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CU System Briefs (07/18/2013)

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  • ST. LOUIS, Mo. (7/18/13)--The Missouri Corporate CU, Missouri Credit Union Charitable Foundation and the Missouri Credit Union Association have established a memorial fund in honor of state credit union champion and attorney Leon Kusnetzky, who died May 14. The fund encourages the growth and initiatives of small credit unions and helps sponsor scholarships for the Credit Union Development Education program.  Kusnetzky's work for and in credit unions dates back to the 1960s. His firm, Kusnetzky, Schwartz, Rosenfeld, Sailler & Lilla, helped improve legislation affecting the state's credit unions. He helped with credit union bylaws and the development of credit union service organizations (CUSOs)  in the state.  He defended credit unions against lawsuits, navigated bankruptcy litigation, set up policies and analyzed contracts. He also worked to help small credit unions in a tough regulatory environment by sponsoring the small credit union CUSO, said MCUA. In 2012 he was inducted into MCUA's Honor Roll, a distinction given to people who go above and beyond in their service to the state's credit union movement ...
  • WHEATON, Ill. (7/18/13)--Hermila Garcia, 24, was sentenced to jail time and probation for stealing more than $3,000 from Dupage County Employees CU in Wheaton, Ill. She also must pay back the $3,875 she allegedly took from the $16 million asset credit union, the judge ruled. Before Garcia's September arrest on felony theft charges, she was a teller at the credit union for seven years. The thefts--in which Garcia allegedly took money from her drawer last summer and falsely filled out paperwork indicating she had deposited the money into the credit union's vault--were discovered after an audit, authorities said. Last week, Garcia pleaded guilty to felony theft and was sentenced to 24 days on jail work release and restitution, and two years of probation, court records indicated (Daily Herald July 16) ...
  • HARRISBURG, Pa. (7/18/13)--Gene Biddle, former CEO of Spring Mill Employees FCU, Roaring Spring, Pa, died July 14, the Pennsylvania Credit Union Association said (Life is a Highway July 17). He was 78. Biddle served as the credit union's CEO/general manager until June. He was also an employee of Appleton Papers for 40 years. A funeral was held Wednesday ...

CUs Overwhelmingly Preferred By Financially Savvy Consumers, Poll Shows

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LOS ANGELES (7/18/13)--Financially savvy consumers overwhelmingly choose credit unions as their preferred institutions, says a new GoBankingRates.com poll, and that is no surprise, says Paul Gentile, Credit Union National Association executive vice president of strategic communications and engagement.
 
"For users of financial services, it's all about trust--and the credit union model, as a cooperative operating on a not-for-profit basis with no shareholders--engenders the trust among consumers and small business customers," he told GoBankingRates.com (July 17).

Among those polled on the GoBankingRates site and its partner sites--US News, Boston.com, AL.com and The City Wire-- more than 73.76% of poll respondents choose credit unions as their preferred institutions. Local community banks distantly followed, being preferred by 14.18%, national banks by 9.93%, and other institutions by 2.13%.
 
The publication also featured an explanation by Andrew Schrage, personal finance journalist and co-owner of blog Money Crashers Personal Finance, who noted he used to have an account at a national financial institution but pulled it when he ran into bad customer service.  Like 2.2 million other banking customers since 2011, he moved his money to a credit union.
 
Credit unions still have more work to do, however. A more general survey found that credit unions are still a long way to becoming the average person's primary financial institution, said GoBankingRates.com's poll of more general consumers.
 
That's all the more reason for credit unions to Unite for Good by providing service excellence, raising awareness about the benefits of credit unions and eliminating barriers--such as banks' attacks on credit unions' tax-exempt status and their attempts to limit credit unions' ability to offer member business loans, said CUNA.  This three-pronged campaign is working toward credit unions' shared strategic vision in which "Americans choose credit unions as their best financial partner."

Use the links to access the GoBankingRates.com article and learn more about the Unite for Good campaign.

CUs Earn Multiple CUAD Awards Each

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BISMARCK, N.D. (7/18/13)--Three credit unions were each recognized with multiple first-place awards for their community involvement and financial literacy efforts by the Credit Union Association of Dakotas during an awards banquet last month.
Click to view larger image Kaylee Lapp, left, marketing specialist and training coordinator, Town & Country CU, Minot, N.D., and Robbie Thompson, president/CEO of the Credit Union Association of the Dakotas.         

Town and Country CU, Minot, N.D., earned three first-place awards. They include:
  • Building Connections Award;
  • Dora Maxwell Social Responsibility Award, $200 million to $500 million in assets; and
  • Desjardins Adult Financial Education Award, $150 million to $500 million in assets. 

Click to view larger image Stephen Vaughan, left, vice chair of Capital CU, Bismarck, N.D., and Robbie Thompson, president/CEO of the Credit Union Association of Dakotas.
Capital CU, Bismarck, N.D., collected two first-place awards, including:
  • Louise Herring Philosophy in Action Award, $250 million or more in assets; and
  • Desjardins Youth Financial Education Award, $150 million to $500 million in assets.    
Postal Family FCU of Fargo, N.D., also collected two first-place awards, including:
  • Louise Herring Philosophy in Action Award, less than $50 million in assets; and
  • Dora Maxwell Social Responsibility Award, $5 million to $20 million in assets.
Click to view larger image Karen Anderson, left, CEO of Postal Family FCU, Fargo, N.D., and Robbie Thompson, president/CEO of the Credit Union Association of the Dakotas (Photos provided by the Credit Union Association of the Dakotas)
The Building Connections Award recognizes the cooperative spirit and the theme of "people helping people" through involvement in National Cooperative Month and International Credit Union Day.
 
The Dora Maxwell Awards for Social Responsibility Award signifies a commitment to volunteering time, energy and resources to boost the living standards of others.
 
The Louise Herring Awards for Philosophy in Action Award display how credit unions put People Helping People credit union philosophy into action.

The Desjardins Financial Education Awards recognize the financial literacy efforts of credit unions in educating youth and adults.

Winners of Dora Maxwell, Louise Herring and Desjardins Financial Education state-level awards go to the national awards competition sponsored by the Credit Union National Association.                     

Court Denies S&P's 'Puffery' Defense In Government's RMBS Lawsuit

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LOS ANGELES (7/18/13)--A federal judge in Los Angeles has refused to dismiss the federal government's lawsuit against Standard & Poor's over S&P's ratings of residential mortgage backed securities (RMBS) and collateralized debt obligations (CDOs)  prior to the nation's financial crisis.
 
U.S. District Judge David O. Carter Wednesday denied the motion to dismiss by S&P and its parent company, McGraw-Hill Cos. Inc., rejecting S&P's argument that investors should not have relied on any of its statements about the credit ratings because the statements were "non-actionable puffery" and were "couched in aspirational terms" not subject to fraud claims.
 
In the suit, the Department of Justice alleged that S&P committed fraud under the Financial Institutions Reform, Recovery, and Enforcement Act of 1989  by inflating the ratings it gave the RMBS and CDOs. Financial institutions--including Western Corporate FCU and a credit union--invested in those instruments and suffered losses. The losses resulted in liquidation.
 
In his 18-page opinion, Carter noted that "defendants lead off with a proposition that is deeply and unavoidably troubling when you take a moment to consider its implications. They claim that, out of all the public statements that S&P made to investors, issuers, regulators, and legislators regarding the company's procedures for providing objective, data-based credit ratings that were unaffected by potential conflicts of interest, not one statement should have been relied upon by investors, issuers, regulators, or legislators who needed to be able to count on objective, data-based credit ratings."
 
The opinion noted that the government argued that "S&P's statements were not a 'general, subjective claim' about the avoidance of conflicts of interest, but rather a promise that it had 'established policies and procedures to address the conflicts of interest through a combination of internal controls and disclosure.'"
 
"It is clear that the government's complaint identifies and describes in detail examples of the CDOs for which S&P is alleged to have issued or confirmed ratings that did not accurately reflect their true credit risks," Carter wrote. "More importantly, the government's complaint alleges, in detail, the ways in which none of S&P's credit ratings represented the thing that they were supposed to represent, which was an objective assessment of creditworthiness, because business considerations infected the entire ratings process."
 
The government also argued that S&P had clear knowledge that CDOs were backed by deteriorating RMBS.
 
"The government has satisfied the heightened pleading standard ...and sufficiently pleaded both objective falsity and subjective knowledge and intent..." the court said, adding it agreed with the Ninth Circuit Court ruling that money need not flow "directly to the defendant from the party deceived by the defendant."
 
"The court finds that the government has sufficiently pleaded the intent required to support its fraud claims. Any disputes over the veracity of these claims, or contested facts, are properly challenged at a later stage of litigation."
 
The Justice Department's complaint listed 76 CDOs as examples of investments that went bad, including 11 sold to WesCorp and 26 sold to Eastern Financial Florida CU. Other losses listed including Citibank, Bank of America, M&T Bank and First Midwest (News Now Feb. 6).

Li To World's CUs: Social Media Use Is All About Relationships

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Click to view larger image "Social media is going to exist whether credit unions choose to be there or not, making engagement the only way to sway negative comments," social media and technologies expert Charlene Li told the World Council of Credit Unions' 2013 World Credit Union Conference Tuesday. Social media engagement for business begins with strategic planning, she said.
OTTAWA, Canada (7/18/13)--A successful social media business strategy requires more than just the latest technologies, according to Charlene Li, social media and technologies expert and Tuesday's general session speaker at the World Council of Credit Unions' 2013 World Credit Union Conference in Ottawa, Canada.

Growing numbers of credit unions and financial institutions have experimented in social technologies, but few have incorporated them into long-term social business plans that strategically engage their members and employees.

"It's really about how you form a relationship," said Li, founder of Altimeter Group and best-selling author of Groundswell and Open Leadership. "Credit unions have a very special relationship with their members that is very unique and heartfelt in their communities. You see people in your branches, online, on your websites and on mobile phones. Soon you will see these people on your social media channels as well."

Click to view larger image "Business is social. Social is relationships," Charlene Li, social media and technologies expert, told a packed general session room at the World Credit Union Conference Tuesday in Ottawa, Canada.
With today's global media penetration at more than 50% and growing across every demographic, credit unions have an opportunity to reach and form relationships with their entire member base. Organizations must create a social strategy that connects back to their business goals, or they are destined to fail, Li said.

"If you don't know why you're using these, you should probably stop and really sit back and think, 'What is it I'm doing with my credit union? Why do I have these technologies? How do they tie back to our business goals?'" Li said.

Before any organization begins strategizing a social media plan, it must embark on what Li calls a "journey" through consecutive phases, starting with planning. By laying a foundation for the future, credit unions can evolve to reach convergence--when their social efforts align with their business objectives. Li recommended credit unions start by defining and prioritizing their top three to four long-term business goals over the next couple years, then decide how social media can help achieve them.

Click to view larger image During the audience question and answer in Tuesday's general session, Ben Janzen, stewardship in action adviser for Mennonite Savings and CU (Canada), asked Charlene Li, social media and technologies expert, for advice on how credit unions can maximize their social media efforts during business hours.  (Photos provided by the World Council of Credit Unions)
"Tools and technologies will come and go," Li said. "Your strategy has to stand the test of time."

More than 180 conference attendees spent the evening visiting one of seven credit unions throughout Ottawa. The sold-out tours included visits to Alterna Savings and CU Ltd., Buduchnist CU Ltd., Caisse populaire Rideau-Vision d'Ottawa, Frontline Financial CU, Meridian CU, Ottawa Women's CU and Your CU.

The 2013 World Credit Union Conference ended Wednesday. Wednesday's events included a closing general session presentation by Start with Why: How Great Leaders Inspire Everyone to Take Action author Simon Sinek, World Council's annual awards ceremony and a closing night reception at the Canadian Museum of Civilization.

Filene Tracks Race For Highest Credit Score For Fin Ed Efforts

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MADISON, Wis. (7/18/13)--The Filene Research Institute launched a study to investigate the establishment and trajectory of a credit score--starting from an initial FICO score of zero.
 
The Great Credit Race will follow the use of a Visa credit card by 20 individuals who have no established FICO or a zero score for six months to ascertain key variables that affect the score's opening growth.
 
As part of Filene's i3 program, two member credit unions--Del Norte CU, Los Alamos, N.M., and Dupaco Community CU, Dubuque, Iowa--will pilot the study in an effort to crack the code on how credit scores experience an uptick from score inception.   
 
"The great conundrum is that it's really hard to get credit if you have no credit score," said George Hofheimer, Filene's chief research and innovation officer. Since considerable weight is put on revolving credit for credit score determination, the Great Credit Race has made using a credit card the crux of the study.
 
"Unveiling some of the initial triggers, both positive and negative, on a credit score could be groundbreaking for consumers who struggle with home and car ownership, rental ability, and even job acquisition," Hofheimer added.
 
"The Filene study is quite unique in its perspective," said Denise Wymore, Del Norte vice president of member loyalty. "We know what types of behaviors raise or lower scores on established credit scores, but it's really a mystery as to what behaviors actually help build a score from the ground up."
 
The study also will provide insights into more effective ways of helping consumers understand money, according to David Klavitter, Dupaco senior vice president of marketing.  "It's the role of credit unions to improve our members' overall financial well-being," he said. "Better financial education is critical."
 
Participants in the study will receive a Visa credit card with a $500 limit and are told they must make monthly payments in a timely manner and cannot exceed the set limit. On the last day of each month, each credit union will do a soft pull of the credit score via TransUnion. On the 180th day of the race, the individual with the highest score will be deemed the winner and receive $500.
 
"The insight gleaned from this study may give consumers a real step up in the credit game, helping them establish habits that will open the doors to better opportunities and lives," said Hofheimer.
 
Other i3 credit unions contributing to the project include Elevations CU, Boulder, Colo.; Leaders CU, Jackson, Tenn.; Vancity CU, Vancouver, B.C.; and Xceed Financial CU, El Segundo, Calif. Currency Marketing of Chilliwack, B.C., is providing marketing support and guidance.

PCUA Offers Training On Lending To Marcellus Shale Small Businesses

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HARRISBURG, Pa. (7/18/13)--The Pennsylvania Credit Union Association is sponsoring a two-day extensive training course Aug. 5-6 on lending to small businesses that are a part of the Marcellus Shale supply chain.

Marcellus Shale refers to one of the largest natural gas fields in the world.

The Shale Gas Supply Chain: How to Lend to Small Businesses conference will meet at Canonsburg, Pa., and will feature shale industry leaders, who will discuss the operating cycle of a shale driller, the supply chain opportunities, as well as benefits and pitfalls, said PCUA (Life is a Highway July 16).

The opportunities stem from efforts by energy companies to tap three layers of gas-rich shale--Marcellus, Utica and Upper Devonian--that stack up hundreds of feet below the surface in the western part of the state, said PCUA. Workshop attendees also can tour a Marcellus Shale drilling site, for an additional fee.

The Marcellus Shale region stretches 95,000 square miles--from West Virginia through upper New York and is expected to generate 212,000 jobs.  A "fairway" of the fields cover 40,000 to 50,000 square miles through Pennsylvania (News Now Aug. 18, 2011). 

Credit unions are likely to see increased economic development as well as a mixed bag of opportunities and risk. One gas company has predicted that for every one of its employees, three or four employees of contractors also will work at each stage of developing the drilling wells.

As a result, credit unions in the region are expecting over the next two decades an influx of deposits from new jobs, mortgage loans with complex issues related to appraisals of property with wells and mineral rights, complex property leases, more complex tax income classifications and opportunities for small business loans.

Grzegorz Bierecki Named World Council Chair

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OTTAWA, Canada (7/18/13)--Grzegorz Bierecki, president/CEO of the National Association of Co-operative Savings and Credit Unions (NACSCU), Poland's credit union trade group, has been named chair of World Council of Credit Unions' board of directors.
 
Click to view larger image Incoming World Council Chair Grzegorz Bierecki, left, of Poland receives the chain of office from outgoing Chair Manuel Rabines during a general session at the World Credit Union Conference.
Bierecki succeeds outgoing chair Manuel Rabines, general manager of Federacion Nacional de Cooperativas de Ahorro y Credito del Peru (FENACREP). Bierecki formally accepted the chair's chain of office during the World Credit Union Conference general session Tuesday in Ottawa.
 
"A very long time ago, I chained myself to credit unions," said Bierecki, a Solidarity activist who was jailed for his political activity under Communist rule. "It was 24 years ago when I saw these words describing the credit union philosophy on the wall of a Kansas building: 'Not for profit, not for charity, but for service.' It was [with] this sentence that my study of credit unions began."
 
Click to view larger image "Working together with international institutions developing regulations, influencing credit unions and supporting their work, said incoming World Council Chair Grzegorz Bierecki. "That is the task that no one will perform better than the World Council of Credit Unions."
Bierecki has played a key role in the rebirth of Poland's credit unions--or SKOKs as they are known in Poland--which in the course of 15 years became the largest non-bank financial network in the country. Bierecki has led Poland's credit union system as president of NACSCU since 1992. Today, 55 credit unions in Poland serve 2.6 million members under a unified marketing brand from a central back-office platform.
 
"Credit unions are an example of love acting in the economy," Bierecki told the audience as he applauded their dedication toward helping others. "If love is intelligent, it can find a way to act that is prudent, right and profitable. I ask that you do not ever run out of such a love."
 
Click to view larger image World Council of Credit Unions' 2013 annual general meeting included member organization delegates from more than 30 countries. (Photos provided by the World Council of Credit Unions)
New World Council directors at the 2013 annual general meeting Monday afternoon included Oswaldo Oliva Vidal, CEO of Federacion Nacional de Cooperativas de Ahorro y Credito de Guatemala, who was elected, and Steven Stapp, president/CEO of San Francisco FCU, who was appointed by the Credit Union National Association (CUNA).
 
World Council also recognized its new direct member association, the Islamic Investment and Finance Cooperatives Group of Afghanistan, at the annual general meeting. New associate members included the Credit Union Executives Society and The Members Group, both in the U.S.
 
World Council presented member awards to recognize growth in assets and membership in 2012. The Outstanding Asset Growth Award went to Confederacao Interestadual das Cooperativas Ligadas ao Sicredi of Brazil. Outstanding Membership Growth Awards went to CUNA for highest absolute growth and to Kenya Union of Savings & Credit Co-operatives (KUSSCO) for highest relative growth.
 
CUNA was honored for achieving its highest membership growth numbers in decades. KUSCCO received the award for relative membership growth during a period when many countries in the region were experiencing a slowdown in membership growth.
 
The World Credit Union Conference ended Wednesday.

FBI Offers Reward For Arrest Of Liquidated CU's CEO

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SOLON, Ohio (7/18/13)--The Federal Bureau of Investigation Wednesday offered a reward for information leading to the arrest and prosecution of the CEO of a Cleveland, Ohio-based credit union that was liquidated Monday.
 
Alex Spirikaitis,  CEO of the now-liquidated Taupa Lithuanian CU, is wanted on charges related to embezzlement.  He was believed to be holed up at his home in Solon, Ohio, after authorities arrived Tuesday night with an arrest warrant. However, they discovered Wednesday--after what they believed was  a 12-hour standoff  with Spirikaitis barricaded inside--that the home was empty (KAIT8.com  and WKYC.com July 17.
 
Authorities had tried to serve the warrant on charges of  false credit institution entries at 8 p.m. Tuesday.  Family members were present at the home but were asked to leave when it was thought Spirikaitis had barricaded himself inside. The FBI and police stayed at the home overnight and attempted to communicate with him using a loudspeaker.
 
The Ohio Division of Financial Institutions closed the $23.6 million asset credit union Monday after determining it had no prospect for restoring viable operations and appointed the National Credit Union Administration as liquidating agent  (News Now July 16).  Members' deposits are federally insured up to $250,000 by the National Credit Union Share Insurance Fund.
 
The 11th federally insured credit union liquidation this year, Taupa Lithuanian CU served 1,154 members. It was chartered in 1984 to serve the Lithuanian community of  Cleveland and Northeast Ohio.