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CU System

CUNA closed Monday for holiday no INews NowI

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WASHINGTON and MADISON, Wis. (9/4/09)--The Credit Union National Association's Washington, D.C., and Madison, Wis., offices will be closed Monday in observance of the Labor Day holiday. News Now will not publish a Monday edition. It will resume regular publication on Tuesday.

CUNA calls for board nominations

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WASHINGTON and MADISON, Wis. (9/4/09)--The Credit Union National Association (CUNA) is accepting nominations for its 2009-2010 Board of Directors in several district/classes. They are:
* District 1, Class C; * District 2, Class A; * District 3, Class B; * District 4, Class C; * District 5, Classes B and D; and * District 6, Classes A and D.
Leagues or credit unions eligible to run for an election will receive the Call for Nominations letter, which is being mailed today, or they can access the letter using the resource link. To be an eligible credit union candidate for a CUNA Director position, the candidate must be an employee or voting board member of the nominating credit union. Nominations must be in writing and seconded in writing by two other credit unions of the same size group from the district. Only two seconds will be recorded for each candidate. Upon request, a list of credit unions by size group and district will be furnished to candidates to assist in obtaining seconds. To be an eligible league candidate for a CUNA Director position, individuals must be a league president and be nominated in writing by their league, with a second in writing by at least one other league from the district. Deadline for nominations and seconds is Oct. 16. CUNA's Corporate Governance Committee will verify eligibility of each candidate, the credit union's affiliation, size group and district, and date/time of receipt. Voting will Oct. 23 and close on Dec. 18. For more information, use the link.

TJX Cos. settles data breach lawsuit with CUs

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FRAMINGHAM, Mass. (9/4/09)--TJX Cos. has agreed to pay $525,000 to settle a lawsuit brought by two credit unions and two banks related to the huge data breach of its customers' information in 2005 and 2006. The Framingham, Mass.-based company will reimburse HarborOne CU of Brockton, Mass., and Eugene, Ore.-based SELCO Community CU, as well as AmeriFirst Bank and Trustco Bank for part of the expenses they incurred related to the breach, TJX said in a press release Thursday. The settlement agreement "will result in the dismissal of the putative financial institutions class action" and "all related litigation," TJX said. The $525,000 reimbursement does not include attorneys' fees. It is part of $118 million that TJX had set aside during second quarter 2007 to cover costs related to the breach. The settlement is the latest in a string of cases that have plagued the discount retailer for two and a half years. In June, TJX agreed to pay nearly $10 million to settle lawsuits filed by attorneys general in 41 states (ComputerWorld Sept. 3). In November 2007, it announced it would pay up to $40.9 million to Visa USA Inc. card issuers affected. The breach forced thousands of credit unions and banks to reissue debit and credit cards for millions of member/customers whose information was compromised by the hacking. More than 45 million cards were compromised in what was at that time the largest data breach ever and one of the costliest. Since then breaches at Hannaford Bros. grocery chain and Heartland Payment Systems have exceeded that number of cards compromised. Last week, a Miami man pleaded guilty to masterminding the attacks on TJX and other retailers, including Dave & Busters, BJ's Wholesale Club, OfficeMax, Boston Market, Barnes & Noble, Sports Authority, Forever 21 and DSW. Albert Gonzalez, 28, faces between 15 and 25 years in prison (News Now Sept. 1). TJX owns retail discount stores such as Marshalls and T.J. Maxx.

Its Natl. Preparedness Month. Wheres disaster plan

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MADISON, Wis. (9/4/09)--September is National Preparedness Month, and the No.1 thing credit unions can do to prepare for a disaster is test their preparedness plans, according to the president/CEO of Agility Recovery Solutions. “Most credit unions have a written plan in place for disaster recovery,” Bob Boyd, president/CEO of Agility, told News Now. “But they really need to ask questions: What would happen if a piece of infrastructure didn’t work? Does that plan help? Who will do what?” To help credit unions with disaster planning, Agility is hosting several free webinars:
* Pandemic Planning--How to Prepare Your Business for the Upcoming Flu Season, Sept. 16 at 2 p.m.; * Social Media--What Role Does It Play in Business Preparedness, Sept. 23 at 2 p.m.; and * Creating a Culture of Preparedness, Sept. 30, 2 p.m.
Agility Recovery Solutions, a CUNA Strategic Service provider, also has partnered with the Federal Emergency Management Agency to encourage disaster preparedness. Credit unions’ apprehension about a possible H1N1, or swine flu, pandemic is increasing. However, most credit unions’ disaster plans don’t deal with swine flu. Boyd suggested credit unions prepare for a pandemic by cross-training staff and giving them the ability to work from home. Credit unions won’t hurt their business by preparing for swine flu. And while many credit unions may think that testing disaster plans is expensive, it doesn’t have to be, Boyd added. “There are steps [credit unions] can take today,” Boyd said. “If they don’t do it now, they will be behind the gun, and that’s when mistakes happen.” Most credit unions find ways to improve each time they test a plan, he added. The Massachusetts Credit Union League posted a message on its website encouraging credit unions to prepare for a possible epidemic. “Whether the H1N1 flu virus will worsen with symptoms this fall or winter remains to be seen, but the Center for Disease Control reports that this is a new flu strain with little immunity amongst the citizenry,” the league said. “As a result, at the very least, businesses should expect many more of their employees and members to come down with the flu this flu season.” Last week, a presidential advisory group of the nation’s leading scientists and engineers released a report assessing the Obama Administration’s preparations for this fall’s expected resurgence of H1N1 flu and outlined key steps officials can take to minimize the disease’s impact on the nation. The report concluded that the H1N1 flu is unlikely to resemble the deadly flu pandemic of 1918-19. But in contrast to the benign version of swine flu that emerged in 1976, the report says the current strain “poses a serious health threat” to the nation. The issue is not that the virus is more deadly than other flu strains, but rather that it is likely to infect more people than usual because it is new and few people have immunity. This means doctors’ offices and hospitals could fill to capacity, the group said in a release. Individuals should wash their hands frequently, and stay home from work when sick. “Workplaces could liberalize rules for absenteeism so employees don’t feel pressured to come to work when sick,” the group said. Since it’s hurricane season, credit unions and leagues also are preparing for potentially dangerous storms. The Texas Credit Union League (TCUL) added a storm tracker system with scrolling updates concerning weather developments on its website. Users can access storm preparation resources by clicking on a “Disaster Preparation” banner on the TCUL website. Disaster recovery is also needed during power or phone outages, regardless of whether they are triggered by a natural disaster. Schools FCU, Los Angeles, recently experienced a phone outage, which prevented the credit union from accessing the Internet or its account database. “The phone line went down on a Friday--payday--creating a potentially troublesome situation for our members who were likely to move thousands of dollars among their accounts,” said Barbara Abraham, Schools FCU operations manager. Although members could not conduct transactions at Schools’ physical branches, they could make deposits and withdrawals through shared branching. While the phone line was being repaired, PSCU Financial helped credit union members conduct transactions through its call center and also helped staff maintain a transaction log. “It is hard to forsee when a crisis will disrupt regular credit union workflow, but there is no need to reinvent the wheel in adverse scenarios to ensure effective and continuous service,” said Peter Schmitt, PSCU Financial Services executive director. The U.S. Small Business Administration (SBA) posted a message Tuesday on YouTube with Administrator Karen Mills reminding the public about National Preparedness Month and the effects of a disaster. She encouraged everyone to develop and implement preparedness plans. “There’s a tendency to think that a large-scale disaster is not going to happen ‘where I live,’” Mills said. “We should all realize that storms, floods, earthquakes, fires and man-made disasters can strike at any time and anywhere.” SBA’s suggested disaster prep includes:
* An emergency response plan; * Adequate insurance coverage; * Copies of important records; and * A disaster survival kit with a flashlight, portable radio, batteries, first-aid supplies, non-perishable food, bottled water, a basic tool kit, plastic sheeting and garbage bags, cash and a digital camera to take pictures of damage.
The Credit Union National Association also offers disaster preparedness resources, including archived Agility webcasts on pandemic planning. For more information, use the links.

Mission FCU helps schools bridge funds gap

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SAN DIEGO (9/4/09)--Mission FCU is attempting to drum up extra financial support for local schools hit by budget cutbacks through its “Mission 4 R Schools” initiative. For every new account opened at the $2 billion asset, San Diego-based credit union through Dec. 31, Mission FCU will deposit $25 in the new account and make a matching $25 donation to a school chosen by the new member (Reuters Sept. 1). The matching funds can be used by local elementary, middle and high schools, and also colleges and universities, the credit union said. “At Mission Federal, we are acutely aware of the critical need for additional funding sources for our local schools, so we developed this groundbreaking fundraising opportunity to show our support during these extreme budget times,” said Tricia Link, Mission Federal vice president of communications and community relations, in a press release. “The ‘Mission 4 R Schools’ matching donation funds will be provided to schools by Mission Fed without any strings attached,” she added. “Funds can be used for everything from classroom computers to museum field trips, instruments for the band to science equipment and classroom supplies.”

CUs get more press on state employee assistance

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WASHINGTON (9/4/09)--Credit unions nationwide received more media attention for helping state workers through challenging economic times. A Thursday Stateline.org article noted Virginia CU, Richmond, Va., for its Virginia State Employee Loan Program, which the credit union operates in partnership with the Commonwealth of Virginia Campaign to help state workers who face emergency expenses and would benefit from a low-cost, emergency loan with a required financial education component. The loans have a 24.99% annual percentage rate, and are intended to prevent state workers with poor credit from using payday lenders--who could charge 300% or more in interest, the publication said. Since the program was announced by Virginia Gov. Tim Kaine July 13, more than 1,620 employees have received loans. North Carolina State Employees’ CU, Raleigh, also was noted for its Salary Advance program that allows members to borrow up to $500 at a 12% interest rate. Members must repay the amount, plus interest, by the next paycheck. Since 2001, more than 111,800 individuals have borrowed $1.5 billion from the program with a default rate of 0.002%. Hawaii State FCU, Honolulu also allows members who are furloughed or who have reduced incomes to borrow up to $5,000 from the credit union at a low interest rate. More than 20 Pennsylvania credit unions offer low-interest or zero-interest loans to help state workers who were not getting paid. Some dropped off thank-you cards at one credit union to show their gratitude, Stateline.org said. Several states have had budget impasses over the past few months that have affected state workers.

IUSA TodayI notes CU debit card program

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PALO ALTO, Calif. (9/4/09)--A credit union’s debit card reward program was noted by USA Today Tuesday in an article about how debit-card issuers are instituting new reward programs as consumers use their debit cards more during the recession. Addison Avenue FCU--a $2.375 billion asset credit union based in Palo Alto, Calif., primarily serving employees of high-tech companies--is offering new perks to members who use their debit cards a specified number of times, the nationwide newspaper said. Addison started a checking account in July 2008 to pass on to members some of its income when debit cards are used, Benson Porter, Addison CEO, told the paper. Credit union members earn 3.51% interest on their money in Addison’s Dividend Rewards checking account if they make a minimum of 12 debit purchases per month, make one electronic deposit per month and agree to receive online statements, Porter told the paper.

Minnesota foundation elects board officers (09/03/2009)

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ST. PAUL, Minn. (9/4/09)--The Minnesota Credit Union Foundation
(MNCUF) Board of Directors has named its table officers and elected directors at its annual meeting in July. These board members will serve staggered terms:
* Chuck Albrecht, Mid-Minnesota FCU, Baxter; * Mary Hansen, Mayo Employees FCU, Rochester; * Lynn Kothe, North Memorial FCU, Robbinsdale; * Kristi Mukomela, Novation CU, Oakdale; and * Judy Root, Bluestone FCU, Eagan.
Mukomela will continue to serve as board chair, with Kothe continuing as vice chair and Root as secretary/treasurer. Since attaining status as a public charity in 2007, the MNCUF board completed a strategic planning process to examine the overall organization to strengthen the foundation's governance structure and broaden its focus. It revised its bylaws, created and altered operational policies, and established a greater Web presence. MNCUF will add two new board members this fall, bringing the total to seven. Lon Krueger, retired CEO from Accentra CU, is working for MNCUF as a volunteer to assist implementing the strategic plan. Recently, MNCUF provided funds for:
* The Minnesota Credit Union Network's Small Credit Union Conference; * The Cooperative Network's Youth Leadership Conference; * Financial education activities and scholarships through the Minnesota Family Involvement Council; * Charitable giving to Gillette Children's Specialty Healthcare through Minnesota Credit Unions for Kids; * The Homes for Our Troops project to support construction of a home for a wounded Iraq War veteran; * Disaster relief for credit unions in the state; and * Educational grants for credit union professionals and volunteers.

ICNNI ITheStreet.comI IMarketWatchI feature Hampel on economy

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NEW YORK and WASHINGTON (9/4/09)--Bill Hampel, chief economist for the Credit Union National Association, was quoted in three national publications regarding his perspectives on the economic recovery, the Federal Reserve’s actions and the Federal Open Market Committee’s (FOMC) August deliberations on the economy. Several economists concur that the Fed, Congress and the Bush and Obama administrations should share the credit for steps taken to help end the recession, said CNN.com Thursday. “The actions of the Fed and Treasury starting last October actually worked, regardless of how unpopular they were,” Hampel told CNN.com. “It was messy. It was dirty. It required a lot of money. But they were successful in preventing the implosion of a lot of institutions.” The FOMC noted in its minutes and statement regarding its August meeting that it will keep its key interest rate at zero for “an extended period,” said The Street.com Wednesday. If other factors remain relatively the same, that decision likely will result in an interest rate hike in the middle of 2010, Hampel told the publication. “The Fed does a good job of being apolitical, but they're still in Washington, so I find it unlikely that they'll raise the fed funds rate until employment improves,” Hampel said. “Don't expect the fed funds rate to increase till next summer.” And Hampel told MarketWatch Wednesday, “The bottom line is that until we see a demonstrable improvement in the labor market, they [the Fed] are not going to raise the fed funds rate.” He also told the publication that Fed officials were “less worried that they were too optimistic about a second-half recovery.” Considering the high debt burden consumers are carrying, the recovery “will not be too much to write home about,” he added. On a related topic, Hampel told MarketWatch that deflation is unlikely to occur. However, the fact that federal officials are discussing it should indicate how remote the possibility is of inflation going up.

N.Y. judge rules free speech no shield in lawsuit

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NEW YORK (9/4/09)—In a rating agency case that may have broad implications, a U.S. District Court judge here rejected arguments by Moody’s Investor Services Inc. and Standard & Poor’s (S&P) that investors can’t sue over deceptive ratings of private-placement notes because those ratings are protected by the First Amendment right of free speech. In her decision, U.S. District Judge Shira Scheindlin declined to dismiss fraud charges brought by two investors, Abu Dhabi Commercial Bank and Kings County, Washington, against Moody’s, S&P, and Morgan Stanley & Co. The ruling will force the three companies to respond to fraud charges in the class action suit that claims certain risks associated with securities backed by subprime mortgages were not exposed for investors. The case could be of interest to credit unions because similar questions regarding rating agency responsibility and investors' right to sue the ratings agencies have circulated in the credit union movement regarding investments made by corporate credit unions. “Although this court’s decision is not technically binding on the myriad of similar cases currently pending against the ratings agencies, it likely will have some influence on other judges because the U.S. District Court for the Southern District of New York is influential in financial services law,” assessed Michael Edwards, Credit Union National Association counsel for special projects. "This case did not directly involve mortgage-backed securities per se, but the court's reasoning may be applicable to a variety of debt instruments rated by these companies. Because the National Credit Union Administration (NCUA) is the conservator of U.S. Central (FCU) and (Western Corporate FCU) WesCorp, NCUA may wish to examine this decision to analyze whether it opens any paths to recovery on behalf of the conserved corporates. Reaching any sort of conclusion, however, will take a lot of research and analysis," Edwards added. Scheindlin did not rule on the merits of the lawsuit, which brings 32 counts of fraud against eight companies, but she did opine that free-speech rights cannot be used as a shield from lawsuits because the ratings firms opinions were not distributed generally to the public but rather to a select group of investors. She also noted that there is an unresolved question regarding whether the ratings agencies "genuinely or reasonably" believed that the ratings they assigned "were accurate and had a basis in fact."

CU System briefs (09/03/2009)

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* HARTFORD, Conn. (9/4/09)--A bookkeeper for the now-defunct Meriden (Conn.) Franco-American CU pleaded guilty to embezzling more than $743,000 from the credit union. Melissa Laliberte, 39, of Wallingford pleaded guilty to embezzlement and filing a false income tax return. The credit union was placed into liquidation in July 2008 by the National Credit Union Administration (NCUA). At the time it had 206 members and less than $340,000. Prosecutors said Laliberte withdrew her salary multiple times each month; took loan payments from members to pay personal expenses; failed to post cash withdrawals from her and her husband's accounts; and falsified deposits to the accounts. She was ordered to pay restitution to NCUA, plus back taxes, penalities and interest to the Internal Revenue Service. Laliberte faces up to 30 years in prison and a maximum $1 million fine (WTIC.com and Associated Press Newswires Sept. 2) … * LIMA, Ohio (9/4/09)--A defendant's outburst in a courtroom and his family's reaction at his sentencing for a credit union robbery resulted in the family's eviction from the courtroom. Shortly before he was sentenced to the maximum 26 years in prison for robbing a bank and Superior FCU, Lima, Devonne Wilson cursed the judge and jury. His family began yelling and were evicted. Wilson calmed down and politely asked for an appeal. He was convicted of aggravated robbery with a gun in the March 9 holdup of Chase Bank and the March 20 robbery of Superior FCU. Wilson also was ordered to pay $19,000 in restitution to the two institutions (The Lima News Sept. 3) … * HARRISBURG, Pa. (9/4/09)--U.S. Rep. Kathy Dahlkemper (D-Pa.), left, was welcomed by Erie FCU President/CEO and Pennsylvania Credit Union Association (PCUA) board member Norb Kaczmarek, right, during her recent visit to the credit union. They discussed several credit union issues but focused primarily on the Credit Card Accountability, Responsibility and Disclosures (CARD) Act and the act's effect on Erie FCU, and the costs associated with health reform. PCUA said Dahlkemper is a strong supporter of credit unions and has co-sponsored multiple credit union measures, including member business lending (Life is a Highway Sept. 2). (Photo provided by the Pennsylvania Credit Union Association) … * KANSAS CITY, Mo. (9/4/09)--More than a dozen Kansas City-area
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credit unions met with U.S. Rep. Sam Graves (R-Mo.) Aug. 26 in Kansas City. Concerns about the Credit Card Accountability, Responsibility and Disclosures (CARD) Act dominated the discussion, reported the Missouri Credit Union Association (MCUA). Credit unions explained how the CARD Act hurts some consumers by including open-end lending. He indicated he would check into the issue (The Missouri difference Aug. 28). From left are Don Cohenour, MCUA; Suzie Sifuentes, Burlington Northtown Community CU; Pat Yokley, CommunityAmerica CU; Glenna Osborn, Missouri Central CU; Rep. Graves; Phil Weber, Central Communications CU; James Spafford, Postal and Community CU; and Rob Givens, Mazuma CU. Also attending from MCUA were Jean Hadley, Amy McLard and Peggy Nalls. (Photo provided by the Missouri Credit Union Association) … * SALT LAKE CITY (9/4/09)--Mountain America CU employees helped "Fill the Bus" to raise money and take donations of school supplies for students of an elementary school that was damaged by fire a month and half ago. Volunteers from the credit union and the Wal-Mart Distribution Center in Tooele, Utah, collected the items to replace items lost in the blaze at Grantsville Elmentary. More than $1,500 was raised. The fire occurred after teachers had set up their classrooms for the coming year and all their supplies were destroyed …