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Current market differs from Rhode Island collapse

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EAST PROVIDENCE, R.I. (9/24/08)--The problems facing today's financial market are different from those that caused a number of banks and credit unions in Rhode Island to collapse in 1991, said state regulators and industry experts. There are two key differences, regulators told The Providence Journal (Sept. 18):
* The current crisis on Wall Street relates mainly to investment banks, which do not take deposits--not regular banks that accept deposits and make loans, said Allan W. Graham, professor of accounting at the University of Rhode Island's College of Business Administration. * The deposits of the collapsed institutions in 1991 were insured by a private firm, the Rhode Island Share and Deposit Indemnity Corp. (RISDIC), which failed, said A. Michael Marques, director of the Rhode Island Department of Business Regulation. Today all depository institutions in the state carry federal deposit insurance.
The current financial market crisis stems from subprime loans, or mortgage loans made to risky borrowers, Graham told the newspaper. The loans were assembled by the investment banks into packages and sold to investors as "high quality corporate debt." When homeowners defaulted, the investment packages dropped in value, crippling investment banks and hurting investors who bought the packages, Graham said. Big, national banks that expanded into investment banking are affected. But smaller local banks and credit unions don't have the exposure to those risky assets that were the problem for the big failures, said Graham. Credit unions and smaller banks are more conservative and the state's banks and credit unions are safe, he said. Marques says institutions aren't totally immune from today's economy. They may see an uptick in delinquencies but that is what institutions expect when they lend, he said, noting that "it's manageable." He told the paper that overall, banks and credit unions in Rhode Island are safe and sound. The article reported that independent research and rating firm Veribanc analyzed 40 banks, credit unions and thrifts based in the state and ranked 26 of them with the highest safety rating. None received its lowest possible rating. Credit unions and banks in the state today have federal insurance that would kick in if an institution failed, the newspaper said. While depositors recovered their funds from the RISDIC crisis via a state-backed bailout, federal insurance would provide full coverage to today's depositors up to $100,000 per depositor, per account category, per institution, the article said.

League announces status of Galveston CUs

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FARMERS BRANCH, Texas (9/24/08)--The Texas Credit Union League was still trying Tuesday to obtain a status report from two credit unions located in Galveston, the city hit hard by Hurricane Ike on Sept. 13. They are Galveston School Employees FCU, a $5 million asset credit union with roughly 1,721 members, and Electrical Workers 527 FCU, a $1.4 million asset credit union with about 550 members. Five credit unions, including those, have headquarters in Galveston. Two other credit unions located elsewhere have a branch in Galveston, reported the league. The status of the five headquartered in Galveston:
* Coastal Community FCU: The credit union's Galveston branch is closed, but its La Marque branch is open. It also has a satellite branch at the San Luis Hotel for all city and hotel employees only. The credit union has $36.4 million in assets and more than 89,333 members. * Electrical Workers 527 FCU: The league is working to obtain a status report. It has one branch. * Galveston Government Employees FCU: Its Galveston branch closed. The $9.5 million asset credit union has temporarily moved to a site in League City, where it is operating from a mobile unit. * Galveston School Employees FCU: The league is working obtaining a status report. It has one branch. * Island Teachers FCU: The Galveston branch is closed. It is temporarily serving members from an alternate site at Associated CU of Texas in La Marque. Island Teachers is a $605,351 asset credit union with more than 586 members.
Galveston also had branches of two other credit unions. Their operational status:
* JSC FCU: Headquartered in Houston, this credit union's Galveston branch "is located in the historical strand area and took in about six feet of water," said the league. "It has 15 branches in the Houston area. All are open except for the Galveston, La Porte and Seabrook locations." The credit union has $1 billion in assets and 106,544 members total. * University FCU: Based in Austin, the credit union reported to the league that its Galveston branch is closed. The credit union has a temporary service center available at AMOCO FCU's Bay Colony Branch in Dickinson. University FCU has $929 million in assets and more than 123,578 members.

Seattle CUs banks work with city to serve unbanked

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SEATTLE (9/24/08)--The city of Seattle is collaborating with 22 credit unions and banks to offer services to people who are unbanked to make it easier and more affordable for them to open savings and checking accounts. Roughly 52,000 households without traditional banking services in King County, Washington--the county where Seattle is located--pay an annual average of $800 in check-cashing fees, the city said (The Seattle Times Sept. 23). There are seven credit unions participating in the program, Linda Jekel, director of credit unions for the Washington State Department of Financial Institutions (DFI), told News Now. Seattle modeled the initiative after a similar program that has been running for about two years in San Francisco. Participating financial institutions there have about $4 million in deposits from new customers, according to the Federal Reserve Bank of San Francisco. Seattle’s goal over the next two years is to get 10,000 people to open accounts, and to have 80% of the accounts remain open for at least one year, the paper said. Credit unions and other financial institutions provide financial education to participants in the program. Most of the participating financial institutions allow people to open accounts with $50 or less, and all but two offer free checking. The others charge $6 per month in fees. Participating credit unions in some instances are offering low-cost and minimum balance accounts. The city’s initiative will help credit unions market their services to new population segments, including outreach to immigrant groups, the Times said. Once people get in the door of affordable financial services, they can learn how finances work and become better financial citizens, Scott Jarvis, director of the Washington State DFI, told the paper. The seven Seattle-area credit unions participating in the inititative are: Boeing Employees CU, Express CU, Seattle Metropolitan CU, Verity CU, Washington State Employees CU, Watermark CU and Woodstone CU.

Ex-chiefs of staff headline California-Nevada league convention

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RANCHO CUCAMONGA, Calif. (9/24/08)--Leon Panetta, chief of staff to former President Bill Clinton, and Andrew Card, former chief of staff to President George W. Bush, will give their perspectives on the November presidential election and implications for the nation at the California and Nevada Credit Union League’s Annual Meeting and Convention. The event takes place Nov. 5-7 in San Francisco with the Panetta and Card presentations set for Nov. 6--two days after the national presidential election. Also among the speakers at the convention will be Anna Quindlen, a Pulitzer Prize-winning journalist, Newsweek columnist and best-selling author, who will provide her perspective on current events and issues. Other speakers include former NFL football player, author, actor and humanitarian Rosey Grier, and economist Esmael Adibi, director of the A. Gary Anderson Center for Economic Research and Anderson Chair of Economic Analysis at Chapman University. “This year’s convention is well-timed to address the current economic and political challenges the nation is facing,” said Bill Cheney, the leagues’ president/CEO. The convention theme, “YOU make the Movement Shine,” salutes credit unions and members in celebrating the 75th anniversary of the California Credit Union League.

Massachusetts adopts stricter consumer data rule

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BOSTON (9/24/08)--Massachusetts state regulators released new rules Tuesday to make businesses better safeguard consumers’ personal information. The Massachusetts Office of Consumer Affairs and Business Regulation issued the regulations, which require companies that handle personal information--such as Social Security numbers and credit card accounts--to encrypt stored data, monitor employees’ access to the data, and take other measures to safeguard customer information. They become effective Jan. 1 ( Sept. 23). Massachusetts Gov. Duval Patrick also signed an executive order that requires state agencies to take similar precautionary measures. Consumer concern about the increasing number of data breaches containing personal information prompted the state’s action, Daniel Crane, Massachusetts undersecretary of consumer affairs and business regulation, told the paper. Hundreds of credit unions nationwide had to reissue thousands of plastic cards to members as a result of the TJX Cos. data breach, which exposed the personal information on at least 45.67 million cards. TJX operates TJ Maxx and Marshalls stores. Other data breaches this year include supermarket company Hannaford Bros., mortgage company Countrywide Financial Corp., and Bank of New York Mellon.

Minnesota Network announces state award winners

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ST. PAUL, Minn. (9/24/08)--The Minnesota Credit Union Network (MnCUN) announced the statewide winners in its 2008 Dora Maxwell, Louise Herring and Desjardins competitions. All three awards are sponsored by MnCUN and the Credit Union National Association. Dora Maxwell winners are:
* Heartland CU, St. Paul, $50 million to $100 million in assets; * Mid-Minnesota FCU, Baxter, $100 million to $200 million; * TopLine FCU, Maple Grove, $200 million to $500 million; and * US FCU, Burnsville, $500 million and more.
Louise Herring winners are:
* Fort Snelling FCU, Minneapolis, less than $50 million in assets; * First Alliance CU, Rochester, $50 million to $250 million; and * US FCU, greater than $250 million.
Desjardins Youth Financial Education Award winners are:
* Anoka Hennepin CU, Coon Rapids, $75 million to $250 million in assets; and * City-County FCU, Brooklyn Center, greater than $250 million.

Take a look at CUs--New Jersey publication

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NEWARK, N.J. (9/24/08)--Those who want to own part of a financial institution without buying its stock should look at credit unions, according to Alky Danikas, lecturer of finance and economics at St. Peter’s College and “Money 101” columnist for The Jersey Journal. He encouraged readers to find credit unions within their fields of memberships, and compared their rates with those of banks. As of Thursday, the top 50 credit unions surveyed by were charging 12.97% interest compared with the national average of 14.88% on credit cards. Credit unions also were paying 4.3% on certificates of deposit, compared with 3.94% by thrifts and 3.33% by banks, he said (The Jersey Journal Sept. 22). For the full article, use the link.

Study Success depends on employees perceptions

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MADISON, Wis. (9/24/08)--Credit union employees have a hard time explaining how credit unions fit into society, according to a new Filene Research Institute study that outlines connections between employees' perceptions of their credit unions and the service provided. The institute asked anthropologists John B. Gatewood of Lehigh University and John W. Lowe of Cultural Analysis Group to study the dominant views of credit union employees toward their organizations. Results are outlined in a newly released report, Employee Perceptions of Credit Unions: Implications for Member Profitability. The study hypothesizes that credit union success is critically dependent on its employees and is likely to be strongly colored by employee perceptions of credit unions. Employee attitudes influence their work behavior and their interactions with members, and play a significant role in employees' abilities to recruit new members through word of mouth, said Gatewood and Lowe. The findings:
* Employees can't neatly compartmentalize how a credit union fits into society. * Employees agree on the "credit union idea" but have difficulty explaining that idea to external parties. * Employees can identify the parts of the credit union puzzle, but they don't see how they all fit together. * "Trusted" is the highest rated characteristic attributed to credit unions. * Employees younger than 30 and those with higher levels of education are less committed to credit unions. * Significant variance exists across institutions in employee commitment and in the consensus of what a credit union represents.
"Many firms, especially in the financial services industry, present hollow claims on differentiation," said George Hofheimer, Filene chief research officer. "But credit unions are truly different. This study indicates that differentiating factors map very well to what many people view as the ideal financial institution," Hofheimer said. "In short, credit unions have a unique story to tell, and like most really good stories, it takes time to get the pitch right." Researchers asked employees several questions, including:
* How do employees think about credit unions? * What are the areas of consensus and of disagreement? * Do knowledge and attitudes toward credit unions vary in a meaningful way? * How deep does their commitment to the ideology of credit unions go? * How is the image of credit unions projected to members?
The report is available free to institute members and for $125 for non-members. For more information, use the resource links.

Chinese CU leaders in U.S.

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WASHINGTON (9/24/08)--Six representatives from the Zhejiang Province Rural Credit Cooperative Union in eastern China visited three U.S. credit unions and the Credit Union National Association (CUNA) last week to learn about U.S. credit union operations. The World Council of Credit Unions (WOCCU) facilitated the trip geared to help Chinese credit unions take best practices from U.S. credit unions back to Chinese soil.
Eric Richard, Credit Union National Association (CUNA) executive vice president and general counsel, discussed CUNA's structure with a visiting Chinese delegation. (Photos provided by World Council of Credit Unions)
The group began in California, where they learned how credit unions serve members at the grassroots level at Northeast Community FCU and San Francisco Lee FCU. Both credit unions serve San Francisco's Chinatown community. Farther east, the Chinese delegation discussed credit union operations and risk management efforts with Municipal CU (MCU) President/CEO Kam Wong and his staff in New York City. The Chinese visitors were particularly struck by MCU’s ability to survive the attacks and events of 9/11. The credit union is located across the street from the World Trade Center site. MCU lost its information technology systems and was forced to temporarily relocate its headquarters in the months following 9/11. U.S. capital requirements was the topic of interest during the group's final stop in Washington, D.C., to visit with Eric Richard, CUNA executive vice president and general counsel, and Michael Edwards, CUNA counsel for special projects.
Click to view larger image Learning about risk management efforts at Municipal CU (MCU), New York, were from left: Xiao Zhenhai, Yuhang Rural Cooperative Bank; Ralph Pagan, Carole Porter and Janet Perkins, all of MCU; Lin Yuqing, Zhejiang Provincial Rural Cooperative CU; Norman Kohn, MCU; Andrea Dannenberg, World Council of Credit Unions; Kam Wong, MCU; Xu Guoxing, Zhu Fanyu, Ying Chaohui and Lin Wei, all of Zhejiang Provincial Rural Credit Cooperative Union; and Ana Puello, MCU.
Chinese rural credit cooperatives must have at least 4% in capital reserves, which is half the requirement for Chinese banks. Edwards also discussed how U.S. credit unions manage risk through minimum net worth capital requirements and limited investment powers. The group also learned more about National Credit Union Administration share deposit insurance and how it might be applied to the credit union environment in Zhejiang. “I was particularly impressed by the size of the Zhejiang credit union system and the level of service they offer to members,” Richard said. “Mr. Zhu explained they have 81 member credit unions, serving 25 million households through 4,000 branches. With $80 billion in assets, this is a huge credit cooperative system.” The Chinese delegation was led by Zhu Fanyu, director-general of Zhejiang Provincial Rural CU, and included staff members Lin Wei, human resources section chief; Lin Yuqing, director of the Quzhou office; Xu Guoxing, risk management section chief; and Ying Chaohui, secretary. Xiao Zhenhai, board chairman of Yuhang Rural Cooperative Bank in Zhejiang Province, also joined the group.

Daredevil NCUA and mom speakers at N.Y. league convention

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ALBANY, N.Y. (9/24/08)--The Credit Union Association of New York announced speakers for its annual convention Oct. 7. The event will take place in Niagara Falls Oct. 6-8. “The theme of this year’s convention is ‘harness the power’ and each of these individuals has done just that in their life, for credit unions and the human spirit,” said William J. Mellin, association president/CEO. Speakers include Alison Levine, president, Daredevil Strategies; Rodney E. Hood, National Credit Union Administration (NCUA) vice chairman; and Jill Kelly, co-founder, Hunter’s Hope Foundation. Levine will speak about organizational effectiveness, leadership development and team dynamics. She has an 18-year business career in healthcare, technology and finance. She has worked at Goldman Sachs and served as deputy finance director for California Gov. Arnold Schwarzenegger. Hood will present a general issues update. Prior to his appointment as NCUA vice chairman, he worked as association administrator of the Rural Housing Service in the U.S. Department of Agriculture. He addressed the housing needs of rural America and helped administer a $43 billion dollar mortgage portfolio. Kelly, wife of former Buffalo Bills quarterback and pro football Hall of Fame member Jim Kelly, will provide information about Hunter’s Hope, a foundation she and her husband established in 1997 after their son, Hunter, was diagnosed with Krabbe Disease.

CU System briefs (09/23/2008)

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* HARRISBURG, Pa. (9/24/08)--Citadel FCU, based in Thorndale, Pa., hosted an event for U.S. Rep. Jim Gerlach Monday in Malvern. Gerlach, shown here speaking to the group, provided an update about the federal bailout, reflections on the current financial services marketplace, the campaign of Republican presidential candidate John McCain, and the congressional session's agenda (Life is a Highway Sept. 23). Among attendees were Pennsylvania Credit Union Association (PCUA) President/CEO Jim McCormack and Christina Mihalik, PCUA associate vice president, governmental affairs; Jay Murray and Lori Gall of Mid-Atlantic Corporate FCU; Mike Kaczenski, PCUA board director and CEO, Sun East FCU; and Carol Humerick, PCUA Governmental Affairs Committee member and Citadel FCU senior vice president. (Photo provided by the Pennsylvania Credit Union Association) … * ST. LOUIS (9/24/08)--Blaine Luetkemeyer, Republican candidate for Missouri Congressional District 9, visited Columbia-based Missouri CU's Jefferson City branch Sept. 12 (The Missouri Difference Sept. 19). He met with Hal James, Missouri CU; Betty Clark, United CU, Mexico; Laura Royse, Tigers CU, Columbia; and Missouri Credit Union Association's (MCUA) President Rosie Holub and staffers Peggy Nalls and Amy McLard. Luetkemeyr is a former state representative whose family owns a bank. He faces Democrat Judy Baker, who supports credit union issues in the November election. MCUA also met with John Hagler, policy advisory to Democrat Jay Nixon, who is facing Republican Kenny Hulshof in the governor's race. (Photo provided by the Missouri Credit Union Asssociation) … * NORTHVILLE TOWNSHIP, Mich. (9/24/08)--Martha Ninichuk, vice president of consulting at the Maryland/District of Columbia Credit Union Association (MDDCCUA), has been hired by the Michigan Credit Union League (MCUL) as its new director of membership relations (Michigan Monitor Sept. 22). Prior to joining MDDCCUA about two years ago, Ninichuk spent six years at the World Council of Credit Unions. Her assignment in Macedonia involved working with the Michigan league and its service corporation. She is a former CEO of St. Cletus CU. She will oversee MCUL's credit union relations department and will supervise its CRI International Partnership, financial education programs and the Michigan Credit Union Foundation … * SAN DIEGO, Calif. (9/24/08)--Debra Schwartz has been selected as president/CEO of Mission FCU, announced Mission Federal Board Chairman Don Shelton. Schwartz has been serving in the dual role as interim CEO and executive vice president since the April 2008 retirement of former President/CEO Ron Martin. Schwartz has more than 25 years of financial services leadership experience. Prior to joining Mission Federal, she served as chief financial officer at First Future CU and as executive vice president at San Diego County CU, both based in San Diego … * ST. LOUIS (9/24/08)--Two long-time volunteers were honored by the Missouri Credit Union Association (MCUA) for their commitment and contributions. Jacques Sachs and Merl Wilhelm were named to the Missouri Honor Roll on Sept. 16. Sachs has volunteered for TelComm CU, Springfield, for more than 55 years. Wilhelm has served CU Community CU, Springfield, for nearly 45 years. The presentation was made during MCUA's Convention and Exposition. The Missouri Honor Roll plaque is on permanent display at Missouri Credit Union House, Jefferson City (The Missouri Difference Sept. 19) … * BRATTLEBORO, Vt. (9/24/08)--Two Vermont CUs have announced a proposed merger, pending approval by members and state regulators. Merging would be Windham County VEA CU in Dummerston, a $1.6 million asset credit union--the second smallest in the state--and the state's sixth-largest credit union, River Valley CU, Brattleboro, with $45.2 million in assets ( Sept. 23). Windham County VEA CU approached the larger credit union about the merger proposal, saying it wanted a partnership so it could offer its members more products and services, according to River Valley President/CEO Jeffrey Morse. A public hearing is planned for Oct. 3 on the proposal. Morse told the publication it was hoped the deal could be completed by mid-October …