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CU System Briefs (05/13/2013)

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  • YORKTOWN, Va. (5/13/13)--A Virginia man who pleaded guilty to robbing a Credit Union Service Center in Yorktown, Va., in August, was sentenced to 40 years in prison Thursday, with 25 of those years suspended (Williamsburg-Yorktown Daily and Daily Press May 10). Conway Cook received a harsher sentence than normal because during the Aug. 3 robbery, he allegedly passed a note to a teller, instructing her to keep her hands where he could see them or he would press a button on his cell phone to detonate a bomb. He pleaded guilty to one count of robbery in February. At the sentencing hearing, he told the judge Satan told him now to rob a bank to get money for drug ...
  • DURHAM, N.C. (5/13/13)--The civil and human rights community honored consumer advocate Martin Eakes May 2 with its highest honor--the Hubert H. Humphrey Civil and Human Rights Award--for his work as a champion of economic empowerment for women, low-income, rural and minority communities. Eakes is the co-founder and CEO of Self-Help CU in Raleigh, N.C., which provides consumer financial services, technical support, and advocacy for the economically disadvantaged. Self-Help has invested more than $6 billion in loan financing to female, low-income, minority and rural borrowers. As CEO of Self-Help's Center for Responsible Lending, Eakes has spearheaded the fight against predatory lending practices and is regarded as a leading national advocate for fair lending practices and sound economic policy, said The Leadership Conference website  (civilrights.org April 18) ...
  • MONTPELIER, Vt. (5/13/13)--Ginny Fleischman, president of Green Mountain CU, South Burlington, Vt., has retired after more than 20 years of service with the credit union, the Association of Vermont Credit Unions said (Newslines Express May 10). Fleischman served nine years on the AVCU Board of Directors, including three years as secretary and one year as treasurer. She also served on several AVCU committees. During her years at Green Mountain CU, the credit union grew to $20 million in assets from $3.5 million. Fleischman will stay on with the credit union in an administrative capacity ...

In The Media: Leagues Stress CU Difference, Tax Exemption

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MADISON, Wis. (5/13/13)--Leagues continue to set the record straight on why credit unions' not-for-profit, cooperative status have earned them their tax exemption. In Oregon and Illinois, where banks are seeking legislation to end that status, leagues have weighed in with opinion-editorials in local and statewide media.

An opinion-editorial by Illinois Credit Union League President/CEO Daniel Plauda, which originally appeared in the State Journal-Register April 24 and was reported in News Now (April 26), has been picked up for coverage by other publications in the state, including the Illinois Times (May 9), and the Belleville News-Democrat (May 8) .

In it, he said taxing credit unions won't save the state's budget deficit and that doing so would "pick the pockets of almost three million state residents who rely on credit unions to provide them with affordable financial services."

Northwest Credit Union Association President Troy Stang, in an opinion article, "Credit Unions are Different--They Value People Over Profits," in the Portland (Ore.) Business Journal (May 3), noted that Oregon banks are pushing a bill "that would impose extra regulatory burdens and expenses on credit unions. If the bill should pass, it could force some credit unions to eliminate services and drive up the costs of others."

Roughly 1.4 million Oregonians are credit union members "because they appreciate better interest rates and personalized service that comes from doing business with local, member-driven, not-for-profit financial cooperatives," he wrote, adding Oregon members saved an average of $152 per household in 2012, or $110 million statewide.

Credit unions pay their members, not stockholders and they "did not engage in the risky, irresponsible big-bank behavior that nearly brought out economy to its needs in 2008 and required tens of billions of taxpayer dollars to bail them out," wrote Stang.

He also cited Voter/Consumer Research that found 90% of Oregonians had a favorable view of credit unions, compared with 53% for banks.  "The poll also found that 82% of Oregonians believed that credit unions, regardless of size, should not be taxed more than they already are, because their cooperative structure allows them to return tangible benefits to members."

A third league president, Patrick La Pine of the League of Southeast Credit Unions, in an op-ed about accepting public deposits in the Orlando Sun-Sentinel, also addressed the attacks on the tax exemption. (See related story, LSCU CEO Sun-Sentinel Op-ed: Let CUs Accept Public Deposits, in today's News Now.)

Two Elected To Maine League Board

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PORTLAND, Maine (5/13/13)--Two elections for the Maine Credit Union League Board of Directors were recently held at the York County and Jeannette G. Morin Chapter meetings, the league said.

The York County Chapter re-elected Luke Labbe, president/CEO of PeoplesChoice CU in Saco, to a new three-year term on the league board (Weekly Update May 10).

Also, the Jeannette G. Morin Chapter elected Roger Sirois, president/CEO of Atlantic Regional FCU in Brunswick, to a three-year term. Sirois replaces Gail Richardson, president/CEO of Midcoast FCU in Bath and a member of the league board since 2000. Richardson is retiring in June.

Both terms will begin following the league's Annual Meeting June 14.

Maine League Testifies On Seven Foreclosure Bills

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PORTLAND, Maine (5/13/13)--The Maine Credit Union League testified on seven foreclosure bills before the State Legislature's Judiciary Committee Wednesday.

The league testified on a bill that would establish a timeframe for mediation, allow for an option for the borrower to out of the mediation program and shorten the redemption period cases where mediation was completed (Weekly Update May 10).

The league helped draft the bill. Testifying on behalf of the league was attorney Ben Marcus, the league's legislative counsel. In his testimony, Marcus said the league believes the bill balances the interests of consumers and lenders by providing reasonable and modest changes to the current system.

Marcus also testified in support of LD 1389, which would expedite the foreclosure process. The changes in the bill would make the foreclosure system more efficient, effective and better able to serve those that need assistance, Marcus said.

Other bills Marcus provided testimony on included:

  • LD 612, which would protect owners of property in foreclosure from accumulating debts when mortagees refuse to complete the foreclosure process;
  • LD 1116, which would amend the attorney's fees provision in foreclosure actions; and
  • LD 784, which would impose penalties for residential mortgage fraud and false representation concerning title;
Another bill, LD 392, designed to protect homeowners and reduce foreclosure fraud, was passed by both the House and Senate before it was vetoed by Gov. Paul LePage. The bill required, upon request, that the original mortgage note be produced for foreclosure proceedings to continue.

"We feel that this bill makes certain that the consumer's interests remain paramount and a top priority throughout the process, while providing the appropriate safeguards to ensure foreclosures are not unreasonably delayed and protects against abuses of the system, Luke Labbe, president/CEO of PeoplesChoice CU, Saco, wrote in testimony submitted on behalf of Maine's credit unions in support of the bill.

The league also testified in opposition to LD 807, also would provide protection to a condominium when a condominium is foreclosed on. The bill had been presented in two previous legislative sessions.

LD 807 would negatively impact the availability and terms of mortgage loans to acquire condominium units throughout the state, Quincy Hentzel, the league's director of governmental affairs, said in her testimony.

LSCU CEO Sun-Sentinel Op-ed: Let CUs Accept Public Deposits

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TALLAHASEE, Fla. (5/13/13)--Florida lawmakers should consider legislation to allow credit unions to accept public deposits from municipalities and public offices, Patrick La Pine, president/CEO of the League of Southeastern Credit Unions, wrote Friday in an op-ed in an Orlando, Fla., newspaper, the Sun-Sentinel.

Because such a measure was not considered in the 2013 Florida legislative session, limitations will continue on municipalities and prevent them "from seeking better, more competitive rates of returns for their investments, as well as from establishing a financial relationship with their local credit union, with which they may already have a personal relationship," La Pine wrote.

When credit unions in the state receive deposit requests from local government agencies, the credit unions must deny them because Florida law permits only commercial, for-profit banks to receive those funds, he added.

Banks posit a specious argument that because credit unions "don't pay taxes" the way banks do, they should not be allowed to serve local governments, La Pine wrote. That claim is false because credit unions do pay "tangible property taxes, real property taxes and all employment taxes like a bank," he added.

The reason credit unions are exempt from paying state and federal income taxes is because they have a not-for-profit structure and a mission of serving their communities, La Pine explained.

"Credit unions are 100% locally owned and return all profits back to their Florida membership in the form of lower fees, better interest rates and better returns on deposits. If this good measure to allow credit unions to accept public deposits is not given a fair consideration soon, it's the taxpayers who will continue to lose out," La Pine concluded.

To read the op-ed, use the link.

Several other states allow credit unions to accept public deposits or have considered or are considering legislation. They include California, Illinois, Missouri, New Jersey, New York, Oregon and Washington.

Consolidation Among CUs Continues

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MADISON, Wis. (5/13/13)--Credit union mergers continue to occur nationwide, with smaller credit unions looking to pool their resources through consolidation to better serve members, while others look to garner larger memberships or growth in a specific community or area.

Among the mergers:

  • Cone Drive Gears FCU, based in Traverse City, Mich., with $3.6 million in assets, merged into Traverse City, Mich.-based Members CU with $210.5 million in assets. The recent economic downturn and regulatory pressure from the Dodd Frank Act led to Cone Drive Gears FCU seeking the merger, said Members CU (SNL Bank and Thrift Daily May 1).
  • The $10.4 million asset Brockton (Mass.) Postal Employees CU--the oldest U.S. postal credit union--merged into Brockton-based Crescent CU, with $401.8 million assets, and the new entity operating under the Crescent CU name. The merger will allow both credit unions to garner a more competitive edge amid a time of compressed margins and low interest rates, Crescent said (Banker & Tradesman May 8).
  • Oak Creek, Wis.-based Lakeside CU, with $8.8 million in assets, merged into Educators CU, based in Racine, Wis., with assets of nearly $1.5 billion. Educators' members were looking to get a branch in the Oak Creek area, so the addition of Lakeside fits that need, Educators said (MilwaukeeJournal-Sentinel April 25).
  • Two Houston credit unions, StarTrust FCU, the former Enron employees credit union, will merge with InvesTex CU, effective July1, to achieve competitive advantages and economies of scale, according to the StarTrust website. The merger will create a credit union operating as InvesTex CU, with six branches in the Houston area and more than $170 million in assets, serving roughly 27,000 members.

National Co-op Bank Names Mercer As Vice Chair

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WASHINGTON (5/13/13)--Michael Mercer, president/CEO of Georgia Credit Union Affiliates, has been elected to a second term as vice chair of the National Cooperative Bank board of directors.

The announcement was made at the annual meeting of the financial services company, which serves  the nation's cooperatives, Thursday in Washington, D.C.

He will be next in line for the board chairmanship after 2013.

Al Plamann, who recently retired as president/CEO of Unified Grocers in Commerce, Calif., was re-elected as president.

The board also welcomed two new members:  Martin Lowery, executive vice president, external affairs of National Rural Electric Cooperative Association, Arlington, Va., and Mary Ann Rothmann, executive director of the New York City Council for Cooperatives.

Mercer was chairman of the Credit Union National Association last year.

NCB's board members represent different industries where cooperative play an important role.

USA TODAY Spotlights CUNA's Student Loan Survey

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NEW YORK (5/13/13)--
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USA TODAY shone a spotlight on the Credit Union National Association's High School Student Borrowing Survey by featuring a graphic of key survey results on the front page of its Money section in Friday's nationwide print edition.

The chart is in the popular "USA Snapshot" space in the lower left-hand column under the heading: I pick 'D. Don't Know' and shows the percentage of students who said "don't' know" when asked these questions about student loans and college expenses:

  • Average student loan rate: 83% didn't know;
  • Student loan duration:77%;
  • Number of loans needed to graduate: 61%; and
  • Expected debt at graduation: 50%.
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The source attribution says: "Source: CUNA survey of 846 teens age 17-18."

CUNA's survey found that half of high school seniors have no idea what college will cost or how debt works and indicates many lack basic financial knowledge, according to Paul Gentile, CUNA executive vice president of strategic communications and engagement.

USA TODAY's chart is another step in generating awareness about the plight of students overloaded with student loan debt when they graduate from college. Student loan debt, which was more than $1 trillion in 2012, is the largest source for consumer debt in the U.S., a fact that has caught the attention of federal agencies such as the Consumer Financial Protection Bureau (News Now April 23).

"Credit unions are a good source to go to for help. They can provide financial education so students better understand the basics and how their decisions on college funding impact their financial future," Gentile noted.  "Credit unions also provide affordable funding with private student loans at reasonable terms," he added.

CUNA and credit unions are urging Congress to permit credit unions to offer longer-term private student loans so students have an affordable alternative. Federal credit unions are limited to loans with maturities of 15 years or less, with certain exceptions such as mortgage loans, by laws that were enacted when the college tuition and other costs were less expensive.

A number of media have reported CUNA's survey findings, including NBC, The Wall Street Journal, Huffington Post and Bankrate.com.

Coordinated Attack Hits N.Y. City ATMs With $45M Breach

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NEW YORK (5/13/13)--An alleged international gang of cybercriminals stole $45 million by hacking their way into a database of prepaid debit cards and then draining ATMs worldwide, federal prosecutors said Thursday.

Eight members of the alleged gang's New York City crew stole about $2.4 million from about 3,000 ATMs in the metropolitan area during February, according to a four-count conspiracy and money-laundering indictment unsealed  in Brooklyn (USA Today May 10).

After reaching out to its member credit unions in the New York City area Friday, the Credit Union Association of New York could not identify any credit unions with ATMs that had been compromised in the attack.

"New York City has a ton small credit unions," said Ron McLean, CUANY senior vice president of support services. "Most of them do not have a lot of ATMs."

The ATMs of Municipal FCU, New York, the largest state-chartered credit union in New York City, do not appear to have been compromised in the attack, Michael Mattone, the credit union's assistant vice president of public relations and corporate communications told News Now.

"We have not been contacted by authorities," Mattone said. "Our security department is double checking to be sure that none of our ATMs were used in the attacks."

The cybercriminals would hack into the computer systems of credit card processors, steal information involving prepaid debit card accounts and eliminate the withdrawal limits and balances of those accounts. Organized crime cells would then withdraw unlimited amounts of cash from ATMs before the operations would be shut down.

Thieves carried out two lucrative unlimited operations between October 2012 and last month, the indictment said. In the first attack, hackers working with the gang on Dec. 22 allegedly targeted a credit card processor that handled prepaid MasterCard debit cards issued by the National Bank of Ras Al-Khaimah, a United Arab Emirates bank also known as Rakbank.

The second unlimited operation allegedly took place between the afternoon of Feb. 19 and the pre-dawn hours of the following day. Hackers allegedly compromised computers of the processor of prepaid debit cards for the Bank of Muscat, located in Oman. In about 10 hours, gang members in 24 countries conducted about 36,000 ATM transactions, withdrawing an rougly $40 million, the indictment said. The withdrawals included $2.4 million by the alleged New York crew.