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More suits filed on ATM notices in New Mexico

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LAS CRUCES, N.M. (5/24/11)--Three more lawsuits over ATM disclosures of fees have been filed against three credit unions in New Mexico by a Michigan couple who have already filed dozens of similar suits in Michigan and elsewhere. Nancy Kinder and Ray Harrison of Fowlerville, Mich., both retirees, drive around the country looking for ATMs without proper fee-notification signs and photograph ATMs without legal signage, according to court records. They then file class actions lawsuits against credit unions and banks who own the ATMs, saying nondisclosure of fees charged for transactions at ATMs violates Regulation E, the Electronics Funds Transfer Act. The law requires institutions to post a notice in a prominent place on the ATM about fees. More than 36 lawsuits, excluding the most recent three, have been filed in the past 18 months. Working with them is a Chevy Chase, Md., lawyer, Geoffrey Bestor, who teams with local attorneys to file the cases in other states. Bestor and Richard N. Feferman of Feferman & Warren, Albuquerque, N.M., filed the three New Mexico lawsuits. The latest suits are against White Sands FCU and Chino, FCU, both of Las Cruces, N.M., and Firstlight FCU, El Paso, Texas. Firstlight owns and operates several ATMs in New Mexico, said court documents. The suits filed are identical, except for the ATM and credit union information, and were all filed May 17. The rash of suits prompted CUNA Mutual Group to issue a warning to credit unions about a "significant" spike in lawsuits against credit unions related to ATM fee disclosures. Twelve suits were filed between mid-December and January (News Now Jan. 14). At that time, the insurance company said many credit unions sued erroneously believed that a fee notice sign was not necessary since the fee was disclosed on the terminal screen of the ATM. Some suits were prompted when institutions changed their fees but not their signs.

Fed in TCF case files appeals court argument

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WASHINGTON (5/24/11)--Free market vs. price fixing in the interchange debate has found its way into the Federal Reserve Board arguments filed Friday against TCF National Bank's appeal to block the Fed's implementation of proposed debit card interchange fee cap regulations. In its brief, filed in the U.S. Court of Appeals for the Eighth Circuit, the Fed argued that TCF Bank's expectation for a continued revenue stream from debit transactions is not dependent on the free market but on card companies such as Visa, who set the prices. In its court case brief, the Fed maintained that the a debit card interchange fee cap contained in the Dodd-Frank Wall Street Reform Act "seeks to correct inefficiencies in the market for debit card service by requiring that interchange fees be "reasonable and proportional to the costs of debit transactions is entirely consistent with principles of due process." It noted that TCF Bank "characterizes its interest as a 'right to recover costs plus a reasonable return on the capital invested in its extensive, debit card operation." A protected interest, however, must be more than a unilateral expectation or an abstract need and cannot be merely speculative, the Fed argued. "Nothing in plaintiff's contract with Visa guarantees any minimum interchange fee or even limits the circumstances in which Visa can reduce the fee schedule," said the Fed, noting the lower district court found that "Visa retains unmitigated discretion to set debit interchange fees and there is no statutory or contractual provision guaranteeing TCF a certain level of interchange income." The Fed also indicated that "a continuing threat of litigation creates a meaningful risk that Visa will have to make additional fee adjustments." The bank had argued that Visa has the theoretical right to cut its interchange drastically but said economic and business constraints on Visa will prevent it from substantially reducing the fees. Its appeal is from a decision by the U.S. District Court for the District of South Dakota in Sioux Falls, in which the court denied the bank's motion for a preliminary injunction on April 4 but also did not dismiss the case. TCF's lawsuit, filed in October, states the government cannot write laws--such as the interchange law--that would arbitrarily prevent a business from recovering its costs sufficiently to avoid losses on its business operations. The Credit Union National Association as well as the Clearing House Association LLC, American Bankers Association, Consumer Bankers Association, The Financial Services Roundtable, Independent Community Bankers of America, Midsize Bank Coalition of America, and the National Association of Federal Credit Unions have backed TCF in its suit.

Pair guilty in 1.2M theft in Sharebuilders FCU collapse

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LAS VEGAS (5/24/11)--A Las Vegas couple pleaded guilty Thursday to embezzling $1.2 million from the now defunct Sharebuilders FCU in Northridge, Calif. Mireya Guadaloupe Gonzalez, 37, former manager of the credit union from January 2005 to March 2007, pleaded guilty to one count of embezzlement. She and her husband, Jorge Luis Gonzalez, 35, also pleaded guilty to one count of subscribing to false income tax returns (Las Vegas Sun May 20 and Las Vegas Review-Journal May 21). The Internal Revenue Service (IRS) Criminal Investigation unit and the Federal Bureau of Investigation said Mireye Gonzalez electronically transferred funds from several accounts that were inactive or had minimal funds to a joint checking account with her husband and to two accounts in her children's names. She also allegedly deposited funds from the credit union's general ledger accounts to family accounts. She covered up the thefts by changing names and numbers assigned to the dormant accounts, transferring balances to the dormant accounts from other accounts and providing false information to auditors hired by the credit union. IRS said they didn't report $676,000 in embezzled income in 2005 on their joints tax returns, as well as $338,000 for 2006 and $150,000 for 2007. The withdrawals created large negative balances that substantially jeopardized the safety and soundness of the credit union, said the IRS. The National Credit Union Administration shuttered the credit union in April 2007 due to insolvency.

CUSN announces shared-branch excellence awards

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LAKEWOOD, Colo. (5/24/11)--CU Service Network (CUSN) announced its honorees for the fourth annual Shared Branching Excellence Awards. The awards were presented during the CUSN 2011 annual meeting in Aurora, Colo., May 11. CUSN participants and partners are recognized by CUSN for their work in support of shared branching. CUSN presented awards in two categories. For the Excellence Awards, two awards were presented to credit unions that are active on the network and have achieved the greatest growth/transactions in 2010. They are:
* Latah FCU, Moscow, Idaho--greatest acquirer transaction growth--84%; and * White Crown FCU, Denver--largest ratio of annual issuer transactions to total members--ratio of 6.67.
For the Marketing Excellence Awards, two awards were presented:
* Dupaco Community CU, Dubuque, Iowa--best marketing campaign; and * Horizons North CU, Northglenn, Colo.--best marketing campaign (honorable mention).

CUs hit by tornados CUAid activated

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ST. LOUIS (5/24/11)--Tornados touched down in Missouri and Wisconsin Sunday, causing the National Credit Union Foundation (NCUF) to activate its online disaster relief system, CUAid.coop, to raise money for credit union people affected by a Missouri tornado. A massive tornado struck the town of Joplin, Mo., Sunday, leaving at least 89 dead, the business district demolished and nearly one-third of the community devastated in its wake. The Missouri Credit Union Association (MCUA) is working with local credit unions to help in the aftermath. “All four credit unions with locations in Joplin have checked in with some level of damage,” said Mike Beall, president of MCUA. “Following reports from local credit union leaders, we asked the NCUF to activate CUAid.” MCUA made a donation of $10,000 to CUAid to kick-off the fundraising efforts, and contributions from credit unions bring the total to in excess of $40,000 just hours after activation. The four Missouri credit unions with branches in Joplin--District 7 Highway CU, Great Plains FCU, Joplin Metro CU and Postal Federal Community CU--experienced various levels of damage. Details are currently limited to impact on credit union structures. Postal Federal Community CU’s Joplin branch--a CO-OP Network shared branch--is severely damaged and closed. President Steve Pierson reported there are windows blown out, no power and little access. There is no word when the credit union will reopen. Cindy Atteberry, president of Joplin Metro CU, reported minor damage to the credit union’s locations. Offices are closed without computer access and security running on generators. “I hope no one ever has to go through this,” said Atteberry. “It’s truly horrible.” In addition to the damage at the credit union, Atteberry has a personal toll to bear. Her home was demolished in the storm. Ken Martin, president of Great Plains FCU, said its offices have suffered damage and instructed employees to stay home. The Missouri National Guard closed the area to traffic while it continued its search for storm victims. Offices of District 7 Highway CU had minimal damage, but are without power or telephone. “It’s heartbreaking to see such devastation,” Beall said. “With nearly 40,000 members in the area represented by these four credit unions, we know the need for support from the movement will be great. I urge everyone to give what they can to CUAid to help credit unions do what they do best--be there in times of need for their members.” Natural and man-made disasters often create immediate, emergency needs as well as long-term, ongoing needs. In response, the NCUF’s CUAid disaster relief funds can be used for a broad range of disaster-related needs such as critical care, long-term recovery, insurance pay-outs and reasonable operational needs. MCUA also has made a $5,000 contribution to the American Red Cross for Missouri tornado victims. The Wisconsin Credit Union League told News Now it had received not reports from credit unions in the LaCrosse, Wis., area, which was hit by a tornado Sunday. To make a donation, use the link.

Interchange addressed in Longs meeting with CUs

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SPRINGFIELD, Mo. (5/24/11)--The need for a delay in implementing the debit interchange amendment led the conversation that representatives of five Springfield area credit unions had with U.S. Rep. Billy Long (R-Mo.) May 16 at a meeting in his district office.
Click to view larger image Members of Springfield, Mo., credit unions who recently met with U.S. Rep. Billy Long (R-Mo.) about interchange were, from left: Don Ackerman, TelComm; Amy McLard, Missouri Credit Union Association; Steve Pierson, Postal Federal Community; Cathy Stroud, Community Financial; Carolina Decker, CU Community; Long; Judy Hadsall, CU Community; and Debbie Bills and Kathie Peterie, Metro. (Photo provided by the Missouri Credit Union Association)
Long discussed the issue at length and said his office is hearing from merchants, claiming they are responsible for fraud costs. Meeting attendees brought up a recent data breach and fraud at Sony and Michaels Stores, and how financial institutions cover fraud costs (The Missouri difference May 20). “Our meeting with Congressman Long illustrated that too often [lawmakers] are given misinformation by our opponents, as was the case here,” said Steve Pierson, Postal Federal Community CU president/CEO. The Federal Reserve is not allowed to incorporate most fraud costs into the calculation for the debit interchange rule that is set to go into effect on July 21, said the Missouri Credit Union Association. Although it was due on April 21, the final rule has not been released. The House bill, H.R. 1081, the Consumers Payment System Protection Act, is co-sponsored by U.S. Rep. Blaine Luetkemeyer (R-Mo.), and would delay implementation of the debit interchange amendment language for one year. Attendees also discussed the need to increase member business lending limits for credit unions and the importance of the credit union tax-exempt status. U.S House members nationwide are home in their districts this week. “I think it’s important to get an audience with our politicians as much as possible in today’s environment,” said Judy Hadsall, CU Community CU president/CEO. “We provided information on several issues to Mr. Long, and as a businessman, he understands the importance of protecting the open marketplace without government intervention.” The Credit Union National Association (CUNA) opposes a proposal in Congress capping interchange fees and has told federal lawmakers that such action would harm consumers by driving up costs of debit cards, limiting consumer options, and harming competition and technological innovation. Interchange fees allow business costs, including the risk of consumer nonpayment, to be shared by the payments participants, CUNA said. CUNA supports delaying implementation of the proposal until its impact is studied. In a related matter, Cathy Stroud, president/ CEO of Community Financial CU, Springfield, is representing credit union concerns as a member Long’s Small Business and Banking Advisory Council. Long established the council to focus on small business and banking policies, legislation, and additional concerns of the small business and banking industries. Stroud accepted the invitation last week.

Federation CEO honored by Lawyers Alliance of N.Y.

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NEW YORK (5/24/11)--The Lawyers Alliance for New York honored Clifford N. Rosenthal, president/CEO of the National Federations of Community Development Credit Unions, for his public service leadership. In 2009 and 2010, the federation and its Community Development Financial Institution (CDFI) allies worked with the U.S. Department of the Treasury to create the Community Development Capital Initiative (CDCI), which invested capital in financial institutions serving low-income communities. Through the program, the federation partnered with the Lawyers Alliance to pair 45 community development credit unions (CDCUs) with pro bono counsel from 15 law firms in New York and nationwide. The assistance provided by those firms helped participating CDCUs to access about $70 million in low-interest CDCI secondary capital loans. “That kind of money is simply not out there in the current economy, so for our CDCUs to be able to access these funds to expand their service in low- and moderate-income communities nationwide has been a major victory for our movement,” Rosenthal told an audience of more than 450 leaders from the legal financial and nonprofit sectors at the 2011 Business Law & Leadership Gala at Gotham Hall in Manhattan. Rosenthal also noted the daunting the requirements to access CDCI funds would have made it nearly impossible for most CDCUs to comply without the help of the Lawyers Alliance. “I can confidently say that without the assistance provided by the Lawyers Alliance and the pro bono counsel from attorneys nationwide, many of our credit unions would have been forced to drop out of the program,” he said. “They literally saved our members hundreds of thousands of dollars in lawyer fees, and helped us bring millions in much-needed capital to low-income communities across the nation.”

Indiana congressman visits Regional FCUs PAC meeting

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HAMMOND, Ind. (5/24/11)--U.S. Rep. Pete Visclosky (D-Ind.) visited Regional FCU, Hammond, Ind., for the first meeting of the credit union’s new political action committee (PAC).
Click to view larger image U.S. Rep. Pete Visclosky (D-Ind.) met with Northwest Indiana credit union leaders at the first meeting of Hammond, Ind.-based Regional FCU’s newly established political action committee (PAC). From left, Visclosky; Regional FCU President/CEO Jill Banning; Regional Director of Business Development and PAC Chairman Kevin Kosek. (Photo provided by the Indiana Credit Union League)
Visclosky addressed staff, officials and members of the credit union and representatives from the Indiana Credit Union League and other credit unions in northwest Indiana. He discussed national credit union issues, such as maintaining credit unions’ tax exempt status, member business lending and interchange, and district-level concerns, such as job issues in Lake County, Ind. Regional FCU President/CEO Jill Banning emphasized the credit union difference—saying that as financial cooperatives credit unions are owned by members and work to keep costs down for them. If the interchange legislation delay bill does not pass, those who will be hardest hit are the members who can least afford it, she stressed. “Having Rep. Visclosky come to our office and spend time with our group was very valuable,” Banning said. “The purpose of our PAC is to make members more informed about the issues that are important to them and to provide access to those individuals who are legislative decision makers. I think we accomplished that in this first meeting and we have a good model for future events.” The Regional FCU PAC is chaired by Kevin Kosek and will meet again in September. The Credit Union National Association (CUNA) opposes a proposal in Congress capping interchange fees and has told federal lawmakers that such action would harm consumers by driving up costs of debit cards, limiting consumer options, and harming competition and technological innovation. Interchange fees allow business costs, including the risk of consumer nonpayment, to be shared by the payments participants, CUNA said. It is asking Congress to stop and study the impact of the proposal.

Moldovan regulators visit Wisconsin CUs

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MADISON, Wis. (5/24/11)--A visiting group of four financial regulators from the former Soviet satellite country of Moldova was told by a Wisconsin credit union executive that adhering to philosophy and maintaining consistency is the key to success.
Click to view larger image Dave Grace (left), World Council of Credit Unions’ senior vice president of association services, explains the importance of savings mobilization to a visiting delegation of Moldovan financial regulators that included (clockwise from left) Tatiana Balan, Alina Cataraga, Alina Dima, Elena Pui and translator Andrey Kutuzov. (Photo provided by the World Council of Credit Unions)
When Ron Kase joined the staff of Landmark CU, now headquartered in New Berlin, Wis., in 1973, assets were $2 million, and members were served by Kase and three employees. Today, as Kase prepares to retire as Landmark’s president/CEO, the credit union--now Wisconsin’s second largest--boasts $1.6 billion in assets and serves 167,252 members from 19 offices. Credit unions grow best when they can mobilize savings for both institutional strengthening and member service, characteristics that contributed greatly to Landmark’s growth, Kase told the Moldovan group. The Moldovans’ visit to Landmark highlighted a week of credit union education sponsored by World Council of Credit Unions (WOCCU). The visiting regulators sought to better understand how successful credit unions operate so their country’s own fledgling industry would be better poised to meet operational standards when the country applies to join the European Union (EU) later this year. “We know that savings-led development coupled with appropriate and enabling regulations are key ingredients for credit union growth,” said Dave Grace, WOCCU senior vice president of association services who co-hosted the visitors with Liliana Tangwall, WOCCU credit union analyst and a Moldova native. “Wisconsin's credit union movement and its regulators did a fantastic job demonstrating the success of these principles.” Adhering to higher standards will be critical for Moldova’s credit unions, which serve about the same number of members as Landmark CU, WOCCU said. The EU requires deposit-taking financial institutions in all its member countries to insure each deposit for up to 100,000 euros (about US$135,000), a sizeable investment for Moldova’s small financial cooperatives and just one of the challenges they face. Landmark was only one stop for the representatives from the National Commission of Financial Market (NCFM), Moldova’s financial regulatory body. The group also visited with Madison CU and Dane County CU, both in Madison, and the Wisconsin Credit Union League, Credit Union National Association and the Wisconsin Department of Financial Institutions’ Office of Credit Unions. A webinar conducted from WOCCU’s Madison headquarters with members of the European Network of Credit Unions, WOCCU’s sub-organization of EU members, provided a European context for what the regulators had learned. The delegation also learned about risk-based supervision, deposit insurance and the importance of sharing best practices among credit unions, their trade association and their regulator, according to Elena Pui, a board member of NCFM. “Considering that Moldova’s system is passing through an emerging consolidation to increase its credibility, information on insurance for shares and loan loss was especially important,” Pui said. “It was very helpful to hear them discussed from many different points of view.” Joining Pui on the delegation were NCFM credit union and microfinance department staff members Alina Dima, Alina Cataraga and Tatiana Balin. The delegation agreed to maintain an ongoing dialogue with WOCCU while it pursues EU membership.

Two join N.Y.s CU Hall of Fame

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ALBANY, N.Y. (5/24/11)--Edward Albright and John Bryson will be inducted into the Credit Union Association of New York’s Credit Union Hall of Fame June 5 at the association’s Annual Meeting and Convention in Lake Placid, N.Y. Albright is a 25-year veteran of the credit union industry. After working as a National Credit Union Administration examiner from 1974 to 1986, he became the manager/CEO and treasurer of Dannemora (N.Y.) FCU, a position he held until his retirement in 2004. Albright also served in multiple leadership roles for the Credit Union Association of New York and its Adirondack chapter. He was his chapter’s Credit Union Legislative Action Council/Credit Union Political Action Council trustee, representing New York credit unions at federal and state governmental affairs conferences. When Dannemora FCU was recently without a CEO, Albright came out of retirement and resumed that role for nine months until a new leader could be hired. John Bryson, who passed away in 2002, became assistant manager of Rochester (N.Y.) Telephone FCU (since renamed The Summit FCU) in 1973, and general manager shortly thereafter. Through his advocacy with NCUA and work with area employers, he grew the Telephone FCU from a single-sponsor, $7 million-asset credit union to a multi-group credit union with more than $150 million in assets. Bryson also helped form the International Telephone Credit Union Association. Long before the credit union industry had shared branching or ATMs, Bryson negotiated a deal with Lincoln First Bank (now Chase Bank) allowing credit union members to make deposits or cash checks at any of the bank’s nearly 150 upstate branches. Prior to his retirement in 1995, Bryson led the planning for the construction of The Summit FCU’s current corporate headquarters in Rochester. “Both of these individuals made credit unions their life work,” said association President/CEO William J. Mellin. “The success and stature of their respective credit unions today can be traced back to their dedication to and involvement in all aspects of the credit union movement throughout their years of service.”

Southeast Corporate proceeds with cap-building plan

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TALLAHASSEE, Fla. (5/24/11)--With no objections from the National Credit Union Administration to its recapitalization plan, Southeast Corporate FCU will has announced it will present its perpetual contributed capital (PCC) subscription to its membership with the goal of raising $80 million. “Over the past few months, we have laid out a comprehensive, 10-year strategy for member/owner credit unions,” said Southeast Corporate FCU President/CEO Brad Miller. “We have incorporated members’ feedback and are pleased to move ahead with our PCC offering.” In communicating the recapitalization plan, the corporate held town hall meetings, webinars, presentations at chapter meetings, credit union manager luncheons and other meetings. Southeast Corporate staff also met one-on-one with credit union executives and and their boards. Jeanne Kucey, president/CEO of JetStream FCU, Miami Lakes, Fla., said her credit union’s board of directors voted unanimously to recapitalize Southeast Corporate. “It’s our best opportunity to preserve current capital,” Kucey said. “There will be no disruption of services or member inconvenience, and it allows for maintaining an effective and cost-efficient single source for payment, settlement and liquidity services.” Tallahassee, Fla.-based Southeast Corporate FCU said its plan focuses on continuity of service, preservation and protection of member capital, long-term sustainable value to credit unions, and compliance with NCUA’s new Part 704 corporate regulation as various requirements take effect in the next few years. The priority is to make sure member credit unions retain access to the efficiencies and economies of scale that are foundational to the corporate business mode, Miller said. Southeast Corporate a will conduct 90-day capital subscription process beginning Wednesday.