in Yuma, Ariz., on Saturdays. However, a drive-through will remain open at the location, as will ATM machines--one of which is a depository. Also, the credit union will close its downtown branch in mid-April and consolidate its services at the central office location. A call center that was located in the back of the downtown branch also will be moved to the central office in mid-April. AEA FCU has $376.7 million in assets ( March 20) … * ANCHORAGE, Alaska. (3/23/10)--An Anchorage fisherman who received an erroneous deposit of $230,000 in his credit union account and proceeded to spend the windfall was arrested by Alaska State Troopers at a local hotel. Timothy Boles, 37, a crew member of the Cascade Mariner, had received the check when Trident Seafoods employees initiated a wire transfer to the owner of the fishing vessel but put the wrong account number on the transfer. The funds ended up in Boles' Credit Union 1 account. By the time Trident reported the loss, the money was gone. Saying that the windfall "was 20 years coming," Boles allegedly withdrew $115,000 in cash, bought a $90,950 cashier's check, got $5,600 in traveler's checks, and paid off a $17,630 on a loan on his car, which he sold to a dealership to buy a new car. He is charged with a single count of first-degree theft for taking lost or misplaced property (Anchorage Daily News March 19) ...

WOCCU tents help Haiti office stay safe productive

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DELMAS, Haiti (3/23/10)--In post-earthquake Port-au-Prince, tents constitute valuable currency. World Council of Credit Unions' (WOCCU) initial efforts to send tents to survivors of the Jan. 12 Haiti earthquake, including staff of the HIFIVE project WOCCU administers, have brought valuable returns of good will and survival.
Click to view larger image Yvon Baptiste, Haiti World Council of Credit Unions staff member, stands next to the tent in which he and 11 family members sleep out of fear that their house will fall in on them during the night.
HIFIVE, the acronym for Haiti Integrated Financing for Value Chains and Enterprises, was launched last July in Haiti with funding from the U.S. Agency for International Development administered through the Academy for Educational Development. The program works across the financial sector to bring savings, credit and remittance-linked products to people living in poverty in underserved areas of the country. Within weeks after the earthquake, WOCCU delivered 42 tents of varying sizes to Haiti with the financial and logistical assistance of Asociacion de Instituciones Rurales de Ahorro y Credito (AIRAC), WOCCU's member organization in the Dominican Republic. Of that number, tents went to each of WOCCU's 19 employees on the ground in Haiti, as well as to other microfinance agencies in need. The result was greater security for staff and more open dialogue with the partners in WOCCU's program.
Click to view larger image A lone bicyclist travels amid the devastation that still characterizes downtown Port-au-Prince. (Photos provided by the World Council of Credit Unions)
"Our house did not really fall down, but we are afraid to sleep in it," said Yvon Baptiste, HIFIVE's deputy grants manager, who lives with 11 other family members in a tent pitched in the front yard of the house in which he lived that is owned by his father's cousin in Delmas, a suburb of Port-au-Prince. Baptiste and his family have lived in the red-and-white tent since the end of January, tapping the resources of the house but not spending any nights sleeping in the structure out of fear that it will fall down on them. Other WOCCU Haiti employees also share their tents with family members, meaning that as many as 150 people may be living in the WOCCU staff tents at any given time. Baptiste's house has been examined by Haiti's Ministry of Public Transportation and Communication, which categorized the house as safe to enter. However, the WOCCU employee and his family are still not comfortable with the idea that aftershocks or even another earthquake could bring the walls and ceiling down on them in their sleep. "The tent has no electricity or plumbing, and getting up to go to the bathroom in the middle of the night can be a nightmare," Baptiste said. "It's not comfortable, but comfort is not as important to us as our lives."

Canadas Central 1 CU net income up 275

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VANCOUVER, B.C. (3/23/10)--Central 1 CU, the central financial facility and trade association for credit unions in British Columbia and Ontario, reported its net income jumped 275% last year to $99.9 million from $26.6 million in 2008. Assets rose 29.2% to $11.1 billion at year-end 2009 from $8.6 billion the same period a year ago. The gains reflected significant growth in the liquidity of Central 1's member credit unions, Central 1 said in a press release. Return on equity was 19.6%, compared with 7.7% in 2008. "In the first full year of combined operation since the B.C. and Ontario credit union centrals merged in mid-2008, Central 1 performed very strongly," said Don Rolfe, president/CEO. "These results were achieved in a climate of market volatility and difficult economic conditions," he added. Central 1 took advantage of opportunities arising from an unusual combination of events in the financial markets, including declining interest rates and shrinking credit spreads. This resulted in mark-to-market gains in its holdings of financial instruments, which are mostly government and high-grade corporate bonds. The strong results for the year enabled Central 1 to pay a dividend of 10% on top of regular dividends of 2%. After taxes and dividends, Central 1 transferred $74 million into retained earnings, which totaled $262 million at year-end. It has a total capital of $551 million and a ration of regulatory capital to risk-weighted assets of 34.5%.

NuUnion Detroit Edison CUs to merge April 1

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LANSING, Mich. (3/23/10)--Regulators have approved the merger of NuUnion CU, Lansing, Mich., and Detroit Edison CU (DECU), Plymouth, Mich. The newly created Lake Trust CU will launch April 1. The Federal Trade Commission and the Department of Justice gave their necessary approval for the merger earlier this month to make sure--because of its size--that it didn’t violate federal anti-trust laws ( March 19). Also, approvals were granted by the National Credit Union Administration and Michigan’s Office of Finance and Insurance Regulation. The merger will create the fourth-largest credit union in Michigan--at $1.5 billion in assets--and positions the credit unions to serve both memberships with increased access to branches and ATMs, a stronger capital position and enhanced products and services (News Now Feb. 23). “The Lake Trust name is representative of the new organization which will stretch from Lake Michigan to Lake Huron and Lake Erie,” said Steve Winninger, NuUnion president/CEO. He will serve as the new credit union’s CEO, while DECU CEO William J. Thiess will become president.

Minn. bills would allow state deposits in CUs

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ST. PAUL, Minn. (3/23/10)--The grassroots swell of efforts to "Move Your Money" to smaller, local institutions has reached the Minnesota Legislature, which is considering several bills that would direct more public institutions' deposits into credit unions and community banks. HF 3205, authored by Rep. Tim Mahoney (DLF-St. Paul), would give credit unions and local community banks a price advantage in bidding to win deposits from state agencies. He plans to add a requirement that banks and credit unions would need assets of $2.5 billion or less to qualify (Minneapolis/St. Paul Business Journal March 19). The bill would mandate that state agencies discount bids from small, local institutions by 10% to even the playing field with large institutions (Finance & Commerce Marcy 19). The Minnesota Credit Union Network (MnCUN) is supporting the measure. "Minnesota credit unions support the bill because they welcome opportunities to partner with the state," said Kristina Wright, vice president of communications at MnCUN. "They are eager to work with legislators to investigate additional ways that more Minnesota financial institutions can have the opportunity to hold public funds," she told News Now. Mahoney also is proposing a resolution expressing the House's support for small community banks and credit unions, and creating a study to determine the benefits of directing public deposits to those institutions, said Finance & Commerce. Credit unions and community banks already hold 268 of the state's 397 small accounts, ranging in size from $5,000 to $50,000 from state parks, correctional facilities and deputy registrars. Local branches of Minneapolis-based U.S. Bancorp and San Francisco-based Wells Fargo & Co. have the rest, said the Business Journal. Small financial institutions in Minnesota are seeing some of the effects from the Move Your Money movement started by the Huffington Post, which advocated moving money out of large banks to local institutions because of behavior that led to the banking crisis. "We're seeing that movement gaining traction here, especially among young people, which has been a demographic that we've had a hard time reaching," Mark Cummins, MnCUN president/CEO, told Finance and Commerce. Credit unions saw a 10% increase in deposits and a $1 billion increase in loans to consumers and small businesses. Kyle Markland, CEO of St. Paul-based Affinity Plus FCU said new members are looking for relief from broad, complex menu of fees and penalties on deposit accounts and credit cards that are a major revenue source at big retail banks. They also are looking for more reliable lenders, he told the publication.

N.J. municipal deposits bill reintroduced

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TRENTON, N.J. (3/23/10)--Legislation that would amend New Jersey’s Government Unit Depository Protection Act to permit counties, school boards and municipalities to use credit unions as depositories was reintroduced by State Senate President Steve Sweeney (D-3), the state’s highest ranking legislator. Republican Conference Leader Bob Singer (R-30) has again signed-on as the prime co-sponsor, said the New Jersey Credit Union League (The Weekly Exchange March 15). Sweeney originally introduced the legislation in the 2008-2009 legislative session when he was majority leader. He also authored legislation enacted last year that allows the state’s director of investments to invest state cash management and pension funds in federally insured instruments offered by banks and credit unions. State Rep. Fred Scalera (D-36), together with Assembly colleagues Uprenda Chivukula (D-17), John Wisniewski (D-19) and five co-sponsors reintroduced the legislation in the state Assembly in January.

FBI reports 490 crimes at CUs during 2009

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WASHINGTON (3/23/10)--Of the 6,062 crimes reported to Federal Bureau of Investigation (FBI) by U.S. financial institutions last year, credit unions reported 490--including 470 robberies, 14 burglaries and six larcenies. The FBI’s report of 2009 bank crime statistics is not a complete statistical compilation of all bank crimes that occurred in the U.S, because not all bank crimes are reported to the FBI, it said. Loot taken totaled nearly $46 million in 5,514 (91%) of the 6,062 incidents. Total loot recovered after the incidents was slightly more than $8 million. The most popular day for crimes was Friday, and the most popular time period for them was 9 a.m. to 11 a.m. Some of the top methods used in the crimes were:
* Demand note used--3,269; * Firearm used--1,619; * Handgun--1,566; * Other firearm--56; * Other weapon used--105; * Weapon threatened--2,553; and * Explosive device used or threatened--193.
The crimes resulted in 140 injuries. Those most often injured were employees (79), perpetrators (27) and customers (21). All the deaths reported (21) in the act of the crime were perpetrators. Of the 94 incidents in which hostages were taken, 67 of the hostages were employees and 22 were members/customers. The top U.S. regions in which crimes (robberies, burglaries, larcenies and extortions) were committed were the South (2,048) and the West (1,793). To view the full FBI report, use the link.

No merger for Wyoming Colorado associations

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DENVER, Colo. (3/23/10)--The Credit Union Association of Colorado (CUAC) and the Credit Union Association of Wyoming (CUAW), which had explored a formal merger for the past year, will continue to maintain separate associations. The Wyoming association membership voted 10-12 to not support a formal merger. As a result, the Colorado association has suspended a vote among Colorado credit unions. The boards and management team of the associations will continue working together to ensure the needs of both states' credit unions and will collaborate to determine the best way forward in the coming weeks. "While Wyoming credit unions decided not to move forward with a formal merger, we have had a long and successful relationship with Colorado," said Marsha Tynsky, chairwoman of CUAW, "and as chairwoman, I look forward to charting a future course for our two associations." In 1998, the Colorado association began managing the day-to-day affairs of the Wyoming association. In 2003, Colorado purchased Wyoming's league service corporation. For the past few years, the two states joined their credit union foundations, and engaged in cooperative ventures in branding and marketing, payday loan alternatives, and the Credit Union Resource Group, a credit union service organization serving small credit unions. "Even though our two associations will remain separate organizations," said Mike Williams, vice chairman of the Colorado association, "we look forward to continuing our collaboration with Wyoming for the benefit of credit unions in both states."