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CU System briefs (07/01/2009)

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* CRANSTON, R.I. (7/2/09)--Cranston-based Coastway CU officially became Coastway Community Bank Wednesday. The 89-year-old credit union, founded as Telephone Workers CU, had 21,000 members and about $284 million in assets as of Tuesday. The credit union decided to convert to a mutual savings bank because it wanted to do more business lending than it was allowed under the 12.5% of assets cap required of credit unions. In April, 80% of voting members endorsed the conversion. (The Providence Journal July 2 and Warwick Online June 30) … * FORT WORTH, Texas (7/2/09)--OmniAmerican Bank--the former OmniAmerican CU based in Fort Worth--said Tuesday it will offer an initial public offering (IPO) to convert from a mutual savings bank to a publicly held company. The bank converted from a credit union charter on Jan. 1, 2006, to a mutual bank charter. Depositors with the bank as of March 31, 2008, would be eligible to participate in the IPO, which would be completed during the first quarter of 2010. The bank was founded in 1956 as Carswell FCU serving Carswell Air Force Base. It has $1.06 million in assets--less than the $1.6 billion in assets it had when it converted from a credit union to a bank (Fort Worth Business Press and Star-Telegram June 30) …

Minnesota Senate Minority leader meets with CUs

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ROCHESTER, Minn. (7/2/09)--Ten Minnesota credit union representatives met with state Senate Minority Leader Dave Senjem (R-Rochester) Tuesday at a legislative "Meet and Greet" hosted by the Minnesota Credit Union Network (MnCUN).
Click to view larger image Minnesota Senate Minority Leader Dave Senjem (R-Rochester) met with credit union representatives during a legislative "meet and greet" Tuesday. From left are Neil Christy, Minnesota Credit Union Network (MnCUN) vice president of education and credit union development; Senjem; Mayo Employees FCU Chief Financial Officer Ken Blazing and CEO Mary Hansen; and Mark D. Cummins, MnCUN president/CEO. (Photo provided by the Minnesota Credit Union Network)
The second of two summer political meetings, the event provided an opportunity to discuss topics important to credit unions, communities and the state. Credit unions shared the effects the struggling economy and housing market are having on them and their members. "I encourage you to keep the lines of communication open," said Senjem, a long-time credit union proponent. Senjem served on the board of Mayo Employees FCU in Rochester for 23 years. He has been in the state Senate for seven years and has held the position of Senate minority leader since 2006. Throughout his years in the legislature, he repeatedly has professed a dedication to maintaining Minnesota credit unions' tax exempt status, said McCUN. During the meeting, Senjem shared his perspective on the state's "grave fiscal problems." Minnesota has a $2.7 billion budget shortfall stemming from financial instability that will impact citizens for many years, he said. He said the state can restore itself fiscally by investing in job growth. "It is through long-standing relationships with legislators like Sen. Senjem that Minnesota credit unions are able to strengthen our presence in Minnesota politics," said Mara Humphrey, MnCUN vice president-governmental affairs. On Monday, Minnesota credit unions met with the state Speaker of the House Margaret Anderson Kelliher (DFL-Minneapolis).

CUNA closed Friday for holiday no INews NowI

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WASHINGTON and MADISON, Wis. (7/2/09)--The Washington, D.C., and Madison, Wis., offices of the Credit Union National Association (CUNA) will be closed Friday in observance of the Independence Day holiday. News Now will not publish an edition Friday but will resume regular publication on Monday.

Pa. CUs to aid state employees in budget impasse

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HARRISBURG, Pa. (7/2/09)--Nine credit unions in Pennsylvania have announced plans to offer special low-interest loans and lines of credit to help members who are state employees cope with the potential loss of their paychecks. Pennsylvania lawmakers were still negotiating a new budget when the state’s fiscal year ended Tuesday. If legislators remain locked in a budget stalemate after July 17, paychecks would be withheld from 69,000 state employees, according to the Pennsylvania Credit Union Association (Life is a Highway July 1). Speaking at a press conference, Gov. Ed Rendell and Secretary of Banking Steve Kaplan praised the leadership shown by Pennsylvania State Employees CU and highlighted the efforts of three additional credit unions: AmeriChoice FCU and Members 1st FCU, both based in Mechanicsburg, and Oil Country FCU, based in Titusville. Other credit unions developing special programs include Altoona VA Hospital FCU, Altoona; Belco Community CU, Harrisburg; Grove City (Pa.) Area FCU; NE PA Community FCU, Stroudsburg; and Your Choice FCU, Altoona. State employees are required to remain on the job even if the budget is still in limbo. They are then paid for their work retroactively after a budget is signed. Pennsylvania has been unable to meet the annual July 1 budget deadline since 2002. This year, lawmakers have split over Rendell’s proposal to help close a $3.2 billion deficit by increasing the personal income tax rate.

iBelong raises CU awareness in Mississippi

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JACKSON, Miss. (7/2/09)--An “iBelong” television and radio campaign is boosting credit union awareness among Mississippi residents. Created by the Pennsylvania Credit Union Association, “iBelong” began running in Mississippi in January, according to the Mississippi Credit Union Association. A survey completed in May 2009 showed respondents had increased awareness of credit union eligibility, increased favorable perceptions of credit unions and had recently heard positive news about credit unions, when compared to 2007 survey results. Favorable perceptions about credit unions outweighed unfavorable impressions by a 4 to 1 ratio. For example, the number of respondents saying the description “cares more about people than profits” describes credit unions rather than banks increased 300% in 2009. In addition, the “iBelong” campaign is credited with helping boost credit union membership. Mississippi credit unions’ first quarter 2009 member-growth rate was five times greater than the growth rate for all of 2008. The “iBelong” campaign is also being used in Pennsylvania, Illinois and Vermont.

IBoston GlobeI When lender says no turn to CUs

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BOSTON (7/2/09)--Credit unions are a good alternative to traditional mortgage financing as credit markets overall have tightened up, the Boston Globe said in a Tuesday article. Credit unions were listed as the No. 1 alternative of five options mentioned by the newspaper. “Unlike banks and mortgage companies that sell their loans on the secondary market, many credit unions actually keep the loans they make in their own portfolio,” the article said. “The secondary money market purchases bundles of loans from lenders. These loans must meet specific guidelines such as those set by [the Federal Housing Administration], Freddie Mac and/or Fannie Mae. Once the primary lender sells the loan, the lender is now in the position to make another loan to a new borrower,” the article said. Credit unions that don’t sell the loan on the secondary money market can set their own loan requirements, the article added.

Pay It Forward winner announced

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MADISON, Wis. (7/2/09)--Summit CU, Madison, Wis., has announced the winner of its grassroots charity effort contest, Pay It Forward. The winning video pledge, “Giving Relative,” received the highest ranking out of 798 entries in the Pay It Forward contest. Members were taped at Summit’s 20 branches between March 23 and May 14. They explained what they would do for someone else if Summit gave them $10. Winner Elizabeth Lease said she would donate the $10 to a struggling relative. When she received the $10, she contacted her sister, who recently had to quit her job because of increased symptoms associated with lupus. “I asked if she could use some extra cash for groceries, which she needed,” Lease said. I went to her home and gave her $10 to buy some groceries. Needless to say, she was extremely appreciative and at the time it was exactly what she needed to take her mind off of her medical issues.” Lease will receive $500 for her entry, and Summit will donate $500 to her charity of choice--the Lupus Foundation of America--Wisconsin Chapter in Madison. Summit also will donate $500 to the Waunakee Neighborhood Connection, the charity of choice for the second and third place entries. Both were filmed at Summit’s Waunakee branch. Voting took place on Summit’s website June 1-15. Community members were invited to rate the entries on a scale of one to five stars. Summit CU has $1.3 billion in assets. To view the winning video, click on the photo.

Heartland tests new encryption

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PRINCETON, N.J. (7/2/09)--Heartland Payment Systems, one of the nation’s largest payments processors, successfully completed the first phase of its end-to-end encryption pilot project Monday in response to last year’s data breach. The company announced in January that its processing system was breached last year, compromising millions of credit cards and affecting credit unions and their members nationwide. Credit unions in Alabama, California, Florida, Louisiana and Texas have joined in class action lawsuits seeking damages related to the Heartland breach (News Now Jan. 21, March 2 and April 2). The first step of the company’s pilot involved transmitting live Advanced Encryption Standard (AES)-encrypted card transactions from a merchant to Heartland’s processing platform. AES is the highest level of encryption and is on track to replace Data Encryption Standard (DES) and Triple DES as the desired standard for sensitive data, said Heartland (BusinessWire June 30). To his knowledge, this is the first time encrypted transactions have been sent from a merchant’s card reader to and through a major processor’s payments network, said Robert O. Carr, Heartland chairman/CEO. “[Monday’s] transactions involved a Texas-based merchant and multiple credit card, prepaid and signature debit card transactions testing each of the major card brands,” Carr said. “These cards were read by our newly developed pilot tamper-resistant security module (TRSM) terminal. The data was encrypted as the electronic digits left the magnetic stripe and entered the TRSM hardware device. The data was then successfully transmitted to and through our processing platform for authorization and settlement. “Typically, cardholder data is unencrypted as it leaves a merchant’s terminal and is not encrypted until it is either tokenized in a gateway or at rest in the processing platform’s data warehouse,” Carr continued. Cardholder data in transit is at risk of being compromised if cyber criminals or hackers use methods such as network or memory sniffer malware to get the data. “To protect data throughout the life cycle of a credit, debit or prepaid card transaction, Heartland is developing end-to-end encryption technology we call E3 that is designed to encrypt the transaction from the card read through our network and ultimately through transmission to the card brands,” he added. Credit unions are still reissuing members’ cards compromised in Heartland’s data breach. For example, Omaha (Neb.) Police FCU is replacing 1,167 of its members’ debit cards after being notified that the cards were among those compromised in the Heartland data breach (Omaha World-Herald June 30).

Top 10 News Now stories for June

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MADISON, Wis. (7/2/09)--Here are the top 10 most requested News Now stories during June. Use the links to read the entire stories online. 10. Frank advocates expanded powers for CUs BOSTON, Mass.(6/23/09)--Credit unions should be given expanded powers, House Financial Services Committee Chairman Barney Frank told Massachusetts Credit Union League members on Monday. 9. Top 10 emerging risks for CUs outlined at ACUC BOSTON (6/23/09)--Today's fraud landscape is becoming more complex, featuring extensive intertwined risks--some old but with new wrinkles and some emerging at the pace of new technologies. The emerging risks will require credit unions to adopt rigorous, cross-channel fraud monitoring strategies, a CUNA Mutual risk expert said Monday. 8. Banks eyeing checking accounts for fees NEW YORK (6/1/09)--While credit card rates are under scrutiny in Washington, banks are already looking for other ways to boost their fee income. They are raising fees on checking accounts. 7. CUs weigh pros, cons of employees on Facebook MADISON, Wis. (6/16/09)--Using Facebook to build social networks can offer consumers many advantages--such as the chance to re-connect or build new relationships with others, and to promote themselves or other causes. 6. Does Facebook pose security issues for CUs? 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. 5. Treasury wants NCUA independent WASHINGTON (6/18/09)--The U.S. Treasury's report on financial regulatory reform, released to the public on Wednesday, would allow the National Credit Union Administration (NCUA) to maintain its safety and soundness authority over credit unions. 4. Miller v. BoA decision favors financial institutions WASHINGTON (6/2/09)--The California Supreme Court Monday backed Bank of America's (BoA) position and ruled that state law permits BoA and other depository institutions in California to cover overdrafts and overdraft fees from Social Security funds and other protected public benefit deposits. 3. Remittance reforms are on House agenda WASHINGTON (6/4/09)--Rep. Luis Gutierrez (D-Ill.) in a Wednesday House subcommittee hearing said that he would soon introduce legislation aimed at remittance-related reforms. 2. NCUA sets webinar on new law implementation ALEXANDRIA, Va. (6/1/09)--The National Credit Union Administration will present its guidance on implementing its new corporate credit union stabilization plan in a webinar scheduled for June 24. 1. New corp stabilization plan implemented by NCUA ALEXANDRIA, Va. (6/19/09)--The National Credit Union Administration will immediately borrow $1 billion of the total $6 billion offered by the U.S. Treasury to shore up the corporate credit union system after the board at its monthly meeting voted to implement the temporary corporate credit union stabilization fund.

New York CUs Marker Man stage awareness alert

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ALBANY, N.Y. (7/02/09)--More than 40 New York credit union
Click to view larger image Spreading the word about the credit union difference helped “Marker Man” make new friends during a recent awareness event in Albany, N.Y. “Marker Man” is the mascot for the Credit Union Association of New York’s creditunionsFORYOU.com awareness campaign. (Photo provided by the Credit Union Association of New York)
volunteers raised the awareness of legislative staffers, state and private employees, and pedestrians as they roamed the streets surrounding the state’s capitol and legislative building. The volunteers recently spent the day in Albany as part of the Credit Union Association of New York’s awareness campaign, called creditunionsFORYOU.com. “Marker Man,” the campaign mascot, helped draw attention to the volunteers as they held doors open for state workers and chatted with passers-by. The volunteers also manned booths in the Capitol Concourse and outdoors at West Capitol Park. Volunteers were given a credit union awareness T-shirt to wear for the day and were equipped with talking points about the credit union difference, as well as markers to use as giveaways, said the association.

Dupaco Community CU hosts Sen. Grassley

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DUBUQUE, Iowa (7/2/09)--Credit union leaders urged Sen. Charles Grassley (R-Iowa) to preserve current credit card interchange rules and safeguard credit unions’ independent federal regulator at a Dubuque County town hall meeting Tuesday. Iowa credit union representatives asked Grassley not to support proposed federal legislation--H.R. 2695, H.R. 2382 and S. 1212--that would shift the costs of providing credit card transactions, or interchange, from merchants to financial institutions such as credit unions, according to Dupaco Community CU President/CEO Bob Hoefer. “Merchants simply want to pay less for payment card acceptance while still receiving significant benefits,” Hoefer said. “If merchants pay less in interchange fees, this cost would ultimately be shifted to all financial institutions, including Iowa credit unions and, ultimately back to all consumers, including Iowans, who use debit and credit cards.”
Click to view larger image Dupaco Community CU President/CEO Bob Hoefer (left) expresses credit unions’ position on interchange legislation to U.S. Sen. Charles Grassley (R-Iowa) before the start of a public town hall meeting at the credit union.
Click to view larger image More than 125 people attended Sen. Charles Grassley’s town hall meeting Tuesday at Dupaco Community CU’s Asbury branch. (Photos provided by Dupaco Community CU)
Interchange fee rates have remained constant for the past several years and they are a fair rate for merchants using a complex system, added Hoefer. “Despite problems in the financial sector, there has not been one consumer complaint that the payment networks have somehow failed to perform efficiently and effectively, even as consumers go to hundreds of thousands of retailers throughout the world and complete a transaction in seconds,” he said. Through the current system, merchants bear no risk of fraud and interchange rates assist in covering the cost borne by financial institutions. Risks can range from data security breaches to fraudulent transactions, and financial institutions protect against this fraud through interchange rates, he said. Credit union leaders also asked Grassley to maintain the National Credit Union Administration (NCUA) as an independent regulator as Congress looks to overhaul the financial services regulatory system. “There is a huge difference between not-for-profit, cooperative credit unions and for-profit banks,” Hoefer said. “Credit unions largely were not involved in the types of lending practices with which Congress has concerns.” Hoefer underscored that the taxpayer’s cost of operating NCUA is zero. “U.S. credit unions fund the agency through insurance premiums, examination fees, and investment revenue of the National Credit Union Share Insurance Fund,” he said. The credit union charter could be weakened if credit unions were placed under the regulatory authority of a single, consolidated federal bank regulator, Hoefer added. “Such action would only result in increased loan rates, decreased savings rates, higher fees, and the loss of the not-for-profit credit union alternative for Iowa’s 900,000 credit union members,” he said. More than 125 individuals, including 25 credit union representatives from Dupaco Community CU, DuTrac Community CU, and Alliant CU, of Dubuque, attended the event. Julie Vande Hoef, director of government affairs for the Iowa Credit Union League, said Tuesday’s event reflects the strong support of Iowa credit unions in their legislative advocacy efforts. “The future of credit unions depends on their ability to engage lawmakers and articulate the credit union message,” she said. “Elected officials' decisions can influence greatly the future direction of credit unions and their ability to serve members.”