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CU System briefs (07/30/2012)

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  • TALLAHASSEE, Fla. (7/31/12)--Former state prison guard Kimberly Nakia Lewis, 32,  of Sneads, Fla., was sentenced Thursday to two years and one month for using inmates' names and Social Security numbers to file false tax returns claiming refunds. She allegedly provided the names and numbers to a co-defendant, Christopher Lamont Shorter, 34, of Quincy, who owned a tax service. Shorter was sentenced to seven years and two months (Associated Press via The Miami Herald July 27). Lewis and Shorter allegedly claimed $1.3 million in refunds for more than 120 inmates. Shorter had established accounts at the Tallahassee-Leon FCU, the Florida A&M University FCU, and Florida Commerce FCU and allegedly used the accounts to deposit tax refunds (WJHG.com July 27). When they became aware of the fraud, the credit unions proactively returned funds to the Internal Revenue Service. Lewis, who worked at Appalachee Correctional Institution, and Shorter pleaded guilty to conspiracy, mail fraud, filing false returns and identity theft. Shorter also pleaded guilty to wire fraud. Her was ordered to pay restitution to the federal government of $153,062, while Lewis was ordered to repay $7,295 …
  • MADISON, Wis. (7/31/12)--Dane County Habitat for Humanity in Madison, Wis., has named Valerie Johnson (formerly Valerie Breunig) as its new CEO.  Johnson most recently was executive director of the Worldwide Foundation for the World Council of Credit Unions for seven years. The foundation developed credit union programs that funded housing and community projects throughout the world.  Before joining WOCCU, she was the director of development for the Argonomic Science Foundation. She succeeds former Habitat CEO Perry Ecton, who stepped down in April to become executive director of Habitat for Humanity of Broward in Fort Lauderdale, Fla. (WKOW.com July 27) …

NYIB annual conference is this week

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NEW ORLEANS (7/31/12)--The National Youth Involvement Board's (NYIB) 2012 Annual Conference kicked off Monday in New Orleans with a leadership pre-conference workshop, an opening general session and a reception. The conference ends on Thursday.

Monday's pre-conference workshop on "Embrace The Leadership Challenge: Making the Most of Managing from the Middle," was presented by Jeffrey Cufaude, of Indianapolis-based Idea Architects.

The opening general session included NYIB members Anne-Marie Bisson and Rebecca Isaacs reviewing the year and providing lessons in collaboration, innovation and creativity.

Today's general sessions will include "Getting to the Future of Credit Unions--Attracting Gens X, Y and Z" by Sean McDonald, president of Your Full Potential LLC, and "Eight Ways to Make Financial Literacy Captivating," presented by Colin Ryan, creator of Economy of Me, Vermont Credit Unions'  youth finance movement.

Breakout sessions today include Kids and Campaigns, Keeping the Motivation Going in Your Student-Run Branch, and Branding Your Financial Education Program.

Wednesday general sessions will feature "eMerging Technologies and Mobile Marketing," with Mark Arnold, president, On the Mark Strategies; "Pay it Forward with Your Best Practice "and "Secure a Contestant Spot on the NYIB Price is Right," with Juli Lewis and Janice Quigg; and "Capturing the Most Powerful Market: MOMS," presented by Shari Storm, vice president and chief motivation officer, Verity CU.

The closing general session on Thursday will feature Lisa Carver, president, Moxie Consulting Inc., discussing "Working with Different Personalities."

N.Y. mortgage record tax appeal to be argued Sept. 4

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NEW YORK  (7/31/12)--The Court of Appeals of the State of New York is scheduled to hear oral arguments on Sept. 4 in the appeal by Hudson Valley FCU of lower court decisions related to its challenge against the state's mortgage recording tax (MRT).

Earlier this month, the Poughkeepsie, N.Y.-based, $3.2 billion asset credit union filed a reply to an amicus brief from the American Bankers Association and the New York Bankers Association in which the banks argued that federal credit unions should not be exempt from the tax. (Use the link to related story: Bank associations file amicus brief, back mortgage recording tax in the May 21st issue of News Now.)

In its reply, filed July 10, the credit union seeks reversal of the lower courts decisions that the credit union pay the tax and  noted that the banking associations' arguments "are meritless." 

The associations "have long opposed the tax-exempt status enjoyed by federal credit unions under federal law," said the court document. Hudson Valley attacked banks' argument that it was seeking a "novel interpretation" of the exemption to gain a "competitive business advantage."

"Any objective analysis of these arguments serves to illuminate and underscore the exact opposite of what the amici contend--that the Federal Credit Union Act of 1934, as amended, affords Hudson Valley and other federal credit unions constitutional as well as statutory immunity from New York's tax on mortgages, that the contrary determination of the court below is wrong as a matter of law, and that the dismissal of Hudson Valley's complaint should therefore be reversed," Hudson Valley said.

Hudson Valley made three arguments in its response:

  • Its interpretation of the law is consistent with the statute's prior construction and Congress' finding that federal credit unions are exempt from taxation because they are unlike banks and other for-profit lenders.
  • The Federal Credit Union Act, in authorizing federal credit unions to make mortgage loans and exempting federal credit unions and their property from taxation, provides a "clear statutory basis for Hudson Valley's claim of immunity from New York's mortgage tax."
  • Supreme Court precedent and other authority establish that an analysis of federal credit unions' constitutional immunity from taxation is appropriate in deciding the impact of the code on the tax at issue.
(Use the link to related story: Bank associations file amicus brief, back mortgage recording tax in the May 21st issue of News Now.)

Hudson Valley has appealed two lower courts' decisions that denied its challenge to the MRT. It had filed suit on May 12, 2009, in the New York Supreme Court, a lower trial court, against the New York State Department of Taxation and Finance.

The lower court dismissed the case, saying MRT was a tax on the "privilege" of filing the mortgage under state law. An Appellate Division upheld the lower court ruling, and the credit union appealed. The New York Court of Appeals agreed on Oct. 18, 2011, to hear the appeal.

Hudson Valley's lawsuit has been supported in various amicus briefs from the Department of Justice, Federal Housing Finance Agency, the Credit Union Association of New York, the Credit Union National Association and the National Association of Federal Credit Unions.

Interchange oral arguments set for October

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WASHINGTON (7/31/12)--Oral arguments in the lawsuit by merchants against the Federal Reserve Board of Governors over its Dodd-Frank Act-mandated debit interchange rule are set to be heard Tuesday, Oct. 2, and will include arguments from counsel who filed amicus briefs on behalf of a coalition of credit union and bank trade associations, according to court documents filed in the U.S. District Court for the District of Columbia.

Oral arguments will begin at 11 a.m. ET in the U.S. District Court for the District of Columbia. Seth P. Waxman, an attorney with Wilmer Cutler Pickering Hale and Door, a Washington, D.C., law firm, will argue on behalf of The Clearing House Association and a coalition of associations, including the Credit Union National Association (CUNA). Waxman was the Acting Solicitor General who argued the AT&T FCU field-of-membership case before the U.S. Supreme Court in 1997.

The National Association of Convenience Stores and other retail organizations filed their suit in March, seeking a summary judgment declaring the interchange rule and network non-exclusivity regulation invalid. They allege that the 21-cent cap for issuers with assets of $10 billion or more is too high and that the Fed exceeded its authority on the rule. The rule became effective in October 2011.

The financial institutions' coalition, in their brief--which was filed to reflect financial institutions' perspective on the case, maintain the cap is too low and does not allow debit card issuers to cover their costs and earn a reasonable rate of return on their investments.

The Fed, in its response to the suit, made a number of points defending its interpretations of the interchange amendment to the Dodd-Frank Wall Street Reform Act. (See "Fed response filed in interchange suit" for the full arguments.)

In addition to CUNA and The Clearing House Association, the coalition includes the Independent Community Bankers of America, National Association of Federal Credit Unions, Midsize Bank Coalition of America, Consumer Bankers Association, National Bankers Association, American Bankers Association, The Clearing House Payments Co., and The Financial Services Roundtable.

The case will be heard before U.S. District Judge Richard J. Leon in Courtroom 18. CUNA attorneys will be attending the hearing.

iNerdWalleti names top university CU fin ed programs

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MADISON, Wis. (7/31/12)--The NerdWallet finance blog recently named its top picks for university credit unions with financial literacy resources.

Credit unions and the categories they were selected for included:

  • Best for future homeowners: University FCU, Austin, Texas. The credit union's website offers "a complete set of resources for home ownership," according to the blogger, Laura Edgar.
  • Best for online security: Indiana University CU, Bloomington, Ind.  IU CU offers an online Security Center to help members learn about preventing identity theft, including ways to safeguard their computer against phishing and fraud, and tips for protecting their credit cards while traveling.
  • Best for car buyers: SIU CU, Carbondale, Ill. Members can calculate their auto loan payment online with a financial calculator, learn the basics of auto pricing and vehicle history reports, or download necessary Illinois motor vehicle forms. SIU also sells repossessed cars and trucks in conjunction with the collections department.
  • Best for loans: University of Hawaii FCU, Honolulu. Members with questions about the lending or refinancing process, or those who aren't sure what type of loan they need, can sign up for a free financial coaching session. The credit union also offers free home buying seminars.
  • Best for tax tips: UVA Community CU, Charlottesville, Va. To help members walk through the filing process, UVA Community CU offers the Tax Time Solutions page, with directions for deposit refunds, plus links to the Internal Revenue Service, the Virginia Department of Taxation, and financial planning options at the credit union. The credit union has also partnered with Turbo Tax Online, so members can file taxes directly through online banking.
  • Best for mobile security: University and State Employees FCU, San Diego. USE FCU offers a list of mobile phone security tips on its mobile banking page.
  • Best community outreach program: University of Tennessee FCU, Knoxville, Tenn. UT FCU's Helping U Succeed program conducts free financial education programs for the underserved in Knoxville's inner city. UT FCU also has two student-run branches in local high schools.
To read the complete blog entry, use the link.

League advises state on foreclosure settlement funds

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LANSING, Mich. (7/31/12)--During a work group with other financial industry and consumer advocacy representatives, the Michigan Credit Union League pressed state lawmakers tasked with distributing funds from a national mortgage settlement to focus on prevention and refinance assistance programs.

Michigan received $97.2 million as a result of the $25 billion settlement reached between state attorneys general and the country's five largest mortgage servicers due to improper lending and foreclosures (Michigan Monitor July 30).

Recommendations for distribution made by the league include:

  • Foreclosure counseling and legal aid for homeowners--$15 million;
  • Home affordable refinance program grants--$5 million;
  • Assistance to homebuyers--$15 million;
  • Blight elimination--$25 million;
  • Michigan State University extension foreclosure counseling--$5 million; and
  • Michigan housing and community development programs--more than $3.7 million.
Michigan's state Senate passed House Bill 5015 by a 31-6 vote and then returned it to the House where it was approved by a 100-3 vote. The bill had moved to the Senate in June as an empty vehicle measure to be used as the bill to appropriate the financial settlement fund money.

Senate Bill 1160 was then introduced by Sen. Tom Casperson (R-Escanaba) to set up the Homeowner Protection Fund to be administered by the Department of Treasury in consultation with the Department of the Attorney General. The bill's fund would receive the settlement funds and implement H.B. 5015. The bill was sent to the governor for signature into law.

CUNA in Reuters Combining TAG MBL bills could fit

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WASHINGTON (7/31/12)--Some members of the U.S. Senate have indicated that combining credit unions' bill to raise the member business lending (MBL) cap with a bill banks want that would extend the Transaction Account Guarantee (TAG) program for deposit insurance might be workable, the Credit Union National Association (CUNA) told Reuters  Monday.

John Magill, CUNA executive vice president, told Reuters that the senators CUNA talks to have indicated that "marrying TAG, which the banks really want, with the MBL bill, which we are lobbying for, would work." His comments were featured in the article, entitled, "Banks urge U.S. Congress to extend crisis-era deposit insurance."

Magill noted that CUNA will work to ensure that TAG will not end up passing unless the MBL bill is passed; "CUNA has been promised votes in the House and the Senate on its bill. The banks don't have a bill or a vehicle to attach one."

The American Bankers Association and the Independent Community Bankers Association said they would oppose giving credit unions more lending capability in exchange for the temporary TAG extension.

The TAG program is temporary unlimited coverage in addition to, and separate from, the coverage of at least $250,000 that is available to depositors under the Federal Deposit Insurance Corp's (FDIC) general deposit rules.

Without extending the TAG program, the FDIC's unlimited deposit insurance for "noninterest-bearing transaction accounts" would end on Dec. 31. The banks are seeking a two-year extension.

The MBL bill, which the Senate is expected to vote on this year, would raise the cap for credit unions to 27.5% of assets, from 12.25%. The House has pending legislation that would do the same. CUNA estimates that lifting the cap would create 140,000 jobs and inject $13 billion in new funds into the economy during the first year after enactment, at no cost to taxpayers.

Strong 2Q for CUNA Mutuals revenue net income

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MADISON, Wis. (7/31/12)--CUNA Mutual Group posted strong financial results through the second quarter of 2012 due to solid growth in its lending and asset accumulation businesses, the company said Monday.

CUNA Mutual Group recorded $68 million of Generally Accepted Accounting Principles (GAAP) net income through June, compared with $51 million in 2011. GAAP operating revenue grew in the first half of the year by 4.8 %, compared with 2.3% growth last year. This improvement helped offset weather-related losses in the company's auto and home businesses through the second quarter, CUNA Mutual said.

CMFG Life Insurance Co., CUNA Mutual Group's lead life insurance company, grew its statutory total adjusted capital to $1.55 billion through June, up $39 million from year-end 2011.  Strong earnings helped to further strengthen the company's capital through the second quarter. 

"Despite weather-related losses, we continue to see positive momentum in our core businesses," said Alastair Shore, CUNA Mutual chief financial officer. "We have little control over the weather and economic conditions, but we are executing well on initiatives that are within our control."

MDDCCUA officers elected for 2012-13

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COLUMBIA, Md. (7/31/12)--The Maryland & District of Columbia Credit Union Association announced the result of its board officer elections during the organization's 2012 Annual Meeting and Convention, held in Ocean City, Md.

Board officers for 2012-13 include:

  • Chairman--Rod Staatz, president/CEO, SECU, Linthicum, Md.;
  • Vice chair--Chris Conway,  president/CEO, Educational Systems FCU, Greenbelt, Md.;
  • Treasurer--Rob Windsor, president/CEO, First Financial FCU of Maryland, Lutherville, Md.; and
  • Secretary--Theresa Mann, president/CEO, The Partnership FCU, Arlington, Va.
Windsor and Mann were re-elected by acclamation. Kathleen Geary, CEO of HEW FCU, was elected to a three-year term on the board.