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Filed on April 9, 2009, published the first business day after.
- NEW: NCUSIF accounting issues again clarified for examiners
- More accounting guidance sent to NCUA examiners
- CU comment wanted on operating fee plan
- Inside Washington
- Michigan fraudster pretending to be CU is closed
- Central States assigned receiver, drops suit
- Kansas governor signs membership act
- WesCorp subs annual meeting, forums with town halls
- WSJ: Bank’s card fee hike prompts move to CU
- PCUA: REAL Solutions may complement Better Choice program
- CUs can offer better rates than banks on auto loans, savings
- Huffington Post columnist got loan at CU
- NCUF receives $100,000 from Premier Club supporter
- Wharton, Digital FCU launch custom international student loans
- CU System briefs
- Market News
- News of the Competition
- Radio guest offers small biz start-up tips
- iPay Technologies offers new business bill-pay
NEW: NCUSIF accounting issues again clarified for examiners
WASHINGTON (4/0/09, UPDATED 12:10 p.m. ET)—National Credit Union Administration (NCUA) examiners received additional clarification today regarding credit unions' flexibility in booking the National Credit Union Share Insurance Fund (NCUSIF) deposit impairment, according to NCUA.
The agency wants to ensure that its field staff is consistent with advice to credit unions that they have some flexibility in deciding whether to book the impairment of the NCUSIF deposit on their March 31 statements.
The newest guidance addresses the recently release Accounting Bulletin (AB 09-02) and subsequent memo to field staff on accounting for the insurance costs associated with NCUA Corporate Stabilization Plan.
According to Mary Dunn, Credit Union National Association (CUNA) deputy general counsel, the newest communication clarifies that for any credit union using the accrual basis of accounting, examiners should not take exception with either of the following decisions:
- If the credit union records the deposit impairment and premium expense consistent with the guidance in AB 09-2; or
- If the credit union accounts for the deposit impairment and premium expense (including not recording them at all) in accordance with written guidance from a licensed practitioner that states the guidance is consistent with generally accepted accounting principles—or GAAP.
Even if a credit union delays booking the impairment of the NCUSIF deposit without guidance from a licensed practitioner, Dunn said Thursday, the NCUA has indicated that examiners are directed not to take harsh action.
They should instead note such action as an exception under "Informal Discussion Item" or at most an "Examiner's Finding" on the credit union's examination report.
CUNA will continue to work with the NCUA as corporate credit union issues continue to develop.
More accounting guidance sent to NCUA examiners
WASHINGTON (4/10/09)—National Credit Union Administration (NCUA) examiners received additional clarification today regarding credit unions' flexibility in booking the National Credit Union Share Insurance Fund (NCUSIF) deposit impairment, according to NCUA.
The agency wants to ensure that its field staff is consistent with advice to credit unions that they have some flexibility in deciding whether to book the impairment of the NCUSIF deposit on their March 31 statements.
The newest guidance addresses the recently released Accounting Bulletin (AB 09-02) and subsequent memo to field staff on accounting for the insurance costs associated with NCUA Corporate Stabilization Plan.
According to Mary Dunn, Credit Union National Association (CUNA) deputy general counsel, the newest communication clarifies that for any credit union using the accrual basis of accounting, examiners should not take exception with either of the following decisions:
- If the credit union records the deposit impairment and premium expense consistent with the guidance in AB 09-2; or
- If the credit union accounts for the deposit impairment and premium expense (including not recording them at all) in accordance with written guidance from a licensed practitioner that states the guidance is consistent with generally accepted accounting principles—or GAAP.
Even if a credit union delays booking the impairment of the NCUSIF deposit without guidance from a licensed practitioner, Dunn said Thursday, the NCUA has indicated that examiners are directed not to take harsh action.
They should instead note such action as an exception under "Informal Discussion Item" or at most an "Examiner's Finding" on the credit union's examination report.
CUNA will continue to work with the NCUA as corporate credit union issues continue to develop.
CU comment wanted on operating fee plan
WASHINGTON (4/10/09)—The National Credit Union Administration's (NCUA) plan to exclude investments in CU SIP or CU HARP from a credit union's calculation of its operating fee is intended to encourage investment in those programs. The Credit Union National Association (CUNA) is asking credit unions to comment on whether there might be any hidden drawbacks to the proposal.
The Federal Credit Union Act requires a federal credit union to pay an annual operating fee to the NCUA, but the agency has discretion in defining how the fee is determined. Under the NCUA's current formula, there is a direct correlation between the amount of a credit union's investments and its operating fee.
The NCUA established CU SIP, or the Credit Union System Investment Program (CU SIP), and CU HARP, or the Credit Union Homeowners Affordability Relief Program, late last year as part of its effort to stabilize the corporate credit union system.
Under CU SIP, credit unions borrow from the Central Liquidity Facility (CLF) and then invest those proceeds in a corporate credit union. Under CU HARP, credit unions borrow from the CLF and then invest those proceeds in a two-year guaranteed CU HARP note issued by a corporate credit union. CU HARP funds are used to modify mortgages at risk of default.
The NCUA has encouraged credit unions to participate in both CU SIP and CU HARP. However, the agency said in March it is concerned that since investments in both these programs result in increased operating fees, some credit unions will refrain from participating.
The agency will accept comments on its proposal until May 4. CUNA requests credit union comment by April 21.
In addition to identifying any unintended consequences that could occur under the proposal, CUNA also asks for credit union comment on any other changes that could help increase CU SIP and CU HARP participation.
Use the resource link to read the CUNA comment call.
Inside Washington
- WASHINGTON (4/10/09)--Evidence of Treasury's success or failure to help solve the financial crisis is mixed, according to Elizabeth Warren, chair of the Congressional Oversight Panel. The panel has released its April Oversight Report, "Assessing Troubled Asset Relief Program (TARP) Strategy." The report comes out six months after TARP was created under the Emergency Economic Stabilization Act of 2008. Treasury has spent or committed $590.4 billion in TARP funds in the past six months, and has relied on the Federal Reserve's balance sheet--which has expanded by more than $1 trillion, the report said. The Treasury's outlook on the crisis focuses on banks' problems as temporary--and fails to acknowledge that the crisis may be deeper, Warren said. "Treasury's efforts to date could be enough, but we will continue to press them," she said ...
- WASHINGTON (4/10/09)--The Obama administration is encouraging large investment companies to establish bailout funds--similar to war bonds, which were created during World War I to help soldiers (The New York Times April 9). The theory behind the bailout funds is that they would purchase troubled securities from banks, helping lenders make loans to stabilize the economy. The funds could eventually be sold to garner a profit. However, analysts say investors could lose money if banks' assets aren't worth as much as investors thought. The funds, which are currently under discussion, would not be created for several months if the plans are approved ...
- WASHINGTON (4/10/09)--The banking industry is in better shape than some think, according to federal examiners who spent the last eight weeks stress-testing institutions to see how they would fare if the recession gets worse (The New York Times April 9). Though some banks are holding up in the tests--regulators say 19 of the banks being examined will pass--the nation's largest lenders may need a bailout. Citigroup, JPMorgan Chase and others are expected to report their first-quarter results soon. Though the results could indicate that the banks are bouncing back, the banks also could report large losses on real estate and corporate loans, and credit cards ...
- WASHINGTON (4/10/09)--The Federal Deposit Insurance Corp. (FDIC) Thursday was scheduled to offer a second conference all for investors interested in participating in its Legacy Loans program (American Banker April 9). The first call attracted 2,700 participants. The Legacy Loans Program aims to attract private capital through an FDIC debt guarantee and Treasury equity co-investment ...
Michigan fraudster pretending to be CU is closed
LANSING, Mich. (4/10/09)—The Michigan Office of Financial and Insurance Regulation (OFIR) has slapped a cease-and-desist order on an entity claiming to be a Pennsylvania-based credit union, but which the regulator believes to be a bad actor stealing both money and identities.
OFIR alleges that "Firststar CU" is a fraudulent financial institution, which advertised in Michigan newspapers and encouraged customers to apply for loans by providing upfront payments and personal information. It also advertised via a website, which was shut down after OFIR contacted the Web host.
The state regulator urged consumers to have personal contact with a financial institution before entering into a business contract. It also recommended that consumers with questions could verify the identity of credit unions, banks and thrifts, through state or federal regulators.
The Firststar case represents the second time in less than a month that Michigan's credit union regulator has issued a cease-and-desist order against a fake online credit union. In March, OFIR discovered a bogus credit union called Communal CU of Dearborn after consumers complained about its website.
OFIR said that scam artists were promoting the fake credit union on the Internet to consumers looking for a break on a loan or wanting to refinance their mortgage. Consumers told OFIR they were asked to provide two pay stubs, Social Security numbers and bank account numbers, information that could be used for identity theft and unauthorized access to financial and card accounts.
Central States assigned receiver, drops suit
MILWAUKEE, Wis. (4/10/09)--A Milwaukee judge Tuesday appointed Milwaukee attorney Michael Polsky as receiver to oversee the liquidation of Central States Mortgage Co., and Central States' parent company dropped its $15 million lawsuit against the company's founder.
The Wauwatosa, Wis.-based mortgage company, which was 70% owned by credit unions, closed on March 9 and filed for receivership March 27 in Milwaukee County Circuit Court. Its parent company, CSMC Ind., had asked the court to appoint another Milwaukee attorney, Philip Ostroski, as receiver (Milwaukee Journal Sentinel April 7).
CSMC filed a notice Tuesday it was dropping its racketeering lawsuit against founder and former CEO Richard Jungen and four other former executives. The company's attorney, David Meany, said Wednesday the action was dropped for now to enable the receivership to proceed.
The lawsuit had alleged that Jungen and others used another business called Interim Funding to funnel bad mortgages to Central States, causing a $15 million loss.
The dismissal motion was filed "without prejudice," which means CSMC could revive the matter during the receivership case (The Business Journal of Milwaukee April 8).
A receivership is a state court proceeding that allows the liquidation of a company in a manner similar to a federal bankruptcy.
Kansas governor signs membership act
TOPEKA, Kan. (4/10/09)--Kansas Gov. Kathleen Sebelius Wednesday signed into law S.B. 72, which clarifies state credit union membership eligibility components.
The bill clarifies that eligibility components--such as family members and volunteers--are protected. These components were only referenced in the grandfathered portion of the statute, and until the act was enacted, it wasn't clear whether they were allowed.
The Kansas Credit Union Association (KCUA) sought the changes to eliminate confusion about Kansas credit unions' ability to continue serving groups that credit unions have served in the past and to protect their interests.
The clarification is important for credit unions' planning efforts and regulatory purposes, according to Haley DaVee, KCUA director of state legislative and public affairs.
"KCUA wanted to make sure there are no misinterpretations of the law and how it should be applied," she said.
WesCorp subs annual meeting, forums with town halls
SAN DIMAS, Calif. (4/10/09)--Western Corporate FCU (WesCorp) announced it had canceled its Future Forum and CFO Forum conferences and will replace its annual meeting with a member "town hall" meeting in another city.
The corporate, which federal regulators recently placed into conversatorship, scheduled the member town hall meeting for May 18 at Sheraton Fairplex Hotel, Pomona, Calif.
"This year will be a challenging one for credit unions financially, and we have been told by members that their travel budgets have been reduced," said WesCorp in a release on its website.
WesCorp will conduct subsequent town hall meetings in the following weeks in various Western states, with details announced as they become available.
The corporate told its members the meetings were a chance to meet new CEO Phil Perkins and learn about overall performance from other WesCorp leaders. They also will discuss the economic environment, the likelihood of a recovery in 2009 and WesCorp's position.
WSJ: Bank’s card fee hike prompts move to CU
NEW YORK (4/10/09)--Tamara Smith of Burlington, Vt., told The Wall Street Journal Thursday she is opening a new credit card account with a credit union instead of a bank to protect herself from banks' pursuit of higher interest income.
Smith reacted to a Bank of America notice that her 7.9% interest rate would increase to nearly 13% by calling the bank to opt out of the change. That allows her to retain the 7.9% rate, but prevents her from using the card for new purchases, which would trigger the higher rate on her full balance of approximately $2,000.
Bank of America recently announced plans to raise interest rates to double-digit levels for credit-card customers who carry a balance every month instead of paying off the card in full. The bank attributed the move to higher costs for offering credit,.
Citigroup Inc., J.P. Morgan Chase & Co. and American Express Co. already have implemented similar policies, which typically allow cardholders to opt out of higher rates by ceasing to use the card or closing the account. Financial educators encourage consumers who face increases to pay down balances, but warn against closing accounts because it can negatively impact credit scores, said The Journal.
Banks are increasing rates now to avoid new regulatory limits on credit-card increases that take effect in July 2010. Congress is pondering bills containing stronger restrictions with a shorter timeline. Banks have protested those proposals, claiming tighter rules would force them to restrict access to credit and promotional rates.
PCUA: REAL Solutions may complement Better Choice program
HARRISBURG, Pa. (4/10/09)--Leaders from the Pennsylvania Credit Union Association (PCUA) and the state's Treasury Department recently discussed how the national REAL Solutions program can complement Pennsylvania's Credit Union Better Choice Program.
The REAL Solutions program offered by the National Credit Union Foundation (NCUF) works with state leagues to help credit unions serve people of modest means with products such as alternatives to payday lending, volunteer income tax assistance and home loan payment relief.
 |
| Sharing information about AmeriChoice FCU's student branch at Central Penn College were, from left, Mike Wishnow, Pennsylvania Credit Union Association senior vice president, communications and marketing; Keith Welks, the state's deputy treasurer; Kim Bindl, AmeriChoice financial literacy manager; Jim Williamson, the state treasury's director of policy; and Carol Fastrich, AmeriChoice vice president of marketing. (Photo provided by the Pennsylvania Credit Union Association) |
The Better Choice program, which grew out of a collaborative effort between PCUA and the Pennsylvania Treasury Department, offers short-term loans that help people make the transition away from high-cost payday loans to fairly priced credit union services.
Deputy Treasurer Keith Welks and Director of Policy for Treasury Jim Williamson discussed the complementary programs at a meeting hosted by PCUA (Life is a Highway April 9). Earlier, Treasurer Rob McCord met with members of Pittsburgh FCU in Mount Oliver to learn how Better Choice payday lending alternatives helped them save money.
McCord noted that Better Choice loans save borrowers an average of 80 cents in fees and costs per dollar borrowed. A payday loan for $500 typically costs consumers $15 for every $100 borrowed for a two-week term, which adds up to $450 over 90 days. In comparison, a $500 Better Choice loan costs consumers $42.50 for 90 days and leaves them with 10% of the loan, or $50, in a savings account at the end of that term.
The list of the 79 credit union participants is on PCUA's website. To date, participating credit unions have made nearly 15,000 loans worth a combined $6.8 million.
The Treasury Department's Welks and Williamson also visited in-school branches operated by Members 1st FCU at Mechanicsburg High School and by AmeriChoice FCU at Central Penn College.
CUs can offer better rates than banks on auto loans, savings
DALLAS (4/10/09)--Credit unions can offer their members better rates on savings accounts and auto loans than commercial banks, according to a DFW news story in Dallas.
The NBC affiliate compared credit unions with banks to see which is a better deal for consumers. On average, credit unions offer 5.38% interest on four-year auto loans, compared with 6.68% with banks.
Credit unions also offer an average of 0.54% return on savings, compared with 0.36% at banks.
"The differences may seem small, but can add up," the news outlet said.
DFW advised consumers to get to know someone at their financial institutions so that they can have someone to turn to when they need help.
To see the video of the news story, use the link.
Huffington Post columnist got loan at CU
WASHINGTON (4/10/09)--A columnist advocating action to get banks lending again noted in The Huffington Post Thursday that people are still managing to get loans. His example: His wife's loan at Arlington Virginia FCU.
"If one could reduce the point of all the massive government planning and intervention and bailouts down to a single pressing need, it's this: We must take action in order to get the banks lending again," wrote Jason Linkins.
However, "people are still managing to get loans," he said. Earlier this year, his wife needed a loan to pay for her spring semester tuition.
"We went to the Arlington Virgina FCU to get the needed monies. We knew that the terms were good because we'd used them as a lender before, " Linkins wrote. "We knew that they would give us a loan despite the economy, as well. How'd we know that? AVFCU said so, in a television advertisement. It was the first ad I had ever seen for our credit union."
Linkins noted that the ad said the same thing that CEO Brenda Turner told members on the credit union's website. "AVFCU remains well capitalized as defined by federal regulations," she wrote, adding there has been no need for a taxpayer bailout.
"We have never engaged in subprime mortgage lending or high-risk investments. Because we have no pressure to earn large profits to satisfy greedy shareholders, we have never lost sight of our core purpose--prudently serving the financial needs of our member owners," she wrote.
Linkins' column asks a series of questions, including "Were you turned down by a bigger bank before getting a loan with your credit union?" and asks readers to tell about it in 150 words or less.
NCUF receives $100,000 from Premier Club supporter
WASHINGTON (4/10/09)--The National Credit Union Foundation (NCUF) has received $100,000 from Fidelity National Information Services, Visa and Card Services for Credit Unions.
The group jointly made the donation, and joins four other NCUF 2009 Premier Club supporters. Others include the Credit Union National Association, CUNA Mutual Group, The Corporate Credit Union Network, and jointly: Harland Clarke, CO-Op Financial Services, and Western Corporate FCU.
"We've been able to count on CSCU, Visa and Fidelity National each year for their support which is vital during these uncertain economic times," said Steve Delfin, NCUF executive director. "We appreciate their commitment, thank them for their sustaining support, and urge others to follow their example."
Wharton, Digital FCU launch custom international student loans
PHILADELPHIA (4/10/09)--The Wharton School of the University of Pennsylvania and Digital FCU, Marlborough, Mass., announced a custom loan program to help international students receive funds for school.
The loans will cover tuition and living costs at Wharton and will be available to first-year international students for their second year of study. The loans carry no origination fees.
Digital FCU developed the program for Wharton's international MBA students with Credit Union Student Choice, a credit-union owned organization that offers school-certified private student lending solutions to credit unions nationwide.
The credit union has a "unique business model that makes it suited to meet the private loan needs of international students," said James Regan, DCU president/CEO.
About 40% of Wharton's MBA students are international, and the school has 84,000 alumni in 139 countries.
The global economic crisis has hurt many financial institutions who traditionally offered private student loans, according to Anjani Jain, vice dean of Wharton's Graduate Division.
News Now reported Jan. 26 that CitiAssist and Sallie Mae international student loan programs had been pulled because of the economic crisis. The article noted that MIT FCU, Cambridge, Mass., started a loan program with Credit Union Student Choice to help students pay for school.
Digital FCU has $4 billion in assets.
CU System briefs
- ALBANY, N.Y. (4/10/09)--Diane LaVigna-Wixted, executive director of the New York Credit Union Foundation, has been appointed to serve on the National Credit Union Foundation's (NCUF) grant committee by NCUF Chairman Allan Kemp McMorris. The committee approves or
recommends for approval grant requests and oversees the grants process as well as develops and approves the annual grants portfolio. As part of her duties with the New York foundation, LaVigna-Wixted works with credit unions, schools and community organizations to improve financial literacy. The state foundation also offers financial support to credit unions through four grant-making programs: professional development grants, financial fitness grants, smart money grants and organizational grants. In 2008, it awarded 109 grants totaling $136,102. LaVigna-Wixted is also a volunteer member of the executive committee of the State Credit Union Foundation Network ...
- HARAHAN, La. (4/10/09)--ASI FCU celebrated the grand opening of its newest branch in Mid-City at an open house March 23. The branch provides full services to the Spanish-speaking residents of New
Orleans and to ASI's overall membership (eNews April 8). The Mid-City branch offers both a full-service bilingual branch and Spanish-English materials to the community. City Councilmember Shelley Midura and State Rep. Austin Badon Jr. addressed the crowd. The branch also was welcomed by Darlene Kattan of the Hispanic Chamber of Commerce and Martin Gutierrez of the Catholic Charities and the Hispanic Apostolate of the Archdiocese of New Orleans. (Photo provided by the Louisiana Credit Union League) ...
- SARASOTA, Fla. (4/10/09)--Sarasota (Fla.) Coastal CU and MidFlorida FCU, Lakeland, announced that they are merging. The new credit union will be called MidFlorida FCU. All Sarasota Coastal employees will be offered jobs with MidFlorida (Herald-Tribune.com April 8). Sarasota Coastal's branches will be remodeled and staff will be increased at each office. The merger is slated to close June 30. Sarasota Coastal has $224.5 million in assets. MidFlorida has $1.28 billion in assets ...
- ODESSA, Texas (4/10/09)--Southwest 66 CU has presented two members with loan forgiveness awards. James Magness of Odessa and Miranda Castilleja won the awards. Magness won $4,988.07 for a loan he'd taken out for home improvement, and Castilleja, a single mother, received $19,687.05 to pay off her auto loan (Odessa American April 8). Southwest 66 has $50 million in assets ...
- ATLANTA (4/10/09)--A man who robbed CDC FCU in Atlanta Aug. 23 wearing a Dracula mask and possessing a semi automatic weapon has been sentenced to more than 20 years in prison. Nathaniel Little Jr. of Decatur, Ga., also must pay restitution of $14,669. Little pleaded guilty Nov. 12 to the robbery (AJC.com April 9). Little is accused of robbing the $185 million asset credit union twice--once in August, and once in September ...
Market News
MADISON, Wis. (4/10/09)
- Continuing unemployment claims surged to another record high as the job market remained weak, the Labor Department reported Thursday. The number of people receiving jobless claims for more than one week jumped by 95,000 during the week ending March 28 to 5.84 million--setting a record high for a 10th consecutive week in records going back to 1967. In a glint of hope, first-time claims for unemployment insurance fell by 20,000 during the week ended April 4 to 654,000. Still, the decline was from a very high level. And analysts expect job losses to continue climbing, with the unemployment rate rising to around 10% by the end of the year, from the current 8.5% rate (Associated Press via Yahoo! News April 9) ...
- The Federal Reserve lowered its economic forecast for the remainder of 2009 at its policymaking meeting last month, according to minutes of the meeting released Wednesday. The central bank now expects the unemployment rate to increase more steeply into early next year before "flattening out at a high level over the rest of the year." Officials said the nation's gross domestic product probably will flatten out during the second half of this year, and then increase very slowly in 2010. Fed officials also noted that the Term Asset-Backed Securities Loan Facility would get off to a slow start. They therefore explored alternative ways to ease the markets. And some were concerned that purchasing Treasury debt would be viewed by investors as supporting rising budget deficits. The Fed kept the key fed funds rate near zero at the meeting and restated that it expected rates to remain "exceptionally low for an extended period." (CNNMoney.com and The Wall Street Journal Online April 9) ...
- The nation's trade deficit plunged to a nine-year low in February as consumer and business demand waned. The trade gap fell to $26 billion, from $36.2 billion in January, the Commerce Department reported Thursday. February's trade deficit was the lowest since November 1999. U.S. imports dropped 5.1% to $152.7 billion, the lowest level since September 2004. U.S. exports rose 1.6% to $126.8 billion, as sales of pharmaceuticals, vehicles and telecommunications equipment improved. The World Bank predicts that global trade will decline 6.1% this year as the recession continues (Bloomberg.com April 9) ...
- Major U.S. companies are still spending on innovation during the recession, even as they slash jobs and wages, so they can compete when better economic times return, according to a study by The Wall Street Journal (April 6). Overall research-and-development (R&D) spending by the 28 firms in the study slipped just 0.7% in the fourth quarter, compared with a year earlier, even as their revenue tumbled 7.7%. Many innovations have been spawned in economic downturns and then introduced as the economy recovered, said Barry Jaruzelski, a partner at consultant Booz & Co. He noted that television and mass-produced chocolate-chip cookies were refined during the Great Depression, but didn't become commercial successes until after World War II. Cumulative spending by businesses, government and universities will increase more than 3% in 2009, predicts the Battelle Memorial Institute, which tracks R&D spending. Many firms that made big R&D reductions during the recessions of the 1980s and 1990s took more than five years to return to previous spending levels, noted Battelle analyst Jules Duga (The Wall Street Journal Online April 6) ...
- Pulte Homes of Bloomfield Hills, Mich., announced Wednesday that it has agreed to acquire homebuilder Centex Corp. of Dallas, in a $1.3 billion stock deal that would create the biggest U.S. homebuilder by revenue. The two firms hope that a combined company will be better able to weather the worst housing downturn since the 1930s. Centex shares have plunged 70% during the past 12 months. Pulte shares are down 30%. The combined firm would be headquartered in Bloomfield Hills (Bloomberg.com April 8) ...
- Fitch Inc. may downgrade $18.1 billion of commercial mortgage-backed bonds sold from 2006 to 2008, the ratings agency said Wednesday. Losses on those transactions will average 4.5% to 5%. And deals underwritten in 2007 with high concentrations of pro forma loans could produce loss rates as high as 7.5%. "A sharp decline in economic conditions and the lack of available real estate financing have begun to impact commercial property and CMBS loan performance," said the ratings agency. On Tuesday, ratings agency Standard & Poor's said it may lower ratings on as much as $96.6 billion of commercial mortgage-backed securities (Bloomberg.com April 8) ...
News of the Competition
MADISON, Wis. (4/10/09)
- Wells Fargo & Co. sparked a rally in bank shares Thursday after announcing it would earn $3 billion in net income for the first three months of 2009. That's a 50% increase from $2 billion a year earlier. Profit of about 55 cents per share was more than double the average estimated by analysts. Wells Fargo's acquisition of Wachovia Corp, whose adjustable-rate loans were considered the riskiest in the industry, cut Wells Fargo's stock price in half this year. However the acquisition has exceeded expectations. Financial institutions experienced more than $1.29 trillion in losses and writedowns since mid-2007, with more than 100 companies in the mortgage industry collapsing. Wachovia's $101.9 billion in losses and writedowns was the highest for any U.S. lender, said Bloomberg (Bloomberg.com April 9) ...
- Life insurers are eligible for capital infusions under the federal rescue program, according to the Treasury Department, which said applications are under review (Bloomberg News via American Banker April 9). A number of life insurers met the requirements for the Capital Purchase Program, and hundreds of financial institutions are in the pipelieng that will be reviewed and funded on a rolling basis as appropriate, said Andrew Williams, a spokesman with the Treasury. To be eligible, an insurer must own a federally insured institution. Insurers in North America have reported losses and writedowns totaling more than $190 billion. The American Council of Life Insurers says that U.S. life insurers hold about $1 trillion of corporate debt and need aid to buy more bank bonds and inject liquidity into the credit markets. Twelve life insurers are in line for approval for Troubled Asset Relief Program funds ...
- Nearly every credit card in the nation has at least one feature that would be found "unfair and deceptive" under Federal Reserve rules finalized last year, says Philadelphia nonprofit Pew Charitable Trusts. In its review of 400 cards offered by a dozen of the nation's biggest card issuers, Pew found widespread examples of practices that could hurt consumers financially. Among the findings: 93% of card agreements permitted the issuer to hike any interest rate at any time, and 87% could impose automatic penalty rate hikes on all card balances, even on accounts that were not 30 days or more past due. The median penalty rate was 27.99% a year. Other findings: 72% of the cards included low promotional rate offers that were revocable after one payment, and 92% included a fee for exceeding the credit limit. During 2007 and 2008, card issuers hiked rates on nearly one-fourth of credit card accounts, which translates into a $10 billion hit on consumers' wallets. The new rules, effective July 1, 2010, include banning rate increases on existing debt except when payments are at least 30 days late, and requiring issuers to apply payments first to the highest interest balances (American Banker April 9) ...
- The Securities and Exchange Commission (SEC) agreed Wednesday to look for ways to restrict short sales of stock, something bankers have advocated. The commissioners voted unanimously to consider a list of proposals that include the return of an uptick rule, allowing investors to sell a stock short only at a price above the last trade, or establishing a "bid-up" rule, based on the last bid. Commissioner Kathleen Casey and others indicated that the burden of proof would rest with the proponents of the short-selling restrictions. The agency is set to begin a 60-day public comment period on the proposals (American Banker April 9) ...
Radio guest offers small biz start-up tips
WASHINGTON (4/10/09)--High unemployment and massive layoffs are steering many Americans toward starting a small business. Do your homework, and think "future" before you take the plunge, according to one of the guests on Sunday's H&FF Radio show.
Home & Family Finance airs Sundays at 3 p.m. EDT on the Radio America Network. The show also is carried on American Forces Radio 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:
- "Turning Points--Think ‘Future' when Starting a Business," with Susan Tiffany, director, personal finance information for adults, Center for Personal Finance, CUNA, Madison, Wis.;
- "Sustainable Home Ownership: Future Role of Government," with Lisa Ransom, vice president of federal affairs, Center for Responsible Lending, Washington, D.C.;
- "Low-Income and Minority Financial Services Concerns," with Stephanie Bittner, consumer credit counselor, and National Foundation for Credit Counseling's "Counselor of the Year," Consumer Credit Counseling Service of Delaware Valley, Philadelphia; and
- "Credit Card Reform," with April Brenslaw, director, consumer regulations, Office of Thrift Supervision, Department of the Treasury, Washington, D.C.
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, maker of award-winning cheddar; Western Corporate FCU (WesCorp) and its member credit unions; and the Defense Credit Union Council and member credit unions, serving those who serve the country worldwide.
For more information, read "Make the Move to Small-Business Ownership" in Home & Family Finance Resource Center.
iPay Technologies offers new business bill-pay
NEW YORK (4/10/09)--iPay Technologies has released Biz 2.0, a new bill pay and electronic invoicing solution.
More than 390 credit unions and banks are offering the solution to small businesses nationwide, iPay said.
Biz 2.0 integrates bill pay processes with iPay's electronic invoice generation, BillPayperless. The solution allows small businesses to manage their payables and receivables with one tool (Datamonitor April 9).
iPay is an independent online bill payment provider for financial institutions.
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