RESOURCES
— CUNA's CPDOnline
CPDOnline is a web-based training service that includes everything you need to manage your credit union training program from start to finish.
— FACT Act Guidelines and Rules on Identity Theft “Red Flags” and Change of Address Discrepancies
— Compliance Frequently Asked Questions - April 2008 Publication
[More]
April 24, 2008
> An award-winning publication of the Virginia Credit Union League.
> Your comments and submissions are always welcomed. E-mail pr@vacul.org.
> Visit the Virginia Credit Union League Homepage
In Today’s Edition …
Headline News
Education & Networking Opportunities
Compliance/Regulatory Affairs News
Governmental Affairs News
League News
Chapter News
Marketing News
Financial Literacy News
News From Credit Unions
News About Credit Unions
Consumer/Marketplace News
Technology News
Security/Fraud Prevention
Competition News
Reminders
Headline News
Entries Sought for League Financial Literacy Awards; Deadline May 1
Get recognized for your good works in delivering financial education! The Third Annual Virginia Social Responsibility Awards program recognizes all National Youth Involvement Board (NYIB) classroom presenters and will present the following financial literacy-related awards: Financial Literacy Visionary, Youth Advocate of the Year, Education Partner of the Year, and Class Act. The Awards Celebration will be held in Charlottesville on June 18. Deadline for submitting your entries is May 1! [Note: These awards are separate from the Desjardins Youth Financial Education Awards. Desjardins entries will be due Aug. 1, 2008. Details to follow.]
All About Branding: Marketing Workshop Set for April 30
We have all heard that branding is about the logo, colors, print materials and promotions created in the Marketing Department. The truth is that branding is about the members’ experiences with your organization, which involves Member Services, Lending, Accounting and even the Information Systems Department. Come learn how branding is not just a marketing thing anymore at the Credit Union Marketing Council of Virginia’s April 30 workshop in Richmond.
> Morning Session … “Confessions of a Brandaholic - A Branding Conversation” with Tina Gibson - President, So Savant (www.sosavant.com)
You know them: Workaholic. Shopaholic. Chocoholic. Now, meet a Brandaholic. During this interactive session, self-proclaimed Brandaholic Tina Gibson will share branding myths and truths and take you on a trip through the “Land of Brand” that will lead to your ultimate destination - DISTINCTION!
> Afternoon Session … “The Brand Who Cried Wolf”
The branding buzzword is a favorite in the business world, but it's often misunderstood. Are you confused as to what branding really is? Join us as we look at branding from a different perspective — through fables. We will take a look at what some of our favorite childhood fables can teach us about branding and how it can apply to the entire organization.
> When: April 30, 10 a.m.—2 p.m. Where: Brandermill Country Club (Midlothian). Cost: $79 per person. Discount: Just $49 registration for each additional attendee from your credit union!
> View flyer and registration form here.
Community Involvement Committee Launches ‘Fly The Flag’ Fundraiser
***Deadline May 2***
The League Community Involvement Committee is asking credit unions to participate in our
Fly The Flag campaign to raise funds for Children’s Miracle Network. From June 7 through July 7, credit unions are asked to sell 4-inch by 6-inch stick flags and 4-inch by 6-inch American flag magnets as a charitable fundraiser. You can order these items directly from your League for $1 each for the stick flags or $3 each for the magnets. It’s a great way to raise funds for the Children’s Miracle Network hospitals in the Commonwealth, to show your patriotism, and to “decorate” your lobby for Flag Day (June 14) and Independence Day (July 4)! Orders must be placed by May 2 to guarantee timely delivery.
Report Your Financial Literacy Presentations for ‘07-’08 School Year
Many thanks to all our National Youth Involvement Board presenters for reporting their financial literacy presentations for the 2007-2008 school year. At present (April 23), we rank 3rd in number of students reached (23,152) and 4th in total presentations (586). With the school year winding down, don't forget to report your financial literacy presentations to NYIB. Log on to http://www.nyib.org/ for details!
[MORE HERE]
Celebration of 100 Years of America's CUs Planned
The celebration of the 100th anniversary of the founding of the American credit union movement is the focus of a new team composed of Credit Union System organizations announced last Thursday. The "Credit Union Action at 100" (CUAT100) team is made up of representatives of the Credit Union National Association (CUNA), the American Association of Credit Union Leagues (AACUL), America's Credit Union Museum and CUNA Mutual Group. CUAT100 is charged with focusing on a variety of measures to ensure that the 100th anniversary of the American credit union movement is properly--and respectfully--marked and recognized. The team will focus on publicity and media outreach plans, marketing materials for credit unions and state leagues, creation of a historical Web site, and recognition events tied into major meetings, such as the 2009 America's Credit Union Conference and Exposition, which will be held June 21-24 in Boston.
[MORE HERE]
Education & Networking Opportunities
Spring Compliance Conference May 6-7: Register Now
Two days of essential compliance training are on tap at this year’s Spring Compliance Conference, May 6-7, in Williamsburg. On day one, Mary-Lou Heighes, president of Compliance Plus, Inc., will review the most important regulatory issues for credit unions today, including the new rules and guidelines for Identity Theft Red Flags and Address Discrepancy Procedures and third-party vendor due diligence. Tom Winn and Dan Summerlin, of Woods Rogers PLC, will spend day two on an in-depth discussion of Human Resources issues that affect credit unions. Location: Crowne Plaza Williamsburg at Fort Magruder.
[MORE HERE]
[REGISTER NOW] (Deadline is April 30)
How to Coach Your Employees
The role of manager/supervisor is one of the most challenging in the credit union movement. Your time and attention can be pulled in many directions, including member service, staffing and personnel issues, and operational decision-making. Join us May 13 for “Coaching Credit Union Employees For Peak Performance,” a unique program designed to help you improve your coaching abilities and boost your confidence. Location: Sheraton Park South (9901 Midlothian Turnpike, Richmond).
Creating a Member-Focused Sales/Service Culture
To fulfill our mission and to take our credit union’s service from average to “Wow!” we must be fast, accurate and friendly. We must also identify the member’s financial needs and learn how to effectively suggest how we can improve their financial life. Learn what it takes to put your credit union on the fast track to a true sales culture – one that’s driven by motivated employees, focused on service, and capable of producing a long-term bottom line impact. Date and Time: May 14; 9 a.m. until 4 p.m. Location: Sheraton Park South (Richmond).
[MORE HERE]
4th Annual Financial Literacy Boot Camp June 19
Whether you are a “freshman” in financial education or a veteran, this year’s “Financial Literacy Boot Camp...and Beyond” has something valuable for you! The morning’s intensive Poverty Simulation shows your staff the barriers that people of modest means face each day. In the afternoon, attend the breakout session that suits your needs: reaching out to Latino communities, running a successful student branch, teaching Financial Literacy SOLs, or Financial Literacy 101, a guide to getting started in financial education. Date: June 19. Location: DoubleTree Hotel (Charlottesville). Time: 8:30 p.m.-4:30 p.m. Cost: $89.
Money Smart Train-the-Trainer Workshops Offered for CUs
Your League is partnering with the FDIC to offer a series of free train-the-trainer seminars on the Money Smart personal finance program. This will prove especially useful for credit union personnel involved in conducting financial literacy programs or those working one-on-one with members in personal finance basics. Three training dates remain: May 7 (Manassas), July 23 (Virginia Beach), and Oct. 1 (Waynesboro). You’re welcome to attend any of the seminars. Each will run from 9 a.m. to approximately 4 p.m. Questions can be directed to Cathy Baldwin at 800.768.3344, ext. 615 or cbaldwin@vacul.org
> View the registration form here. (pdf, 86kb)
Regional Marketing Workshop Sept. 24-25 in Roanoke
Marketing and business development pros must puzzle together many different tools – events, public relations/communications, technology, and sponsorships - to help build membership and create loyal members. Join your fellow credit union marketers from across the region in Roanoke Sept. 24 and 25, as we put the pieces together to strengthen our credit unions’ marketing efforts. The Credit Union Marketing Council of Virginia – in partnership with the Virginia League, North Carolina League and the North Carolina Marketing Council – will sponsor this two-day regional marketing conference at the Hotel Roanoke, featuring nationally-known speakers and tons of networking opportunities. Registration is now open! View the information flyer here. (pdf, 270kb)
Card Payments Conference June 8-11
Join us at the Card Payments ’08 Conference -- “Navigating for Success” -- hosted by Fiserv EFT and Fiserv Credit Processing Services. Visit www.2008cardpayments.com for more details and to register. This is one conference you can't afford to miss! Hosted at Disney’s spectacular Grand Floridian Resort & Spa, June 8–11, this promises to be Fiserv’s most beneficial annual conference ever, offering the following training and education:
· Discover credit and debit best practices that positively impact your card programs and improve your bottom line.
· Increase member retention and profits by launching a rewards program.
· Reduce risk for your institution by understanding emerging regulatory issues.
· Understand how bill payment can help retain customers and increase wallet share.
· Satisfy members with Prepaid cards -- without the huge investment.
· Learn about emerging technologies in the U.S. Payments market.
· Mitigate risk for both debit and credit programs.
Serving The Underserved/Latino CU Conference June 11-14
The 34th Annual Conference on Serving the Underserved and 5th Latino Credit Union Conference will be held jointly June 11-14 at the Westin City Center in Dallas, Texas. The conferences are being sponsored by the National Federation of Community Development Credit Unions and the Network of Latino Credit Unions and Professionals. Program features include presentations by top-level federal officials, innovative credit unions, researchers, and more – as well as an awards luncheon celebrating the unsung heroes of the credit union movement. Bring your board of directors, senior management and volunteers.
[MORE HERE] (pdf, 550kb)
NYIB Conference Registration Now Open
The 2008 National Youth Involvement Board (NYIB) Annual Conference details and registration are available on the NYIB Web site (www.nyib.org). The conference is set for Caesar's Palace in Las Vegas, July 28-31. Access the conference details by clicking on "About the Conference" or by clicking on the link in the homepage welcome message.
WOCCU Launches Second Hispanic Marketing Immersion Program
Looking for a way to increase membership growth by reaching a newly emerging but underserved market? World Council of Credit Unions has opened registration for its 2008 Hispanic Marketing Immersion Program, which offers credit union staff and executives the opportunity to become fully immersed in Mexico's rich culture while working within Mexican credit unions and exploring their marketing strategies. The 2008 Immersion program commences Sept. 20. Participants can choose either a one- or two-week session priced at $1,600 and $2,600, respectively. To register online, visit www.woccu.org/events/hmip. For print versions of the registration form, please contact Josh Fetting at jfetting@woccu.org or 608.395.2060.
Compliance/Regulatory Affairs News
Low-Income Standard Would Be Broadened Under Plan
The National Credit Union Administration (NCUA) proposed broadening its low-income designation to consider different income patterns in metropolitan areas. The designation is important in determining whether a credit union qualifies for assistance to help low-income members. "The proposed rule will eliminate the confusion associated with adjusting median household income in metropolitan areas with higher costs of living," the board said. It set a 60-day public comment period on the recommendation. The 2006 Member Service Assessment Pilot Program (MSAP) recommended that the formula for determining whether a federal credit union qualifies as low-income be reassessed. The NCUA Outreach Task Force agreed with the MSAP that the standard for low-income designation be changed to be consistent with the position of other federal agencies.
New Services Proposed for CUSOs
Credit Union National Association (CUNA) President/CEO Dan Mica said Thursday that CUNA has concerns about proposed provisions to extend federal regulators' access to the books and records of federally insured state credit union CUSOs, and to allow state regulators to inspect the books and records of a federal credit union's CUSO if a state chartered credit union also participates in that CUSO. "However, at the same time, we commend the agency's effort in proposing expanded authority for CUSOs. We look forward to working with NCUA to enhance the ability of credit unions to participate with CUSOs," Mica said following a National Credit Union Administration (NCUA) open board meeting. At that meeting, the agency also proposed an expansion of services for (CUSOs) to conform with broader powers granted to credit unions by the 2006 Financial Institutions Regulatory Relief Act. The agency's plan also would add credit card loan origination and payroll processing to the CUSO list.
FinCEN Proposes Improvements to CTR Exemptions
The Financial Crimes Enforcement Network has unveiled a proposal to improve the usefulness and availability of exemptions to filing currency transaction reports. The proposal does not go as far as most financial institutions would like, but it would reduce repetitive filings and grant some regulatory relief. Though current law allows exemptions to CTR filing, financial institutions have been reluctant to use them, arguing they are difficult to understand and invite enhanced regulatory scrutiny. In fiscal 2007, which ended Sept. 30, institutions filed more than 16 million CTRs. They filed only 60,000 exemptions during all of 2007. FinCEN's proposal is designed to make exemptions easier to use, and to clarify the circumstances under which they can be made.
[MORE HERE] (pdf, 68kb)
Fight Brewing Over Preemption
A fight is brewing over whether and how much national banks and thrifts must comply with state laws designed to delay or prevent foreclosures. Unlike consumer protection laws, state foreclosure and real estate property laws generally are not preempted. But if such a law affects the substance of a loan — or interferes with the bank's ability to collect a debt — the issue becomes murkier. That discord has left national banks and thrifts struggling to know what terms they must follow as a growing number of states consider or pass foreclosure prevention laws. It also is likely to start a new front in the war over preemption, observers said. (American Banker Online, April 21)
Governmental Affairs News
Card-Abuse Plans Await
The Federal Reserve Board plans to release two proposals at its board meeting next week to crack down on abusive credit card practices, sources said. The central bank signaled last week that it would soon release its plan to ban unfair and deceptive credit card practices under the Federal Trade Commission Act. But the Fed is also expected to issue a proposal to change Regulation Z, which governs credit card disclosure practices. Both proposals are expected to be put out for 60 days' comment. The Fed already proposed Reg Z changes last year, but sources said it is updating the plan to better coordinate it with the unfair and deceptive practices proposal. The unfair and deceptive practices proposal is to focus on double-cycle billing, universal default, and changes in a card's term, according to Sandra Braunstein, the Fed's director of consumer and community affairs, who testified last week. American Banker reported in February that the Fed's proposal would curtail double-cycle billing; increase the timeframe for disclosures of universal default rate increases, to 45 days, from 21 days; require credit card companies to let customers opt out of an interest rate hike; and give guidance on the allocation of payments. One area still being debated, however, is default pricing, which refers to a card issuer's policy of increasing interest rates based on missing a certain set amount of payments, a source said. (American Banker Online, April 22)
Lawmakers Urge Halt to Internet Gambling Rulemaking
Some congressional heavy hitters urged the Federal Reserve Board and U.S. Treasury Department to set aside their endless and toilsome efforts to implement the Unlawful Internet Gambling Enforcement Act (UIGEA). House Financial Services Committee Chairman Barney Frank (D-Mass), and three other of the panel's members, sent an April 21 letter to Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke regarding what they termed "the unworkable regulations" of UIGEA. Treasury and the Fed are charged by the law to issue rules to implement its provisions. The letter noted an April 2 House Financial Services subcommittee hearing on the internet gambling law, at which representatives from both the implementing agencies, as well as financial services industry, testified. Through that hearing "the Federal Reserve, the Treasury and the industry made clear that regulations from the UIGEA are vague, confusing, burdensome, and generally unworkable," the letter said.
League News
3rd Annual Social Responsibility Awards Banquet June 18
A must for every credit union, this prestigious event recognizes winners of Virginia’s Desjardins Youth Financial Education Award, Dora Maxwell Social Responsibility Award, the Louise Herring Philosophy in Action award, all NYIB Classroom Presenters, the Financial Literacy Visionary Award, the Youth Advocate of the Year Award, Class Act Award, Education Partner of the Year, and more! Awards will be presented by Virginia Credit Union League President Rick Pillow. Space is limited, so register early! Date: June 18. Location: DoubleTree Hotel, Charlottesville. Time: 6:30 p.m. Cost is $39 per person.
CU Members Get Deep Discount on Kings Dominion Tickets
Your members can take advantage of deep discounts on Paramount’s Kings Dominion tickets on all weekends through May 18. Tickets are just $31.95 (regular admission) or $24.95 (juniors and seniors). View the promotional flyer with ticket ordering information.
> Kings Dominion will donate $1 to Children’s Miracle Network for each CU ticket purchased!
CMN Richmond in 'Quest for the Triple Crown;’ CUs Urged to Participate
Join Children’s Miracle Network-Richmond as it celebrates "The Quest for the Triple Crown" at its Annual Spring Reception on May 16. The evening will be filled with live music, traditional Derby samplings, a silent auction and a competitive race for the Triple Crown. They encourage traditional Derby attire, so pull out that seersucker suit and large hat and join them at the races! The celebration takes place at the DoubleTree Hotel (Franklin Street, downtown Richmond) at 7 p.m. Tickets are available for $30 per individual or $50 per couple. For more information, e-mail rpwestcott@chva.org. To have a race or participating horse named in your honor, or for other sponsorship opportunities, please contact Ryan Corrigan or 804.228.5929 or rcorrigan@chva.org.
Chapter News
Tidewater Chapter Workshop Set for April 26
The Tidewater Chapter will hold its annual workshop on April 26, at ABNB Federal Credit Union (830 Greenbrier Circle, Chesapeake). This year’s workshop offers topics that will appeal to both staff and volunteers, including: (1) Unclaimed Property - Melinda Barbish, Virginia Division of Unclaimed Property; (2) Plastic Card Fraud - Allen Trosclair; (3) Disaster Recovery - Betty Myers, National Credit Union Administration (NCUA); (4) Employment Issues - Heather Mullen, Attorney, Kaufman & Canoles; (5) Member Service - Annette Cain; (6) Supervisory Committee Duties - Jo Burkett, National Credit Union Administration (NCUA); (7) Investments 101 - Harry Simmerman, VACORP Federal Credit Union; and (8) BSA Refresher/CTRs/SARs - Mariann Beverly, Virginia League. Registration will start at 8 a.m. Cost of the workshop is $45, which includes lunch. For details, call Kenny Davis (Portsmouth VA City Employees Federal Credit Union) at 757.393.8863, ext. 6260 or e-mail davisk@portsmouthva.gov
Richmond Chapter Charity Golf Tourney July 21
Save the date: The Richmond Chapter will hold its 14th Annual Charity Golf Tournament on July 21 at Stonehenge Golf & Country Club. Proceeds from the tournament will benefit Children’s Miracle Network. Additional details on golfer registrations and sponsorship opportunities will be sent out soon!
Marketing News
Filene: CUs Can Become Gen Y-ers’ Lifelong Partner
Credit unions are positioned to help younger generations achieve success and become their lifelong financial partner, George Hofheimer, chief research officer for the Filene Research Institute, told the Texas Credit Union League (TCUL). He led a panel discussion with Generation Y and credit union staff members who shared their ideas about attracting the younger generation (LoneStar Leaguer April 17). "Credit unions are about serving those younger generations and meeting their needs," Hofheimer said. While people need to network, young adults "do it differently," said Hofheimer. Trey Reeme, director of channel integration for Texas Dow Employees CU, Lake Jackson, agreed. He told how young people view information on the Web through social networking sites such as Facebook. Credit unions should adapt to these trends because they will be important in the future, Reeme said. "Mobile business is coming but branches aren't dead," he said. "Integration will be key." Filene is planning a series of monthly releases, Business Briefs, that can be downloaded from www.filene.org. The briefs describe the issues young adults face and will be available soon, Hofheimer added.
Financial Literacy News
League Updating Financial Literacy Directory; Your Information Needed!
Here’s your golden opportunity to get credit for your good works in the financial education arena. We are in the process of updating The Credit Union Financial Literacy Resources Directory - a vital part of your League’s Financial Education display, which exhibits to thousands of people at conferences and workshops across the Commonwealth. We need you to participate by providing us with basic information on your financial education initiatives. Once you do, you’ll get your very own directory page as a way to tell the world about your good works. Send an e-mail to your League’s Financial Literacy Director Dawn Lindley at dlindley@vacul.org and ask for an electronic copy of the directory template. The template is a Microsoft Word document that you simply open to enter your information. When you have completed the page, e-mail it back to Dawn with an attached photo. It’s that easy!
> The directory also promises to be an important tool for educating lawmakers about our efforts, as well. But to be truly effective, we need you to participate!
News From Credit Unions
Synergy One FCU Sponsors Financial Literacy Event for Students
Manassas Park High School sophomore Lamont Jackson groaned and leaned over the card table. His make-believe adult life wasn’t going so well. He still had to buy life insurance and health insurance for his child, and he had only $78 to budget for the month. The 17-year-old’s plight was fairly common as members of the school’s Entrepreneur business classes took part in the third annual Making It Real program for high school students on Tuesday. Sponsored by Synergy One Federal Credit Union, the three-hour event gave students a sometimes painful view into what it takes to live, work and play in Prince William County.
Richmond Postal CU Announces New President/CEO
Richmond Postal Credit Union is pleased to announce Joseph (Joe) M. Haddon Jr. as their new President/CEO. Prior to joining Richmond Postal Credit Union, Haddon served as Senior Vice President for Dominion Credit Union in Richmond.
Belvoir FCU Elects Board Members and Officers
Pamela Boyer, Lee Gazzano, Alfred Rudolph and Bruce Sneed were re-elected to the Board of Directors at the Annual Membership Meeting of Belvoir Federal Credit Union held on April 15. At the subsequent organizational meeting, the following officers were elected: Chair, Pamela Boyer; 1st Vice Chair, Alfred Rudolf; Treasurer, Leslie Poole; and Secretary, Candi Johnson. Belvoir Federal Credit Union Board members volunteer their time and talents to direct the credit union. They are elected democratically from among the members.
DeCesare Elected to League Board
Gaye DeCesare, VP of Administration for Belvoir Federal Credit Union, was recently elected as Director-At-Large for the Virginia Credit Union League.
[MORE HERE]
Belvoir FCU Supports 36th Annual Cherry Blossom Run
Belvoir Federal Credit Union supported the 36th Annual Credit Union Cherry Blossom Run held in Washington, D.C. on April 6, with its largest number of participants -- 38 volunteers, 10 runners and 10 walkers. 2008 marks the 7th year Belvoir Federal has supported this event.
Virginians Make Who’s Who CU Directory
Three hundred sixty-four Virginians made the “Who’s Who in America’s Credit Unions” Directory. The honor recognizes volunteer officials and staff members who have helped build the credit union movement into what it is today. Visit the Web site for directory details and to nominate someone for inclusion in the next edition.
News About Credit Unions
CU Officials Speak Out
With rapid rates of consolidation, a struggling economy and constant attacks from the competition, there was plenty to discuss when the Annual Meeting of the Virginia Credit Union League took place in Downtown Norfolk earlier this month. The three-day event was highlighted by a panel discussion that featured members from credit union regulators, trade associations and lobbying groups.
[MORE HERE]
(Free registration required)
American Banker Notes Banker 'Doublethink'
The ability of the leader of the American Bankers Association to hold two contradictory beliefs simultaneously—at least where credit unions are concerned—was questioned in the April 21 issue of American Banker. Confused yet? asked a subhead in the publication's "Washington People" section. The short article pondered whether ABA President Ed Yingling has been "flipping through the pages of George Orwell's '1984,' which defined 'doublethink' as the power to hold two contradictory beliefs simultaneously." The article noted that after the Treasury Department outlined its blueprint for financial regulatory reform, Yingling issued a statement that said, "We are no more ready to abandon the thrift charter than we are to abandon the American family dream of living in a house that you own." That release was closely followed, the article said, by an ABA letter of praise for the Treasury plan, which suggested merging the credit union and bank charters, by saying the two types of institutions are very similar and should be treated as such. "The letter raised eyebrows among some observers, since, generally speaking, the bank and thrift charters are considerably more alike than the bank and credit union ones. "For example, credit unions are cooperatively owned not-for-profits, as opposed to banks, which are for-profit institutions owned by shareholders. In contrast, both bank and thrifts are for-profit organizations," American Banker noted.
The article said the ABA "rejected the claim that the ideas are contradictory."
[MORE HERE]
Little Interest in Seeing NCUA Regulate ‘Hostile’ Takeovers
Despite massive opposition by credit union groups to last year’s hostile takeover attempt by Wings Financial Federal Credit Union, there appears to be little, if any interest among credit union executives in having the National Credit Union Administration (NCUA) regulate against hostile takeovers. CU executives commenting on an NCUA proposal are overwhelmingly opposed to increased NCUA efforts to regulate in the area of conversions to mutual savings banks, as well as hostile takeovers, like the Wings Financial bid to acquire Continental Federal Credit Union that sparked a major uproar last year. (American Banker Online, April 18)
U.S. Government Stands Behind Deposits
A reader on Bankrate.com asks columnist Don Taylor about deposit insurance. “I have heard from many sources that accounts covered by the Federal Deposit Insurance Corp. are not as guaranteed as many believe,” writes the consumer. “For example, the FDIC does not require dollar-for-dollar reserves to back up deposited money in banks and that the FDIC only has a small portion covered. If that is true, it could take months to years to receive reimbursement if a major bank was to fail.” “Dr. Don” offers an explanation of the FDIC and NCUSIF insurance funds, and tells the reader this: “My read is that you shouldn't lose sleep over this if your deposits are FDIC- or NCUSIF-insured. NCUSIF -- the National Credit Union Share Insurance Fund -- is the insurance fund for credit union shares and it, too, is backed by the full faith and credit of the U.S. government. In the event of a bank failure, the FDIC would either move the insured depositor's account to another FDIC-insured bank or give the depositor a check equal to the account balance, according to the FDIC Web site.”
NCUA Orders Do-Over in Vote to Merge CU Into Bank
The National Credit Union Administration (NCUA) has thrown out last September’s vote by members of Northeast Community Credit Union to merge into nearby Haverhill Bank and ordered the vote be conducted again under its process to convert a credit union into a mutual savings bank. The $98 million credit union, which has lost 5% of its assets in this depressed mill town a half hour north of Boston, is seeking to combine with a healthier local savings bank. But NCUA said the brief vote at last September’s Annual Meeting, where 78 attendees unanimously approved the merger, was not sufficient to satisfy its regulations. NCUA said the credit union must instead allow a mail-in ballot and hold a special meeting where more of its 10,000 members may participate. (Credit Union Journal, April 23)
Live ‘Rich’…Join A CU
Author Farnoosh Torabi offers some advice for those looking to live “rich” even if they’re not – check out a credit union! “[C]redit unions are not-for-profit institutions, so they don't have to subject their banking clients to exorbitant fees, like for-profit banks do.”
[MORE HERE]
Consumer/Marketplace News
Reports Offer Grim Picture of Economy
The economy is slowing across the nation, the home-building sector is tanking more than even the pessimists could have imagined a few months ago and prices keep rising at an uncomfortably high rate. Those are the unpleasant conclusions of several government reports released recently that, together, offer a picture of a U.S. economy being squeezed from all directions. "Today's news confirms a lot of what we've been hearing and how people have been feeling about the economy," said Mark Vitner, a senior economist at Wachovia. "There is a clear case that the economy is lousy, but not a clear case that the economy is in recession." The bad news was in line with economists' expectations. Economic conditions have weakened almost across the board in the past six weeks, according to the "beige book," a compilation of anecdotal reports about business conditions from around the United States prepared by the Federal Reserve.
Shiller: Housing Slump May Exceed Depression
An influential economist who long predicted the housing market bubble cautioned Tuesday that the slump in the U.S. housing market could cause prices to fall more than they did in the Great Depression and bailouts will be needed so millions don’t lose their homes. Yale University economist Robert Shiller, pioneer of the widely watched Standard & Poor’s/Case-Shiller home price index, said there’s a good chance housing prices will fall further than the 30 percent drop in the historic depression of the 1930s. Home prices nationwide already have dropped 15 percent since their peak in 2006, he said. “I think there is a scenario that they could be down substantially more,” Shiller said during a speech at the New Haven Lawn Club.
Lenders Swamped by Delinquent Mortgages
Seven out of 10 troubled mortgage borrowers remain without a plan to work out their loans despite increased industry efforts to help them, according to a new report from a coalition of state attorneys general and banking regulators. The group collected data from 13 of the largest subprime lenders from October through January and found that the lenders are overwhelmed by their workloads and unable to keep pace with the number of borrowers who are falling behind on payments.
The Trillion-Dollar Mortgage Time Bomb
Among the nightmares lurking around the corner for the already battered housing and credit markets would be a meltdown at mortgage financing giants Fannie Mae and Freddie Mac.
Although few are predicting an imminent need for a bailout just yet, credit rating agency Standard & Poor's recently placed an estimated price tag on this worst case scenario -- $420 billion to $1.1 trillion of taxpayer's money. This dwarfs how much it cost to help banks during the savings and loan crisis of the late 1980s and early 1990s. That cost taxpayers about $250 billion in today's dollars. S&P added that saving Fannie and Freddie might cost so much that the federal government's AAA credit rating, the top possible rating, might even be at risk. If that was lost, then all federal government borrowing would become more expensive. Fannie Mae and Freddie Mac both help the mortgage market function by purchasing pools of loans and packaging them into securities. So it is crucial for the mortgage industry for the two agencies to continue functioning smoothly.
Delinquent Auto Loans on the Rise as More Borrowers Drown in Debt
The turmoil that has roiled the housing market is also making waves in the auto loan industry. Although auto loans have fixed interest rates -- compared with the adjustable mortgage rates that have pummeled homeowners -- many consumers are finding that they have taken on more debt than they can handle to purchase their cars as well. Delinquencies on indirect auto loans, which are made through a third party and constitute roughly 90 percent of car loans, reached more than 3 percent in the fourth quarter of last year, the highest rate in at least 17 years, according to the American Bankers Association.
Financial Jargon Puzzles Americans
A new survey from AARP reveals that more than half of American adults have made investment mistakes owed to confusion by financial jargon. Another recent survey showed teens lack financial literacy. It’s not surprising that young people still have a lot to learn, but it appears that adults aren’t much better off. In the survey of more than 1,200 adults age 18 and up, more than half of the respondents said they made an investment with an unfavorable outcome because they were "confused" or "didn't understand" basic investment concepts and financial jargon. Financial literature is not read by 54 percent of respondents because "it's too hard to understand." "Many people are more likely to read the nutritional information on a cereal box than read a mutual fund prospectus before they buy," said Richard "Mac" Hisey, chief investment officer at AARP Financial in a press release.
Some other highlights from the survey:
-- 54 percent believe that a major reason jargon is used instead of simpler terms is to distract people from focusing on the fees they will be paying.
-- 78 percent said they believe that materials from financial companies are more about selling than educating.
-- 63 percent say that a major reason jargon is used is to make a product or service seem more impressive.
-- 49 percent believe a major reason jargon is used is to make the consumer feel less confident that they can handle their own finances.
-- 41 percent said information from financial services companies is "not so" or "not at all" helpful.
Gen X Shrugs, Says ‘Whatever’ to Retirement
Baby boomers say they are worried about achieving a comfortable retirement, but a new study suggests Generation X is even more pessimistic. More than two-thirds of Americans aged 27 to 42 don't think they will ever be able to stop working, according to a survey published jointly on Monday by Scottrade and BetterInvesting. In contrast, 64 percent of respondents aged 55 to 64 said they could retire and not worry, even though this group is much closer to retirement age. "The Gen X group is the most anxious about their finances," said Chris Moloney, chief marketing officer at Scottrade. Of the 1,000 respondents 18 and older polled in early January, 40 percent said they had saved less than $25,000 for retirement. For perspective, someone who envisions 20 years of retirement on about $50,000 a year would need to have $1 million stashed away. Generation Xers are well aware of this need, the survey found. In fact, 37 percent said they would like to have between $1 million to $5 million saved for retirement — even if their ability to save this money leaves such sums in the realm of wishful thinking. Twenty-one percent said they have yet to begin saving for retirement. "Gen X is in the middle of a 'retirement perfect storm' of very high expectations, low retirement savings and massive concern about the future of Social Security," Moloney added.
[MORE HERE]
Homes Still Too High for 'Average' Family
One of the worst things about the overall real estate market today is that there doesn't seem to be any silver lining behind that big black cloud. Normally, you'd think dramatically falling prices would make homeownership a reality for more moderate-income families. But even with homes more affordable, the median price is still out of reach for a median-income family in many markets, according to "Paycheck to Paycheck: Wages and the Cost of Housing in America," a study by the Center for Housing Policy, or CHP, in Washington, D.C. Comparing housing costs in more than 200 metropolitan areas with the wages earned by workers in 60 occupations, the study found that homeownership is unaffordable for all of the five-fastest growing occupations -- registered nurses, retail salespeople, customer service representatives, food preparation workers and office clerks. Even registered nurses, who typically have high salaries, were unable to purchase a median-priced home in 108 of the markets.
Detroit in the Ditch
This was supposed to be a good year for Detroit's Big Three. General Motors, Ford Motor and Chrysler LLC all struck new labor pacts with the United Auto Workers union last year. That was expected to help the automakers cut billions of dollars in costs and move them back towards profitability after years of losses. So much for that. Instead, sales have been battered by a combination of high fuel prices and a slowing economy. "There's tremendous uncertainty in the market right now, and most is related to the state of the economy," said David Cole, chairman of the Center for Automotive Research. "This is shaping up as a rotten year."
Dodd Introduces Student Loan Measure
Tying concerns about the shaky mortgage market to student loans, Senate Banking Committee Chairman Chris Dodd said Monday he is introducing legislation that would make it easier for borrowers who fall behind on mortgage payments to qualify for certain loans to pay for college costs. Though Sen. Dodd addressed the issue of drying up liquidity for student loans last week by urging the Treasury Department and the Federal Reserve Board to take action, the bill Sen. Dodd announced Monday focuses more on mortgage woes than anticipated student loan shortages. The bill is designed to ensure that those hit by recent mortgage market problems would not be barred from certain college financial aide opportunities. (American Banker Online, April 22)
Technology News
Security, Continuity CUs' Biggest Tech Costs
Technology-wise, credit unions plan to spend the biggest portions of their budgets on security and business continuity planning over the next three years, according to a recent Credit Union National Association (CUNA) survey. In the 2008-2009 CUNA Technology and Spending Report, respondent credit unions ranked their top three technology expenditures in the next three years: information technology (IT) security (47%); business continuity (39%); risk management/compliance automation (34%); and expanding e-commerce activities (34%). Larger credit unions, with $500 million or more in assets, tended to cite expanding e-commerce activities, rather than IT security as one of their top three. The CUNA report details credit union technology spending in terms of total technology budget and its percent of overall operating expenses, average annual vendor expenses, and functions support by IT staff and vendors.
Mobile Banking Gaining Traction Among Younger Consumers
Most Americans are still hesitant about banking with their cell phones and PDAs, but young people are increasingly coming around to the idea of mobile banking, according to a new survey. Meeting the needs of these tech-savvy customers is going to be key for financial institutions to stay competitive - the income of "Generation Y" is expected to surge over the next 10 years and exceed that of Baby Boomers. So far, although most major banks offer mobile banking services, 89 percent of consumers do not use their cell phones to conduct mobile banking transactions, according to a study by IBM's retail banking consulting practice shown to The Associated Press.
Security/Fraud Prevention
Consumers Take Steps to Thwart ID Thieves
According to media reports, identity theft is a widespread problem -- but do Americans think this applies to them personally? Bankrate's most recent poll reveals that the answer is a resounding yes. In fact, eight out of 10 Americans express worry about having their identities stolen. In many cases, their concern may be validated by personal knowledge of a victim. One-third of Americans (34 percent) know someone who has been a victim of identity theft. In the Northeast, it's closer to one in four (28 percent) while in the West almost one in two people (44 percent) know an ID theft victim.
Competition News
Fed Bank Bailout Totals $360 Billion
Battling to relieve stressed credit markets, the Federal Reserve has provided a total of $360 billion in short-term loans to squeezed banks since December to help them overcome credit problems. The central bank on Tuesday announced the results of its most recent auction - the 10th since the program started in December, where commercial banks bid to get a slice of another $50 billion in the short-term loans. It's part of an ongoing effort by the Fed to help ease the credit crunch, which erupted last August, intensified in December and January and took another turn for the worst in March with the sudden crash of Bear Stearns, the nation's fifth-largest investment house. The mighty blows of the housing, credit and financial crises threaten to push the country into a deep recession.
Bank Prepares to Expand on Success
Hampton Roads-based TowneBank posted a $6 million profit in the first quarter of this year, a sign that bodes well for the local economy. TowneBank is doing so well that it is considering more public shares of its stock so it can continue to expand. As the nation's largest banks suffer the consequences of making risky housing-related bets, businesses with good credit are struggling to get loans on good terms and are seeking out new lenders, said Bob Aston Jr., chief executive of TowneBank. "Our pending loan pipeline is the largest in our history," Aston said in a statement, "and may well lead us to consider a new capital offering in order to take full advantage of the opportunities we are experiencing."
Bank to Tighten Lending Rules
Bank of America Corp. said Tuesday it will tighten its mortgage lending standards after it completes its acquisition of Countrywide Financial Corp. later this year, and it will stop making one type of loan widely blamed for foreclosures. The Charlotte-based bank's plans came as part of testimony before the Federal Reserve Bank of Chicago, which held a meeting about the company's $4 billion deal to acquire the California lender. Bank of America said it will discontinue so-called option adjustable-rate mortgages, or loans that allow customers to make payments for less than the monthly interest due. Critics say such loans carry higher rates and can cause borrowers' balances to increase. The bank said it will also greatly reduce offerings of other nontraditional loans, such as those that allow for little documentation.
Alexandria Seeks Steep Tax on Payday Lenders
Alexandria is proposing to impose a steep new tax on payday lenders operating within the city, but the industry is vowing to fight the measure. Under a plan proposed by City Council member Justin Wilson, the city would use the money to offer consumer education services to low-income people who are taking out the high-interest, short-term loans. Attorney Lewis Wiener, who represents Advance America, said many lenders charge high interest rates. He said that although payday lenders are permitted to charge fees for a $100 loan equal to an annual interest rate of 391 percent, overdraft fees at ordinary banks for the same amount can run as high as 913 percent or 1,329 percent for a bounced check, he said. "If you want to call us predatory, who's next?" Wiener said.
[MORE HERE]
Reminders
CUNA Mutual Discovery Conference June 18-21
CUNA Mutual Group’s 2008 Discovery Conference will be held June 18-21, in Hollywood, Fla., at the Westin Diplomat Resort and Spa. Discovery 2008 offers more than 45 learning sessions, keynote presentations by Marcus Buckingham and Peter Sheahan and an abundance of networking opportunities. For complete information on Discovery Conference, accommodations, and to register, go to www.cunamutual.com/save. Direct questions to Linda Nesheim (linda.nesheim@cunamutual.com), 800-356-2644, ext. 8892, or Paula Shaw (paula.shaw@cunamutual.com) ext. 7505.
Southeast Directors Conference July 13-16
Credit unions are charged with guiding their member-owners to financial paths that change lives and lead to prosperous futures. Through knowledge of industry trends and environments, credit union directors become better equipped to make decisions that positively influence a credit union’s ability to light the paths to financial well-being. Join us as Mississippi hosts the 2008 Southeastern Regional Directors Conference for your opportunity to shine a light on the information you need to lead your credit union and member-owners to bright futures. The conference will be held July 13-16, at the beautiful Beau Rivage Resort in Biloxi, MS. The event will feature informative educational sessions that will help directors better understand disaster planning, the regulatory environment, the political environment and how the economy affects credit unions. In addition, directors can develop their own professional skills as well as their ability to lead credit unions with sessions on negotiations, the changing role of credit union boards and directors, the secrets of service professionalism, and more.
