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Filed on March 16, 2004, published the first business day after.
- Inside Washington
- Report: House leader wants to keep CUs' tax status
- Mica responds to FDIC's Powell (again) on CU taxes
- Treasury, CUNA staffers address issues
- RESPA changes delayed
- CU System briefs
- Missouri ID-theft bill carries life penalty
- Navy FCU reissues cards after retailer's breach
- Treasury official, Arizona CU teach literacy
- L.A. hopes new CU will thwart check cashers
- NYIB scholarship application deadlines near
- First SCC branch sees transaction volume soar
- Nine New Mexico CUs join sharing branching
- Education CU Council officers, scholarships named
- Alabama league partners to offer business services
- Fed holds rates steady
- Market News
- News of the Competition
- Online coupons save you hard cash
- CUs change names with help of Weber Marketing
- RDS announces vice president appointments
- Criminals access Canadians' credit reports
Inside Washington
- WASHINGTON (3/17/04)-- Securities and Exchange Commission (SEC) Chairman William H. Donaldson told House Financial Services Committee Chairman Michael G. Oxley (R-Ohio) that "the current state of affairs with respect to 529 plans is complicated and likely difficult for parents to understand." Donaldson reported the creation of the "Chairman's Task Force on College Savings Plans" at the SEC to study the issues more fully. Donaldson was resonding to a Feb. 4 letter from Oxley regarding state-sponsored tuition savings plans, also known as 529 plans. Since the tuition savings plans began in 1997, their value has grown quickly. In 2003, the total amount invested in the plans was $35 billion. The value of all plans is projected to reach $145 billion by 2008. Investments in the plans may be made either directly through a state trust or through financial intermediaries...
- WASHINGTON (3/17/04)--The House Financial Services Subcommittee on Housing and Community Opportunity, chaired by Rep. Bob Ney (R-Ohio), will hold a hearing entitled "Successful Homeownership and Renting through Housing Counseling," on Thursday. The hearing will focus on the importance of housing counseling and specifically on H.R. 3938, the Expanding Housing Opportunities through Education and Counseling Act of 2004, introduced by Ney on March 11. H.R. 3938 would enhance the counseling programs currently operating through the U.S. Dept. of Housing and Urban Development (HUD) and would foster other private counseling programs. John Weicher, assistant secretary, Housing/Federal Housing Commissioner for HUD is among those scheduled to testify...
- WASHINGTON (3/17/04)--Freddie Mac said it had hired Ralph Boyd Jr. as executive vice president and general counsel. The former head of the Justice Department's civil rights division will head Freddie's legal and government relations operations and report to chairman and chief executive Richard Syron, according to American Banker (March 16). Boyd will start his new job April 1, and succeeds Maud Mater, who was fired in August by Freddie's regulator for her involvement in the company's accounting scandal, which resulted in its restating three years of earnings...
Report: House leader wants to keep CUs' tax status
WASHINGTON (3/17/04)--According to yesterday's edition of the American Banker newspaper, House Majority Whip Roy Blunt (R-Mo.) sought to clarify comments he made in speech Wednesday about credit unions' tax status.
Apparently attendees at the America's Community Bankers government affairs conference heard Blunt say "he supported plans by House Ways and Means Committee Chairman Bill Thomas (R-Calif.) to study tax-exempt entities, including credit unions," reported the American Banker.
A spokesperson for Blunt said "the remarks were directed at tax-exempt charities--not credit unions," according to the report.
"There is some confusion out there that his comments represent his support for looking at the tax-exempt status of credit unions. That is just not the case," the spokesperson was quoted in the American Banker. "Congressman Blunt wants to keep them tax-exempt."
Blunt's clarification brought praise from credit union lobbyists.
"We're grateful that the Majority Whip has reaffirmed his long-held position on the tax-exempt status of credit unions," said CUNA's John McKechnie, senior vice president of government affairs. "Representative Blunt is a true friend to the more than 82 million American consumers who are credit union members."
In the meantime, no hearings have been scheduled on credit unions' tax status, but McKechnie pointed out that credit unions are taking nothing for granted.
"Messages from the credit union community this week are explaining to Congress that hearings on credit unions' tax status are not necessary or appropriate," he said. "Congressional supporters of credit unions strongly suggest that we try to avoid hearings--not because credit unions have anything to hide--but instead because there was such a negative tone set leading up to this discussion."
Mica responds to FDIC's Powell (again) on CU taxes
WASHINGTON (3/17/04)--CUNA President/CEO Dan Mica said it once and said it again yesterday--FDIC Chairman Donald Powell "continues to be out of step with the Bush Administration, and out of line as a regulator."
Mica took aim at comments Powell made yesterday during an Independent Community Bankers Association meeting in San Diego. Powell said credit unions should pay taxes because of the growing number of credit unions with more than $1 billion in assets, increased credit union advertising, and the additional tax revenue for the Federal Treasury.
Last week Powell made similar remarks to attendees of an America's Community Bankers meeting.
"It seems to us that the American public deserves something more than a cheerleader for the banking industry at the helm of the fund overseeing the safety of the public's savings in banks," observed Mica.
Mica pointed out that Powell likely does not know--or does not care to acknowledge--that not-for-profit credit unions return $5 to their members in lower costs for every $1 realized in tax savings. "And since that money goes directly to the credit union's members, it stays (and is spent again) in the community--an important distinction when more consumers must do business with giant out-of-state banking conglomerates," Mica explained.
Mica pointed out that Powell also seems to ignore the fact that more banks are converting to Subchapter S and Limited Liability Corp. (LLC) status, which allows them to bypass taxation at the corporate level and pass through the tax liability to their shareholders.
"In fact, CUNA estimates that if recent growth rates continue, the total foregone tax revenue due to Subchapter S election by banks will amount to approximately $13.5 billion over the next 10 years. By 2006, the annual foregone tax revenue from Sub S banks will exceed the foregone revenue from the credit union tax treatment," Mica concluded.
Treasury, CUNA staffers address issues
WASHINGTON (3/17/04)--CUNA staffers yesterday met with Assistant Secretary of the Treasury for Financial Institutions Wayne Abernathy and his staff to, among other things, again thank the agency for its support of credit unions' tax exempt status.
The meeting fell on the heels of letters from CUNA Chairman Dick Ensweiler and CUNA President/CEO Dan Mica, which expressed CUNA's appreciation for Treasury Secretary John Snow's remarks in favor of the credit union tax exemption. Snow made the comments to attendees of the 2004 CUNA Governmental Affairs Conference, as well as to banker groups.
"CUNA wants to continue our strong relationship with the Treasury and believe we had an important dialogue again today," said CUNA's General Counsel Eric Richard.
CUNA and Treasury staff also discussed reform of prompt corrective action, the CU Regulatory Improvements Act (CURIA, H.R. 3579), Regulation D issues, small business lending, remittances, and financial literacy. "We have a number of issues that involve the Treasury, and we look forward to continue working with them to further the agency's goals, as well as those of credit unions, in a number of areas," said Associate General Counsel Mary Dunn.
RESPA changes delayed
WASHINGTON (3/17/04)--The U.S. Dept. of Housing and Urban Development (HUD) said revisions to rules governed by the Real Estate Settlement Procedures Act (RESPA) would be delayed until mid-April.
HUD said it asked The Office of Management and Budget (OMB) to take an extra 30 days to review recommended changes to rules because of the complexity of the plan. HUD has not released specifics on its proposed overhaul.
On March 4, a letter from members of the House of Representatives let by Reps. Judy Biggert (R-Ill.) and Ruben Hinojosa (D-Texas) sent a letter to OMB urging the agency to reject the overhaul plan and return it to HUD for revisions, citing opposition from industry and consumer groups.
CUNA contends that major changes proposed to RESPA would be unduly burdensome for credit unions and with very few corresponding benefits for consumers.
"Although we agree that RESPA needs simplification, the changes originally proposed by HUD will not achieve this goal," explained CUNA Associate General Counsel Jeff Bloch. "Our hope is that HUD will review this further and then re-propose this rule for additional comment in light of the widespread opposition."
Use the resource link below to read CUNA comment letter to HUD on proposed changes to RESPA.
CU System briefs
- OKLAHOMA CITY, Okla. (3/17/04)--The Minnesota Item Processing Corp., a credit union service organization owned by the Minnesota CU Network, and SunCorp Corporate CU, Denver, have joined CheckClear LLC's Endpoint Exchange Network. The addition of Minnesota Item Processing Corp. allows 100 credit unions in the Federal Reserve's Ninth District to access electronic check image exchange, clearing and settlement to its members throughout Minnesota (Business Wire Feb. 25). SunCorp Corporate's membership in the check-imaging network gives its 500-plus member credit unions in 20 states to these services ...
- NASHVILLE, Tenn. (3/17/04)--Volunteer Corporate CU, Nashville, Tenn., is offering a free seminar series on balance sheets and strategic planning for credit union members through its Consulting Services Department. The department also has updated its website for Consulting Services ...
- DETROIT (3/17/04)--Downriver Community FCU, Ecorse, Mich., installed a 911 panic button on one of its ATMs. The device--which some say may be the first in the state--connects ATM users to police dispatchers through a two-way speaker that can be heard up to 30 feet away. The alert system works only if an ATM card is in the machine (Detroit Free Press March 16). President/CEO Michael Chmiel said that four robberies at that branch last year were enough to justify the 911 alert button's cost of $1,400 ...
- HARRISBURG, Pa. (3/17/04)--About 50 credit unions will receive rebates more than $7,000 for their participation in the Apollo Credit Card and Debit Card programs. The small-asset credit union cards program is offered by the Pennsylvania CU Association and the Illinois CU League Service Corp., according to Life is a Highway (March 16) ...
- RANCHO CORDOVA, Calif. (3/17/04)--Sheri Ledbetter, WesCorp's director of public affairs, was the guest speaker at the March 10 central division meeting of the California Financial Crimes Investigators Association. Ledbetter gave an overview of Check 21 legislation and how it might affect law enforcement and their investigations of financial crimes ...
- WASHINGTON (3/17/04)--Domain names with the .coop suffix that expired Jan. 30 were deleted Monday. However, that means credit unions and other cooperatives may be able to get their preferred name now that it is available, according to the DotCooperation LLC. For more information on expired or deleted domain names, check www.nic.coop ...
Missouri ID-theft bill carries life penalty
JEFFERSON CITY, Mo. (3/17/04)--Missouri Gov. Bob Holden is expected to sign a bill that would penalize the most serious identity theft offenders with life imprisonment.
The Missouri CU Association supported the bill, which passed the General Assembly March 4 with a vote of 126-3 (CourierNet March 12).
A sentence of 10 years to life would be applicable to the most serious cases of identity theft--those resulting in the theft of $100,000 or more in money, goods or services. Lesser offenses such as amounts as little as $500 could mean prison time, and smaller losses may fall into misdemeanor territory (American Banker March 16).
Amy McLard, vice president of public and legislative affairs for the Missouri CU Association, said the bill was a positive step. "(Identity theft) is a very big issue for our members," she told News Now. "No one should have to go through that."
She noted that higher penalties may be more of a deterrent to identity theft as well.
Missouri ranked 18th in the nation in 2002 with nearly 2,600 cases of identity theft.
State Rep. Jason Brown (R-Platte City), a victim of identity theft himself, authored the bill which aims at thefts that use stolen Social Security or driver's license numbers, bank account information, computer passwords, birth certificates, fingerprints and biometric data.
Navy FCU reissues cards after retailer's breach
NORFOLK, Va. (3/17/04)--Navy FCU froze 40,000 credit and debit card accounts held by its members and reissued them new plastic after a security breach at BJ's Wholesale Club compromised Visa and MasterCard accounts.
Navy Federal said it established new account numbers and issued replacement cards for members because of security issues (The Virginian-Pilot March 16). Navy Federal has 2.4 million members, of which two million have a credit or debit card or both, according to Loren Moeller, Navy Federal spokeswoman.
The warehouse-club chain has eight million members and 150 stores in the eastern U.S. It advised members to notify the card issuer if they find suspicious activity on their cards.
Treasury official, Arizona CU teach literacy
PHOENIX (3/17/04)--The U.S. Treasury's Deputy Assistant Secretary for Financial Education, Dan Iannicola Jr., joined Desert Schools FCU of Phoenix in teaching a high school class on budgeting and credit management last week.
Iannicola and Marsha Lunden, an executive with the credit union, taught the class at Metro Center Academy, a second-chance school that assists students ages 17-21 who have dropped out of high school to get a full high school diploma, according to States News Service (March 11).
"It's critical that we make financial education a priority," said Iannicola. "While financial education is very valuable for adults, it can have the greatest overall life impact on young people. Young people have not yet established bad spending patterns. Therefore, education can mold their habits more effectively than it can for adults," he added.
While in Arizona, Iannicola spoke at the Education Finance Council's annual meeting in Scottsdale about the need for pre-loan counseling and financial education for individuals pursuing a post-secondary education. He advised student lenders on the best ways to help high schools establish effective financial education programs.
He also met with the Arizona CU League, Arizona Saves, Jump$tart Coalition of Personal Finance, National Endowment for Financial Education, the University of Arizona Extension and Desert Schools FCU. They discussed ways to make it easier for individuals to use existing sources.
L.A. hopes new CU will thwart check cashers
PACOIMA, Calif. (3/17/04)--Roberto Barragan, director of the Valley Economic Development Center, believes that a new credit union in the area not only would serve the unbanked population but also give an alternative to the area's check-cashing stores, according to Los Angeles Daily News (March 13).
There are about seven check-cashing stores to every bank in Pacoima, Calif., which has a population of 200,000.
Barragan is committed to creating an alternative in the mostly Hispanic area with 20% of the population below the poverty line. He has the support of City Council President Alex Padilla to support a credit union that also would provide low-interest, small-business loans to the community.
The NCUA has not yet approved Barragan's business plan for the credit union, which already has generated an asset base of $350,000. Barragan said the regulator was concerned about the viability of a credit union that focused on small-business lending.
However, Wescom CU, a Pasadena-based consultant to the Valley Economic Development Center, is confident a community-based credit union will garner approval based on the previous successes of the development center.
An AARP study found a strong relationship between the location of payday lenders, and the ethnicity and income of the local community. Almost 60% of African-Americans, 49% of Latinos and 33% of Californians live within a mile of a payday lender. Of those, 42% have household incomes less than $25,000.
Even though Pacoima has two banks--Citibank and Wells Fargo--they act more like check-cashing and money-transfer services than banks. By offering the services without requiring bank accounts, the banks increase the divide between the banked and unbanked, according to Neal Dudovitz, executive director of Neighborhood Legal Services.
Dudovitz said people aren't encouraged to open accounts and therefore are kept out of the financial mainstream. Everyone in Pacoima should have a bank account, he noted.
The presence of a credit union would let Pacoima residents conduct financial transactions without driving several miles to deposit a check or access an ATM, says the article.
NYIB scholarship application deadlines near
MADISON, Wis. (3/17/04)--Deadlines are approaching for applications to several scholarship opportunities from the National Youth Involvement Board (NYIB).
Deadlines are May 10 for all scholarships except for the April 5 deadline for NYIB's Development Education Training Scholarship applications.
The scholarships are:
- NYIB Development Education (DE) Training Scholarship. Each year NYIB awards up to two scholarships to persons in the NYIB Network to attend the CU Development Education (DE) Training June 3-8 in Madison, Wis. The scholarship covers the event's registration fee, but not travel costs.
- The Robert Curry Scholarship. Awarded to one league liaison or state delegate within the NYIB Network, the scholarship covers lodging and registration to the NYIB Annual Conference Aug. 3-6 in Madison, Wis.
- Regional NYIB Scholarships. These are awarded to one NYIB volunteer in each NYIB region: West, Central and East. The scholarship covers registration to the NYIB Annual Conference.
- Top Classroom Presenter Scholarship. There is no application required. These are awarded each year to the top two persons in the NYIB Network reporting classroom presentations. The scholarship covers registration to the NYIB Annual Conference. Travel costs aren't included.
- World Council of CUs' Leadership Institute Scholarship. New this year, the scholarship covers registration for the World Council's Annual International Leadership Institute, which will be held in Nassau, the Bahamas, Aug. 1-4.
Nomination forms for Outstanding State Delegate of the Year Award and Outstanding Volunteer of the Year Award are also due May 10.
Use the resource link to NYIB's website for nomination and application forms, or contact a member of NYIB's Scholarship/Award Committee.
First SCC branch sees transaction volume soar
SOUTHFIELD, Mich. (3/17/04)--Chessie FCU, based in Cumberland, Md., has seen its transaction volume grow almost 700% in the four years since it opened the first Service Center Corp. (SCC) outlet in the nation in Frederick, Md.
Chessie's Frederick outlet allows it to perform national shared-branching transactions for other credit unions' members.
"Before opening our Frederick outlet, we processed fewer than 40 shared-branch transactions per day," says Chessie FCU CEO Richard "Doc" Daugherty. "Now we average more than 230 daily transactions, and that provides a lucrative source of income."
Chessie's success helped spur six credit unions in the mid-Atlantic region to open SCC outlets, also called CU Service Centers, during the past year. In February, Fairfax County FCU launched the first SCC outlet in Virginia.
"I couldn't believe it. The first day we opened the Fairfax outlet we processed three shared-branch transactions," said Fairfax County FCU CEO Joe Thomas. "With no signage or anything, we were already experiencing the benefits of signing with SCC. We broke even our first month, processing over 400 transactions, and it appears we'll double that number in March."
Thomas says it launched its service center "to serve other credit union members and keep our lobby busy during lag times. Since the outlet is located near many government offices, many travelers now use us as a resource."
SCC, based in Southfield, Mich., is a subsidiary of the CO-OP Network.
Nine New Mexico CUs join sharing branching
ALBUQUERQUE (3/17/04)--Nine New Mexico credit unions representing 191,500 members have joined the CU Service Center's shared branching network.
Credit union members can now access more than 1,300 shared credit union branches nationwide with the agreement.
According to the New Mexico CU League, the service already has helped many New Mexicans, including an elderly woman who requested $9,000 in travelers' checks from her credit union. The woman was going to visit her brother who was sick and didn't know how long she would be gone.
Credit union staff discovered that there were 16 branches within a 10-mile radius of her brother's house--including one on his street--allowing her to forego signing 210 travelers' checks and giving her the ability to conduct financial transactions while in a different location.
Education CU Council officers, scholarships named
TAMPA, Fla. (3/17/04)--The Education CU Council elected board officers during its 31st annual conference in Tampa, Fla., in February.
New board officers are:
- President: Constance Kennelly, Tulane-Loyola FCU, New Orleans;
- Vice president: Eva Chesley, Educational Systems Employees FCU, Bladensburg, Md.;
- Secretary: Steve Dahlstrom, Spokane Teachers CU, Liberty Lake, Wash.; and
- Treasurer: James Mattson, University of Michigan CU, Ann Arbor, Mich.
Newly elected board members are: Truman Baird, Oregon Community CU, Eugene, Ore.; Edward Enyedy, School Employees Lorain County CU, Elyria, Ohio; and Lynn Huether, Classroom Teachers FCU, Louisville, Ky. Continuing board members are Tony Budet, University FCU, Austin, Texas; and Eva Gaudio, St. Vrain Valley CU, Longmont, Colo.
The council also awarded two Memorial Scholarships to CUNA Management School for Gregory Hallman, K&E FCU, Jackson, Mich., and Kathryn Getz, Sweet Home FCU, Amherst, N.Y.
 |
| The Education CU Council's board for 2004 is, from left: Steve Dahlstrom, secretary; Jim Mattson, treasurer; Connie Kennelly, president; Eva Gaudio; Truman Baird; Lynn Huether; Tony Budet; Eva Chesley, vice president; and Ed Enyedy. (Photo provided by the Education CU Council) |
Alabama league partners to offer business services
BIRMINGHAM, Ala. (3/17/04)--CU Business Services (CUBS), owned by Alabama credit unions and the Alabama CU League, has partnered with PlatformOne to provide technology infrastructure and administrative services for small businesses through participating credit unions.
PlatformOne is a provider of human resources business process outsourcing services, an area experiencing explosive growth.
The announcement represents "an important step in the development of new business strategies for CUBS," says Mark Cooper, CUBS vice president. The partnership "enhances our ability to offer additional business services to our long-standing members and provides us the potential to enter new markets."
In addition to current credit union services provided, including training, merchant processing and lending financial services, CUBS' offerings will extend into small-business operations including those of a professional employer organization (PEO). The agreement offers human resources outsourcing services such as payroll and benefits administration, and finance and accounting outsourcing services such as billing, receivables, and financial reporting.
This means "credit unions will now be able to further serve their small business member/owners, many of whom are underserved by commercial banking entities," says Gary Wolter, president/CEO of the Alabama league and CUBS chairman. "Credit unions will now be able to receive vital assistance in the administration of their companies as an added service through their credit union membership."
The deal begins immediately. PlatformOne will manage and deliver the technology and administrative services while CUBS will market its services to affiliated credit unions and their members. CUBS will start to market PEO and related back-office administrative services to targeted credit unions in the state this year. Individual credit unions will market these services to their small-business members.
Fed holds rates steady
WASHINGTON, D.C. (3/17/04)--Federal Reserve policymakers left the target for the fed funds rate unchanged at a 46-year low of 1% yesterday and again promised to be "patient" in raising interest rates because the job market remains weak. The fed funds rate, an overnight bank loan rate, influences bank prime lending rates. Many consumer loan rates are in turn pegged to the prime.
In a closely watched statement accompanying the rate decision, the Fed slightly changed its stance on the labor market, saying, "Although job losses have slowed, new hiring has lagged." In a statement accompanying the Fed's Jan. 28 decision to keep rates steady, the Fed said hiring was "subdued," but that "other indicators suggest an improvement in the labor market."
The Fed also said economic output was "continuing to expand at a sold pace"--a little less upbeat than in January, when the Fed said economic activity was "expanding briskly." The Fed again said that the risk of inflation remains low, with the "upside" and "downside" risks to sustainable economic growth "roughly equal."
Analysts expected the Fed to keep rates on hold again after last week's report on February job growth. The Labor Department said Friday that the economy created only 21,000 jobs last month. The weak job market has depressed wage growth and helped keep inflation low. The Fed lowers the fed funds target when it wants to stimulate borrowing and boost the economy. It raises rates when it wants to curb economic growth and fight inflation.
Battling the effects of a recession and the terrorist attacks, the central bank repeatedly cut rates in 2001. The Fed added one rate cut a year in 2002 and 2003 amid slower-than-expected economic growth and a weak job market. The fed funds rate has been at 1% since last June (The Wall Street Journal Online and CNN/Money March 17).
Market News
MADISON, Wis. (3/17/04)
- The U.S. budget deficit stems almost entirely from tax cuts and spending increases rather than the lingering effects of the economic slowdown, according to an analysis by the nonpartisan Congressional Budget Office (The New York Times on the Web March 16). The CBO estimates that economic weakness accounts for just 6% of the budget shortfall, which is expected to hit a record $500 billion this year. The agency predicts that stronger economic growth will actually boost tax revenues in 2005 even as the deficit remains at a relatively high $374 billion. Bush administration officials don't dispute the CBO's basic conclusion, but still say stronger economic growth and spending constraints will lower the deficit within five years. President Bush and his advisers have repeatedly said that the soaring budget deficit reflects a series of shocks--including the recession, the Sept. 11, 2001 terrorist attacks, and the loss of investor confidence following a string of corporate scandals. The CBO report concludes that "cyclical" problems are just a tiny part of the overall budget problem ...
- U.S. companies' hiring plans have increased, according to the Employer Outlook Survey by Manpower International, a Milwaukee-based staffing firm. The poll found that 28% of employers plan to hire more workers during the second quarter--the third consecutive increase in hiring plans and the highest percentage since the first quarter of 2001. In another hopeful sign, employers' hiring plans were up in all of the 10 sectors that Manpower tracks. Just 6% of employers said they plan to cut staff--down from 13% in the previous quarter and 9% in the year-earlier period. The percentage of firms anticipating no change in hiring remained at a still-high 62%, compared with 61% in the first quarter and 63% a year earlier. Manpower CEO Jeffrey Joerres said it will take several more quarters of improvement in companies' business before they start to recruit new hires (CNN/Money and Reuters March 16) ...
- Secretary of State Colin Powell asked India Tuesday to open its markets to increased U.S. exports (Associated Press March 16). While he said the move wasn't a precondition for the continued outsourcing of U.S. jobs to India, he said more open trading policies could help "offset the kinds of losses that we get while outsourcing jobs to other parts of the world." In an effort to cut costs, companies from the U.S. and other Western countries have hired about 170,000 workers in India for such jobs as payroll accounting, telemarketing and customer support. Industry groups predict that number will reach 1.1 million by 2008 ...
- The Mortgage Bankers Association (MBA) has boosted its forecast for mortgage loan originations in 2004 to $2.5 trillion, from a previous forecast of $2 trillion (mbaa.org March 15). The trade group said it raised its forecast because continued low interest rates will prompt another record high in purchase mortgages this year along with a surprisingly strong refinancing market. "Some borrowers are responding to these rates by purchasing homes and others are making up for missed opportunities to refinance," said MBA Senior Vice President and Chief Economist Doug Duncan. Refinancings are expected to make up 46% of mortgage originations in 2004--compared with 66% in 2003 and 62% in 2002. Duncan noted that the job market hasn't been strong enough to drive up interest rates this year. The MBA predicts that the average 30-year, fixed-rate mortgage will dip to 5.4% in the second quarter, then increase slowly during the remainder of the year ...
- Housing starts declined 4% in February to a 1.855 million annual rate--the slowest pace since August, according to the Commerce Department. Strong rain contributed to a 1.6% drop in home construction in the South, which has about one-half of all home starts. Starts were also down in the large Western housing market, while construction increased in the Northeast and Midwest. According to Freddie Mac, the average 30-year, fixed-rate mortgage was 5.64% in February, but has since declined to 5.41%. While February housing starts were weaker than analysts expected, the overall level was still 13.1% higher than in February 2003. At February's pace, housing starts are still on pace to post the strongest gain since 1978. Residential construction accounts for 5% of the value of all goods and services produced in the U.S. Housing-related spending on goods such as furniture and appliances also contributes to economic growth (Bloomberg.com and Reuters March 16) ...
- Fannie Mae said its mortgage investment portfolio fell at a 6% annual rate to $882.1 billion in February, the fifth consecutive decline. Since peaking in September, Fannie's retained portfolio has shrunk by 3.8%. However, demand by other banks and investors for such assets remained strong. The value of the mortgage-backed securities Fannie guarantees for other investors surged at a 16.6% annual rate to $1.34 trillion in February. Fannie Mae is the second-largest financial institution in the U.S., behind only Citigroup (American Banker Online and The New York Times on the Web March 16) ...
News of the Competition
MADISON, Wis. (3/17/04)
- BNP Paribas SA, the largest bank in France, has agreed to acquire Community First Bankshares of Fargo, N.D. (Bloomberg.com March 16). BNP's BancWest Corp., the fifth-largest consumer bank in California, will pay $1.2 billion in cash for the acquisition. The company will gain 155 branches in 12 states, including Utah, Colorado, Arizona and Wyoming. Like the U.K.'s Royal Bank of Scotland Group and HSBC Holdings, Paris-based BNP is seeking to expand its consumer banking business in the U.S. as growth opportunities at home decline. BNP said the euro's advance against the U.S. dollar made the timing of the acquisition more favorable. During the past 12 months, the euro has gained 16% against the dollar ...
- Paris-based BNP's acquisition of Community First Bankshares adds to the most active first-half pace of acquisitions in the U.S. since 1998, when mergers formed Citigroup, Bank of America, Wells Fargo and Bank One Corp. (Bloomberg.com March 16). According to Bloomberg statistics, the BNP deal is the fifth acquisition of a U.S. bank this year worth more than $1 billion. So far this year, there have been $91.8 billion worth of U.S. bank acquisitions--led by J.P. Morgan Chase's $55 billion deal to acquire Bank One. During the first half of 2003, the total was $47.2 billion ...
- In the largest settlement in the fund industry's scandal so far, Bank of America and FleetBoston have agreed to pay $675 million to settlement allegations of improper mutual-fund trading (CNN/Money March 16). New York Attorney General Eliot Spitzer, whose office negotiated the settlement jointly with the Securities and Exchange Commission, said that Bank of America will pay $125 million in fines and $250 million in restitution, while FleetBoston will pay $70 million in fines and $70 million to reimburse investors. The two banks, which have agreed to merge, also said they would lower fund fees by $160 million over the next five years and make changes in their fund operations, including a board overhaul. Bank of America hopes to complete its acquisition of FleetBoston in early April ...
- Money manager MFS Investment Management announced Tuesday that it plans to eliminate brokerage commissions, which were used in exchange for free stock research (Reuters March 16). In February, the company paid $255 million in fines and restitution to settle civil fraud charges involving improper trading in mutual funds. In what it claims to be the most far-reaching reforms in the funds industry, MFS also said it will take "unprecedented" measures to improve transparency--including breaking down expenses for individual portfolios. MFS, which calls itself the oldest mutual fund company in the U.S., said it will increase disclosure of portfolio turnover and costs and expand disclosure of volume sales discounts. MFS is a unit of Canada's Sun Life Financial Inc. ...
- American Online has introduced a new last-minute bill payment service in an effort to differentiate itself from other Internet providers. AOL Bill Pay provides a single interface that links payers directly to the Web sites of more than 2,500 companies. Users see a list of their outstanding bills when they sign on to the free service. To differentiate it from other bill-payment services, AOL Bill Pay provides users with authenticated, color-coded e-mail bills and money-management tools, such as reminders about cellphone minutes and credit-card balance thresholds. The tool can also be configured to notify users of possible fraud, such as a large drop in an account balance or an unusually big credit-card transaction. The design of the service was based on the findings of a member survey, said Bill McIntosh, an executive director of personal finance at AOL. "They really liked the notion of paying on the same day, but had lots of other problems around trying to remember multiple user IDs and passwords," said McIntosh. AOL expects most of its 33 million subscribers to sign up for AOL Bill Pay, which is powered by software vendor Yodlee Inc. The service only includes firms that already let customers pay bills directly over the Web. Because it doesn't handle the actual payments, AOL won't be inserting itself in the transactions, said John Keeling, an executive director at AOL (The Wall Street Journal Online and American Banker Online March 16). ...
Online coupons save you hard cash
NEW YORK (3/17/04)--With a simple click, sizable savings at both traditional and online retailers are available to bargain-hunters who enjoy the speed of the Internet (MSNMoney.com March 3).
For decades, paper coupons--the savvy shopper's best friend--inspired brand loyalty and trips to the store. Today's online coupons allow you to search for the exact items or retailers you want.
The online coupon world is much smaller than the world of paper coupons, at just 0.2% of the 239 billion coupons issued last year, according to NCH Marketing Services. However, online coupon clickers redeem at a far higher rate than traditional coupons--7.5%, vs. the sub-2% rate of those in the local paper, according to Promo Magazine.
There are many discounts and services available at coupon sites all over the Internet, such as print-at-home coupons that require a quality printer, subscription services that may charge you for the chance to save money, paperless or U-pons for offline use that let you redeem online offers in brick-and-mortar grocery stores using the chain's preferred shopping card, or online coupon codes comprised of a combination of letters and numbers that unlock savings all over the Web.
You may pay a price for using online coupons--either in cash, depending on the type you use, or with your personal information. The sites that require you to register are the usual offenders, asking for name, e-mail address, and brands you favor. Figure out what your privacy is worth. If you're unwilling to pay in any way, consider using coupon codes and sites that don't require you to register.
CUs change names with help of Weber Marketing
SEATTLE (3/17/04)--Credit unions and one of the largest financial services data-processing companies used Seattle-based Weber Marketing Group in 2003 to help them change names and develop competitive brands.
Lockheed FCU, Burbank, Calif.; Mission FCU, San Diego; Utah First FCU, Salt Lake City; Community Resource CU, Baytown, Texas; USA FCU, San Diego; TruWest CU, Scottsdale, Ariz.; CoastHills FCU, Lompoc, Calif.; and KeyPoint FCU, Baton Rouge, La., all used the branding and marketing communications agency.
Credit unions ranged from billion-dollar asset credit unions such as Lockheed FCU and Mission FCU to small ones such as Utah First FCU and Community Resource CU.
Data-processing provider XP Systems also is a financial industry client of Weber Marketing Group.
RDS announces vice president appointments
INDIANAPOLIS (3/17/04)--re:Member Data Services (RDS) recently announced the promotions of three directors to vice president positions.
Kent Campbell moves to vice president of information technology (IT) from director of IT. Before joining RDS, he served as the director of information technology at Aprimo.
As vice president of client support, Crystal Yeagy will coordinate the customer service and operations departments.
In her role as vice president of sales and marketing, Kristi Lowell, who previously worked as vice president of sales and marketing at the Indiana Corporate FCU, will be responsible for the marketing and sales departments as well as the relationship managers.
Criminals access Canadians' credit reports
VANCOUVER, B.C. (3/17/04)--Criminals posing as lenders gained access to about 1,400 individuals' credit reports from Equifax Canada, according to the credit reporting agency (The Globe and Mail March 16).
The information accessed affects about 1,400 consumers primarily in British Columbia and Alberta, although other provinces such as Ontario may have some consumers impacted.
The imposters gained access to social insurance numbers, bank account numbers, credit histories, home addresses, job descriptions, and the names of spouses. Authorities say this is enough information to allow identity thieves to take over bank accounts, open new accounts in the stolen names, and impersonate individuals to obtain loans or credit cards.
Equifax Canada discovered the breach in February and began notifying the individuals whose reports were accessed.
The Royal Canadian Mounted Police could not say whether thieves have done anything yet with the information. In 2002, roughly 8,000 people in Canada filed ID theft complaints amounting to $5.3 million in losses.
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