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N.Y. official Allow CUs in underbanked program

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NEW YORK (6/3/09)--The New York State Banking Department will present its recommendations to the state banking board this week about how to expand its Banking Development District (BDD) program to bring banking services to underdeveloped areas. Some say credit unions should be allowed to participate. Critics of the current program say participants have not demonstrated they can meet the needs of underserved people, and State Banking Superintendent Richard Neiman has acknowledged a gap between what's offered by traditional banks and what's actually needed and used by underserved people (American Banker June 2). Credit unions should be allowed to participate in the program, something the banking lobby opposes, said Jonathan Mintz, commissioner of the New York City Department of Consumer Affairs. Only banks and thrifts are eligible for the program's benefits, which include tax breaks, below-market-rate municipal deposits and other incentives to banks that set up branches in underserved neighborhoods. The banking department held public hearings and received input from credit unions, community groups and alternative financial services providers, said the article. So far 38 branches in the state, including 25 in New York City, have qualified for the BDD program. Participants range from national companies like Capital One Financial Corp. and Citigroup Inc. to small local institutions.

Data breach suit targets CardSystems auditor

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NEW YORK (6/3/09)--In what may be a first in the field of data-breach litigation, a bank has sued the security auditor of CardSystems Solutions for liability in the 2004 data breach of the now-defunct card payment processor. Merrick Bank, based in Utah, sued the processor's security auditor, Savvis Inc., which had just given CardSystems Solutions an all-secure clearance three months before the hacking was discovered, according to (June 2). The hacking compromised thousands of credit and debit cards, including those of credit union members. Hundreds of credit unions ended up closing accounts and reissuing cards and some saw losses due to fraudulent activity on the compromised accounts. The case will test the card industry's primary security standard, which was known in 2004 as Cardholder Information Security Program (CISP). CISP was the predecessor of today's current card industry standard, the Payment Card Industry Data Security Standard (PCI DSS). It will also test the liability of security auditing firms that deem companies as compliant with the standards. Merrick Bank, in its suit filed last year in Missouri, alleges that Savvis was negligent in certifying that CardSystems was complaint with industry standards. The compliance certification issue came to the forefront after Heartland Payment Systems and RBS WorldPay experienced large breaches even thought they had been certified as compliant with PCI standards. Another breached company, Hannaford Bros.,was certified in February 2008--while its customers' data were compromised in an ongoing breach process. The case moved to an Arizona court five months ago but only recently was assigned a judge, which means the case can move forward, said Arizona has a law that allows an entity that isn't a direct party to a contract to seek recovery if it is an "intended beneficiary" of the contract. In this case, even though Merrick didn't contract directly with Savvis to certify CardSystems, it relied on that certification being trustworthy, said the publication.

CU is among FIs sued over ATM fee disclosures

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PITTSBURGH (6/3/09)--Consumers filed nine lawsuits within two weeks in a federal court in Pittsburgh claiming there was no notice about fees on ATMs they used. A credit union is among those being sued. The suits are seeking class-action status. The credit union, $593.9 million asset Clearview CU, based in Moon Township, Pa., is being sued by Daniela Helkowski, who claims she withdrew cash on May 7 from an ATM at the credit union's main branch and was charged $2.25 for the transaction. In the suit, which was filed May 19 in the U.S. District Court for Western Pennsylvania, Helkowski said there was no sign at the ATM about the fees. The suit maintains the credit union's machine violates the Electronic Funds Transfer Act, which requires posting a notice "on or at" the ATM. The law requires notifying consumer of fees by signs located on or near the machines and on-screen before transactions are completed. Helkowki also filed a similar lawsuit against Sewickley (Pa.) Savings Bank on May 21. In that instance, she said she withdrew cash from the bank's ATM on May 6 and saw no disclosures about fees. Other defendants in similar suits include ATM Cash World, Northwest Savings Bank and Allegheny Valley Bank of Pittsburgh (Pittsburgh Tribune-Review June 1). The suits were all filed by the same Sewickley-based law firm.

CUNA-directed study supports preschool fin ed

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MADISON, Wis. (6/3/09)--Research into how young children learn indicates that they are capable of acquiring basic money concepts long before they enter school. Through social interaction and observation, preschoolers can begin to comprehend such abstractions as the purpose of money. That’s one of the key conclusions of phase one of the University of Wisconsin (UW)-Madison study into preschool financial literacy. The Credit Union National Association (CUNA) developed the concept and offered advice for the study, and a grant from the National Credit Union Foundation funded the research. Parents who guide their preschoolers in learning about money and saving obviously won’t create toddler Warren Buffets. “However, it is generally recognized that very young children can be taught about the basic benefits and tools of sharing, savings, and purchase that will support good financial habits and practices as children, leading to better managed financial lives as adult, independent spenders and savers,” the report said. In praising the study, CUNA President/CEO Dan Mica pointed out that full family membership policies put credit unions in a unique position to capitalize on this insight. “Four years ago, we created our Thrive by 5 teaching resource for parents on the hunch that it could help them explain and model smart spending and saving to their children from a very early age. This report says that we were right to push the financial literacy envelope below kindergarten," Mica said. “As the study moves forward, I expect that we’ll find out exactly what kinds of activities work best with this age group. With that knowledge we can improve Thrive by 5 if necessary, and give credit unions a tool for parents to better encourage healthy attitudes about money in their children before they begin school. The long-term result will be more financially secure adult members,” Mica added. The research was led by Karen C. Holden, Ph.D., professor in the UW’s Department of Consumer Science, and Charles W. Kalish, Ph.D., chair of the UW’s Department of Educational Psychology, with assistance from graduate students Laura Scheinholz, Deanna Dietrich, and Beatriz Novak. In the first phase of the planned three-year study, they reviewed dozens of previously unconnected studies of the development of economic concepts in early childhood. “The literature in cognitive development provides support for the proposition that financial literacy education is appropriate for young (preschool-aged) children. Children are already engaged in thinking about, and acting within, a financial environment. The conceptual tools they develop in their everyday lives will be the starting point for any formal educational efforts,” they concluded. The research team also examined 28 U.S. and 45 international programs to identify “the key financial concepts that are targeted in the financial education programs aimed at young children.” It found little evidence that these programs considered “the cognitive ability of children to grasp those concepts.” Furthermore, the researchers said, “There has been virtually no rigorous evaluation of these programs.” Future phases of the research will attempt to rectify these shortcomings by determining the most age-appropriate educational outcomes for preschool financial education and testing which methods and activities work best in preschool classrooms and in the home, starting with CUNA’s Thrive by 5. For the executive summary and the full research report, use the link.

Texas legislature ends with big CU wins some losses

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AUSTIN, Texas (6/3/09)--The 81st session of the Texas Legislature, which meets for five months every two years, ended Monday night with some wins for credit unions and some losses, the Texas Credit Union League (TCUL) said. This session, the TCUL Bill Analysis Team met weekly and reviewed captions and contents for over 7,000 filed bills, flagging over 400 for possible impact on credit unions. The team ultimately monitored more than 120 bills in the final weeks of the process (LoneStar Leaguer June 2). Texas credit unions had high hopes for the session, and most of those hopes will be rewarded, TCUL said. Among the victories for credit unions includes the passage of the Credit Union Department Sunset bill, which will allow the Texas Credit Union Department (TCUD) to continue as a separate, independent regulator of credit unions for another 12 years until 2021. Also, the Texas budget bill, SB1, fully funds the credit union department over the biennium, including providing all requested funds for examiners’ salary progressions--something that did not happen in the 2007 session, said the league. In a last-minute move over the weekend, State Rep. Drew Darby (R-72) helped pass HR 2900, a product of a conference committee going “outside the bounds.” The original bill HB 3870 and SB 2238 had died from procedural impediments. This revived bill will free the state financial regulatory agencies, including the credit union department, from being under much of the two-year appropriations/budget process in the future. Thus, TCUD will now become a semi-“self-directed” agency, with its budget set by the Texas Credit Union Commission. It is important for credit unions to make sure the commission holds the line on any unwarranted or unnecessary examination fee increases moving into the future, the league said. Credit unions also were relieved to see several bills fail to pass. These would have changed laws regarding acceptance of presented powers of attorney, and provided new penalties for internally mishandling child support lien requests. On the loss side for credit unions, two bills of interest did not get passed. HB 345, a data security breach bill, was set as the last bill on the calendar in mid-May on a procedural deadline. This is the second session that data security legislation failed to cross key hurdles in the face of business lobby opposition. Not a single vote was cast against it by a lawmaker. Democratic lawmakers, wishing to kill a Voter ID bill that had to pass May 26 or die, began to delay by eating up time talking (known as “chubbing”) on a Local and Consent Calendar for hundreds of bills. Voter ID legislation failed to make procedural deadlines and died, sinking many other pending bills, including HB 345, further down the legislative calendar. TCUL is preparing a complete legislative summary of the session, which will be made available to members in several weeks once the governor’s period to sign or veto bills has expired on June 20.

IAmerican BankerI CUs are the mouse that roared

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MADISON, Wis. (6/3/09)--Credit unions’ market share for the home loan origination market has grown to the extent that they could be called the industry’s “mouse that roared,” American Banker said Tuesday. With the reputation of large financial institutions hurt by aggressive loans that backfired during the real estate market’s boom, credit unions have gained more members, the publication said. Also, credit unions tend to have a better reputation than many lenders in the residential real estate finance business, and--for the most part--follow low-risk strategies, American Banker said. “People are looking for people they can trust to originate a mortgage,” Les Parker, president of Parker & Co., a mortgage advisory firm with clients that include credit unions, told the publication. Credit unions have some constraints on the their home loan growth such as regulatory and business culture changes they would need to implement to become bigger player in the mortgage business, and because of the nature of their membership paradigm, American Banker said. American Banker is a banking industry publication.

Clinton notes CUs in eulogy of ex-CUNA spokeswoman

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WASHINGTON (6/3/09)--Former President Bill Clinton talked about credit unions and Brooke Shearer's passion for them during a memorial service Saturday for Shearer, a former spokesperson for the Credit Union National Association (CUNA). Shearer, 58, who was communications director for CUNA in Washington during the 1980s, died May 19 at her home of cancer. She had known Bill and Hillary Clinton for 38 years, Clinton said. Clinton told about calling Shearer a week before she passed away, according to Larry Blanchard, CUNA Mutual Group legislative consultant, who attended the celebration of life service. Clinton and Shearer discussed the importance of credit unions, he told about 1,000 people at the service. She began the conversation by asking how the economy was doing, Clinton said. Clinton assured her President Barack Obama's administration had made a good start and things were improving. Shearer interrupted him and told him that they needed "to help credit unions get through that mess. We've got to get that fixed." Shearer remained enthusiastic about credit unions and during her final months sent letters to Obama's transition team and other policymakers about the positive impact credit unions had in helping members weather the recession. Other speakers at the service included Hillary Clinton; Supreme Court of the U.S. Associate Justice Stephen G. Breyer and his wife Joanna; Shearer's sons Devin and Adrian Talbott, and her daughter-in-law Lauren Talbott. Shearer served as Hillary Clinton's personal aide during Bill Clinton's 1992 presidential campaign. Shearer and her husband, Strobe Talbott, held positions in the Clinton administration. Talbott now heads the Brookings Institution research and policy center. Shearer was founding director of the Yale World Fellows program and was on the board of the International Center for Research on Women.

Canadas Central 1 CU restates financials

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VANCOUVER, B.C. (6/3/09)--Canada’s Central 1 CU announced that it has restated its 2008 financials. Central identified an error in its reporting, which led the credit union to overstate its 2008 net income by $3.2 million. The restatement reduces net income for 2008 to $26.6 million from $29.8 million. Net income, however, still represented a 9% increase over 2007. The amount transferred to retained earnings for 2008 is restated at $20.9 million, compared with the $24.1 million previously reported. Restated retained earnings at year-end 2008 were $188.1 million. Central’s Management’s Discussion and Analysis for 2008 and its 2008 Annual Report have been revised to reflect the changes. Central 1 CU provides services to credit unions in British Columbia and Ontario.

2009 WYCUP deadline is June 15

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MADISON, Wis. (6/3/09)--Those applying to the World Council of Credit Unions' (WOCCU) Young Credit Union People (WYCUP) Scholarship Program have until June 15 to submit their completed nomination materials. The program seeks individuals who have made significant contributions to the development of their own credit unions, regional or national credit union systems and have demonstrated the potential to employ their talents at the international level. Credit unions and credit union organizations that are affiliated with WOCCU members are encouraged to nominate the next generation of credit union leaders for the scholarship. To be eligible for the scholarship, nominees must be sponsored by their credit union or credit union organization to attend WOCCU's 2009 World Credit Union Conference in Barcelona, Spain, July 26-29; be 35 years old or younger as of Jan. 1; and submit a completed nomination form. The WYCUP scholarship, which consists of an all-expenses-paid trip to the 2010 World Credit Union Conference, will be awarded to five recipients at the 2009 conference. All WYCUP nominees will be recognized in Barcelona and invited to events organized specifically for participants under age 35, including a networking session. Conference registrants age 35 and under also qualify for a discounted registration fee. For more information, use the link.

Kansas CUs YouTube video contest a winner

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WICHITA, Kan. (6/3/09)--The Kansas Credit Union Association (KCUA) recently awarded Matt Elwood, an aspiring film director and member of Credit Union of America, Wichita, Kan., $5,000 for creating a video that encompasses the credit union difference.
Click to view larger image Credit Union of America member Matt Elwood received $5,000 for creating the winning video, the “Bank vs. Credit Union Rap Battle,” in the Kansas Credit Union Association’s (KCUA) YouTube video contest. Attending the check presentation were, from left, Ashley Bridgeman, KCUA director of marketing and communications; Josh Ellis, film collaborator; Marla Marsh, KCUA president/CEO; Frank Shoffner, Credit Union of America executive vice president; and (seated) Elwood. (Photo provided by the Kansas Credit Union Association)
Elwood and a collaborator, Josh Ellis, created a video, the “Bank vs. Credit Union Rap Battle,” which highlights credit unions’ financial services, member ownership and nonprofit status. The contest was sponsored by Kansas credit unions and moderated by KCUA. Contestants submitted videos and promoted them to family and friends to garner the most views. KCUA originally expected the videos to receive roughly 4,000 impressions, or views, but 17 videos received more than 25,000 views. The visitors were divided evenly between males and females, and individuals aged 13-25 and 45-55, KCUA said. “We have generated an astounding number of impressions in a short amount of time for a simple message: Credit unions are a viable alternative to traditional financial institutions,” said Ashley Bridgeman, KCUA director of marketing and communications. KCUA will use the messages obtained from the videos in a marketing campaign geared toward members of Generation Y. To see the videos, use the link.

CU System briefs (06/02/2009)

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* GADSDEN, Ala. (6/3/09)--Employees at three Etowah County branches of Gadsden, Ala.-based Community CU have gone on strike with the United Steel Workers Local 12. The strike began Monday (The Gadsden Times June 1). One branch on Albert Rains Boulevard will be closed temporarily because of negotiations. Employees picketed the main branch in Alabama City and the Rainbow City branch. Mike Morris, president of the $214 million asset credit union, told the publication that terms of the negotiations cannot be discussed publicly. He urged members to be patient and said he hoped the strike wouldn't last long. Employees from other branches outside of Etowah County and who not striking are working at the two open branches … * ST. LOUIS (6/3/09)--Canine crusaders at Arsenal CU springing into
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action on behalf of pets included the $127.3 million asset credit union's kids club mascot, Tracker the bassett hound, and employees. On May 16, the credit union's team of employees, financially supported by co-workers, family members and friends, helped raise funds for the Humane Society of Missouri's Dr. Doolittle Fund, which finances routine veterinary-medical care for homeless pets so they can be placed for adoption. The "Bark in the Park" event was held at Forest Park in St. Louis. Tracker was featured in a news report that aired on local NBC affiliate KSDK Channel 5. (Photo provided by the Humane Society of Missouri) … * SANTA ROSA, Calif. (6/3/09)--Redwood CU (RCU), based in Santa
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Rosa, partnered with the Blood Bank of the Redwoods for a blood drive at 10 locations in one week. They counted 204 donors, who gave 163 pints of blood, which has the potential to save 489 lives. Locations were Santa Rosa, Windsor, Rohnert Park, Petaluma, San Rafael, Novato, Point Arena, Ukiah, Cloverdale and Napa. Other RCU locations partnered with local businesses to hold the drives at their locations. RCU serves 145,000 members with $1.8 billion in assets. (Photo provided by Redwood CU) … * HAMILTON, Ohio (6/3/09)--Scott Edward Hester, 44, was taken into custody Monday after being on the lam since a May 27 robbery at a branch of AurGroup Financial CU, based in Fairfield, Ohio. He was considered armed and dangerous, and the incident caused evacuations and a lockdown of an elementary school. After being cornered at a residence, Hester refused to surrender, and a special weapons and tactics (SWAT) team used tear gas to capture him. Hester is charged with two aggravated robberies with a gun specification--at the credit union robbery and at a convenience store (Cox News Service June 1) … * ALBANY, N.Y. (6/3/09)--Kenneth J. Bopp, a member of Capital Communications FCU's board, died Friday in Albany at the age of 77. Through the years, Bopp served as a consultant for the Credit Union Association of New York; as branch manager of (GE) Silicone Employees FCU, Selkirk; and as president of both First Prize FCU and the Capital credit union chapter. He also was chairman of the board at Excelsior CU. "The association notes with sadness the passing of Ken Bopp," said William J. Mellin, president/CEO of Credit Union Association of New York. He added Bopp "was always ready and able to act on behalf of the credit unions of New York State…." Bopp is survived by his wife, three sons, one daughter, and 11 grandchildren …