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Its flood season Agility warns CUs

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CHARLOTTE, N.C. (3/24/10)--Isolated weather events in several sections of the country caused several of Agility Recovery Solutions' members to stage alerts or declare disasters last week. None were credit unions. However, Agility is reminding credit unions that it's time to take stock of what to do before the weather packs a wallop, starting with a flood preparedness checklist. Floods in the Northeast last week plagued many businesses, including two financial institutions and members in New England, reported Agility, a business recovery and continuity service provider based in Charlotte, N.C., and a CUNA Strategic Services (CSS) provider. Both banks experienced severe flooding in their basements. Agility helped them set up recovery assets, with one requiring a small mobile unit and both banks were operating. Flooding near Fargo, N.D., resulted in one client asking Agility to stand ready to deliver 50 laptops and a mobile unit, if needed. "Disaster recovery is more than bits and bytes. It's very personal," said Agility CEO Bob Boyd. "The reality is these businesses are vital to the economic success of our communities, yet 90% of small and mid-sized businesses are unprepared for an interruption." Businesses are more likely to flood than burn down, said Agility. Most businesses can save between 20% and 90% on the cost of stock and moveable equipment by taking action to prepare in advance of flooding. Agility provides a flood preparedness checklist that goes over what to do before the flood, during the event, afterward, and how to communicate with your staff. Use the Agility/CSS link to access the checklist. Agility also sends out a tip each week relating to disaster recovery and preparedness. Use the link to sign up for the tips. In addition to its North Carolina headquarters, Agility Recovery Solutions also has distributions centers in Atlanta, Ga., and Mississauga, Ont. It has been in alliance with CSS since 2006. It serves 339 credit unions with 478 branches.

Average APY for rewards checking accounts 3.3

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NEW YORK (3/24/10)--Consumers are looking for ways to boost their interest earnings in a low-rate environment, and credit unions might consider offering rewards checking accounts. Bankrate.comprojects the accounts will be a more popular option for deposits in coming years. "Rewards checking accounts offer very compelling yields, so long as consumers are able to meet each of the account requirements each month, said Greg McBride, senior financial analyst for Bankrate, which announced results of its first annual 2010 Rewards Checking Survey. The average annual percentage yield (APY) for rewards checking accounts has maxed out at 3.3%, according to the study. The survey examines what to expect if opening a rewards checking account from a credit union or bank and what to look for to make sure the account gets the maximum yield. Credit unions will want to take note what others are doing in the field. Other findings:
* The average default APY if the account holder does not keep up with the minimum requirements was 0.16%, a significant drop off, said Bankrate. * The balance cap for earning the high APY was, most commonly, $25,000. * Of the accounts surveyed, 95% required the account holder to make a certain number of debit card transactions month to receive the highest APY. The average number of debit card transactions required was 11, but the most common requirement was 10 per month. * Roughly 91% of the rewards checking accounts have requirements for direct deposit and/or bill pay, but 48% require only one or the other, not both. One direct deposit per month is the standard requirement. * About 35% demand a mandatory bill pay requirement, ranging from logging in to as many as four bill payments per month; however, one bill payment per month is the most common requirement.
The study surved more than 211 banks and credit unions across the nation.

HeartlandTJX hacker sentencing is this week

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BOSTON (3/24/10)--Prosecutors plan to ask for a 25-year prison sentence--the maximum allowed--this week for the computer hacker who helped orchestrate several of the largest thefts of credit and debit card data in U.S. history, costing consumers, credit unions, other financial institutions and insurance companies more than $200 million. Albert Gonzalez, 28, a former federal informant from Miami, pleaded guilty last year to separate hacking cases in Massachusetts, New Jersey and New York that involved a number of high profile data breaches. He is to be sentenced on Thursday and Friday in a U.S. District Court in Boston, where several cases were consolidated (Associated Press March 23). The cases included hackings at: TJX Cos., BJ's Wholesale Club, Heartland Payment Systems, Hannaford Brothers, 7-Eleven stores, OfficeMax, BostonMarket, DSW, Barnes & Noble, Sports Authority and the Dave & Buster's restaurant chain. Authorities said that just two of Gonzalez's servers contained more than 40 million distinct credit and debit card numbers. Maximum sentences in the TJX , Office Max and DSW case would be 25 years. He also faces 20 years for the Dave and Buster's attack, and up to 25 years for the Heartland, Hannaford and 7-Eleven cases.

New Wash. law aims to keep financial info safe

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OLYMPIA, Wash. (3/24/10)--Washington Gov. Christine Gregoire Monday signed a law that will encourage financial institutions to take extraordinary measures to protect consumers from identity theft and financial fraud, said the Washington Credit Union League. H.B. 1149 removes the financial burden of reissuing compromised cards and accounts from credit unions and banks affected by large-scale data breaches, and encourages them to actively intervene on behalf of consumers. It also encourages businesses conducting credit and debit transactions to be careful with consumer data. “Washington credit unions have spent millions of dollars cleaning up the mess left by merchants and data processors when large-scale data compromises occur," said league President/CEO John Annalorao. "The private financial information these third-party processors hold has too often been negligently stored or transmitted. Credit and debit card fraud can be the result. “This new law thoughtfully addresses that responsibility by placing recovery costs back on the negligent party," Annalora said, noting it is "likely a national model for state data breach legislation,” Annaloro said. Under current Washington law, when a breach compromises a consumer's card data, the breached business must alert the consumer or the cardholder's financial institution unless the breach is part of an ongoing investigation. Because of reputation management issues and the cost of notifying customers, the breached business generally chooses to notify the card-issuing financial institution. At that point the financial institution has a choice--alert consumers of a possible risk of fraud or actively intervene. Either way, the financial institution unfairly bears the reputational and financial burden, said the league. The increase in frequency of large-scale data breaches, combined with the soaring reissuing cost of plastic cards---between $15 and $20---has stymied the once standard practice of blocking and reissuing cards, the league said. The new law seeks to revive this practice. “When the first notification of a data breach occurs, having the financial institution immediately begin blocking and reissuing compromised plastic is the most proactive step a credit union or bank could take to protect the consumer from harm,” said Annaloro. “Allowing financial institutions to recoup these costs from a negligent data-breacher removes the financial burden from affected financial institutions. This encourages institutions to always take action on consumers’ behalf,” he said. The highlights of the legislation are threefold:
* A business that processes more than six million debit or credit transactions per year is liable when it fails to exercise reasonable care through encryption of account information; * Vendors such as data processors are liable for damages due to a defect in the vendor’s software or equipment related to the encryption if the defect resulted in the breach; * Financial institutions may recoup from businesses or vendors reasonable actual costs of reissuing plastic cards to Washingtonians affected by a data breach.
Businesses are immune from action when the information they process is encrypted and the business itself is certified compliant. During the past five years, Washington has enacted several statutes to help consumers protect themselves from identity theft and financial fraud. This new law further improves consumer protections against these types of crimes, said the league. Washington is the second state to enact data breach legislation. Minnesota passed a similar law in 2007. Prime sponsors of the legislation include Rep. Brendan Williams (D-22), Rep. Dan Roach (D-31), and Sen. Jeanne Kohl-Welles (D-36). In addition to community banks, which had opposed the legislation until this year, this data breach protection legislation was supported by consumer groups and at least one national insurance company, CUNA Mutual Group.

Bankers MBL attacks fail scrutiny

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WASHINGTON (3/24/10)--Credit unions have been attacked by bankers with eight general claims against raising credit unions' member business lending (MBL) cap, but those claims do not stack up under scrutiny, according to an analysis by the Credit Union National Association (CUNA). The claims and the facts that poke holes in the bankers' arguments are the topic of a feature this week in CUNA's online legislative/regulative news analysis publication, Credit Union NewsWatch, which is published twice a month. One of the arguments centers on safety and soundness. Bankers say that raising the MBL cap to 25% of a credit union's assets (up from 12.25%) would undermine credit union safety and soundness. But data collected by the National Credit Union Administration (NCUA) and the Federal Deposit Insurance Corp. show that credit unions have a long history of engaging in safe and sound business lending, and that business lending is actually much safer at credit unions than at other institutions, says CUNA's Research and Policy Analysis. The data indicate:
* Credit union MBL net charge-off rates have been significantly lower than bank rates year-in and year-out for over a decade. Since 1997, credit union MBL net charge-off rates have averaged 0.15%, a figure that is roughly one-sixth of the 0.82% bank average during the same period. * More recently, with the increased losses at all lenders from the financial crisis and recession, the increase in loss rates at credit unions pales in comparison to bank results. During 2009, credit unions charged off business loans at a 0.59% rate--about one-fourth the 2.36% rate reported by banks over the same period. In 2008, credit unions charged off 0.33% compared with banks' 1.01%. and in 2007, the figures were 0.09% for credit unions and 0.52% for banks. * Compared to other loans at credit unions, business loan net charge-off rates are lower than net charge-off rates on credit union consumer loans and essentially identical to the net charge-off rates in credit union real estate loan portfolios. * Most credit unions have excess liquidity today that is depressing their overall earnings. Moving assets from low-yielding investments into higher-yielding MBLs, even after accounting for credit losses on those loans, will increase earnings, capital contributions and overall safety and soundness. * NCUA has indicated if the MBL cap were increased or eliminated, it would revise its regulation to ensure additional capacity in the credit union system would not result in unintended safety and soundness concerns.
To access the NewsWatch article (Members Only), use the link. To subscribe, use the second link.

Tech CU offers mobile banking security tips

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SAN JOSE, Calif. (3/24/10)--Consumers can significantly minimize the risk of fraud and help protect their identity while using mobile banking services by following some common-sense tips, said Technology CU, San Jose, Calif. “Fraudsters know that the key to their success lies in the consumer,” said Victor Smilgys, Technology CU assistant vice president of e-commerce and a mobile banking security expert. “So they are being very crafty in their approach to making the consumer believe an app is harmless and, in some cases, disguising it as a security safeguard. Better education is the key to minimizing these risks.” Tech CU’s Consumer Tips for Mobile Banking Security include:
* Password-protect your mobile device and lock your device when it's not in use. Keep your mobile device in a safe location. * Frequently delete text messages from your financial institution on your mobile device, especially if they contain sensitive information. * Never disclose personal information about your accounts via a text message, (i.e., account numbers, passwords, or any combination of information) that can be used to steal your identity. * Immediately contact your financial institution to change the details of your mobile banking profile if you change your mobile number or lose your mobile phone. * Do not hack or modify your device, since this will leave it susceptible to infection from a virus or Trojan. When possible, install mobile security software on your device if it’s available. Some mobile security solutions include: AhnLab Mobile Security, avast! PDA Edition, Kaspersky Mobile Security, and Norton Smartphone Security. * Be aware that malware exists and fraudulent applications will continue to pop up. Don’t download applications onto your phone without checking them out first. Verify the legitimacy of an application with your financial institution before downloading it to your Smartphone. Verify that the applications publisher or seller is your financial institution, or if possible, go through your financial institution’s website to download the application. * Report any banking application that appears to be malicious to your financial institution right away. * Monitor your financial records and accounts on a regular basis and consider having electronic alerts on account activity sent to your e-mail or mobile device. Regularly review your statements with online banking. This will enable you to spot any suspicious activity.
Victims of identity theft should contact their financial institution immediately. They also should place a fraud alert on their credit report and continue to review their credit reports, close their accounts that they know or believe have been tampered with or opened fraudulently, and file a complaint with the Federal Trade Commission. Using mobile banking can actually help deter some fraud because it gives consumers an easy way to check their account on a regular basis and notify their credit union or bank more quickly if they see suspicious activity, Smilgys concluded.

Gov. Quinn kicks off Illinois legislative day

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NAPERVILLE, Ill. (3/24/10)--Nearly 140 credit union activists are expected to be present when Illinois Gov. Patrick Quinn kicks off the Illinois Credit Union League’s (ICUL) annual legislative day and reception today in Springfield. Other event highlights will include:
* A regulatory update with officials from the National Credit Union Administration, including board member Michael Fryzel, and Robert Meza, director of the Division of Financial Institutions of the Illinois Department of Financial and Professional Regulation. Meza will provide an update on Illinois state-chartered credit unions; * ICUL staff Steve Olson, executive vice president, general counsel and chief operating officer, and Keith Sias, director of state governmental affairs, who will brief participants on current issues critical to credit unions; * State Capitol visits, where participants can personally call on their lawmakers at the Capitol; and * A legislative reception at the Governor’s Mansion--a new location for the event. More than 40 lawmakers from both sides of the aisle and other dignitaries will attend.
The Illinois General Assembly is scheduled to adjourn its spring legislative session on May 7.

IParadeI other media address trying a CU MBLs

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MADISON, Wis. (3/24/10)--Several media reports--including Sunday’s Parade magazine--this week focused on consumers trying a credit union, and credit unions’ push to increase member business loans (MBL) and lift their MBL cap. Some national media outlets advised consumers to take a good look at credit unions as an alternative financial institution. Some examples are:
* Sunday’s Parade magazine featured advice for consumers on “modernizing [their] money management.” One of the tips on building savings recommends that consumers look to credit unions to obtain higher interest rates. It points readers to to learn more. To read the article, use the link. * In a Tuesday Walletpop Walletblog post, consumers who are trying to obtain a car loan are told: “This might be a good opportunity to determine whether you qualify for membership in any of your local credit unions, as credit unions typically offer very competitive rates for auto loans.” To read the post, use the link. * A Sunday article from the NBC affiliate in Dallas and Fort Worth, Texas, highlights how consumers are moving to local credit unions and community banks from larger national banks, and how a national grassroots effort called “Move Your Money”--which promotes this move--is gaining popularity. “The benefits of being a member of the credit union is that you don’t have those fears that customers of larger banks typically have,” Dallas CU member Dizette Weathers-Maxfield told To read the article, use the link.
Other media outlets have chronicled how credit unions are attempting to expand their small-business loans by asking Congress to lift their MBL limit. Some examples are:
* The Arizona Capital Times mentioned Monday that because credit unions “have been less affected by recession than other financial institutions,” they are looking for more authority under regulations to make more business loans to their members ( “All they need is an act of Congress,” the article said, adding that “Arizona’s 54 credit unions serve more than 1.5 million members ...” * A letter to the editor by John Hirabayahsi, president/CEO of Community First CU, Jacksonville, Fla., published Sunday in urges an increase in the 12.25% cap on credit unions’ small business lending to 25%. “With a cap increase, credit unions would be able to infuse an additional $10 billion to assist struggling small businesses in the first year alone,” he wrote. Hirabayashi added, “All this will take is support from Congress to raise the credit union member business lending cap.” * A Thursday article on discussed how state of Washington credit unions are ready to issue more commercial loans to small businesses if Congress raises the lending cap. “As of now, Washington credit unions are responsible for 3.4% of business lending, whereas banks control over 96% of lending,” said KNDO. “Here … the demand for credit unions continues to grow, even for small businesses.” To read the article, use the link.

CU System briefs (03/23/2010)

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* YUMA, Ariz. (3/24/10)--An all-staff challenge issued by AEA FCU CEO Ken Bredemeyer last year resulted in AEA employees raising $28,000 for Children's Miracle Network, which raises funds for
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children's hospitals. The latest donation brings the total donated by the credit union to $80,000 since 2008. Bredemeyer noted that the credit union's commitment to help others remains true even during tough economic times. "The credit union industry philosophy of 'People Helping People' is absolutely recession proof," he said. Employees' fundraisers include the traditional bake sales and raffles, plus candy grams, bingo nights, letters from Santa and sports pools. New in 2009 was a weekly Zumba exercise class, hosted by the credit union's Foothills branch, and the most successful fundraiser--for the second consecutive year--was the Roping Roundup hosted by the credit union's financial services staff. The three-day family event attracted 300 attendees and lassoed a record $4,500 for the hospital network (Photos provided by AEA FCU) ... * DOVER, Del. (3/24/10)--Del-One CU has surpassed the $250 million asset mark just shy of its 50th year. The accomplishment was achieved by remaining true to sound fiscal management practices and to its mission of providing "The One Way to a Better Life" for members, said the credit union. Duke Strosser, president/CEO, noted the "significant milestone could not have been accomplished without our members' continued loyal and trust..." The Dover-based credit union was founded as Delaware Highway FCU by a group of Delaware Highway employees who pooled their savings. Today it has seven branches statewide serving more than 30,000 members and more than 200 Delaware businesses ... * PORT HURON, Mich. (3/24/10)--Michele Myrick, executive vice president of E&A CU, died March 17 at the age of 40. She was the daughter of Roger Quitter, recently retired CEO of Christian Financial CU (Michigan Monitor March 22). Myrick joined the staff of the Port Huron, Mich.-based E&A CU in 1999 as vice president of finance and became executive vice president in January 2005. She previously managed the accounting and human resources departments at Financial Health CU--now Option 1 CU--for two years. She was active with the Metro East Chapter and in many Michigan Credit Union League (MCUL) committees and with the Metro East Chapter, said the league. She was vice chairman of the MCUL Political and Governmental Affairs Forum, a PAC trustee. In addition to her father, she is survived by her husband and two sons. Funeral services were Monday ...