News Now Archive

Filed on January 13, 2005, published the first business day after.

CUNA offices closed Monday

WASHINGTON (1/14/05)--The Credit Union National Association (CUNA) offices in Washington, D.C. and Madison, Wis., will be closed Monday in observance Martin Luther King Jr. Day. Also, CUNA's Washington office will be closed on Thursday, Jan. 20 because of security restrictions in proximity to Inaugural events. CUNA's Washington office at 601 Pennsylvania Ave. NW is located on the Inaugural parade route.

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Inside Washington

  • WASHINGTON (1/14/05)--Catherine Orr, senior counsel for the Credit Union National Association participated in a focus group meeting to provide input into the Banking and Finance Sector portion of the National Capitol Region (NCR) Critical Infrastructure Protection Project. A consortium of universities, lead by George Mason University, is assisting the Department of Homeland Security in the preparation of the framework for a NCR Infrastructure Protection Plan. The Banking and Finance Sector focus group discussion centered on evaluation of the use and effectiveness of vulnerability assessments and risk management processes and methodologies in the area of critical infrastructure. The plan will also include seven other critical infrastructure sectors: emergency services; water; energy; health services; telecommunications; transportation; and postal and shipping. The consortium will suggest to Homeland Security ways in which public private cooperation can be leveraged to effectively implement, maintain and evolve the NCR infrastructure over time...

  • WASHINGTON (1/14/05)--The American Bankers Association is continuing to oppose a bill that would permanently ban banking conglomerates from providing real estate brokerage and property management services. The reason being: The bill would deny competition in an area that can benefit consumers and broaden the number of players involved in real estate brokerage. And it artificially singles out national banks while other lenders, like credit unions and savings institutions, have the authority to be involved in real estate brokerage (National Journal's CongressDailyPM Jan. 12)...

  • WASHINGTON (1/14/05)--Health savings accounts are gaining in popularity, according to a survey released by America's Health Insurance Plans. The group said this is an emerging market off to a fast start. Congress created the plans as part of the 2003 Medicare overhaul law. Nearly 350,000 individuals purchased plans in September 2004, just a few months after rules governing the accounts were finalized, according to the survey of 29 AHIP member companies conducted that month. About 30% of these consumers previously had not had health insurance. However, polls by the Kaiser Family Foundation and the Harvard School of Public Health revealed that 47% of adults polled had never heard of health savings accounts, and 17% said they do not know what the term means. Four percent of respondents were actually enrolled in an account (National Journal's CongressDailyPM Jan. 12)...

  • WASHINGTON (1/14/05)--Massachusetts banks have prevailed in a federal lawsuit they brought last year challenging restrictions on insurance sales through bank branches. The U.S. District Court in Boston found in favor of the banks in a declaratory judgment Wednesday, removing several restrictions on the manner in which nationally chartered banks can sell insurance in the state. State-chartered banks are expected to ask state regulators to use a Massachusetts law and allow them the same rights as nationally chartered banks to sell insurance through branches. The federal suit was filed last year by the Massachusetts Bankers Association and seven member banks, some state and some nationally chartered (American Banker Jan. 13)...

  • WASHINGTON (11/14/05)--It sounds counterintuitive: using stored value cards--a product with no danger of default--to build a credit history. But to attract the unbanked, some financial services companies are promoting the cards as a way for people to demonstrate fiscal responsibility. The cards can generate information that could be incorporated into consumer credit scores, vendors and industry analysts say. For example, timely payment of card fees or using cards to make regular payments can be evidence of creditworthiness, proponents claim. Such a record certainly carries less weight than taking out a mortgage or buying a car, but stored-value cards are emerging as a way to get a credit toehold, industry experts say (American Banker Jan. 13)...

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CU-to-mutual conversion rule takes effect soon

ALEXANDRIA, Va. (1/14/05)--The National Credit Union Administration (NCUA) Board adopted a final rule amending its regulation regarding the conversion of insured credit unions to mutual savings banks.

NCUA Board Chairman JoAnn Johnson questions NCUA staff attorney Frank Kressman about the conversion disclosure rule (photo provided by CUNA)

Effective immediately, the rule will require:

  • A converting credit union to provide its members with additional disclosures about the conversion before conducting a member vote, which must address:

    1. Ownership and control of the credit union;

    2. Operating expenses and their effect on rates and services;

    3. The effect of a subsequent conversion to a stock institution; and

    4. The costs of conversion.

    This information will have to be placed in a prominent place with each written communication that a credit union sends to its members regarding the conversion, and credit unions must take specific steps to ensure that the disclosure is conspicuous to the member. These disclosures may be modified upon approval by the NCUA Regional Director and, in the case of a state-chartered credit union, the appropriate state supervisory authority.

  • The membership vote on conversion must be by secret ballot and be conducted by an independent entity. NCUA has also included guidelines for conducting a fair vote.

  • A federally insured state credit union must provide NCUA with information about how the laws of the state where it is chartered relates to NCUA's conversion rule.

The final rule will be effective immediately upon publication in the Federal Register. Chairman JoAnn Johnson stated the board felt it was important to get this consumer protection regulation in place immediately to protect members as well as to provide certainty to credit unions considering conversion as to what procedures to follow in the conversion process. She stated that the aim of this rule is to provide members with access to clear, concise, accurate and meaningful information so that they can be fully informed when they vote on the conversion.

"Requiring additional disclosures to members in a set format prior to conducting the vote on conversion will go a long way to ensuring that crucial information is not lost in the large volume of information that members receive concerning the conversion," Johnson said.

Board Member Debbie Matz pointed out that NCUA has gained a great deal of knowledge concerning conversions since the passage of the Credit Union Membership Access Act of 1998; this final rule is a result of observations of the actual experiences of credit unions.

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Resource Links
Access NCUA's Final Rule
Related stories: CU-to- bank conversions


NCUA finalizes private insurance rule

ALEXANDRIA, Va. (1/14/05)--The National Credit Union Administration (NCUA) Board yesterday adopted a final rule to require more disclosures from credit unions converting from federal to private insurance and to make other changes to the insurance conversion process.

During the comment period, the Credit Union National Association (CUNA) and others raised serious concerns about several provisions in the proposal, and the agency incorporated several amendments to address some key issues associated with the proposal.

"We are gratified that NCUA made a number of changes to the proposal, and commend the agency for taking action to craft a more balanced approach. As this rule is put into effect, we will be monitoring its implementation closely," said Dan Mica, CUNA president/CEO.

The rule amends existing requirements and addresses mergers of federally insured credit unions as well as conversions from federal insurance to private insurance. Key points include:

  • The credit union must provide NCUA with proof that the nonfederal insurer is authorized to provide insurance and will insure the credit union.

  • The vote by members must be by secret ballot and administered by an independent entity.

  • Every communication to members about the insurance conversion must comply with NCUA's notice requirements, including the requirement to provide a statement that federal insurance is based by the full faith and credit union of the U.S. government and if the credit union converts to provide insurance and then fails, the government will not guarantee members will get their money back.

  • Unlike the proposal, the final rule does not require prior approval from NCUA of all share insurance communications made during the voting period. CUNA, leagues and others had opposed this provision vigorously. Credit unions converting to private insurance will be required to provide NCUA with a copy of their communications at or before the time they are made.

  • Also in a variation from the proposal, if the conversion is approved, but not before, the credit union would be required to inform members that they could make penalty free withdrawals. Such withdrawals could be for the federally insured portion (up to $100,000) of funds in certificate accounts and would have to be made between the time of the approval of the conversion and its effective date.

The rule is effective 30 days after publication in the Federal Register, which is expected next week.

Chairman JoAnn Johnson stated that the agency had made a good faith effort to work with interested groups to improve the rule. She indicated that NCUA wants to ensure that members are fully informed but does not want to overly burden credit unions.

NCUA Board Member Debbie Matz questions NCUA staff about private insurance conversions (Photo provided by CUNA).

Board Member Debbie Matz said she believes this is the most far-reaching consumer protection regulation issued by the agency. She said it was not NCUA's intent to "ban private insurance, infringe on the authority of state supervisory agencies, or regulate credit unions after conversion."

According to CUNA Associate General Counsel Mary Dunn, the association will work with the leagues and NCUA to monitor the implementation of this rule very closely.

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Resource Links
Access NCUA's Final Rule


Maximum CU interest rate remains at 18%

ALEXANDRIA, Va. (1/14/05)--The National Credit Union Administration (NCUA) Board approved a final rule that continues the 18% interest rate ceiling for loans and lines of credit advances made by federal credit unions during the period of March 9, 2005, through Sept. 8, 2006. The 18% ceiling has been in place since 1987.

Under the Federal Credit Union Act, federal credit unions are limited to charging 15% of loans, unless the NCUA Board approves a higher loan rate ceiling, which can be set as high as 21%.

The current 18% ceiling was due to revert to 15% on March 9, 2005. As required by Congress, NCUA will review this rule again in 18 months. The Board is prepared to reconsider the 18% ceiling at any time prior to that if warranted by changes in economic conditions.

Both Chairman JoAnn Johnson and Board Member Debbie Matz remarked that keeping the ceiling at the same level encourages risk-based lending, decreasing the ceiling would discourage such lending and result in members seeking out other means obtaining loans and line of credit advances and may fall prey to predatory lenders.

CUNA supported retaining the ceiling at 18%.

Johnson mentioned that the publication of the annual interest rate ceiling level is one month earlier than last year in order to provide credit unions a degree of certainty for planning.

CUNA Chief Economist Bill Hampel talks after the board meeting with Holly Herman, senior advisor and chief of staff to NCUA Chairman JoAnn Johnson (Photo provided by CUNA).

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Resource Links
Access NCUA's Final Rule


CUNA plans for Inauguration Day

WASHINGTON (1/14/05)--The Credit Union National Association (CUNA) is making a variety of plans for Thursday's Inauguration Day events happening in the nation's capital--from dealing with security to connecting with lawmakers.

CUNA's Washington office address at 601 Pennsylvania Ave. NW places it directly on the inaugural parade route and within an established security zone. The Secret Service has asked downtown Washington employers to limit operations on that day, so CUNA's office will officially be closed. However that doesn't preclude the location from serving as the perfect vantage point to watch the parade.

Looking east toward the U.S. Capitol, CUNA's Washington office address at 601 Pennsylvania Ave. NW (left) places it directly within the security zone and on the inaugural parade route--which already is being lined with bleachers. (Photo provided by CUNA)

During that day, CUNA's main event will consist of lunch and then parade viewing from the sixth floor office windows for credit union officials, senior staff and guests. CUNA's Executive Committee members and selected senior staff will be attending the swearing-in ceremonies.

Later, some will be attending a few of the balls on Thursday evening, along with all of the additional government officials and members of Congress. "Which ball" is largely unknown, as the balls are all covered by one ticket.

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Abernathy oversees his final literacy group meeting

WASHINGTON (1/14/05)--Outgoing Treasury Assistant Secretary for Financial Institutions Wayne Abernathy yesterday opened the fourth meeting of the Financial Literacy and Education Commission by thanking NCUA Chairman JoAnn Johnson and staff for hosting the "MyMoney" launch at NCUA headquarters in October.

Abernathy is leaving the Treasury Department to join the American Bankers Association.

In addition to Johnson, Abernathy was joined by Treasury's Deputy Assistant Secretary for Financial Education Dan Iannicola, as well as guest speakers and leaders in the financial services community including Rep. Judy Biggert (R-Ill.), United States Mint Director Henrietta Holsman Fore, Commodity Futures Trading Commission Chairman Sharon Brown-Hruska, and Comptroller of the Currency Julie Williams.

CUNA Associate General Counsel Mary Dunn also attended.

Biggert expressed her commitment to raising levels of financial literacy and the need for solid personal finance skills to help improve lives. "If our young people learn how to manage money, credit, and debt, they can become responsible workers, heads of households, investors and business leaders," said Biggert. "But financial literacy is a lifelong process, and it's crucial that we continue our efforts to reach out to people of all ages and economic backgrounds."

Treasury's Deputy Assistant Secretary for Financial Education Dan Iannicola remarked on the commission's progress to date in developing the national financial education strategy. Iannicola stated that the national strategy working group is working diligently toward its completion in summer of 2005.

The Financial Literacy and Education Commission was created by President Bush in 2003.

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Resource Links
MyMoney.gov
CUNA’s Youth Financial Literacy initiatives


CU System briefs

  • ST. LOUIS (1/14/05)--David Bohrer, deputy director for the Missouri Division of Credit Unions, announced his plans to retire, effective April 1. On Jan. 1, Senior Financial Examiner Ken Bonnot was promoted to deputy director, and Financial Examiner Specialist Kevin Weaver was promoted to chief examiner, according to the Missouri Credit Union Association's CourierNet (Jan. 12) ...

  • DUBLIN, Ohio (1/14/05)--State Rep. Geoff Smith (R-Upper Arlington), the sponsor of the Ohio credit union bill, was named chairman of the Insurance Committee in the Ohio House, according to the Ohio Credit Union League's eLeaguer (Jan. 12). House Bill 470 allows credit unions to receive deposits of probate, guardianship and public funds, and expands financial education in grades K-12 ...

  • DULUTH, Minn. (1/14/05)--The suspect in the Dec. 9 robbery of Superior (Wis.) Community CU was identified by a teller, who recognized him as a frequent customer of a liquor store where she once worked. Thomas Burke was arrested shortly after the robbery because teller Larissa Ronkainen recognized him. Burke will be arraigned Feb. 4 on felony charges of robbery with use of force (Duluth News-Tribune Jan. 13) ...

  • REDMOND, Wash. (1/14/05)--The board of directors of Qualstar CU, Bellevue, Wash., voted unanimously to promote Mark R. Nelson to president from chief operating officer, effective Jan. 1. Nelson will serve as president until sometime in 2006 when he will succeed John C. Relic as CEO. The $300 million asset credit union also announced the following staff changes: Marlene Boone to chief operating officer and president of Qualstar Financial Services Inc.; Mike Elfstrom to chief financial officer; Kara Taylor to vice president of information systems; and Carla Pizarro as vice president of finance ...

  • BEAUMONT, Texas (1/14/05)--Mobiloil FCU, Beaumont, Texas, promoted Ellen Messick to vice president of finance. She previously worked as accounting supervisor and controller before joining the $170.6 million asset credit union in 2002. She has more than eight years of experience with credit unions ...

  • GAITHERSBURG, Md. (1/14/05)--Mid-Atlantic FCU, Gaithersburg, Md., hired Rick Wieczorek as vice president/chief financial officer. Before joining the $200 million asset credit union, Wieczorek was executive vice president at Callahan and Associates, and chief financial officer for nine years at NRL FCU, Oxon Hill, Md. He also was member services supervisor at Coastal Central FCU ...

  • HARRISBURG, Pa. (1/14/05)--St. Basil's Parish CU, Pittsburgh, received approval from the Pennsylvania Department of Banking for a community charter. With the charter change comes a name change--to Basil Community CU. The new charter for the $7.8 million asset credit union extends to specific neighborhoods in and around Pittsburgh (Life is a Highway Jan. 12) ...

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CUs answering appeals for tsunami relief

MADISON, Wis. (1/14/05)--Credit unions and related organizations have stepped up to the plate to answer appeals for funds to help hundreds of credit unions rebuild in the aftermath of the Dec. 26 tsunami in South Asia. One group has kicked off the appeal with a donation of $100,000.

National Credit Union Foundation (NCUF) is spearheading fundraising efforts on behalf of the World Council of Credit Unions Inc. (WOCCU), whose Worldwide Foundation for Credit Unions' Tsunami Disaster Relief Fund will rebuild the credit unions. In Sri Lanka alone, more than 800 credit unions were destroyed.

The $100,000 contribution, from the Credit Union Executives Society (CUES), was made to NCUF will benefit the relief fund. Steve Delfin, NCUF executive director, in thanking CUES on behalf of NCUF and WOCCU, said he hoped others would follow the lead and make a contribution to help WOCCU rebuild the credit unions. "Through this appeal, we asked everyone in the credit union movement to help ease the financial burden and expedite the rebuilding of the credit union system in South Asia by following CUES' lead."

The National Credit Union Disaster Relief Fund will disburse funds to the World Council for distribution to its member credit unions in the affected areas. Credit unions can donate through their state credit union foundation or make a designated transfer directly within the corporate credit union network by contacting their corporate. Individuals or organizations wishing to contribute can do so by check or wire transfer. A donation form, along with frequently asked questions about the giving process, can be found on NCUF's website.

"It is striking that all over the world, credit unions are where people come together after crisis to rebuild their communities and to restart their economic lives," said Brian Branch, interim president/CEO, of World Council. What follows is a breakdown of other credit union fundraising efforts throughout the U.S.:

  • The Minnesota Credit Union Foundation established a statewide credit union effort to give Minnesota credit unions "the opportunity to conveniently and directly assist with the rebuilding of credit unions in tsunami affected countries," said foundation Chair Kristi Mukomela, president of Novation CU, Oakdale, Minn.

  • Northwest Corporate FCU, Portland, Ore., donated to the fund to rebuild credit unions, and Kathy Garner, president/CEO, noted that Northwest Corporate won't charge for donations wired through the Corporate Network. It also donated to Northwest Medical Teams International Inc., a local humanitarian effort. A nurse volunteering in Indonesia, Sandra Stone, is the wife of Northwest Corporate employee Mike Stone. The corporate says a chili feed by the Snohomish Credit Union Chapter in Everett, Wash., also raised funds.

  • The Washington Credit Union Foundation approved $10,000 for the rebuilding effort. It also awarded a $500 disaster relief grant to Seattle-based Credit Union Northwest to help an employee from Malaysia return to Indonesia to search for missing family and care for surviving family members.

  • Service CU, Portsmouth, N.H., will match all contributions collected at its branches or online, up to $50,000. "By matching contributions received at the credit union, more lives may be saved and fewer victims may go hungry, shelterless or fall prey to disease. Together, we will all have made a difference by helping our fellow man," said Gordon Simmons, president/CEO of the $875 million asset credit union.

  • Thursday's Patriot-News in Harrisburg, Pa., included an article about the area's relief efforts and interviewed Greg Smith, president of $2.19 billion asset Pennsylvania State Employees CU. Its board approved matching employee contributions through the end of the month. Employees already have raised $3,000. "One thing the president has said that sticks with me is that this country has an opportunity to show the world what we're like, show our better side," Smith told the newspaper.

  • Erie (Pa.) General Electric FCU is collecting funds plus medical supplies such as gauze and rubber gloves, over-the-counter medications, toothbrushes, toothpaste, and more. The $112 million asset credit union collected more than $300 in cash and hundreds of dollars worth of supplies from employees and members.

  • Cabrillo CU, a $150 million asset credit union in San Diego, says holders of Gold MasterCard credit card's ScoreCard points can turn them into cash donations to the American Red Cross until Feb. 11. "As a business that has offices in the fire-affected areas of San Diego, we are well-aware of the impact of this kind of natural disaster," said CEO Robin Lentz. "Because credit unions are not-for-profit and are member-owned, Cabrillo can be more flexible in this time of need. We are here to help in any way we can," Lentz said.

  • The $3.5 billion asset Security Service FCU, San Antonio, partnered with the American Red Cross and so far collected more than $22,000 at its 28 service centers in Texas and California.

  • At Ripco CU, a $55.3 million asset credit union in Rhinelander, Wis., the credit union is working with WJFW-NBC 12 on a community-wide fundraiser. Ripco will provide a dollar-for-dollar match--up to $5,000--on donations made in its collection boxes until Jan. 31.

  • Chaco CU, Hamilton, Ohio, has collected $2,000 so far. The $121 million asset credit union will continue collecting until Jan. 31.

  • Aerospace Community CU, St. Charles, Mo.; Vantage CU, Bridgeton; and Missouri Credit Union Association employees participated in a "Dress Down for Tsunami Relief" day Jan. 7 for the American Red Cross. MCUA also donated to the Worldwide Foundation for Credit Unions.

Other organizations are involved in tsunami efforts, too.

The Cooperative Development Foundation (CDF) launched a Tsunami Cooperative Recovery Fund and, once it gets $10,000 from individual and corporate contributions, will match it with a $10,000 matching grant from the National Cooperative Bank (NCB).

"We applaud the work of relief agencies to meet the immediate needs of those who survived the tsunami," said CDF Board Chair Terry Lewis, a vice president at NCB. "But we're focusing on longer-term needs, when the cameras are turned off and the media have moved on. The reconstruction will take years and member-owned cooperative businesses will be a key to that recovery."

Bluepoint Solutions, a Vista, Calif.-based provider of document management solutions for credit unions, donated $1,000 to the credit union rebuilding effort and challenged other service providers to contribute.

"Given the magnitude of this catastrophe, $1,000 isn't a lot of money," said Hal Tilbury, CEO and founder. "However, if all the companies that prosper from their relationships with credit unions find their way to contribute similarly, maybe we really can make a difference."

Contributions can be sent to:
National Credit Union Foundation
For: South Asian Tsunami Appeal
PO Box 78880
Milwaukee, WI 53278-0880

Wire transfers should be directed to:
U.S. Central
9701 Renner Blvd., Suite 1000
Lenexa, KS 66219
ABA No. 301082688
Account No. 301000275
Reference South Asia Tsunami Disaster Relief

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Resource Links
National CU Foundation


Flooded Marietta CUs reopen, more rain on the way

DUBLIN, Ohio (1/14/05)--With cleanup efforts still under way, Ohio Valley Community CU, Marietta, is preparing for even more rain after the second wave of flooding in four months, reports the Ohio Credit Union System.

The credit union reopened branches in Hannibal and Clarington to serve flood-affected members. However, the Clarington branch still has water in its empty basement, member service manager Robyn McGuire told the league.

Sandbagging the doors of the Marietta office helped keep most of the mud out, but water levels reached between three and four feet. The branch had replaced millwork, drywall and counters after the flood in September 2004.

The office reopened after pumping the water out but moved everything out again with more rain in the forecast.

McGuire said the staff is exhausted. They appreciate the thoughts and prayers, but they just need the rain to stop, she said.

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Discover/PULSE merger means more debit choices

HOUSTON and RIVERWOODS, Ill. (1/14/05)--With the merger of Discover Financial Services and PULSE EFT Association, consumers will find more choices available for using their debit cards.

The 4,100 financial institutions that are members of PULSE approved the $310 million sale during a special vote Jan. 11 in Houston. About 1,000 credit unions are members of the electronic funds transfer group.

Stan Paur, PULSE president/CEO, said the combined company will be able to provide all types and sizes of financial institutions with a full-service debit platform and products such as credit, signature debit, PIN debit, gift card, stored value card and ATM services.

Discover Financial Services Chairman/CEO David Nelms said the combination of PULSE's experience in debit and Discover's signature capabilities will increase choice in the growing debit market.

PULSE will become a business unit of Discover Financial Services and will retain its brand, pricing, operating platform, management team, staff and Houston headquarters.

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Wescom CU offers help to California storm victims

LOS ANGELES (1/14/05)--Wescom CU announced Thursday it would provide emergency financial assistance to members impacted by the Southern California storms and mudslides.

Wescom, Los Angeles County's largest credit union with assets of more than $3 billion, is headquartered in Pasadena. It has 240,000 members in Los Angeles, Orange, Riverside, San Bernardino and Ventura counties.

"Assistance is available to our members, including interest-free loans, deferred payments to those sustaining property damage or loss, free replacement checks, the waiving of early withdrawal penalties on certificates of deposit, and the quick negotiation of checks from insurance companies or agencies such as FEMA (Federal Emergency Management Agency)," said Wescom Executive Vice President and Chief Operating Officer Jane Wood.

She encouraged members to visit any of the credit union's Southern California branches or to call the credit union.

Southern California was buffeted by three deadly storms in a five-day deluge blamed for at least 20 deaths. Los Angeles recorded 17 inches of rain in 15 days, the wettest period since 1877, when the National Weather Service began keeping records for the area.

La Conchita, where a rain-weakened mountain buried part of the town, killing at least 10 people, is located in Ventura County. The slide destroyed 15 homes and severely damaged another 16 homes (USA Today Jan. 13).

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CUs’ credit counselor aids defunct-CCCS clients

SALT LAKE CITY (1/14/05)--Balance Financial--a consumer credit counseling service used by many Utah credit unions--is helping consumers who were financially hurt by the now-defunct Consumer Credit Counseling Service (CCCS) of Utah.

The subsidiary of Consumer Credit Counseling Service of San Francisco--similarly named but unrelated to the failed Utah company--paid $30,000 to 85 Utah residents who went to CCCS of Utah for financial help.

Balance Financial President Joanne Budde said the agency is stepping forward to protect the reputation of Consumer Credit Counseling Services. We don't want one agency to destroy the trust we've developed and good reputation we've earned over the past 40 years, she said. (The Salt Lake Tribune Jan. 12)

Mountain America FCU, West Jordan, and Goldenwest FCU, Odgen, have used Balance Financial for credit counseling services for their members.

Now the San Francisco organization has expanded to help members of Granite FCU, Salt Lake City; Jordan FCU, Sandy; Cyprus FCU, West Jordan; Alliance CU, Ogden; Deseret First FCU, Salt Lake City; and Tooele FCU.

Budde emphasized that consumers do not need to be credit union members to use Balance Financial's services.

CCCS of Utah lost its affiliation with the National Foundation for Credit Counseling last year. It was meant to help consumers by negotiating on their behalf for better interest rates or reduced payments with creditors.

Instead, the debts weren't paid and nearly $64,000 was missing from the trust account set up to hold clients' money. Former president Scott McCagno is appealing the $45,000 in fines invoked by the Division of Consumer Protection for his alleged mismanaging of the agency.

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Ohio U's frosh orientation adds financial ed info

DUBLIN, Ohio (1/14/05)--When freshmen at Ohio University take their freshman-orientation course, they will learn how to manage their finances with information provided by Ohio University CU, Athens.

According to the Ohio Credit Union System's eLeaguer Newsletter (Jan. 12), Tricia Hale, the credit union's member development specialist, worked with course instructor and author Char Rae, Ph.D., to create a textbook for the school's UC115 University Experience course.

Hale had been working for six years to convince the university to include financial education in its orientation course.

The textbook's chapter on financial management includes information from the National Endowment for Financial Education (NEFE) and other sources provided by the credit union.

The instructor's manual includes Hale as an information source. The UC115 course covers time management, stress management, campus safety, drug and alcohol use, and financial management.

For more information about NEFE, a partner of the Credit Union National Association and many credit unions in their high school financial education programs, use the resource link.

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Resource Links
National Endowment for Financial Education


ID thief nabbed after three years, nine identities

ALABANY, N.Y. (1/14/05)--A woman who kept police at bay for three years pleaded guilty Tuesday to using nine identities in fraud schemes that netted her $63,000 (Times Union (Jan. 12).

Shaquana Wright, 24, used fake credentials to create checking accounts at Sunmark FCU, Schenectady, and State Employees FCU, Albany, as well as Charter One, TrustCo and Key banks.

She wrote a check from one alias to another and cashed the check with the appropriate ID. She also used fake IDs to buy and sell cars, and pay rent and utility bills for herself, family and friends. She furnished homes with items purchased with funds wired in and out of her many accounts, as well as from accounts of unsuspecting victims.

Aliases she used: Natalie Lewis, Shaquana Turner, Shahmeeka Chaney-Artis, Mikiya Orr, Virginia Carolyn Medley, and Tiffani Poindexter. Authorities had tried to catch Wright for three years but always just missed her, said Albany County prosecutor William Andrews.

Wright will be sentenced on March 7. She faces up to 10 years in prison.

For more information from the Credit Union National Association (CUNA) about preventing identity theft, use the resource links.

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Resource Links
Identity & Fraud Seminar
Statement Stuffer: ID Theft: How to Prevent It and How to Get Over It


New CUSO announced by WesCorp, others

SAN DIMAS, Calif. (1/14/05)--The launching of a new credit union service organization dedicated to expense management and payment solutions was announced Thursday.

WesCorp formed Procura LLC, which is jointly owned by Credit Union Financial Services Limited Partnership (CUFSLP), MEMBERS Development Co. LLC, PSCU Financial Services and the corporate.

CUFSLP is a co-distributor of the Trust for Credit Unions, a family of no-load mutual funds created by and for credit unions. As a research and development company, MEMBERS Development Co. LLC is jointly owned by CUNA Mutual Group and credit unions.

As the largest credit union service organization, PSCU Financial Services provides services for credit, debit, ATM, bill payment, presentment and contact centers. Western Corporate FCU has nearly $24 billion in assets with more than 1,000 member/owner credit unions.

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Market News

MADISON, Wis. (1/14/05)

  • Rising homeownership and higher-income households helped boost remodeling spending to a new high, according to a report released Thursday by Harvard University's Joint Center for Housing Studies. Home-improvement spending jumped 52% to $233 billion in 2003 from $153 billion in 1995. The record $233 billion in spending made up 40% of all expenditures on home construction and accounted for more than 2% of economic activity. Households with incomes of $120,000 or more were the main spenders, accounting for 60% of the growth in remodeling expenditures since 1995. And while baby boomers were responsible for more than half of expenditures, spending by younger adults surged more than fivefold to $28 billion over the period. Strong spending gains were also found among foreign-born households and ethnic minorities--led by the nation's fast-growing Hispanic population. The study predicts continued growth in remodeling spending as low mortgage rates boost home purchases. The study also noted that rising home prices have given homeowners equity to finance home improvements (The Wall Street Journal Online and Reuters Jan. 13) ...

  • The Federal Reserve is monitoring home prices but doesn't consider them to be at a level that would signal a national housing bubble, said Fed Governor Edward Gramlich. Answering questions at a panel session on low-income housing organized by the Center for Economic and Policy Research, Gramlich also said the Fed has been closely monitoring the subprime mortgage market, which provides loans to people with low incomes or damaged credit. Subprime loans, which barely existed 10 years ago, now account for about 25% of mortgages. "This evolution of the subprime market has put a lot of people into homes while some of them are in trouble and may have been better renting," said Gramlich. About 7% of subprime loans are seriously delinquent. "There is a problem in the growth of mortgage brokers who don't have an incentive to make sure that a loan is repaid," he added. He said the central bank also is concerned about the rising popularity of mortgages with low or no down payments because such loans are more risky than traditional mortgages (Dow Jones Newswires and Reuters Jan. 12) ...

  • Retail sales surged 8% to a record $4.06 trillion in 2004--the strongest gain in five years, according to the Commerce Department (Bloomberg.com Jan. 13). Sales excluding autos jumped 8.9%, the largest increase in 12 years of comparable recordkeeping. Retail sales account for nearly half of consumer spending, which in turn makes up about two-thirds of economic activity in the U.S. The year ended on a strong note, as discounts boosted auto sales to a three-year high and prompted a late surge in holiday shopping at chains such as Wal-Mart Stores and Kohl's Corp. Retail sales rose 1.2% in December, the strongest gain in three months. The report reinforces expectations that the Federal Reserve will continue boosting interest rates in 2005. "By many measures, the economic landscape looks reasonably good," said Federal Reserve Bank of New York President Timothy Geithner, in a speech Thursday. Most analysts expect the Fed to boost the target for the fed funds rate another 25 basis points to 2.50% when the policy-setting committee meets Feb. 1 and 2 ...

  • A four-year college degree still gives employees a big payoff in wages, but the gain in leveling off (The New York Times Jan. 13). Men and women with four years of college earn an average of about 45% more than those with just a high school education, according to the Bureau of Labor Statistics. However, the figure has remained in the 45% range since the late 1990s, and it increased much more slowly during the 1990s than in the 1980s. The leveling off of the wage premium for a college degree has lasted long enough to indicate that it isn't just a temporary pause but another important shift in the dynamics of the labor market. Economists meeting last week at the American Economic Association's annual meeting explored the trend. One panel discussed what Harvard labor economist Richard B. Freeman described as the apparently inexhaustible supply of immigrants with college degrees who hold jobs or seek jobs in the U.S.--thus depressing the demand for and the wages of all well-educated job seekers. The economists also discussed the fact that income inequality continues to grow even as the payoff from a college education is leveling off. Harley Shaiken, a labor economist at the University of California at Berkeley, said that while education is essential, it isn't enough to close the income-inequality gap. He said government must assume more of the burden in closing the gap, through strengthening collective-bargaining laws and increasing the minimum wage. "The obsession with education has become a mantra to avoid tough political choices," said Shaiken ...

  • The number of workers filing initial claims for unemployment insurance increased by 10,000 during the week ending Jan. 8 to 367,000--the highest level since late September. The Labor Department said there were no special factors to explain the increase. However, some workers may have postponed filing until after the holidays. The four-week moving average, which smoothes out weekly volatility, also increased--by 12,750 to 344,000. In a hopeful sign, the number of people continuing to file unemployment claims tumbled by 219,000 during the week ended Jan. 1 to 2.631 million--the lowest level since mid-2001. The size of the decline was the largest in more than 12 years. The recent increase in claims could reverse this trend. But while continuing claims decline both because benefits expire and because people find new jobs, fewer workers are now exhausting their benefits before they find new work. And the average duration of jobless benefits has been declining. The duration was 16.28 weeks at the end of November--down from 16.7 weeks in April (Reuters and Economy.com Jan. 13) ...

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News of the Competition

MADISON, Wis. (1/14/05)

  • Check courier AirNet Systems Inc. may be putting itself up for sale, a casualty of declining check volume (American Banker Online Jan. 13). The company, which receives 60% of its revenues from delivering paper checks, said it has hired Chicago investment bank Brown Gibbons Lang & Co. to "evaluate various strategic alternatives to enhance shareholder value." Options could include selling all or part of the firm, refinancing, raising additional capital, or restructuring the company, said AirNet in a press release. Trends are running against the company's revenue base. Consumers increasingly are using electronic payments--which are boosting the volume of online bill payment and credit and debit cards and damping check usage. And banks and billers receiving checks are beginning to convert them into electronic files. The banking system processed 36.7 billion checks in 2003--down 12.4% from 2001, according to a Federal Reserve survey released last month. Responding to these trends, AirNet has been trying to beef up its nonbanking business, which includes charter passenger flights and the delivery of transplant organs. And in 2003, AirNet started offering check-imaging equipment ...

  • J.P. Morgan Chase, the second-largest bank in the U.S. after Citigroup, announced plans on Wednesday to close a large credit-card facility in Tampa, Fla., by the end of the year (The Wall Street Journal Online Jan. 13). The shutdown will result in 1,900 layoffs, part of the 12,000 jobs that J.P. Morgan is cutting in connection with its $58 billion acquisition of Bank One Corp. in 2004. Intensive cutbacks in jobs, health-care costs and charitable donations are expected to continue throughout 2005 under the leadership of Jamie Dimon, president and chief operating officer of J.P. Morgan. The former CEO of Bank One will take over the CEO job at J.P. Morgan next year from William Harrison. Dimon has long been known as a relentless cost-cutter, through his four years at Bank One and at Citigroup during the 1980s and 1990s. At J.P. Morgan, Dimon has boosted employees' health-care premiums and increased New York employees' workweek to 40 hours from 35 hours ...

  • A former J.P. Morgan Chase vice president has agreed to plead guilty to federal charges that he illegally paid $50,000 of the bank's money to an attorney to win financing business from Philadelphia's city government (Dow Jones Newswires Jan. 13). Anthony Snell was set to plead guilty Thursday to two counts of wire fraud. He also agreed to cooperate in a federal investigation of an alleged pay-to-play corruption scheme involving bank executives and city officials. Also indicted in the case are two executives from Commerce Bancorp's unit in Pennsylvania. And an executive with Janney Montgomery Scott, an investment-banking firm in Philadelphia, has been charged with making false statements to FBI agents who were investigating the case ...

  • Charles Schwab has again escalated the discount war, announcing that it has halved the level of assets that clients need to avoid paying some fees. The nation's largest discount brokerage said Thursday that it eliminated service fees on brokerage, individual retirement, education savings, custodial and college saver accounts for customers with at least $25,000 of household assets at Schwab. That's down from a $50,000 minimum. Earlier this week, Ameritrade Holding announced that is was cutting its regular commission prices by more than half, to $5. Schwab in November cut its base commission rate for online stock trades to $19.95 from $29.95. The discount brokerages are trying to lure regular investors back to the stock market (Dow Jones Newswires and Reuters Jan 13) ...

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Consumer brief

  • WASHINGTON (1/14/05)--If you're trying to figure out where all your money goes, perhaps 2005 is the year to develop a spending plan. Follow three basic rules. First, keep it simple. Take one step at a time. List all sources of income and track all your expenses. Then compare the two to figure out if you're living within your means. Second, make it personal. Some people prefer sophisticated software, while others feel more comfortable with paper and pencil. Use the method that works for you. Third, be positive. A successful budget doesn't prevent you from having fun. It's intended to control small expenses now so you can set goals to buy bigger things and have even more fun in the future (Kiplinger's January)...

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Companies help California league with collection

RANCHO CUCAMONGA, Calif. (1/14/05)--To help maximize collection processes, the California Credit Union League (CCUL) has partnered with The Best Service Co. (TBSC) and JM Associates.

The companies offer a loan recovery rate, averaging 12% to 30%, and they manage the legal aspects of collections including levies, liens, subpoenas, skip tracing, judgments and monitoring of bankruptcies.

Neither agency charges a fee unless it recovers losses. The policy includes legal action.

"They provide credit unions with comprehensive and customized activity reports as frequently as the credit union would like," said Sylvia Fath, CCUL vice president of business services.

Credit unions can access the TBSC and JM Associates websites to view their activity and progress reports.

The two agencies operate nationwide so they can track members who have moved to another state.

They also provide guidance to credit unions to help determine if a portfolio is collectible and how to perform the collections themselves.

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Canada checking fees up due to swipe-crazy debits

VICTORIA, B.C. (1/14/05)--Fifteen percent of Canadian checking account customers surveyed are paying an average of $21.50 a month in fees because they're confused about ATM surcharges and are "swipe happy" with their debit cards, reports a study commissioned by Coast Capital Savings CU, Victoria, B.C. (Calgary Herald Jan. 8).

Canada's consumers are paying inflated fees even though they have options that allow 13% of them to pay nothing, another 14% to pay $6 or less per month, and 58% to pay between $6 and $20 a month.

Lawrie Ferguson, vice president of the credit union, notes that 15% of respondents pay more than $20 a month in fees, partly because people are confused about the extra fees charged when they use an ATM not owned by their financial institution.

She also noted that Canadians are "swipe crazy," using debit cards for a multitude of small transactions averaging 50 cents per transaction.

The survey, conducted by pollster Ipsos-Reid, found that the average consumer makes 44 transactions a month, 42% of them on a debit card.

In research conducted by the Public Interest Advocacy Center in Ottawa in 2003, 29% of Canadians responding said they paid no monthly service fees and 24% pay $1-$10 in fees. A year earlier, Statistics Canada noted that 69% of households pay bank service charges, averaging $15 a month.

Ipsos-Reid's research for Coast Capital Savings CU, found that 40% of people surveyed think their checking account fees are unfair. Forty-seven percent of men, compared with 32% of women, believe their service fees are unfair.

However, credit union members are significantly less likely than bank customers (29% vs. 43% respectively) to believe the service fees are unfair.

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