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
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May 8, 2008
> An award-winning publication of the Virginia Credit Union League.
> Your comments and submissions are always welcomed. E-mail pr@vacul.org.
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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
Security/Fraud Prevention
Competition News
Headline News
League, CUNA Urge CUs to Write Congress in Opposition to H.R. 5546
Your League and the Credit Union National Association (CUNA) are asking credit unions to contact their Congressional representatives and ask that they oppose H.R. 5546, a bill that would establish a tribunal to regulate the fees charged by the issuers of credit cards to merchants. These interchange fees allow the administrative costs of credit cards -- including nonpayments -- to be covered by all customers, thus making consumer credit available to more people and affordable for credit unions (and other institutions) to offer. We especially want to see the participation of constituents of the Congressmen who serve on the Judiciary Committee, where the bill is to be debated. Virginians on Judiciary are Representatives Rick Boucher (D-9), Bobby Scott (D-3), Randy Forbes (R-4), and Bob Goodlatte (R-6). A hearing may be scheduled as early as May 15, so timely action is needed.
Credit unions oppose H.R. 5546 because it would:
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Impose unnecessary regulation over the card transaction interchange fee process by establishing a costly governmental tribunal that would be authorized to impose its decisions on a system that is more appropriately governed by the market.
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Unnecessarily establish government interference that would harm all participants, including consumers, merchants, and financial institutions. Interchange enables credit unions of all sizes to issue credit cards.
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Likely result in cost-shifting and increased fees for consumers to obtain credit cards.
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Impede technological innovation in the financial services sector. Interchange is just one part of a payment processing system that is an essential component of the overall financial marketplace. Credit unions believe it is not prudent public policy to separate interchange from the overall financial system.
While H.R. 5546 on the surface appears to be a consumer-friendly bill, in reality it would harm consumers by increasing costs and reducing credit card options.
Please do the following:
· Go to http://www.mycuisme.com/ and e-mail your Congressional representative.
· Urge your co-workers and volunteer officials to e-mail their Congressional representatives.
· After you’ve contacted your Congressional representative, let your League’s Karin Sherbin know. Drop her an e-mail at ksherbin@vacul.org.
Senators' Support for CURIA Urged
Each member of the U.S. Senate has been sent a letter from the Credit Union National Association (CUNA) urging them to support and co-sponsor S. 2957, the Credit Union Regulatory Improvements Act (CURIA). The key credit union legislation was introduced for the first time in the Senate May 1 by Sen. Joseph Lieberman (I-Conn.). A House version of the regulatory improvements package carries the names of 149 official backers. In urging Senate support, CUNA President/CEO Dan Mica wrote that by co-sponsoring CURIA, lawmakers will be "helping credit unions continue their mission of serving working families, making needed services available to lower-income or underserved consumers, and helping promote economic growth and well being in our nation's communities."
[MORE HERE]
> Be sure to log on to http://www.mycuisme.com to e-mail Sens. Warner and Webb and urge them to co-sponsor S. 2957, the Senate version of CURIA. It only takes a few minutes. And please encourage your credit unions friends and fellow staff members to follow your good example!
Mica Outlines Next Step for CURRA
The Credit Union National Association (CUNA) met last Friday with House Financial Services Committee Chairman Barney Frank (D-Mass.) and his staff to address the next steps for the Credit Union Regulatory Relief Act (CURRA, H.R. 5519). CUNA President/CEO Dan Mica said the session was productive and discussions lasted about an hour. Mica noted after the meeting that the bill now is in the hands of the committee chairman. "There is nothing more we can do at this time for CURRA," Mica said. "Our focus has turned completely to the broader Credit Union Regulatory Improvements Act, known as CURIA in both the House and Senate." CURIA has 149 sponsors in the House and was introduced in the Senate just last week.
[MORE HERE]
> E-mail your Congresswoman or Congressman in support of the House version of CURIA (H.R. 1537). Log on to http://www.mycuisme.com!
League to Host Fundraiser for Gov. Warner
On May 22, your League and the Credit Union National Association (CUNA) are hosting a fundraiser for former Gov. Mark Warner. The event is at the Credit Union House in Washington, D.C. from 4:30 p.m. to 7 p.m. While our federal PAC will contribute to Warner's campaign for the U.S. Senate seat of retiring Sen. John Warner, we are encouraging credit union members who attend the fundraiser to offer their own contributions. Checks should be made out to Friends of Mark Warner. If you cannot attend but would like to make a contribution anyway, you can mail yours c/o Emily Sullivan, 10 G Street NE, Suite 470, Washington D.C. 20002. (Suggested giving levels of $50 to $200). Please note that your contribution is part of the League's fundraiser. At the May 22 event, we will offer heavy hors d'oeuvres and a chance to greet Gov. Warner. He is scheduled to be at Credit Union House from 5 p.m. to 6:15 p.m. Please RSVP by May 19 to Cathy Baldwin at cbaldwin@vacul.org, or 800.768.3344, ext. 615.
> Note: Owed to federal regulations, only members of League-affiliated credit unions are permitted to attend and contribute at the May 22 League-sponsored fundraiser.
CUs Catch Up With Gov. Warner at Senate Bid Kickoff
Half a dozen credit union supporters attended former Gov. Mark Warner’s U.S. Senate campaign kickoff in Lynchburg on Tuesday. In talking to credit union representatives after his speech, he thanked Virginia’s credit unions for their support over the years.
NCUA: One Percent ROA Not 'Holy Grail'
In the current economic environment, the National Credit Union Administration (NCUA) expects credit union to have lower return-on-average-assets (ROA) ratios --and that's OK. "Credit unions have high net worth, and using your capital appropriately to deal with this very severe market dislocation is OK," said NCUA Board Member Gigi Hyland during a CUNA webinar titled, "CU Response to the Current Economy: NCUA/Compliance." NCUA Director of the Office of Examination and Insurance Dave Marquis and CUNA Chief Economist Bill Hampel also participated in the Friday event, which now is archived. "One percent ROA is not and cannot be a holy grail anymore, especially in this market," said Hyland, who reiterated the agency's August 2006 evaluation of earnings letter to credit unions. That NCUA supervisory letter clarified that agency examiners are expected to evaluate each credit union's earnings level relative to net worth needs, financial and operational risk exposures, the current economic climate, and the institution's strategic plans.
[MORE HERE]
WSJ Says This Is Big Year for 'Little Guy'
The weekend edition of The Wall Street Journal highlighted the Credit Union National Association's grassroots efforts, calling 2008 a "big year for the Little Guy." The story included a picture of CUNA's "The Little Guy." The current economic climate and worries of working Americans have come to the forefront during this election year, according to the Journal. This has changed lobbying strategies for many groups in Washington. "Folks beat money anytime in a political fight," House Financial Services Committee Chairman Barney Frank (D-Mass.) was quoted in the story. The current political and public backlash against "Big Banks, Big Oil, and Big Business," has resulted in many lobbying groups putting their "members and dependents out front —the more Main Street they are, the better," said the Journal.
[MORE HERE]
Get Recognized for Your Good Works!
Your League, in association with the Credit Union National Association (CUNA), is seeking entries in our three social responsibility competitions: the Desjardins Youth Financial Education Award; the Dora Maxwell Award for Social Responsibility and the Louise Herring Award for Philosophy in Action. These unique competitions give credit unions the opportunity to showcase their work as agents of positive social change for both their members and their communities. The deadline for entries in each competition is Aug. 1. There is no fee for the state-level competition.
[DOWNLOAD THE AWARDS PACKET] (pdf, 1MB)
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 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.
[MORE HERE]
[REGISTER NOW ONLINE]
Education & Networking Opportunities
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).
[MORE HERE]
[REGISTER HERE]
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]
[REGISTER HERE]
REAL Solutions Training June 24
Your League and the National Credit Union Foundation have teamed together to offer a day of training on the Foundation’s signature project – REAL Solutions. REAL Solutions is about migrating low-wealth households toward economic empowerment. Our one-day training workshop will teach you about market-proven products you can offer that represent a real alternative to payday loans or check-cashing services, for example. You’ll also hear from credit union professionals who’ll share their story on serving emerging markets like immigrants and young adults. Date: June 24. Location: DoubleTree Hotel (Richmond Airport). Time: 10 a.m. until 3 p.m. Cost: $45.
[MORE HERE]
[REGISTER 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: (1) reaching out to Latino communities, (2) running a successful student branch, (3) teaching Financial Literacy SOLs, or (4) 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.
[MORE HERE (including registration form)]
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
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, Mississippi. 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.
[MORE HERE]
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 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)
Compliance/Regulatory Affairs News
NCUA Issues Proposed Unfair or Deceptive Credit Practice Rule
The National Credit Union Administration (NCUA) Board has approved a joint proposed rule prohibiting credit card and overdraft service practices as unfair or deceptive under Section 5 of the Federal Trade Commission Act. The NCUA, Federal Reserve Board and Office of Thrift Supervision issued a joint proposed rule last week that would prohibit the following seven practices associated with credit card programs:
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Unfair time constraints for consumers to make payments;
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Unfair allocation of payments among balances with different interest rates;
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Unfair application of increased annual percentage rates to outstanding balances;
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Unfair fees for exceeding the credit limit solely because of a hold placed on an account;
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Unfair balance computation method;
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Unfair financing of security deposits and fees for issuance or availability of credit; and
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Deceptive firm offers of credit.
The proposal would also require federal credit unions (FCU) provide an opportunity for a consumer to opt out of an overdraft protection program, and it would prohibit an FCU from charging a fee for an overdraft caused by a hold placed on consumer funds in connection with the use of a debit card.
[MORE HERE]
Governmental Affairs News
May Edition of The Advocate Now Available
The May 2008 edition of The Advocate – our governmental affairs newsletter – is available online. Topics covered include regulatory relief legislation, Treasury’s plan to revamp the financial services regulatory system, recognition of our VACUPAC golf tournament sponsors, and updates on chapter fundraising for the Virginia Credit Union Political Action Committee (VACUPAC).
100% for VACUPAC
Congratulations and a big “Thank You!” to Celco Federal Credit Union for its contributions to the Virginia Credit Union Political Action Committee (VACUPAC). Each member of the credit union’s board of directors has made a monetary contribution of at least $25 to VACUPAC. For more information on how your credit union can support VACUPAC, please contact Karin Sherbin at ksherbin@vacul.org or 800.768.3344, ext. 626.
Bush Criticizes Democrats on Housing Plan
President Bush vowed yesterday to veto a Democratic plan to rescue hundreds of thousands of homeowners at risk of foreclosure, charging that the measure would "reward speculators and lenders" while doing little to ease the nation's mortgage crisis. "We are committed to a good housing bill that will help folks stay in their house," Bush told reporters after meeting at the White House with congressional Republicans. "I will veto the bill that's moving through the House today if it makes it to my desk." The president's declaration surprised House Democrats, who were planning to vote late yesterday on the measure, part of a broad package of housing initiatives aimed at slowing the pace of foreclosures, unfreezing mortgage lending markets and halting the slide in home prices.
[MORE HERE]
League News
King’s Dominion Offers CU Members Deep Discount for Memorial Day Weekend
Paramount’s King’s Dominion is offering credit union members a deep discount on its Memorial Day weekend park prices (May 24 and 25). Members ordering the discount ticket and meal package online get special $34.99 pricing per ticket. Package includes an all-you-can-eat picnic featuring chicken, hamburgers, hot dogs and more, plus park admission. Learn more about the offer and purchasing information here.
Chapter News
Lynchburg Chapter Sets May 13 Meeting
Central Virginia Federal Credit Union’s Kim Wilkerson will present a program titled, “What Were You Thinking?” at the Lynchburg Chapter’s May 13 meeting. Location: Fairview Christian Church. Time: 6 p.m. social; 6:30 p.m. dinner and 7 p.m. business meeting. For reservations and information, please call Sandra Williams at 434.525.9585 or e-mail her at sanwilli@verizon.net.
Hampton Roads Chapter to Host May 15 Scholarship Night
The Hampton Roads Chapter will recognize its scholarship winners at its May 15 meeting, so please make plans now to attend. Location: Point Plaza Suites and Conference Hotel (Newport News). Time: 5:30 p.m. social; 6:30 p.m. dinner and meeting. Deadline for reservations is May 9.
[MORE HERE]
NoVa Chapter Sets May 15 Meeting
The NoVa Chapter’s May 15 meeting will offer a special program on “Helping Financially Distressed Members.” These are difficult times for credit unions and our members, so you’ll want to join us as we explore effective tools and techniques in helping our members navigate troubled financial waters. This session will focus particular attention on the current real estate crisis. Location: Marriott at Fair Oaks
(11787 Lee Jackson Hwy). Time: 5:30 p.m. social; 6:30 p.m. business meeting and dinner; and 7:30 p.m. program. To register, send the names of attendees to Cheryl Dickerson at cdickerson@fairfaxva.gov or fax 703.359.2496.
Richmond Chapter Scholarship Night Set for May 20
Join the Richmond Chapter May 20 for its Annual Scholarship Night at the Cultural Arts Center. The Chapter will award $1,500 scholarships to two deserving high school students. In addition, guest speaker Suzanne Rohler, deputy director of administration for the Virginia College Savings Plan, will give an overview of the different college savings plans her organization offers. Location: The Cultural Arts Center – Glen Allen. Time: 5:30 p.m. registration and reception.; 6:15 p.m. dinner; 7 p.m. program. Reservations: Please e-mail Chris Burgess at cburgess@baylandsfcu.org or call Tracy Hodges 804.843.2520, ext. 152. When responding, please provide a list of those attending from your credit union. Deadline for reservations is noon, May 15.
[MORE HERE]
Richmond Chapter Legislative Committee Plans Trip to Orioles, Yankees Game
Join the Richmond Chapter’s Legislative Committee for its annual Major League Baseball outing on Aug. 23. You’ll see the Baltimore Orioles take on the New York Yankees at Camden Yards. Tickets are $65 per person, but act fast, as only 50 seats are available on the bus. Contact Bill Dawson if you’re interested - 804.740.6925 or wbd51@aol.com.
[MORE HERE]
Tidewater Chapter Meeting Slated for May 22
The Tidewater Chapter will host its annual scholarship night on May 22, so please make plans now to attend. Location: Springhill Suites (6350 Newton Road, Norfolk). Time: 6 p.m. social; 6:30 p.m. dinner and meeting. To register, contact Terry Lambert by 4 p.m., May 19 by fax at 757.388.2698 or e-mail primecare1@yahoo.com.
Marketing News
What Have You Done For Me Lately?
When it comes to choosing a credit card today, consumers — that means all of us — are sitting in the drivers’ seat. With dozens of competing offers to choose from, we can afford to be as selective as we like. Increasingly, that has meant selecting from rewards-based cards that pay us for our loyalty. This is great for us when we’re wearing our consumer hats. But as retail bankers, credit-card issuers, merchants and payments-network officials, it means the stakes for securing loyalty have risen. The challenge that we all face is creating a long-term relationship with a savvy consumer who is increasingly willing to switch institutional loyalties. Faced with an abundance of choice in the reward-card category—at least 60 percent of credit cards offer a reward component—consumers have been trained to evaluate offers based on a strategy of point accumulation and redemption value. And, the value placed on an offer today may differ from an offer provided tomorrow, or next year. How do we translate an effective rewards program to a sustainable loyalty proposition?
[MORE HERE]
Rethinking Rewards in Tough Times
Unlike previous economic downturns, when a slowdown in the U.S. lowered demand, reduced prices and offered some relief to consumers, global demand is still pushing prices of everything from food to fuel higher. That’s putting a pinch on consumers globally, and it means that credit-card issuers must carefully mind the store. A new report from TowerGroup argues that one way credit-card issuers can manage their own exposure to financially stressed consumers is to redesign rewards programs to encourage good credit behavior and focus less on luxury giveaways, acknowledging that not all programs are suited to all climates. The issue isn’t trivial, it can impact the bottom-line in terms of charge-offs, customer profitability and ongoing loyalty. TowerGroup estimates that the funding of rewards points typically costs issuers between 25 to 200 basis points of card spend; large issuers such as JPMorgan Chase, Bank of America, Citigroup and American Express each incur reward liabilities averaging more than $200 million per year. But by seeing consumers through this rough patch, issuers can build customer loyalty for the long term. But besides rethinking rewards programs, issuers should also be thinking about how to use rewards technology, which allows institutions to gather transaction level information to analyze and identify consumers who are getting into financial trouble. (American Banker Online, May 2)
Extended Hours: Longer Hours Correlate To Higher Deposit Growth
The term “bankers’ hours” has a negative connotation and is an outdated insult at an industry where many institutions have 70-hour work weeks. TD Commerce Bank, for example, has championed customer convenience, offering 78 branch hours per week—36 hours more than the national median. The Cherry Hill, NJ-based bank, acquired by Toronto-Dominion Bank in October, has doubled its total assets from $2.5 billion in 2003 to nearly $5 billion at the end of 2007, thanks to its reputation as “America’s Most Convenient Bank.” “The thing that we are most known for, and the thing that people look forward to the most, is our hours and our convenience,” says Linda Verba, evp of retail. Commerce is onto something, according to MapInfo, a Troy, NY-based branch-performance technology and consulting firm owned by Pitney Bowes. It estimates that the average U.S. branch gains 0.3 percent in deposits annually for each “extended” hour it’s open. An “extended” hour is defined as all hours beyond eight during the weekday and every weekend hour. A branch with $10 million in deposits can gain an additional $30,000 for each added hour. Offering extended hours over the weekend yields an even bigger boost: an 11.6 percent growth in total weekend deposits, which means that mythical bank would gain $1.2 million in deposits annually if it’s open on weekends. “For the bank thinking about going out there and extending their hours, the thing to think about is: ‘Do I have branches that intuitively would make sense for me to stay open late to potentially create sales after the traditional 4:30 or 5 o’clock closing times?” asks Steve Rymers, MapInfo’s director of client services. The decision to keep a branch open later should not be a sweeping decision across all branches in its footprint, but rather a market-by-market decision. A bank should consider the competition’s hours, the added costs of staying open longer, whether staff can accommodate extended hours, and whether the branch’s location and size warrant extra hours. (American Banker Online, May 5)
Leveraging the Gen Y Resources You Already Have
They pass you on the street, come into your branches, work in the same building, or might be eating dinner across the table from you this very evening. And yet, here you are, reading an article about reaching the very people that surround you everyday. There is so much advice devoted to this topic that it will make your head spin, and while Gen Y shares many similarities as a group, there are local dynamics and trends that are unique to your region. While you are busy burrowing through generic Gen Y material, you may be ignoring your most valuable resource. If you actually want to know about the financial needs of younger individuals and what appeals to them…just ask. Some credit unions have sought advice directly from members of Gen Y. They have used the insight they gained to adjust existing products and services, develop new ones, and to determine which channels work most effectively to reach this group.
[MORE HERE]
Financial Literacy News
Final Results: Youth Saving Challenge Hits $12 Million
The National Credit Union Youth Week Saving Challenge, hosted by the Credit Union National Association (CUNA), garnered more than $12 million in savings. Youth Week took place April 20-26. Four hundred credit unions reported their results to CUNA. Total deposits equaled $12,035,272.42; 76,524 youth made deposits; and credit unions opened 6,748 youth accounts.
[MORE HERE]
Feds Want Input on Financial Literacy
The President’s Advisory Council on Financial Literacy is seeking comments and suggestions that it may incorporate into its final report to President Bush later this year. The panel wants ideas about: youth financial literacy; financial education in the workplace; financial access for underserved markets; financial literacy research; and outreach and awareness. Statements may be e-mailed to financialliteracycouncil@do.treas.gov, or sent in triplicate form to the President’s Advisory Council on Financial Literacy, Office of Financial Education, Room 1332, Department of the Treasury, 1500 Pennsylvania Ave., NW., Washington, DC, 20220. The deadline is May 23. A full copy of the information request is in Federal Register/Vol. 73, No.54. (Credit Union Times, May 7)
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 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!
[MORE HERE]
News From Credit Unions
Fort Lee FCU, AFFN Donate Almost $3,000 to Army Community Services
Fort Lee Federal Credit Union and Armed Forces Financial Network recently donated $2,928.93 to Army Community Services at Fort Lee. ACS helps soldiers and their families in time of need.
[MORE HERE]
This Little Piggy Went to DuPont Community CU
Americans on average save less than one percent of their income, according to a recent CBS Evening News report. Growing up in a culture so focused on spending makes the idea of saving money for the future a foreign concept to youth. To help the situation, DuPont Community Credit Union (DCCU) uses Money Savvy Pigs to teach 8- to 12-year-olds how to look at their “income” in a more educated way.
[MORE HERE]
Chartway Expands to Serve Members in Wilson, NC
In an effort to expand its membership and services, Chartway Federal Credit Union opened its newest branch in Wilson, North Carolina on May 7. The branch will feature a full-service office where customers can apply for credit union membership, acquire savings, deposit, and investment products, as well as apply for loans. The store will offer a surcharge-free ATM for Chartway members.
[MORE HERE]
Chartway Announces New Board, Officers
Following their 49th Annual Meeting at the Virginia Beach Convention Center in April, Chartway Federal Credit Union announces that the following individuals were confirmed as members of the 2008-2009 Board of Directors: E. L. Gull, Jr. (Chairman of the Board), Judith P. Sparrow (1st Vice Chairman), John L. McGrath (2nd Vice Chairman), Melvin S. Mizelle (Treasurer), James J. Sibley (Secretary), Dallas L. England (Director), Wayne E. Foshay (Director), Robert O. Holmes (Director), and Albert C. Merritt (Director).
[MORE HERE]
News About Credit Unions
Biz Lending at CUs Scores Nationwide Media Hits
Credit unions' business lending scored a major media hit last weekend with an article about nontraditional options for small business borrowers. The article, which featured statistics from the Credit Union National Association (CUNA) appeared in Business Week, AOL, CNBC.com, CNN.com, Forbes.com, and Tampa Tribune, among others. The Associated Press article tells about a man in Texas who spent a year developing relationships with three large banks, only to be abruptly denied a loan for his restaurant-microbrewery because the national economy had soured. He went to the credit union, and his loan was approved within two weeks. His microbrewery is set to open in October. The article also cited these statistics from CUNA: Credit unions made almost $12 billion in new business loans last year. Total business loans at credit unions were $28 billion. The average size of the loans was $181,000.
[MORE HERE]
Biz Services, Net Promoter Score Topics of Two New White Papers
Credit unions can learn how to use business services to build member relations and about Net Promoter Scores in two new white papers from the CUNA Operations, Sales, and Service (OpSS) Council. "Taking Care of Business Members: The Case for Business Services as a Relationship-Building Strategy" illustrates how credit unions can grow with their business members and establish a two-way conduit to their personal and business accounts. Net Promoter Score (NPS) - used for analysis and benchmarking purposes to measure “customer” loyalty - is gaining popularity within certain industries. Given the importance of the consumer "experience" and the spread of “customer” opinions via word-of-mouth, blogs, and online social networking sites, NPS may prove a valuable replacement of outdated customer satisfaction surveys. CUNA Council members are entitled to complimentary copies of these white papers; non-members may purchase the white papers for a price of $50 per copy. The papers are available online at www.cunacouncils.org; select the "Cross-Council White Papers" link located in the "Tools and Resources" drop-down menu and select the "OpSS" tab.
Self-Help CU Pilots Foreclosure Resolution
Self-Help Credit Union is planning to buy foreclosed homes in a newly built northwest Charlotte subdivision, then either sell them or rent them with an option to buy as part of a pilot program aimed at alleviating the growing foreclosure crisis. “Our plan is to acquire up to 25 homes, starting with bank-owned properties, fix them up, then put them back on the market,” said Evan Covington-Chavez, head of Self-Help's Residential Real Estate Team. The 147-unit subdivision, known as Peachtree Hills, is located just outside the city and has a high foreclosure rate, even though it is only five years old.
[MORE HERE]
Consumer/Marketplace News
Banks Tighten Their Belts On Prime Lending During Q1
Banks continued to tighten lending standards for mortgage borrowers over the past three months, the Federal Reserve reported Monday; in particular, prime borrowers are now beginning to feel the credit squeeze, although banks said lending standards had tightened across the board for mortgages in all credit and lending categories. The Fed’s quarter survey of loan officers found evidence of broad credit tightening outside of just mortgages; almost no banks had eased credit terms on any type of major lending during the first three months of 2008.
[MORE HERE]
Credit Card Issuers Increasingly Tighten Standards, Fed Says
If you’ve recently been turned down for a credit card or had your credit limit reduced, based on the results of a quarterly survey, you’re not alone. The April 2008 survey of senior loan officers, released May 5 by the Federal Reserve, shows a threefold surge in the amount of banks acknowledging tougher credit card approval standards compared with the January survey. “About 30 percent of domestic banks -- up from around 10 percent in the January survey -- reported that they had tightened their lending standards on credit card loans over the past three months," the latest survey says. The January survey had itself shown a doubling in the percentage of banks that tightened credit standards from the October survey -- to about 10 percent from about 5 percent in the third quarter.
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Home Resales Fall Again on Tighter Credit Standards
The number of Americans who signed contracts to buy previously owned homes fell in March for the second consecutive month as falling prices and tougher loan rules discouraged buyers. The index of pending home resales fell 1% from a month earlier, to 83, following a February drop of 2.8% that was larger than previously reported, the National Association of Realtors said in a report issued Wednesday. (American Banker Online, May 8)
Bernanke: Foreclosure Woes Require Action
The wave of foreclosures sweeping the nation are driven in part by a nearly unprecedented decline in home prices and require a concerted government and private-sector response, Ben Bernanke, chairman of the Federal Reserve, said Monday. "Realistic public- and private-sector policies must take into account the fact that traditional foreclosure avoidance strategies may not always work well in the current environment," Bernanke said in a speech before the Columbia School of Business. Bernanke's comments come as concern about the housing crisis and debate about how to help homeowners in trouble is growing. Foreclosure filings of all kinds - delinquency notices, auctions sale notices and bank repossessions - were up 112% during the first three months of 2008 compared with the same period a year ago.
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Foreclosures Increase Substantially in State
Virginia had the 15th highest foreclosure rate among the 50 states and the District of Columbia in the first quarter, according to figures released recently by RealtyTrac, an online resource of foreclosed properties. One in every 246 households in Virginia -- or a total of 13,151 -- received notices of default, auction sales and bank repossessions from January through March, up 526 percent from the same period a year ago. The report showed that the Richmond region had the 24th lowest foreclosure rate among 100 cities. Yet, the number of notices there rose 1,341 percent from a year ago to one in every 425 households, or a total 1,182, properties in some phase of foreclosure. RealtyTrac noted that the actual increases may not be as high in Virginia and Richmond due to data collection changes or improvements. Also ranked was the Norfolk-Virginia Beach-Newport News area, which came in at No. 84 -- or the 16th lowest among 100 metro areas. One in every 544 households there, or a total of 1,095 properties, received notices of foreclosures in the first quarter, up 366 from the same period a year ago. The Washington-Arlington-Alexandria area ranked No. 22, with one in every 112 households receiving notices, or a total 15,108 properties, up 546 percent from a year ago.
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On the Brink of Foreclosure, They Got Their Loans Changed -- but It Wasn't Easy
President Bush, Congress and banking regulators are counting on loan modifications, which involve changing the terms of a mortgage, to prevent millions of people from losing their homes. Lenders say they are stepping up efforts to modify loans. But housing counselors and attorneys say it is a painstaking process that few homeowners can navigate on their own. "We are all in some cases hitting a brick wall," said Diane Cipollone, attorney and director of the Sustainable Homeownership Project at Baltimore-based Civil Justice. "The response time is months -- months -- to get a workout, and the workout is often unaffordable."
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Your Debt, But Not All Your Fault
“She hooked me with the word debt,’” writes Washington Post columnist Michelle Singletary. "The word alone causes people's blood pressure to rise. It's a hard-sounding word, phonetically in sync with its impact on people's lives," says Tamara Draut in the foreword to the compelling "Up to Our Eyeballs: How Shady Lenders and Failed Economic Policies Are Drowning Americans in Debt." Draut is director of the Economic Opportunity Program at the research and advocacy organization Demos, which co-published the book with the New Press. The book has a mission: to slam the folks who have pushed credit on American households for decades with little accountability for what it could do to borrowers or our nation.
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Overdue Card Debt is Stable in March
Overdue debts at the six largest U.S. credit card lenders held steady in March, remaining at their highest since November 2004 in data compiled by Bloomberg News. Payments late by at least 30 days averaged 4.11% of loans in March, the same as in February, according to reports filed by American Express Co., Bank of America Corp., Capital One Financial Corp., JPMorgan Chase & Co., Citigroup Inc., and Discover Financial Services. "I'd be surprised if we're at the peak for late payments," said Nigel Gault, a research director at Global Insight Inc. in Lexington, Mass. "Pressures on the consumer are increasing, with employment declining, home prices continuing to fall, and prices outpacing wages." (American Banker Online, May 2)
Student Loan Social Lending Sites Latest P2P Venture
More social lending Web sites are cropping up, with the latest batch focusing on providing student loans at a time when there's confusion in the student loan market. A credit union venture -- Zopa.com -- a social finance site with at least six credit union partners -- plans to launch a student loan feature this summer, according to SmartMoney (April 25). At Zopa, loans are funded by the credit union partners. Investors on the site can buy certificates of deposit from the credit unions. Since the investments are insured, the borrower's payments are less than other sites (Yahoo! News May 6).
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IRS Advises on Removing Stimulus Payments from IRAs
The Internal Revenue Service (IRS) released guidance for taxpayers and financial institutions about withdrawals of 2008 tax rebates that are directly deposited into individual retirement accounts (IRAs), Coverdell education savings accounts (ESAs), and health savings accounts (HSAs). Taxpayers who told the IRS on their 2007 income tax return to deposit all tax refunds into a tax-advantaged account--such as an IRA, Coverdell ESA, or HSA--have discovered that the IRS also deposits their tax rebate to the same account. Announcement 2008-44 permits taxpayers in this situation to withdraw from the IRA, Coverdell ESA, or HSA an amount less than or equal to the Economic Stimulus payment tax- and penalty-free.
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Security/Fraud Prevention
The Costs of ID Theft
According to an annual survey released in February by Javelin Strategy and Research, the incidence of identity fraud has steadily declined over the past three years in most parts of the country. But the scope of the problem still scrapes the stratosphere. "The total cost (in 2007) was $45 billion," says James Van Dyke, president and founder of Javelin. That's down from $51 billion the previous year. "It's a huge crime, the number of victims is 8.1 million," he adds. Many studies have sought to put a dollar figure on identity fraud costs to consumers and business. Unfortunately, part of the price remains hidden. Criminals can piece together an identity from bits of valid information or make up a new identity from scratch in a scheme known as synthetic identity theft. Since individual consumers are not victims, this form of ID theft can be difficult to detect, says Avivah Litan, vice president and analyst at Gartner, a technology and research advisory company.
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Competition News
Capital One Is Unwinding Two Decoupled Debit Tests
Capital One Financial Corp. appears to be backtracking on its decoupled debit card program. The McLean, Va., company, which has been testing the cards since last year, confirmed Friday that it would terminate programs May 10 with two merchants: the Altoona, Pa., convenience store chain Sheetz Inc. and the Richmond, Va., grocery chain Ukrop's Super Markets Inc. According to a source familiar with the situation, at least one of the retailers notified customers last week that it would be "discontinuing the program," and that "debit card accounts issued by Capital One will be closed at that time." Rich Steckroth, the director of business development for Sheetz, would not discuss changes in the debit program Friday, saying Capital One had instructed him to refer all inquiries about the card back to the issuer. The decision on terminating the programs seems to have come from Capital One. "We like the program," Mr. Steckroth said. Spokespeople for Ukrop's did not answer questions before press time. Pam Girardo, a Capital One spokeswoman, said in an e-mail that it had completed its pilot tests with the two merchants. She would not say why her company is shuttering the two programs. She also would not confirm whether Capital One has tested the cards with other merchants, though Patty Hayward, a senior analyst in the debit advisory services practice of Mercator Advisory Group Inc., said that she believes those are the only two programs. The cards route point of sale transactions across the MasterCard Inc. network from merchants to Capital One, which sends the transactions across the automated clearing house system to the cardholders' banks for settlement. The cards bear the MasterCard logo and can be used at any merchant that accepts MasterCard cards. (American Banker Online, May 5)
FDIC Reserve for Bank Failures Spikes
The Federal Deposit Insurance Corp. increased its reserve for anticipated losses by 370% during the first quarter, to $583 million — a further sign it is prepping for more failures. In a "Letter to Stakeholders" released Wednesday, the FDIC said the increase in its loss reserve, which is separate from the Deposit Insurance Fund, was a result of "the continued deterioration in the banking industry's financial conditions."
(American Banker Online, May 8)
Lawmakers Target Mortgage Lenders
Lawmakers considered allegations Tuesday that mortgage lenders and companies that service loans are misusing the bankruptcy system to impose questionable fees and improperly pressure homeowners facing foreclosure. "I fear a vulture mentality is developing in some quarters," said Sen. Charles Schumer, D-N.Y., who chairs the Senate Judiciary Subcommittee on Administrative Oversight and the Courts. "The companies know that the hapless homeowner is too poor, too unsophisticated or too overwhelmed to challenge often blatantly fraudulent demands for payment." Schumer is considering legislation to expand the government's oversight of the industry and increase the penalties on "bad-actor lenders that skirt bankruptcy law."
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Bank of America-Countrywide Deal: The Bankruptcy Wild Card
Bank of America Corp. may be in the driver's seat when it comes to buying or walking away from Countrywide Financial Corp., but observers warn that B of A's reluctance to provide guarantees to the mortgage lender's bondholders could lead to a date in bankruptcy court. The $1.76 trillion-asset Charlotte company said in a regulatory filing last week that it could give "no assurance" of an outright guarantee for about $38 billion of Countrywide's outstanding debt. That announcement led some observers to believe B of A may try to buy certain Countrywide assets while isolating some of the Calabasas, Calif., mortgage lender's debt. Others say B of A may be laying the groundwork for a price reduction. (American Banker Online, May 7)
FBI Forms Subprime Task Force
Federal authorities, responding to the subprime-mortgage crisis, have formed a task force to determine if lenders or Wall Street firms participated in fraud. The task force will be headed by prosecutors in the Eastern District of New York, where one of the nation's top mortgage lenders went bankrupt last year. Robert Nardoza, spokesman for the U.S. Attorney's office in Brooklyn, confirmed a report on Monday that a task force, comprised of federal, state and local agencies, would focus on the activities of mortgage lenders and Wall Street firms. He declined to give further details.
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