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CU System briefs (09/01/2011)

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* MANHATTAN BEACH, Calif. (9/2/11)--Kenecta FCU has unveiled a new Asset Utilization Loan Program for its mortgage lending division to assist high-net-worth borrowers with significant liquid assets. The program is tailored to the Manhattan Beach, Calif.-based credit union's 5/1, 7/1, or 10/1 Jumbo Adjusted Rate Mortgage (ARM). The borrowers, including self-employed and retired individuals, can use a percentage of those assets as income for qualifying purposes. "This is a valuable niche and a great opportunity for both our retail members and our wholesale business partners who have clients with strong credit histories and financial backgrounds, but are hampered by complex income situations," said Todd Helmerson, director of wholesale loan production. Eligible assets include checking, savings, certificates of deposit, stocks, bonds, 401(k)s, individual retirement accounts and insurance police surrender values. Annuities, trust funds and hedge funds can also be used if there is evidence that the funds are available to the borrower. Loans are available for $417,000 to $3 million. Kinecta has about $3.5 billion in assets … * BILLINGS, Mont. (9/2/11)--Valley FCU of Montana President/CEO C.H. "Chuck" Steele has announced he will retire, effective Jan. 1. He served the Billings, Mont.-based credit union as CEO for 26 years and served 46 years in the financial industry (BillingsGazette.com Aug. 30). The $170 million asset credit union has six branches in south-central Montana and one in Cody, Wyo. ...

Western Bridge members service will be uninterrupted--NCUA

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ALEXANDRIA, Va. (9/2/11)--United Resources FCU's bid to succeed Western Bridge Corporate FCU fell short of the bridge corporate's stated capital subscriptions goal of $200 million Wednesday, said the National Credit Union Administration (NCUA). Scott Hunt, agent for the conservator of Western Bridge, informed members Thursday in a letter that the corporate had not met its member-driven goal by Wednesday's deadline. However, NCUA "remains firmly committed to ensuring continuity of service and operations for all Western Bridge member credit unions," Hunt wrote in the letter. "We have no immediate plans to shutter Western Bridge's operations. NCUA is committed to an orderly and timely resolution that ensures uninterrupted service to all member credit unions." Credit Union National Association (CUNA) President/CEO Bill Cheney said, "We understand that a number of Western Bridge’s members are disappointed that the capital target was not reached. We believe that the agency’s actions and statement Thursday reflect its willingness to consider options for uninterrupted services to all Western Bridge member credit unions; that has been a priority of CUNA’s, and we will continue discussions with NCUA to be sure that is indeed the case. "At a meeting today with NCUA officials, CUNA’s Corporate Credit Union Next Steps Working Group will seek assurances that natural person credit unions will continue to have access to the services that they need," Cheney added. Hunt's memo also noted that "while Western Bridge is a temporary entity, NCUA seeks a holistic approach in addressing member credit union service needs that will not require significant changes to how your credit union currently does business. However, credit unions that choose to directly seek an alternative provider in the coming months are still free to do so." During the fall 2010 corporate system resolution town hall meetings, audiences were briefed on the possible inability of one or more corporates to achieve their planned capital raise. NCUA planned for that contingency when it developed its corporate system resolution plan. The agency said it is enacting its contingency plan to provide an alternative, through which Western Bridge members can continue to obtain corporate services for the long term. The service infrastructure and member service volume at Western Bridge have significant value, said NCUA, which is working to solicit acquirers to obtain the business as a package transaction that will have minimal impact on member credit unions. "This may be accomplished through a merger with or an acquisition by another corporate or wholesale financial institution," said NCUA. NCUA's efforts to negotiate for a package transaction "will be best maximized by retaining the volume of members and service activity that currently exists at Western Bridge. Stabilizing the membership and service base maintains the value of the institution for potential bidders," said NCUA. "We believe the new plan will provide critical elements that each credit union will want to consider as part of its due diligence process before making a final decision on its future service needs," said Hunt's letter. "As such, member credit unions may want to continue utilizing Western Bridge services during this process." NCUA said it expects a solicitation and bidding process to begin soon. To enable a fair bidding process, obtain the best possible solution for member credit unions, and ensure the best financial outcome, within sound public policy, for the Temporary Corporate Credit Union Stabilization Fund, much of the process must be done confidentially, said the agency. NCUA will keep Western Bridge members informed "to the greatest extent possible." Some members already may have finalized a decision to transition to other service providers. NCUA encouraged every member, as part of their individual contingency planning, "to have a full understanding of the products and services they receive from Western Bridge in order to understand the potential effect of a transition to a new provider." NCUA said its staff will work with those credit unions to ensure the process is smooth and timely. NCUA's Frequently Asked Questions about the corporate resolution emphasizes that credit unions do not need to take action at this time, and that their funds are safe. For more, use the link.

WesCorp officers offer arguments in NCUA case

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LOS ANGELES (9/2/11)--Officers of the defunct Western Corporate FCU who were sued by the National Credit Union Administration (NCUA) after the corporate's collapse have filed counterclaims to NCUA's allegations in the U.S. District Court in Los Angeles. They allege that NCUA was aware of WesCorp's investment strategies and approved them. NCUA, in its role as WesCorp's conservator, sued the officers and directors alleging breach of fiduciary duty and fraud related to investments that caused losses at the corporate during the nation's financial crisis. The court in July dismissed the case against WesCorp's former directors but denied the officers' request to dismiss separate charges against them. The counter claim documents were filed separately Aug. 15-16 by attorneys for Robert A. Siravo, former president/CEO of WesCorp; Todd M. Lane, former chief financial officer; Robert J. Burrell, executive vice president; Timothy T. Sidley, former vice president for risk assessment and chief risk officer; and Thomas E. Swedberg, former vice president. The officers' counterclaim documents say that NCUA knew, approved of and encouraged WesCorp's investment strategies and had direct oversight and supervision of WesCorp. For example, Burrell's counterclaims allege that NCUA and WesCorp's members knew, approved of and encouraged WesCorp's investment strategy. NCUA's Office of Corporate Credit Unions monitored the corporate daily, with on-site examiners, annual exams, and a full-time capital market specialist was located at WesCorp's facilities. The documents said NCUA was critical of WesCorp's prior and so-called conservative management, disapproved of that management, suggested or required that WesCorp's board hire new management and approved of…the hiring of the new management. According to court documents, the officers claim that NCUA:
* Gave WesCorp special permission to buy riskier investments than WesCorp ever bought and far riskier investments than those that the agency has attacked in its lawsuit; * Gave WesCorp authority to invest in securities rated as low as BBB; * Approved of WesCorp's investment in Option ARM mortgage-back securities (MBS), lower tranche MBS and reduced documentation MBS; * Approved of WesCorp's investment-related policies and procedures; * Knew that the ratings agencies also praised WesCorp's investments; and * Publicly stated that AA and AAA-rated private label MBS were appropriate investments and nearly as safe as agency MBS.
In addition to the allegations, each defendant is seeking reimbursement for legal expenses incurred in the case. U.S. District Judge George Wu set several dates for the case to proceed, including a post-mediation status conference on March 1, 2012. If the case proceeds according to schedule, a pretrial conference could be heard as early as Sept. 20, 2012.

Sunshine State sees mini-boom in mortgages

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MIAMI (9/2/11)--Florida--one of the states hit hardest during the recession--is experiencing a mini-boom in mortgages, according to a new national survey. The Sunshine State accounted for more than one of out five home loans from April to June, according the most recent survey of lenders from the Mortgage Bankers Association (South Florida Sun-Sentinel Sept. 1) Fewer Florida residents are missing house payments, according to the association. That sign of stability is giving lenders a sense of confidence, said Rich Helber, president/CEO of Tropical Financial CU of South Florida, Pembroke Pines, Fla. Helber told the Sun-Sentinel home prices have stabilized in South Florida. Tropical Financial CU of South Florida has loosened mortgage requirements and accepts more applicants with high debt if they have a good history of making payments. Mortgage applicants may not be required to make a 20% down payment if they have a credit score of 650 or above, he added.

CUNA closed on Labor Day no News Now Monday

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WASHINGTON and MADISON, Wis. (9/2/11)--In observance of the Labor Day holiday the Washington, D.C., and Madison, Wis., offices of the Credit Union National Association (CUNA) will be closed on Monday. News Now will not publish a Monday edition, but will resume regular publication Tuesday.

CUAD CUs sponsor flood recovery conference

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BISMARCK, N.D. (9/2/11)--More than 200 attendees and dignitaries gathered for the Community Flood Recovery Conference Wednesday in Bismarck, N.D. The Credit Union Association of the Dakotas (CUAD)
Click to view larger image Speakers at the Community Flood Recovery Conference sponsored by the Credit Union Association of the Dakotas (CUAD) Wednesday in Bismarck, N.D., and Thursday in Minot, N.D., included, from left: U.S. Rep. Rick Berg (R-N.D.) and CUAD CEO/President Robbie Thompson. (Photo provided by the Credit Union Association of the Dakotas)
teamed up with 10 credit unions to be sole title sponsor of the event. CUAD CEO/President Robbie Thompson welcomed attendees and spoke of people helping people. "Working collectively, we are able to show our commitment, dedication and support to our communities we serve," he said. Speakers included Bismarck Mayor John Warford, Mandan Mayor Tim Helbling, Major-General David Sprynczynatyk, U.S. Sen. John Hoeven (R-N.D.), and U.S. Rep. Rick Berg (R-N.D.). Also speaking was a staffer from the office of U.S. Sen. Kent Conrad (D-N.D.). The conference continued in Minot, N.D. on Thursday. "We jumped at the opportunity to jointly sponsor this important community effort along with other Bismarck and Minot area credit unions," said Thompson. "This is another of the many ways that credit unions are helping rebuild areas impacted by this summer's devastating flooding in North and South Dakota."

Alaskas Eckhardt wins Wegner lifetime achievement award

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MADISON, Wis. (9/2/11)--National Credit Union Foundation (NCUF) has named William Eckhardt, president/CEO of Alaska USA FCU in Anchorage, Alaska, as one of two winners of the 2012 Herb Wegner Memorial Award for Lifetime Achievement. This is the first time in NCUF’s history that two awards for lifetime achievement will be given. Tom Dorety, president/CEO of Suncoast Schools FCU, Tampa, Fla., will also receive a Lifetime Achievement Award. (Use the link.) The awards will be presented on March 19 during the Credit Union National Association’s (CUNA) 2012 Governmental Affairs Conference in Washington D.C. Eckhardt joined Alaska USA in 1971 as an assistant general manager. He became the organization’s CEO in 1979. “Bill Eckhardt is and has been an extraordinary leader under extraordinary circumstances,” said David Chatfield, former president/CEO of the California Credit Union League. “Under his leadership, Alaska USA FCU has consistently achieved amazing advances in operational innovation and member services, despite what to others might seem insurmountable obstacles due to its remote location, vast geography, harsh environment, and extreme ‘boom and bust’ economic conditions. A lifetime in Alaska and exceptional management skills has enabled Bill to lead Alaska USA to not just survive, but thrive in its approach to operations and the unique ‘Alaska USA’ brand of member service.” Alaska USA FCU was the first credit union to offer 30-year mortgage loans and one of the first to offer share drafts. It was also among the first to serve its members nationally and internationally through a dedicated member service center, and was a leader in providing mortgage servicing and insurance trust services. The credit union also coordinated one of the first joint ventures to create regional ATM network Alaska Option. Under Eckhardt’s leadership, Alaska USA FCU was among the first credit unions to use an in-house political and regulatory advocacy team at the state and national level. Eckhardt has served on the board of directors of CUNA and CUNA Mutual Group, and was a founding member of the Filene Research Institute. Eckhardt has also led Alaska USA FCU’s efforts in extending services to Alaska Natives (Inuit, Aleut, Athabaskan, Tlingit and Haida). When Alaska’s Natives were granted millions of dollars and millions of acres of land by Congress in 1971 to settle their aboriginal land claims, the National Credit Union Administration asked the credit union to temporarily expand its field of membership and provide badly needed financial education to Alaska’s Natives. Alaska USA FCU responded by providing membership and opening offices in larger Native villages, and trained Alaska’s Natives to staff those offices. Eckhardt personally traveled widely in the Alaska bush to explain the credit union difference and also opened accounts for Alaska’s Natives. In 1981, Alaska USA FCU was granted authority by congressional action to permanently serve Alaska’s Natives and the regional corporations formed out of the Alaskan Native Claims Settlement Act. It was the only time in history that Congress has taken action to extend the field of membership of a single credit union.

Top 10 iNews Nowi stories for August (09/01/2011)

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MADISON, Wis. (9/2/11)--An article about how a 513-point stock market plunge--a byproduct of the nation’s debt-ceiling negotiations--would affect credit unions was the most read News Now story in August. Here is a list of the top 10 most-visited stories for the month. 10. Compliance: New employee rights notices needed soon WASHINGTON (8/31/11)--The majority of private-sector employers will need to publicly post notices of employee rights as detailed under the National Labor Relations Act (NLRA) in their offices beginning on Nov. 14 under a new rule announced by the National Labor Relations Board (NLRB) Tuesday. 9. Fed action means no short-term rate hikes soon, says CUNA WASHINGTON (8/10/11)--With the decision by the Federal Reserve policymakers Tuesday to hold interest rates at between 0% and 0.25% and keep the rate at “exceptionally low levels” at least through mid-2013, credit unions can’t plan on increases to short-term rates anytime soon, said Credit Union National Association’s chief economist. 8. CUNA Mutual: Another wave of ATM fee lawsuits hits CUs MADISON, Wis. (8/10/11)--Another rash of lawsuits continues to be filed against financial institutions for failing to properly disclose ATM fees. CUNA Mutual Group reminds credit unions simple preventative steps can help them avoid costly fines and legal fees. 7. CUs outperform banks on national customer loyalty metric CHICAGO, Ill. (8/8/11)--Credit unions are outperforming banks when it comes to maintaining member/customer loyalty, according to a nationally recognized customer loyalty metric. 6. MasterCard, CUNA team up for Aug. 17 interchange call WASHINGTON (8/15/11)--MasterCard's plans for a two-tiered debit interchange fee rate structure, how that rate structure will impact credit unions, and the anticipated time table for implementation will be covered during an Aug. 17 Credit Union National Association (CUNA) audio conference call. 5. Former CU manager banned from further work ALEXANDRIA, Va. (8/17/11)--The National Credit Union Administration (NCUA) on Tuesday prohibited Brian Zimmerman, a former manager and treasurer of Lebanon, Pa.-based LEBCO Educators FCU, from future work at any federally insured financial institution. 4. TCCUSF assessment is likely 25 bp ALEXANDRIA, Va. (8/29/11)--The National Credit Union Administration’s (NCUA) 2011 Temporary Corporate Credit Union Stabilization Fund (TCCUSF) assessment, which is set to be announced at an NCUA board meeting later today, will likely be around 25 basis points (bp) of total insured shares, Credit Union National Association (CUNA) Chief Economist Bill Hampel has said. 3. Low minimum hindered prepay plan: CUNA WASHINGTON (8/3/11)--A higher minimum size for the National Credit Union Administration’s (NCUA) proposed prepayment program for corporate credit union stabilization assessments would have attracted more credit union participation, the Credit Union National Association (CUNA) noted when the agency announced Tuesday it had not received sufficient credit union pledges to go forward with the plan. 2. MasterCard tells CUs of interchange structure plans WASHINGTON (8/18/11)--MasterCard plans to implement a two-tiered debit interchange fee structure, and currently plans to keep its existing market-based rate structure in place for credit unions and other financial institutions with under $10 billion in assets, MasterCard Global Head of Public Policy Shawn Miles said during a Wednesday conference call. 1. How stock market woes may impact CUs MADISON, Wis. (8/8/11)--Thursday's 513-point plunge in the stock market--the worst decline in nearly two years--could affect credit unions and their members.

NEW Western Bridge members will get uninterrupted service says NCUA

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Members' drive for United Resources FCU to succeed Western Bridge Corporate FCU fell short of the bridge corporate's stated capital subscriptions goal of $200 million Wednesday, announced the National Credit Union Administration (NCUA). Scott Hunt, agent for the conservator of Western Bridge, informed members Thursday in a letter that the corporate had not met its goal by Wednesday's deadline. NCUA "remains firmly committed to ensuring continuity of service and operations for all Western Bridge member credit unions," Hunt wrote in the memo to members. "We have no immediate plans to shutter Western Bridge's operations. NCUA is committed to an orderly and timely resolution that ensures uninterrupted service to all member credit unions." Credit Union National Association (CUNA) President/CEO Bill Cheney said, "We understand that a number of Western Bridge’s members are disappointed that the capital target was not reached. We believe that the agency’s actions and statement today reflect its willingness to consider options for uninterrupted services to all Western Bridge member credit unions; that has been a priority of CUNA’s and we will continue discussions with NCUA to be sure that is indeed the case. "At a meeting Friday with NCUA officials, CUNA’s Corporate Credit Union Next Steps Working Group will seek assurances that natural person credit unions will continue to have access to the services that they need," Cheney added. Hunt's memo also noted that "while Western Bridge is a temporary entity, NCUA seeks a holistic approach in addressing member credit union service needs that will not require significant changes to how your credit union currently does business. However, credit unions that choose to directly seek an alternative provider in the coming months are still free to do so." During the fall 2010 corporate system resolution town hall meetings, audiences were briefed on the possible inability of one or more corporates to achieve their planned capital raise. NCUA planned for this known contingency when it developed its corporate system resolution plan. The agency said it is enacting its contingency plan to provide an alternative, through which Western Bridge members can continue to obtain corporate services for the long term. The service infrastructure and member service volume at Western Bridge have significant value, said NCUA, which is working to solicit acquirers to obtain the business as a package transaction that will have minimal impact on member credit unions. "This may be accomplished through a merger with or an acquisition by another corporate or wholesale financial institution," said NCUA. NCUA's efforts to negotiate for a package transaction "will be best maximized by retaining the volume of members and service activity that currently exists at Western Bridge. Stabilizing the membership and service base maintains the value of the institution for potential bidders," said NCUA. "We believe the new plan will provide critical elements that each credit union will want to consider as part of its due diligence process before making a final decision on its future service needs," said Hunt's letter. "As such, member credit unions may want to continue utilizing Western Bridge services during this process." NCUA said it expects a solicitation and bidding process to begin soon. To enable a fair bidding process, obtain the best possible solution for member credit unions, and ensure the best financial outcome, within sound public policy, for the Temporary Corporate Credit Union Stabilization Fund, much of the process must be done confidentially, said the agency. NCUA will keep Western Bridge members informed "to the greatest extent possible." Some members already may have finalized a decision to transition to other service providers. NCUA encouraged every member, as part of their individual contingency planning, "to have a full understanding of the products and services they receive from Western Bridge in order to understand the potential effect of a transition to a new provider." NCUA said its staff will work with those credit unions to ensure the process is smooth and timely.

Fitch affirms Southeast Corporate rating

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NEW YORK (9/2/11)--Fitch Ratings has affirmed the “A+” long-term issuer default rating (IDR) and “F1+” short-term IDR of Southeast Corporate FCU, Tallahassee, Fla. Fitch’s rating outlook for Southeast Corporate is stable. Southeast Corporate FCU announced Aug. 26 that its capital commitments received fell short of the $80 million goal necessary to operate as a stand-alone corporate (News Now Aug 29). It is looking for a merger partner. Fitch has also downgraded the viability rating of Southeast to “c” from “ccc” based on the announcement that the corporate failed to recapitalize. Southeast’s viability rating of “c” and its individual rating of “E” have been placed on rating watch negative. All other ratings were affirmed by Fitch. Fitch’s affirmation of Southeast’s long-term IDR reflects that the company’s IDR is currently at its support rating floor. Southeast continues to benefit from support mechanisms put in place to maintain liquidity in the corporate credit union system and is still operating with regulatory support from the National Credit Union Association, given its weak capital position, Fitch said. The downgrade of the viability rating and the placement on negative rating watch reflects Fitch’s concern that because of its failure to raise sufficient capital to meet new regulatory standards Southeast is at risk of regulatory intervention.

CU Central of Canada forms CU Nation grassroots effort

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TORONTO (9/2/11)--Credit Union Central of Canada has created the CU Nation, a network of grassroots advocates. CU Nation will provide:
* A chance to participate in Canada’s credit union lobby day and orientation session on Parliament Hill; * Training webinars to build skills to persuade legislators; * Templates for communicating with Parliament members; and * Information to help shape Canada’s credit union message.
Credit Union Hike the Hill 2011 will take place Nov. 14 and 15 in Ottawa. It will include a Government Relations Forum with political speakers, training and meetings with legislators. For more information, e-mail dorsek@cucentral.com.