News Now Archive

Filed on May 29, 2003, published the first business day after.

• Inside Washington
• Dollar asks Congress to consider risk-based PCA
• More CUs considered in NCUA regs, starting June 30
• States to lobby Congress on fair credit reporting
• Bankers seek to ride new vehicle for tax breaks
• NCUA: DC home loan law preempted
• CU System briefs
• Alabama bankers back down on CU tax amendment
• Michigan columnist hits banks opposing CU bill
• Social Security/ID bills progress in Texas
• Arkansas league, chapter host Sen. Lincoln
• CUNA Future Forum headliners beyond ordinary
• CUNA calls for Annual General Meeting resolutions
• Florida Central’s Garcia running for CUNA Board
• Ohio league tunes into small CUs
• Market News
• News of the Competition
• Consumer briefs
• Wescom IDS, eFunds offer new account verification
• Debt consolidation on the rise in Australia

Inside Washington

• WASHINGTON (5/30/03)--The Federal Trade Commission (FTC) is offering training to financial institutions that must comply with the agency's Safeguard Rule, which implements the security provisions of the Gramm-Leach-Bliley Act (GLBA). This rule took effect May 23. Financial institutions that are subject to FTC oversight must have in place a comprehensive security program to ensure the security and confidentiality of customer information. GLBA has safeguard provisions that require FTC and other regulators to establish standards for financial institutions relating to administrative, technical, and physical safeguards for customer information. The FTC training program will be offered on June 9 and June 23 in Washington, D.C. Participation by telephone is available with one day advance notice. More information is on FTC's Web site...

• WASHINGTON (5/30/03)--The Federal Reserve Board published in the Federal Register on May 27 a final rule notice that it will expand the operating hours for the online Fedwire Funds Service (Fedwire). Under this final rule, depository institutions could participate in the earlier operating hours on a voluntary basis. The timeframe for full implementation of the expanded operating hours is the second quarter of 2004. Fedwire participants will be notified at least sixty days before the specific effective date of the new hours. As CUNA requested in its comments, the Federal Reserve will retain the flexibility to extend the closing hours for Fedwire for significant market disruptions...

• WASHINGTON (5/30/03)--Federal Reserve Bank of Kansas City, Mo., President Thomas Hoenig reportedly wants publicly traded banks to be required to disclose any material finding identified by examiners in an effort to enhance market discipline. This includes loan portfolio concentrations, management shortcomings, and violations of regulations such as limits on lending to insiders. Hoenig believes this would resolve problems very early in the process and make the banking industry safer and more effective over the long term. Bank executives would make the disclosures, which would include qualifiers such as the steps the bank plans to take to fix whatever problems the examiners have flagged. Other regulators have made comments on bank disclosures as well. Federal Reserve Board Chairman Alan Greenspan, in a speech early this month, urged bankers to explain their risk exposures, rather than just dumping data on the markets. In addition, Treasury Under Secretary Peter Fisher and Fed Governor Susan Bies have made similar remarks (American Banker, May 29)...

• WASHINGTON (5/30/03)--FDIC reported it has received over 8,000 consumer complaints about banks last year. According to the agency's annual report, 3,987 complaints concerned state-chartered nonmember banks, 54% of which were about credit card accounts. FDIC also said the most frequent complaints involved billing disputes and account errors, loan denials, credit card fees and service charges, and collection practices. FDIC noted that it established a centralized consumer response center in July to investigate such complaints. Additionally, the report said the FDIC received 7,000 letters and 8,000 phone calls inquiring about deposit insurance and consumer protection issues (American Banker, May 29)...

Dollar asks Congress to consider risk-based PCA

GRAND RAPIDS, Mich. (5/30/03)--NCUA Chairman Dennis Dollar believes legislation is needed to "improve the one-size-fits-all" Prompt Corrective Action (PCA) law by making it based on risk.

Speaking to more than 600 attendees at the 69th Annual Meeting of the Michigan CU League, the NCUA chairman said the current federal law inhibits proper credit union business planning because it "fails to properly reward solid risk management decisions and penalizes planned and balanced credit union growth."

He said his recommendation to base the PCA law for credit unions on risk-based assets is worthy of "serious" consideration.

"I believe strongly in a regulator taking prompt corrective action any time a financial institution has net worth problems," Chairman Dollar explained. "Any regulatory actions should certainly be taken before the problem becomes severe and may jeopardize the institutions."

However, he pointed out, "any trigger for taking such action requires the evaluation of the risk in the institution. Every credit union with 7% net worth does not have the same risk profile, but yet PCA says that any credit union with at least 7% net worth is well capitalized. This one-size-fits-all approach is just not reasonable in what is inherently a risk-based process."

Chairman Dollar has proposed that the PCA standards of 7% ("well capitalized") and 6% ("adequately capitalized") be based upon a denominator of risk assets, rather than total assets as specified in the current law.

"I do not wish to see Congress lower the standards," Dollar maintained. "In fact, I would strongly oppose lowering the bar. It just seems to me that the PCA standards, to be most effective in encouraging better risk management by credit unions, should be based on a percentage of at-risk assets, not total assets. Why do we need credit unions reserving a full 7% against the cash in their vaults, overnight cash accounts, federally guaranteed loans like student loans and SBA loans?"

Instead, Dollar asserted, "The net worth reserve should be based upon their assets which have the potential to cause a loss. Then, and only then in my opinion, would PCA work like it was intended by providing credit unions with an incentive for managing their risk more effectively."

Dollar noted that Congressional action may not be immediate, as "Congress needs time to digest the pluses and minuses of the present PCA law."

Nonetheless, he predicted that some inclusion of a risk-based component would eventually be necessary. Otherwise, "well planned and diligently managed credit union growth may suffer."

Dollar suggested that a starting point for any NCUA regulation to implement a risk-based PCA law would be the pre-1998 statutory reserve formula for federally insured credit unions. This excluded five factors from the asset denominator:

• Cash on hand;
• Deposits in federally insured institutions;
• Loans guaranteed by governmental agencies;
• Investments in NCUA's Central Liquidity Facility (CLF); and
• Each credit union's 1% deposit in the National CU Share Insurance Fund (NCUSIF).

"A risk-based formula is not foreign to NCUA or credit unions," Dollar reminded. "Prior to 1998, each credit union's statutory reserve requirement was based on risk assets, not total assets. Credit unions grew and managed risk extremely well during that period, including building capital significantly through retained earnings. I personally believe the integrity of PCA will be enhanced long term if we can take the best of the pre-1998 risk-based asset definition and couple it with the regulatory discipline of the PCA statute."

Dollar first suggested risk-based PCA at CUNA's Governmental Affairs Conference (News Now, March 3). Since then, CUNA has met on the issue with Dollar and with Wayne Abernathy, the U.S. Treasury's assistant secretary for financial institutions.

"In our discussion with the Treasury on risk-based capital, we noted that credit unions have been under PCA for four years--and it's probably in need of some tweaking," explained Bill Hampel, CUNA's senior vice president of research and policy. "It sounds like a good move in the right direction."

Banks currently have a lower capital requirement than credit unions--even though bank assets are generally riskier, Hampel observed. "Since credit unions have their own unique risk structure, the risk-based capital requirement would have to take into account the unique nature of credit union operations."

Hampel cautioned that if a new, more complex system were "laid on top of PCA, that would be a problem. But my reading is this would be an improvement. The current system puts unnecessary restraints on the growth of well managed credit unions."

Gary Kohn, CUNA's vice president for legislative affairs and senior legislative counsel, said Treasury officials indicated "they are interested in discussing these issues in more detail, and taking a fresh look at these issues."

Resource Links

PCA calculators

More CUs considered in NCUA regs, starting June 30

WASHINGTON (5/30/03)--Starting June 30, NCUA will begin considering more credit unions in the regulations it writes affecting smaller credit unions. NCUA recently approved a final rule that changes the definition of small credit unions to be those with $10 million or less in assets, rather than $1 million or less.

For each new NCUA proposed rule that will have a significant economic impact on a substantial number of small entities, NCUA must do an analysis that describes the impact of the proposal as well as a description of any significant alternatives to the rule that minimize the impact.

CUNA advocated raising the threshold to significantly above $1 million.

CUNA noted in an analysis that the revision would not affect the definition of small credit union in terms of eligibility requirements for NCUA's Small Credit Union Program (SCUP), a credit union with assets of $5 million or less.

CUNA has analyzed NCUA's new regulation that redefines the definition of small credit unions (Resource Link below).

Resource Links

CUNA’s Final Rule Analysis

States to lobby Congress on fair credit reporting

WASHINGTON (5/30/03)--State governments and their public interest allies plan to lobby lawmakers in Congress heavily to let the federal preemption of state credit reporting laws expire, reports National Journal's CongressDaily (May 29).

The Senate Banking Committee has already held one hearing on FCRA renewal issues, and the House Financial Institutions and Consumer Credit Subcommittee has scheduled its second hearing for Wed., June 4.

The states and their allies reportedly are counting on the support of key lawmakers, especially in the Senate. They believe that a variety of local laws on credit reporting will not interrupt timely credit decisions or raise interest rates, but may even have the opposite effect.

Resource Links

Privacy and FCRA

Bankers seek to ride new vehicle for tax breaks

WASHINGTON (5/30/03)--Since the House-Senate tax conference committee stripped out an amendment that would have further expanded tax breaks for banks, bankers have been lobbying to attach their tax break provisions to other moving legislation.

Bankers are looking for any vehicle that would help more banks pay fewer taxes.

Over 1,800 banks have organized as S-corporations in recent years so they can pass tax obligations on to shareholders.

At the rate Subchapter S banks are growing, CUNA's Economics and Statistics Department projects the dollar value of Subchapter S banks' tax benefits will exceed the dollar value of credit unions' federal income tax exemption by 2006.

If the bankers' legislation becomes law in the current Congress, banks' Subchapter S tax breaks will exceed credit unions' benefits even sooner.

At the same time, the American Bankers Association (ABA) and its state bankers associations continue to lobby for higher taxes on credit unions.

"We will continue to point out their hypocrisy," says Gary Kohn, CUNA's vice president of legislative affairs and senior legislative counsel. "Banks are trying to evade taxes at the same time they try to eliminate credit unions' tax-exempt status."

Although not-for-profit credit unions are exempt from federal income tax, credit unions do pay many other taxes--including payroll taxes, real estate taxes, sales taxes, and more.

Meanwhile, some banks are evading state taxes by creating shell corporations in Nevada. A recent investigative report showed that, for example, 11 of the 15 largest banks in Wisconsin funneled their profits to their Nevada shell corporations. This enabled them to report a paper "loss" in Wisconsin and evade state income taxes.

The banks argue that they need to avoid taxes to compete with credit unions. But unlike credit unions, banks are "not passing their tax savings on to consumers," observes Mike Schenk, vice president of CUNA Economics and Statistics. Banks charge higher fees and reap a much higher return on assets than credit unions.

Schenk addressed these competitive issues and more in a June 22 research paper, Commercial Banks & Credit Unions: Facts, Fallacies & Recent Trends. (See the first Resource Link below.)

State-chartered banks would get another tax break if the Financial Services Regulatory Relief Act of 2003 (H.R. 1375) becomes law. State-chartered banks would have the option to convert to Limited Liability Corporations (LLCs). LLCs combine protection from individual liability like a corporation with the pass-through tax treatment of a partnership. (See the second Resource Link below.)

CUNA endorses H.R. 1375 because it includes 13 regulatory relief provisions for credit unions. (See the third Resource Link below.) Ironically, ABA says it cannot support the bill because of its regulatory relief for credit unions.

Resource Links

Commerical Banks & Credit Unions (Scroll down for 6/22 PowerPoint)

LLC tax breaks for banks

Regulatory relief provisions for credit unions

NCUA: DC home loan law preempted

ALEXANDRIA, Va. (5/30/03)--NCUA clarified in a Legal Opinion Letter that the District of Columbia's Home Loan Protection Act of 2002 (HLPA) does not apply to federal credit unions.

HLPA is an anti-predatory lending law prescribing certain disclosures and filings and prohibits certain terms and conditions in both open and closed-end home loans.

NCUA says the District may not require federal credit unions to comply with that law and preempted it because it would limit or affect the rates, terms of repayment, and other conditions of loans and lines of credit that federal credit unions may offer to their members.

NCUA pointed out that federal credit unions are already subject to the Home Ownership and Equity Protection Act (HOEPA), which is an amendment to the Truth in Lending Act (TILA). Both HOEPA and HLPA exclude loans to finance the purchase or construction of a borrower's principal residence.

The agency pointed out that recent court cases have limited TILA's "savings clause," which provides that a creditor must comply with any state law governing HOEPA loans to the extent the state law is not inconsistent with HOEPA. Based on court decisions, NCUA's lending regulation preempts any state law, including one affecting aspects of lending primarily regulated by TILA, that limits or affects lending rates, repayment terms, or lending conditions by federal credit unions.

Further, NCUA's lending regulation also specifically provides that the NCUA Board retains exclusive examination and administrative enforcement jurisdiction over Federal credit unions. NCUA, not the mayor of the District of Columbia, who has enforcement jurisdiction under HLPA, has the sole authority to take enforcement actions against federal credit unions.

CUNA has posted an analysis of NCUA's letter on its Web site (Resource Link below).

Resource Links

NCUA Legal Opinion Letter

CUNA’s Analysis

CU System briefs

• RANCHO CUCAMONGA, Calif. (5/30/03)--Rita Fillingane, project manager for the credit union development department of the California CU League, has been elected to the board of the California Jump$tart Coalition, the state chapter of the national organization that promotes financial literacy among the nation's youth. Fillingane joined the 19-member board through her work with the California Youth Involvement Network, a volunteer organization supported by the league. The league has been associated with the California coalition since the coalition's organization in 2000. Fillingane administers and coordinates activities to support the California Youth Involvement Network; the league's Shapiro Group, which provides assistance to smaller credit unions in California and Nevada; and the league's Diversity Committee ...

• DOTHAN, Ala. (5/30/03)--Two suspects in the Wednesday afternoon robbery of Five State CU, Dothan, Ala., were apprehended after leading police on a high-speed chase from Phenix City to Opelika. The chase involved four law enforcement agencies, a state helicopter, and a wrecked patrol car. Credit union employees told police the two men entered and stole an undisclosed amount before fleeing in a blue car. A state helicopter performing marijuana eradication work in the area joined the chase. No injuries were reported when the suspects' car struck a sheriff's deputy's car. The chase ended after about 30 minutes, and Michael Alexander Griffin and Cornelius Julius Williams, both of Opelika, were charged with first-degree robbery (Columbus Ledger-Enquirer May 29) ...

• GREENVILLE, S.C. (5/30/03)--Greenville (S.C.) FCU has promoted Steve Banks to the position of executive vice president. Banks began is more than 20-year credit union career at State Employees' CU in Raleigh, N.C., before joining the $59 million asset Greenville FCU as vice president of operations in 1999 (Greenville News May 25) ...

Alabama bankers back down on CU tax amendment

MONTGOMERY, Ala. (5/30/03)--Alabama's banking lobby backed down Wednesday and did not introduce an amendment to strip credit union language from HB 25--the proposed rewrite of the state's Financial Institution Excise Tax. The Alabama CU League attributes the banks' inaction to support in the House for the credit union position, support stemming from grassroots efforts.

Influenced by the number of credit union calls and efforts by league lobbyists, House members voiced opposition to the bankers' amendment when the measure was brought to the House floor Wednesday night.

Late Wednesday afternoon, the league had learned that the Alabama bankers had drafted an amendment to HB 25 stripping from the bill the credit union language that reinstated utility, communication and sales tax credits for credit unions.

The league immediately issued a legislative call to action to all members, asking them to contact their House members and urge representatives to oppose any amendment that would strike the tax credits for credit unions.

League lobbyists also lined up active support for the credit union position among several House members, including HB 25's sponsor, Jack Page (D-Gadsden), Vice-Chair of Banking Mike Hill (R-Birmingham), and Craig Ford (D-Gadsden), also a member of House Banking.

"Credit unions displayed the power of grassroots action yesterday by responding to the league's call to action and calling their representatives," says Gary Wolter, president of the league. "This is another victory for credit unions in Alabama."

However, Wolter cautioned that the banks will try again. "Our attention is now turned towards the Senate," he says, adding the league has "heard from the bankers that they will continue to try and amend House-passed HB 25 as the bill moves its way through the Senate Finance and Taxation Committee to the full Senate."

(Filed by Angela Davidson, communications specialist with the Alabama CU League)

Michigan columnist hits banks opposing CU bill

GRAND RAPIDS, Mich. (5/30/03)--"Bank fees are at an all-time high...And so, incidentally are bank profits," says a columnist for The Grand Rapids Press (May 28). That's why it's "no surprise" that bankers are fighting state legislation allowing more Michigan consumers to belong to credit unions, "which generally charge lower fees than banks."

In an article entitled "Banks see credit unions as a threat; Credit unions are exempt from income taxes," staff writer Rick Haglund, discusses the provisions of the bill to modernize Michigan's 1925 CU Act and notes that banks aren't happy about the bill's allowing credit unions to expand their field of membership beyond a single community.

One banker quoted says credit unions' field of membership expansions "could be the earth and the moon." Haglund also repeats bankers' claims that credit unions have advantages, including their not-for-profit status and their exemption from state and federal income taxes.

Michigan CU League President and CEO David Adams provides statistics for the article about how tiny credit unions' assets are compared with the size of the banks.

Haglund also notes that lawmakers at a Senate hearing commented that credit unions are far more responsible than payday lenders that charge exorbitant fees and interest rates. The banker's responsde: the bill doesn't restrict the size of the fees credit unions could charge for such loans.

"It's almost comical to hear a bank lobbyist warn that credit unions might charge a steep fee for a financial service. Few are more adept at doing that than the banks," Haglund concludes.

Social Security/ID bills progress in Texas

AUSTIN, Texas (5/30/03)--Although home equity reform and modernization have been key focal points for credit unions during Texas' legislative session, several other bills--most notably dealing with use of Social Security numbers and ID theft--are progressing through the House and Senate. Today is the last day that the two chambers can consider the bills.

The home equity reform, which means Texas no longer would be the only state prohibiting home equity lines of credit, was sent Wednesday to Gov. Rick Perry for signature and will go to the Secretary of State's office for placement as a constitutional amendment on the election ballot in September. The credit union act modernization bills were sent May 24 for the governor's signature. The governor has 10 days to sign a bill, says Carolyn Merchan-Saegert, associate general counsel at the Texas CU League.

Here's a rundown on the other bills from Merchan-Saegert:

• HB 1053 reduces the availability of Social Security numbers to unauthorized users. It provides for credit unions currently using Social Security numbers as account numbers to be "grandfathered" in, allowing them to use the numbers if the use is continuous and the credit union discloses annually to the accountholder that he has the right to stop the use. The bill passed the Senate Wednesday with an amendment to exclude public records and court records, and goes back to the House for concurrence. Today is the deadline for considering the bill.

• SB 611 prohibits printing of a Social Security number on an identification card or other identification device required to access a product or service, unless the individual has requested in writing. An amendment allows credit unions that make a good faith effort but still can't comply by the March 1, 2005 deadline to appeal for an extension to the CU Commissioner. The House has passed SB 611 and the deadline for concurrence by the Senate is today.

• SB 1211, a collateral insurance bill, allows financial institutions to insure a property for more than its worth to protect the institution if the borrowers don't insure their property. Previously, financial institutions were limited to insuring for the amount of the outstanding balance of the loan. The bill has passed both chambers and has been sent to the governor for signature.

• SB 1666, which updates definitions of a financial institution and allows a credit union to convert to a state savings bank, effective Sept. 1, was signed by Gov. Perry Wednesday, says Merchan-Saegert.

Arkansas league, chapter host Sen. Lincoln

LITTLE ROCK, Ark. (5/30/03)--The Arkansas CU League and the South Arkansas Chapter of CUs hosted a legislative reception Wednesday for Sen. Blanche Lincoln (D-Ark.) in El Dorado, Ark.

The event was the first of several that will be held in each of the state's congressional districts.

Sen. Lincoln visited with credit union CEOs, volunteers, staff, and members from four area credit unions.

U.S. Sen. Blanche Lincoln (D-Ark.), fourth from left, visits with the staff of Mil-Way FCU in Texarkana during a reception held in her honor.

"We worked closely with Sen. Lincoln's staff to coordinate this event," says League President Reta Kahley. "We are very pleased with the participation from the credit unions in South Arkansas and look forward to hosting similar events in each of our congressional districts."

CUNA Future Forum headliners beyond ordinary

MADISON, Wis. (5/30/03)--The CUNA Future Forum, set for Sept. 29-Oct. 2 in Reno, Nev., will deliver on its promise to provide top-notch programming without "all those talking heads." Instead, attendees can expect general sessions that are dynamic, interactive, and beyond the ordinary, keeping with the event's theme of "Honor the Past. Manage the Present. Create the Future."

Among the headlining events:

• Taylor Mason--Future Forum's "Man on the Streets." Acting as conference weaver and "man on the streets," Mason and his foam rubber friends take nothing, including each other, seriously. The group puts on a "one-man show" that won the Star Search Comedy Grand Prize, combining comedy, music, and ventriloquism.

• David Landis (a.k.a. Sen. George Norris)--A Living History. Landis will provide a humorous and thought-provoking rendition of the life of former U.S. Sen. George Norris, who was instrumental in the signing of the Federal CU Act of 1934.

• Marcus Buckingham--Building a Strength-Based Organization. Author and senior consultant with the Gallup Organization, Buckingham spent 10 years focusing on how to find, harness the talent of, and retain the most valued employees. He takes key points of his books, "First, Break All the Rules: What the World's Greatest Managers do Differently" and "Now, Discover Your Strengths" to show attendees how to become a great manager. He shows the link between employee opinions and productivity, profit, customer satisfaction, and the rate of turnover and will talk about interviewing talent, developing a performance management routine, and getting the best performance from talented employees.

• CU Sound Off Open Forum Discussion. You can either change or become a "splat" on the road. Moderator Patrick Adams will lead this highly interactive and thought provoking forum.

• Creativity Jam Session--Mari Pat Varga and Johnse Holt. Bang on drums, laugh, play... and learn! The Creativity Jam Session is an interactive experience using music as a metaphor to discover ways to manage change, build teams, enhance creativity, and learn four key principles in creating a work environment where communication and diversity thrive.

• Dream Big--Kevin Carroll. Carroll, a "Katalyst" for Nike, shows how to maximize one's possibilities and discover a holistic approach to developing human potential.

• What You Must Do When You Get Back On Monday--Patrick Adams. In this interactive closing session, Adams will help attendees create a "plan of action" for things they must do when they get back to the office.

For more information about the 2003 CUNA Future Forum, including breakout sessions, the CU Marketplace, and guest/family programs, or to register for the event, use the resource link or call 800-356-9655, ext. 5700.

CUNA calls for Annual General Meeting resolutions

MADISON, Wis. (5/30/03)--In preparation for CUNA's Annual General Meeting (AGM), CUNA's Corporate Governance Committee is asking member credit unions and leagues to submit resolutions no later than Aug. 8.

Resolutions deemed appropriate by the committee will be presented for discussion and vote at the AGM on Oct. 1 at the Hilton Reno in Nevada.

Adopted resolutions will move forward as recommendations to the CUNA Board.

Suggested resolutions can be sent by:

• E-mail: thanson@cuna.coop
• U.S. mail: Office of the Corporate Secretary, CUNA, P.O. Box 431, Madison, WI 53701-0431
• Fax: (608) 231-4874

The AGM will be held during CUNA's Future Forum, Sept. 29 - Oct. 2 at the Hilton Reno.

Resource Links

Future Forum

Florida Central’s Garcia running for CUNA Board

TAMPA, Fla. (5/30/03)--Laida E. Garcia, executive vice president of Florida Central CU in Tampa, is running for the CUNA Board seat representing mid-sized credit unions in nine Southeastern states.

The seat represents credit unions with 15,000 - 55,999 members (Class B) in Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi, North Carolina, South Carolina, and Tennessee (CUNA District 3).

Nominations for eight CUNA Board seats are open through June 20. CUNA members can nominate individuals willing to run for election by their peers in the following geographic districts and size classes:

• Northeast (District 1):
• Credit unions with at least 56,000 members (Class C);

• Mideast (District 2):
• Credit unions up to 14,999 members (Class A);

• Southeast (District 3):
• Credit unions with 15,000 to 55,999 members (Class B);

• Midwest (District 4):
• Credit unions with at least 56,000 members (Class C);

• Plains & Rockies (District 5):
• Credit unions with 15,000 to 55,999 members (Class B); and
• League Presidents (Class D).

• West & Pacific (District 6):
• Credit unions up to 14,999 members (Class A); and
• League Presidents (Class D).

• (CUNA's May 12 NewsWatch includes a chart listing the states represented by each CUNA District. See the first Resource Link below.)

Each credit union candidate for a CUNA Board seat must be an employee or voting board member of a nominating credit union.

Nominations must be signed in writing by the nominating credit union's chairman or secretary, and seconded in writing by two other credit unions in the same district and class. A list of credit unions by district and class is available upon request.

Nomination forms are downloadable directly from CUNA's Web site. (Use the second Resource Link below, and scroll down to your district and class size.)

Or send your name, credit union name, mailing address, district and class via:

• E-mail: thanson@cuna.coop
• U.S. mail: CUNA Corporate Secretary, P.O. Box 431, Madison, WI 53701-0431.
• Phone: 1-800-356-9655, ext. 4013

Nominations must be received by June 20.

Resource Links

CUNA District Chart (Page 3 of the PDF)

Download nomination forms

Ohio league tunes into small CUs

DUBLIN, Ohio (5/30/03)--Small credit unions in Ohio are one group getting special attention from the Ohio CU League in a number of areas (eLeaguer Newsletter May 29).

The league's electronic newsletter has a "Small CUs" section devoted to topics for small credit unions. Among the services the newsletter mentions as available:

• A Web page for small credit unions on the league's Web site. "Small credit unions can stay up to date with current issues that affect them by visiting" the page. The page is continually updated with news and special sessions and includes links to downloadable resources, including the Small CU Resource Guide to Success.

• A new Small CU Education Task Force, which met May 19, with Diane Rodriguez of Dynamic FCU as task force chairman. At the meeting the group discussed ways to increase participation of small credit unions in cooperative meetings and events. It plans to work with the league on a small CU networking program, and the task force reviewed mentoring opportunities, technology-driven, and distance-learning opportunities.

• A networking session June 12 for small credit unions in southwest Ohio (Miami Valley, Butler, and Cincinnati chapters).

• NCUA's Region IV will host a Small CU Program Workshop in Toledo Aug. 13. The event is open to all small credit unions in the state.

Market News

MADISON, Wis. (5/30/03)

• Consumer spending and a narrower trade deficit helped boost the U.S. economy, which grew at a 1.9% annual rate during the first three months of 2003--faster than the 1.6% estimated last month, according to the Commerce Department. The growth compares with the gross domestic product growth rate of 1.4% during fourth quarter 2002. The 1.9% is still below the 3.2% growth rate needed to help turn around the struggling labor market, say economists. First-quarter growth was restrained by the buildup of the war in Iraq, which pushed crude oil prices to a 12-year high and prompted consumer confidence to drop to a nine-year low. Economists had forecast a gain of 1.8% (The Wall Street Journal Online and Bloomberg.com May 29) ...

• The labor market continues to contract as the number of people who filed first-time jobless claims exceeded expectations--with 424,000 people filing for unemployment benefits during the week ending May 24. Initial claims declined from 433,000 the prior week. This was the 15th week jobless claims have been above 400,000, the number that indicates a contracting labor market. While the economy has been in a recovery for more than a year, the labor market hasn't followed suit. Claims have been above this level since February, with claims higher the current quarter than during the previous three quarters. The four-week moving average, which evens out fluctuations from week to week, also dropped--to its lowest point since mid-April. Contributing to the jobless figures during April was production cuts in the auto industry. Continuing claims reached a new record--3.76 million during the week ending May 17 and higher than the post 9/11 surge. The combined initial and continuing claims have raised the insured unemployment rate (for those workers, usually full-time workers, eligible for job claims) to 3%. This suggests the jobless rate for May could climb higher (Economy.com May 29) ...

• U.S. employers initiated 1,576 mass layoffs involving 161,095 workers during April, according to the Labor Department (Economy.com May 29). The number of events increased slightly from a year ago, but the number of workers involved in the mass layoffs decreased. April marked the 11th consecutive month that the number of mass layoff initial claims declined over the year. However, the lack of a consistent improvement in layoff events means companies are struggling to maintain staffing levels during the weak economy. Manufacturing accounted for 32% of the mass layoff events and 39% of all initial claims, compared with 31% of events and initial claims during April 2002. The largest number of initial claims occurred in the transportation equipment, food production, and computer and electronic products sectors. The largest decreases were in transit and ground passenger transportation, telecommunications, and agriculture and forestry support sectors ...

• The Chicago Fed National Activity Index (CFNAI), which monitors the condition of the U.S. economy through five broad areas, slipped deeper into negative territory during April, to -0.85, compared with the revised -0.69 reading for March (Economy.com May 29). It was the eighth negative reading in the past nine months, indicating generally weak economic conditions. Of the index's five categories, production and employment-related indicators made the largest negative impact to the index. Employment indicators contributed -0.37, with employers eliminating 48,000 jobs during April. Losses in manufacturing, retail and transportation industries were offset partially by gains in financial services, construction, and government payrolls. The unemployment rate increased to 6% during April. Industrial production saw a larger than expected decrease--0.5%--and manufacturing output declined 0.6%. This is the second month of large declines, and widespread weakness in almost all the market segments. Capacity use fell to 74.4%--a new cyclical low and the lowest since 1983 ...

News of the Competition

MADISON, Wis. (5/30/03)

• Shareholders for Honolulu's CB Bancshares Inc. apparently have given a thumbs down to the unsolicited takeover bid by a rival bank, Central Pacific Financial Corp. Officials at a special meeting Wednesday say that judging by the proxy votes, shareholders have turned down the $285 million bid. Final vote results will be announced next week. CB Bancshares has $1.2 billion in assets, while Central Pacific has $1.7 billion. Central Pacific plans to hold a separate meeting of CB shareholders to vote again next month (American Banker May 29) ...

• Bank of America Corp. made an undisclosed payment to securities firm U.S. Bancorp Piper Jaffrey in 1999 to publish research for a client that went bankrupt later that year, say informed sources (Bloomberg.com May 29). The $400,000 payment came two months after the bank's securities unit arranged an April sale of $200 million of high-yield, high-risk bonds for Just for Feet, a shoe retailer that went bankrupt, say documents in the recent $1.4 billion settlement between Wall Street firms and regulators over misleading research. Piper Jaffrey was the only brokerage to recommend buying the stock in May 1999. Bank of America wasn't part of the conflict-of-interest investigations by regulators. However, its payment was similar to those made to brokerages by Morgan Stanley and four other firms. The National Association of Securities Dealers says those transactions broke rules because they included material information that wasn't disclosed ...

• MasterCard International sponsored a seminar in New York last week to get more businesses to use commercial card programs. One of its corporate card customers, American Electric Power, Columbus, Ohio, noted it had tried a number of employee expense programs, including a paper-based system and a system with 10 different cards for travel and entertainment, and procurement. Its new system is designed to send information about card transactions directly to a company's general ledger, red-flagging any personal or unusual transactions. Under the old system, it spent $17 million on travel. With the new automated card-based system expenditures were $22 million. The new system caught some employees using their business cards for personal expenses. MasterCard vice president of global e-business Philip J. Philliou said that the regulatory climate means it's important for companies to document expenses (American Banker May 29) ...

• Mexican President Vicente Fox is supporting Citigroup Inc. in its fight with legislators who are demanding the bank's Banamex unit repay $627 million of bonds it obtained during the 1995 bank bailout by the Mexican government, reports Bloomberg.com (May 29). Fox filed a appeal to Mexico's Supreme Court to block a congressional auditor from requiring return of the money. The auditor says Banamex improperly received the debt by swapping loans that didn't qualify for a rescue, but the bank denies the allogation. Mexico's legislators are seeking the return of bonds they say the government should not have given in the bailout. Fox may have intervened to avoid setting a precedent that might slow economic recovery in the nation, say analysts ...

Consumer briefs

• MCLEAN, Va. (5/30/03)--American cars are getting pregnancy-friendly. The American auto industry is starting to make cars that aim to make pregnant women more comfortable while behind the wheel. For examples, General Motors' 2004 Malibu Maxx features standard adjustable pedals, standard vertical height adjustment on the driver's side, and a standard adjustable steering wheel. The goal with the Malibu Maxx is to allow a pregnant driver to adjust virtually everything on the driver's side of the car. The Maxx starting price is expected to be less than $20,000. Ford took a different approach. Its 2004 Mercury Monterey minivan aims to make it easier for a pregnant woman to fold, tumble (in the second row), or remove (in the third row) the second- and third-row seats (USATODAY.com May 20) ...

• WASHINGTON, D.C. (5/30/03)--Almost 4.5 million Americans age 65 or older are looking for work. This is almost a 50% increase, according to a Census Bureau report. In 1980, about 3 million Americans age 65 or older (about 12.6% of the then 24.2 million people in that age bracket) were in the work force. In March 2002, there were 4.5 million 65 and older in the work force, 13.2% of the total number of people in this age group. There are many reasons why more seniors are choosing to work. These include an interest in trying a completely different career, a need to because of stock market losses and rising medical costs, and a desire to stay active after retirement (Yahoo! News May 21) ...

Wescom IDS, eFunds offer new account verification

WOODLAND HILLS, Calif. (5/30/03)--Wescom IDS and Chex Systems Inc., a subsidiary of eFunds Corp., have joined to offer credit unions an automated membership verification process for credit unions to use before opening an account.

The partnership will integrate Wescom IDS' automated Membership Application product with Chex System's services, New AccountChex, AccountChex Plus, and Qualifile.

"New account applications at credit unions depend upon ID verification through ChexSystems so it made perfect sense that this approval process be automated to provide credit union applicants benefits such as increased speed and accuracy," says Wescom IDS President Ann Marie Michael. She added the faster process lessens the time members have to wait to use their services.

Typically, ChexSystems sees a 20% to 50% increase in inquiry volume at new account desks when its clients use an integrated solution, according to Rahul Gupta, senior vice president and business line executive, eFunds Risk Management Solutions.

Wescom IDS, based in Woodland Hills, Calif., is a partnership between Wescom CU, a $2.3 billion asset credit union, and Integrated data Systems.

Debt consolidation on the rise in Australia

SYDNEY (5/30/03)--Lenders in Australia are reporting that debt consolidation is now one of the most popular reasons for applying for loans up to $40,000, reports The Age (May 26).

Community First CU, a credit union in Australia, says its recent campaign offered personal loans at 9.5% a year to assist members serious about getting rid of their debt. The result: A noticeable spike in the number of loans for that purpose.

According to Kerry McMorrow, general manager of marketing, the percentage of debt-consolidation loans rose to 23.8% in March from 13.5% in January.

Catherine Wolthuizen, finance policy officer with the Australian Consumers' Assocation, says personal loans are a low-cost alternative to credit cards and their nature is finite--demanding regular, fixed payments which require more discipline in spending.