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CUs pick up steam says MSNBC.com

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NEW YORK (6/11/10)--More than 1.2 million Americans joined a credit union in 2009, the Credit Union National Association (CUNA) told MSNBC.com (June 9). The growth is significant, with credit unions now having nearly 10% of the household savings in the U.S.--their biggest share ever, the news outlet said. The article attributes the growth to "public backlash from the financial meltdown and government bailout" of banks. "Memberships increased more than one-and-a-half times faster than the growth in the U.S. population," CUNA President/CEO Dan Mica said in the article. Nearly one in four Americans now belongs to a credit union. "Twenty years of surveys show credit unions are really trusted and highly regarded; the most trusted sector in the financial services industry," Mica told MSNBC.com. "Credit unions have always invested rather conservatively, so they didn't get caught up in all of the recent loan losses." The article cites a new Bankrate.com study that shows "free checking is alive and well at credit unions." It also points out that members are owners, not stockholders, and quotes Noreen Perrotta, money editor at Consumer Reports, who says that at credit unions " you are as important as the next depositor. In a mega bank, if you don't have a large amount on deposit, you may get slammed with more fees and you may feel like you're not that important to them." Consumers saved $7.3 billion--$81 per member--in 2009 by using credit unions, said the article. It also cites Tukwila, Wash.-based BECU's aggressive advertising campaign, "Switch Now or Pay Later" and discusses shared branching. The article also points to CUNA's credit union locator at creditunion.coop. For the full article, use the resource link.

Washington league Oregon association intend to merge

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BEAVERTON, Ore., and FEDERAL WAY, Wash. (6/11/10)--The boards of directors of the Credit Union Association of Oregon (CUAO) and the Washington Credit Union League have signed a letter of intent to merge, they announced Thursday. Pending independent votes of the two states' memberships and their boards' joint approval of the final business plan, the regional, Northwest-focused credit union trade association will begin operations on Jan. 1. "The executive leadership and boards of the two organizations are aligned in common purpose, vision and desired objectives,” says Washington league President/CEO John Annaloro. “In addition to eventual cost efficiencies, the proposal would create an organization with a strong national voice that empowers Northwest credit unions to exercise more influence within the national credit union system and among third-party product and service providers,” Annaloro said. The two organizations have discussed the possibilities of combining operations for more than 20 years. According to the CUAO President/CEO Troy Stang, in addition to creating greater depth of service to member credit unions, a regional model gives staff the ability to concentrate on their areas of expertise. “The credit union movement benefits from innovation and evolution,” he says. “The proposed merger provides the opportunity to share knowledge, grow networks and collaborate in ways that help our members become more competitive in the markets they serve.” Senior teams from both organizations together are developing the regional operations plan. Town hall meetings will be held in August to discuss that plan with credit unions across the two states. Joint board meetings to consider member feedback are planned for September. “Both boards feel strongly that now is the time for a combined organization to build a sustainable association model to serve their needs into the future,” says Oregon association Board Chairman Gene Pelham, president/CEO of Rogue FCU, Medford. “However, as democratically run associations the approval of the merger, ultimately, is in the hands of our member credit unions.” “It’s important to also note that this proposal will not change either associations’ priorities or core value in all aspects of the credit union environment,” says Washington league Board Chairman Debie Keesee, president/CEO of Spokane Media FCU. “We will continue to provide effective leadership and advocacy for the credit union movement on a local level.” A simultaneous, multi-state membership vote is planned for November.

Interchange amendment report Negative impact in five areas

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MAYNARD, Mass. (6/11/10)--The interchange amendment in the Senate version of the regulatory reform bill would have negative consequences in five areas, according to an independent industry study. The amendment, which would allow government intervention in setting interchange fees, is strongly opposed by the Credit Union National Association and the nation's credit unions. This week hundreds of credit union representatives hiked the Hill in Washington, D.C., while more than 400,000 contacts with congressional representatives were made by credit unions grassroots supporters delivering the message: "No interchange amendment."(See related story in News Now's "CUs' interchange efforts noted in Wash. Post.") The report from Mercator Advisory Group, a firm based in Maynard, Mass., analyzed the potential impact of the amendment on the electronic payments industry. Among the findings:
* The cost of financial services will rise for consumers across a wide range of economic levels. * The largest issuers will have less of an incentive to promote debit-related products and services, and will either shift activities toward credit-based services or will cover their costs differently by fee-based approaches to debit accounts. * The smaller financial institutions, though exempt from portions of the amendment, are unlikely to escape undamaged. Wide government-mandated pricing discrepancies between large players, whose fees are price-controlled, and smaller exempt issuers would be difficult to sustain from a network perspective. The report noted "major public statements by smaller issuers expressing concern over the loss of their customers to those institutions mandated to charge artificially low rates." * State and federal agencies that recently migrated public benefit payments from paper checks to prepaid card programs are growing increasingly alarmed at the impact this legislation would have on these programs and their ability to continue supporting them without additional funding sources. * Merchant benefits may not be as robust as anticipated. While direct debit interchange costs may be lower (depending on the current rates which vary widely), merchants may see a shift in consumer usage toward credit products, a decline in average ticket size as fewer cardholders opt for debit in an environment with lower promotional activities, or more transactions taking place in less efficient forms such as cash and paper checks, the report said.
The report said the amendment has five erroneous assumptions:
* "The amendment falsely assumes that debit cards and checks are a functionally equivalent, or similar, payment scheme which implies that a common cost structure exists under which these forms of payment are processed." * "Proponents of the amendment incorrectly assert that small financial institutions are protected from harm." * "The amendment also appears to assume, contrary to prevailing evidence, that regulation of payment schemes operating in the U.S. economy will improve market conditions and benefit consumers." * "Proponents of the amendment incorrect assumes that imposing price controls would not have broad, sweeping unintended consequences for key stakeholders." * "The amendment incorrectly assumes that all debit card value chains are the same and so failed to identify that prepaid cards, which run under the debit scheme, will cost more for both government and low/moderate income citizens."
The reported noted that smaller financial institutions would be harmed because establishing and sustaining a two-tiered structure would be unlikely. Under a two-tiered structure, small institutions would charge market-based interchange fees while the larger banks responsible for approximately 80% of debit transactions would be limited to a much lower government-controlled rate. "It is not clear why any of the large banks, which are essential to achieving the scale necessary for a nationwide or global network, would continue to sustain a system that provides such a dramatic advantage to thousands of [their] competitors. A potential outcome is that card networks find it necessary to implement a single interchange schedule based on the Federal Reserve's ruling in order to best preserve the integrity and value proposition of their debit and credit systems," the report said. "In summary, it is our opinion that caution is warranted before any regulation of this type is enacted," said the report. "It is evident by the numerous calls for additional consideration being made by state agencies, credit union advocacy groups, industry experts, and independent analysts that further study is warranted and justified."

N.J. Senate passes municipal deposits bill

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TRENTON, N.J. (6/11/10)--The New Jersey Senate Thursday afternoon passed municipal deposits legislation supported by credit unions, according to the New Jersey Credit Union League. The vote was 29-6. S-1807 will enable counties, school boards, municipalities and other local government entities to use credit unions as depositories. The measure was sponsored by Senate President Steve Sweeney (D-3), Senate Republican Conference Leader Bob Singer (R-30) and Deputy Majority Leader Paul Sarlo (D-36). "This is an important day for credit unions and property taxpayers alike," said league President/CEO Paul Gentile after the vote. "While some tried to make this a bank vs. credit union issue, it's really more about choice, competition and saving taxpayer dollars," he said. He noted that the issue "will benefit all New Jerseyans." A companion bill introduced by Assemblyman Fred Scalera (D-36) and seven co-sponsors is pending consideration in the lower house. That bill will be reviewed by the Assembly Financial Institutions & Insurance Company committee, Chris Abeel, league director of governmental affairs, told News Now.

ATM and debit card safety tips for members

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HOUSTON (6/11/10)--Keeping your personal identification number (PIN) a secret is among safety tips released Thursday by PULSE, an ATM/debit network. Credit unions can pass the tips on to members. June is ATM & Debit Card Safety Awareness Month, which is why PULSE released the tips. The recession has prompted consumers to use their debit cards more than other forms of payment, but with the increased use comes an increased risk of fraud, according to Jim Cichy, PULSE vice president of fraud management. “To keep money safe and secure, consumers need to better understand how to work with their financial institution to combat security compromises and fraudulent use of financial information,” he said. Along with keeping PIN numbers a secret, PULSE noted that consumers should memorize their PINs and never write it on a card or store the number with the card. Also, never let someone else enter a PIN number. “No company or individual should ever ask for your PIN,” PULSE said. PULSE also suggested that consumers:
* Never provide a debit or credit card number or any personal information through an unsolicited e-mail or request; * Look for secure transaction symbols when shopping online to ensure the account information is protected; * Call the financial institution if a card is lost or stolen; * Review all account statements promptly and report any errors; * Do not expose a card’s magnetic stripe to magnetic objects because they can damage cards; * Block the view of others when using an ATM or PIN debit terminal; * Observe surroundings before using an outdoor ATM or debit terminal; * Do not use ATMs that appear to be tampered with and report tampering to the ATM owner immediately.

WOCCU to Basel Smaller FIs effective in crisis

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FRANKFURT, Germany (6/11/10)--Smaller financial firms, including the world’s credit unions, did better than their larger counterparts during the recent economic crisis, but attempts to strengthen global financial regulations by closing loopholes in existing laws could unintentionally cause problems for those firms, said the World Council of Credit Unions (WOCCU). That was the message a WOCCU delegation gave attendees at a Basel Committee on Banking Supervision meeting held in Frankfurt, Germany, June 1. WOCCU was one of five organizations summoned by the Basel Committee--and the only one representing credit unions--to discuss the committee’s current capital and liquidity proposals. From a participant list that included the heads of Deutsche Bank, Barclays PLC, HSBC, Citibank and others, the committee solicited opinions on proposed capital level increases and the introduction of first-time global liquidity standards. The proposed standards make increased credit union access to central bank liquidity, capital sources, deposit insurance and payment systems even more critical in helping financial cooperatives avoid facing unintentional restrictions in serving members, WOCCU said. “For the past six years, we’ve seen global capital rules set in favor of large money center banks,” said Dave Grace, WOCCU vice president of association services, who traveled to Frankfurt with WOCCU President/CEO Pete Crear. “We drove home the point that credit unions have been more stable, more resilient and have a lower risk profile than large banks. These advantages need to be reflected in the committee's pending recommendations.” Basel Committee members, led by Chair Nout Wellink, acknowledged the severity of the proposed changes, estimating that current proposals could reduce global gross domestic product by 0.5% to 1% due to the proposed leveraging restrictions on financial institutions. Meeting-participants’ concerns were added to existing industry input, which includes more than 300 comment letters the committee has already received. The committee will attempt to synthesize all information as it finalizes a regulatory reform package for presentation at the upcoming Group of 20 (G-20) nations summit meeting Nov. 11-12 in Seoul, South Korea. During the Frankfurt meeting, WOCCU representatives stressed the success credit unions have had during the economic crisis and the intrinsic strength of the cooperative model. The delegation also noted that specific recognition of financial cooperatives’ unique advantages exists in the committee’s capital proposal, but appears absent in the proposed liquidity model. Continued absence of that consideration and continued lack of access to central bank liquidity sources could keep credit unions from successfully fulfilling their mission--a force that has helped blunt the impact of the economic meltdown this past year, according to Crear. “Better rules for financial institutions worldwide is the first step toward addressing the ills caused by the 2009 economic crisis,” Crear said. “By meeting with the Basel Committee on these issues, we’ve assured that credit unions will continue to have a seat at the table and a credible voice in the global re-regulation of financial services.”

Is your balance sheet ready for rising interest rates

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MADISON, Wis. (6/11/10)--Credit union managers and boards nationwide are keeping two main concerns about interest rates in the forefront--when and how quickly they turn around, and what credit unions should do to prepare for interest rates’ upturn, according to Southwest Corporate FCU Investment Services. The question all credit unions should be asking is, “Is our balance sheet well-positioned if interest rates were to begin rising tomorrow?” wrote Mark DeBree, Southwest Corporate manager of asset liability management (ALM) services, in an article titled “Managing Interest Rate Risk: What Goes Down Must Come Up!” “A strong asset/liability management program can help credit unions position [that question] relevant to two others: How much risk does a credit union have to rising rates? And what is the credit union strategy when interest rates do change?” Debree added. To have a sound risk-management process, one should:
* Understand and be familiar with the assumptions used within the ALM process; * Ensure that the analyses measuring interest rate risk are accurate and presented in a timely manner; * Designate senior management responsibility for managing the credit union’s risk exposure; and * Ensure that credit union personnel are capable of understanding and communicating the resulting risk exposures to examiners and the board.
“When properly tuned, an ALM model addresses the identification, measurement, monitoring, and reporting of interest rate risk exposures,” Debree wrote. “Credit union senior management is ultimately responsible for making the decisions for controlling or managing that risk. For this reason, examiners want to ensure credit unions understand ALM and are able to incorporate the ALM results into their risk management and decision-making processes.” To read the article, use the link.

Arizona league awards board announced

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TUCSON, Ariz. (6/11/10)--The Arizona Credit Union League honored recipients with its league awards and elected members to its board during the 2010 annual convention in Tucson, Ariz., June 3-6. Robert Ramirez, president of Vantage West CU, Tucson, Ariz., was elected board chairman. Other elected officials include:
* Vice chairman Susan Frank, Desert Schools FCU, Phoenix; * Treasurer Colleen Curtis, Southwest Healthcare CU, Phoenix; and * Secretary Dan Desmond, TruWest CU, Scottsdale.
Steve Dunham, former chairman, withdrew from nominations but joined the board along with Brian Barkdull, American Southwest CU, Sierra Vista; Nathaneal Tarwasokono, Pima FCU, Tucson; Todd Pearson, Arizona Central CU, Phoenix; and Vince McKee, Pinal County FCU, Case Grande. The league also awarded Pete Pritts, CEO of FirstCorp., Phoenix, with the Very Outstanding Credit Union Person award. The award honors an individual who goes above and beyond to serve the credit union movement. Harland L. Bradford Sr., American Southwest CU, was honored with the Rose Mofford Credit Union Volunteer Award. Bradford has more than 30 years of volunteer service and has earned five Volunteer Achievement Award certifications, the league said. Paul Stull, Arizona State CU, Phoenix, received the Credit Union Advocate of the Year award. Also, 11 credit unions received honors for 100% participation in advocacy efforts and six credit unions were honored for their growth management with Credit Union Progress Awards.

Summit spotlights Maine CUs youth fin lit

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AUGUSTA, Maine (6/11/10)--Maine’s credit unions reinforced their commitment to financial literacy as one of the lead sponsors and presenters at the state’s first-ever Financial Literacy Summit held May 7 in Augusta, Maine.
Click to view larger image Maine Gov. John Baldacci, center, presented a plaque recognizing the leadership and involvement of Maine’s credit unions in the state’s first Financial Literacy Summit, held recently in Augusta, Maine. Rick Lachance, left, president/CEO of Maine Education and Maine Credit Union League director, and Jon Paradise, right, league governmental and public affairs manager, accepted the plaque on behalf of Maine’s credit unions. (Photo provided by the Maine Credit Union League)
Nearly 175 teachers statewide participated in this event, which was organized by the State’s Office of Securities and the Maine Jump$tart Coalition. Maine’s credit unions are represented on Jump$tart’s board of directors (News & Views June 2010). Maine Gov. John Baldacci spoke about the importance of financial education in schools and singled out Maine credit unions as “one of the leaders in helping bring financial education to students across Maine and being proactive on this very important issue.” The event featured state and national speakers, and several breakout sessions. Two of the breakout sessions featured credit union representatives as presenters. Donna Steckino, president/CEO of Community CU, Lewiston, discussed Maine-Based Community Programs for Financial Literacy. She spoke about the Financial Fitness--Money Management Experience fairs that she helped to start in Maine. “We are working to expand the number of fairs and will continue to do so moving forward,” Steckino said. “Maine credit unions were innovators in this concept and are eager to reach even more students.” “More than 150 educators were given practical tools to help students become financially capable adults,” wrote Judith M. Shaw, administrator of Maine’s Office of Securities, in an opinion piece about the event in the Portland Press Herald (June 10). “Each of us has a responsibility to be educated about personal finance and the pitfalls that can yield money problems for ourselves and our families,” Shaw added. “Perhaps more important, we have an obligation to share this insight with future generations.”

CU System briefs (06/10/2010)

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* HARAHAN, La. (6/11/10)--The Louisiana Credit Union League has
announced two promotions. Jennifer Green, who has been with the league since 2002, has been promoted to vice president. She will continue to be the main compliance contact for Louisiana credit unions. In addition, she will oversee the league's human resources, education and information technology departments. Lacey Hyer has been named director of communications. She will be responsible for planning, coordinating and directing all league public relations and communications programs. She has worked with the league since 2006 (eNews June 9) ... * UPPER MARLBORO, Md. (6/11/10)--NASA FCU has launched its free remote deposit service, allowing members, businesses and other individuals to deposit checks anytime, anywhere, from a computer with a scanner and Internet connection. "Remote deposit and our other online services essentially bring the credit union to our members, no matter where they live, saving them time and money," said Karen Friel, vice president of operations. The service has no monthly fee or minimum contact term or termination costs. Members login to the credit union's eBranch website and select "remote deposit": then endorse, scan and securely upload the check image; review images of the deposited checks; and click "submit." Up to 999 checks can be included in one deposit. Deposits are immediately credited to the account. The credit union plans to launch its mobile version of the remote deposit service in July ... * CHICAGO (6/11/10)--Mechanicsburg, Pa.-based Members 1st FCU has won the Fun at Work award presented by bswift, a Chicago software and services provider for human resource and benefits administration. Members 1st has 650 employees. During the presentation of the award in Chicago last week, bswift noted that the creation of a fun work environment at the credit union starts at the top with Members lst President/CEO Robert Marquette. "His alter ego is the Original Advice Guy, a super hero who travels around the community (also appearing on TV and billboards) to assist consumers with their financial decisions," said bswift Chief Fun Officer Patrick McGarrity. "At Halloween, he chooses a theme and spends three days visiting all 43 Members 1st branch locations in five counties to judge decorations [and] costumes and award prizes. Every morning he is in the office, he visits every cubicle in every department to say 'good morning,'" said McGarrity. Members 1st boasts a 98.7% satisfaction rating among its 172,000 members (Business Wire June 9) ...