News Now Archive

Published on December 14, 2012.

CUNA-opposed TAG bill defeated in Senate

WASHINGTON (12/14/12)--Thursday's defeat of a Transaction Account Guarantee (TAG) extension on a budget point of order is a "death blow" to the legislation and a significant victory for the Credit Union National Association (CUNA), credit unions and state leagues across the country that aggressively opposed this bank bailout program, CUNA President/CEO Bill Cheney said.

The bill failed to gain the 60 Senate votes needed to move forward for final consideration. The final vote count was 42 to 50.

"This is the first time that credit unions have vigorously opposed bank-backed legislation; it won't be the last time," Cheney emphasized.

The TAG legislation (S. 3637) would have extended unlimited deposit insurance coverage granted during the financial crisis for noninterest bearing transaction accounts. Coverage is set to revert back to $250,000 at year's end without congressional action. The bill has been strongly favored by major bank trade associations.

CUNA has criticized the TAG extension by noting the program already has cost the Federal Deposit Insurance Corp. almost $2.5 billion and has provided a guaranteed oasis to the banks of $1.4 trillion.

CUNA and the leagues have urged federal lawmaker not to "expose taxpayers to potentially $1.4 trillion in losses while the banks are making billions again."

"We will be alert for any attempt by banks to attempt to attach this bill to some other year-end legislative package--and will oppose any such effort just as energetically as long as there is no similar treatment for credit union business lending legislation in the same measure."

In the meantime, Cheney said, "credit unions will continue to look for, and seize, any opportunity to include our member business lending legislation in any appropriate end-of-year legislative package."

"Congress will be in session for at least another week and a half--this is not over until it's over," Cheney declared.

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More time to tell CU exam stories: Deadline now Jan. 15

WASHINGTON (12/14/12)--To ensure that all interested credit unions have a chance to respond about their examination experiences, Credit Union National Association (CUNA) and the state leagues have extended the deadline until Jan. 15 for the exam survey distributed to credit unions earlier this month.

Credit unions that received the survey will be getting an email notice later today about the deadline extension.

The previous deadline was today, Dec. 14.

The CUNA/league survey was released this month to collect and compile key credit union comments regarding their experiences with on-site regulatory examinations, how satisfied credit unions are with their exams and results, and with National Credit Union Administration (NCUA) and state examiner performance, among other issues.

Advocating on behalf of credit unions to improve the examination process is one of the highest priorities of both CUNA and credit union leagues, and a firm grasp of the current state of credit union examination process is needed to ensure that credit unions are effectively represented in discussions with the NCUA and state supervisory authorities.

Survey replies are confidential, and identifying information from individual credit union respondents will not be seen by individuals outside of CUNA's Market Research Department. Only summary results will be reported.

The information, which will be kept anonymous, will help CUNA and the leagues hone their exam issue advocacy efforts.

The CUNA/league exam survey was sent to all affiliated credit unions except those in NCUA Region II. Those credit unions already have already participated in a similar survey spearheaded by the New Jersey Credit Union League.

For the survey, use the resource link. The exam survey can also be accessed on cuna.org under "top initiatives" on the home page, on the regulatory advocacy page, and via the compliance page.

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CFPB may let FIs float trial disclosures

WASHINGTON (12/14/12)--The Consumer Financial Protection Bureau (CFPB) is considering whether to allow credit unions and other financial services companies to conduct trial consumer disclosure programs on a case-by-case basis.
 
In announcing the bureau's request for public comment on the proposed policy change, CFPB Director Richard Cordray said the innovation would allow companies to conduct "real-world trials of disclosure alternatives."
 
In turn, those trials would help the CFPB identify what works and does not work to provide consumers with "the clear information they need to make financial decisions in a marketplace of evolving programs and products," the director added.
 
If adopted, the policy would fall under the auspices of the CFPB's Project Catalyst, an initiative announced a month ago and intended to encourage consumer-friendly innovation in markets for consumer financial products and services.  The Dodd-Frank Wall Street Reform and Consumer Protection Act, which created the CFPB, authorized the CFPB to facilitate innovation and to approve trial disclosure programs.
 
The proposal would enable the CFPB to approve individual companies, on a case-by-case basis, for limited-time exemptions from current federal disclosure laws in order for those companies to research and test informative, cost-effective disclosures. 
 
The companies involved would then share the results of their trial disclosure with the CFPB. The CFPB would use that information to improve its disclosure rules and model forms.
 
CFPB will accept public comment for 60 days after the proposed policy is published in the Federal Register, which likely will be within the next week or two.
 
Use the resource links below to read the CFPB's proposal.

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G.I.C. FCU of Ohio liquidated Thursday

ALEXANDRIA, Va. (12/14/12)--G.I.C. FCU, of Euclid, Ohio, served 3,476 members and had assets of approximately $15.5 million before it was closed Thursday by the National Credit Union Administration (NCUA). The agency said it liquidated the credit union after determining it was insolvent and had no prospect for restoring viable operations.

The NCUA's Asset Management and Assistance Center will transfer certain share accounts to Steel Valley FCU of Cleveland, the NCUA noted in a release. Steel Valley is a full-service credit union with more than $37.2 million in assets. It serves more than 7,800 members. For accounts that cannot be transferred to the Cleveland credit union, the NCUA's Asset Management and Assistance Center will issue, within a week, checks to individuals who hold verified accounts.

G.I.C. FCU was a full-service financial institution chartered in 1936, originally to serve employees of Gould Inc. At the time of closure, G.I.C. was a multiple-common-bond credit union serving several select groups. Its closing represents the 12th federally insured credit union liquidation of 2012.

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Credit bureaus scrutinized by CFPB

WASHINGTON (10/14/12)--A study of credit reporting bureau activities has shown that less than 20% of consumers request their credit report files each year, the Consumer Financial Protection Bureau (CFPB) revealed this week.

The CFPB study, entitled "Key Dimensions and Processes in the U.S. Credit Reporting System: A review of how the nation's largest credit bureaus manage consumer data," focuses on how the nation's three largest credit reporting bureaus--Equifax Information Services LLC, TransUnion LLC and Experian Information Solutions Inc.--collect, compile, and report consumer credit information.

"Most decisions to grant credit--including mortgage loans, auto loans, credit cards, and private student loans-- include information contained in credit reports as part of the lending decision," the CFPB report notes. Credit reports are also used to determine rental housing eligibility, insurance premiums, and hiring decisions. "As the range and frequency of decisions that rely on credit reports have increased, so has the importance of assuring the accuracy of these reports," the agency report adds.

Credit card history dominates the information in these consumer credit reports, and debt collection items generate the highest rate of credit report disputes, the CFPB found.

The majority of information in credit reports comes from a small number of large banks and other financial institutions. Most consumer credit complaints are forwarded to the credit card companies, mortgage lenders and servicers and auto lenders that maintain consumer accounts, the CFPB added.

However, documentation that consumers mail in to support them in their credit disputes may not be passed on to credit issuers. This may prevent them from properly investigate and report back to the credit reporting company.

CFPB Director Richard Cordray said the release of the CFPB report "is another step toward bringing more clarity to the confusing world of credit reports.

"If consumers know how these companies handle their credit histories, they can make better decisions on how to handle their financial lives," he said.

Cordray's agency began supervision and examination of consumer credit reporting agencies with more than $7 million in annual receipts this fall. The CFPB's examination authority covers about 30 firms that account for 94% of total credit report industry receipts.

For the full CFPB credit bureau report, use the resource link.

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Inside Washington

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CUAid update: Donations still needed for Sandy relief

MADISON, Wis. (12/14/12)--The National Credit Union Foundation (NCUF) is seeking additional support from the credit union community to continue to assist credit union people affected by Hurricane Sandy.
 
Since Oct. 31, NCUF has raised and distributed more than $260,000 to credit union employees, volunteers and members, but there still are applications for assistance outstanding. 
 

This week, the New Jersey Credit Union League (NJCUL) began to deliver CUAid grant checks to credit union people across the state. Angel Santos, left, NJCUL business consultant, and  Ann South, right, president/CEO of Novartis FCU, East Hanover, and New Jersey Credit Union Foundation chairman, presents a check to Novartis FCU Member Service Representative Althea Rankins, whose home was flooded during Hurricane Sandy.
 
"The response from the credit union system thus far has been absolutely outstanding," said Tom Candell, NCUF deputy executive director/chief operations officer/chief financial officer. "It's not typical for NCUF to continue to fundraise this long after disaster strikes, but it's also rare for us to have so many credit union people that can still benefit from assistance. We'd like to help as many people as possible get back on their feet, so any and all additional support is appreciated."
 
To date, $121,000 in CUAid funds has been distributed in aid to 94 credit union employees, volunteers and members in New York. Another $141,000 has been disbursed to 161 credit union people in New Jersey.
 
The New Jersey Credit Union League (NJCUL) has begun to deliver CUAid grant checks to credit union credit unions across the state.
 
Paul Gentile, left, New Jersey Credit Union League president/CEO, offers a check to Tom O'Shea, president/CEO Aspire FCU, Clark, N.J., to present to a member. (Photos provided by News Jersey Credit Union League)
Angel Santos, NJCUL business consultant, and Ann South, president/CEO of Novartis FCU, East Hanover, and New Jersey Credit Union Foundation chairman, presented Althea Rankins, member service Representative at Novartis FCU, a check for $1,500 from CUAid.
 
Rankins' home was flooded during Hurricane Sandy. The Novartis FCU board of directors also presented Rankins with a $500 gift card from Home Depot.
 
NJCUL President/CEO Paul Gentile presented a $1,500 check to Tom O'Shea, president/CEO of Aspire FCU, Clark, N.J., to present to an Aspire member.
 
Santos and Ron Behrens, president/CEO of Raritan Bay FCU, Sayreville, N.J., presented a $1,500 check to Shannon Gonzalez, the credit union's collection coordinator. Gonzalez lost her home during the hurricane.
 
Santos along with Bryan McMillen, board chair, and Jonathan Kaufman, president/CEO at IFF Employees FCU, Hazlet, N.J., presented $1,500 checks to Beverly Weston, senior teller, and Laura Larsen, operations manager. Both Weston and Larsen lost their homes during the storm.
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NCUA seeks expedited hearing on St. Paul Croatian FCU payments

CLEVELAND (12/14/12)--The National Credit Union Administration (NCUA)--seeking to receive restitution of funds lost in the collapse of St. Paul Croatian FCU from Cleveland businessman A. Eddy Zai--has asked a federal court in Ohio to grant a motion for prejudgment attachment or schedule an expedited hearing on that motion to avoid impeding its recovery of the losses.
 
Zai pleaded guilty Nov. 5 to bank fraud that contributed to one of the largest credit union failures in U.S. history. He is to be sentenced in the U.S. District Court in Cleveland on Feb. 5.  
 
He owes $21.895 million, according to an affidavit filed May 21 by one of the individuals working on the liquidation of the credit union.  As part of his plea bargain, he is to forfeit $16.7 million, according to the preliminary order of forfeiture filed Nov. 30. It is the largest restitution in Northeast Ohio's history (Cleveland.com Nov. 5).
 
NCUA, the credit union's liquidating agent, noted that it does not have an executed settlement agreement with defendants Zai, Tina Zai, Ted Vanelli and Cleveland Group of Companies defined in a prejudgment document as holding a promissory note outlining the money flow for any restitution.
 
NCUA is concerned the parties "may take certain actions with respect to the note that could hinder or delay the liquidating agent or otherwise impede its ability to recover the losses," it said in its motion, filed Dec. 10 with the U.S. District Court Northern District of Ohio Eastern Division in Cleveland.
 
A prejudgment attachment would place the note under the control of the court and require Cleveland International Fund Ltd. (CIF), whose president is Zai, to make all required payments to the court in accordance with a settlement agreement executed between NCUA, CIF and International Regional Center in late July.
 
CIF had recently filed a motion to vacate the orders, and NCUA said it is concerned the note remains under the control of the Cleveland Group LTD or the Zais.
 
Also on Dec. 10, the U.S. Attorney's Office (USAO) withdrew its seizure warrants in the case as part of an agreement with CIF, IRC and other companies affiliated with Zai.  The agreement specifies forfeiture or restitution for the collapse--up to $16.7 million-- from CIF, Cleveland International Fund-Flats Ltd., CIF-Hospital; Flats East Hotel LLC, Flats East Office LLC, Flats East Retail LLC and University Hospitals Health System Inc.
 
The collapse of St. Paul Croatian FCU cost the National Credit Union Share Insurance Fund about $170 million (News Now Nov. 8). 
 
Zai admitted to conspiring with others, including Anthony Raguz, former CEO of the defunct credit union, to submit false loan documents. Raguz pleaded guilty to issuing more than 1,000 fraudulent loans totaling $70 million to about 300 accountholders. He received kickbacks, gifts, and bribes totaling more than $500,000.  Raguz was sentenced in November to 14 years in prison and ordered to pay $71.5 million in restitution.
 
Nineteen people were charged in the scheme. Alleged ringleader Koljo Nikolovski of Eastlake and Skopje, Macedonia, was sentenced in May to 18 years in prison for his role in the fraud.

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CMG, Watterson sign agreement on RMBS due diligence documents

SEATTLE (12/14/12)--CUNA Mutual Group and Bellevue, Wash.-based Watterson Prime LLC have reached an agreement on CUNA Mutual's motion to compel Watterson to produce documents related to residential mortgage backed securities (RMBS) sold to the insurance company by RBS Securities before the nation's financial crisis hit.
 
The companies filed a notice Wednesday in the U.S. District Court for the Western District of Washington (Seattle) of voluntary dismissal, without prejudice to the defendant, of the motion to compel the documents.
 
The agreement came as the federal court in Seattle was preparing a proposed rulingfiled Nov. 30 that would have ordered Watterson Prime to turn over due diligence documents subpoenaed by CUNA Mutual for its lawsuit against RBS Securities.
 
The company's Sept. 17 subpoena had sought documents related to 15 RMBS at the center of CUNA Mutual's $72 million lawsuit against RBS, specifically nine types of documents related to the RMBS' underwriting, appraisal of, due diligence and more..
 
CUNA Mutual filed its lawsuit against RBS in a U.S. District Court in the Western District of Wisconsin (Madison) on Jan. 17. It seeks a rescission of its purchases, which it bought in 10 separate offerings. The purchases were based on representations made by RBS about the credit quality of the mortgage pools that collateralize the securities, CUNA Mutual said in its complaint. 
 
CUNA Mutual maintains that RBS falsely represented the products it sold between 2004 and 2007.
 
A key issue in the Wisconsin case is whether RBS engaged in proper due diligence regarding the mortgage loans underlying the certificates it sold, CUNA Mutual said in its motion to compel Watterson Prime to produce the documents. RBS identified several third party companies--such as Watterson Prime, the Clayton Group, and the Bohan Group--to perform due diligence review in the form of loan-level re-underwriting, it said.

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CUs' call center collaboration to cut costs, improve service

MADISON, Wis. (12/14/12)--Shared Service Solutions (S3), a groundbreaking collaboration among three credit unions, has initiated a process of combining each entity's call center operations into a single point of contact, according to the Credit Union National Association (CUNA). 
 
Bellco CU in Greenwood Village, Colo.; Bethpage FCU in Long Island, N.Y.; and State Employees CU in Linthicum, Md., are the collaborators.
 
Plans call for the S3 collaboration to transition the partners to joint operations for processing residential mortgages, consumer loans, credit and debit cards and deposits. The initiative is expected to deliver savings of millions of dollars annually and to improve the membership's overall experience.
 
The credit unions have a long history of cooperation and collaboration that is paying big dividends for members, CUNA said. Their Open Technology Solutions (OTS) alliance--formed in 2003--created value for the partners by adding scale and efficiency to the process of providing information services. By sharing the expense of operating computer systems and other technologies, the partners increased skill sets and service and reduced costs.
 
The need to reduce back-office redundancy through more cooperation and collaboration is one of the top strategic issues facing credit unions, CUNA said. Credit union professionals repeatedly tell CUNA this but, when asked, also say they don't cooperate or collaborate more because they aren't aware of successful efforts. With this in mind, CUNA recently created a repository to collect examples of successful efforts and to find ways to encourage credit unions, leagues and credit union service organizations (CUSOs) to share their stories. 
 
The site presents users with the opportunity to join a collaboration listserv, to share information about initiatives and to read about examples of interesting cooperative efforts that seem to make a difference. It also includes links to additional resources such as Credit Union Magazine articles and several Filene Research Institute studies. CUNA's goal is for the website to be used by credit unions of all sizes--not just small credit unions.  
 
To visit the site, use the link. 
 
"Visitors to the site also can sign up for the listserv and suggest a resource or add an anecdote," said Mike Schenk, CUNA vice president of economics and statistics. "They also can use the provided link to add an example (or two or three) of an interesting collaboration initiative in their state. Finally, and most important, visitors should share this information with all credit unions in their state--large and small.  
 
"The benefits of cross-pollination and the potential to replicate successful initiatives can be great,' Schenk added. "The site is clearly not 'the' solution to the collaboration issue, but CUNA hopes visitors will that it is one small step in the right direction."

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Trend: CUs' name changes slowing

MADISON, Wis. (12/14/12)--U.S. credit union name changes have slowed down this year, according to The Financial Brand, an online industry trade publication focused on branding, marketing, advertising, promotions and branch design in retail banking, including credit unions.
 
In the past seven years, there have been 234 credit union name changes, said the company, which studied every name change in the credit union industry since 2006. That represents 3.27% of all credit unions, which collectively hold 5.52% of all credit union assets, The Financial Brand said.
 
This year saw the fewest credit union name changes in the past seven years--24, the company said. The high was 42 in 2009 and 2011.
 
One trend is that smaller credit unions are changing their names. In 2006, about 79% of all credit unions changing their monikers had assets in excess of $100 million. However, by 2012, that percentage had plunged to 33%, with the other 67% having assets under $100 million, said The Financial Brand.
 
Other trends: nine percent of new names included the word "First" while 6.8% added the word "Financial."
 
Although alphanumeric constructions are rare--Plus 4, Med 5, Coast 360 and Latitude 32 being the most unique--48 credit unions nationwide (20.5%) that changed their name since 2006 have included a geographic emphasis or reference in their new name, the company said.    
 
To read the article, use the link.

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NCUF's national financial capability report now online

MADISON, Wis. and WASHINGTON (12/14/12)--The National Credit Union Foundation (NCUF) has made available a free financial capability report and a resource guide online. 
 
NCUF believes that credit unions do outstanding work around building the financial capability of American families, but that they don't do a great job of telling that story. For that reason, NCUF compiled a financial capability report that outlines the financial education and capability building efforts by the U.S. credit union system, said Lois Kitsch, NCUF national program manager.
 
The report includes an executive summary, 12 credit union system case studies, key findings and one page from every state sharing its financial education efforts. The report, along with a companion resource guide, is available for free download from the REAL Solutions Impact Center. The site also includes a one-sheet success story from each state. 
 
The report, "Credit Unions: Focused on Financial Capability Across the Nation," is the result of an almost year-long data collection effort by NCUF and state credit union leagues.

NCUF and REAL Solutions conducted the national study of credit-union-provided member and consumer financial education and counseling. The data will be useful to state leagues/associations and the broader credit union industry because it quantifies the extent to which credit unions are providing opportunities for members/consumers to advance their financial knowledge and decision-making skills, said NCUF.

The report describes 10 financial education/counseling interventions offered to members/consumers by credit unions. It provides cumulative data about member use of and access to credit-union provided financial education/counseling products, tools and courses, and it reveals probable keys to program success. National data are supplemented by case studies of credit unions and state leagues that illustrate each type of educational intervention.
 
The accompanying resource guide assists credit unions and others with accessing resources, information and curriculum already created to help them offer even more financial literacy programs. Each method of financial counseling/education provides examples, additional resources and information, and tips to help credit unions expand their current education programs or introduce new ones.
 
To view the report and resource guide, use the links. 
 
Early next year, NCUF will begin working on its 2012 report, Kitsch told News Now.

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Rekindling SEG relationships explored in CUNA council paper

MADISON (12/14/12)--A new whitepaper from the CUNA Marketing & Business Development Council discusses how credit unions can rekindle select-employee group (SEG) relationships in  a marketing environment that has shifted to community charters in recent years.
 
"The business development pendulum is coming back after a swing to community charters," said the paper, titled "Developing Strategies for SEG-Based Credit Unions." "Increasingly, credit unions large and small, rural and urban, see and act on the promise of increased business through SEG-based efforts."
 
Trends examined in the paper include:

To download the white paper, use the link.
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CU System briefs

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Market News

MADISON, Wis. (12/14/12)

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News of the Competition

MADISON, Wis. (12/14/12)

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H&FF Radio talked ID theft, eldercare on Sunday

WASHINGTON (12/14/12)--Sunday's H&FF Radio discussed guarding your personal information during the holidays, helping elders stay in their homes and communities, and ensuring neck and back health.
 
The show, which you also can hear later via the Internet, featured Paul Berry, Washington, D.C., journalist and broadcaster, discussing these topics with special guests:

Home & Family Finance is a resource center for personal finance information at the Credit Union National Association (CUNA). The radio show is sponsored by CO-OP Network, the national credit union ATM network; Cabot Creamery Cooperative, maker of award-winning cheddar; and the Defense Credit Union Council and member credit unions, serving those who serve the country worldwide.
 
Home & Family Finance airs Sundays at 3 p.m. ET on the Radio America Network. The show also is carried on American Forces Radio Network. The one-hour program devoted to consumer finance issues is brought to you by America's credit unions and their 90 million members, and is presented by CO-OP Network.
 
CUNA and Radio America are podcasting Home & Family Finance through iTunes, Podcast Alley, Odeo, and other popular podcast library sites, as well as on Radio America and CUNA's websites.
 
For related information, read "Elders Are Easy Targets for Scams" and watch "Guard Your Plastic Cards" in the Home & Family Finance Resource Center.
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Low-income designation webinar to be held Tuesday

MADISON, Wis. (12/14/12)--There is still time to sign up for the third webinar in a three-part series on benefits of a low-income designation (LID) and other resources and opportunities available to low income credit unions.
 
Sponsored by the Credit Union National Association (CUNA) and the National Federation of Community Development Credit Unions, "Fuel for Growth: Understanding and Planning for Supplemental Capital" will be held at 1 p.m. CT Tuesday. The webinar is scheduled for 90 minutes.
 
To sign up for the webinar, use the link.

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