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Four CU CEOs elected to CUSOs board

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ST. PETERSBURG, Fla. (5/13/10)--Member-owner credit unions of PSCU Financial Services, a credit union service organization based in St. Petersburg, Fla., elected four board members to three-year terms April 29 during the CUSO's 2010 Senior Leadership Workshop and Member Forum. New board members are:
* Susan Adams, president, Entrust FCU, Richmond, Va.; * Hubert Hoosman, president/ Vantage CU, Bridgeton, Mo.; * Jeff March, president, Citadel FCU, Thorndale, Pa.; and * Kyle Markland, president, Affinity Plus FCU, St. Paul, Minn.
More than 500 people attending heard presentations from former Speaker of the House Newt Gingrich, former Secretary of the Treasury John Snow, and Dennis Dollar of Dollar & Associates and former National Credit Union Administration chairman. The forum also included sessions on best practices and new ideas for effective credit union management. Visa's Bill Sheedy, president of The Americas, announced that PSCU Financial Services was the first CUSO to implement its near-real-time alerts for Visa transactions. PSCU Financial Services' board officers are:
* Chairman, Craig Esrael, president of First South CU, Bartlett, Tenn.; * Vice chairman, Michael Valentine, president of Baxter CU, Vernon Hills, Ill.; * Treasurer, Jane Watkins, president of Virginia CU, Richmond, Va.; and * Secretary, Susan Adams, president of Entrust FCU, Richmond.

Ireland league withdraws support on easing lending limits

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DUBLIN (5/13/10)--The Irish League of Credit Unions board met last weekend to discuss possibly reversing the league's position on changes to rules that aim to ease lending limits. The rules have been criticized by some credit unions as containing too many burdensome conditions (Sunday Tribune May 9). The league initially welcomed the government's proposed changes to Section 35, which would allow credit unions to lend up to 30% of their loan portfolios in loans with terms longer than five years. The change aimed to reduce each loan payment--by spreading the payments over a longer period--for members with financial problems. However, the changes proposed also include tough rules on impairments that would hurt borrowers, said some credit unions. They said one missed payment on a rescheduled loan would require an immediate impairment for 100% of the loan's value, making it too risky for credit unions to help borrowers in trouble. That would be the opposite of what Finance Minister Brian Lenihan said was the goal behind the changes, the publication said..

PCUA monitoring state sales tax expansion proposal

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HARRISBURG, Pa. (5/13/10)--The Pennsylvania Credit Union Association (PCUA) is monitoring Gov. Edward Rendell’s budget proposal to expand the state’s sales and use tax to include 74 categories of tax exemptions. So far, credit unions’ exemption is intact. Pennsylvania State Sens. Mike Stack and Larry Farnese, both democrats from Philadelphia, held a roundtable discussion about the proposal Tuesday in Philadelphia. Sens. Stack and Farnese opposed expanding the sales tax, said PCUA (Life is a Highway May 12). Several representatives from the business community voiced concerns about applying the sales tax on currently tax-exempt professional services. Such a tax, they said, would result in: double-taxing the consumer; driving low- and moderate-income individuals out of the legitimate banking system; effecting negative consequences on small businesses and start-up companies; and becoming detrimental to job preservation and creation. There was no mention of credit unions or a suggestion to look to them for a revenue source, PCUA said. Christine Seitz, PCUA director of political affairs and fundraising, attended the roundtable.

Suspicious auto insurance claims rising CUNA Mutual says

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MADISON, Wis. (5/13/10)--Auto insurance scams contributed to a 46% increase in the number of suspicious claims submitted to insurers last year, according to a National Insurance Crime Bureau (NICB) study. CUNA Mutual Group, which works with Liberty Mutual and Progressive insurance carriers, says this increase is consistent with what its insurers have seen, and can lead to higher auto insurance premiums for consumers. While the overall number of injury claims dropped by 17.1% from 2007 to 2009, the number of claims resulting from suspected staged accidents jumped by 46% during the same period, said NICB’s research. Car insurance rates also increased 4.3% in the first quarter of 2010--a total increase of 24% in the last three years (WalletPop.com May 10). Auto insurance scams often involve staged auto accidents. In a staged auto accident, an individual can fake an injury to collect from an insurance policy, said Lois Zajac, CUNA Mutual director of product management. An example of a staged accident would be a driver slamming on the brakes to cause an accident, such as a rear-ender. The driver then tries to collect from the other driver’s insurance policy by claiming to have whiplash. Claims involving injuries are what CUNA Mutual and its insurers are focusing on the most. “Our bodily injury claims have increased because of fraud,” Zajac said. A bodily injury claim, unlike a vehicle repair, can take a long time if the victim requires physical therapy or misses work, she added. The staged auto accidents are sometimes carried out by criminal rings. The rings also may target a particular insurance company. “They’ll move around if they see an insurer tighten up. The criminals are very smart,” Zajac said. Criminals also may have certain doctors they work with to “prescribe” treatment for the fake injuries, she said. Most of the bogus claims are in Florida, New York, California, Texas and Illinois. The cities with the most claims are New York City, Tampa, Miami, Orlando and Houston, said NICB. CUNA Mutual encouraged credit unions concerned about the fraud to work with trusted insurance partners. Overall, insurers, law enforcement and the NICB are working to keep the fraud under control, Zajac said. “We’re all victims,” Zajac said. “We’re all being ripped off, which leads to higher [insurance] premiums. It’s definitely a problem that we all pay for.”

FBI targets cyber money mules for prosecution

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WASHINGTON (5/13/10)--The Federal Bureau of Investigation (FBI) is planning a major effort to break up and prosecute “money mule” operations that cyber criminals use to turn funds stolen online into cash. Several credit unions have encountered “money mules”--people who receive transfers of stolen funds in their bank accounts--hired by cyber rings. The FBI is targeting the mule operation--the end of the criminal supply chain--to heighten public awareness and discourage people from becoming mules, said Patrick Carney, acting chief of the FBI’s Cyber Criminal Section (The Wall Street Journal May 11). “We want to start to get some attention on this issue,” Carney said at a Federal Deposit Insurance Corp. forum on banking and cyber crime in Arlington, Va. “We think a good way to drive that home would be to prosecute them.” Mule operations are a key component of cyber crimes, the Journal said. When cyber thieves loot a credit union or bank account, they transfer the stolen money to a mule’s account to make the transaction seem legitimate. The mule then withdraws the funds and sends them to criminal associates--mostly overseas in countries such as Russia, Ukraine and Moldova, the Journal added. Earlier this year, five credit unions in Florida were targeted by one fraud and identity theft ring involving 42 people who stole more than $200,000 over three years (News Now March 26). Vanessa Rideau, 41, allegedly recruited people--money mules--to open accounts at a local credit union. When the recruits received their ATM cards, they would sell the cards and personal identification numbers to her for a fee. Then Rideau would deposit a fraudulent check or empty envelope into the account via an ATM--and immediately withdraw cash. Later, the check didn’t clear and the credit union would contact the account holder, who would say the card had been stolen. The frauds occurred from 2005 to 2008 and targeted: Insight CU, Martin FCU, Central Florida Educators FCU, McCoy FCU and Fairwinds FCU.

CU System briefs (05/12/2010)

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* CARTHAGE, Mo. (5/13/10)--An employee's pickup truck caught fire in the parking lot of Great Plains CU's Carthage, Mo., branch at about 8 a.m. Tuesday. Employee Kelly McCoy had just arrived to work 10 minutes earlier in the 2001, three-quarter ton truck. The truck was engulfed in flames, and a front left tire exploded as firefighters approached, but no one was injured. Firefighters pried open the hood and sprayed water on the engine. They said the damage was too severe to tell what caused the fire but that it started in the engine. The truck was a total loss (CarthagePress.com May 11) ... * VANCOUVER, Wash., and ONTARIO, Calif. (5/13/10)--The 2010 Oregon and Washington Credit Unions for Kids Wine Auction raised more than $135,000 for children's hospitals in the Children's Miracle Network. "Our goal was $125,000, and frankly we weren't sure we could achieve that this year," said Roger Michaelis, CEO of Vancouver, Wash.-based iQ CU, the event's main sponsor. The event attracted 150 attendees, with Michaelis and Sarah Canepa Bang, president/CEO of Financial Service Centers Cooperative Inc., serving as co-hosts. Over the years, the auction has raised more than $1 million. Other sponsors were: Co-Op Financial Services, Southwest Corporate CU, Columbia CU, CUNA Mutual, BECU, OnPoint Community CU and Allied Solutions. The national Credit Unions for Kids program originated in Oregon, Southwest Washington and Texas and raises funds for 170 hospitals. The Northwest Wine Auction is one of the program's largest events, with the city of Portland, Ore., as the nation's No. 1 fundraiser for Credit Unions for Kids ... * HANSCOM AFB, Mass. (5/13/10)--Hanscom FCU touted its charitable successes during its 56th annual meeting, announcing that its
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biggest contributions for 2009 were checks for $16,892 to Children's Hospital Boston and $10,093 to the Massachusetts Coalition for the Homeless. It noted its support for the military population it serves, including serving as a major sponsor of Hanscom Heroes Homecoming, which honors troops returning from Iraq and Afghanistan. Volunteers also assisted patients at Veterans Hospitals at Jamaica Plain and Brockton and contributed to Homes for Our Troops, which builds specially adapted homes for severely injured military members. Pictured at the check presentation to Children's Hospital Boston is from left, David Sprague, president/CEO, Hanscom FCU; Jane Melchionda, president/CEO of EasCorp; Andy Martin, Children's Hospital patient partner; and Ray Phillips, Hanscom FCU board member. (Photo provided by Hanscom FCU) ...

CU based in Virgin Islands gets regulators scrutiny

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DENVER and WASHINGTON (5/13/10)--A credit union chartered in the U.S. Virgin Islands with a Denver back office is promoting 6%-7% certificates of deposit in an ad on Google. And that has caught the eye of state and federal regulators, who are trying to determine if the credit union is legitimate or if it is a fraud. The CD rate of Her Majesty's CU (HMCU) is much higher than the typical credit union range of 3% to 4%, according to the Credit Union National Association's (CUNA's) economics and statistics. "The credit union is domiciled in the U.S. Virgin Islands, with a corporate back office or processing center in Colorado," confirmed Commissioner Chris Myklebust of the Division of Financial Services, Denver Office of Regulatory Agencies (DORA). "It is not a legitimate Colorado credit union," he said. "Under Colorado law, to be state-chartered, the credit union must have insurance with the National Credit Union Administration['s National Credit Union Share Insurance Fund]." That means the credit union "cannot solicit Coloradoans. The attorney general's office here recognizes HMCU as a back office," because HMCU filed a "doing business as" form with the Secretary of State, he told News Now. Myklebust said he has had a number of calls from credit unions all over asking about its legitimacy because the credit union is seeking alliances with other credit union organizations. The credit union was formed by Stan Roberson, CEO of Jilapuhn Inc., of Denver, formerly of East Point, Ga. Roberson's company was the founding sponsor of another credit union--Jilapuhn Employees FCU in East Point, Ga., which was formed in January of 2005 but liquidated by the NCUA eight months later. NCUA liquidated that credit union on Aug. 26 after "determining the credit union had an impaired capital position and was experiencing irresolvable problems in the areas of capital adequacy, cash management, record keeping and management," NCUA said in a press release on Aug. 29, 2005. The credit union had less than $150,000 in assets and served fewer than 200 members, the agency said. In a decision related to an appeal of NCUA's liquidation actions, NCUA stated that the asset management and assistance staff members acting as its agents were "pursuing an investigation of the financial dealing and potential fraud involving federal credit union staff and owner/CEO Jilapuhn Inc., the federal credit union's sponsor organization." Roberson said that the new credit union is not chartered or insured by the NCUA. "We are chartered by the U.S. Virgin Islands and insured through Lloyds of London. We have membership with the New York Credit Union League," Roberson said in an e-mail obtained by News Now. However, the Credit Union Association of New York (the former New York Credit Union League)--which works with affiliated credit unions in the Virgin Island--said that is not the case. "We were approached in 2008 by people starting up the credit union, but all that has been filed is a d.b.a. notification," Bonnie Sklar, public relations coordinator at the New York association, said. "In 2009, we declined membership to the organization because it was not insured by the NCUSIF and because it is not a credit union chartered in the U.S.," Sklar told News Now. CUNA's statistics department contacted another credit union in the Virgin Islands, which verified that HMCU exists there but could not confirm whether it is a legitimate credit union there. When its staff tried to contact HMCU, no phone number was listed under HMCU's name. "They may be trading under a different trade name," the credit union said in an e-mail. The credit union also contacted Virgin Islands' Banking & Insurance office in the Lieutenant Governor's office to ask whether one can charter credit unions under the U.S. Virgin Islands (USVI) law. The individual who answered the phone at USVI did not know, but the supervisor was out of the office. Colorado's Myklebust said his office has been in contact with the USVI regulator and the state's securities office has been alerted. HMCU membership is open only to Virgin Island residents and military and defense department members, but its website indicates it will open a CD for anyone. Its application page is not a secure page for financial transactions. Jilapuhn's company website is still active and now provides a Colorado contact address. The company's site says it is a telecommunications reseller. No one has proved the credit union isn't legitimate. Due to a loophole, the state of Colorado has no legal standing to shut the credit union down. NCUA has no standing either. "This is a Virgin Island-licensed, uninsured entity," said John McKechnie, NCUA director of public and congressional affairs. "They call themselves a 'credit union' and Virgin Island authorities are apparently unable to do anything about this. They aren’t advertising as federally insured and [make] no references to NCUA so, we have no authority," he told News Now.

Bankrate.com CUs viable option on low-rate credit cards

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NEW YORK (5/13/10)--Low-interest-rate credit cards from credit unions are a viable option for consumers who are not looking for the rebates and rewards of major bank credit cards, Bankrate.com said Wednesday. “Credit unions generally offer lower interest rates and fees, so if you carry a balance, they may be cheaper,” the financial news outlet said. Penalty rates on credit union cards also are lower--or may not even exist, Bankrate said. Because credit unions are owned by their members, major rate hikes on the cards and other changes are not as likely as they would be at banks, the news outlet said. The Bankrate article, “Low interest rate credit cards,” encouraged consumers to seek out low interest rate cards that best fit their lifestyle. “If you plan to pay the balance in full, then you might be better off with a rewards card that doesn’t charge an annual fee,” Bankrate said. To read the article, use the link.