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SELCO to appeal dismissal of class action in TJX case

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EUGENE, Ore. (3/27/08)--SELCO Community CU has filed a notice of appeal on a federal court's dismissal of a class action lawsuit in the TJX Cos. data breach case. It also has filed a separate complaint in a state court against TJX and its bank, Fifth Third Bank. SELCO Community and AmeriFirst Bank, based in Alabama, are asking the U.S. Court of Appeals to overturn the U.S. District Court's dismissal of the class action lawsuit, according to Steven L. McIntire, general counsel of the Eugene, Ore.-based credit union. The class action case was dismissed after most of the multiple-party lawsuit settled with TJX Cos. on the costs of replacing the credit and debit cards compromised by the largest data breach in history. Although the notice of appeal has been filed, the actual appeal hasn't been filed yet, McIntire told News Now. The credit union and bank are appealing the court's dismissal of their claims of negligence and breach of contract, as well as the denial of certification as a class action lawsuit, McIntire said. The court also refused the credit union's attempts to amend on conversions and unlawful trade practices. TJX Cos. and Fifth Third have appealed the court's decision to remand the case back to lower court, and that likely will result in a "stay" of other pending cases, which could hold up the credit union's appeal. The credit union has retained a Boston law firm, Whatley, Drake and Kallas to handle the case. A separate lawsuit was filed with the Middlesex County Superior Court in Massachusetts repeating the same claims. "Essentially the state case is mirroring the federal case," McIntire said. SELCO had to replace more than 11,000 Visa and debit cards related to the TJX breach. When the class action case was dismissed in the settlement, "we didn't accept the settlement," McIntire said. "Our position is that we really need to bring national attention to the problem of data breaches and the industry not policing" their data. "Now we're seeing more breaches," he said, citing a Hannaford Bros. grocery chain breach that was disclosed last week. The matter "needs to be addressed through legislation--but that's very difficult--or through lawsuits," he said. In suing, the credit union is thinking "in terms of goals for the overall industry and the big picture, not just the dollars and cents," he added. "We're trying to prevent similar occurrences in the future."

Small biz owner CU is doing it right

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SALT LAKE CITY (3/27/08)--A credit union couldn't ask for a more glowing endorsement from a member on its philosophy of service. The $3.2 billion asset Mountain America CU in Salt Lake City was the topic of a column written by a member with a business loan. The title: "Doin' it right." Jim Ackerman, president of Ascend Marketing Inc., a two-person business run out of his home, recently attended Mountain America's Business Services Department's third open house. The event attracted 100 business members. "I have never run into a financial institution so committed to serving its business clientele in such a comprehensive way," he said. "It is so refreshing to see an organization that thinks customer service the way 'I' think it." Mountain America CU so impressed him he wrote a column in The Enterprise (March 10-16), a weekly business-focused newspaper. In it he tells how he had been "reasonably satisfied" with his bank. An earlier big bank "always made me work hard to do business with them," but the bank he settled with was "pretty decent. They never went out of their way to get to know me or my business, but they didn't actively hamper my efforts either," he wrote. He did most of his banking online, but he didn't like to run to the bank with his deposits. At a networking event, he met Annette Zimmerman, senior vice president for business services at Mountain America, who introduced Ackerman to Dan Summerhays of the credit union's business department. Ackerman mentioned the deposit dilemma and Summerhays said, "No problem. We can come pick those up for you." Ackerman became a business member, and the credit union is still picking up his deposits. Summerhays also asked for a meeting to get a better idea about Ackerman's business, offered a line of credit, and even referred a business to Ackerman. "I don't care how much the banks want to make the case that credit unions have become just like them, you won't convince me," Ackerman wrote. "Banks are all about them and their stockholders, and playing it safe and sound." Credit unions, he wrote, "understand the spirit of interdependence. I've never seen anybody exemplify that like Mountain America Credit Union." He suggested all businesses do as the credit union does: "Pro-actively work for the good of your clients. Take care of them first. When you do, they'll take care of you, and the sky is the limit."

CUs learn mortgage expansion strategies

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DURHAM, N.C. (3/27/08)--"There is simply no other choice: Credit unions have to make more mortgage loans" is the message brought to credit unions attending a recent two-day mortgage lending expansion workshop.
At a workshop on Mortgage Lending Strategies in Uncertain Times are, from left: Martin Eakes, Self-Help CU president/CEO; Brenda Weaver, National Federation of Community Development Credit Unions CDCU Mortgage Center director; Rodney Hood, National Credit Union Administration vice chairman; and Randy Chambers, Self-Help CU chief financial officer and federation vice-chairman. (Photo provided by the National Federation of Community Development Credit Unions)
That message was delivered by Martin Eakes, CEO of Self Help CU, Durham, N.C. at Mortgage Lending Strategies in Uncertain Times, a workshop held in Durham and organized by the National Federation of Community Development Credit Unions. Eakes emphasized the need for credit unions to make mortgage loans by starting with existing members. Credit unions must make more of these loans to survive financially and fulfill the credit union mission, he said. Self-Help CU has provided low-income members more than $5 billion in affordable financing through direct lending and its own affordable loan secondary market. Phil Greer, vice president at Raleigh-based State Employees' CU, agreed with Eakes on how to treat the foreclosure problem. "What's most important is for credit unions to just do the right thing," he said. His credit union's affordable loan program recently won national recognition via the 2008 Herb Wegner Institutional Award. One of SECU's programs provides low-interest loans to teachers relocating to North Carolina; another promotes environmentally sustainable "green" construction. Rodney Hood, vice chairman of the National Credit Union Administration, encouraged attendees to do whatever they could to provide safe, affordable mortgages and emphasized partnerships, such as working with the Federal Home Loan Banks for assistance or groups such as NeighborWorks for housing counseling. Rita L. Haynes, CEO and Gloria McClendon, branch manager and loan officer, both of $10 million asset Faith Community United CU, Cleveland, Ohio, described their foreclosure prevention processes. "Faith Community has been inundated with people coming to us for assistance and working with local organizations allows us to help more," said Haynes. McClendon encouraged credit unions to be creative in pioneering new mortgage products. The credit union's "Wheels Loan," for example, helped members refinance their car payments, which freed up cash for mortgage payments and helped prevent foreclosures. Stephanie Struble of Opportunities CU, Burlington, Vt., spoke of the value of direct contact with members. "At Opportunities, we don't say 'no,' we say 'when,'" she said, adding, "the credit union works with members and the community to help move bad debt into good debt." Bob Dorsa of ACUMA focused on the future of mortgage markets and explaint mortgages are essential to the success of the credit union movement. "Helping people affected by this mortgage crisis may be one of the greatest opportunities for credit unions as a movement," Dorsa said. Brenda Weaver, director of the federation's CDCU Mortgage Center LLC, noted that community development credit unions and all credit unions "are uniquely positioned to help people through the mortgage crisis and the current economic turmoil." The workshop was made possible through assistance from the National Credit Union Foundation and the Center for Responsible Learning.

Hannaford Card issuers responsible for breach costs

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SCARBOROUGH, Maine (3/27/08)--Banks, credit unions and other card issuers likely will bear the multi-million dollar costs of reissuing credit and debit cards compromised by the data breach at Hannaford Bros., said the Maine-based grocery chain. A spokesperson for Hannaford said the supermarket chain fulfilled its responsibility by identifying and fixing the breach, and by notifying its customers, credit card companies, and financial institutions (Associated Press via Fosters.com March 26). Carol Eleazor, vice president of marketing at the company, said the financial institutions and the card companies are the ones who "manage the card usage." Hannaford Bros. works with them but doesn't make any calls or participate in any other way in the decision on how to deal with the compromised card, she told media. According to a Tampa newspaper, two more class action lawsuits were filed in Tampa--bringing the total filed so far to four, including two filed earlier this month in Maine (Tampa Times March 25). The breach also has brought prompted more data protection bills in state legislatures. Town & Country FCU, based in South Portland, Maine, expects to issue about 14,000 new cards at a cost of $10 to $12 per card, which would total at least $140,000. The costs include staff administrative time, mailing notifications to members, and the reissuing the physical card (Fosters.com March 26). The breach, which affected 4.2 million cards in New England, New York and Florida, was discovered Feb. 27 and made public March 17. The breach, which covers transactions at grocery stores from Dec. 7 to March 10, is unusual because it involved hacking encrypted data while it was in transmission after consumers swiped their cards at the stores' readers. Since 2005, more than 223 million consumers have seen their data exposed in unauthorized data breaches, reported the Privacy Rights Clearinghouse. So far about 2,000 actual incidents of fraud have been reported, said Hannaford.

CU System briefs (03/26/2008)

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* JACKSONVILLE, Fla. (3/27/08)--Counterfeit cashier's checks bearing the name of Florida Telco CU are being circulated, says the Federal Deposit Insurance Corp. (FDIC). The counterfeits display the Jacksonville-based credit union's routing number but are otherwise dissimilar to authentic checks. The bogus items are green with dark green borders and rounded corners; authentic checks are light blue with thin double borders and red check numbers. The counterfeits display a security feature statement embedded in the top border and along the bottom border with two padlocks, while authentic checks display the credit union's phone number below its name and address in the top left corner. The counterfeit checks display "Cashier's Check Remitter:" in the lower left corner. They also misplace the statement "Over $20,000 must be countersigned" at below the second of two signature lines in the lower right corner, instead of below the first signature line. Authentic checks also include "Authorized Signature" below the second line … * PORTSMOUTH, N.H. (3/27/08)--New Hampshire Governor John Lynch is scheduled to deliver the keynote address tonight at the 51st Annual Meeting of Service CU, a $1 billion-plus asset credit union based in Portsmouth. Other speakers will include Portsmouth Mayor Thomas Ferrini, New Hampshire Banking Commissioner Peter Hildreth, Defense Credit Union Council President/CEO Ronald Arteaga, and New Hampshire Credit Union League President/CEO Daniel Egan. The credit union began in 1957 on Pease Air Force Base with eight founders each contributing $5. Since then it has expanded to serve civilian communities in the state and military members round the globe, said Gordon Simmons, president/CEO … * HARRISBURG, Pa. (3/27/08)--Louise Lingenfelser, CEO of UGI Employees FCU, Reading, Pa., has been elected to the board of directors of the Pennsylvania Credit Union Association, announced board Chair Diana Roberts (Life is a Highway March 26). Lingenfelser will fill the board seat from District 9 being vacated by Fran Muto, CEO, People First CU, Allentown, who has been a board member since May 2003 … * RANCHO CUCAMONGA, Calif. (3/27/08)--The California and Nevada Credit Union League has named Keri Bailey as director of state government affairs. Bailey joined the leagues in 2005 as state legislative and regulatory lobbyist after a 10-year career working with the California legislature. Prior to joining the league, she was chief of staff for Assemblyman Ed Chavez (D-Industry), a member of the Assembly Banking and Finance Committee. In her new position, she will oversee the state legislative and regulatory affairs for credit unions in both states. She succeeds Ron Fong, who earlier this month was hired as president/CEO of the California Grocers Association … * RANCHO CUCAMONGA, Calif. (3/27/08)--California and Nevada Credit Union Leagues President/CEO Bill Cheney has announced a realignment of league staff. Mark Klinkert, senior vice president of professional development, has added the responsibilities of chief operating officer. Lucy Ito has been named senior vice president of credit union growth and development. Sylvia Fath is now senior vice president of business services; Bob Arnould, senior vice president of governmental affairs, now oversees the Public Affairs Department as well as the league's governmental affairs team; Cindy Cavanaugh is vice president of accounting and finance; John Drago is vice president of information technology; Henry Kertman is vice president of public affairs; Carol Payne is vice president of communications and marketing; and Tracy Miller Olszowy is director of membership development …

California Assembly committee OKs new data protection bill

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SACRAMENTO, Calif. (3/27/08)--The California legislature moved a step closer Tuesday to adopting a landmark data security measure when the Assembly Judiciary Committee approved California Credit Union League-sponsored legislation. The unanimous, bipartisan support for Assembly Bill (AB) 1779 was introduced by Sacramento Assemblyman Dave Jones. It is the first step in renewed efforts to force California retailers and government agencies to protect consumers’ sensitive financial data, and to take responsibility for any unauthorized access of that information, said the league. The bill represents a framework for discussions that began in 2007 when the league and Jones joined forces to send AB 779 to the governor’s desk. “We got real close with AB 779 last year and it’s great to see the new data-security bill is off to a good start with a unanimous vote by the Judiciary Committee,” said league President/CEO Bill Cheney. “This is a vital measure for California consumers and the credit unions that serve them. “Data thefts are on the rise in the retail sector, and consumers increasingly find that information stolen at the retail level is used to commit identity theft and plastic card fraud. We must act quickly to close the loopholes in existing law that has allowed retailers to have a pass on this issue for far too long,” Cheney said. The legislation now moves to the Assembly Appropriations Committee, where it is slated for consideration before the fiscal deadline of Aug. 31.

N. Hampshire CUs double outreach lending goals

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MANCHESTER, N.H. (3/27/08)--New Hampshire’s five-year Credit Union Community Outreach Initiative, designed to help underserved low- and moderate-income New Hampshire families, doubled the amount committed in its original lending goals. When the initiative was announced in October 2003, credit unions statewide--through the New Hampshire Credit Union League’s Community Outreach Committee--pledged to lend $35 million through programs designed to offer fair and reasonable loan alternatives, which centered on consumer education and affordable rates and fees. The program’s success resulted in New Hampshire credit unions lending $70 million--twice the amount committed--in four years rather than five. “When we first developed the Credit Union Community Outreach program in 2003, we held lengthy discussions concerning our ability to achieve a goal of this size,” said Peter Kavalauskas, president of Portsmouth, N.H.-based Northeast CU and chairman of the committee. “We went ahead anyway because we saw the need for consumer friendly financial products that focused squarely on the need of lower- and moderate-income people,” he continued. The committee credits the program’s success to ongoing brainstorming and product refinement. “We found that even the best ideas might not be applicable in every area of the state. Programs that were successful in helping people finance the purchase of multi-family, owner-occupied homes were effective in cities, but other solutions were needed in less densely populated areas of the state,” said Rob Kimmett, league senior vice president of public relations and marketing. The initiative had four main components. Home loans accounted for 85% of the total dollars. The two largest mortgage lending initiatives were the Homeownership Loan Program and the Home Loan Payment Relief (HLPR) Program. The Homeownership Loan Program concentrates on helping low-income individuals purchase a multi-family home after financial education efforts and classes in being a landlord. The loan offers attractive market rates and flexible qualification standards. Family emergency loans were another component of the program. These are small personal loans made to families or individuals for amounts up to $1,000 for 12 months or less. Ordinary credit standards are relaxed, because the borrowers using these loans would not typically qualify for a personal loan.

Are you prepared for the next disaster

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MADISON, Wis. (3/27/08)--Disaster protection is important to credit unions because nobody’s immune from crises--there is always a potential threat that can impact your business. That was the key message from a “Disaster Preparedness--Prepare for the Unexpected” webinar broadcast Wednesday by CUNA Mutual Group. Glenn Engel, CUNA Mutual certified business continuity planner, and Mike Retelle, CUNA Mutual disaster team leader and credit union protection claims manager, presented an overview of disaster preparedness for credit unions during the hour-long webinar. “The impact of a disaster on your business depends on how well prepared you are,” Engle said. “The threats to businesses include acts of nature, man-made acts and infrastructure or technology.” There are more potential risks today for businesses, such as disasters, terrorism, acts of war, human error and outsourced service providers, he added. Over the years, the evolution of the industry has gone from disaster recovery planning to business continuity management--otherwise known as continuity of operations, Engel explained. Business continuity is made up of three components: prevention plans (before the crisis), emergency response plans (during the crisis) and business resumption plans (following the crisis). “The more recovery time, the more the recovery costs become,” Engel said. “The optimum solution for credit unions involves weighing the costs to be prepared versus the recovery costs.” The business continuity program drivers are risk analysis--determining and quantifying risk--and business impact analysis, which involves prioritizing business functions and determining the impact of a loss of a business function. “It is crucial to make sure that disaster recovery plans are easy to understand, specific, and have step-by step procedures,” Engel explained. “The plans must also be available. Can anyone recover and use them? You need to have them available off-site so they don’t get lost in a disaster.” It also is important for credit unions to develop a “how to recover” script, Engle said. This involves breaking processes into procedural steps, deciding what will be done differently during the recovery process, and then documenting it. To make sure the plan works, response team members need to maintain off-site inventory, perform periodic plan review and maintenance, conduct ongoing training, and have regular exercises or tests of the plan, Engle added. “A successful business continuity management program involves a strategy, an up-to-date plan, trained personnel, and testing,” he concluded. An untested plan is no plan at all, Retelle told participants. “Disaster planning for credit unions is similar to what you do for your home. You have to have a plan and then practice the plan. Credit unions need to involve management staff and regular staff. The recovery plan needs buy-in from all the people involved.” Credit unions must determine what is important, such as: lending, dealing with the membership, getting ATMs up and running, and so forth, Retelle said. The key information that CUNA Mutual needs from a credit union when a disaster strikes is:
* The nature of the loss/event; * Any special immediate credit union needs; * The identity of the main credit union contact person; and * The best way to reach the credit union’s main contact person.
CUNA Mutual Group’s Disaster Team can be reached 24/7/365 at 800-637-2676.

NASCUS to hold summit in Seattle

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ARLINGTON, Va. (3/27/08)--The National Association of State Credit Union Supervisors (NASCUS) has announced the agenda for its annual NASCUS State System Summit Aug. 21-23 in Seattle. Joining the speaker lineup will be Idaho state regulator Gavin Gee and Bryan Sims, founder/CEO of brass/MEDIA Inc., Corvallis, Ore. Gee, director of the Idaho Department of Finance, will speak about the "State Regulatory Mortgage Project: A Step Toward a Solution to the Mortgage Crisis." State mortgage regulators have worked since 2004 to develop a nationwide licensing system for the residential mortgage industry. Gee will provide an update on the Nationwide Mortgage Licensing System (NMLS), a Web-based system. "Generation Y…and Why Your Credit Union Can't Afford to Miss Them" will be addressed by Sims. The session will discuss the ins and outs of how credit unions can reach young adult members by understanding the way they think. For the full agenda, visit the resource link.

Wegner Awards nominations open through June 17

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MADISON, Wis. (3/27/08)--All individuals and organizations within the credit union system can make nominations for the credit union movement’s highest national honors: the 21st Annual Herb Wegner Memorial Awards presented by the National Credit Union Foundation (NCUF). “The foundation is calling for Wegner Awards nominations two months earlier than in previous years,” noted NCUF Executive Director Steve Delfin. “We anticipate attendance at the Wegner Awards Dinner will again reach the Grand Hyatt’s seating capacity--so we plan to announce the award recipients two months earlier as well. Our plan is to begin taking reservations for the 2009 dinner as early as September 2008.” Nominations are due by June 17 for:
* The Individual Achievement Award, honoring an unsung hero for innovative concepts and/or accomplishments that have made a significant impact on the national and/or international credit union movements within the past 10 years--or now have a significant potential impact. Nominations must cite a specific subject of achievement. Examples include financial literacy, service to the unserved or underserved, alternatives to predatory lending, and/or new products. * The Outstanding Organization/Outstanding Program Award, honoring an organization or business for innovative concepts and/or products/services that have made a significant impact with measured results on the national and/or international credit union movements. * The Lifetime Achievement Award, honoring an individual who has dedicated his/her life to promoting credit union philosophy. This person must have created innovative concepts and provided leadership that has made a significant and lasting impact on the national and/or international credit union movements.
There are four steps to make a nomination:
* Use the Resource link to print out the Wegner Awards brochure and nomination form; * Fill out the nomination form; * Gather at least five letters of recommendation citing examples of the nominee’s achievements relevant to the award criteria, and * Mail the nomination form and recommendation letters to NCUF by June 17.
Awards will be presented at the 21st Annual Herb Wegner Memorial Awards Dinner on Feb. 23. The dinner will take place at the Grand Hyatt Washington in conjunction with the Credit Union National Association’s 2009 Governmental Affairs Conference in Washington, D.C.