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Filed on April 3, 2008, published the first business day after.
- Frank assures CUs on reg reform issue
- FOIA request seeks bankers' role in 'Blueprint'
- Senate tables mortgage debt forgiveness
- Rep. Waters offers two anti-foreclosure plans
- CU volunteers blanket Cherry Blossom Run
- Mica in The Hill: Doomsayers ignore history
- Inside Washington
- 90% of small businesses see opportunity in recession
- TJX Cos. settles with MasterCard
- CU’s members contacted by hoaxers posing as police
- Brennan named new CEO of Irish League of CUs
- BizKid$ participant to be honored at White House
- CO-OP: CUs should convert ACH to debit
- Boulder Municipal Employees FCU offers free WiFi access
- Missouri CUs OK dues schedule, meet legislators
- CU System briefs
- Corporate: Don’t compromise credit standards for recession
- Market News
- News of the Competition
- Regulatory expert: How NCUA safeguards your money
- Toolkit allows social network developers expand to mobile
Frank assures CUs on reg reform issue
WASHINGTON (4/3/08)--Credit unions received a welcome message from a key leader in Congress Wednesday regarding the U.S. Treasury Department's proposal for financial institution regulatory restructuring: In a paraphrase, Congress backs credit unions.
House Financial Services Committee Chairman Barney Frank (D-Mass.) introduced Credit Union National Association (CUNA) witness Harriet May at Wednesday's hearing on the Internet Gambling law. (See related News Now story, "CUNA: Internet gambling law's burdens need Hill's action.") May is CEO of GECU, El Paso, Tex., and a CUNA board member.
Frank then said to May, "Please tell my good friend and former colleague Mr. Mica not to worry about the Treasury proposal to eliminate credit unions. We would never do that. So please tell him not to worry about that."
Frank's comments came the same day an editorial in The Hillnewspaper took note of CUNA President Dan Mica's concern that the Paulson plan would eliminate the National Credit Union Administration (NCUA) and force consumers to pay more for less. "These are serious criticisms that Congress should meet with equal seriousness," the editorial asserted.
CUNA's Mica received nationwide press exposure when he fired off the first question at Treasury Secretary Henry Paulson's briefing Monday on the agency's regulatory restructuring blueprint.
Mica explained to Paulson that the Treasury proposal could result in the demise of credit unions as they function today.
Paulson explained details in the 212-page report and the thinking behind its development. A summary of the report was leaked to the media during the weekend.
FOIA request seeks bankers' role in 'Blueprint'
WASHINGTON (4/4/08)—The Credit Union National Association (CUNA) is seeking written information on what role bank trade associations may have attempted to take to influence the U.S. Treasury Department's recently unveiled Blueprint for a Modernized Financial Regulatory System.
Specifically, CUNA has filed a request under the Freedom of Information Act (FOIA) asking Treasury to disclose bankers' attempts to affect the Treasury's plan in ways intended to put credit unions out of business. The request was submitted on behalf of Credit Union Magazine, which intends to publish a story based on its findings.
The CUNA request covers but is not limited to information concerning the American Bankers Association, the Independent Community Bankers of America, and America's Community Bankers, which has now merged with the ABA.
"There can be no question that the information sought would contribute to the public's understanding of government operations and activities, permit the public to better petition the government to redress grievances, and is in the public interest," says the FOIA request.
"The Treasury's release of the Blueprint has been the subject of widespread reporting in the media, subject to widespread public outrage, and also subject to speculation regarding whether special interests influenced its development and writing," it adds.
The letter goes on to note the extensive media coverage of the impact that the Blueprint would have on America's credit unions and on speculation concerning special interest group influence on the Blueprint's formulation. The list includes: Wall Street Journal, The New York Times, the Associated Press, the Boston Globe,the Philadelphia Inquirer, Forbes, The Washington Post, Politico, Congress Daily, PBS's Nightly Business Report, and Bloomberg Television.
Senate tables mortgage debt forgiveness
WASHINGTON (4/4/08)--The Senate yesterday continued debate over legislation that would reduce uncertainty for those embroiled in the current housing market turmoil.
Yesterday's action on The Foreclosure Prevention Act of 2008 included consideration of a Credit Union National Association (CUNA) supported amendment by House Majority Whip Richard Durbin (D-Ill.) to minimize foreclosures by allowing bankruptcy judges to forgive mortgage debts.
During floor debate, Durbin blasted the mortgage banking industry for opposing his amendment, and said "credit unions support this amendment, because they never got into this crazy loan business." He also said the New York Times published an editorial in support of the amendment, which ultimately was tabled 58 to 36.
Meanwhile, CUNA was following a provision that would have provided $200 million for housing counselors to help families facing foreclosure. As part of a compromise, the funding level for the bill's financial counseling provisions was reduced from the level initially proposed.
The final outcome of that provision is uncertain, as several groups, including CUNA and the National Credit Union Foundation have an interest in maximizing financial counseling efforts.
"One of the virtues of a bi-cameral legislature is that a bill has to pass both the Senate and the House," said Donovan. "The financial counseling component of this legislation will be important for the House to consider when it takes up this legislation, and we encourage the House to increase the funding of these provisions."
Rep. Waters offers two anti-foreclosure plans
WASHINGTON (4/3/08)—Rep. Maxine Waters (D-Calif.), chairwoman of a House Financial Services subcommittee, this week introduced two bills intended to respond to the nation's growing foreclosure crisis.
The bills are The Foreclosure Prevention and Sound Mortgage Servicing Act (H.R. 5679) and The Neighborhood Rescue and Stabilization Act (NRSA, H.R. 5678).
H.R. 5679 would create a legal duty for mortgage servicers to engage in reasonable loss mitigation activities before foreclosing.
Waters, in a release, said she held off introducing the measure after a November 2007 hearing by her subcommittee on housing and community opportunity. The subcommittee heard complaints of homeowners, homeownership counselors, Legal Aid attorneys, and local government officials about the difficulties encountered in getting "prompt, reasonable action" by mortgage servicers.
"At that time, however, I was still prepared to withhold final judgment on industry efforts," Waters said, "I wanted to confirm whether the industry—as it repeatedly claimed—was still in the ramping-up phase of far more decisive and collective voluntary action by the mortgage servicers, especially through the much publicized and Bush Administration-endorsed HOPE NOW Alliance."
However, she called the results of those efforts "unimpressive."
Waters' second bill, NRSA, would give states and large cities the resources to save devastated neighborhoods by purchasing, rehabilitating, and reselling/re-renting foreclosed and abandoned properties.
Use the resource link below for more bill details.
CU volunteers blanket Cherry Blossom Run
WASHINGTON (4/4/08)—Credit Union National Association (CUNA) volunteers will be pulling together as a team this weekend to help approximately 12,000 runners stow and retrieve their valuables during the Credit Union Cherry Blossom 10-Mile Run on Sunday, April 6.
Credit Union Miracle Day, Inc. (CUMD), sponsor of the 36th annual Credit Union Cherry Blossom Ten Mile Run, has exceeded its 2008 goal of raising $1 million to benefit Children's Miracle Network and its 170 affiliated children's hospitals nationwide.
Of the 12,000 runners this weekend, hundreds are congressional staffers expected at the event, which is featured as part of the National Cherry Blossom Festival. Also, 4,800 credit union members are signed up to run.
CUNA will staff the "gear check" tent before, during and after the run. In addition, 50 credit unions are sending nearly 700 volunteers to help with the race.
Also providing volunteer services at the meet will be staff members from the National Credit Union Foundation, the American Association of Credit Union Leagues, and the Association of Corporate Credit Unions.
With this year's donation, CUMC will have contributed a total of $3.6 million to children's hospitals since its inception in 2001.
"We are very pleased with these results which clearly demonstrate our commitment to helping children who need it most to get quality medical treatment," said Juri Valdov, chairman of CUMD.
"It reconfirms the credit union philosophy of people helping people and the credit union cooperative spirit. Through our 130 partnering credit unions and business partners in 30 states, we were able to hit this mark," Valdov added. He is CEO of Northwest FCU, Herndon, Va.
Mica in The Hill: Doomsayers ignore history
WASHINGTON (4/4/08)—The country learned a lot about addressing economic woes as a result of the Great Depression that followed World War I and its aftermath and those lessons put the country in better stead each time it has faced such troubles, wrote Credit Union National Association (CUNA) President/CEO Dan Mica in his latest column for the Washington, D.C. publication The Hill .
Mica, writing his now-monthly "K Street Insiders" column, advised readers to remember that "the worst almost never happens." He said that is likely to be the case for the country's current economic downturn.
The CUNA leader acknowledged that there is cause for concern, but cautioned the Washington lobbying community not to overreact.
"This is the time for thoughtful leaders in all sectors to reach out, be creative and meet needs that address concerns of our clients, customers and constituents, while meeting the test of good public policy that helps resolve the issues at hand," he said.
A key to success in these times, he added, is "acting quickly when necessary, but also knowing when the problem will be solved not by legislation, but by American resilience."
"(W)e need to remember that the worst of the worst almost never happens. We have had only one Great Depression since World War I, and we have learned a lot since then about not letting things get that out of hand again," Mica said.
Since 1929, he reminded, the country has seen "a dozen recessions" and in each of these recessions, most Americans kept their jobs, Congress continued its work, the stock market remained open, the production of food, clothing, consumables and daily goods did not stop, and the regulators did not cease to regulate.
"There is much more reason to expect that this latest slowdown will be another recession rather than the second Great Depression.
"While doomsayers talk about a catastrophic meltdown or an economic disaster about to befall our country, if not the world, those of us on K Street need to take a deep breath and take stock of reality," Mica said.
Mica appears regularly as a guest columnist for The Hill's K Street Insiders feature. "K Street" refers to an area in Washington, D.C. known as a base for influential lobbyists, think tanks and advocacy groups stationed in the nation's capital.
Inside Washington
- WASHINGTON (4/4/08)--The Federal Deposit Insurance Corp. (FDIC) will likely supervise state-chartered banks, predicted FDIC Chairman Sheila Bair (American Banker April 3). The Treasury has released a plan calling for one agency to supervise the banks, and Bair told her staff in an e-mail that the FDIC would likely be assigned the responsibility ...
- WASHINGTON (4/4/08)--The Treasury Department's plan to revise financial regulation would allow commercial firms to own and run federally insured depository institutions, or FIDIs, and has sparked debate among bankers. Camden R. Fine, president/CEO of the Community Bankers of America, said the plan would put taxpayer dollars at risk (American Banker April 3). Fine's group has fought against combining banking with commerce and attempts by large retailers to own industrial loan companies (ILCs). Others see the plan as progressive. Former Utah Banking Commissioner George Sutton, who has represented companies trying to earn ILCs, said separating commerce and banking is an outdated idea. Dan Mica, president/CEO of the Credit Union National Association, garnered press earlier this week when he questioned the Treasury plan, stating that it would result in the demise of credit unions as they function today (News Now April 3) ...
90% of small businesses see opportunity in recession
MADISON, Wis. (4/4/08)--Despite the current U.S. economic downturn, small businesses are prepared to cope and even grow, according to Intuit Inc.'s "Get Back to Business" survey. Credit unions serving these businesses can grow along with them.
The survey indicates nine out of 10 small U.S. small business owners see opportunities in the current recession, and about 75% expect to grow (BusinessWire April 3).
The survey was recently conducted for Quickbooks, which makes small-business accounting software. Two-thirds of small business owners surveyed said they have experienced economic downturns in the past and will rely on their experience and passion to grow.
The majority of respondents indicated that customer retention was their No. 1 priority (63%). Their second priority was focusing on finances.
"Small business owners are extremely adaptable and nimble individuals. Faced with climbing gas prices and tightening credit standards, they continually prove to be the driving force of our economy," said Rick Jensen, senior vice president of Intuit's small business division. "It is their unrelenting passion for serving their customers that enables small businesses to innovate and ultimately succeed in the face of any challenge the market presents them."
What does this mean to credit unions?
"Clearly, credit unions share the same passion for serving their members as small businesses do," Jon Haller, Credit Union National Association director of corporate and market research, told News Now. "Therefore, we feel there are tremendous opportunities for credit unions to measure and identify their members' satisfaction and how members feel their credit union can better serve their needs."
Contrary to what may be the common wisdom, tight economic times are really a good time for keeping a finger on the pulse of what members may want and need from credit unions, Haller said.
"People will be seeking fewer loans, so there will be a smaller pie that credit unions have out there," Haller added. "So it's more important than ever for credit unions to identify and shore up any product- or service-related issues that may exist."
TJX Cos. settles with MasterCard
FRAMINGHAM, Mass. (4/4/08)--TJX Cos. Inc. has entered into an agreement with MasterCard International Inc. to settle a lawsuit related to the largest data breach in history. The TJX breach compromised as many as 94 million cards, including those issued by credit unions.
The agreement calls for MasterCard to make alternative recovery offers to its eligible card issuers who issued payment cards claimed as compromised in the breach. MasterCard will recommend that eligible MasterCard issuers accept such offers.
TJX will fund up to a maximum $24 million (pre-tax) in alternative recovery payments, depending on the extent of acceptance by card issuers. The settlement sets one condition: Issuers of at least 90% of the accounts claimed in the breach must accept the alternative recovery offers by May 2.
Accepting issuers will release and indemnify TJX and its acquiring banks on their claims, the claims of their affiliated issuers, and those of their sponsored issuers as MasterCard issuers related to the intrusion. That includes claims in putative class actions in federal and Massachusetts state courts.
The Framingham, Mass., discount retailer announced the settlement Wednesday in a press release (Business Wire April 2). The funds to pay the alternative recovery payment settlement were put aside in reserves that TJX established earlier for costs related to the computer intrusion.
TJX had already entered a separate settlement with Visa U.S.A. in December, where 95% of financial institutions eligible for U.S. Visa accounts potentially affected accepted an alternative recovery offer. That deal had required 80% of the institutions eligible to accept the alternative recovery offer (News Now Dec. 21).
Some credit unions and banks opted not to take the settlement in the Visa case and have separate lawsuits pending. For example, SELCO Community CU in Eugene, Ore., and AmeriFirst Bank in Alabama are appealing the dismissal of their class action lawsuit against the retailer (News Now March 26).
CU’s members contacted by hoaxers posing as police
ALBANY, N.Y. (4/4/08)--Several members of SEFCU, Albany, N.Y., have been contacted by scammers posing as police and claiming to be helping with the Hannaford Bros. security breach.
The scammers asked members for their name, address, home phone, and the last four digits of their Social Security number. Scammers told the members the information was needed to help those whose credit cards may have been compromised by the Hannaford security breach, Michael Castellana, SEFCU CEO, told News Now.
Hannaford Bros. is the Maine-based grocery chain that announced March 17 that it had found customers' card data had been pilfered while in transit during transactions from 300 grocery stores in the Northeast and Florida.
It warned its customers that follow-up phishing and vishing often occur after security breaches.
Several members called the $1.474 billion asset credit union, saying they had been contacted by individuals claiming to be police. "Of those who called, none had given out the information," Castellana said.
It is not known how many members were contacted by scammers, he added.
The credit union placed an alert on its website and is talking to members about the scam when they come into its branches. SEFCU also reminded members that it would not contact them in the manner the scammers have, Castellana said.
Castellana said it's unfortunate that credit union resources are tapped to address issues such as scams. He expects that it will only get worse. "There are a lot of people trying to get their hands on members' information, and it's up to us to stand in the way of the members and the bad guys," he said.
Brennan named new CEO of Irish League of CUs
DUBLIN, Ire. (4/4/08)--The Irish League of Credit Unions (ILCU) announced Thursday it has appointed Kieron Brennan as its new CEO.
Brennan, 48, of Dublin is a manager with POBAL, a not-for-profit company focused on community development and financing. The company manages programs on behalf of the Irish government and the European Union (Business and Finance Daily News Service.
He previously was manager, Ireland, at Triodos Bank, one of Europe's largest ethical banks; executive director of Clann Credo, a social investment fund; CEO of Partas, which supports the development of local enterprise and the social economy, and program evaluator with the European Social Fund Program evaluation unit.
The appointment was announced by Uel Adair, president of ILCU, who said Brennan's "unique financial and community development background has equipped him well to contribute to the ongoing development of the Irish credit union movement."
Brennan succeeds Liam O'Dwyer in the position.
BizKid$ participant to be honored at White House
WASHINGTON (4/4/08)--Biz Kid Raphael Spiro, founder of Bedsidebooks, is one of 10 youngsters in America who will receive presidential recognition for his social entrepreneurship.
The award will be presented at the White House on April 16th during Financial Literacy Month, according to the Washington Credit Union League.
Bedsidebooks is a program of student volunteers who collect, sort and deliver recycled books to needy members of the community.
BizKid$, a public television series that aims to teach youth about financial literacy, is garnering international attention (News Now Sept. 20).
The show has an underwriting partnership with JA Worldwide and America's Credit Unions. About 140 organizations, including credit unions and credit union leagues, provide funding for the show. About one-third of the show's total underwriting budget was provided by the National Credit Union Foundation.
BizKid$ has been positioned as family viewing in a number of markets, which encourages kids to watch the show with their parents.
CO-OP: CUs should convert ACH to debit
RANCHO CUCAMONGA, Calif. (4/4/08)--In a tight economy, credit unions should convert their cash, check and automated clearinghouse transactions to debit transactions to increase revenue, says James Hanisch of CO-OP Financial Services.
Credit unions can earn revenues on interchange fees when a transaction is made. "Generally, there is no interchange income to credit unions on cash or check transactions," Hanisch said. He is executive vice president of network operations and chief administration officer with CO-OP.
Debit transactions, both signature and personal identification number-based, earn revenue. The amount depends on the merchant, but the range is "realistically 25 cents to 40 cents on average" per transaction, he said.
"CO-OP for many years has encouraged credit unions to market to their members the benefits of using debit cards," he said.
Credit unions looking to convert their transactions to debit will have to invest in marketing and behavior change for their members. "They should encourage their members to pull cards instead of cash," he said.
Cash still accounts for roughly one-third of all transactions, Hanisch said. Any transaction with income is better than a transaction that doesn't generate income, he concluded.
Boulder Municipal Employees FCU offers free WiFi access
BOULDER, Colo. (4/3/08)--Boulder Municipal Employees FCU (BME FCU) is helping its members and community become more connected while also marketing itself to the community by offering free WiFi access in Boulder.
"It's pretty neat to be able to offer this service," BME CEO Ann Babiak told News Now. The network is a "great tool to attract the younger generation," Babiak said. "Our credit union membership is getting older. We need to attract younger members."
The network covers downtown Boulder and areas around the credit union's main office. Anyone can use the network, and because of web direction technology, users are automatically routed to a BME FCU home page. There, they can find information about local events, entertainment, restaurants--and how to become a credit union member.
The credit union plans to expand the network throughout the county and in nearby Lafayette by selling ads to small business that will appear on the home page. "We don't want to place limits on (the network)," Jeff Recker, BME vice president of information technology, told News Now. "We want to serve members and give back to the community."
The idea for the network came about one year ago. "We'd just put in our fifth ATM," Babiak said. "Jeff and I were talking about how strategically placed our ATMs are, and Jeff said we have great locations for WiFi and should utilize that," she said.
So far, the network has received "excellent" feedback. As of yesterday, BME had secured two other small businesses that wanted to place WiFi signals on their buildings.
Babiak also encouraged credit unions to "think outside the box." BME is one of the smallest credit unions in the state, and size shouldn't limit creativity, she said.
Recker noted that the network will continue to improve. "It's definitely a work in progress," he said.
Missouri CUs OK dues schedule, meet legislators
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The main focus of the Annual Advocacy and Business Meeting was to meet with state lawmakers, who learned how credit unions make the difference for Missouri consumers during the two-day event Monday and Tuesday.
More than 50 state legislators attended MCUA's legislative dinner reception Monday. The reception featured displays highlighting credit unions' involvement with specific financial education, consumer advocacy and charitable programs.
Credit union staff and volunteers were formally recognized Tuesday on the Missouri House and Senate floors at the Missouri Capitol. Attendees visited lawmakers, and delivered gifts and the credit union difference message.
The league also presented the 2007 Missouri credit union awards and recognized "You Make the Difference" advocacy award winners during another reception.
CU System briefs
- ARVADA, Colo. (4/4/08)--The time and place have changed for the funeral service for Bill Sterner, president of Elevations CU, Boulder, and chairman of the Credit Union Association of Colorado and of Credit Union Strategic Partners. Visitation will be at 2 p.m. Saturday at Crist Mortuary, 3395 Penrose Place, Boulder, CO 80301. The funeral service will be at 3:30 p.m. Saturday at 1st United Methodist Church, 1421 Spruce St., Boulder ...
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PORTLAND, Ore. (4/4/08)--Michael Cline, president/CEO of Oregonians CU based in Portland, has announced his retirement, effective March 31. Chuck Garner has been named new president/CEO in accordance with the credit union's succession plan. Cline, with 39 years' experience in financial institutions, led the $220 million asset since 2005 when Oregonians was created with the merger of three credit unions: Oregon Central, Oregonian Federal, and Mt. View Federal. He had served as Oregon Central CU since 2001. Garner had been executive vice president of Oregonians CU since 2005 after serving as CEO of Oregonian Federal since 1981. He has worked in financial services since 1973. Oregonians CU has six branches in the Portland area, Eugene and Prineville. It has more than 30,000 members and serves almost 3,000 select employer groups ...
- HARRISBURG, Pa., and PHILADELPHIA (4/4/08)--Philadelphia FCU has been designated as a Small Business Administration (SBA) Guaranteed Lender in Eastern Pennsylvania, says the Pennsylvania Credit Union Association (Life is a Highway April 3). "In this type of economic climate, small business owners need access to capital to start their businesses and keep them growing," said David Dickson, SBA district director, during a visit to the credit union's Operations Center. "SBA guaranteed loan programs help keep those lifelines open and I am happy that PFCU is joining us in those efforts." Accompanying him on the visit was Michael Kane, business development specialist with SBA. They presented a plaque to credit union President/CEO James McAneney and Vice President of Lending Claire Ippoliti ...
Corporate: Don’t compromise credit standards for recession
DALLAS (4/4/08)--There is a 50% chance the U.S. will experience at least one quarter of negative growth, and a 40% chance the country will have two consecutive quarters of contraction, according to Brian Turner, Southwest Corporate CU manager of advisory services.
Turner commented on Federal Reserve Chairman Ben Bernanke's message Wednesday that the U.S. economy could fall into a recession.
A recession is no longer two consecutive quarters of contraction, according to some financial analysts, Turner noted. Instead they correlate a recession to any time there is a slowdown in growth, while to others, "a slowdown is when a neighbor loses a job, a recession is when you lose yours," he added (LoneStar Leaguer April 3).
"The nation's economy is very diverse geographically," Tuner said. "That separation traditionally runs between the Coastal and Upper Midwestern areas and the rest of the country. Over the past two decades, the former has seen home valuations appreciate at a rate equal to at least 10 times the rate of inflation. They have a higher percentage of service-based employment, and as a result, much higher wages and labor costs.
"The rest of the country, still not immune from the cyclical downturn, is being impacted far less due to its diverse industry, more modest incomes and reasonable home values," Turner added.
Credit unions must be as proactive as possible in their balance sheet management by keeping a proper mix within their earnings-asset portfolio between loans and investment assets, Turner said.
"Credit unions must not compromise their credit standards to pursue volumes of higher rates--that would be a short-term Band-Aid," he said. "Credit unions have to be very conscientious in their pricing to minimize long-term costs of funds. Having to offer premium certificate rates to attract liquidity not only compromises long-term earning streams, it also adversely impacts the marketplace that they share."
Market News
MADISON, Wis. (4/4/08)
- Consumer delinquencies in the fourth quarter rose to the highest level in 15 years, and they will continue to increase during the first half of this year as consumers face "stubbornly high" food and gasoline prices, according to a report by the American Bankers Association (ABA). The delinquency rate on eight types of loans jumped 21 basis points to 2.65% of all accounts during the quarter--the highest level since the first quarter of 1992. "The rise in consumer-credit delinquencies is consistent with a rapidly slowing economy," said ABA Chief Economist James Chessen. He said the overall increase in the delinquency rate largely reflects late payments on auto loans. The delinquency rate for direct auto loans jumped to 1.9% from 1.81%. The delinquency rate for home-equity loans rose to 2.39% from 2.28%, while the delinquency rate for home-equity-lines-of-credit rose 0.12 percentage points to 0.96% (Dow Jones Newswires and Bloomberg.com April 3) ...
- Home prices declined in 21 cities during January, as banks sold off foreclosed homes at bargain prices, according to a report by Radar Logic Inc. Price declines were led by Sacramento, where the price per square foot tumbled 28% from a year earlier to $166, and by Las Vegas, where the price per square foot plunged 25% to $137. San Diego saw a 21% decline, while Los Angeles experienced a 17% drop. "Like homebuilders who feel pressure to get rid of inventory quickly, many banks and lenders experience the same pressure when dealing with homes from foreclosure" and sell them at below-market prices, said the report. There were two bright spots nationwide. Prices in Charlotte, N.C., rose 3.9%, while New York saw a 2% price gain (Bloomberg.com April 3) ...
- Falling home prices are affecting the job market as people find it harder to accept new jobs in other regions when they can't sell their homes. No government agency tracts the data specifically for job moves. However, the number of people moving across state lines for all reasons plunged by 27% in 2007--after rising by nearly that percentage during each of the previous three years, according to Census Bureau data. Interstate migration tumbled to 1.6 million people last year--from 2.2 million in 2006. A decline in worker mobility made a large contribution to that drop, said Moody's Economy.com Chief Economist Mark Zandi. He noted that while it's "still a historically high number," the recent slowdown in the economy since midyear 2007 could send domestic migration down to "a record low in 2008." (The New York Times April 3) ...
- The number of people filing first-time claims for unemployment benefits jumped last week to the highest level since just after Hurricane Katrina slammed into the Gulf Coast in September 2005. Initial jobless claims surged by 38,000 during the week ending March 29 to 407,000, the Labor Department reported Thursday. The four-week moving average, which smoothes out weekly volatility, jumped by 15,750 to 374,500. Continuing claims--the number of people still on the benefit rolls after an initial week of aid-- surged by 97,000 during the week ended March 22 to 2.937 million--the highest level since July 2004 (Bloomberg.com April 3) ...
- The service sector continued to contract in March. The Institute for Supply Management's non-manufacturing index, which includes banks, retailers, and other service providers, edged up to 49.6--from 49.3 in February but still below the 50 level that indicates growth. The index has remained below that level for the past three months. Despite the slowdown, purchasing managers remain worried about higher prices. Members' comments "reflect concern about rising fuel and energy costs and the impact they are having on commodity prices," said Anthony Nieves, chairman of the institute's non-manufacturing business survey committee. The price index jumped to 70.8 in March from 67.9 the previous month. Both new orders and export orders increased last month, while employment continued to contract (Associated Press via Yahoo! News April 3) ...
News of the Competition
MADISON, Wis. (4/4/08)
- Freddie Mac, Fannie Mae and the Federal Home Loan banks have become the main mortgage providers, as private financing sources have retreated. They provided 90% of the financing for new mortgages at year-end 2007, according to the Office of Federal Housing Enterprise Oversight. Fannie and Freddie provide financing by purchasing mortgages and packaging them into securities. The two government-sponsored enterprises accounted for a record-high 75% of new mortgage financing at the end of last year--twice the percentage they held at the end of 2006. The Home Loan banks lend funds to member institutions against mortgage collateral. They made $875 billion worth of such loans last year--up 36% from 2006 (FT.com April 3) ...
- Two more student-loan providers have exited the market. NorthStar Education Finance, one of the largest originators of government-backed student loans in the U.S., said it will halt such lending (The Wall Street Journal Online April 3). The credit crunch has made it extremely difficult to market securities backed by student loans. Including NorthStar, 31 lenders responsible for 10% of new loan volume have stopped participating in the Federal Family Education Loan program. In other news, CIT Group announced Thursday that it will stop making new student loans (Reuters via Yahoo! News April 3). CIT entered the student-loan business in 2005 when it acquired Student Loan Xpress. However, the business became more difficult, as the asset-backed market stalled and new federal legislation made student lending less profitable ...
- An in-depth investigation of Countrywide Financial Corp.'s mortgage-processing systems by bankruptcy investigators has been authorized by a federal judge. The Justice Department's office of the U.S. Trustee is seeking evidence that the mortgage lender systematically abused borrowers involved in bankruptcy proceedings. Countrywide argued that the office had no authority to investigate the company. The office claimed it needed to investigate claims that the firm inflated mortgage payments with improper fees and ignored court orders. Judge Thomas Agresti of the U.S. Bankruptcy Court in Pittsburgh ruled that the Trustee's office had found "a common thread of potential wrongdoing" in some bankruptcy cases involving Countrywide (The Wall Street Journal Online April 3) ...
- Washington must increase its regulation of Wall Street to keep other banks from needing rescues similar to the Bear Stearns rescue by the central bank, said Federal Reserve Bank of New York President Timothy F. Geithner. "We judged that a sudden, disorderly failure of Bear would have brought with it unpredictable but severe consequences for the functioning of the broader financial system and the broader economy," said Geithner in Congressional testimony. "Absent a forceful policy response, the consequences would be lower incomes for working families, higher borrowing costs for housing, education, and the expenses of everyday life, lower value of retirement savings, and rising unemployment," added Geithner (The New York Times April 3) ...
- Wachovia Corp. is considering halting its Pick-A-Payment mortgage loans in 17 counties in California that have been socked by rising foreclosures and declining home prices. Critics say the loans, which offer clients four different payment options every month, carry high fees and can prompt increases in loan balances. Wachovia acquired the loan product when it bought Golden West Financial Corp. in 2006 (Associated Press via The Wall Street Journal Online April 3) ...
- Merrill Lynch, which has been hit with big losses on mortgages and other assets, plans to slash 10% to 15% of its non-broker workforce in May, CNBC reported yesterday. The layoffs could range from 4,000 to 7,000 employees. Merrill Chief Executive John Thain is expected to review the structure of the workforce by the end of this month (Reuters via Yahoo! News April 3) ...
Regulatory expert: How NCUA safeguards your money
WASHINGTON (4/4/08)--How safe is your money when you deposit it at the credit union? National Credit Union Administration (NCUA) Vice Chairman Rodney Hood explains the ins and outs of deposit insurance and what it means for you.
Home & Family Finance airs Sundays at 3 p.m. EDT on the Radio America Network. The one-hour program devoted to consumer finance issues is brought to you by America's credit unions and their 90 million members, and is presented by CO-OP Network.
The Credit Union National Association (CUNA) and Radio America are podcasting Home & Family Finance through iTunes, Podcast Alley, Odeo, and other popular podcast library sites, as well as on Radio America and CUNA's websites.
Sunday's show, which you also can hear later via the Internet, features Paul Berry, Washington, D.C., journalist and broadcaster, discussing these topics with special guests:
- "How Will You Live When You're Old: Housing Alternatives for an Aging America," with Anne Sweaney, Ph.D., professor and head, Department of Housing and Consumer Economics, College of Family and Consumer Sciences, University of Georgia, Athens, Ga.;
- "Is Your Money Safe: Deposit Insurance," with Rodney Hood, vice chairman, NCUA, Alexandria, Va.;
- "Economic Stimulus Package: How Much Money Will You Get and What Do You Do to Get It?" with Barbara Speedy, AARP, Washington, D.C.;
- "Get Better Mileage From Your Fuel Dollars--Listener Tip of the Month," with Susan Tiffany, director of personal finance information for adults, CUNA, Madison, Wis.; and
- Listener Q&A.
Home & Family Finance is a resource center for personal finance information at CUNA. The radio show is sponsored by CO-OP Network, the national credit union ATM network; Cabot Creamery Cooperative, makers of cheddar cheese; Visa; and WesCorp. For more information, read "Totaling It Up: The True Cost to Drive Your Car" in Home & Family Finance Resource Center.
Toolkit allows social network developers expand to mobile
LAS VEGAS (4/4/08)--Credit unions looking to reach younger generations through social networking applications, such as Facebook, can expand their web applications to mobile devices with a toolkit from Frengo Corp.
Frengo, a provider of social mobile services (SMS), announced Wednesday it has released its OpenSocial Mobile Toolkit. The kit is a platform that allows developers for social networks to extend their Web-based applications to mobile devices.
Mobile phones are a central component of social networking, keeping members of online communities connected. Teens and young adults have shown a strong demand for mobile networks to stay in touch with their social circle, Frengo said.
OpenSocial Mobile Toolkit's platform supports all major U.S. carriers and most global mobile carriers. It can reach more than one billion phones worldwide, the company said.
The toolkit includes SMS alerts, notifications and mobile web services--including wireless application protocol (WAP) hosting, and handset recognition and transcoding. Frengo provides photo and image handling from the mobile handset, so users can send and share pictures on their social networks.
Several credit unions, such as Christian Financial CU, Roseville, Mich., and Piedmont CU, Danville, Va., have begun using applications in Facebook to reach younger members. The credit unions recently deployed MyMoney, a Fiserv product that allows members to access their accounts online through Facebook (News Now March 24).
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