News Now Archive

Filed on January 22, 2003, published the first business day after.

• Inside Washington
• Scope may narrow in GAO’s study of CUs
• Congress’ tax package likely after April 15
• Treasury, Senate Banking leaders join CUNA’s GAC
• Business loans, deposit insurance on NCUA agenda
• Should E-SIGN regs cover electronic checks?
• CU System briefs
• Utah League prepares to fight CU tax bill
• State appeals California card disclosure ruling
• Personal-finance education urged in Montana bill
• ID theft complaints doubled in 2002
• CUs examined every two years under Arizona bill
• Carbajal to receive Wegner individual award
• CU involved in new IDA program in San Antonio
• Market News
• News of the Competition
• Can you trust your living trust?
• Wescom CU implements ATM deposit service at CU
• CU co-op named to Canberra fire-recovery task force
• Smallest B.C. CU is first to surf at ATM

Inside Washington

• WASHINGTON (1/23/03)--OCC has issued Money Laundering: A Banker's Guide to Avoiding Problems to assist financial institutions and financial services providers that are vulnerable to misuse by criminals for laundering illegally obtained profits and funds intended to finance terrorist activities. This third revision was "prompted by the growing sophistication of money launderers, a growing international response to money laundering, changes to anti-money laundering laws, and recent anti-terrorist financing legislation." The booklet provides useful basic background information on U.S. laws and international efforts to stop money laundering as well as discusses actions bankers can take to better identify and manage money laundering and terrorism risks. Further, the booklet contains a "high-level discussion" of important related concepts and issues...

• WASHINGTON (1/23/03)--FDIC said in a memo this week that it will be cutting more than 200 additional staff positions on top of the recent voluntary staff reductions conducted through a buyout program, which achieved more than 700 reductions. FDIC reportedly will begin informing employees next month whether their positions will be eliminated, 60% of which will be from the agency's Washington, D.C. headquarters. In addition, cuts will be made across all divisions. FDIC staff has been reduced by 12% since late 2001 (American Banker, Jan. 22)...

• WASHINGTON (1/23/03)--OCC took an enforcement action against First National Bank, Brookings, S.D., requiring the institution to pay restitution to credit card customers harmed by its marketing practices. The bank was ordered to terminate its payday lending business and stop merchant processing activities as well. OCC is requiring the bank to establish a $6 million reserve fund to compensate "those who were deceived by various credit card marketing practices by the bank." The enforcement order says First National Bank "repeatedly violated the Truth in Lending Act, failed to adequately underwrite or document payday loans, and failed to adequately review or audit its payday loan vendors"...

• WASHINGTON (1/23/03)--Before issuing final regulations on terrorism risk insurance, the Treasury Department announced its third set of interim guidance to assist insurers in determining how they may comply with certain immediate provisions of last year's Terrorism Risk Insurance Act. A Treasury official said the department has been "working overtime" to issue final regulations implementing the law. "Our goal is to implement the [Terrorism Risk Insurance] Program in a manner that is fair and easily understood, maximizes reliance upon the existing state regulatory structure, and allows insurers to participate in the Program as part of their normal course of business," stated Wayne Abernathy, Treasury's assistant secretary for financial institutions. The first two sets of interim guidance were issued Dec. 3 and Dec. 18, 2002, respectively...

Scope may narrow in GAO’s study of CUs

WASHINGTON (1/23/03)--The study of credit unions by the U.S. General Accounting Office (GAO) may not be broad as initially envisioned.

"The changing of the guard on the Senate Banking Committee does have ramifications for the GAO report," observes Mary Dunn, CUNA's senior vice president and associate general counsel for regulatory advocacy. "It doesn't look like it's going to be released before late May or early June, and it may not be as comprehensive as we thought it would be."

The GAO study was requested last summer by Sen. Paul Sarbanes (D-Md.), then chairman of the Senate Banking Committee. With Republicans now the majority party in the Senate, Chairman Richard Shelby (R-Ala.) has new priorities for the Banking Committee (News Now, Jan. 3).

Sen. Sarbanes called for GAO's review to examine:

• Credit unions' financial condition, safety and soundness;
• NCUA oversight;
• The impact of the Credit Union Membership Access Act of 1998 (CUMAA) -- including PCA and other requirements;
• The use of CUMAA-authorized multiple common bonds and community charters, and;
• How credit unions are carrying out their mission under CUMAA and the Federal Credit Union Act.

In an in-depth meeting last October (News Now, Oct. 14, 2002), CUNA explained key credit union issues to a delegation of staff from GAO's Washington and San Francisco offices.

CUNA briefed GAO staff on the:

• Safety and soundness of the credit union movement;
• Importance of an independent regulator;
• Benefits of a viable dual chartering system;
• Value of a private insurance option;
• Unintended burdens of Prompt Corrective Action (PCA);
• Need for changes in arbitrary member business loan limitations, and;
• Dedication of credit unions to fulfilling their mission.

Chris Kerecman, federal representative for the California Credit Union League, flew in to provide his perspective. Kerecman participated in the 1991 GAO review of NCUA.

GAO also held an initial meeting with NCUA last September (News Now, Sept. 23).

"NCUA welcomes the opportunity the GAO study provides us to tell our story and get into the public domain some of the credit union success stories of recent years," said NCUA Chairman Dennis Dollar. "I am quite proud of how effective we have been at NCUA in fulfilling both the letter and the spirit of the Federal Credit Union Act and CUMAA."

Congress’ tax package likely after April 15

WASHINGTON (1/23/03)--CUNA has been told from Capitol Hill staff that Congress will not likely complete action on President Bush's proposed tax package until after April 15.

Because the President's plan has attracted fire from House and Senate Democrats and "friendly fire" from Senate Finance Committee Chairman Charles Grassley (R-Iowa), provisions of the plan are expected to be considered as part of the budget reconciliation process. The House and Senate will not consider the package as a stand-alone bill.

Congressional staff told CUNA that it is more likely the legislation will be completed in late May or early June.

The final budget bill may be expanded to include a number of savings initiatives that are important to credit unions, such as Individual Development Accounts (IDAs) and Farm, Fishing, and Ranch Risk Management (FFARRM) accounts.

Treasury, Senate Banking leaders join CUNA’s GAC

WASHINGTON (1/23/03)--Assistant U.S. Treasury Secretary Wayne Abernathy and U.S. Sen. Wayne Allard (R-Colo.) will join CUNA's Governmental Affairs Conference (GAC), Feb. 23-26.

Assistant Secretary Abernathy, who became familiar with credit unions as the Banking Committee's staff director, now leads the Treasury's legislative and regulatory efforts affecting financial institutions and the agencies that regulate and insure them.

He also oversees the Treasury's Office of Financial Education, the Community Development Financial Institutions (CDFI) Fund, and the new Terrorism Risk Insurance Program. He's also responsible for the promotion of consumer access and protection in financial services.

Abernathy's first speech to credit unions will take place at the GAC on Monday, Feb. 24 at 11:00 a.m.

Sen. Allard is a long-time friend of credit unions. Returning to the majority on the Senate Banking Committee, he will be in a position to discuss the committee's agenda for 2003-04. Sen. Allard will be the first speaker on Tuesday, Feb. 25 at 8:30 a.m.

Abernathy and Allard join a lineup of high-profile speakers at CUNA's GAC:

• NBC Nightly News Anchor Tom Brokaw, fresh off his trip to Iraq;
• Senate Majority Whip Mitch McConnell (R-Ky.), recognized by Congressional Quarterly, as one of "Washington's most powerful people";
• House Financial Services Committee members Bob Ney (R-Ohio) and Brad Sherman (D-Calif.), who will present a panel on how credit unions are viewed on Capitol Hill;
• Committee Chairman Michael Oxley (R-Ohio), a strong supporter of regulatory relief for credit unions;
• Ranking Member Barney Frank (D-Mass.), an advocate of many credit union initiatives;
• "New generation" lawmaker Harold Ford Jr. (D-Tenn.), one of the youngest members ever elected to Congress;
• CNN host Charlie Cook, one of America's most popular political analysts;
• The reigning Miss America, Erika Harold, on behalf of the Children's Miracle Network (CMN)
• All three NCUA Board members, who will speak during general sessions and host walk-in receptions for CUs from all six NCUA regions;
• All six NCUA regional directors, who will listen to examination issues and other regulatory questions raised by CUs at the receptions; and
• Small Business Administration (SBA) Administrator Hector Barreto, who will discuss how SBA can help CUs make more member business loans.

The conference also offers social events, a spouse/guest program, and an exhibit hall filled with the latest products and technology.

One afternoon is reserved for visits to Capitol Hill, where participants will meet personally with their federal lawmakers.

Early bird registration is $679 through Jan. 24 ($729 after that date).

For more information about registration and hotel arrangements, use the Resource Link or contact CUNA Meetings and Special Events at 1-800-356-9655, ext. 5700, (gacinfo@cuna.coop).

For more information about the program, use the Resource Link or call CUNA's Washington office at (202) 508-6763.

Business loans, deposit insurance on NCUA agenda

ALEXANDRIA, Va. (1/23/03)--The NCUA Board today is reviewing what may be the most far-reaching state member business loan (MBL) rule it has ever seen.

The MBL rule proposed by the Texas CU Commission incorporates ideas from several other state MBL rules.

"I think Texas looked very cleverly at what other states have applied for, and asked NCUA to consider many of those provisions in its state regulation," observes Mary Dunn, CUNA's associate general counsel and senior vice president for regulatory advocacy.

In the meantime, Dunn reports that NCUA continues to explore its own MBL rule for federal credit unions. She says NCUA expects to propose a revised federal MBL rule soon.

Also on the agenda at today's monthly NCUA Board meeting is a quarterly status report on the National Credit Union Share Insurance Fund (NCUSIF).

News Now will provide complete coverage.

Should E-SIGN regs cover electronic checks?

WASHINGTON (1/23/03)--CUNA is asking credit unions to comment on whether the Commerce Department should determine that requirements from the Electronic Signatures In Global and National Commerce Act (E-SIGN Act) should be applied to processing checks.

The E-SIGN Act validates and facilitates the use of electronic records and signatures, and removes any legal uncertainty about the validity of contracts that are entered into electronically. Among other exceptions, the E-SIGN Act does not apply to certain sections of the Uniform Commercial Code (UCC), including UCC Sections 3 and 4, which relate to processing checks.

In preparation for its report to Congress due June 30, Commerce is seeking to determine whether this exception continues to be necessary for the protection of consumers.

The removal of Articles 3 and 4 of the UCC from the list of exceptions to the E-SIGN Act would apply to electronic negotiable instruments and give depository institutions another means of processing checks electronically under check law.

In 2000, Articles 3 and 4 were expected to be revised to include electronic negotiable instruments. However, the revision of these articles did not address that issue.

Currently, Congress is expected to reintroduce bills that would allow for check truncation by letting institutions voluntarily exchange electronic checks or request substitute paper copies.

If this legislation becomes law, the effective date is expected to be at least one year after enactment.

CUNA's Regulatory Comment Call (the Resource Link below) poses six questions to assist credit unions in preparing their comments:

1. How are you required by federal, state, or local laws to process paper share drafts? Are you required by state or local laws to give the original written share draft to your member?

2. Has the requirement to process paper share drafts instead of their electronic counterparts hampered your operations?

3. Should the treatment of electronic negotiable instruments be created in a general law like the E-SIGN Act by removing this restriction or should it be treated in specific banking laws like the bills on check truncation or UCC Articles 3 and 4?

4. What protections will be available for your members if the exception is removed and the E-SIGN Act allows for the electronic delivery of checks?

5. Would removal of the exception in the E-SIGN Act to allow the processing of electronic negotiable instruments under check laws result in costs or benefits to your organization?

6. Do you support the current version of the E-SIGN Act that exempts Articles 3 and 4 of the UCC from its coverage?

Comments should be submitted to CUNA by Feb. 10, and to the Commerce Department by Feb. 24. Comments to CUNA should go to Associate General Counsel Mary Dunn (mdunn@cuna.coop) and Assistant General Counsel Michelle Profit (mprofit@cuna.coop).

CU System briefs

• ANCHORAGE, Alaska (1/23/03)--The U.S. Air Force, Pacific Air Forces Command, awarded Alaska USA FCU's Eielson branch as the 2002 CU of the Year. The $2.02 billion asset credit union earned the distinction for its extensive product and service portfolio and exceptional member service and support of base activities ...

• PALO ALTO, Calif. (1/23/03)--Three financial advisors from $1.5 billion asset Addison Avenue FCU's investment subsidiary in Palo Alto, Calif., have been recognized by Bank Investment Marketing as among the top 50 investment representatives in the country. The magazine evaluated candidates on their assets under management, production, and client base. Bill Thompson ranked first on the list with 685 clients and more than $82.7 million in assets under management. Phil Nguyen ranked fourth with 700 clients and $83 million in assts. And Bill Heiser came in 14th with 500 clients and $75 million in assets under management ...

• WASHINGTON (1/23/03)--Western Corporate FCU (WesCorp) in San Dimas, Calif., has joined the Callahan CU Financial Services Limited Partnership, which includes more than 40 partners. The service organization founded and administers Trust for CUs mutual funds, which has $3.4 billion in credit union funds under management. WesCorp's affiliation increases the potential to develop leadership in manufactured housing lending, says Charles (Chip) Filson, president of Callahan Financial Services Inc. ...

• STATE COLLEGE, Pa. (1/23/03)--Russell Brooks has been appointed president and CEO of $40 million asset SPE FCU in State College, Pa. Brooks succeeds Andra Cochran, who resigned to relocate to Indiana, where her husband has accepted a position at Indiana University's Kelley School of Business ...

• SACRAMENTO, Calif. (1/23/03)--Lisa Marchegger has been promoted from vice president of planning and corporate development and chief information officer to executive vice president at $972 million asset Schools Financial CU in Sacramento, Calif. The credit union also has promoted Jack Kocunik to senior vice president of finance. He will continue with his former role of chief financial officer ...

• ANN ARBOR, Mich. (1/23/03)--Midwest Financial CU in Ann Arbor, Mich., has appointed Tonya Coon as vice president of real estate and Tanya Warington as vice president of member service. Midwest Financial CU has $119.5 million in assets (Crain's Detroit Business Jan. 20) ...

• BLOOMINGTON, Ill. (1/23/03)--Gail Dahlem is responsible for all loan duties in her new position as loan officer/vice president of $11.5 million asset Bloomington (Ill.) Municipal CU. Dahlem has been in the finance industry since 1995 (The Pantagraph Jan. 19) ...

• BUFFALO, N.Y. (1/23/03)--Menel Selianou, former manager of $18.4 million asset Kenmore Teachers FCU in Buffalo, N.Y., died Jan. 16 at the age of 75. He is survived by his wife, three daughters, three sons, and 12 grandchildren (Buffalo News Jan. 19) ...

Utah League prepares to fight CU tax bill

SALT LAKE CITY (1/23/03)--The Utah League of CUs is preparing to defend the state's dual-charter system from a bill that would impose a corporate franchise tax and fee on large credit unions in the state.

"I think this battle in Utah has implications outside of Utah," Stephen Nelson, director of communications for the league, tells News Now. "A few people from other states have contacted me and said, ‘We're watching what's going on in Utah because if anything like this passes in Utah, they'll be coming to our state.' It's something that matters to credit unions throughout the country."

If the Utah bill passes, the state's largest credit unions would be subject to the state's corporate franchise tax. If they wanted to build branches or serve anyone outside of their domicile county, they'd be subject to a 30% fee that's about equivalent to Federal Income Tax.

Nelson says the league is working with the American Association of CU Leagues (AACUL) to gain league support in other states.

If passed, the bill would damage credit unions' dual-charter system because the large credit unions could avoid the taxes by switching to a federal charter. "I think it's safe to say that they're not going to pay the 30% tax even if it is passed," says Nelson. "Part of what's at stake is the dual-charter system here in Utah."

That would give credit unions no reason to remain state-chartered in Utah.

Nelson says he's not sure if it will pass. "We think it has a lot of support in the Senate. That's why the battle's being fought in the House. We're optimistic that it will be stopped. We have a few options that we're pursuing."

The league is getting the credit union message to consumers with radio ads asking members to call legislators, contact a Web site, put up posters, and help with direct mailings.

The league's radio ads invite members to call House Speaker Marty Stephens and tell him to stop the bill.

According to the Deseret News (Jan. 21), bankers countered by e-mailing bank staff to call Stephens. The representative's staff said he received 379 calls from people saying credit unions should be taxed and 255 from people asking him not to tax them.

"The testimony to me is I‘ve never heard one person say a good thing about a bank that didn't work for a bank," Nelson maintains. "But there's a lot of outside support for credit unions from members, people who don't work for credit unions."

State appeals California card disclosure ruling

SAN FRANCISCO (1/23/03)--The state of California has filed notice of its plans to appeal a U.S. District Court ruling that shields state and federal credit unions from a potentially costly credit card disclosure law.

The notice was filed Wednesday in the U.S. Court of Appeals for the Ninth Circuit in San Francisco.

"This move was expected," says CUNA General Counsel Eric Richard. "The state felt it had a duty to take the matter to the next highest level in the judicial process. However, we continue to feel that the District Court decision is strong and that the ruling will be upheld for credit unions of all charter types."

Richard emphasizes that for credit unions, "Nothing has changed or will change for some time. State and federal credit unions do not have to comply with the California credit card disclosure law. The appeal will have to be considered by the Appeals Court. And should the Appeals Court overturn the District Court, the case could well be returned to the lower court for further proceedings."

This judicial process would take time, Richard points out. "In the meantime, credit unions are under no obligation to comply with the statute."

If the statute is ultimately enforced, it would require institutions in various states to:

• Provide detailed disclosures to credit card holders in California who are permitted to make monthly payments of less than 10% of their account balances;

• Make special disclosures to California cardholders who make only the minimum payment for six straight months; and

• Provide for a toll-free hotline to counsel all California cardholders.

The California law was scheduled to take effect July 1, 2002. But CUNA and 10 co-plaintiffs won an injunction that prevents the law from applying to federal credit unions (News Now, Dec. 23, 2002).

This month, CUNA reached an agreement with the co-plaintiffs and the state to also extend the protection to state-chartered credit unions (News Now, Jan. 13).

As the agreement stipulates, "The injunction issued by order of the court on Dec. 23, 2002, shall apply with respect to all non-federally chartered card issuers so long as said injunction remains in effect with respect to federally chartered card issuers."

CUNA will defend the injunction as the case progresses. "Our ultimate goal," says Richard, "remains to do everything we can to protect the interests of all credit unions."

Personal-finance education urged in Montana bill

HELENA, Mont. (1/23/03)--The 2003 Montana legislature may consider a joint resolution to urge the state's Board of Public Education to integrate basic personal-finance principles into schools' curricula.

Joint Resolution No. 10 being introduced by state Rep. Bob Lawson also would urge that financial-literacy performance standards be implemented into the curricula.

The draft notes that a high school financial education course--with instructor's manual, student workbook, and supplemental materials--already has been developed by the National Endowment for Financial Education (NEFE), the Cooperative Extension System, and CUNA at no cost to schools.

The draft also cites an October white paper by the U.S. Treasury's Office of Financial Education, which says the average American could answer only 42% of a personal financial quiz correctly. And it quotes a survey by the Jump$tart Coalition for Personal Financial Literacy, which indicates 68.1% of high school seniors failed a financial-literacy test--an increase from 59.1% in 2000 and 44.2% in 1998.

For more information about NEFE's High School Financial Planning Program (HSFPP), use the Resource Link.

Resource Links

NEFE's High School Financial Planning Program

ID theft complaints doubled in 2002

WASHINGTON (1/23/03)--Identity theft complaints nearly doubled last year, announces by the Federal Trade Commission (FTC). Credit unions, too, are noticing the increase.

"Complaints about identity theft are a growing problem--without a question," CUNA Mutual Group spokesperson Sydney Lindner tells News Now.

CUNA Mutual doesn't keep specific overall statistics about the crimes related to ID theft that would be comparable to the FTC statistics. It keeps statistics on plastic card fraud, "which is only one small part of the overall ID theft problem."

Identity theft crime was No. 1 on the government's list of consumer frauds for 2002--for a third consecutive year. Fraud complaints jumped to 380,000 from 220,000 in 2001. In dollar losses, ID thefts accounted for $343 million in losses last year, compared with $160 million the year before.

The most common types of ID thefts that credit unions and their members encounter are new-account ID theft and account-takeover ID theft, Lindner says.

In the first, someone opens an account with the credit union and pretends to be someone else. The key to prevention in that situation is to "validate the person and determine if she is who she says she is," says Lindner.

In the second instance, a person steals mail to access the numbers of a deposit or checking account, switches addresses for those accounts, and sometimes even asks for additional cards for a "spouse." To prevent this type of ID theft, tell members to retrieve their incoming mail promptly from their mailbox and never mail financial information from their home mailbox. They also should shred old financial documents before discarding them.

During 2002, about 43% of about 380,000 complaints registered in a government database involved the theft of identity information. The database houses information collected by FTC, the Federal Bureau of Investigation (FBI), law enforcement agencies, and consumer groups.

Credit unions can educate their members about preventing ID theft. For more information, use the first Resource Link.

Resource Links

Federal Trade Commission statistics

CUs examined every two years under Arizona bill

PHOENIX (1/23/03)--The Arizona CU League supports a bill that would expand credit union examination cycles from every year to every two years if passed, Pat Bodnar, vice president of public affairs for the league, tells News Now.

The bill applies to all state-chartered credit unions, giving them parity with banks. Bodnar says it will not jeopardize credit unions' safety and soundness because the superintendent of banks can examine a credit union any time he wants.

"Credit unions do a call report every month, so the state banking department always has a financial picture of the credit union," she explains.

The league expects the bill to pass because it saves the superintendent's office money and credit unions time. Bodnar knows of no opposition to the measure.

Carbajal to receive Wegner individual award

MADISON, Wis. (1/23/03)--The National CU Foundation (NCUF) has selected Rufino Carbajal Jr., president of West Texas CU, El Paso, Texas, to receive this year's Herb Wegner Memorial Individual Achievement Award.

The award honors Carbajal's 26 years of work to improve the financial services available to the citizens of El Paso and Texas, many of them in the lower income and underserved community.

As a resource for the World Council of CUs Inc. (WOCCU), Carbajal hosted two interns from Honduras in 1995 through WOCCU's People to People program and traveled to Guatemala in 1996 on a two-week, technical-assistance assignment. He also testified before Congress on credit union efforts to serve the underserved.

Under his leadership, West Texas CU, formerly TSWAG FCU, grew from a one-person operation to a full-service institution with three locations, 34 employees, and more than $35 million in assets. It has introduced a pioneering risk-based-lending program, individual development accounts, low-cost wire transfers through WOCCU's international remittance network, IRNet, and an affordable housing program.

The credit union is a founding co-owner of the El Paso CU Affordable Housing LLC (AHCUSO), a national credit union model program funded partly by the NCUF and the Texas CU Foundation. In its first year, the El Paso AHCUSO has funded more than 24 affordable mortgages and counseled about 120 members, developed financial literacy curricula in English and Spanish, and translated the National Endowment for Financial Education's (NEFE's) High School Financial Planning Program into Spanish (with permission from NEFE).

"West Texas CU's impressive record of service to its members is testament to Mr. Carbajal's dedication to the organization which he serves," says Harold Feeney, Commissioner, Texas CU Department. "And it is evidence of his ability to address the concerns and needs of a diverse membership on a daily basis while nurturing a growing institution."

The Herb Wegner Memorial Awards represent the highest national honor available in the credit union movement and are named in honor of the late CUNA CEO. They recognize "innovative, creative, risk-taking" leadership in the spirit of Herb Wegner.

The award will be presented Feb. 23, at NCUF's Herb Wegner Memorial Awards Dinner during CUNA's Governmental Affairs Conference in Washington, D.C. For more information, contact Kris Hoffman, NCUF, at 608-231-4397 or khoffman@cuna.coop.

Resource Links

Herb Wegner Memorial Awards

CU involved in new IDA program in San Antonio

SAN ANTONIO (1/23/03)--Security Service FCU in San Antonio will act as a custodian for a new government individual development account (IDA) program that matches low-income families' savings four-to-one up to $750, reports the San Antonio Express-News (Jan. 18).

A low-income family that saves the maximum $750 would receive $3,000 in matching funds. The family would be required to spend the money on a college education, first-time home purchase, or starting a small business.

The money would be given directly to the mortgage company or college after the household workers completed 12 hours of education--half in financial literacy and half related to paying for college or a first-time mortgage.

Security Service FCU has $2.5 billion in assets.

Market News

MADISON, Wis. (1/23/03)

• Hispanics have edged past blacks to become the largest minority group in the U.S., according to new data released by the Census Bureau. The Hispanic population rose to 37 million in July 2001--up 4.7% from April 2000. Over the same period the black population rose 2% to 36.1 million, while the white non-Hispanic population increased just 0.3% to 196 million. Hispanics now make up almost 13% of the U.S. population, while blacks represent 12.7%. It was expected that Hispanics would at some point edge past blacks because their birth and immigration rates are higher, said Census Bureau demographer Roberto Ramirez. He predicts the trend will continue (The New York Times and Associated Press Jan. 22) ...

• Immigration and demographics are among the major factors that will sustain the housing market during the next five years, 10 years, or even 20 years, according to a panel of top real-estate economists who spoke Friday at Inman News' two-day summit (mbaa.org Jan. 21). Immigration and foreign-born households are very important to the housing markets in many gateway city areas, noted Nicolas Retsinas, director of Harvard University's Joint Center for Housing Studies. He said any large curtailment in immigration would have a huge effect on the housing market over the long term. John Tuccillo, former chief economist at the National Association of Realtors, said that job creation is the most important factor affecting the housing sector. He said there shouldn't be any crisis in subprime lending as long as the economy continues to create jobs ...

• Mortgage originations for one- to four-family homes will decline by nearly 39% to $1.77 trillion this year from an estimated $2.46 trillion in 2002, according to the latest forecast by the Mortgage Bankers Association (MBA). Mortgage originations will decline this year as interest rates increase during the second half of the year in response to a stronger economy, said MBA chief economist Doug Duncan. He predicts the 30-year, fixed-rate mortgage will edge up to 6.8% by the fourth quarter--still low enough to attract homebuyers but high enough to deter homeowners from refinancing. The refinancing share of overall mortgage originations is expected to decline to 25% by the fourth quarter from an expected 65% in the first quarter (mbaa.org Jan. 21) ...

• Mortgage applications edged down last week despite a dip in mortgage rates. The Mortgage Bankers Association's mortgage applications index fell by 4.7% to 1100.3 during the week ending Jan. 17, as both purchase and refinancing applications declined. Refinancings made up 75.7% of all applications, down slightly from 77.7% the previous week. The average contract interest rate for 30-year, fixed-rate mortgages fell to 5.74% from 5.84%, while the average contract interest rate for 15-year, fixed-rate mortgages dropped to 5.17% from 5.21%. The one-year, adjustable rate mortgage fell to a record low of 3.61% from 3.75% the previous week. Low mortgage rates have buoyed housing demand even as consumer confidence has been eroded by news of continued layoffs, a weak economy, and a possible war with Iraq (mbaa.org and Reuters Jan. 22) ...

• The nation's unemployment rate would be much higher if not for a 60% jump in the number of Americans drawing disability benefits since 1984, according to research conducted by economists at MIT and the University of Chicago. The unemployment rate, as a percentage of the labor force (those who are jobless and looking for work) was 6% in December, according to the Labor Department. The labor force doesn't include those who draw disability benefits. There were about 5.5 million adults drawing disability benefits as of December. If the combination of an easier disability application process, falling relative wages, and increasing health-care costs hadn't occurred, many low-skilled workers might still be in the labor force, said MIT economist David Autor and Chicago economist Mark Duggan, authors of the report. They predict another 40% surge in disability rolls over the next decade (CNN/Money Jan. 22) ...

• Eastman Kodak Co. said it plans to slash 1,800 to 2,200 more jobs this year, resulting in charges of $75 million to $100 million. The photography firm posted net income of $130 million for the fourth quarter, compared with a net loss of $206 million a year earlier. Overall, Kodak plans to cut 2,300 to 2,900 jobs in 2003, up from its original range of 500 to 700 layoffs in previously announced cuts (Dow Jones Newswires Jan. 22) ...

News of the Competition

MADISON, Wis. (1/23/03)

• The Office of the Comptroller of the Currency (OCC) has given First National Bank of Brookings, S.D., 90 days to exit the payday lending business and to set aside $6 million in restitution for credit-card customers harmed by its marketing practices. The OCC order said the regulator was prepared to charge First National with a range of deceptive practices, unsafe and unsound activities, and other violations. It orders the bank to sever all ties with Cash America, a Fort Worth, Texas, firm that offers pawn loans and check-cashing services. The order is the OCC's second recent enforcement action against a small national bank that partners with a national payday lender. The OCC last fall ordered Goleta National Bank of Goleta, Calif., and payday lender ACE Cash Express to sever their ties and pay $325,000 in fines (Dow Jones Newswires Jan. 22) ...

• FleetBoston Financial Corp. has filed a lawsuit against credit card firm Advanta Corp., claiming it is entitled to $508 million in tax deductions related to its acquisition of Advanta's consumer credit card business in 1998. The suit seeks indemnification from Advanta for any damage FleetBoston incurs by its lack of entitlement to the tax deductions. Fleet also seeks a judgment that it shouldn't have to repay Advanta for any damages Advanta incurs due to its receipt of a $47 million gain on the sale of a partnership asset. In the Securities and Exchange Commission filing, Advanta said it considers the lawsuit frivolous (Dow Jones Newswires and Reuters Jan. 22) ...

• BB&T Corp. of Winton-Salem, N.C., has agreed to acquire First Virginia Banks of Falls Church, Va. The $3.4 billion stock swap would give BB&T the 2nd-largest share of Virginia's banking market, putting it behind only Wachovia Corp. The deal, which is expected to close in the third quarter, would also make BB&T the 11th-largest banking company in the U.S. About 120 branches will be closed after the acquisition and another 16 to 20 branches will be sold to meet antitrust requirements, said BB&T Chairman and CEO John Allison. He said the acquisition will also result in some layoffs, although he did not provide an estimate (Associated Press Jan. 22) ...

• Fiserv Inc., a technology vendor based in Brookfield, Wis., is looking to Asia to take up the slack in business as the European outsourcing market continues to weaken, according to American Banker (Jan. 22). In its fourth-quarter earnings presentation, Fiserv said it has signed up CITIC Industrial Bank, China's 6th-largest bank, for core processing services. Fiserv took a $36 million hit from lost business in Europe during the quarter. The CITIC deal, which was signed jointly with International Business Machines Corp.'s China division, calls for Fiserv to license software to CITIC and perform consulting services. European banks have followed U.S. banks is cutting their technology budgets. However, despite the weak U.S. market, Fiserv still generates nearly all of its revenue in the U.S., said Peter Heckman, an analyst at Overland Park, Kan.-based Stifel, Nicolaus & Co. ...

• ATM manufacturers of expect a strong year in 2003, as many financial institutions replace or upgrade old machines--either to meet new technology requirements or to comply with regulatory requirements for serving the handicapped. This year all ATMs must be compliant with the Triple DES encryption standard. In addition, many banks are equipping their ATMs with image technology in anticipation of new laws giving check images the same legal weight as originals. Many ATM manufacturers also are switching to a Windows NT operating platform as International Business Machines (IBM) has discontinued the OS/2, the standard operating system of most bank ATMs. IBM will stop supporting OS/2 by yearend (American Banker Jan. 22) ...

Can you trust your living trust?

SAN FRANCISCO (1/23/03)--People who include living trusts in their estate plans may want to recheck the paperwork. Many living trusts--up to 75% by one expert's estimate--are put together incorrectly (CBS MarketWatch Oct 2).

An estate's assets must fund the trust, so everything must be re-titled to the plan's name. Any assets not titled to a living trust are subject to the costly and time-consuming probate process. But according to some financial planning experts, many attorneys fail to communicate this important piece of information and instead, simply leave it to their clients to complete.

Analysts estimate there are several million living trusts now in effect, but say about three-fourths of them won't work as intended. In order to ensure your living trust works for you, keep the following in mind:

• Stick to an attorney who has expertise in estate planning. Your lawyer may be an expert litigator, but that doesn't mean he or she is able to draft living trust documents correctly.
• Find an attorney who is willing to counsel you rather than simply pushing paper. If you're paying legal fees and only get complicated documents in return, it might be time to get a different lawyer.
• Discuss your living trust with your heirs to make sure your plans proceed as intended.

Wescom CU implements ATM deposit service at CU

MANHATTAN BEACH, Calif. (11/23/03)--Kinecta FCU in Manhattan Beach, Calif., now uses an ATM deposit-balancing service implemented by $2 billion asset Wescom CU in Pasadena, Calif. The service is offered through one of Wescom's subsidiaries, Wescom Resources Group (WRG).

Kinecta has a proprietary network of 45 deposit-taking ATMs. Wescom now processes deposits for all of the machines, which generate more than 30,000 deposits per month. The deposits are delivered to Wescom's data center, and all work is processed each business day. Adjustments to member accounts then are posted electronically.

"Our ATM network is expanding," says Kathleen Brehme, vice president of information technology for $3 billion asset Kinecta Federal. "It is critical to increase efficiency along our electronic channels. The WRG solution will allow us to do this."

Resource Links

Wescom CU

CU co-op named to Canberra fire-recovery task force

CANBERRA, Australia (1/23/03)--A credit union cooperative is one of the entities named to a new government task force to help Canberra, Australia's capital city, recover from devastation from bushfires, reports Canberra Times (Jan. 21).

The ASX ANZ CPS Credit Union Cooperative Ltd. is among the financial institutions on the task force established in the Australian Capital Territory to oversee the recovery. Thousands of people were evacuated from their homes by the fires, which began on Christmas Day.

People who lost homes and possessions during the fires the past month are receiving government aid packages, and institutions are waiving interest rates on emergency loans.

Firefighters battled fires, some of which they ruled as arson, not only in the Australian Capital Territory. They fought more than 100 blazes in New South Wales, which surrounds the territory (BBC News Jan. 17), and other fires the Blue Mountains west of Sydney (smh.com Dec, 25).

Smallest B.C. CU is first to surf at ATM

VANCOUVER, B.C. (1/23/03)--British Columbia's smallest credit union, Mount Lehman CU, has one-upped the big guys. Its 1,700 members are the first Canadians to be able to surf the Internet while withdrawing cash at the ATM, says Vancouver Sun (Jan. 16).

The credit union installed a new Windows-based ATM that shows the news, weather, sports, and online account information.

It plans to offer more services on the ATMs in the future.