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Michigan Pa. CUs urge support of raising MBL

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MADISON, Wis. (3/30/12)--Credit unions in Michigan urged their congressional delegates "to take quick action in support of a proposal that will strengthen small businesses, jumpstart local economies and create jobs."  Likewise, Pennsylvania credit unions are asking their lawmakers to support the Credit Union Small Business Jobs Bill, S. 2231, when it comes up for a vote soon.

Senate Majority Leader Harry Reid (D-Nev.) has indicated he will hold a vote on Sen. Mark Udall's (D-Colo.) credit union member business lending bill S. 509. The legislation, now S. 2231, is on a fast track, with a vote expected soon. The bill would increase credit unions' member business lending cap to 27.5% of assets from the current 12.25%.

"We all can agree that credit unions need a win, and fortunately that time is now," said Pennsylvania Credit Union Association (PCUA) President/CEO Jim McCormack. "This will be the first time a stand-alone credit union bill will be considered on the floor since 1998, when the Senate voted on H.R. 1151 (the Credit Union Membership Access Act).  The credit union full court press on District and Washington Senate Offices must start now," he said in PCUA's newsletter (Life is a Highway March 29).

Michigan's credit unions say that small business needs the law. "Small businesses in Michigan and across America are the engines of employment and economic growth--and these small businesses need relief from a credit crunch that is holding them back," said David Adams,  president/CEO of the Michigan Credit Union League (MCUL) & Affiliates.

"Michigan's credit unions have consistently stepped up to support small businesses at a time when other lenders have stepped back. Credit unions can and want to do more to help get Michigan and America working and competing again, and that's why it's critical that the U.S. Senate pass" the bill, he added.

"One of the best ways to help small businesses get access to capital so they compete and create jobs is to unleash credit unions' full potential to support small businesses. That requires removing an arbitrary, irrational and counter-productive limit on small business lending," Adams said in a press release. "Credit unions want to play a greater role in strengthening the economy of Main Streets across Michigan and America," he said, noting that the bill is "vital to making that happen."

Michigan has an estimated 180,000 small businesses, 158,000 of which employ fewer than 20 people, according to the Small Business Administration. Small businesses represent 98.3% of Michigan employers and are responsible for 51.6% of private sector jobs in the state.  "In Michigan, 90% of businesses fail by their 10th year, largely because they lack guidance; 80% fail because they don't have access to capital," said MCUL.

The league said that data show increased small business support from Michigan's credit unions comes as bank lending has remained sluggish since the 2008 recession. Federal Deposit Insurance Corp. data indicate that U.S. banks' small business lending continued to decline in fourth quarter of 2011, and that year-over-year bank small business loans outstanding declined by nearly 5% in 2011, said the Michigan league.

If approved, the bill, which is opposed by banks, would inject $13 billion in new small business loans into the economy and help create as much as 140,000 new jobs without cost to the taxpayers, said the Credit Union National Association (CUNA).  CUNA and more than 4,000 attendees of its Governmental Affairs Conference last week visited legislators on Capitol Hill to urge passage of the bill.

Equifax Sub-prime borrowers grew across lending sectors

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ATLANTA (3/30/12)--Lending to sub-prime borrowers rose across all lending sectors during 2011, says Equifax's March National Consumer Credit Trends Report and CreditForecast.com, a joint product of  Equifax and Moody's Analytics.

New credit in 2011 totaled $782 billion--below pre-recession levels but gaining more than 10% over 2009 and 2010 levels, which were $695 billion and $709 billion, respectively.

Total retail credit card limits rose 6% from December 2010 to December 2011. Total bank credit card limits jumped 24% during that period, while consumer finance credit limits increased a modest $1.2 billion.

U.S. consumer debt totaled $11 trillion, down 11% from the $12.4 trillion peak in fourth quarter 2008. Equifax said the drop is driven by an almost 12% decline in home financing balances, which totaled  $8.7 trillion this past February, compared with $9.8 trillion in 2008.

Non-mortgage and non-student consumer debt balances dropped 22% from 2008's peak of $2.05 trillion.  After reaching a post-recession low of $1.6 trillion last May, consumer debt balances have risen about 2%, said the report.

"Year-over-year results show borrowers are taking advantage of the new opportunities and seeking to diversity their financial activity, which is building momentum toward economic improvement," said Equifax chief economist Amy Crews Cutts.

Here are the findings in several key areas.

Bank credit cards:

  • Lending to sub-prime consumers increased 41% from 2010 to 2011 as sub-prime borrowing hit a four-year high last December, with 1.1 million new bank credit cards issued.
  • New sub-prime card limits grew 55% for the period to $12.5 billion, the highest level since $27.4 billion in 2008.
  • Bank credit card growth continued, with 39.9 million bank cards opened in 2011--an 18% increase from 2010 and the highest total since 2008. However, the total is still below pre-recession levels.
  • The increase in total bank card originations was accompanied by a 31% hike in total credit limits. 2011 was the first time in more than four years that credit lines increased, reaching $163 billion.
Auto finance:

  • Subprime borrowers gained share in the new-auto loan market, especially in the auto finance segment where they now make up more than 46% of the market.  Prime borrowers make up 83% among auto bank originations but also lost share the past two years to subprime borrowers.
  • New-auto finance loans amounts rose $11.6 billion--to $176.2 billion--in 2011 from $164.6 billion in 2010. 2011 hit the highest originations level since the $221.1 billion loaned in 2007.
  • Auto bank loan amounts were up 14%--to $187 billion in 2011--from $162.1 billion in 2010.
  • The number of new auto loan originations increased 2% to $19.6 million from 2010's $17.3 million.  Equifax noted that the 2011 figure surpasses 2008 totals and is 9% lower than the six-year high reached in 2007 at $21.5 million.
  • Severe delinquency rates for auto finance loans were worse than for auto bank tradelines; however, both rates have returned to pre-recession levels.
  • For 2011, total new-auto loan originations hit a six-year high in December, although total originations for the year were at a four-year peak.
Consumer finance:

  • New consumer finance loans originated in 2011 totaled $20.2 million, up 4% from 2010, and the highest since 2008.
  • Delinquency rates dropped to 7% in February 2012, the lowest since July 2007.
  • These loans' originations fell from 2007 to 2010, but the trend reversed in 2011, with $1.2 billion of new loan amounts added.
  • Originations in December reached $5 billion; the highest since December 2008 when it was $5.1 billion.
  • Although consumer finance loans typically served high-risk consumers, in February 2011, low-risk borrowers became the dominate market segment. As of February 2012, over 33% of these loans (by dollars) were to high-risk borrowers; 39% went to low-risk borrowers.
Student loans:

  • New student loan originations are dominated by higher-risk (little income, young credit histories) borrowers . However, the share shifted slightly the past two years to low-risk student borrowers.
  • As of December 2011, nearly 66% of newly originated student loans were held by higher -risk borrowers.
  • Among total outstanding student loan balances, low-risk borrowers have declined in share, although they still dominate. As of February 2012, low-risk borrowers accounted for 37% of outstanding student loan balances; high-risk student borrowers accounted for nearly 35%.
  • Average loan size for new student loans declined in December 2011 from December 2010, but total new student loan debt per consumer rose to a five-year high. In December 2011, the average loan size decreased 8% to $6,333 from December 2010. Total student loan debt per consumer for that period increased 3% to $9,558.
The report also addressed retail credit card balances, which increased markedly among low-risk borrowers, who hold just below 42% of these balances. High-risk borrowers make up 26%.  During the period,  retail card originations to sub-prime borrowers rose  4.7 percentage points to 31% of originations.  Retail card limits grew nearly 6% in 2011, totaling $60 billion for newly originated cards.  Retail card tradelines grew 4% over December 2010, adding 4.2 million new accounts. Delinquency rates and write-offs continued to decline, said the report.

S. Carolina chapters seeking first Palmetto Protand233gand233

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COLUMBIA, S.C. (3/30/12)--Four South Carolina regional credit union chapters have selected candidates for the inaugural South Carolina Credit Union League  (SCCUL) Palmetto Protégé Competition, which recognizes young professionals and the opportunities credit unions provide them.

These finalists will compete for the Palmetto Protégé position on April 20 during the 2012 SCCUL Annual Meeting in Myrtle Beach: 

  • Patricia Bivens, CPM FCU, North Charleston, representing the Charleston Area Chapter;
  • James "Jay" Montgomery, SAFE FCU, Sumter,  Columbia Chapter;
  • Ernest "Dizzy" Felkel, SPC CU, Hartsville, Pee Dee Chapter; and
  • Katie Matthews, Secured Advantage FCU, Simpsonville, Piedmont Chapter.
The Palmetto Protégé will serve as statewide leader of the league's Young Professional Initiative (YPI) and peer advocate for credit unions. Responsibilities coordinated by the league include:

  • Presentations at five chapters on the protégé's background, experience, YPI, and the Palmetto Protégé program;
  • Participation in the league's Leadership Conference as a secondary presenter and YPI advocate;
  • Facilitator of YPI Roundtables through the remainder of the year; and
  • Regular contributions via social media including the league's Facebook page.
The winner will get first choice of three development scholarships, with the remainder available to other state finalists. Scholarships are available for Southeast CUNA Management School, National Youth Involvement Board Annual Conference, and South Carolina Hike the Hill in Washington, D.C.

iNPRi covers CUs rescue of bankless community

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ALBURGH, Vt. (3/30/12)--The story of a Vermont credit union that saved a small town from losing its financial services provider has drawn media coverage from National Public Radio (NPR).

The article, published online, describes how NorthCountry FCU in South Burlington, Vt., stepped in to provide financial services to residents of the small town of Alburgh, Vt., after People's United Bank announced it was closing its branch in the town. The closure left the community with no financial services.

Community residents formed a Find a Bank Committee to recruit a financial institution to come to town.

NorthCountry FCU, based in South Burlington, Vt., "answered the call," the NPR article says.

When she learned people's bank was closing its Alburgh branch, Irene Clarke, one of the Find a Bank Committee's co-founders, realized the community's businesses would suffer without access to financial services.

Find A Bank committee co-founder Terry Tatro said NorthCountry's presence will help keep the town alive.

"If people have to go out of town to do their banking, they're going to do other services out of town also," Tatro told NPR. "Sooner or later, all you're going to have left is a bedroom community. We're close to that now, and we want to go the other way."

Having a local relationship with a financial institution matters to small businesses, according to a study by the National Federation of Independent Businesses, the article said.

Credit unions are trying to get their member business lending (MBL) cap raised so they can provide local businesses loans. Increasing the MBL cap to 27.5% of assets from 12.25% of assets would inject $13 billion in new funds into the economy, creating as many as 140,000 new jobs in the first year after enactment, estimates CUNA.

CU in Hawaii notifies members of data breach

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KAILUA-KONA, Hawaii (3/30/12)--Hawaii Community FCU in Kailua-Kona, Hawaii, notified its members of a data breach, impacting several hundred of its 40,000 members.  

Employees of the $350 million asset credit union improperly accessed personal information of some members--including their names, addresses and last four digits of their Social Security numbers--in April 2011, said James Takamine, president/CEO (Associated Press and American City Business Journals March 28).  

At this time there doesn't seem to be any risk of identity theft, Takamine said. The data breach affected less than 500 of the credit union's members, he added.

The breach happened nearly a year ago. The credit union delayed notification during an investigation by an independent attorney. Some employees involved in the incident were fired. Current employees must go through training that prohibits them from accessing members' private information, AP said.

Also, employees will be able to anonymously report suspicious activity of co-workers by using a new website, AP said.

ICA launches new co-op global ranking system

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MADISON, Wis. (3/30/12)--A new global ranking system for cooperatives, called the International Cooperative Alliance (ICA) World Cooperative Monitor, is being launched by ICA.

In 2012, ICA wants to re-launch the Global 300 report with better methodology to ensure greater accuracy and inclusiveness in its reporting, said Charles Gould, ICA director-general (2012intlsummit.coop March 28).

To accomplish that goal, ICA will partner with the European Research Institute on Cooperative and Social Enterprises to deliver more complete data. ICA first started ranking the top 300 cooperatives worldwide in 2005.      

All cooperatives are being asked to fill out an application form to participate in the World Cooperative Monitor, Gould said. For more information, use the link to visit the project website.

Roughly one billion people in 96 countries belong to cooperatives, with credit unions constituting the second-largest segment. The cooperative banking/credit union segment constitutes 26% of cooperatives in the world, according to a recent WorldWatch Institute report.

Cooperatives around the world partnered in January to launch the 2012 International Year of Cooperatives (IYC). ICA is one of three hosts of the 2012 International Summit of Cooperatives, Oct. 8-11 in Quebec City, Canada.

Designated by the United Nations, IYC highlights the contributions cooperatives have made to help reduce poverty, create jobs and promote socio-economic development worldwide.

ICBS NewsI CUs helping shrink student debt

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NEW YORK (3/30/12)--Credit unions have moved into the student loan market, offering borrowers a way to consolidate their private loan debt at lower rates, according to a Thursday CBSNews.com article.   

While consumers have been able to consolidate federal college debt in the past, that has not be been the case with private college debt. That's because private lenders did not have a reason to offer loan consolidation at lower rates, when they could keep customers paying off loans at higher ones, CBS News said.

Because the average age of credit union members is 50, credit unions have ample incentive to attract younger members, Ken O'Connor, director of student advocacy at cu.StudentLoans.org, told the publication. The cuStudentLoans.org site is powered by Fynanz, a strategic alliance provider of CUNA Strategic Services.

Private consolidation loans for college at variable rates of 4.75%, 5.75% and 7.25% are being offered by credit unions, said the article.

Student loan debt was one of the top topics at the Senate appropriations subcommittee on financial services and general government hearing Wednesday (News Now March 28).

The hearing was the second in about a week to highlight student lending. Sen. Richard Durbin (D-Ill.), who heads the subcommittee, last spring introduced legislation that would treat privately issued student loans the same as other privately issued debt in bankruptcy proceedings in a bill, known as the Fairness for Struggling Students Act (S. 1102).

Also, combined national student loan debt hit the trillion dollar mark several months ago, and students borrowed $117 billion in federal student loans in 2011, Rohit Chopra, Consumer Financial Protection Bureau (CFPB) student loan ombudsman, noted earlier this month.

CFPB has asked credit unions and others in the student lending industry to provide information on the role of schools in the private student loan marketplace, and other issues for a study to be released this summer.

To read the CBS News article, use the link.

Data Pennsylvanians increase use of CUs

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HARRISBURG (3/30/12)--Pennsylvanians increased their use of credit unions last year. In 2011, Pennsylvania's 526 credit unions grew in assets, loans, savings and members, according the Pennsylvania Credit Union Association (PCUA).

Assets grew by 6% to $36 billion. Membership increased by 2% to 3.7 million.

The increased growth is due in part to a greater awareness of credit unions brought on by consumer angst against increasing fees at commercial banks and other financial service providers, PCUA said.

Fourth quarter data collected by the National Credit Union Administration (NCUA), demonstrates that Pennsylvania credit unions grew from the prior in several areas, said PCUA. They grew:

  • 6% in assets;
  • 2% in loans;
  • 6% in savings; and
  • 2% in membership.
The national credit union statistics are just slightly below the Pennsylvania numbers, said PCUA. Nationally, credit unions grew by 5% in assets, 1% in loans, 5% in savings, and 2% in membership.

Roughly 7,234 U.S. credit unions serve 93 million members nationwide.

"Consumers continue to discover that credit unions offer lower fees and better service than other financial institutions. The continued fallout from Wall Street has led many consumers to seek out financial institutions operating within their communities," said PCUA President/CEO Jim McCormack. "With more than 500 credit unions operating in the commonwealth, there is truly a credit union for every Pennsylvanian."

April is National Financial Literacy Month

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MADISON, Wis. (3/30/12)--April is National Financial Literacy Month, providing credit unions with an opportunity to help their members understand that financial education is the first step toward financial independence.

The Credit Union National Association (CUNA) will sponsor its annual National Youth Saving Challenge during April. It is held in conjunction with National Credit Union Youth Week, also sponsored by CUNA. This year National Credit Union Youth Week will be held April 22-28, with the theme "Be a Credit Union Super Saver."

Last year nearly 146,000 young members deposited $28.5 million into their saving accounts during National Youth Savings Week---with 9,058 of these new accounts.

For National Credit Union Youth Week promotional materials, including free art work, use the link.

Among the ways credit unions and credit union-related organizations are encouraging their members to budget, save, manage credit, and pay down debt during April, include:

  • The National Credit Union Foundation (NCUF) and the Texas Credit Union Foundation (TCUF) have developed "Credit Unions Support Financial Education: Leading the Way to Financial Freedom," a program to raise awareness of credit unions' financial education activities and the importance of financial education. The program is being piloted in California, Illinois, Louisiana, Nevada, New York, North Carolina, South Carolina and Texas by state 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 to holding a "Financially Fit Day" event April 4, to include fundraising among staff and members.
  • CUNA Mutual Group will sponsor TCUF's April 4 "Financially Fit Day" event. TCUF will sponsor a dunking booth as its "Financially Fit Day" event.
  • The California Financial Literacy Month blog featured a financial literacy program every day in March to help state credit unions gear up for April.
  • TCUF is hosting its "Make the Difference," campaign to promote, celebrate and encourage financial education efforts among credit unions and their communities throughout Texas. The foundation will use the month-long event as the springboard to encourage all credit unions to begin or expand their efforts to provide financial and consumer education to their members, local schools, and communities. "Make The Difference" grants of up to $500 are available to spur these activities. These programs include credit union-based programs or local partnerships with groups such as Junior Achievement, Boys & Girls Clubs, YMCAs/YWCAs, churches and schools.
  • The Michigan Credit Union League will pair credit unions with state lawmakers for youth financial education events during
    Every month is financial literacy month at Liberty Savings FCU, which holds financial education seminars throughout the year. Karen Velasquez, marketing and business development officer, recently gave a lesson on credit to the business math class at the Kenmare Alternate High School for Women. Velasquez (center) is shown with the group of students and their teacher (far right). (Photo provided by the New Jersey Credit Union League)
    its ninth annual Financial Literacy Legislative Challenge (Michigan Monitor March 5). Lawmakers will join with credit unions to host financial education events at schools, credit unions, or within their local communities. The challenge builds relationships between Michigan legislators and their constituents while providing students with financial skills.
  • State CU, Columbia, S.C., is supporting Financial Literacy Month with a free webinar designed to help teachers, parents and grandparents raise financially savvy children. The webinar provides a road map for teaching fundamental financial skills that can be used throughout life. "Teaching Children about Money: Raise a Financially Savvy Child" will be offered four times in April.
  • Liberty Savings FCU, Jersey City, N.J., celebrates financial literacy throughout the year, said the New Jersey Credit Union League. It holds free seminars on personal finance for local schools and organizations (The Daily Exchange March 23). Karen Velasquez, Liberty Savings FCU marketing and business development officer, recently gave a lesson on credit to the business math class at the Kenmare Alternate High School for Women.

IWSJI Public funds used to battle banks CUs benefit

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NEW YORK (3/30/12)--Credit unions are a key beneficiary in the movements to use local government funds as "a battering ram against big banks," said The Wall Street Journal Online in an article Thursday.

The article, written by David Weidner and entitled, "It Takes a Village to Battle a Bank," outlines numerous community anti-big- bank efforts that have gained momentum since the start of the year among cities moving their money out of big banks for one reason or another.

It cites movements in Brockton, Mass.; Los Angeles; Kansas City, Mo.; and New York  City that have resulted in resolutions, ordinances, and legislation; and it notes similar actions are underway in Austin, Texas; Boston; Chicago; Minneapolis; San Francisco;  San Jose, Calif.; and Portland, Ore.

Some "dump your bank" actions have worked, said the Journal. It referred to estimates from the Move Your Money movement  that roughly $59 million was moved from four big banks since mid-2011. Bank of America's deposit base 5% rose in 2011, but the bank experienced a $5 billion decline during fourth quarter at the height of the Occupy protests, it said.

"The biggest beneficiaries might be federally insured credit unions," said the article. "Credit unions added 1.3 million new member accounts and $41 billion in new deposits in 2011, according to the National Credit Union Administration," it added.

"The gains may not be entirely attributable to protesting customers, but it surprised the credit-union industry, which was expecting little if any such growth in 201. Whether account holders have continued to move away from big banks will become clearer next month when first-quarter earnings and deposit data are released," the article said.

The article also said the events mean that "big banks will take the little guys a little more seriously." For the complete article, use the link.