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State interchange bill meets CU opposition

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MADISON, Wis. (4/27/10)--Any government intervention that results in the inability of small institutions to offer credit and debit card services to members would place credit unions at a huge disadvantage with their members, according to testimony in one of the states whose legislature is considering changes in credit card company practices. On Friday, the Georgia House Banks and Banking Committee heard testimony on HB 1456, a credit card interchange bill, from opponents of the bill, including the Georgia Credit Union Affiliates (GCUA), the Community Bankers Association, the Georgia Bankers Association and the Electronic Payments Coalition. The bill, introduced on March 22 by sponsors and co-sponsors with business ties, was heard in full committee but likely will go nowhere. "We are as confident as we can be with two days left in the session that this bill will not have any more traction other than the hearing," said GCUA Senior Vice President of Government Influence Cindy Connelly. She noted that the issue, which has been waged for years in Washington and in the courts, is beginning to surface in state legislatures across the country, such as Vermont, Colorado, Georgia and California, and the credit union system is taking steps to educate credit unions about the issues. For example, the Electronic Payments Coalition is hosting webinars on interchange, that discuss what interchange is and why it's important, myths and facts surrounding the interchange debate, and unintended consequences of proposals to regulate interchange fees. The next webinar is Thursday at 10a.m.-11 a.m. ET. For more information, use the link. No vote has been scheduled for the Georgia bill, since the date for crossover into the other legislative chamber has passed. However, Committee Chairman James Mills has indicated the issue could resurface (NACS Daily News April 26). The bill had aimed to:
* Provide retailers the ability to set different prices; * Determine if they can accept specific payment products, and * Reward retailers with fees and fines if an electronic payment system violated the
Testifying before the committee on behalf of credit unions Friday was Mike Culbertson, GCUA's chief advocacy officer. He noted that members demand credit and debit card services and credit unions offer these in direct response to members' needs and demands for convenience. Other points he argued:
* Government intervention would put smaller institutions at a huge disadvantage with members who expect their credit union to offer the services and could lead to members seeking an alternative provider. * A key feature is the universal acceptability of debit and credit cards worldwide. * Adopting laws impacting universal acceptance would confuses consumers, who will see problems of acceptability tied to the card. Consumers might not take time to understand problems that are due to anything else other than the card; they would seek a card from competitors. * Even the largest credit unions don't have negotiating power or opportunity to negotiate with merchants on interchange; they rely on the stability of the default schedules for most transactions. * The strength of any network is in rules that enable the widespread acceptance of cards, even from the smallest issuers.

Irish CUs OK plan to go electronic

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DUBLIN (4/27/10)--In what is described as the biggest single change to the Irish credit union movement in decades, delegates at the Irish League of Credit Unions (ILCU) approved plans for a new payment service that would allow credit unions to offer debit cards and electronic transfers. They approved the plans during the league's annual general meeting last weekend at the University of Limerick. More than 1,500 delegates representing 505 credit unions attended (The Irish Examiner April 26). Establishing a credit union service organization (CUSO) was a key issue at the meeting. The approved CUSO "will be the biggest thing to hit the movement in decades, answering the calls from members and nonmembers alike about access to payment solutions, specifically electronic debit transfers, electronic credit transfers and debit cards," said ILCU President Mark Bailey. Kieron Brennan, CEO of the ILCU, said the "momentous" decision was required by members, who called to say " they have lost faith in other financial institutions and the level of trust they have in credit unions is at an all-time high, and they would like to have more access to a bigger range of financial services through our credit unions." Less than 10% of credit unions affiliated with the league have the ability to provide electronic funds transfers and just 5% provide debit cards. In other news from the conference, Financial Regulator Matthew Elderfield warned credit unions to remain vigilant for another challenging year due to the country's economic circumstances. Credit unions are in the front line of the battle to ensure these problems are kept at bay, he said. He added loan arrears and level of rescheduled loans have risen sharply the past two years.

CU System briefs (04/26/2010)

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* BRAINTREE, S.D. (4/27/10)--Red Sox first baseman Kevin Youkilis and Liberty Bay CU, Braintree, have made a three-year deal to sponsor his charity, Hits for Kids (Boston Business Journal April 26). The $650 million asset credit union will donate to the charity over the span of three years and will establish a T-shirt program with proceeds benefitting Hits for Kids. Youkilis will make personal appearances on behalf of the credit union, and Liberty Bell will feature him in promotions ... * RIDLEY, Pa. (4/27/10)--A former executive vice president and marketing director of Ridley-based Boeing Helicopters CU was to begin a 28-month prison sentence Monday for fraud for taking kickbacks to arrange loans for unqualifed applicants. Anthony Forte Jr., who was also president of the Boeing company's largest union, also must pay restitution totaling $1.25 million. Forte, 44, pleaded guilty to the charges. His younger brother and six other people considered middlemen in the scheme were also convicted (DelcoTimes.com April 25 and News Now Feb. 24) ... * GREENSBORO, N.C. (4/27/10)--The North Carolina Credit Union League has named Jeanne Couchois as vice president of compliance and risk management. Couchois, who joined the league in 2009, will assist credit unions in addressing their compliance needs. Under Couchois, the department will continue to offer a full range of compliance services including answering compliance questions from member credit unions, conducting training sessions and providing intensive compliance support through the compliance specialist program. Couchois helped pilot the league's new compliance specialist program when she joined the league on a part-time basis. She also conducted training sessions on compliance-related topics for the league. Prior to joining the league, she worked for the North Carolina State Employees' CU (The Weekly Update April 23) ...

Small CUs fewer banding together on services

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WORCESTER, Mass. (4/27/10)--Small U.S. credit unions are dwindling in number and some of the remaining ones are banding together to achieve economies of scale, according to a Monday article in the Worcester Business Journal. “Big credit unions are getting bigger and there are more of them while small credit unions are dwindling in number. All this is happening while the total number of credit unions continues to decline around the country," said the article titled, “Big Credit Unions Keep Getting Bigger.” One distinct factor has caused the decrease in the number of small-asset credit unions, Daniel Egan, president/CEO of the Massachusetts Credit Union League, New Hampshire Credit Union League and the Credit Union Association of Rhode Island, told the Journal. “This is a direct response to smaller-asset credit unions not being able to maintain the continuingly increasing regulatory requirements,” Egan added. One remedy is that roughly a dozen small-asset credit unions in central Massachusetts have banded together and use their combined purchasing power to achieve economies of scale--such as hiring an information technology (IT) director, Debbie Guiney, president of Allcom CU, Worcester, told the Journal. “We got a great price for someone to come in, do IT audits and check for vulnerabilities, and it was much less than what any of us could have individually achieved,” she said. “This type of collaboration will be critical for institutions to survive.” Also, the collapse of the financial services industry highlights the need for smaller locally based credit unions and banks, Egan told the Journal. “Given the recent economic crisis, the whole idea of ‘too-big-to-fail’ is being called into question,” he added. “We’re seeing an increased interest in people going to credit unions to have the safety and security of local financial institutions.” To read the article, use the link.

Vt. card acceptance bill would endanger CU programs league says

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BURLINGTON, Vt. (4/27/10)--Association of Vermont Credit Unions (AVCU) President Joe Bergeron was among the first to testify Wednesday in front of the Vermont House Commerce Committee regarding a controversial credit card acceptance bill. The bill, S. 138, would endanger how and where Vermont credit union members’ credit and debit cards are accepted, AVCU said. Bergeron and Department of Banking, Insurance, Securities and Healthcare Deputy Commissioner Tom Candon testified, along with the primary representative of the Electronic Payments Coalition (Newslines Express April 23). On Thursday, Vermont State Employees CU President/CEO Steve Post and New England FCU chief financial officer Sue Leonard also testified in favor of credit unions. They focused on the potentially detrimental effects of S.138 on their cardholders and credit union card programs. “In line with testimony provided by Candon and me [Wednesay], Post and Leonard referenced the negative effects of possible surcharging by merchants, negativity of minimums and maximums, and unreliability of card functionality if S.138 is passed,” Bergeron said in AVCU’s newsletter. “Also referenced were the burden card issuers bear resulting from data breaches occurring at merchants and processors, and resultant fraud.” Of special note was testimony by MasterCard’s Vice President of State Governmental Affairs Rich Santoro, whose participation Bergeron specifically requested. “Visa and MasterCard are the primary recipients of much of the opposition’s criticism and claims that network rules and interchange are restrictive, unfair and detrimental to small business,” Bergeron said. “Taking the witness chair was a bit of an unknown that ultimately seemed to work out favorably.” All parties emphasized that the bill’s verbiage would permit minimums and maximums on card purchases, and surcharging at different amounts on different types or brands of plastic, and perhaps differently by location. Although it was apparent at the start that legislators were confused by the interpretation that S. 138 would permit these practices by merchants, by the end of testimony there appeared to be agreement on the need for clarification, AVCU said. Bergeron said a vote could be expected on the matter today or Wednesday, depending on floor actions.

Polish and Slavic FCU offers 2.5M special dividend

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NEW YORK (4/27/10)--Polish & Slavic FCU (PSFCU), the largest U.S. ethnic credit union, announced April 15 it earmarked $2.5 million for a special dividend to assist members in tough economic times. The PSFCU board of directors declared the special dividend will be paid out May 3--a historic date for Poles, commemorating the anniversary of the Polish Constitution of 1791--one of the most progressive constitutions in the world at that time, said the credit union. To qualify for the dividend, the individual or business must be a member of PSFCU as of both Dec. 31 and May 3, 2010. Members will receive a lump sum equal to 0.25% of their total average share balances for the year ended Dec. 31. The special dividend will be automatically deposited into members’ regular share accounts at the close of business May 3. “We have once again demonstrated the benefit of membership in a well-managed, member-driven credit union,” said Tomasz Bortnik, chairman of the PSFCU board. “There’s never been a more appropriate time for us to share our success with our members. This special dividend sends a clear signal to all members that we place a tremendous importance on contributing to their financial well-being.” This marks the first time in its 34-year history that PSFCU has paid a special dividend. The election of a new board last October, during which members chose candidates who championed the dividend, was the primary impetus for the payout. The winning directors ran on the promise to “share the wealth” of the credit union with its members. “We are in a strong financial position that we can afford to help our members in these extremely difficult times,” said Agnieszka Poslednik, PSFCU chief operating officer. “We have a net-worth-to-asset ratio of 10.46% and $1.31 billion in assets.”

Second nomination for CUNA Board seat

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MADISON, Wis., and WASHINGTON (4/27/10)--The Credit Union National Association (CUNA) has received a second nomination in a special election for the CUNA Board District 5, Class B seat. The candidate is Angela S. McCathran of People’s Trust FCU, Houston. The other candidate is Roger Heacock, president/CEO of Black Hills FCU, Rapid City, S.D. Deadline for nominations is the close of business May 5. Since there is more than one candidate, the special election will be conducted by written ballot from May 7 to June 4. District 5 comprises the Arizona, Colorado, Kansas, Montana, Nebraska, New Mexico, North Dakota, Oklahoma, South Dakota, Texas, Utah and Wyoming leagues. The seat is currently held by CUNA Chairman Kris Mecham, who announced his resignation from the board effective June 1. Mecham is leaving the U.S. this summer to perform mission work in Mongolia for his church. The term of office for the position will begin immediately after a successful candidate is determined and will expire at the adjournment of CUNA’s 2013 Annual General Meeting. Nominees must be an employee or voting board member of the nominating credit union. The nomination must be in writing and seconded in writing by two other credit unions of the same size group from the district. Credit unions wishing to nominate a candidate should complete a nomination form and obtain the candidate’s consent and two seconding nominations. Forms will be accepted by fax at 608-231-4878, email thanson@cuna.coop or by hard copy to 5710 Mineral Point Road, Madison, WI 53705.

Texas foundation elects officers

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FARMERS BRANCH, Texas (4/27/10)--The Texas Credit Union Foundation (TCUF) announced that it has elected a new slate of officers (LoneStar Leaguer April 26). This year’s officers include:
* President Dick Ensweiler, president/CEO of the Texas Credit Union League; * Chair Lily Newfarmer, CEO, Tarrant County CU; * Vice-chair Maria Martinez, CEO, Border FCU, Del Rio; * Treasurer Jerry Merrill, CEO, Concho Educators FCU, San Angelo; and * Secretary Arna Reynolds, CEO, Amarillo (Texas) Community FCU.
The foundation also recognized:
* Angela McCathran, CEO, People’s Trust FCU, Houston. She was chair of TCUF for two years and served seven years on the board. She will be an advisory trustee for two more years; * Anne Boatright, CEO, Capitol CU, Austin, who served two years as a trustee in the league chair position, and two years as an advisory trustee in the past chair position; and * Kerry Parker, CEO, A+FCU, Austin, who served 10 years on the TCUF board, two as chair.

White House sees HSFPP NEFE in action

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WASHINGTON (4/27/10)--Thirteen high school girls at the White House Friday learned life skills related to financial management in a lively session presented by the National Endowment for Financial Education's (NEFE) High School Financial Planning Program (HSFPP).
Lisa Moore, a teacher from the Arlington (Va.) Career Center, smiles on her way into the White House Friday to teach a budgeting lesson from the National Endowment for Financial Education's High School Financial Planning Program to 13 girls in a program mentored by First Lady Michelle Obama and senior White House staff.
Using the NEFE program, Lisa Moore, a teacher from the Arlington (Va.) Career Center, presented the 90-minute lesson in budgeting to the group in the State Dining Room of the White House in Washington, D.C. Last week was National Credit Union Youth Week, which is a part of financial literacy month. The White House, under the direction of First Lady Michelle Obama, is conducting a program for 20 teens, who are mentored by senior White House staff members. The First Lady often attends meetings of the group. The group's activities included a visit in March to the Supreme Court to visit Justices Ruth Bader Ginsberg and Sonia Sotomayor. Part of the mentoring program's goals is to teach life skills, including financial education, said John A. Parfrey, director of NEFE HSFPP, who accompanied Moore to the event. NEFE first learned of the White House program when a call went to the National Institute of Food and Agriculture (formerly Cooperative Extension) at the U.S. Department of Agriculture for samples of NEFE materials. NEFE sent complete sets of HSFPP materials to Obama's office.
Thirteen high school students work in the White House State Dining Room on budgeting skills during a High School Financial Planning Program's session taught by Lisa Moore of the Arlington (Va.) Career Center. Calculators were provided by Arlington Community FCU. (Photos provided by the National Endowment for Financial Education)
During the week of April 12, NEFE was asked to send class materials and a teacher. Dawn Linley, Virginia Credit Union League director of marketing and financial literacy, and Patty Browne of the Arlington Community FCU helped put NEFE in touch with Moore, who immediately accepted the assignment. CUNA and the leagues have partnered with NEFE since 2000, helping to broaden the program's reach into high school classrooms nationwide. The group met Friday for the lesson while the first lady was on a long weekend break in North Carolina. Moore and Parfrey arrived at the White House to meet their liaison, Carynne Hardy and her supervisor, Domestic Policy Advisor Jocelyn Frye, who is senior assistant to Michelle Obama and a member of President Barack Obama's Domestic Policy Council. The group set up in the chandelier-studded State Dining Room, and the White House provided two large TV screens for PowerPoint presentations. All the girls had "White House, Washington, DC" writing pads and Moore brought along calculators contributed by the Arlington Community FCU. "I hope that word of this class reaches the First Lady and that maybe because this one class helped a group of bright young girls start to think differently about money, Mrs. Obama will do something to help all of us in this endeavor process of getting our whole nation thinking about money in a new and different way," Parfrey said.

Author of Ohio CU Act others honored by league

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COLUMBUS, Ohio (4/27/10)--The Ohio Credit Union League honored several individuals for their contributions to the credit union movement during an April 15 awards ceremony, at its ZENITH10 conference, in Cincinnati.
Tim Clarke Bonow addresses attendees and reflects on his father’s legacy after accepting the Louise McCarren Herring Lifetime Achievement Award from the Ohio Credit Union League on behalf of his grandfather, Claude Clarke. (Photos provided by the Ohio Credit Union League)
Claude Clarke, author of the Ohio Credit Union Act of 1934, was posthumously honored with the Louise McCarren Herring Lifetime Achievement Award. Clarke served as the manager of the league and is a former Credit Union National Association chairman. He died in 1975. Clarke’s grandson, Tim Clarke Bonow, accepted the award on his behalf. The league also honored Bill Burke, CEO of Day Air CU, Kettering, with the 2010 Professional of the Year Award. Under Burke, Day Air experienced a 7% growth in membership, 11% growth in assets and a 15% growth in deposits in 2009.
Bill Burke, CEO of Day Air CU, Kettering, accepts the Professional of the Year Award at ZENITH10, the Ohio Credit Union League’s conference, held April 15 in Cincinnati. League board chair Jennifer Ferguson is also pictured.
Jerry Gramke received the 2010 Volunteer of the Year Award for his work at Cincinnati Police FCU. “When I began, we had just hired our second employee and offered only auto loans and savings accounts,” Gramke said. “Today I am proud to say we are a full-time financial institution and growing.” The 2010 Claude Clarke Political Inspiration Awards were presented to Phil Buell, CEO of Superior FCU, Lima; and Seven Seventeen CU, Warren. The awards recognize an individual and a credit union for their advocacy efforts. Seven Seventeen CEO Gary Soukenik accepted the award on behalf of the credit union. He said: “Don’t let banks set our agenda. All credit unions must maintain and increase their advocacy efforts, and we all must work collectively to educate legislators to make the right choices.”