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CU System briefs (05/17/2011)

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* POUGHKEEPSIE, N.Y. (5/18/11)--A former marketing director at Poughkeepsie, N.Y.-based Hudson Valley Community CU pleaded guilty to grand larceny in the theft of $400,000 from the branch he worked for in Corinth. Jason LaPierre, 35, of Hudson Falls, who also was a minister at a church there, will be sentenced July 11 for the theft, which occurred over a four-year period. State police said he duplicated some checks and deposited the money into his own accounts. The theft was discovered in December. He faces three to nine years in prison and an order for restitution of the funds (The Daily Gazette May 17) … * GRESHAM, Ore. (5/18/11)--A woman robbed the Gresham, Ore., branch of Beaverton-based Rivermark Community CU late Monday morning after threatening to detonate what turned out to be a fake bomb. Police said the woman handed a teller a note demanding money and pulled the fake bomb out of her pocket. The device was black, cylinder shaped and had wires sticking out of it. The woman demanded large bills and fled with the cash in a sport utility vehicle driven by a man. The Portland bomb squad used a specialized robot to analyze the device and determined it was a fake (nwcn.com May 16) … * MADISON, Wis. (5/18/11)--UW CU, based in Madison, Wis., has been named a 2011 Mpower ChaMpion and a 2011 EPA Green Power Partner. The Mpower ChaMpion program is a free, voluntary carbon reduction program for Madison area businesses. The credit union was one of 18 businesses chosen for the program sponsored by U.S. EPA, City of Madison, Madison Gas & Electric, Campos Comprehensive Engineering and Focus on Energy. It will commit to sustainability initiatives and receive tools and support to complete them. The $1 billion asset credit union also was selected as an EPA Green Power Partner because 57.2% of the electricity for its branch network is generated from renewable resources such as wind power. UW CU is the first credit union in the nation to receive the designation, as well as the first financial institution in Wisconsin, and the 50th company in the state to become a Green Power Partner …

Cheney outlines CU issues at Wisconsin league meeting

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PEWAUKEE, Wis. (5/18/11)--Some of the top issues of concern to credit unions are truly consumer issues and top concerns of 2.2 million Wisconsin citizens who are the member-owners of the
Credit Union National Association President/CEO Bill Cheney tells the Wisconsin Credit Union League annual meeting this week that credit unions' top issues are truly consumer issues. (Photo provided by the Wisconsin Credit Union League)
financial co-ops. That was the message shared by Bill Cheney, president/CEO of the Credit Union National Association (CUNA), with credit unions at the Wisconsin Credit Union League's 77th Annual Meeting & Convention in the Wisconsin Dells. Cheney cited the strength and stability of credit unions nationally--with strong net worth, solid earnings and strong asset quality--as well was their more recognizable profile on Capitol Hill. During a CUNA conference, he said, House Speaker John Boehner praised credit unions and thanked them for not turning their backs on their members during challenging economic times. CUNA presses constantly to know where all 535 members of Congress stand on issues that concern credit unions and be responsive to them, he said. Among the top concerns he discussed were:
* Interchange legislation: The Federal Reserve's proposed rule on debit card interchange fees--set to go into effect July 21--would disadvantage consumers because its current exemption for smaller card issuers won't work as intended. Credit union members who can least afford increased costs would shoulder the effect of the rule, Cheney said, noting that the Dodd-Frank reforms passed last year did not allow the Fed to consider all the costs of providing a card program. However, Cheney added the Fed received more than 11,000 comment letters--about half of them from credit unions--on the issue and that CUNA is working diligently on regulatory, legislative and legal fronts to delay the rule’s implementation. He encouraged activists to use league resources and CUNA’s Grassroots Action Center to urge Wisconsin’s U.S. senators for a delay in the rule, further study and do-over. * Member business lending (MBL). The proposed MBL bill by Sen. Mark Udall (D-Colo.) and Rep. Ed Royce (R-Calif.) to increase the MBL lending cap is “a win on the public policy argument,” Cheney said. The measure, supported by the Treasury Secretary and Obama administration, would add $13 billion of new credit and create 140,000 jobs in the first year alone at no cost to taxpayers. Already, including Udall and Royce, it has 19 co-sponsors in the U.S. Senate and 26 in the House, and support is bipartisan. “The MBL legislation is important to all credit unions because of how important it is to the whole economy,” Cheney emphasized. Credit union business loans nationally have a charge off rate of 0.66% for 2010, compared with banks’ rate that is nearly three times higher at 1.75%. “Long before there was a Federal Credit Union Act, credit unions made business loans for provident purposes,” he said, adding that a banker once admitted to him that credit unions making business loans helps his bank because everyone benefits when entire economies are more prosperous. Passing the MBL legislation is still a top priority for the movement, he said. * Credit union taxation. While no one on Capitol Hill has suggested increasing taxes on credit unions, Cheney emphasized that the movement should be vigilant because Congress is looking to broaden the U.S. tax base to lower tax rates for everyone. A tax on credit unions is a tax on members, not a corporation, he said, urging credit unions to continue sharing stories of how they help working people and communities. The most revenue that could be raised by new taxes on credit unions--around $1 billion--pales in comparison to the $14 billion in annual savings from better rates and lower fees that credit unions accrue for their members, he said, adding that preserving credit unions’ tax status is policy that is pro-consumer. * Supplemental capital. Credit unions must have access to new forms of capital so they don’t have to pass costs on to members and can avoid needing to shun member deposits, Cheney stressed. He noted comments of National Credit Union Administration (NCUA) Board Chair Debbie Matz in support of supplemental capital and distinguished between new streams of capital and “ownership capital,” which credit unions would not be willing to forego. * Regulation & exams. Credit unions’ increasing regulatory burden is not a sustainable path forward, Cheney said, adding that CUNA would continue to challenge the NCUA budget as a continuing drain on member resources. He pointed to the Credit Union Bill of Rights intended as a guide credit unions can point to when interacting with NCUA examiners, as well as a website for sharing concerns about exam practices.
To access those, use the links.

New CUs for Kids website now live

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SCOTTSDALE, Ariz. (5/18/11)--A new Credit Unions for Kids website went live Monday. Credit Unions for Kids is a nonprofit collaboration of credit unions, chapters, leagues/associations, and business partners nationwide engaged in fundraising activities to benefit 170 Children’s Miracle Network (CMN) Hospitals. The website allows credit union supporters to:
* Meet their state’s Champion patient; * Share their personal miracle story; * Learn about Credit Unions for Kids national campaigns; * Download fundraising ideas and materials; * Discover best practices; * Find their local CMN Hospital; and * Reveal their Credit Unions for Kids success stories.
“The new website will be a critical component in our effort to drive both awareness and fundraising,” Joe Dearborn, senior director of Credit Unions for Kids, told News Now. “The site really has something for every credit union that’s interested in fundraising for their local Children’s Miracle Network Hospital. “A very special shout out and thank you to Fabian Geyrhalter and Sara Hoerner at Geyrhalter & Company for a fantastic job with the design and rebuild,” Dearborn added. “Without the very generous support from the team at Geyrhalter this project would not have been possible. In addition, a sincere thanks to Felicity Guerin [in the Washington, D.C., office of the Credit Union National Association] for all her efforts.” To see the website, use the link.

St. Paul Croatian depositors sue NCUA

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CLEVELAND (5/18/11)--Two former members of St. Paul Croatian FCU, the now defunct Eastlake, Ohio, credit union, are suing the National Credit Union Administration (NCUA) in federal court, alleging NCUA erred in calculating their accounts and that the deposit insurance money paid to them was inadequate. Plaintiffs Steve and Marija Skertic owned several joint accounts at the credit union and are petitioning the U.S. District Court for the Northern District of Ohio, Cleveland, for additional payment of $164,000 from NCUA. NCUA had to liquidate St. Paul Croatian in April 2010 because of fraud. The failure cost the National Credit Union Share Insurance Fund $170 million. A grand jury already has indicted 16 people on charges related to fraud at the credit union (News Now March 4 and May 17). According to court documents, the balance of the Skertics’ joint account with St. Paul Croation on the liquidation’s date of April 30, 2010, was $718,330. NCUA determined that only $553,844 of the Skertics’ joint accounts was insured, and paid that amount to them on June 24, 2010. The balance of $164,486 was deemed uninsured and was not returned, the complaint said. On March 17, NCUA denied the Skertics’ appeal regarding the deposit payment, upholding the liquidating agent’s decision. Under NCUA rules governing share insurance, the Skertics could have simply moved money from some of their accounts to other accounts to be fully insured. However, NCUA and St. Paul Croatian FCU told the Skertics their accounts were fully insured, the complaint said. They claim NCUA’s action violates Section 745 of its rules regarding notice of insurance coverage of member accounts and that it violated the fifth and fourteenth amendments of the U.S. Constitution regarding deprivation of property without due process.

PCUA PCUF boards elect officers

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HARRISBURG, Pa. (5/18/11)--The Pennsylvania Credit Union
Association (PCUA) and the Pennsylvania Credit Union Foundation (PCUF) have elected new board officers, according to PCUA (Life is a Highway May 17). Mike Kaczenski, CEO of Sun East FCU, Aston, has been elected chairman of PCUA's board, succeeding Ray Brunner, CEO of WEST AIRCOMM FCU, Beaver. Brunner's term ended Friday at the conclusion of PCUA's 77th Annual Convention. Kaczenski has served on the board since 2004 and was vice chairman the past two years. Maria LaVelle, CEO of Westmoreland Community FCU, Greensburg, was elected vice chairman of the PCUA Board. LaVelle has served on the board since 2009. She also is a member of the foundation's board. Brunner will become the foundation's chairman for a two-year term, succeeding Diana Roberts, Hershey (Pa.) FCU. Kaczenski will serve as an ex officio member of the PCUF board, along with Roberts, who replaces foundation chairman Norb Kaczmarek on the board. Also, Carol Fastrich-Aranos of AmeriChoice FCU, Mechanicsburg, was named to the PCUF board to fill a seat vacated by Margie Coan of Transit Workers FCU, Philadelphia.

ACUCs Hispanic Outreach events begin May 24

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MADISON, Wis. (5/18/11)--The Credit Union National Association (CUNA) and Coopera Consulting, a credit union Hispanic outreach consulting firm, Monday announced two Hispanic outreach events will be held in conjunction with CUNA’s America’s Credit Union Conference & Expo (ACUC), June 19-22 in San Antonio. CUNA and Coopera will host a free pre-conference webinar May 24 on Latino Membership Growth. The event is for credit unions seeking to learn more about how to grow Latino membership by exploring trends, tools and best practices. The interactive webinar will include a presentation and Q&A with the presenters, Miriam De Dios, vice president of Coopera, and Warren Morrow, CEO and founder of Coopera Consulting. Coopera and CUNA also will host a half-day Latino Membership Growth Forum June 19 at CUNA’s ACUC. The session will provide hands-on opportunities to work with tools that help grow and serve Hispanic membership. Each participant will receive a free assessment of the financial opportunity and membership growth potential for reaching Hispanics within their credit union’s market. Participants also will learn about the Texas Credit Union League’s Juntos Avanzamos initiative--an outreach initiative TCUL created to empower Texas credit unions to more effectively meet the needs of their Hispanic community--and about the Network of Latino Credit Unions and Professionals--an organization dedicated to increasing the representation and participation of Latinos in the credit union movement. The 2010 Census reported that more than half of the growth in the total U.S. population between 2000 and 2010 was due to an increase in the Hispanic population. “Credit unions that offer products and services tailored to Hispanic markets are well-positioned to capture a loyal and growing member base,” said Laida Garcia, chair of CUNA’s Hispanic Outreach Committee. “These events and the overall program at ACUC will help prepare credit union leaders to capture the opportunity.” For more information, use the links.

2011 year of system intrusion says CUNA Mutual fraud expert

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MADISON, Wis. (5/18/11)--Last week’s debit breach at retailer Michael Stores Inc., where at least 90 payment terminals in 20 states were tampered with, came as no surprise to Ann Davidson, senior consultant in risk management for CUNA Mutual Group, and others in the card security business. Davidson called 2011 “the year of the system intrusion,” with card associations such as Visa and MasterCard reporting two or three breaches every day. The uptick in fraud is one of the downsides of the today’s wired world, Davidson said. “As everything is moving to electronic, criminals are getting more sophisticated too,” Davidson told News Nows. “They’re relentless. They continue to search until they find the weakest link. At the end of the day, they want to find the easiest way to put cash in their pockets.” And there are many “links” in the card processing chain that provide potential points for entry for fraudsters. In addition to the credit union’s card system, criminals can tap into merchant encryption, third-party processors and point-of sale software. With such sophisticated attacks, Davidson said it is critical that a credit union has in place a fraud management system that automates the process of fraud detection, raising alerts based on pre-defined rules and proactively analyzing transaction data. Davidson likened a fraud management system to a home smoke detector. “If something’s smoking, the alert goes off,” she said. But just as important, she adds, someone has to be home to extinguish the flames. “It’s great to have it in place, but somebody has to be in place to react 24 hours a day, seven days a week, 365 days a year,” she said. Once fraudulent activity is detected, Davidson advised credit unions to contact their service provider, processors and card associations. “Communication is key,” she said. As proof she pointed to the detection of the Heartland Payment Systems breach in 2009. “Credit unions were critical to uncovering that breach,” Davidson said. “They got on the horn with their card associations. They sent out communications to everyone involved that they were noticing an increase in card fraud.” Communication is vital because if multiple financial institutions or merchants are involved, processors and associations are equipped to put the pieces to together to detect a global breach. “It’s a team effort,” Davidson said. “There’s no silver bullet in the world of card exposures.”

Illinois CU activists unlock the vault at state Capitol

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NAPERVILLE, Ill. (5/18/11)--Nearly 120 credit union leaders attended the Illinois Credit Union League’s (ICUL) recent Legislative Day.
Click to view larger image Attendees of the Illinois Credit Union League’s recent Legislative Day in Springfield were offered an impromptu tour of the state’s vault. (Photo provided by Illinois Credit Union League)
Illinois State Treasurer Dan Rutherford, a strong credit union supporter, delivered the keynote address, and offered the ICUL delegation an impromptu tour of the state’s vault. The vault, located two stories beneath the Capitol, no longer stores cash, but is used for storing valuables from unclaimed property. Brent Adams, secretary of the Illinois Department of Financial and Professional Regulation, and Michael Fryzel, National Credit Union Administration board member, provided attendees with an overview of the regulatory environment from both state and national perspectives. State Rep. Joe Lyons (D-Chicago) and State Sen. David Koehler (D-Pekin) also addressed the delegation, with most of their remarks focusing on the state’s fiscal challenges. Prior to Hill visits with their state legislators, participants were briefed by ICUL staff members. Steve Olson, executive vice president, general counsel and chief operating officer, and Keith Sias, vice president of state governmental affairs, provided an overview of key legislative initiatives and the current legislative environment in Illinois. Nearly 6,000 bills have been filed during the spring session of the Illinois General Assembly. The ICUL is monitoring 250 bills with a potential impact on credit unions. Of those, about 25 remain in process. As expected, several bills that would negatively impact lenders in the areas of mortgage foreclosures and collections have been introduced. ICUL has worked to defeat these bills in committees. Bills of interest to credit unions include:
* H.B. 3050, an initiative to keep components resulting from Executive Order 2004-6 negotiated as part of an agency consolidation in 2004, including maintaining an independent department of financial institutions with its own director. The league is neutral on this bill as a result of a civil penalties assessments provision proposed by the Illinois Department of Financial and Professional Regulation. The bill has unanimously passed both chambers and is being forwarded to Illinois Gov. Patrick Quinn. * H.B. 2101, which clarifies the existing authority of counties to invest funds with credit unions and provides clarification within the counties code for procedures for such investments. The league supports this bill, which passed the House on April 5 and is on a third reading in the Senate.
More than 50 bills relating to the mortgage foreclosure crisis were filed during the spring session. ICUL said it has been actively involved in efforts to provide meaningful relief to Illinois homeowners impacted by the foreclosure crisis without burdening the financial services industry. The league’s approach is to attempt to fine-tune the mortgage foreclosure process, rather than penalize lenders--and, ultimately borrowers--through increased fines and penalties. Three competing bills are moving through the legislature to address foreclosures in different ways. Of the three, ICUL opposes two, because they would impose new fees, assessments and restrictions on lenders with little relief for homeowners. ICUL’s Legislative Day concluded with a reception, where more than 160 were in attendance, including credit union officials and 30 members of the Illinois General Assembly and other dignitaries. The Illinois General Assembly is scheduled to adjourn May 31.