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Filed on October 25, 2005, published the first business day after.
- Nominees one step closer to NCUA Board
- Inside Washington
- South Florida CUs recovering from Hurricane Wilma
- Merger to join VolCorp, WesCorp
- ‘Knucklehead’ CU robber seeks parole
- New York Assembly member learns how credit unions work
- WOCCU coordinates European Parliament breakfast seminar
- Nov. 15 deadline set for NCUF grant proposals
- Market News
- News of the Competition
- Bankruptcy filers must first go through credit counseling
Nominees one step closer to NCUA Board
WASHINGTON (10/25/05)—The National Credit Union Administration (NCUA) Board came one step closer to its full complement of three members Tuesday when the Senate Banking Committee conducted its nomination hearing for both Rodney E. Hood and Gigi Hyland who are the President's candidates to fill the two vacant seats at the agency.
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 Click for slide show. NCUA board nominees Gigi Hyland (left) and Rodney Hood (right) take the oath at their nomination hearing before the Senate Banking Committee. (Photo provided by CUNA) |
Hood and Hyland were presented and endorsed by Senate notables from their home states. Republican Sens. Elizabeth Dole and Richard Burr, both of North Carolina, introduced Hood, noting his extensive background in the financial industry and in public service. And Sen. John Warner (R-Va.) introduced "another Virginian," Hyland, whose family comes from Fairfax, saying he was "swept away" with her accomplishments in life.
If approved, Hood and Hyland would join Chairman JoAnn Johnson on the NCUA Board. The candidates are expected to be approved by the committee, confirmed by the Senate, sworn in, and in place at the agency prior to a Nov. 29 open board meeting.
At the Banking Committee hearing, the candidates were lightly questioned by Committee Chairman Richard Shelby (R-Ala.)
Shelby asked Hood if there are any current trends that threaten the safety and soundness of the credit union movement, and Hood replied that any trend toward adding additional federal taxes to credit unions would pose just such a threat.
Of Hyland, the committee chairman asked what is the appropriate role of a regulator and to what extent should a regulator appear as an industry advocate. Hyland said that a line must be drawn by a regulator between listening to the concerns of those being regulated and then using independent judgment regarding the resolution of different matters.
Hyland said credit unions' concerns and the movement's need for regulatory flexibility must all be balanced in the interest of maintaining safety and soundness of credit unions and of the National Credit Union Share Insurance Fund.
The Credit Union National Association (CUNA) endorses both Hood and Hyland for NCUA positions. Hood was nominated to the NCUA on May 10 to fill a vacancy created when Dennis Dollar left his position more than a year ago. Hyland's name was sent to the Senate for confirmation on Sept. 30. She would fill the board seat recently vacated by Debbie Matz. Assuming confirmation, Hyland's term would expire in 2011 and Hood's in 2009, according to the White House.
Hood currently serves as associate administrator of the Rural Housing Service at the U.S. Department of Agriculture (USDA), a position to which Bush appointed him in September 2004. Rural Housing Service is the largest direct lender of loans in the Federal Government, according to USDA.
Hood previously served as marketing director and group sales manager for the North Carolina Mutual Life Insurance Company in Durham, N.C. His prior experience includes work with emerging markets at Wells Fargo and community development programs at Bank of America.
Hyland is senior vice president, general counsel for Empire Corporate FCU in Albany, N.Y. She previously was executive director for the Association of Corporate Credit Unions. Hyland received her bachelor's degree from the College of William and Mary and her law degree from George Mason University.
Inside Washington
- WASHINGTON (10/26/05)—The Office of the Comptroller of the Currency said it is alright for banks in areas affected by Hurricane Wilma to relax their terms for customers hit hardest by the storm. The agency said banks will not be subject to additional regulatory scrutiny for extending repayment terms, restructuring debt obligations, or easing credit terms for new loans to some borrowers as long as those measures taken are consistent with prudent banking practices. (American Banker Oct. 25)...
- WASHINGTON (10/26/05)—The Federal Deposit Insurance Corp. has updated its online economic database with second quarter information on personal bankruptcies, total personal income growth, non-wage income growth, wage and salary income growth, labor force and population data, multifamily housing permit growth, municipal unemployment rate, single family housing permit growth, total housing permit growth, unemployment rate, foreclosures, and delinquencies. The data can be found at www2.fdic.gov/recon. (American Banker Oct. 25)...
South Florida CUs recovering from Hurricane Wilma
TALLAHASSEE, Fla. (10/26/05)--Many south Florida credit unions reopened today, but others remained closed as they continued to cope with damage from Hurricane Wilma.
Most of the closed credit unions were coping with the loss of power, but a few lacked communications and several reported to the Florida Credit Union League that offices had sustained serious damage. Among the credit unions hit hardest by Wilma was Sun CU, Hollywood, where the two-story main office was "destroyed" when the hurricane removed the roof and the second floor, according to Mark Ivester, the league's vice president of communications.
Ivester said Florida Power and Light Co. estimated it could take up to four weeks to fully restore power throughout the state.
Telecommunications were also affected, making it difficult for the league to obtain damage reports from credit unions. Meanwhile, many credit unions are struggling to communicate with employees and members.
Hurricane Wilma lacked the storm surge that proved devastating in New Orleans, Ivester said. However, Hurricane Wilma's final quadrant was unusually strong, meaning that parts of south Florida were hit by two waves of devastating Category 3 winds at the beginning and the end of Wilma's progress through the region.
The National Credit Union Foundation is working with the Florida League to assess the needs of impacted credit unions and will provide assistance from undesignated funds as needed.
Merger to join VolCorp, WesCorp
NASHVILLE, Tenn. (10/26/05)--Volunteer Corporate CU (VolCorp) and Western Corporate FCU (WesCorp), San Dimas, Calif., have announced plans to merge.
Chartered in 1981, VolCorp has $1 billion in assets and serves 258 credit unions in Tennessee and the southeastern U.S. WesCorp has more than $25 billion in assets and serves 1,066 credit unions in 41 states and Guam.
As part of the merger, WesCorp has agreed to retain all VolCorp's existing staff and keep a permanent office in Nashville. One director from VolCorp's board will be appointed to the WesCorp Board of Directors and VolCorp's current directors will serve on a Southeast Advisory Committee that will meet periodically with the WesCorp board and senior management.
"By aligning VolCorp's strong member relationships with extraordinary investment and payment systems skills and capabilities, the combined VolCorp and WesCorp will increase the viability and competitiveness of our credit union family," said Blake Strickland, VolCorp chairman of the board.
The merger must be approved by both the National Credit Union Administration and the Tennessee Department of Financial Institutions, which may take up to 120 days. A majority of VolCorp's member credit unions must then vote in favor of the merger before it becomes final.
‘Knucklehead’ CU robber seeks parole
UTAH STATE PRISON (10/26/05)--A prisoner who robbed Goldenwest CU when he was just 15 years old said he was just a knucklehead kid when he committed the act. But a parole official seemed doubtful that serving three years of a potential life sentence for aggravated robbery has changed Matthew Ricky Prieto, now age 19 (Deseret Morning News Oct. 24).
Cheryl Hansen, the Board of Pardons and Parole Board member reviewing Prieto's case, told Prieto at his parole hearing that he was being "the same knucklehead" in prison. She pointed to numerous infractions of prison rules to explain why Prieto is unlikely to get out soon.
Prieto robbed Goldenwest CU in 2001 by pulling a BB gun on the branch manager as she was opening the office for business. He escaped with $91,200.
Six months later, his stepfather robbed the same branch of $2,000. Prieto has been ordered to pay a minimum restitution and may be ordered to pay for counseling that the branch manager completed after the robbery.
New York Assembly member learns how credit unions work
LATHAM, N.Y. (10/26/05)--Robert Reilly, a first-year member of the New York State Assembly, recently asked the New York State Credit Union League for more information about how natural-person and corporate credit unions work.
That conversation led Reilly to request visits to Capital Communications FCU and Empire Corporate FCU. Accompanying Reilly were Vice President Amy Kramer and Advocacy Specialist Danielle Marion from the New York State Credit Union League's Governmental Affairs department.
At Empire Corporate FCU, Reilly met with President/CEO Joseph P. Herbst; Dirck Van Deusen, senior vice president of corporate relations; Gigi Hyland, senior vice president/general counsel; and Nancy Virkler, senior ice president/operations. Topics included the differences between credit unions and banks and why the not-for-profit, tax-exempt status of credit unions is at the core of putting people first.
Reilly then toured Capital Communications FCU's main branch, guided by President/CEO Paula Stopera. The assemblyman asked questions about security issues and congratulated the credit union on being named one of the top places to work in the Capital District by The Business Review.
WOCCU coordinates European Parliament breakfast seminar
BRUSSELS, Belgium (10/26/05)--Members of the European Parliament learned more about credit unions at a breakfast seminar sponsored by the World Council of Credit Unions, Inc. (WOCCU) and its European members from Ireland, Great Britain, Poland and Romania.
The seminar was held within the parliament and hosted by Brian Crawley and Marian Harkin, both Irish members of the European Parliament.
The meeting included a vigorous discussion of the potential impact of the consumer credit directive on credit unions in the European Union. One European Parliament member also reported that a credit union loan helped finance her campaign.
Credit union representatives attending the seminar included Liam O'Dwyer, Uel Adair and Noel Madden of Ireland; Grzegorz Bierecki and Pawel Grezsik of Poland; Gary Plank, Pete Crear and Dave Grace of WOCCU; Roney Hobley and Ciara Morrison of Great Britain; Florin Simion from Romania; and Eleonora Zgonjanin from Macedonia.
Nov. 15 deadline set for NCUF grant proposals
MADISON, Wis. (10/26/05)--Completed applications are due by Nov. 15 from credit unions, state associations, foundations and other system affiliates seeking grants from the National Credit Union Foundation (NCUF).
NCUF has $600,000 available for distribution to support programs aimed at four objectives:
- Consumer access to credit unions
- Financial education for members of the public
- Savings and/or asset accumulation
- Small credit union development
NCUF's Grants Committee will review applications and select recipients by Dec. 15. Questions about the grant process should be directed to Martha Dodson in NCUF Institutional Relations at mdodson@ncuf.coop. Use the resource link below to access the grant form.
Market News
MADISON, Wis. (10/26/05)
- Consumer confidence fell to a two-year low this month amid worries about rising energy prices. The Conference Board's consumer confidence index fell by 2.5 points to 85--following an 18-point plunge in September. It was the lowest level since October 2003. "Much of the decline in confidence over the past two months can be attributed to the recent hurricanes, pump shock and a weakening labor market," said Lynn Franco, director of the Board's Consumer Research Center. Franco said the "degree of pessimism, in conjunction with the anticipation of much higher home heating bills this winter, may take some cheer out of the upcoming holiday season." Consumers of natural gas can expect to spend at least $500 more for heating this winter, while those using heating oil can expect to pay about $378 more. These costs mean consumers will have less to spend on other goods and services. And expected further increases in interest rates by the Federal Reserve could dampen consumer confidence even more as debt burdens and borrowing costs rise. The National Retail Federation predicts that holiday retail sales will total $435.3 billion this season--up just 5% from last year and the weakest gain since 2001 (Bloomberg.com and Economy.com Oct. 25)...
- Sales of previously-owned homes were unchanged in September at an annual pace of 7.28 million units--the 2nd-highest level on record, according to the National Association of Realtors. NAR said sales would have declined last month if not for increased demand following Hurricane Katrina. For example, sales tumbled 85% in New Orleans but surged 150% in nearby Baton Rouge. "The nearby regions picked up a great deal of activity very quickly," said NAR chief economist David Lereah. NAR predicts that existing-home sales will total 7.10 million units this year—up from 6.78 million last year (The Wall Street Journal Online and Economy.com Oct. 25)...
- Hurricane Wilma could be the nation's 3rd-costliest storm in history, according to a forecast by AIR Worldwide (CNN/Money Oct. 25). Insured losses from Wilma could total $6 billion to $9 billion--making its losses behind only this year's Hurricane Katrina and Hurricane Andrew in 1992. "The largest driver of losses will be the concentration of properties on Florida's east coast between West Palm Beach and Miami," said Jayanta Guin, vice president of modeling at AIR. Hurricane Andrew caused inflation-adjusted insurance losses of almost $21 billion in 1992, while this year's Hurricane Katrina caused a record loss of $34 billion...
- BP PLC, the 2nd-largest publicly-traded oil company in the world, reported a 34% surge in earnings for the third quarter as soaring oil prices more than offset the impact of repair costs and lost production from the Gulf Coast hurricanes. BP said its net profit rose to $6.53 billion last quarter. Royal Dutch Shell PLC and Exxon Mobil Corp. will report their third-quarter earnings later this week. Oil prices peaked at $70.85 a barrel on the New York Mercantile Exchange on August 30 after Hurricane Katrina slammed into the Gulf Coast. Prices have moderated since then. However, oil prices "are expected to be well supported into the winter," said BP chief executive Lord Browne (The Wall Street Journal Online and Associated Press via The New York Times Oct. 25)...
- Businesses are responding to record-high energy costs by boosting prices for their own goods and services, according to Economy.com's latest Survey of Business Confidence (Oct. 24). Only a few firms said they aren't raising prices. Confidence remains remarkably stable despite the impact of the Gulf Coast hurricanes, notes Economy.com. However, firms are less confident about business conditions six months from now. Real-estate and construction companies are the most upbeat, while retailers are consistently pessimistic...
News of the Competition
MADISON, Wis. (10/26/05)
- Many banks are warning that the new bankruptcy law will have a large impact on their bottom line because the expected surge in filings has been much larger than first forecast (The New York Times Oct. 25). More than 500,000 people filed for bankruptcy protection during the 10 days before the new law took effect on Oct. 17, according to Burlingame, Calif.-based Lundquist Consulting. That total is about one-third the total number of filings made during all of last year. The new law makes it harder for consumers to file for bankruptcy protection. The nation's five largest credit-card issuers have said that the unexpectedly large increase in filings has slashed hundreds of millions of dollars from their third-quarter earnings. And many firms say the filings will also affect their fourth-quarter results. "This by far exceeded our expectations, this spike in bankruptcies," said Alvaro G. de Molina, chief financial officer of Bank of America, which will become the largest credit-card issuer in the U.S. after it completes its acquisition of MBNA Corp...
- Most borrowers are paying against the principal on their interest-only mortgages despite soaring energy prices, according to a survey by Wells Fargo (BizJournals via mbaa.org Oct. 25). Seventy-three percent of the 8% of homeowners with interest-only mortgage loans in the study said they pay both the principal and interest at least some of the time. "It's obvious from the survey that homeowners understand the loan options they choose and how they manage what's likely their largest asset—their home," said Doreen Woo Ho, president of the San Francisco bank's consumer credit group. Industry analysts noted that the poll's sample size of 1,300 homeowners could be too small to extrapolate results. And they noted that most interest-only loans were made only recently, so that analysts don't yet know how they'll season...
- Banks are using new software to track how people surf through their Web sites in an effort to detect fraud (American Banker Oct. 25). Redwood Shores, Calif.-based Business Signatures Corp., which tracks what users do after they log in, will have the ability to block suspicious transactions by midyear. A new application from Hillsboro, Ore.-based Corillian Corp. tracks which pages people view on a bank site to spot criminals planning to create fake Web sites. Jim Maloney, chief security executive at Corillian, said a top-10 financial institution that started using its software this year virtually eliminated "successful phishing attacks related to its online banking service." Peter Relan, chairman and chief executive of Business Signatures, said his application performs a similar task but after the customer has logged in. However, anti-fraud software that operates behind the scenes addresses only half the job, noted Bruce Cundiff, a research analyst at Pleasanton, Calif.-based Javelin Strategy and Research. He said visible security systems can reassure consumers. "How much value is an invisible solution if half of what I'm dealing with is consumer perception" said Cundiff ...
- Bank of America is offering credit cards to its ATM customers (American Banker Oct. 25). Kirk Lindsey, the Charlotte bank's ATM executive, said 200 of its almost 1,700 ATMs started offering credit cards last week in a pilot program. He said offers are made to the firm's mailing-list customers. Lindsey said that while banks typically are cautious about adding ATM features because they could boost wait times for customers, he doesn't expect the card offers to take up much time. Chris Gill, a senior manager for Boston-based Dove Consulting, said offering credit cards via ATMs yields several advantages. He noted that acquisition costs are lower than for direct mailings, and ATMs can reach many people quickly. J.P. Morgan Chase has been offering credit cards at its New York-area ATMs since 2003. Spokespeople for Citigroup and BB&T Corp. said their firms are considering offering cards via their ATMs ...
Bankruptcy filers must first go through credit counseling
NEW YORK (10/26/05)--New bankruptcy rules took effect Oct. 17, and consumers are asking all the right questions, including whether they have to go through credit counseling before they file. The answer: Yes (SmartMoney.com Oct. 13).
Now, when you file for bankruptcy, you must submit paperwork certifying that you have participated in a two-hour credit counseling session with an approved credit-counseling agency. The session must be completed within six months before the filing date. If the credit counselor recommends that you go through an independent repayment plan instead of filing for bankruptcy, and you still decide to file, your Chapter 7 filing may be dismissed or converted to a Chapter 13, with your agreement.
There's more. Both Chapter 7 and Chapter 13 filers are required to attend a personal financial management course before exiting bankruptcy. This can be done in person, over the phone or online.
Contact the National Foundation for Consumer Credit at 800-388-2227 (nfcc.org) for the location of the nearest nonprofit Consumer Credit Counseling Service.
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