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Eight cities encourage low-incomers to use FIs

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WASHINGTON (4/16/09)--Eight cities are encouraging low-income consumers to use financial institutions through a Bank on Cities campaign that will include credit unions and banks. The campaign, sponsored by the National League of Cities (NLC) in Washington, D.C., aims to help the 28 million unbanked and 44 million underbanked Americans--who lose $11 billion annually to payday loans (Nation Cities Weekly April 13). NLC’s Institute for Youth, Education, and Families (YEF Institute) selected the cities to participate in a second phase of the campaign, which provides technical assistance for municipal leaders so they can connect low- and moderate-income families with mainstream financial services. The cities are:
* Bryan, Texas; * Denver; * Gaithersburg, Md.; * Indianapolis; * Louisville, Ky.; * Newark, N.J.; * Rapid City, S.D.; and * St. Petersburg, Fla.
Teams from each city will receive assistance from YEF Institute staff and will participate in monthly conference calls, Web seminars and cross-city meetings. Many Americans do not have a credit union or bank account, according to Clifford M. Johnson, YEF Institute executive director. “Because a city’s economic health depends on the financial security of its residents, cities have a lot to gain by partnering with banks and credit unions to expand financial opportunities for families, especially in these uncertain economic times,” he said. John Fischer, assistant director of economic development for the city of Louisville, was recently appointed to oversee the campaign. Fischer said he would like to have all Louisville credit unions and banks involved (The Courier-Journal April 14). The campaign was inspired by a 2006 Bank on San Francisco initiative, which allowed financial institutions in the city to promote low-cost financial products. The program has helped residents open 16,000 accounts at financial institutions. In 2008, the first phase of Bank on Cities assisted 10 cities in developing initiatives to expand access to free and low-cost bank accounts and financial education.

Report 90 breaches compromised 285 million records

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BASKING RIDGE, N.J. (4/16/09)--Financial institutions and other corporations fell victim during 2008 to some of the largest cybercrimes ever, with 285 million compromised records stemming from 90 confirmed data breaches, according to a new study released Wednesday by Verizon Business. More electronic records were breached in 2008 than the previous four years combined. The financial services sector accounted for 93% of all compromised records and 30% of the breaches analyzed, said the "2009 Verizon Business Data Breach Investigations Report." More than 90% of the compromised records saw a strong involvement of organized crime. Most (74%) data breaches were caused by external sources, while 32% were linked to business partners, the study said. Contrary to widely held beliefs that most fraud is from inside, the study found that only 20% of the breaches last year were attributed to insiders. Most breaches resulted from a combination of events rather than a single action, said the study's executive summary. Of the breaches, 64% were by hackers who used a combination of methods. In most successful breaches, the attacker exploited a mistake committed by the victim, hacked into the network and installed malware to collect data from the victim's system. In 68% of the cases, the breach was discovered by third parties. During the past five years, few victims discovered their own breaches, said Verizon. Nearly all records compromised in 2008 were from online assets. Despite concern about desktops, mobile devices and portable media, 99% of all breached records were attributed to compromised servers and applications. In last year's cases, about 20% involved more than one breach. Multiple distinct entities or locations were individually compromised as the result of a single case. Half consisted of interrelated incidents often caused by the same individuals. A staggering 81% of the victims were not compliant with the Payment Card Industry Data Security Standard (PCI-DSS), the study found. What's more, 83% of the attacks were not highly difficult, and 87% were considered avoidable through simple or intermediate controls. In 2008, Verizon said attacks targeting personal identification numbers (PINs) exploded. The big money for cybercriminals is in stealing PIN information with associated credit and debit card accounts. "This report should serve as another wake-up call that good security and a proactive approach are paramount to running a business in this day and age--particularly since the economic crisis is likely to trigger a further increase in criminal activity," said Dr. Peter Tippett, vice president of research and intelligence at Verizon Business Security Solutions. "The financial services firms were singled out and fell victim to some very determined, very sophisticated and, unfortunately, very successful attacks in 2008," he noted. "This report shows it's not about clever or complex security protection measures. It really boils down to ensuring the basics are met from planning to implementation to monitoring the data," Tippett added. Verizon offered several recommendations for businesses:
* Change default credentials often; * Avoid shared credentials; * Review user accounts; * Employ application testing and code review; * Patch comprehensively; * Assure human resources uses effective termination procedures; * Enable application logs and monitor; * Define what's "suspicious" and "anomalous."

Putting members first CU gives branch to another CU

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THREE RIVERS, Calif. (4/16/09)--CEO Paula Estep and the board of directors at Valley Oak CU in Three Rivers, Calif., turned over one of the credit union’s branches to another credit union to ensure its members would continue to be served--and served by the same staff they have come to know. Valley Oak CU’s Madera County branch presented an economic and geographic hurdle for the credit union--it was 65 miles away from the next closest branch. But rather than close the branch, let the staff go, and watch members trickle off to competitors in the area, Estep contacted Hank Barrett, CEO of Modesto, Calif.-based Valley First CU. She asked if his credit union would consider assuming the branch, its employees, and Valley Oak’s Madera-based members. “I have been through a branch closure before, where we just had to pull out of the geographical area,” Estep said. “It was so unpleasant for the membership and the employees. If we were just to pull out, our members would move to a bank. We wanted to keep the credit union industry alive and going. I didn’t even consider [handing over our branch and our members to be] that big of a deal. It just felt like the right thing to do.” Barrett said he was blown away by the request. “To turn over your membership to someone else is truly a testament that you are looking out for your members’ well being,” he said. “I have to take my hat off to Paula for being such a true credit union professional.” Barrett’s board agreed to take over the branch, and a joint letter from the $60.2 million- asset Valley Oak and $296.7 million-asset Valley First was sent to Madera-based members announcing the switch. Estep said members were pleased to find they would still see the same employees they knew. On April 1, Valley First officially moved into the Madera branch. It is now a shared branch through the end of April to allow members to open new Valley First accounts before the branch becomes a part of Valley First. Estep encourages other credit unions to make a similar choice if they can. “Instead of just having those members bleed off and go to competitors in the area, why not keep it in the credit union industry? It’s a win–win for everybody,” she concluded.

ILA TimesI pulls ads for bogus First Star CU

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LOS ANGELES (4/16/09)--The Los Angeles Times has pulled ads for a fake credit union after readers called the newspaper and said they could not access the credit union’s website. Readers also found negative comments about First Star CU online (Los Angeles Times April 15). The address given in the advertisement is the address of a shopping mall, the newspaper said. The Times pulled the ad from its Monday and Tuesday editions. The advertising department “verified that the website was not working and the phone was not working,” newspaper spokesman John Conroy said. Other newspapers also have pulled the advertisement, the Times said. The National Credit Union Administration (NCUA) Wednesday issued an alert about First Star CU and an advance fee loan scam. NCUA encouraged anyone who has been victimized by the loan scam to contact the agency. Friday News Now reported that the Michigan Office of Financial and Insurance Regulation (OFIR) issued a cease-and-desist order against a fake credit union, “First Star CU,” claiming to be a Pennsylvania-based credit union. OFIR said the institution is a fraudulent financial institution. News Now reported this week that the Pennsylvania Department of Banking issued a consumer scam alert about First Star CU. The department warned about an advance fee loan scam after two consumers who applied to First Star and First Star Lending Services for loans were asked to pay several hundred dollars in upfront fees (Life is a Highway April 10). “First Star Lending Services” and “First Star Credit Union,” claim to be located at 1800 Loucks Rd., Suite 850, York, Pa. However, no such address exists there. First Star Lending Services claims to offer first and second mortgages, consumer loans and other financial products, but it is not licensed by the Pennsylvania Department of Banking. There is no First Star CU chartered by state or federal regulators, the department said.

Greylock fights fraud with education technology

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PITTSFIELD, Mass. (4/16/09)--While news of the huge number of records compromised last year by data breaches hits the public, Greylock FCU knows it is playing a leading role in helping Berkshire County, Mass., residents protect their financial information. "In the past three years, as fraud worldwide has increased, we have actually seen a decrease in the impact to our members, thanks to continued education and investments in new technology," said President Angelo Stracuzzi. The Pittsfield, Mass.-based Greylock Federal has invested more than $200,000 in security initiatives, "and we have saved millions of dollars for Greylock and our member/owners, thanks to these measures," said Stracuzzi. Greylock's behind-the-scenes investments include firewalls and other technology. "Every financial institution has to make these investments," Stracuzzi said. "We have never had a breach of our systems, and we take every precaution to protect member information." It has taken several other measures to protect its members' information. For example, it was the first financial institution in Berkshire County to offer license and signature scanning. The scans enable front line staff to prevent impersonators from accessing funds or information. It has more than 52,000 licenses and signatures on file electronically. Also, Greylock Federal posted hundreds of alerts on its websites, published articles in newsletters and held forums about information security. It also produced educational radio ads that air frequently throughout the country. "We have a continuous education program to help our members protect their own information, and it seems to be working," said Marilyn Sperling, senior vice president of member services. "Sadly, there are some people who fall prey to these fraudulent schemes, but the numbers re small and seem to get smaller each time." In addition, the credit union has invested in a 24/7 fraud monitoring service for its Visa credit and debit card holders. The service tracks purchasing patterns and if those patterns change, the service may disrupt a transaction and immediately contact the member directly to verify the legitimacy of the purchase. "It's a great system and has prevented more than $1 million in potential fraud," said Sperling. "When a member is contacted by the monitoring service, it is much different than when these scammers call. The service asks you a series of yes and no questions but does not ask for any account numbers, PINs or security codes. I have been contacted myself, and it works well," she added. The $1.127 billion asset credit union also offers advice to members with tips placed daily in branches, newsletters, Web alerts, radio ads and all other communications channels. The advice is shared here, so credit unions can pass it along to their members. Among the advice:
* If you receive a call, e-mail or Internet inquiry asking for account-specific information, do not respond. Hang up and alert your financial institution as soon as possible. * Watch out for scams that promise something for nothing. If it sounds too good to be true, it is. * Lock up or shred any documents with personal information. * Review your account statements regularly and order a credit report at least once a year. * Never use your Social Security number as a bank account or driver's license number. * Avoid sending checks from your home mailbox. Use a secure U.S. Postal Service mailbox or your credit union's online banking and bill-pay services. * Online, never open links in an e-mail unless you are 100% sure who sent it. It is safer to type in the Web address yourself. Your credit union will never send you an e-mail with a link. * Have your driver's license and signature scanned. That way, no one else can claim to be you.

Moodys adjusts four corporates short-term ratings

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MADISON, Wis. (4/16/09)--Moody’s Investors Service adjusted the short-term ratings of four corporate credit unions Tuesday to Prime-3 from Prime-1. The rating actions affected:
* Members United Corporate FCU, Warrenville, Ill.; * Central Corporate CU, Southfield, Mich.; * Corporate Central CU, Muskego, Wis.; and * SunCorp Corporate CU, Westminster, Colo.
The rating actions reflect Moody’s view that the corporates’ baseline credit assessments, a measure of their stand-alone credit profiles, have weakened. In particular, the eventual impairment of the corporates’ capital investments--member capital shares and paid-in capital--in U.S. Central FCU, and potential losses in their securities portfolios, will lead to capital ratios that are weak and would be inconsistent with an investment grade rating on a stand-alone basis, Moody’s said in a press release. However, Moody's views the probability of external support from both the U.S. government and the credit union network for the corporate credit unions to be high, resulting in significant lift to their short-term ratings, which are Prime-3. The short-term ratings also consider the senior position of debt obligations relative to member shares, which provides substantial added protection for third-party creditors. The Prime-3 ratings and developing outlooks reflect the uncertainty of potential regulatory and/or structural changes to the Corporate Credit Union Network, and the risk that such changes may diminish the relevance of these firms upon the restoration of normal market and economic conditions. In January, the National Credit Union Administration (NCUA) issued an “Advance Notice of Proposed Rulemaking” (ANPR) and request for comment. Under the ANPR, the NCUA sought public comment as to the appropriate business functions, geographic reach, capitalization, permissible investments, risk management and corporate governance of corporates. The NCUA also is considering whether there should continue to be a two-tiered corporate network, which has U.S. Central as the only wholesale credit union in the U.S. Tuesday’s rating actions are consistent with Moody’s recent announcement that it is recalibrating some of the weights and relative importance attached to certain rating factors within its current bank rating methodologies. Capital adequacy, in particular, takes on increasing importance in determining stand-alone ratings in the current environment, Moody’s said.

Arizona Federal to close two more branches

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PHOENIX (4/16/09)--Arizona FCU said Tuesday it expects to close its two Tucson, Ariz., branches on unspecified dates. “When final actions and dates are determined, we will communicate directly with our members,” said Christopher Paterson, the credit union’s community relations manager, in a prepared statement (Tucson Citizen April 14). Arizona FCU, based in Phoenix, has $1.739 billion in assets, with 23 of its 25 branches in the greater Phoenix area, the newspaper said. In February, the credit union announced it closed four branches to deal with a decline in demand for financial services in the economy. At the time, Arizona FCU said a troubled economy contributed to a significant fourth-quarter loss and an undercapitalized position (News Now Feb. 17).

CU System briefs (04/15/2009)

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* ALBUQUERQUE, N.M. (4/16/09)--The New Mexico Credit Union Education Foundation has awarded scholarships totaling $48,600 to 81 students in the state for the 2009-2010 school year. Each student received $600. More than 400 students applied for scholarship, and 41 recipients were re-applicants. Applicants must be residents of the state and meet requirements such as a grade point average and full-time enrollment. The foundation is a scholarship program formed through special legislation that allows credit unions to use abandoned funds for educational or charitable purposes. Since it was established in 1992, the foundation has presented 870 scholarships totaling $430,600 to students attending accredited vocational or technical school, college or university in New Mexico … * PLANO, Texas (4/16/09)--Southwest Corporate FCU has named Jerry Delezen as senior vice president of information technology (IT) and Brad Ganey has senior vice president of payment services, announced John Cassidy, president/CEO. Jody Beck, the former senior vice president of operations, has retired after 32 years with the corporate. Her responsibilities included oversight of both the IT and Payments Services departments. Delezen, with more than 30 years' experience in IT and management, will direct IT department and be responsible for developing, integrating, operating and supporting the corporate's automated systems, databases, and voice and data communications. Ganey will oversee item processing, electronic payments and correspondent services. He is also responsible for support services, remote deposit services, funds transfer operations and ACH, and card services. He has more than 23 years' experience in the financial services industry … * HARRISBURG, Pa. (4/16/09)--Jeannette Rubber FCU has merged with Elliott FCU, effective April 1. Both credit unions are in Jeannette, Pa. According to the Pennsylvania Credit Union Association, the Jeannette Rubber branch was renovated and services expanded. Members of the combined credit union now have three branches for their financial needs (Life is a Highway April 15) … * NEENAH, Wis. (4/16/09)--Evergreen CU is living up to its name, by celebrating Earth Day April 22. The $23.9 million asset credit union is promoting and using environmentally friendly products, such as the scooters from Metro Motorcylces on display in its lobby for its "Wheel Make It Happen" vehicle campaign. Four employees at the credit union have purchased scooters. LaVerne Beyer, aka Mrs. GreenJeans, encouraged youth members in The Seedling Club to turn in an Earth Day coloring picture to claim one of the potted Evergreen Trees pictured. Earth-friendly information and prizes will be part of the Earth Day celebration Wednesday. (Photo provided by Evergreen CU) … * OKLAHOMA CITY, Okla. (4/16/09)--Wanda Prater, who became the first manager of the Department of Public Safety FCU in Oklahoma City in 1958, died at her home April 11. She was 79. Prater worked at the credit union for 35 years. Funeral services were Wednesday (The Oklahoman April 14) …

Illinois leagues 79th convention kicks off today

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NAPERVILLE, Ill. (4/16/09)--More than 700 executives representing 125 credit unions are expected to kick-off the Illinois Credit Union League’s (ICUL) 79th Annual Convention today.
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The event runs through Saturday in Chicago. It’s theme is “Shake, Rattle n' Roll.” The convention will begin today with the Delegates’ Meeting, which will include the swearing in of two new ICUL directors. The Exhibit Hall Grand Opening, with more than 70 vendors, will follow. During Friday’s keynote--by speaker Al Mosocco of PulseBeat Marketing--and awards ceremony, a number of credit unions and individuals will win accolades for their accomplishments in the past year, including three Hall of Fame inductees, Spirit of Service (Employee of the Year and Volunteer of the Year) recipients, and recipients of the ICU Foundation’s Memorial and Tribute awards. Winners of the state-level Dora Maxwell, Louise Herring, and Desjardins awards and supporters of the Credit Union Political Action Council (CUPAC) also will be recognized.