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NCUA files sealed response in Vensure case

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WASHINGTON (5/31/11)--The National Credit Union Administration (NCUA) filed a sealed response last week to Vensure FCU's arguments in the credit union's lawsuit seeking to delay NCUA's placing the credit union into conservatorship. Mesa, Ariz.-based Vensure had filed a sealed document on May 19, and NCUA had until Thursday to respond. The credit union had sought a temporary restraining order to halt the conservatorship. The case was heard May 11 in the U.S. District Court for the District of Columbia, and U.S. District Judge Rosemary Collyer had indicated she was inclined to rule in favor of NCUA and let the conservatorship stand. However, she gave the option for an additional written filing from the credit union before ruling. Vensure FCU was taken into conservatorship on April 15. It is one of 16 financial institutions that allegedly held funds tied to online gambling sites under investigation by the Federal Bureau of Investigation.

Wash. regulator urges student loan due diligence

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OLYMPIA, Wash. (5/31/11)--Washington State's credit union regulator has issued guidelines urging credit unions to use thorough due diligence when adopting student loan programs. The Division of Credit Unions (DCU) in the Washington State Department of Financial Institutions (DFI) is "giving closer attention to new loan programs. Recently, examiners found a few Washington credit unions have adopted student loan programs with very limited research and few controls," said the DCU in a bulletin dated May 17 and revised May 24. It outlined these conditions that examiners expect to find before a student loan program will be considered safe and sound:
* Perform due diligence by analyzing the conditions, costs, and benefits to the credit union of the program before implementing it. "One key objective of the credit union due diligence will be for management to understand the program and be prepared to make appropriate adjustments to protect the credit union as risk levels fluctuate," the bulletin said. * Have an analysis by the credit union's attorney to strengthen the contract in favor of the credit union. * Check reputation risk by analyzing all costs to the borrower of a private student loan program. "Critics have chastised some lenders for high cost debt to students as well as inflexible repayment options," said DCU. * Project the credit union's expected revenue, expenses and anticipated rate of return on the amount invested in student loans. * Adopt a policy for governing the loan program and managing the vendor before embarking in an indirect student loan program. If student loans are risk-priced, set reasonable limits on the loan amount in each risk category. "A credit union with an indirect student loan program should carefully analyze the third party's underwriting criteria," the bulletin urged. * Limit the concentration of private student loans on the books, as a new unsecured loan program, to growth of no more than 10% of the credit union's net worth per year, and keep the limit in place until the credit union has more than three years satisfactory experience with the program. * Provide adequate allowance for loans. Federal student loan programs may have controls and guarantees in place that the credit union is unable to duplicate to achieve a similar lower risk. Private loan programs may have a higher risk profile and require additional reserves, the regulator said. * Make sure insurance meets state requirements and the provider is licensed in the state. * Verify membership eligibility of each applicant before making the loan. * Continue monitoring the loans' service quality and the third-party vendor's financial health. * Include interest rate characteristics of the student loans when measuring interest rate risk before and after implementing the program.

Vermont letters outline interchange concerns

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SOUTH BURLINGTON, Vt. (5/31/11)--Joe Bergeron, president of the Association of Vermont Credit Unions (AVCU), outlined interchange concerns in letters to U.S. Sens. Pat Leahy (D-Vt.) and Bernie Sanders (I-Vt.) last week. Bergeron wrote a letter to each expressing “grave concerns by Vermont credit unions” about the looming Federal Reserve debit interchange control proposal that will become law on July 21 unless Congress acts to delay its implementation (Newslines Express May 27). Bergeron’s letters were sent as the National Retail Federation (NRF) launched a 60-day campaign, which NRF said will include a Washington fly-in by hundreds of business owners, an “aggressive media relations campaign,” and a nationwide print and radio advertising campaign, including inside-the-beltway print and radio ads that propose to spend “hundreds of thousands of dollars.” “Vermont consumers will ultimately be the ones who suffer because merchants have no more incentive to reduce prices due to lowered interchange than they would if they found a better deal on insurance premiums,” Bergeron wrote in the letter. Debit-card-issuing institutions will naturally seek to recoup any lost revenues by other means, costing consumers more in new or higher fees or lower rates of return, he added. Bergeron ended the letter by pointing out that credit unions “are not arguing for merely the status quo or to kill any reform effort,” but for support of a proposal that would delay implementation for 15 months while the issue receives comprehensive review. Such a delay would ensure that consumers and credit unions don’t get caught up in a “marketplace train wreck” and that a balance can be struck between merchants, card issuers and consumers, he added. Because the Credit Union National Association (CUNA), leagues and credit unions nationwide are entering a critical stage in the battle to ensure the best possible operating environment for credit unions, CUNA President/CEO Bill Cheney again called on credit unions and state leagues to maintain the grassroots pressure during the Memorial Day congressional recess and the weeks that follow by continuing to urge their legislators to delay implementation of the Federal Reserve’s debit interchange fee cap regulation (News Now May 26).

CUAid tornado donations top 110K in South 75K for Mo.

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MADISON, Wis. (5/31/11)--The National Credit Union Foundation (NCUF) has received more than $110,000 in donations to help credit union people affected by the devastating storms throughout Alabama on April 27. Also, more than $75,000 has been raised from the credit union community for Joplin, Mo.-area credit unions since the May 22 tornado. The Southeastern Credit Union Foundation (SECUF) said it will match up to $100,000 of donations made to CUAid for further community reinvestment projects in the affected areas of Alabama. “We can’t thank the credit union community enough for their generous giving in the wake of the tornadoes in Alabama,” said SECUF Executive Director Amber Tynan. “With SECUF’s $100,000 match, we have doubled the money that has come in and it’s making a difference. For many credit union staff, this money has given them a road back to normalcy. With the outbreak of tornadoes in Missouri and Oklahoma, we know that the needs of credit unions are great right now across the country. I know the credit unions in Alabama are thankful for the generosity of their peers.” SECUF has handed out more than $35,000 in grants to credit union staff affected by the tornadoes. The CUAid money and the SECUF match will help many more credit union staff who have applied for grants. The foundation also is working with six Alabama chapters on a Rebuilding Alabama initiative where the foundation matches the chapter project request up to $10,000. Currently SECUF is working with two chapters on projects. In Missouri, because of the quick response from the credit union community, the Missouri Credit Union Charitable Foundation processed and mailed checks to affected members, employees and volunteers within three days after the tornado. “Your call was truly a blessing,” said Cathy Stroud, president/CEO at Community Financial CU in Springfield, Mo. “I am so thankful that we are part of such a great association of credit unions. The amount collected is phenomenal. I was totally without words and it’s not often I am without words.” In both cases, as donations are posted through, NCUF is coordinating with SECUF and the Missouri Credit Union Charitable Foundation to efficiently distribute money to credit union employees and members in the affected areas. To make a donation, use the link.

Kansas tornado destroyed CU employees home

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READING, Kan. (5/31/11)--A tornado that ripped through Reading, Kan., and surrounding areas on Saturday, May 21, took the home of an Emporia State FCU staffer. Judy Sorenson, a member services representative at the Emporia, Kan.-based credit union, was on vacation with her husband when the severe weather hit. Her son and daughter-in-law, who were at the Sorenson house in Reading, took cover in the basement. No one was injured, but the house was destroyed, said the Kansas Credit Union Association (KCUA). Emporia State FCU staff have gathered food and supplies for Sorenson, who is staying in a nearby hotel. Throughout the week, staff continued to help the community clean up and salvage items from the rubble, while the rest of the employees covered for them back at the credit union. In addition to food, supplies, and a helping hand, staff donated money in support of Sorenson. The credit union set up a fund for donations. For more information, call 620-342-2336. Andrew Smarsh, a member service representative at the credit union, helped with the cleanup. "I have never actually helped out personally with someone who has lost a lot of their belongings," he said. "You could definitely tell where the tornado traveled…on one side of the road, rubble and belongings where a house stood, and on the other side, the house's windows were just blown out and minimal damage done to the house." Branch manager Angie Miller said she is overwhelmed and amazed at the willingness of the staff to help their co-worker. "The board and staff have been wonderful," she said. "Their generosity simply can't be matched--they've donated their time, physical help, monetary help, made food, and taken care of Judy at both the storm site and her new motel home." Sorenson has worked at Emporia State since 2005 and has been a member of the credit union since 1971. Her father had been a member since 1960, and her two sons worked at the credit union part time while attending Emporia State University. The credit union had about 60 members in Reading. Roughly half were affected, ranging from no losses to total car losses, to residences and rental homes either damaged or total losses, KCUA told News Now. The credit union is offering a small, short-term 30-day notes at 0% for members with damage covered by insurance, if requested. Reading, which has a population of 250, is located 20 miles northeast of Emporia, Kan. About half the town's 10 homes were destroyed, as well as half the businesses. One person was killed and five injured, said KCUA.

Women worldwide to meet at global leadership forum

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MADISON, Wis. (5/31/11)--Women credit union leaders worldwide will convene at this year's Global Women’s Leadership Forum in Glasgow, Scotland, July 23-24, in conjunction with the World Council of Credit Unions’ (WOCCU) World Credit Union Conference.
Click to view larger imageParticipants gathered at the 2010 Global Women’s Leadership Forum in Las Vegas. (Photo provided by the World Council of Credit Unions)
Global Women’s Leadership Network members--an international group of proactive, professional credit union women--will discuss challenges facing credit unions and hear from speakers including British Broadcasting Co. Radio 4’s on-air personality Liz Barclay. Barclay is one of the most recognized voices on British radio with a common-sense approach to money and finance on her show, You and Yours. During the only international peer-to-peer exchange in the industry, attendees share ideas and learn from their counterparts in other credit union movements around the globe. Despite operating in vastly different environments, women in the network face similar leadership challenges at their credit unions and together find insight and strategic solutions. “I had the opportunity to network and learn about the successful strategies my peers use to grow their credit unions,” said Winona Nava, CEO of Guadalupe CU in Santa Fe, N.M. “The stories shared demonstrate that the credit union philosophy is alive and prospering around the globe. Even though vast distances separate us, we are all united in our desire to improve the lives of our members and our communities. It was remarkable that in spite of our various backgrounds, nationalities and geographic locations, we all share the same struggles as women and as leaders.” The network, co-founded by WOCCU and the Canadian Co-operative Association, provides women the opportunity and resources to make a measureable difference in each other’s lives, and in their credit unions and communities. It engages members with professional and personal development through social media and educational forums, and provides tools for women to connect with their peers. Women credit union leaders and volunteers can sign up for membership; use the link. Organizations such as credit unions, service organizations and vendors also can join and appoint two women leaders to represent their organization. For more information, use the link or e-mail

Wisconsin Farmers Union opposes CU conversion bill

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MADISON, Wis. (5/31/11)--The president of the Wisconsin Farmers Union has written an op-ed article opposing a measure in a state legislative committee that would make it easier to convert a credit union directly to a bank. The column, posted on Friday, is by Darin Von Ruden. His organization works to enhance the quality of life for family farmers, rural communities and all citizens. The measure passed the Wisconsin Legislature's Joint Finance Committee on May 12 as a budget amendment, and the Wisconsin Credit Union League has called on Gov. Scott Walker to veto it. "There were no public hearings on this proposal, nor were any credit unions or credit union members given an opportunity to comment on the proposal," said Von Ruden's article. "This is a major law change that would undermine the stability of credit unions." He noted that many of the 220 credit unions in Wisconsin are in rural areas and farming communities, which are "often underserved by investor-owned banks." "Credit unions are an important part of a diverse and competitive financial industry in rural Wisconsin. We should not be making it easier for investor-owned banks to gobble up locally owned credit unions," said Von Ruden. Current state law contains safeguards to ensure that members know that a vote on conversion is taking place, and that they have the information to cast an informed vote, he said. The new provision requires only a simple majority of those present at any given meeting to vote in favor of conversion. "It would allow for a very rapid conversion from a credit union to a bank, without allowing time for members of the credit union to understand the implications…or even know that the conversion is taking place," Von Ruden wrote. "Credit unions have always been an excellent source of loans, financial education and general support for Wisconsin's farmers and rural residents," he said, adding that the Wisconsin Farmers Union "calls on members of the legislature to safeguard the future of the state's credit unions by removing the credit union conversion language from the omnibus budget package. Creating a new method to dissemble Wisconsin's credit unions is unnecessary and unwise."

CU System brief (05/30/2011)

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* NEW YORK (5/31/11)--The Brooklyn, N.Y.-based Polish & Slavic FCU announced Thursday it has hired Oskar Mielczarek as its new president/CEO. Mielczarek has extensive background in credit, asset-backed financing and marketing of financial products from his service at J.P. Morgan Chase, Merrill Lynch and Barclays in North America and Europe. According to board Chairman Tomasz Bortnik, the board is "confident that Mr. Mielczarek's stewardship and team-oriented managerial style will bring great value to the largest ethic credit union in the country." He has a master's in business administration from Harvard Business School. PSFCU, which has nearly $1.4 billion in assets, recently opened its third Chicago area branch and its sixth branch in three and a half years. It has increased assets 7% the past two years and membership is up by 4% for the same period …