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CU System briefs (09/19/2012)

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  • MUNCIE, Ind. (9/20/12)--Stanley Dewayne Wills, 33, of Muncie, Ind., was sentenced to 60 years in prison for his role in a May 2009 armed robbery at Industria Centre FCU (The Star Press Sept. 18). Twenty years of the sentence stemmed from Wills' being designated a habitual offender. He had pleaded innocent to armed robbery, criminal confinement and other charges. It was reported he planned to appeal the conviction (The Star Press Sept. 19). A co-defendant, John Repass, recently was sentenced to 20 years in prison for his role in the $250,000 holdup, which was believed to be the largest holdup in local history. About $55,000 of the stolen money was recovered. Wills and Repass were ordered to pay restitution of $194,894 …
  • EAST PROVIDENCE, R.I. (9/20/12)--An East Providence, R.I., woman has been charged with robbing Columbus CU around noon Tuesday while her three-year-old son allegedly was in the getaway truck. Jennefer Gomes, 34, was charged with first degree bank robbery. The arrest was made three hours after a woman wearing a wig and Halloween mask entered the credit union and told the teller she had an explosive device. She fled with an undetermined amount of money. Police said they recovered some of the loot (Providence Journal Sept. 19 and Sept. 18). The robbery was one of two credit union robberies in East Providence Tuesday. The second was at Pawtucket CU when a man described as the "bearded bandit" entered the credit union before 3:30 p.m. The bearded bandit is a suspect in half a dozen robberies since February (The Call Sept. 19) …
  • FARMERS BRANCH, Texas (9/20/12)--The Texas Credit Union Foundation (TCUF) said its 15th annual golf tournament hosted with the Texas Credit Union League's joint Leadership and Marketing conferences in San Antonio has raised about $85,000 in net proceeds. Proceeds will help TCUF provide resources for financial education initiatives, educational grants and scholarships for Texas credit union professionals and volunteers (LoneStar Leaguer Sept. 18). The tournament hosted 136 golfers and 62 sponsors, with dozens of volunteers at Canyon Springs Golf Club in San Antonio …

Missourians embrace mobile banking technology

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ST. LOUIS (9/20/12)--In Missouri, it is just a matter of time before mobile banking becomes the primary method for conducting financial transactions, according to an online consumer survey conducted by the Missouri Credit Union Association (MCUA).

Nearly 40% of Missourians surveyed said they currently use mobile banking. Across all ages, the top reasons for using mobile banking included confirming payments, balancing checking accounts and transferring money.

Those who don't have mobile banking were primarily age 45 and older. They were asked why they don't use the service. The three most popular answers:

  • I don't have a Smartphone;
  • I have no need for it; and
  • I have security concerns.
MCUA noted that the primary reason for not using mobile banking was a lack of technical capabilities, not a negative perception of the service.

Also more than 50% of non-users said they were "extremely likely" or "somewhat likely" to use mobile banking in the future.

Vantage CU, based in Bridgeton, offers an inclusive mobile banking product, called tweetMyMoney, which works on all cellular devices that have text messaging capabilities. The first of its kind in 2009, it is operated via Twitter.

"We have several hundred members enrolled in tweetMyMoney," said Eric Acree, Vantage executive vice president, who noted the service is free and ensures security. "No account number, nor other sensitive personal or account information, is displayed in tweetMyMoney. All the sensitive information is kept safe at Vantage behind the online banking firewall," Acree said.

More than 2,000 Missourians participated in the survey, which was conducted from June 15 to July 15, said MCUA.

CU league urge members Write CFPB on reg burden

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FARMERS BRANCH, Texas (9/20/12)--While many credit unions are weighing in on the regulatory burdens that new regulations are posing, some are explaining to their members exactly what the new regulations will mean to them--and urging their members to comment as well.

"Members of credit unions can't fathom the meaning of increased regulatory actions on their credit union--unless your tell them," said Winter Prosapio, assistant vice president of public affairs at the Texas Credit Union League, in the league's blog Wednesday.  She pointed out that Wayne Vann, CEO of the $1.5 billion asset Navy Army Community CU based in Corpus Christi, Texas, did just that.

In a newsletter article, Vann spelled out how regulatory changes recently proposed by the Consumer Financial Protection Bureau (CFPB) would impact his credit union's members.  

"Though the CFPB's purpose is to provide oversight, what we have experienced to this point has been the implementation of stricter regulations and requirements for financial institutions," Vann wrote. "These regulations drive all financial institutions' costs upward; which of course, in turn, filters down to you, the member.

"The most recent requirement involves real estate appraisals," he said. "In the past, we have relied on various no-or-low cost sources to gain valuations. Going forward, that is not an option; and therefore, every real estate advance will require a certified appraisal at an average cost of $375. Note: this is just one example of a cost increase," he wrote.

He told members he supports consumer protection but believes the agency is "misguided, and its rule-making will have unintended consequences." He recommended members go online to to research the agency. "Write them! Call them! Email them! Encourage thorough examination and scrutiny of any rule changes and their effect on you and your wallet," he urged.

The league's blog provided three tips for crafting such a letter to credit union members.  Members need to know:

What the CFPB  is and how it works.  While very familiar to credit unions, CFPB "will come as a complete surprise to most members.  Note that the bureau is just over a year old and that its purpose is to protect consumers from bad actors in the financial sector. However, due to the nature of regulation, many of those rules will apply also to not-for-profit credit unions as well," said the league.

What the unintended consequences are. Vann told how costs will rise. Many credit unions may no longer offer certain services--such as remittances--as a result of CFPB's rule changes. And its attempt to protect consumers may actually hurt them by possibly decreasing available credit if lenders cease offering certain types of lending products because of cost and the complexity of compliance.

That their voices matter.  Regulators want to hear concerns from consumers more than anyone, said the league. "Their voices are valuable in shaping these rules, so the end result is favorable for the very individuals who will, in the end, bear the costs of these regulations. Urge members to ask CFPB to focus on bad actors, but to exempt credit unions from its costly and burdensome new regulations, said the league.

CEOs IFox BizI op ed Big bank policies hurt American dream

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GLASTONBURY, Conn. (9/20/12)--"Big bank policies are limiting the ways that Main Street banks and credit unions can generate income and lend to small businesses, while subjecting them to onerous compliance burdens," an entrepreneur specializing in banking technology wrote in an opinion-editorial in Fox Business Monday.

The article entitled "Preserving the American Dream Through Small Businesses" was written by Louis Hernandez Jr., CEO of Glastonbury, Conn.-based Open Solutions, a bank technology firm that serves credit unions and banks.

"These and other policies are also harming small businesses by limiting their access to capital and burying them under regulations that consume valuable resources and increase operational costs," Hernandez wrote.

Noting that he is an "entrepreneur who has benefitted greatly from the American Dream," Hernandez wrote that he is "troubled to see the tenets of this dream--owning a home, getting an education, having a job or owning a business, and achieving financial self-sufficiency--being crushed by regulations that are killing small businesses and community-based financial institutions that support them."

Community-based institutions disproportionately finance small business growth, which create the majority of new jobs, he wrote.

"The importance of Main Street financial institutions, which drive the national economy one community at a time, cannot be underestimated," Hernandez said. "By financing the small businesses that create 65% of new jobs, they drive consumer spending, which represents about 70% of the U.S. economy."

Community-based financial institutions can collaborate with each other, upgrade their tedchnology infrastructure, and create greater awareness of their role in the national economy, he said, noting he has written a book, Saving the American Dream: Main Street's Last Stand, which includes credit unions and community banks explaining how their institutions make a difference to small businesses and job growth.

In the article, he cited as an example Beacon CU, a $962 million asset credit union in Wabash, Wash., which gave a fresh start to a mom-and-pop office supply shop bankrupted by the recession. Today that business plays an important role in its community.

To access the full article, use the link.

The Credit Union National Association (CUNA) and credit unions nationwide are urging the House and Senate to pass measures that would introduce roughly $13 billion in new small business loans and help create 140,000 new jobs the first year. Congress can allow credit unions to help the economy simply by raising the member business lending cap for credit unions to 27.5% of assets from the current 12.25%, at no cost to the taxpayer, said CUNA.

IBiz2CreditI attributes Aug. CU slowdown to MBL cap

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MADISON, Wis. (9/20/12)--Although the overall volume of U.S. loan applications rose by 4.3% in August, credit union loan approvals declined--in part because of the member business lending (MBL) cap, according to the Biz2Credit Small Business Lending Index. 

For a third consecutive month, credit unions' loan approvals slid in August, falling to 52.9%--the lowest percentage since June 2011 ( Sept. 18).

The slowdown in loan approvals is partially caused by the credit unions' mandated 12.25% MBL cap, the report indicated. Small banks were reporting increases in business lending, showing the need for business loans is strong, said Biz2Credit.   

The Credit Union National Association (CUNA) and credit unions are urging Congress to increase credit unions' member business lending (MBL) cap to 27.5% of assets from 12.25% so that more loans could be made to small businesses, considered a staple in the economy. CUNA and credit unions say that increasing credit unions' MBL cap would open up more opportunity to offer MBLs, inject $13 billion in business loans into the economy and create as many as 140,000 new jobs, with no cost to taxpayers.

On Sept. 12, CUNA sponsored a Capitol Hill event in Washington, D.C., focusing on the timeliness of adopting credit union business lending legislation. It was live-streamed on the internet, bringing the urgency of the legislation into the offices of House and Senate members, as well as to credit unions and leagues nationwide  (News Now Sept. 13).

The sponsors of the MBL legislation--Sen. Mark Udall (D-Colo.) and Rep. Ed Royce (R-Calif.)--made special appearances at the event, which drew nearly 200 credit union and small-business supporters, and members of congressional staff.

Udall said that the restriction on credit union business lending is a "regulation that we ought to lift."

"When credit unions have this additional capacity to lend to small businesses, it's a no-cost, sure-fire way to grow our economy," Udall said. "Simply put: There are credit unions with money to lend, and small businesses in many communities that need loans to spur job growth--why don't we get government out of the way and let our economy grow?"

The event also included panels of small business advocates, credit unions and small-business owners. Panelists said they saw no clear reason to oppose an MBL cap increase, and while banks have claimed there is no demand for small business loans, John Arensmeyer, CEO of The Small Business Majority, said his experience indicates universal demand for small-business loans nationwide.

To read the and News Now article, use the links.

CUs starting to see repeat refinancings

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MADISON, Wis. (9/20/12)--Some credit unions are seeing more refinancings and even repeat refinancings because of the continuing drop in U.S. mortgage interest rates.

Millions of homeowners who refinanced their mortgages a few years ago when 30-year fixed-rate loans fell below 5% have opted to refinance for a second or third time as rates further decline ( Sept. 14).

Last year, U.S. mortgage bankers provided funds for $1.5 trillion of loans--of which 66% were refinancings. This year another $1.5 trillion in loans are on track to be originated, but refinancings likely will constitute 75% of the total, according to data compiled by National Mortgage News and the Quarterly Data Report (American Banker Sept. 18).

Amoco FCU, a $589 million asset credit union based in Texas City, Texas, is offering a 2.75% interest rate on 10-year mortgages and a 4.75% rate on 30-year mortgages, according to the Texas Credit Union League (LoneStar Leaguer Sept. 17).

The credit union is seeing more members wanting to refinance their current mortgage loans to take advantage of the lower rates, the Texas league said.

During the past couple of years, Denali Alaskan FCU Vice President Jim Picard told the Banker he is seeing a large upswing in multiple refinancing deals in his $484.3 million asset credit union's service area in Anchorage, Alaska. 

Achieva CU in Largo, Fla., set a record in August in its mortgage department, said Gary Regoli, president/CEO of the $997 million asset credit union (Tampa Bay Times Sept. 10). The majority of the transactions are refinancings, and the credit union also is seeing good business with second mortgages, Regoli added.

Last week, the refinance share of U.S. mortgage activity rose to 81% of total applications from  80% the prior week, according to the Mortgage Bankers Association (MBA).

Seven leagues collaborate on exam survey project

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HARRISBURG, Pa. (9/20/12)--Seven credit union leagues/associations in the National Credit Union Administration's (NCUA) Region 2 are collaborating on an examination survey project.

Among the state leagues participating in the project are: Pennsylvania, California/Nevada, Virginia, Delaware, New Jersey, Maryland/D.C. and West Virginia, said the Pennsylvania Credit Union Association (PCUA) (Life is a Highway Sept. 19) .

The survey feedback on NCUA exam practice trends will be live through Oct. 19.

The New Jersey Credit Union League developed the program prototype to address the examination process in terms of education, preparation, follow-up and proactive interaction with regulatory agencies.

The program is designed to bring together CEOs to share their exam experiences challenges and insights, and provide them with an opportunity to share in the resolution process of addressing regulatory and examination issues.

"We realize the examination experience can be a stressful time for a credit union," said John Kilduff, PCUA vice president of credit union services. "We're collaborating with six other credit union leagues in NCUA Region 2 to seek feedback from credit unions in Pennsylvania. The information we receive from our credit unions will be aggregated with that from other Region 2 states and will be used to begin discussions with Credit Union National Association and NCUA on ways to improve the process going forward."

FBI Cybercrooks target CU bank employees

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WASHINGTON (9/20/12)--Cybercriminals are obtaining the login details of financial institution employees--targeting credit unions and small- to mid-sized banks--to illegally wire themselves hundreds of thousands of dollars, according to a new Federal Bureau of Investigation (FBI) fraud alert.

Fraudsters obtain the logins through phishing and spam e-mails before installing keystroke loggers and remote access Trojans on their computer, gaining complete access to internal networks and logins to third party systems.

In some of the incidents, before and after unauthorized transactions occurred, financial institutions were victimized by a distributed denial of service attack against their public websites or Internet banking URLs. The attacks likely were used as a distraction for credit union or bank personnel to prevent them from immediately identifying a fraudulent transaction, which in most cases is necessary to stop the wire transfer, said the FBI.

The illicit wire transfer amounts have ranged between $400,000 and $900,000. In at least one case, the fraudsters raised the wire transfer limit on a member/customer's account to allow a larger transfer. In most of the identified wire transfer failures, criminals were unsuccessful only because they entered the account information incorrectly.

The FBI recommended that financial institutions educate employees on the dangers associated with opening attachments or clicking on links in unsolicited e-mails. Also, financial institutions are advised not to allow employees to access personal or work e-mails on the same computers used to initiate payments. For a list of further FBI recommendations, use the link.

Credit bureau sued over info provided to OFAC

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SAN FRANCISCO (9/20/12)--A man who thought his name was on a terrorist watch list has sued the credit bureau Trans Union, alleging it broke California laws by failing to alert him to all the information it sells about him to third parties such as the Office of Foreign Assets Control (OFAC) .

The class action lawsuit by Brian D. Larson of Lake Forest, Calif., was filed Sept. 12 in the Superior Court of California in San Francisco. Trans Union is headquartered in Chicago and is the third-largest credit reporting bureau.

The lawsuit alleges the credit reporting bureau violated the California Consumer Credit Reporting Agencies Act (CCRAA), which oversees state consumers' rights to inspect and correct consumer information sold about them.  Trans Union "deprives consumers of these rights by willfully failing to provide consumers with complete and truthful  'OFAC  alert' information it sells about them to third parties," said the complaint.

OFAC alerts supposedly advise credit grantors whether the credit applicant is a match to terrorists, money launderers, narcotics traffickers and other enemies of the U.S. defined on OFAC's Specifically Designated National and Blocked Persons List.  OFAC requires credit unions and others to block property and reject transactions involving any country, entity or individual on OFAC's list (News Now June 20, 2008).

In the complaint, Larson said he obtained a copy of his personal credit report from Trans Union on Oct. 26, 2011. The report disclosed information under the headings "Personal Information," "Adverse Accounts," "Satisfactory Accounts," "Regular Inquiries" and "Account Review Inquiries," then stated it was the "End of Credit Report." 

Beneath that heading, under "Additional information," was a paragraph indicating that the following information was provided as a courtesy and was not part of the credit report but may be provided when TransUnion received an inquiry about the plaintiff from an authorized party. The report noted, "This additional information can include Special Messages, Possible OFAC Name Matches, Income Verification and Inquiry Analysis Information," said the court document.

Because the bureau stated that the OFAC alerts are "additional information" provided only as "a courtesy," "consumers such as plaintiff are misguided into believing that they cannot dispute, and have corrected, inaccurate OFAC information that defendant alone is attributing to them," said the complaint, which added the file did not disclose the actual OFAC alert used to determine potential or actual matches with the plaintiff.

In previous litigation, the U.S. Court of Appeals for the Third Circuit rejected Trans Union's argument that it did not need to reinvestigate or correct erroneous OFAC alerts that it placed on consumer reports because the alerts were not part of the consumer's file, the complaint said. It also indicated the defendant failed to maintain reasonable procedures to assure maximum possible accuracy of the OFAC alert information it sells.

The suit is seeking damages of $100 to $5,000 per class member per violation, punitive damages. injunctive relief and costs and attorney's fees.