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Five New Orleans CEOs share views on reg reform

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NEW ORLEANS (7/23/09)--Five credit union CEOs from the New Orleans area weighed in on regulatory reform in New Orleans CityBusiness (July 20). Each CEO provided a one-sentence description of how reg reform would impact credit unions. Michelle Duhe, CEO of $87.1 million asset Shell New Orleans FCU, said the credit union industry is largely untouched by the reforms because the National Credit Union Administration (NCUA) remains an independent entity. However, credit unions likely would feel some impact with the creation of the Consumer Financial Protection Agency. Christopher Maurer, CEO of $21 million asset UNO FCU, New Orleans, noted that many of the reforms have minimal impact on credit unions. "As member-owned cooperative institutions, credit unions adhere to high standards that often don't exist at other financial institutions whose primary concern is increasing the wealth of a few large stockholders." Mark Rosa, CEO of Jefferson Financial CU, a $155 million asset credit union in Metairie, explained that the proposed financial reforms will have less of an impact on credit unions if they can keep NCUA as regulator. Janet Sanders, president/CEO of the $98 million asset Greater New Orleans FCU, Metairie, said the biggest effect would be "the increase in regulations and compliance requirements. These new regulations will require additional time and resources but will only strengthen the already successful cooperative model of credit unions." Mignhon Tourne, president/CEO of $270 million asset ASI FCU, Harahan, said the Credit Card Reform Act potentially will have little impact on credit unions because credit unions have "not participated in deceptive credit card marketing practices…We see increased consumer reform as a real credit union opportunity for industry differentiation."

USAID designates WOCCU to lead Haiti project

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MADISON, Wis. (7/23/09)--The U.S. Agency for International Development (USAID) has designated World Council of Credit Unions (WOCCU) as lead implementer for a three-year, US$34.4 million, multi-partner program to strengthen enterprise development and promote job creation in rural Haiti.
Click to view larger image World Council of Credit Unions will work with Haiti's financial institutions to bring value chain financing to Haiti's rural micro-, small and medium-sized businesses. (Photo provided by the World Council of Credit Unions)
The Haiti Integrated Financing for Value Chains and Enterprises (HIFIVE) program will work with the financial sector to bring savings, credit and remittance-linked products to underserved areas of the country and provide technical training to micro-, small and medium-sized enterprises (MSMEs). WOCCU will work with Haiti's financial institutions, including banks, to create affordable, yet profitable, financing options for MSMEs participating in established value chains. The chains are groups of individuals and/or businesses that bring a product from conception to market. OCCU will also work with the institutions to begin offering money-transfer services and remittance-linked products, as well as expand their outreach to new service areas using technologies such as point-of-sale (POS) devices, personal digital assistants (PDAs) or cell phone banking to reduce transaction costs. "Small businesses in rural Haiti face significant barriers to growth, yet they have great potential to drive economic development and bring new employment opportunities to their communities,“ said Brian Branch, WOCCU executive vice president and chief operating officer. The added the program "will bring the necessary tools--training opportunities, business connections and financial access--right to the local entities that can effect change from the ground up." Haiti is the poorest nation in the Western Hemisphere, with 80% of its population living below the poverty line. Its MSMEs are often hampered by political instability, poor infrastructure, frequent natural disasters, lack of skilled labor and limited markets, said WOCCU. While the country has shown positive economic growth in recent years, MSMEs--especially in rural areas--are still largely excluded from the formal financial system. With 70% of financial institutions concentrated in urban settings, rural households and businesses have been forced to seek less reliable funds through expensive, informal channels. WOCCU will adapt its value chain finance methodology, developed in Peru, to help Haitian financial institutions identify at which point financing brings value chain participants the best return and represents a good investment for the institution. WOCCU will provide technical assistance, mentor loan officers and offer specialized training to help commercial banks, microfinance institutions and cooperatives develop appropriate value chain financial products and services. WOCCU's field partner in the program, TechnoServe, will facilitate value chain linkages and technical assistance training among producers, producer associations, input suppliers and buyers. As a core component of the program, WOCCU will manage the distribution of USAID-funded grants to local financial institutions and business service providers to encourage the development and use of new technologies, training opportunities, partnerships with other USAID-funded programs and risk management practices. The grants are meant to encourage Haiti's conservative financial sector to innovate and grow beyond their traditional markets. WOCCU is implementing the HIFIVE program as an Academy for Educational Development (AED) sub-recipient under USAID's FIELD-Support Leader with Associates program. AED will provide oversight and documentation assistance to facilitate program activities, and Technoserve will co-implement the program with WOCCU.

Study Social medias results hard to judge

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FARMERS BRANCH, Texas (7/23/09)--Measuring the effectiveness of social media campaigns is difficult for interactive marketers, according to a new study by Forrester Research, which could have implications for credit union marketers considering use of social media channels. Of the 119 interactive marketers asked between May and June to rank such measurement capabilities on a scale of 1 to 10--“1” being “novice” and “10” being “expert”--the average response was 4.5 (LoneStar Leaguer July 22). The average is ambitious considering that social media is still less than four years old, said Emily Riley, Forrester Research analyst and report author. Few respondents reported having any established metrics for their social marketing campaigns. On average, marketers’ confidence in measuring the effect of their online brand-building wasn’t much better--5.3 out of 10. To measure the value of all types of online campaigns, marketers must focus on a customer’s engagement. However, online brand marketers rely on easy metrics, with 35% reporting they used clicks as a key performance indicator, Riley said. Engagement beyond activity can be measured for brand and direct campaigns, although only 14% of respondents reported tracking brand awareness as a key performance indicator, Riley said. Mature measurement of interactive brand marketing should include qualitative research gathered through surveys, focus groups, or listening platforms, she added. Advanced direct-response marketers should measure as far along the purchase process as possible, Forrester recommends. The University of Phoenix, for example, links its site analytics tool to its customer database to measure the quality of the leads--based on length of time enrolled--generated by its different online campaigns. Also, social media measurement should employ a variety of metrics. Marketers should start with brand-oriented--key performance indicators--for their social campaigns and then tie the involvement and interaction aspects of social media to purchase behavior, Forrester said.

Oregon CUs lobby efforts successful

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BEAVERTON, Ore. (7/23/09)--Oregon credit unions experienced successes, frustrations and opportunities as they continued to advance credit union legislative initiatives during the Oregon legislative session, which adjourned a few weeks ago, said the Credit Union Association of Oregon (CUAO). The key legislative priority for Oregon credit unions, Senate Bill 438, was signed by Gov. Ted Kulongoski on June 4. SB438 enacts several technical revisions to the Oregon Credit Union Act that will update the credit union charter in areas that include membership requirements, accounting rules, annual meeting policies and bonding requirements. The bill will allow those select employee group (SEG)-based credit unions moving to a community charter to maintain current SEG groups that would be located within their new field of membership. CUAO also introduced an amendment to SB731, which provides that funds that are exempt under federal law remain exempt when deposited in a debtor’s financial account as long as they are reasonably identifiable. “Our amendment takes the onus off of the financial institution and puts it on how the information is transmitted to us in order to determine if the funds are exempt,” said Pamela Leavitt, CUAO senior vice president of governmental affairs and public relations. “We worked the committee and came up with the votes needed for our amendment. The final bill passed and was signed into law with our language.” Also, CUAO focused on financial education by supporting legislation that highlighted the importance of financial literacy in the classroom. CUAO and credit unions testified in support of SB501, which would add “finances” to essential learning skills. The bill also requires school districts to provide curriculum in finances. SB441 is a bill that would define “finances” to mean “curriculum designed to achieve financial literacy and to give students personal financial management skills by teaching the basic principles involved with earning, spending, savings and investing money.” CUAO said it will continue efforts to promote this issue before the state legislators. State Treasurer Ben Westlund introduced SB600 to allow credit unions to accept public deposits over the current limit of $250,000 per account. The bill had a hearing, but no further action was taken. CUAO said it hopes to continue working with Westlund on the issue. CUAO participated in a work group to find compromise on SB628, a bill to require mandatory mediation between trustee and grantor before sale to a foreclosure residential trust deed. CUAO fought to have the bill changed to give the borrower a modification request form, along with the notice of sale, instead of forcing a required meeting between borrowers and lenders. CUAO succeeded in helping pass the changes. CUAO also was involved in several other legislative issues, including bills about licensing mortgage bankers and brokers, priority liens for condo and homeowner associations, robbery issues, employments issues and several lending issues. A final report on the 2009 legislative session will be completed in early fall.

Spending less is new normal to 32 of Americans

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PRINCETON, N.J. (7/23/09)--Spending less and saving more have become even more entrenched as the "new normal" for many Americans surveyed this month by the Gallup Poll. That can impact both loans and savings at credit unions. July's results show little significant change from Gallup's April spending/savings habit study. In the July study, 32% of Americans surveyed reported that spending less will become a "new normal" for them in the years ahead, while 8% say they'll be spending more. That leaves 60% of Americans who haven't changed their spending habits during the survey period. Continued savings by members will find their way into credit unions as deposits, but less spending also means consumers and members are still waiting to see what the economy will do before they finance that new car or remodel their home. "Clearly there will be at least some negative repercussions on consumer lending going forward," said Gallup's report. "But at the same time, two-thirds of Americans say that they have not changed their spending habits, that their spending changes in recent months will not be permanent in the years ahead, or that they will actually be spending more." The impact of these stated intentions depends on how much the individuals would have spent in the first place, before deciding to decrease spending. "The economy would be affected more by a decrease in spending among previously high-rolling millionaires or affluent suburban families than it would by a downward shift among the same number of low-income, low-spending senior citizens," said Gallup's report. The poll contains one surprise: There weren't major differences in the impact of the recession across income groups. Those who said their new normal is to spend less were across the board in income. However, lower-income respondents were slightly more likely than higher-income Americans to say their new normal pattern would be spending more. On the savings end, one in four Americans say saving more is their new normal. In both the April and July surveys, about one-fourth of people polled said they recently have been saving more and that this is their new normal. Roughly 10%-13% said they'll save less. Data on saving showed more variation due to income than the spending data did. Higher income people are more likely to save more because they have more discretionary income that can be earmarked for savings than lower-income Americans. Gallup did include a caveat: it is difficult to know just how firmly Americans will stick to their projections when the economy does pick up and unemployment drops. "Good intentions to restrain spending and to save more could go out the window if the U.S. returns to flush and vibrant economic times," the report said.

Pa. budget rejected CUs already disbursing funds

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HARRISBURG, Pa. (7/23/09)--The Pennsylvania State House of Representatives rejected the $27.1 billion State Senate spending plan Tuesday, and credit unions already are disbursing funds to help members deal with the disruption of the state’s budget. With a budget impasse affecting the paychecks of thousands of Pennsylvania Commonwealth employees, Pennsylvania State Employees CU (PSECU), Harrisburg, began paying out funds for the specially created PA Budget Impasse Loans on Friday (Life is a Highway July 22). To date, PSECU has disbursed over $2.9 million to more than 3,300 members as the first wave of state employees contacted PSECU for advances to supplement or take the place of their regularly scheduled pay. “The loan area has been working 12-hour days in preparation for this situation, and on this past Friday and Saturday, our phone staff answered over 5,700 calls,” said Gregory A. Smith, PSECU president. “Our staff has been working diligently to help our state employee members.” The credit union has determined it can help 96% of the nearly 34,000 member state employees identified as eligible. Also, Belco Community CU, Harrisburg, to date has helped 30 state employees with financial relief during the budget deadlock. State employees who will not be paid have been offered a special interest-free loan to help them stabilize their finances during the impasse. Belco Community’s program offers a $1,000 line of credit at 0% annual percentage rate (APR) during the 2009/2010 state budget impasse and for 60 days after the budget is signed by the governor. Any remaining balance after that time will begin to accrue interest at a 3.9% APR. To be eligible for Belco Community's offer, individuals must be credit union members with direct deposit of payroll from the state. Loans are subject to credit approval. “Many state employees have taken advantage of our loan offer, and we will continue to meet their needs as long as the budget impasse continues,” said Lonny Maurer, Belco Community president/CEO.

New minimum wage wont affect most CUs says CUNA

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MADISON, Wis. (7/23/09)--On Friday, the nation's federal minimum wage will increase to $7.25 per hour. However, the wage hike is not likely to have much effect for most credit unions. "The new minimum wage will have little effect on credit union wage costs," said Steve Rick, senior economist for the Credit Union National Association. "Most, if not all, credit unions currently pay more than the new federal minimum wage to their entry-level employees," Rick told News Now. "So the new law will not be a binding constraint on hourly wages." The increase is required by the Fair Minimum Wage Act of 2007, an amendment of the Fair Labor Standards Act. The wage applies to all non-exempt employees in 30 states. The other 20 states have minimum wages that are higher than the federal limit. The increase is the last of a three-step gradual increase mandated by the 2007 act.