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Federation hails fair mortgage initiative

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NEW YORK (6/15/09)--The National Federation of Community Development Credit Unions hailed the launch of the Fair Mortgage Collaborative (FMC), a coalition of organizations to provide fair and safe loans for low- to moderate-incomers, as an important step in providing access to mortgages with consumers' best interests in mind. The FMC initiative was announced June 10 at the National Council of La Raza (News Now June 11). It aims to certify certain lenders as "safe, "fair," and free of predatory lending to help restore consumer confidence in mortgage lenders. The federation is a co-founder and executive committee member of the collaborative. Cliff Rosenthal, federation president/CEO and treasurer of the FMC, said the federation has worked on the project for four years. "This is an important building block" in certifying credit unions as equitable, trusted and sustainable providers of financial products for consumers, he said. BECU (Boeing Employees CU) in Tukwila, Wash., one of the certified lending organizations in the FMA program, is one of the federation's Community Development Partners, a group of large, high-performing credit unions helping to advance service to low- and moderate-income communities, he said. BECU is a major supporter of the Express CU in Seattle, which became a community development credit union (CDCU) affiliated with a new nonprofit organization to serve low-income communities. "In any initiative like this, reaching scale is a critical challenge. BECU, with more than 600,000 members and assets in excess of $8.7 billion, is the largest credit union in Washington State and the fourth largest credit union in the country," Rosenthal said. "Its participation in this initiative will be extremely important in demonstrating the value and impact of FMC certification, especially at a time when our country desperately needs to restructure the way the mortgage business works." The federation's CDCU Mortgage Center LLC, which purchases affordable fixed-rate mortgages from its member credit unions, has also been certified by the FMC. "We expect there to be substantial demand for certification, which requires a review of credit union mortgage portfolios and practices by an independent third party," Rosenthal said. "Because of our role in the FMC, our member CDCUs and community development partners will be the first credit unions to be eligible for certification."

Quebec banks CUs ordered to pay millions for card fees

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MONTREAL (6/15/09)--A Quebec Superior Court Thursday ordered nine Canadian banks and the federation of Desjardins credit unions in Quebec to repay roughly $200 million in credit card fees charged when consumer made purchases in foreign exchange that were converted to Canadian dollars. The judgments were rendered in three class-action suits by Justice Clement Gascon. They involved the credit unions, plus the Royal Bank of Canada, Toronto Dominion Bank, Bank of Montreal, Canadian Imperial Bank of Commerce, Scotiabank, National Bank of Canada, Laurentian Bank of Canada, Amex Bank of Canada, and Citibank Canada (National Post June 12). Consumers will be entitled to a percentage up to 2.5% on the converted charges, which include purchases made on the Internet. Some banks must pay certain cardholders $25 in punitive damages. The judge also ruled the banks must obey the Quebec Consumer Protection Act. Banks had argued they were not subject to the act because they were federally chartered institutions. In the credit union case, the judge ruled that the Desjardins group of credit unions charged illegal fees between April 17, 2000, and Dec. 31, 2007, and contravened the Consumer Protection Act. He ordered they reimburse consumers nearly $28.4 million, plus interest, but he did not award any punitive damages. The parties will meet within 30 days to iron out the details.

Heartland lawsuit transferred to Houston

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LOUISVILLE, Ky. (6/15/09)--The Judicial Panel on Multidistrict Litigation in Louisville, Ky., ruled Wednesday that the class action data-breach lawsuits against Heartland Payment Systems will be consolidated and heard in the Southern District Court of Texas in Houston. U.S. District Judge Lee H. Rosenthal will hear the case, in which plaintiffs--including credit unions--are seeking to recoup losses from the card payment processor's massive data breach revealed in January. The breach compromised roughly 100 million cards, the largest reported data breach in history, and many credit unions reissued new cards to members whose information was compromised (News Now May 7). Attorneys for the Princeton, N.J.-based Heartland and all but two of the 30 plaintiffs asked for the case to be heard in Texas, according to Bank Info Security June 11). Two plaintiffs, a bank in New Jersey and a bank in Florida, asked that the case be heard in their states. Heartland's information technology staff--who likely would be called as witnesses--are located in Texas (SCMagazine June 11). Attorney Richard Coffman, who represents the Pennsylvania State Employees CU (PSECU), Harrisburg, Pa., and Lone Summit Bank in their suits against Heartland, told Bank Info Security the decision turned around quickly. He noted that Judge Rosenthal has experience with class action lawsuits, is considered fair and even-handed, and moves her docket. "We couldn’t have pulled a better judge for this case," he told the publication. PSECU's suit alleges breach of contract, negligence, equitable indemnification (in which it says Heartland benefited from the $3.4 billion asset credit union canceling and replacing cards for its members), restitution, unjust enrichment and violations of the New Jersey Consumer Fraud Act. Thirty-one separate lawsuits, on behalf of consumers, investors, banks and credit unions, have been filed in the Heartland case. The judicial panel in Kentucky also decided that another data breach case, against RBS WorldPay, would move to Georgia.

Does Facebook pose security issues for CUs

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MADISON, Wis. (6/15/09)--With accounts of hackers and spammers infiltrating social networking sites such as Facebook, credit unions will be happy to learn that some of their colleagues using the sites for online banking have not experienced security problems. Parkview Community FCU, McKeesport, Pa., deployed an online banking application, MyMoney, through Facebook last year. MyMoney, by Fiserv, allows Facebook users to manage their credit union or bank accounts through their user profiles. MyMoney hasn’t attracted as many users as Parkview would like, but security has not surfaced as a problem. “We haven’t had anyone say why they don’t use it,” Lechelle Brown, Parkview business development specialist, told News Now. She noted that Parkview’s online banking system, PC Banking, is very popular. “That’s why we decided to use MyMoney,” she said. Parkview plans to keep the product and promote it. The credit union has seen a “boom” in youth opening up accounts at Parkview, and may send out a mass mailing to those members reminding them MyMoney is available. Brown, who uses MyMoney herself, said the application offers multi-layered security. To access MyMoney, a user must log into Facebook with a username and password, and then log into MyMoney with another username and password. Once inside MyMoney, the credit union’s members can view account balances, histories and transfer money--but only to accounts that have been previously approved. Members also can access their PC Banking service by clicking a link on MyMoney. If MyMoney doesn’t recognize the computer used, it will prompt members to answer security questions, Brown said. Because MyMoney allows only certain transactions, it could be tough for someone to steal money. “There’s only limited things you can do,” Brown said. She also noted that MyMoney users cannot see others’ balances or account information when using the application. Parkview tested MyMoney’s security when the application was first deployed to make sure it was safe, Brown said. In Danville, Va., Dan Veasey, Piedmont CU director of marketing, also deployed MyMoney for a trial last year. The credit union experienced no security issues with the application, but some of Piedmont’s younger members were nervous about banking through Facebook. “They knew people who could hack into others’ computers,” Veasey said. Veasey, who is a part-time web developer, said he tested the application’s security and didn’t notice any problems. “The problem isn’t necessarily Facebook--it’s the perception that things are at risk,” Veasey said. SIU CU, which also maintains Facebook, MySpace and Twitter profiles, has had no security issues or negative feedback, said Chris Sievers, marketing director of the Carbondale, Ill.-based credit union. Casey Braswell, marketing assistant at DATCU, Denton, Texas, also told News Now that no security issues have surfaced with Facebook or Twitter. Pioneer CU, Green Bay, Wis., which uses Facebook and Twitter, has not experienced any security problems or concerns from members regarding viruses, Michelle Kozak, Pioneer marketing specialist, told News Now. Pioneer CU does not use an online banking application through Facebook because it is looking into other banking tools, such as account aggregation. Kozak said media outlets often report on hackers and spammers infiltrating sites like Facebook, but said most Pioneer members who use Facebook are Web-savvy and understand that any viruses out there are not specific to the credit union. However, she noted that one member expressed a concern with Twitter. Pioneer, which has nearly 800 Twitter followers, used a community-oriented tool when it first signed up for Twitter to randomly add followers. One of the individuals Pioneer followed happened to be a member. The member contacted Pioneer, concerned that the credit union was specifically seeking out its members on Twitter. “We reassured him that it was completely a coincidence,” Kozak said. “We have more than 750 people who are following--we wouldn’t know or have time to see if they were all members.” Kozak emphasized that a situation like the one Pioneer encountered with a concerned member can be perceived as a good learning experience. Overall, Facebook and Twitter can be excellent tools for credit unions, Kozak said. “It’s a great fit for us,” she said. “We’re credit union people with personalities--not like stuffy banks. It’s what sets us apart.”

OpSS Council Conference to address economic trends

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MADISON, Wis. (6/15/09)--Credit union professionals can find out what is in store for the economy in the coming year and get ideas for responding to current economic challenges during a presentation at the 12th annual CUNA Operations, Sales and Service (OpSS) Council Conference, Sept. 27-30 in Las Vegas. During “Economic Update,” Credit Union National Association Senior Economist Steve Rick will offer his thoughts on the state of the economy, the economic slowdown, and more. He also will provide insight into the outlook for the economy and credit unions. Rick’s economic expertise is frequently featured at conferences, in credit union trade publications, and in media outlets such as The New York Times and Bloomberg Radio, among others. The conference will conclude with a presentation on “How to Build a Better You.” Speaker, author, and Dallas/Fort Worth radio personality Bryan Dodge will explain how top producers and effective leaders stay on the cutting edge and achieve excellence. Dodge will offer tips for personal and professional growth in three key areas: having the best year ever, creating consistent upward growth in life, and harnessing the power of personal energy. The conference also will include sessions to help credit unions become more efficient and make the most of their limited resources. Other topics include:
* Membership growth; * Compromised credit cards; * Business deposits; * Remote contact center; * Evaluating sales and service effectiveness; * Controlling expenses; * Branch efficiencies through automation; * Mergers and acquisitions; * Check 21; and * Remote capture.
For more information, use the link.

CUNA Mutual looks beyond the recession

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MADISON, Wis. (6/15/09)--CUNA Mutual Group said it is maintaining strong operational and capital positions, weathering the recession well, and looking within and beyond credit unions for future diversification opportunities engendered by the current economic downturn. CUNA Mutual has been weathering the recession from an operational standpoint and a capital standpoint, Jim Buchheim, vice president of corporate communications, told News Now. “Operationally, last year was a good year,” Buchheim said. “In 2009, we’re expecting less revenue and lower profit levels, but still a pretty solid year. We feel we’re on pace to meet our 2009 financial goals from an operational perspective.” From a capital standpoint, the company entered the recession with a good capital position and now is taking steps to maintain it, Buchheim said. Capital involves two measures: statutory capital and GAAP (generally accepted accounting principles) capital. CUNA Mutual’s statutory capital was $980 million at the end of 2008--down from $1.035 billion at the end of 2007. The drop is primarily due to losses in the mortgage securities area, Buchheim said. “We feel that by the end of 2009 we can maintain our statutory capital level,” he added. “We’re also pleased to have A.M. Best affirm our ‘A’ level rating, and Fitch Ratings affirmed our ‘A’ (strong) rating.” The company’s GAAP capital experienced more significant declines because of unrealized losses, Buchheim said. “We still have $1 billion in cash to cover operations, and we can hold on to our bonds until maturity,” he explained. “So we feel good about 2009 because our operational results and capital give us a strong financial position.” Although CUNA Mutual has felt the pain of the recession from some losses and needed cost-cutting measures including layoffs, the company sees opportunities created by the recession and wants to be prepared to take advantage of those opportunities, Buchheim said. The company sees avenues to diversify both outside the credit union space and within the credit union space, he added. Within the credit union space, CUNA Mutual is looking to add to its suite of products in areas such as “Member Connect”--a marketing engine in which the company partners with credit unions to sell insurance products to credit union members. The program generates revenues for credit unions. Also, CUNA Mutual has maintained a strong level of financial support to state credit union leagues and the Credit Union National Association in excess of $30 million per year, Buchheim said. “No other competitor provides that level of support to the credit union space as CUNA Mutual does,” he added. “It’s not even close.” Outside the credit union arena, CUNA Mutual hopes to expand in these areas:
* Crop insurance--The company launched this product a few years ago and is continuing to evaluate it; * 401(k)s--The company aims to move beyond servicing credit unions with this product and provide it for small businesses; and * Debt protection--The company successfully provided this product to credit unions, and now is looking beyond the credit union industry. CUNA Mutual began a pilot about a year ago with the farm credit business and is evaluating investing more in this area in the future.
“We remain a financially strong company committed to credit unions and credit union members. We are cautiously optimistic about seeing the end of the recession in 2009. We see opportunities for growth and expansion in reaching our goal to provide more value to credit unions and our credit union policyholders,” Buchheim concluded.

CU System briefs (06/12/2009)

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* HARRISBURG, Pa. (6/15/09)--The Pennsylvania Credit Union Association (PCUA) contributed to a public policy report on the state's economy, unveiled by the Pennsylvania Business Council at a press conference in the Capitol Rotunda. PCUA is an active member of the council, a group of representatives from pro-business organizations. The report details the group's plans to make the state's economy more competitive in the 21st century. Large and small businesses contributing were from the state's industries such as oil and gas, hospital, insurance and banking industries, and chambers of commerce (Life is a Highway June 12) … * ALBUQUERQUE, N.M. (6/15/09)--Credit Union Association of New
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Mexico (CUANM) staffers (from left) Patrick Turner, Elisa Furlan-Young, Devon Van Hecke and Maria Griego were in 1950s attire at CUANM's annual convention June 3-5 in Albuquerque. The theme was Fiftiesville, to mark the association's 50th anniversary. More than 200 credit union professionals, vendors and guests attended. The event raised about $20,000 for the pediatric emergency unit at UNM Hospital and Children's Miracle Network. This year, CUANM and affiliated credit unions will complete a five-year campaign to raise $1 million for the construction and equipment of the pediatric emergency room. (Photo provided by Credit Union Association of New Mexico) … * ST. LOUIS (6/15/09)--Missouri state Rep. Jill Schupp (D-82), right, stopped by the Electro Savings CU's main branch in St. Louis June 2 (The Missouri difference June 12). During the visit, Schupp learned more about the credit union's efforts involving Homes for Our Troops (HFOT), overcoming members' financial difficulties and maintaining the best interest of the credit union membership. Here, Schupp congratulates credit union President Stan Moeckli on the credit union's raising $900 for HFOT. "It's important for credit unions to stay in contact with legislators outside Hike the Hill and annual meeting visits," said Moeckli. "Meeting with a legislator one-on-one at a credit union office really gives us the opportunity to showcase our individual member interaction and community involvement." (Photo provided by the Missouri Credit Union Association) …

WOCCU Minn. network advocate for Paraguay CUs

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ASUNCION, Paraguay (6/15/09)--With credit unions in Paraguay playing an increasingly greater role in their members’ lives, government regulations and oversight that foster--rather than inhibit--credit unions’ ability to serve members are critical to the growth of the country's credit union movement.
From left, Minnesota Credit Union Network board members Jeff Schwalen and Dick Nesvold visit with CENCOPAN Chair Modesto Segovia and COOPEC CU CEO Juan Centurión in Paraguay. (Photo provided by World Council of Credit Unions)
That message was delivered by delegates from the World Council of Credit Unions (WOCCU) and the Minnesota Credit Union Network (MnCUN). They recently visited Paraguay's lawmakers at the invitation of Central de Cooperativas del Area Nacional (CENCOPAN), WOCCU’s member organization in the South American country. MnCUN and CENCOPAN have been partners joined through WOCCU's International Partnerships Program since 2004. The invitation to speak with lawmakers coincided with CENCOPAN's 15th anniversary and its seventh international seminar. CENCOPAN raised the need for outside advocacy efforts after a 2008 shift in the Paraguayan government brought an end to the former political party’s 61-year administration. Alianza Patriótica por el Cambio (Patriotic Alliance for Change) comprises eight political parties that CENCOPAN officials felt needed to better understand the role that Paraguayan credit unions play in their members’ lives, according to Modesto Segovia, CENCOPAN board chair. “The mission of these visits was to provide government officials with a proper perception of the industry and educate them about the work credit unions do for their members,” Segovia said. “The presence of the U.S. delegates also demonstrated that CENCOPAN maintains international ties with similar organizations worldwide.” As of December 2007, Paraguay had 224 credit unions that served 789,000 members--a market penetration rate of close to 20%. In addition to offering financial services at competitive rates, many of the country's credit unions host on-site healthcare facilities, including pharmacies and emergency medical units. They also offer financial literacy courses for individuals and micro-entrepreneurs who are members. The delegation visited Paraguayan government officials and met with Liliana Ayalde, U.S. ambassador to Paraguay, to highlight ties between WOCCU, MnCUN and the Paraguayan credit union movement, and to discuss the growing importance credit unions have played in serving low-income members nationwide. The official meetings were followed by CENCOPAN’s international seminar, which attracted more than 300 attendees nationwide. Delegation member Jeff Schwalen, MnCUN board member and president of Hiway FCU, St. Paul, Minn., spoke to attendees about challenges facing U.S. credit unions during the country’s turbulent economic climate. Joining Schwalen on the trip were MnCUN board member Dick Nesvold, CEO of SouthPoint FCU, Sleepy Eye, Minn., and Victor Miguel Corro, senior manager of WOCCU’s International Partnerships Program.