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Southwest Corporate comments on ANPR proposal

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PLANO, Texas (4/8/09)--Southwest Corporate FCU made a number of recommendations in a comment letter to the National Credit Union Administration Board Friday on the Advanced Notice of Proposed Rulemaking for Corporate Credit Unions. NCUA is evaluating corporates' role in the Credit Union System and considering whether to amend the corporate credit union regulation (Part 704) to clarify or revise provisions that include capital, permissible investments, management of credit risk and liquidity, and corporate governance. In the letter, Southwest Corporate President/CEO John Cassidy acknowledged that multiple factors contributed to the current market dislocation and the resulting issues facing all financial institutions, including corporate credit unions. "There is clearly a need to apply the lessons learned and to take a fresh look at corporate credit union operations," Cassidy said. "Regulatory changes must be done in a thoughtful and prudent manner to ensure corporate credit unions can continue to provide valuable products and services to their member credit unions." Cassidy's letter addresses the role of corporates in the Credit Union System as it relates to payment systems, liquidity and liquidity management, field of membership, expanded investment authority, and the two-tiered system structure. It also addresses corporate capital issues--including core capital, membership capital, and risk-based capital and contributed capital requirements. Other areas with recommendations include permissible investments, credit risk management, asset liability management, and corporate governance. For payment systems, the Plano, Texas-based corporate made two recommendations: 1) Address payment systems risks through enhanced liquidity management practices, capital requirements and investment management, and 2) neither segregation of payments processing operations nor establishment of separate corporate credit union charters is necessary to mitigate payment systems risks. Southwest Corporate made four recommendations regarding liquidity and liquidity management:
* Providing liquidity to member credit unions should remain a core service provided by corporate credit unions; * Enhanced liquidity management practices should be implemented; * As a risk-limiting constraint, use cash flow gap rather than cash flow duration; and * Broaden the Central Liquidity Fund's lending capabilities.
As for field of membership, Southwest Corporate recommended that corporate credit union restructuring is necessary, but it should be an evolutionary process driven by ANPR reforms and decided by member credit unions. It also recommended keeping national fields of membership. Expanded investment authority included three recommendations: Expanded investment authorities are needed for diversification; require minimum total capital ratio requirements for expanded investment authorities; and maintain the authority for qualified corporate credit unions to engage in derivative transactions. As to the two-tiered structure of the corporate system: U.S. Central should not continue in its current form, and U.S. Central should evolve into a new role, not as a wholesale corporate credit union but as a credit union service organization (CUSO) provider of off-balance-sheet products and services, wrote Cassidy. Southwest Corporate's core capital recommendations included increasing capital ratio requirements at all corporates; establishing a minimum operating income target of at least 15 basis points; requiring all credit unions using corporate credit unions' products and services to contribute capital; and granting a reasonable transition period. Membership capital recommendations included:
* Require all credit unions using products and services offered by corporates to contribute capital, comprised of PIC (part of core capital) and MCS (part of total capital); * Extend the notice period on MCS to five years. * Base credit union member contributed capital on a percentage of a member credit union's asset size; and * Grant a reasonable transition period.
The letter also recommended that a risk-based capital requirement be implemented. Two recommendations were made under permissible investments: Establish concentration limits by investment sector and individual obligor, and major changes in current investment authorities are not warranted due to the combined impact of ANPR recommendations and broad global reforms. Under credit risk management, Southwest Corporate recommended that NCUA: Continue to rely on Nationally Recognized Statistical Rating Organizations' (NRSROs) ratings but with additional requirements; adopt further regulatory requirements regarding the use of ratings; adopt additional concentration limits; and test sensitivities to credit spread widening and standards to apply to that effort. The corporate made one recommendation each in asset liability management (ALM) and corporate governance. For ALM, require the use of net interest income modeling and stress testing. For governance, ensure that representatives from a corporate's member-owners continue to be the appropriate persons to serve on the corporate's board. The letter went into detail about each recommendation. To review further, use the resource link.

Supreme Court rules for suspect in CU robbery confession

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WASHINGTON (4/8/09)--The Supreme Court ruled Monday that confessions obtained by federal authorities before a suspect's first court appearance may be inadmissible if more than six hours pass between the arrest and the court date. The case before the court , Corley v. U.S., was brought by a prisoner who had confessed to robbing a credit union in Norristown, Pa. The prisoner, Johnnie Corley, was arrested as a suspect in the June 2003 robbery of Norsco FCU. However, the arresting agents, from the Federal Bureau of Investigation agents, waited 29 1/2 hours before his court appearance. During that time Corley confessed to the robbery (Associated Press April 6). He was later convicted and sentenced to 170 months in prison. The court ruled, 5-4, that long delays before a suspect sees a judge can provide the government with too much leverage over the person arrested. "Federal agents would be free to question suspects for extended periods before bringing them out in the open, and we have always known what custodial secrecy leads to," said Justice David Souter, who wrote the majority opinion. Federal law and court precedence indicate that confessions obtained within six hours of an arrest are presumed to be valid and may be used at a trial. The question before the court was what to do with confessions when there is a delay before the first court appearance. The court ordered lower courts to examine whether Corley's confession occurred during the first six hours he was in custody. If not, they would have to throw out the confession if the delay in the court appearance was "unreasonable or unnecessary." Voting with Souter were Justices Stephen Breyer, Ruth Ginsburg, Anthony Kennedy and John Paul Stevens. Opposed were Justice Samuel Alito, who wrote the dissenting opinion; Chief Justice John Roberts; and Justices Antonin Scalia and Clarence Thomas. Alito said that confessions that are voluntary should be admitted into evidence, regardless of the time elapsed. He noted that providing Miranda warnings have largely dealt with concerns about coerced confessions.

CU System briefs (04/07/2009)

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* NEW YORK (4/8/09)--At least 19 CUs offer accounts to accept case for wedding gifts, the Wall Street Journal reported yesterday, citing figures from the Filene Research Institute. The story, headlined “Something Borrowed, Something Green,” offered advice and proper etiquette for when the bride and groom want cash for gifts. Referencing the specially designated accounts at the credit unions, The Wall St Journal added, “These institutions market their service as MatriMoney, a name licensed by North Island Credit Union in San Diego. The credit union accounts typically offer an annual interest rate and have no fees.” In today's economy, the story noted, an increasing number of brides and grooms want “cold, hard cash” as wedding presents ... * HARRISBURG, Pa. (4/8/09)--Richard C. Harclerode, former board chairman at LANCO FCU, Lancaster, Pa., died April 3 at age 75. Harclerode led the LANCO board for more than 35 years. During his tenure, LANCO’s operations moved from occupying the back of a classroom at Hempfield High School into four locations that provide a full range of services to people who live or work in Lancaster County. In 2002, the credit union recognized Harclerode’s contributions by dedicating a flagpole in his honor (Life is a Highway April 7) ...

SandPs adjusts ratings for six corporates

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NEW YORK (4/8/09)--Standard & Poor's Ratings Services took action Monday by lowering the ratings of six corporate credit unions and keeping them on CreditWatch Negative. The action was prompted by the impact of National Credit Union Administration's (NCUA) recent actions on corporate credit unions' capitalization, said S&P, noting that the corporates' capitalization was "severely impaired as the result of the expected write-down of their capital investments in U.S. Central CU." The ratings service said it withdrew the ratings of two of the six corporates--Eastern Corporate FCU (EasCorp) and Central Corporate CU (Cencorp)--at their request. The remaining corporates credit unions are:
* Southeast Corporate FCU; * Southwest Corporate FCU; * Constitution Corporate FCU; and * SunCorp Corporate CU.
The remaining corporates will stay on Credit Watch Negative "because of continued negative pressure on the ratings from weak capitalization, the potential for further securities write-downs in the near term, and uncertainty as to the direction and form of future regulatory action toward these companies," S&P said. It said NCUA's program to guarantee all member deposits through December 2010 "is crucial to the corporate credit unions' creditworthiness." For more information about the ratings, use the resource link.

League of Southeastern CUs board elects officers

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BIRMINGHAM, Ala., and TALLAHASSEE, Fla. (4/8/09)--The League of Southeastern Credit Unions (LSCU) Board of Directors Monday elected its first Executive Committee, with Rich Helber, GTE FCU, Tampa, Fla., presiding as chairman of the board. In addition to Helber as chairman, new officers are:
* Chairman-Elect: Joseph L. McGee, Legacy Community FCU, Birmingham, Ala.; * Vice Chairman: Marry Ott Wood, Florida West Coast CU, Brandon, Fla.; * Treasurer: Dale Dalbey, Mutual Savings CU, Birmingham; and * Secretary: Steve Swofford, Alabama CU, Tuscaloosa.
Members of the Executive Committee will serve for one year. The LSCU board consists of eight Alabama credit union representatives and eight from Florida credit unions. Each state's previous board chairman became a member of the new combined board and selected seven board members from the respective states to serve on the LSCU board. The board will have its first face-to-face meeting at the Alabama Credit Union League's Annual Meeting, which will meet Monday through Thursday next week. LSCU was recently formed through consolidation of the Alabama and Florida Credit Union Leagues.

County official shot at CU returns to work

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SALISBURY, Md. (4/8/09)--Wicomico County Administrator Theodore Shea has returned to work after spending almost two months recovering from a shooting at $1.8 billion asset State Employees CU (SECU) of Maryland (Associated Press April 7). Salisbury police are still searching for the man who shot Shea in his van on Feb. 14 while Shea was using the drive-up ATM at SECU’s Salisbury branch. The man approached Shea’s van and demanded money before firing several shots into the vehicle. Shea received a gunshot wound to the leg and now walks with a cane. His return to work came during the budget season for Wicomico County, which is struggling to deal with a projected $12 million decrease in revenue. Shea is the second-highest official in Wicomico County government.

Vote for ICU MagazinesI 2009 CU Hero of the Year

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MADISON, Wis. (4/8/09)--Credit Union Magazine is celebrating the credit union movement’s heroes by asking the movement to help select its 2009 Credit Union Hero of the Year. Credit union leaders have nominated four credit union heroes:
* Carla Hedrick, CEO, Denver Community FCU; * John Herrera, senior vice president of Latino/Hispanic affairs, Self-Help FCU, Durham, N.C.; * Regina McIlrath, president, Table Rock FCU, Shell Knob, Mo.; and * Cathie Tierney, CEO, Community First CU, Appleton, Wis.
To read about the nominees and vote, use the resource link. Voting ends May 1. The winner will be posted on by June 15. The Credit Union Hero of the Year will be honored at the Credit Union National Association's 2009 America’s Credit Union Conference & Expo June 21-24 in Boston.

Pittsburgh Police FCU sets up fund for slain officers

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PITTSBURGH, Pa. (4/8/09)--Greater Pittsburgh Police FCU is accepting donations from across the nation on behalf of three Pittsburgh officers who were killed in an ambush on April 4 while responding to a domestic dispute. The $45 million asset credit union worked with the Fraternal Order of Police Lodge No. 1 to set up the Pittsburgh Fallen Hero Fund to accept donations, according to CEO Sandy Lazzara. All money collected with go to the families of Officers Eric Kelly, Stephen Mayhle and Paul Sciullo II. Lazzara told News Now that Kelly and Mahley were credit union members who were familiar faces to the staff. Kelly was known for offering a friendly hug, while Mahley was the last member in the credit union lobby conducting business on the day before he died. “It’s a shock for our entire community,” Lazzara said. She said the community has responded generously with donations “pouring in” from individuals as well as prominent businesses such as the Pittsburgh Pirates baseball team and the Pittsburgh Penguins hockey team. To date, the largest donations have come from fellow law enforcement officers throughout Allegheny County, although law enforcement organizations from coast-to-coast have called for information on how to contribute. Lazzara said she is thankful for the prayers and support that have been directed to the credit union and its 5,500 members. She is using the widespread media attention directed to the credit union for its role in collecting donations to express appreciation for law enforcement officers. “I want to thank our officers for being on that street 24/7 every day,” Lazzara says. “That’s the most important, because the public only pays attention when a tragedy happens.” Contributions should be made payable to the Pittsburgh Fallen Hero Fund and mailed care of Greater Pittsburgh Police FCU, 1338 Chartiers Ave., Pittsburgh, PA 15220.

NYIB forges partnership with Biz Kids program

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COLUMBIA, S.C. (4/8/09)--Credit union educational staff and volunteers who use the curriculum from the Biz Kid$ series on national public television can now earn credit for their presentations from the National Youth Involvement Board (NYIB).
The cast of Biz Kid$, the public televsision show , teaches youth about managing money. (Photo provided by the National Credit Union Foundation)
NYIB provides a platform for credit union educators to report on presentations to classrooms and other youth events. As a volunteer network of more than 700 credit union professionals, NYIB also collects and shares materials, resources, and insight to help one another educate youth and attract young members. Now on the NYIB website, Biz Kid$ is among the programs in the drop-down menu for reporting presentations. In its third season with exclusive underwriting by America’s Credit Unions, Biz Kid$ is the first national public television series promoting financial education for middle and high school students. The 39-episode series is now airing in 97% of the U.S. public television market--reaching more than 230 million people over the age of two-- through 334 PBS stations serving all 50 states. Each episode comes with teaching materials, lesson plans and activities that meet national financial literacy standards. Credit union professionals and volunteers, as well as school teachers and after-school programs are teaching Biz Kid$' lessons in classrooms and communities. All ready-to-use curriculum and collateral materials are available on CD-ROM or via free download on the Biz Kid$ website. The core curriculum for five modules is available in both Spanish and English. “Biz Kid$ is a valuable addition to the NYIB presentation reporting platform,” said NYIB Chairman Brandon Pugh, director of communications and public relations for the South Carolina Credit Union League. “Biz Kid$ is an outstanding program that reaches key target audiences and complements the materials we feature from many other financial education providers.” “Curriculum development and community educational outreach have always been an important component of this project,” explained Biz Kid$ Project Manager RoxAnne Kruger, executive director of the Washington Credit Union Foundation and senior vice president of member and business development for the Washington Credit Union League. She noted that outreach materials represent 78 classroom hours for students in the fourth to eighth grades. “We’ve also created a new Biz Kid$ Teacher Professional Development Kit,” Kruger continued, adding the modular kit was unveiled to thousands of teachers last at the Conference for Teaching and Learning in New York City. The kit is available for public broadcast stations and station partners to download and use in their training initiatives with schools, after-school programs, and other informal educational settings. Teachers, parents and credit union trainers also will have access. Production of the Biz Kid$ TV series, website, and educational outreach materials were funded by a coalition of nearly 200 credit unions, credit union foundations, and other non-profits, service providers and individuals. Funds are needed now to finalize America’s Credit Unions national underwriting obligations. “The economy is tight, but please do all that you can to dig a little deeper to help secure final funding for an innovative financial literacy program that has never been more in need,” urged NYIB Member Heather Harris, vice chairman of the Michigan Credit Union League’s Financial Education Council. The new partnership was facilitated by the National Credit Union Foundation (NCUF). NCUF Executive Director Steve Delfin put together a Financial Education Resources Center at the Credit Union National Association’s (CUNA) Governmental Affairs Conference. Participants included Biz Kid$, CUNA, NCUF, NYIB, and the National Endowment for Financial Education (NEFE). “All of our missions align around providing financial education,” said Delfin, who also served on CUNA’s Financial Literacy Task Force. “To carry on this cooperative movement, we must collectively promote financial literacy for millennials and the next generations of credit union members.”