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Filed on July 18, 2007, published the first business day after.
- Amended SSN bill passed by Ways and Means
- New affordable housing Fund gets hearing today
- WSJ: Will Fed get tougher on lending, market practices?
- Hyland again urges CUs to get in on Town Hall process
- Inside Washington
- Talks open on first N.J. state CU in more than decade
- Cap One survey: Teens eager to learn more about money
- Gen-X ahead of parents in retirement planning
- CU 24 elects board, officers
- Mid Atlantic Corporate CEO to retire, Murray named successor
- Want more member business? Act like a CU, report says
- Bay Area CUs make state history in community CU partnership
- CU's microloan propels small biz to $3 million DoD contract
- Impact of 'Ditch bank' article swamps server
- CU System briefs
- Market News
- News of the Competition
- Consumer brief
- Fiserv in Business Week’s top 100 IT companies
- Wescom Resources Group rebrands online solutions
Amended SSN bill passed by Ways and Means
WASHINGTON (7/18/07)—The House Ways and Means Committee Wednesday voted unanimously in favor of an amended version of the Social Security Number Privacy and Identity Theft Prevention Act (H.R. 3046), intended to add safeguarding measures to the use of individuals' sensitive personal information.
H.R. 3046 defines situations in which federal, state and local governments, as well as private sector entities, would be prohibited from the sale, purchase or display of individuals' Social Security Numbers (SSNs), one of the most widely used personal identifiers.
Under the bill's provisions, the private sector would be prohibited from selling or purchasing SSNs, but with limited exceptions, such as:
- To ensure the accuracy of credit and insurance underwriting information and certain other Fair Credit Reporting Act purposes;
- Tax purposes;
- To administer employee or government benefits; or
- With the individual's affirmative, written consent.
It includes a clarification that there would be temporary exceptions permitting government agencies and the private sector to sell or display to the general public the last four digits of SSNs for two years after the effective date of implementing regulations.
The Credit Union National Association is currently reviewing the language of the bill to determine how it will impact credit unions.
New affordable housing Fund gets hearing today
WASHINGTON (7/19/07)—Chairman Barney Frank (D-Mass.) of the House Financial Services Committee has set July 19 as the date for a rescheduled hearing on H.R. 2895, the National Affordable Housing Trust Fund Act of 2007.
The bill, intended to produce, rehabilitate and preserve 1.5 million housing units over the next 10 years, was introduced June 28 by Frank, and Reps. Maxine Waters (D-Calif.), Gary Miller (R-Calif.), John McHugh (R-N.Y.) and Jim Ramstad (R-Minn.).
Among other things, it would allocate between $800 million and $1 billion annually to states and local communities without increasing government spending or the federal deficit, according to its sponsors.
The National Affordable Housing Trust Fund would be funded from amounts provided in the recently passed Government Sponsored Enterprises' (GSE) Affordable Housing Fund, from savings related to Federal Housing Administration reforms and the Expanding Americans Home Ownership Act.
Under the trust fund bill, about 60% of the funds would be directly allocated to local communities and the remainder to states, insular areas and Indian tribes.
The committee has scheduled three panels of witnesses for today's hearing.
On the first panel, Assistant Secretary for Housing-Federal Housing Commissioner Brian Montgomery, of the Department of Housing and Urban Development, is slated to testify.
On panel two:
- Henry Cisneros, executive chairman, CityView ; Sheila Crowley, president, National Low Income Housing Coalition ; William D. Euille, mayor of Alexandria, Va., on behalf of the U.S. Conference of Mayors; Lisa Alberghini, director of the planning office for urban affairs, Archdiocese of Boston; and JoAnne Poole, owner of Poole Realty, on behalf of the National Association of Realtors.
- President/CEO Dave Roberts of the of Lutheran Homes Society; Barbara Thompson, executive director, National Council of State Housing Agencies; Hilary O. Shelton, director, Washington Bureau, National Association for the Advancement of Colored People; Megan Sandel, assistant professor of pediatrics, Boston University School of Medicine; and Joe L. Myer, executive director, NCALL, Research, Inc., on behalf of National Rural Housing Coalition.
WSJ: Will Fed get tougher on lending, market practices?
WASHINGTON (7/19/07)—The Federal Reserve Board has lately been in the hot seat of Congressional scrutiny as federal lawmakers question the agency's actions—or lack thereof—regarding protecting consumers from some questionable banking practices.
An article in the July 18 Wall Street Journal questioned whether the agency as a result will become more assertive in regulating the lending and marketing activities of the 35,000 banks, credit unions, finance companies and mortgage brokers it helps to regulate.
The Congress, with Democrats in the slight majority, has focused attention both on problems in the subprime mortgage market, which by some estimates threaten to force as many as 2.2 million mortgages into foreclosure, and on credit card industry practices that some call abusive.
The article noted that the Fed is the only government entity with authority to make rules to prohibit unfair and deceptive practices at the nation's more than 7,000 banks. Also, only the Fed can bar any mortgage practice across the entire lending industry.
But the central bank, to date, has taken a market-based approach to trying to encourage fair disclosures to consumers and that has allowed lenders to develop formerly unheard of mortgage products, such as interest-only loans. Some charge that it also has allowed questionable practices to take root with little abatement.
House Financial Services Committee Chairman Barney Frank (D-Mass.), recently one of the Congress's vocal Fed critics, has raised the idea that if the Fed does not make some changes in its approach by fall, perhaps some of its jurisdiction should be delegated to other regulators.
Faced with that possibility, according to the Wall Street Journal, the central bank has started to revise some of its stances.
For instance, the article noted that while Fed Chairman Benjamin Bernanke once said the Fed "had the authority" to prohibit certain mortgage practices, he has since changed that to say it "has the responsibility" to ban unfair or deceptive mortgage practices.
Hyland again urges CUs to get in on Town Hall process
ALEXANDRIA, Va. (7/19/07)—After the National Credit Union Administration's (NCUA's) fourth Outreach Task Force meeting, board member Gigi Hyland this week encouraged credit unions to participate in two remaining meetings being held this year to gather information on the agency's Member Service Assessment Pilot Program (MSAP).
"The town hall meeting in Los Angeles (July 16) was a valuable forum that enabled credit unions to share their ideas and innovations about service to members across the economic spectrum.
"Every time we host an Outreach Task Force meeting, new and helpful information is related, and the process of gaining a clearer picture of the industry's outreach efforts is furthered," Hyland said in a release.
She encouraged credit unions to participate in the final two meetings, one in Denver, Colo., on Aug. 15 and the other in Washington, D.C. on Oct. 2.
"I look forward to the final two meetings and to working with the Task Force while reviewing and considering the broad range of valuable information gained from the series of meetings," Hyland said, and assured credit unions that the NCUA has not made any decisions on any of the issues being considered by the Task Force.
Those issues include:
- NCUA programs and processes to encourage outreach to underserved communities;
- Data collection on member income and on executive compensation; and
- The value of low-income designation.
Inside Washington
- ALEXANDRIA, Va. (7/19/07)—The National Credit Union Administration Wednesday posted a revised version of the Federal Credit Union Act on its website. The amended act includes changes enacted by the 2006 Financial Services Regulatory Relief Act, signed into law Oct. 13 of that year ...
- WASHINGTON (7/19/07)--The insurance industry, House Republicans and the Bush administration expressed opposition Tuesday toward a measure by Rep. Gene Taylor (D-Miss.) to revamp the federal government's flood insurance program by including coverage for wind damage. Rep. Judy Biggert (R-Ill.) said she doubted Taylor's proposal because a quarter of the flood program policies fail to pay fair market value, and the concept of actuarial insurance pricing, in terms of hurricane damage, would not work in practice. Three insurance groups have written a letter opposing the bill, also (Congress Daily AM July 18). Taylor noted that his bill would help determine if wind or water was responsible for damage, since many insurance companies have denied coverage for wind damage in the aftermath of Hurricane Katrina. But gaining a consensus on the matter could be difficult--Rep. Richard Banker (R-La.) noted that Congress could let insurance companies authorize nationwide policies covering wind, flood and other problems, but that the insurers should be exempt from price caps mandated by the states. Maxine Waters (D-Calif.), Housing Subcommittee Chairman, said she was "disappointed" and "frustrated" by the lack of alternatives that have been offered to solve the debate ...
- WASHINGTON (7/19/07)--The following reports have been posted on the National Credit Union Administration's website for June 2007: Trade, Industry and Profession; Community Charters; Underserved Area; and the Multiple Common Bond Expansion ...
Talks open on first N.J. state CU in more than decade
HIGHTSTOWN, N.J. (7/19/07)--Chartering a new community development credit union (CDCU)--the first state-chartered credit union in New Jersey in more than a decade--was the subject of a recent meeting among officials of the New Jersey Credit Union League (NJCUL), the state banking department and a local community action partnership.
According to NJCUL Vice President James Merrill, Tri-County County Community Action Partnership of Bridgeton, N.J., approached the league seeking assistance. Tri-County is a non-profit group whose mission is to provide services that improve the quality of life and promote self sufficiency to residents of Gloucester, Salem and Cumberland counties.
"We felt the logical step would be to facilitate a meeting with the state Department of Banking," said Merrill. He and league General Counsel Robbie Thompson set up a meeting between Tri-County and the state banking department.
According to Tri-County CEO Albert Kelly, the group was interested in chartering a CDCU to offer financial services to recipients of Tri-County programs.
"Providing financial products and services, as a complement to our existing financial literacy programs, could help improve the quality of life for many people in our community," said Kelly, who participated in the talks. "The league and Department of Banking were extremely supportive in helping us understand the process involved in chartering a new credit union in New Jersey," added Kelly.
Among the issues discussed in the three-way talks were the chartering process and topics relating to starting a new credit union.
Also participating in the discussion were New Jersey Department of Banking staff Dave Weikert, Thomas Hunt, Bill Blunt and John Pavlovsky. Other participants from Tri-County were Chief Financial Officer Edward Bethea, and Freda Jones and Tim Behr.
"I am extremely happy with the outcome of the meeting and appreciative of the time and information provided by the New Jersey Department of Banking," Merrill said.
"Tri-County Community Action Partnership is committed to pursuing a credit union charter", said Bethea.
Cap One survey: Teens eager to learn more about money
McLEAN, Va. (7/19/07)--Another opportunity for credit union youth financial literacy programs: A survey finds that more teens--52%--want to learn how to manage their money, but a whopping 86% have never taken a personal finance class in school.
The results are from Capital One Financial Corp.'s seventh annual back-to-school shopping survey, whose findings were released Monday. The percentage of teens who want to learn money management skills increased to 52% from 49% a year ago. And 80% of teens believe learning money management basics now will serve them in the future.
But 86% haven't taken a personal finance class. And they're not learning management skills from their parents. Only 19% of parents discussed back to school budgeting with their teens, said Capital One, and only 22% of teens made a back-to-school list of items to purchase.
Thirty-five percent of teens surveyed said they prefer to learn from their parents. However, more than 36% of parents have not discussed back-to-school finances with their teens at all. Credit unions have an opportunity to fill in the gaps, working with classrooms or working directly with their members in helping teens learn more about money. According to the survey, here's what teens are most interested in learning:
- How financing works for large purchases such as a car or home (74%);
- Investing money (72%);
- Identity theft and how to protect themselves (68%);
- Saving money (62%);
- Budgeting (58%);
- Stocks (58%);
- Checking accounts (55%); and
- Credit cards (55%).
Capital One offered a number of financial education tips for parents, including using the Jump$tart Coalition for Personal Financial Literacy website for resources.
The Credit Union National Association, in its Resources of Youth and Young Adults webpage, notes that it is not necessary for a credit union to have an organized financial literacy program in place in order to help young members. For more ideas on helping teens, use the resource links.
Gen-X ahead of parents in retirement planning
ST. LOUIS (7/19/07)--Credit unions serving today's Generation Xers may have an easier time helping them with future retirement planning.
That's because Generation Xers are significantly ahead of other generations in saving for their retirements, according to a new study from financial brokerage firm Edward Jones (PRNewswire July 18).
The study indicates that all generations have begun to save at a younger age. Specifically, 68% of the work force aged 25 to 34 say they already are saving for retirement. However, for those over the age of 65, only 34% said that they began saving for retirement before the age of 34.
The phenomenon of younger generations starting to save earlier for retirement likely is due to the realization that Social Security is questionable as a dependable means of retirement income, and the increasing recognition that employee pension plans are fading, according to Cliff Helbert, Edward Jones principal responsible for retirement planning.
Higher education is strongly correlated with retirement planning, according to the survey. While only 62% of people with a Graduate Efficiency Diploma (GED) have put money aside for post-work years, 85% of college graduates have begun to save for retirement.
The survey also indicated that the higher the household income, the more likely it is that respondents will have started saving for retirement.
CU 24 elects board, officers
TALLAHASEE, Fla. (7/19/07)--Credit Union 24 shareholders elected Joan Santiago of IBM Southeast Employees FCU in Boca Raton, Fla., to fill a retiring member's seat on its board and re-elected two board members to second terms. The board also elected its officers for the 2007-2008 term.
Santiago is vice president of operations support with the credit union, where she has worked for more than 13 years. Santiago takes the seat of Paul Simkins, one of Credit Union 24's original founders, who has retired from the board.
Ray Cromer Jr., president/CEO of Envision CU in Tallahassee, Fla., was re-elected to another term, as was Marcia Garcia, senior vice president of human resources and development for Suncoast Schools FCU in Tampa, Fla.
Cromer has a long history with Credit Union 24. As a former board chairman of the Florida Credit Union League, he helped guide the network on its path to becoming an independent corporation.
Maria Garcia has more than 26 years of credit union experience, and has served on the Credit Union 24 Board of Directors since 2004.
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The board also chose officers to lead the 2007-2008 term. Cromer was re-elected as chairman; Mansel Guerry, president of Mississippi Employees FCU in Jackson, Miss., was elected vice chairman; and Chris Leggett, president/CEO of First Community CU in Columbia, Tenn., was re-elected as secretary/treasurer.
Other board members are Bradley Blake, president/CEO of Florida State University CU in Tallahassee, Fla.; Edwin Collins president/CEO of Lockheed Georgia Employees FCU in Marietta, Ga.; Alvin J. Cowans, president/CEO of McCoy FCU in Orlando, Fla.; and Larry Scott, president/CEO of Campus USA CU in Gainesville, Fla.
Mid Atlantic Corporate CEO to retire, Murray named successor
MIDDLETOWN, Pa. (7/19/07)--Edward J. Fox, president/CEO of Mid-Atlantic Corporate FCU in Middletown, has announced plans to retire in July 2008.
Jay R. Murray, a member of Mid-Atlantic's senior staff, will succeed Fox as president/CEO. Murray has been with Mid-Atlantic for more than 10 years.
Fox's retirement date coincides with his 65th birthday.
Fox joined Mid-Atlantic in 1989 after nine years at the Federal Reserve Bank of Philadelphia as financial services officer. Before joining the Federal Reserve, Fox was an assistant vice president at First Pennsylvania Bank (now Wachovia) in Philadelphia.
During his tenure at the corporate credit union, he has overseen the introduction and expansion of Mid-Atlantic's payment service offerings, including share draft processing, automated clearinghouse (ACH) services and the launch of a bill payment credit union service organization, MY CU Services.
Want more member business? Act like a CU, report says
MADISON, Wis. (7/19/07)--The more a credit union acts like a credit union, the more of its members' financial business it's likely to attract, according to a recent best practices report from the Credit Union National Association (CUNA).
"Credit Union Magazine Best Practices--Fatten Your Wallet Share: New Growth With Current Members" studies nine credit unions that are performing particularly well in the area of organic growth--or growth due to factors other than mergers.
The report examines these fast-growing credit unions' strategies for obtaining a greater share of members' wallets, including what they are doing to attract new members, bring in more assets per member, and make more loans per member.
These credit unions--ranging in assets from $7 million to $1.6 billion--reported that the cooperative principle of service and benefits to members is at the core of their success. The credit unions also actively encourage member participation because it helps members learn that the more services they use, the better the deal they get at their credit unions.
Additional strategies discussed in detail include: developing a corporate culture of caring, using members' feedback to set policies, responding to members' financial needs, educating members, and more.
Best practices reports on succession planning, serving members of modest means, growing youth membership, business service providers, consumer lending, credit counseling, disaster recovery, and risk-based lending also are available through CUNA.
Bay Area CUs make state history in community CU partnership
EAST PALO ALTO, Calif. (7/19/07)--Four credit unions are making state history by commiting to a partnership to open a community credit union in East Palo Alto.
Stanford FCU of Palo Alto, Patelco CU of San Francisco, and Addison Avenue FCU of Palo Alto will commit capital and expertise to launch the new credit union. The East Palo Alto CU will open as a branch of Community Trust CU (CTCU) in Modesto, leveraging CTCU's expertise in community revitalization and Latino outreach.
The goal of the project is to establish an institution that will contribute to the economic stability in East Palo Alto by providing basic financial services to members of the community.
"This credit union will provide much-needed services," said East Palo Alto City Council member Ruben Abrica. "People have historically had to struggle in our young city. We're hardworking people overcoming obstacles."
John Davis, CEO of Stanford FCU, continues working to attract credit union partners for the project.
"We know that many people in the community are ‘unbanked' and lack access to capital for purchasing a home or car," he said. "Through this partnership, we hope to begin to build an economic base for the citizens of East Palo Alto."
Stanford FCU will mentor community leaders and create a framework for proper policies, procedures and financial goals. The credit union partners have coordinated efforts to build a $10 million asset base for the project, which will include private donations and community reinvestment. Davis is heading the effort through personal outreach.
Contributing credit unions will donate money for operating capital; invest $100,000 in the new institution's certificates of deposit at 0% interest for three years, which provides addition operating capital for the project; buy loans; provide quarterly performance reviews of the institution; and assist with member education.
The credit union is slated to open in September.
Patelco CU has $4 billion in assets; Addison Ave has $2 billion; Stanford has $640 million; and CTCU has $50 million.
CU's microloan propels small biz to $3 million DoD contract
BURLINGTON, Vt. (7/19/07)--A Vermont credit union's microloan to a member five years ago was the first step in a small business that grew and grew. Today, that business has been awarded a $3 million contract from the Department of Defense.
According to the Association of Vermont Credit Unions (AVCU), Mark Harvie began work on an invention that was financed with a micro-business loan from Opportunities CU, based in Burlington (Newslines Express July 13).
His company, Omni Measurement Systems, recently received a $3 million contract from the Defense Department to develop a bladder relief system for Air Force pilots. Harvie invented, developed and holds the patent on the system, and recently purchased a facility that will add 67 jobs in the community, said AVCU.
In 2002, Harvie and three other people approached the $32.2 million asset credit union for a loan to buy machining equipment. "We had intellectual property and no assets and had been turned down by all the banks in town," Harvie said. He was especially appreciative of the credit union's willingness to get involved when other state financial institutions wouldn't.
Opportunities CU CEO Caryl Stewart said in a press release that "Mark was a creative guy who was being ignored by the system. It is people like him who will grow Vermont's economy and create jobs if given the chance."
The credit union made a series of small loans to Harvie, assisted him in the equipment for the research and development of his project and established a line of credit that allowed the project to progress.
When the fledgling company was awarded the contracts and grew too big for Opportunities to help, the Vermont Economic Development Authority (VEDA) stepped in with funding for the new facility. "This company's story is a great example of how small businesses in Vermont can creative positive impacts on a global scale," sadi VEDA CEO Jo Bradley.
Impact of 'Ditch bank' article swamps server
RANCHO CUCAMONGA, Calif. (7/19/07)--Details have surfaced about Monday's logjam on the CU MatchUp online locator tool, which temporarily swamped its server. The logjam was attributed to an article, "Ditch Your Bank for a Credit Union," which was published Monday morning on MSNMoney.com.
The article told consumers of the virtues of credit unions and suggested ditching banks and their fees by joining a credit union. It carried a link to CU MatchUp.
According to Bill Cheney, president/CEO of the California Credit Union League, which hosts the site, the site had an unusually high amount of traffic as people used the MSNMoney.com link to CUMatchup.
He provided these statistics compiled by John Drago, the league's information technology director:
- MatchUp normally has 545 visitors a day; on Monday, 8,964 visitors logged on to the site;
- Unique visitors on a normal day total 455; on Monday they totaled 7,971;
- Hits on a normal day total 5,143; on Monday, hits totaled a whopping 87,935.
- Daily searches for the site average about 300; the searches Monday totaled 6,054.
The article, written by columnist Liz Pulliam Weston, outlined several distinctions between credit unions and banks and cited statistics from the Credit Union National Association of savings garnered by 90 million credit union members because of reduced fees and better interest rates.
CU System briefs
- ARLINGTON, Va. (7/19/07)--The National Association of State Credit Union Supervisors (NASCUS) announced Wednesday that D. Scott Parsons, former U.S. Treasury deputy assistant secretary, will speak at a general session of the NASCUS State System Summit, to be held Aug. 9-11 in Fort Lauderdale, Fla. He will focus on the importance of public and private partnerships in homeland security and disaster recovery efforts. Parsons also will address state regulators at a Regulators Only Session Aug. 10 ...
- ALBUQUERQUE, N.M. (7/19/07)--The Credit Union Association of New Mexico (CUANM) and its affiliated credit unions raised $45,000 for the University of New Mexico (UNM) Children's Hospital during CUANM's annual convention, Silver Star Gala and Silver Star Classic golf tournament. Spearheaded by CUANM, credit unions in New Mexico are working toward raising $1 million by 2009 for the construction and equipment of a new pediatric unit in the new UNM Hospital addition. The hospital opened to patients in June ...
- LATHAM, N.Y. (7/19/07)--Newly elected state Assembly members Ellen Jaffee (D-Rockland) and Kenneth Zebrowski Jr. (D-Rockland) joined the Westchester-Rockland chapter of the New York State Credit Union League for an informal lunch at Palisades FCU to discuss credit union issues.
From left are: Laiq Dogra, Empire State CU; Mark Welshoff, Palisades FCU; Assemblywoman Jaffee; Ihor Makarenko and Peter Mul, SUMA (Yonkers) FCU; and Assemblyman Zebrowski. After reviewing the league's legislative agenda, the group discussed how credit unions are uniquely positioned to help underserved areas. Also attending were representatives from USAlliance FCU. Amy Kramer, vice president of governmental affairs, and Allison Doney, advocacy specialist, represented the league. (Photo provided by the New York State Credit Union League) ...
- LATHAM, N.Y. (7/19/07)--The New York State Credit Union League received three awards of excellence from the 19th (2007) Annual APEX Awards for Publication Excellence. Awards were in the categories of Magazine and Journal-Print over 32 pages for its quarterly four-color Connection; Covera Card Solution's ATM awareness campaign, At Home...Far Away...And Everywhere in Between; and the New York Credit Union Foundation's Solutions to the Youth Financial Literacy Puzzle Campaign. The 2007 APEX international competition attracted nearly 5,000 entries for 105 award subcategories ...
- JACKSONVILLE, Fla. (7/19/07)--VyStar CU, a $3.169 billion asset credit union based in Jacksonville, will receive tax incentives for its planned Fleming Island service center, which will include nearly 300 jobs relocated from Jacksonville. The Clay County Commission on July 12 approved the economic development grant, which cannot exceed the amount of property taxes resulting from VyStar's $1.4 million capital improvement project. The credit union is purchasing the 85,000-square-foot former AmeriCredit Corp. building and has committed a total capital investment of $20 million. The rebate is 75% of the property tax bill (The Florida Times-Union July 12) ...
- WILMINGTON, N.C. (7/19/07)--James "Jimmy" C. Peterson, retired vice president at the Wilmington branch of Raleigh-based State Employees' CU, died July 10 after an extended illness. He was 61. Survivors include his mother; the mother of his children; one daughter; one son; a sister; and two grandchildren. Memorial services will be Saturday in Raleigh (The News & Observer July 17) ...
Market News
MADISON, Wis. (7/19/07)
- Consumer prices cooled in June as lower energy costs offset another increase in food costs. The consumer price index (CPI) rose 0.2% in June--slowing from a 0.7% jump in May, the Labor Department reported Wednesday. Food prices increased 0.5% last month, the 6th consecutive gain. Energy costs fell 0.5% following a 5.4% jump the previous month. Excluding the volatile food and energy categories, the core CPI rose 0.2%--reflecting higher costs for housing, vehicles, clothing, and medical care. Over the 12 months ending in June, the core CPI was up 2.2% compared with a 2.7% advance in the overall CPI. Despite the decline in energy costs last month, the Labor Department noted that energy costs surged at a 27.8% annual pace during the first half of the year--accounting for 48% of the increase in the overall CPI (Reuters July 18). And energy costs have rebounded this month, suggesting a bigger increase in headline inflation ahead. In Congressional testimony yesterday, Federal Reserve Chairman Ben Bernanke said inflation remains the primary concern of the central bank. However, he also noted that the housing slump may last longer than expected ...
- The latest housing-market indicators are mixed. Housing starts rose 2.3% in June to an annual pace of 1.467 million units, the Commerce Department reported yesterday (Bloomberg.com July 18). However, the gain was led by a 13% jump in multifamily building to an annual pace of 316,000, while construction of single-family homes declined by 0.2% to a 1.15 million rate. Building permits fell to an annual rate of 1.406 million units last month--the lowest pace in a decade and suggesting slower construction ahead. In another sign of weakness, the National Association of Home Builders (NAHB)/ Wells Fargo Housing Market Index fell four points to 24 in July--the lowest level since January 1991 (nahb.org July 17). "Builders are actively trimming prices and offering buyer incentives to work down their inventories, but meanwhile there is a large supply of vacant existing homes on the market, and affordability problems persist despite efforts to attract buyers," said NAHB Chief Economist David Seiders. However, he predicts that the home-construction market will start a "gradual recovery" early in 2008 ...
- Mortgage activity rose slightly last week, according to the latest report by the Mortgage Bankers Association (MBA) (mbaa.org July 18). The group's Market Composite Index edged up 0.9% during the week ending July 13 to 631.6, as a 4.9% jump in refinancings offset a 1.6% drop in purchase applications. Purchase activity had been elevated in recent weeks. However, analysts noted that some buyers are submitting several applications in an effort to obtain a mortgage as lenders tighten standards and rates continue to rise. The MBA said mortgage rates were mixed last week. The average 30-year, fixed-rate mortgage (FRM) edged down 4 basis points to 6.61%, while the one-year, adjustable-rate mortgage (ARM) was unchanged at 5.60%. The 30-year FRM is now 13 basis points lower than a year ago, while the one-year ARM is 68 basis points lower, noted Moody's Economy.com (July 18). The research firm said the housing-market slump will continue as current homeowners and brokers offer sharp discounts to attract buyers, lenders continue to tighten standards, and the Federal Reserve holds off on cutting interest rates ...
- While the housing slump may last longer than expected, inflation remains "the predominant policy concern" of the central bank, said Fed Chairman Ben Bernanke. In testimony to the House Financial Services Committee yesterday, Bernanke said the economy will probably expand at a modest pace during the second half of the year while core inflation (excluding food and energy costs) will ease slightly. But he noted that the "sizeable" gains in food and energy prices that have increased inflation and "eroded real incomes in recent months" are "unwelcome developments." Bernanke also promised stricter standards on mortgage lending. "We plan to exercise our authority under the Home Ownership and Equity Protection Act to address specific practices that are unfair or deceptive," said Bernanke. "I expect that the Board will propose additional rules under HOEPA later this year." Most analysts expect the Fed to keep the target for the fed funds rate at 5.25%, where it has been for more than a year (Bloomberg.com July 18) ...
- Home-mortgage debt in the U.S. will grow at a below-average pace during the next four to five years, said Fannie Mae Chief Economist David Berson. He predicts that home-mortgage debt will rise just 5.7% this year as the housing-market slump continues and job growth slows. Single-family mortgage growth topped 10% for five consecutive years before slowing to 9.6% growth in 2006. Berson noted that growth in mortgage debt during the first half of the 1990s also was lower than its average range of 6 % to 9%. Berson said the economy needs stronger business investment to stimulate growth while the housing slump continues. (Bloomberg.com July 18) ...
News of the Competition
MADISON, Wis. (7/19/07)
- Countrywide Financial Corp., Option One Mortgage Corp., and Merrill Lynch's First Franklin Financial unit said they will no longer offer 2/28 subprime loans, which have a low fixed rate for two years before converting to a higher, variable rate that often tops 10%. Investor demand for 2/28 subprime loans is "very, very limited," said a Countrywide spokesman. Soaring delinquencies and defaults have made investors leery of buying such loans. And regulators are pushing for tighter standards. Borrowers are finding it hard to refinance or sell when their mortgages reset because interest rates have risen and home prices have declined in many areas. Countrywide and First Franklin plan to continue offering similar loans that reset after three years, which gives borrowers more time to improve their financial situation (The Wall Street Journal Online July 18) ...
- Mortgage servicers are gong to great lengths to contact delinquent customers who are disinclined to talk with them. Quantum Servicing Corp. plans to send 100 free cell phones with 50 minutes of prepaid call time, which can only be activated for further use after the borrower calls the company. Quantum says it works out repayment plans or modifications for about three-fourths of the delinquent borrowers it reaches. However, it is able to contact only about one-fourth of such borrowers. Joe Caravetta, a vice president and default manager at Quantum, said another mortgage servicer he worked for mailed free calling cards to delinquent customers. He noted that Quantum also has mailed Starbucks gift cards to delinquent borrowers. "Anything we can do to make the borrower comfortable with us," said Caravetta (American Banker July 18) ...
- Wells Fargo launched a new money transfer program Tuesday that makes it easier for consumers to send money home to their families in Mexico and other foreign countries. In the new ExpressSend program, Wells Fargo customers with eligible checking or savings accounts can have their remittance transaction fees discounted or even waved. They can send funds account to account, account to cash, cash to cash and cash to account, said Wells Fargo. The preferred method of transfer will be account to cash, noted Daniel Ayala, head of global remittance services at the company. "This opens the service for use by a larger number of remitters whose friends and family overseas do not have bank accounts in their home country," said Ayala. Customers also will be offered detailed information on fees and foreign exchange rates--a move that was praised by consumer-advocacy group Appleseed. "We're happy to see any initiative to give more complete pricing," said Appleseed Senior Policy Analyst Ann Baddour (PRNewswire-First Call/ and Associated Press via The New York Times July 17) ...
- About 80 defendants--including affiliates of Merrill Lynch, Lehman Brothers Holdings, Allstate, and Prudential Financial--will pay $149.2 million to settle lawsuits by a group of Enron Corp. creditors, which accused them of receiving preferential treatment and fraudulent transfers to the detriment of other creditors of the bankrupt energy firm. Enron paid more than $1 billion from October 26 and November 6, 2001 to purchase back commercial paper, even as the firm was shut out of the market amid concerns about accounting fraud. The company filed for bankruptcy protection in December 2001. The creditors said they plan to continue a lawsuit against another 100 defendants. Enron's bankruptcy resulted in the loss of thousands of jobs, $1 billion in retirement funds, and $25 billion in stock losses for investors (Reuters and Bloomberg.com July 18) ...
Consumer brief
- WASHINGTON (7/19/07)--Think twice before opening that E-Card--a fake one is being spammed worldwide and it has a nasty computer virus just waiting to be unleashed with the click of your mouse. The greeting is a replica of the well-known Hallmark E-Card or MyPostcards.com. The recipient is instructed to click on a link to view the greeting card. However, the link goes to the hacker's website and opens a file called "postcard.exe." Opening an "executable" file from an unknown source could have the consequence of downloading a Trojan or other unwanted program that damages your computer and creates a security risk. Don't do it (consumeraffairs.com July 9) ...
Fiserv in Business Week’s top 100 IT companies
BROOKFIELD, Wis. (7/19/07)--Fiserv Inc., a provider of information management systems and services, has been selected by Business Week magazine as one of the Future of Tech 2007 Information Technology Top 100 Companies.
Fiserv is ranked at 97. This is the first time the company has been selected for the list.
"This is a great honor," said Norm Balthasar, Fiserv senior executive vice president and chief operating officer. "Banks and financial institutions require constant innovation and the best possible technology to serve their customers. This is the cornerstone of our Fiserv 2.0 mission we announced last year."
Business Week cited Fiserv's acquisition of NetEconomy, a provider of financial crime management and compliance solutions, as one of the reasons why the company made the list.
Fiserv, a Fortune 500 company, serves more than 18,000 clients globally, including credit unions.
Wescom Resources Group rebrands online solutions
PASADENA, Calif. (7/19/07)--Wescom Resources Group (WRG), a provider of advanced technology solutions for credit unions, has rebranded its suite of online banking solutions to MemberEdge.
The rebranding effort works to simplify and unify the company's products and services. WRG is launching MemberEdge through print advertising and other marketing materials.
MemberEdge's online banking solutions include features such as: account balances and history, transaction history, new account opening, transfer, member inquiries, marketing banners and promotions, and application administration and reporting.
Optional MemberEdge add-on products have been categorized into custom suites based on their specific features. Borrowing the "M" and "E" initials from the MemberEdge name, they are called ConnectME, TellMe, SecureME, and BillME.
ConnectME enables members to connect to third-party financial accounts and information, TellME communicates with members about their accounts, SecureME protects members against Internet security threats, and BillME enables members to manage and pay their bills online.
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