Executive Summary - 16 May 2008

By Christian Mullins

Executive Summary:

Contactless payment technology for cell phones is ready and available, but won’t see widespread distribution until 2012, when it’s estimated that one in five phones sold will offer it.  An additional chip and the cost of the phones (Nokia charges 139 Euros) is currently prohibitive.  Additional technological innovation and maturation of the market will decrease costs, making it more palatable to consumers.

By a Senate vote of 29-4, the state of Ohio passed some of the most restrictive legislation towards the payday lending industry in the nation.  The bill caps the Annual Percentage Rate (APR) at 28%, down from 391%.  Loans must be for a minimum of 31 days, and loans may not be given to one individual more than four times per year.  The bill does not impact Ohio’s StretchPay program, used by credit unions to combat payday lenders.

Robbed:

• Nothing to report today.

Arrested, Arraigned, Charged, or Sentenced:

• John Christian Buttner, 33, of Burnsville, Minnesota, was sentenced to 41 months in prison for the robbery of U.S. Federal Credit Union in the same city last July.  He was apprehended the day after the robbery.

Executive Summary - 15 May 2008

By Christian Mullins

Executive Summary:

The National Credit Union Administration (NCUA) has determined that Father Burke FCU in New York City, New York is insolvent and has ordered the credit union to close. The credit union currently has about $1.3 million in deposits but $1.4 million in liabilities. The NCUA has stated that they will issue checks to members within the next week. Father Burke FCU was originally chartered in 1971.

Election year politics are in full swing, with the first salvos being fired regarding The Credit Card Fair Fee Act. If passed, the legislation would change the methods determining interchange fee rates. CUNA placed a full page ad in Politico, a D.C. based daily political journal, urging the Legislature to vote against the bill. Today, retailers and consumer groups, largely supportive of the legislation, will voice their opinions to the House Antitrust Panel. Not surprisingly, Visa and MasterCard oppose the bill.

Robbed:

• Nothing to report today.

Arrested, Arraigned, Charged, or Sentenced:

• Two men, Shawn Owens, 27, and Joshua Brooks, 20, of Los Angeles, California, have been arrested in connection with the robbery of an Orange County CU on Tuesday. The men, using a takeover style robbery, were arrested within 10 minutes of the crime while still on foot. CU employees visually identified the men as the perpetrators.
• Derek Christiansen, 34, of Salem, Massachusetts, pleaded not guilty at his arraignment hearing Wednesday. Christiansen is accused of robbing St. Jean’s CU four times from February 7 through March 24.

Executive Summary International - 14 May 2008

By Christian Mullins

Canada

New Brunswick has instituted several rules changes to credit unions and caisse populaires in the hopes of avoiding another bailout like Caisse Populaire de Shippigan, which cost the provincial government $31 million last year. The key rule change states that if a credit union declares bankruptcy, member’s deposits are guaranteed to $250,000, bringing them in line with other Atlantic provinces. Previously, 100% of their deposits were insured.

Ghana

The Twifo-Heming-Lower Denkyira District Teachers Co-operative Credit Union (say that five times fast) reports that their bottom line is being affected by members who borrow funds then move to another region on study leave, failing to repay the loans. The Accountant-General’s Department compounds the issue by deleting member names that depart the region on study leave.

Ireland

Over the past four years, 149 credit unions purchased approximately €180 million in investment bonds that have since lost about 40% of their value. An agreement reached through the stockbroking firm Davy will allow the credit unions to recover about €35 million, the value of losses on investments sold through the firm, over a ten year period.

Several companies offering Rent-to-Buy homes are being met with skepticism.  It’s a ‘try before you buy’ system, which allows the prospective owner to rent the home at above market prices, with some of that money going to a deposit on the home.  The homeowner/landlord sets a price for the future sale of the home, and the renter has the choice to buy or move out.  Rent-to-Buy is seen as an acceptable market tool provided the value of the home increases or remains steady.

Executive Summary - 14 May 2008

By Christian Mullins

Executive Summary:

Mixed news in the mortgage market Tuesday. Real estate data firm RealityTrac reported that April foreclosures were up 65% over the previous year, and up 4% from March, with a total of 243,353 filings. On the positive side, mortgage applications are up for the second consecutive week, largely benefiting from lower national rates on fixed 30 year loans, which dipped to 5.82% (6.13% this week last year).

Later this summer, the Federal Trade Commission will hold a Town Hall meeting to discuss consumer protection issues regarding contactless payment systems. While the number of contactless purchases is expected to exceed 24 million in 2008, there was a report released in December showing that the encryption could be cracked with $1,000 worth of equipment, causing some consumer backlash, particularly in Boston, where the story was reported in detail.

The House of Representative Judiciary Committee is scheduled to hear testimony on The Credit Card Fair Fee Act, under which interchange rates and terms would be determined by a panel of Electronic Payment System Judges. CUNA has stated they plan to oppose the bill, stating their support for a free market system. Articles with a more thorough pro and con viewpoint are available.

Even though the Federal Reserve has cut interest rates from 5.25% to 2.00% since mid-September, Fed Chairman Ben Bernanke concedes that the credit crisis is not yet over. A primary concern now is that the market may continue to slump while rising energy costs will drive inflation pressures upward. Moving the rate either way could hurt the economy, as could a stabilization of the rate. In short, there are too many determining factors for a consensus projection.

Robbed:

• Fibre FCU, West Kelso, Washington, Tuesday. A man wearing a ski mask and toting a semiautomatic handgun lined up and pepper sprayed everyone in the credit union before leaving with an undisclosed amount of cash.

Arrested, Arraigned, Charged, or Sentenced:

• Police in Berkeley, California arrested four men in connection with the robbery of Cooperative Center FCU Tuesday. The four men robbed the CU using a takeover style and punching a female teller in the back of the head. Three of the men were caught with $6,000 and a cache of guns after police chased down their car. The fourth man was arrested outside an apartment complex later that afternoon.

Executive Summary - 13 May 2008

By Christian Mullins

Executive Summary:

Fannie Mae has announced four initiatives designed to help both current and prospective homeowners. They are: 1. Allowing homeowners current on their mortgage to refinance up to 120% of their home value. 2. Provide $10 billion in financing to qualified first time home buyers. 3. Rent-to-own programs in hard hit real estate markets. 4. Fannie Mae will immediately begin to purchase jumbo-conforming loans at the same price as other conforming loans.

As financial institutions and government agencies become more conservative in their lending practices, Peer-to-Peer (P2P) lenders like Prosper.com and Virgin Money USA are attempting to fill the gap. While it’s still suggested that students exhaust traditional student loan sources first as the rate will generally be more reasonable, P2P lenders may offer a better rate than a private student loan.

Robbed:

• Nothing to report today.

Arrested, Arraigned, Charged, or Sentenced:

• Nothing to report today.

Executive Summary Weekender 10-12 May 2008

By Christian Mullins

Executive Summary:

Riverview FCU has announced that they will merge into Gardiner FCU by the end of the month. Both credit unions are located in Gardiner, Maine, with Gardiner FCU ($17m in assets) about three times the size of Riverview ($5m in assets). Both offices will remain open after the merger.

For the first time in 60 years, the number of credit unions in Pennsylvania has dipped below 600. The number of credit unions reached a high of 1,556 in 1980 and have been declining in number since. On the positive side, most of those lost were due to merger rather than failure, and overall assets for Pennsylvania credit unions is still increasing yearly.

With an increase in energy prices leading to rises in other markets, most notably food, more Americans are turning to credit cards to bridge the price gap. Last Wednesday, the Federal Reserve reported that cumulative credit card balances have risen 6.7% in the first quarter of 2008, to a mind blowing $952.7 billion. Moody’s also reported that credit card delinquency rates have hit a four year high, at 4.53%.

Robbed:

• First Future CU, La Mesa, California, Friday. A man walked into the CU just before 6 pm, told a teller he was armed, and left with an undisclosed amount of cash. No weapon was shown and no one was injured.
• New Horizon CU, Foley, Alabama, Friday. Two men, one armed with a pistol, walked into the credit union and demanded cash. They fled the scene in a CU employee’s car, which was later recovered. It has not yet been determined how much was taken, and no one was injured in the robbery.
• Operating Engineers FCU, Burlingame, California, Friday. A man flashed a handgun, jumped the counter, and fled with an undisclosed amount of cash. No one was injured.
• Mississippi DHS FCU, Jackson, Mississippi, Friday. Two men rushed into the lobby demanding cash. They left with an undisclosed amount of money. One employee fainted but quickly recovered.

Arrested, Arraigned, Charged, or Sentenced:

• Nothing to report today.

Executive Summary - 9 May 2008

By Christian Mullins

Executive Summary:

Coulee Dam CU in Coulee Dam, Washington is the subject of a phishing attack that is more clever than most. Area residents receive an email stating their debit card has been deactivated. Respondents can either click a link to the actual Coulee Dam CU website, or call a generic phone number and leave a message. Anyone who left their phone number was later contacted by the perpetrator(s) who then asked for sensitive information. It is unknown how many members were victimized.

The House of Representatives passed a cluster of bills that, if approved by the Senate and signed by the President, would establish a $300 billion fund for mortgage insurance. The fund would provide aid for approximately 500,000 homeowners struggling to maintain payments. The White House has expressed strong reservations regarding some of the provisions in the larger bill, but has not definitively said it would veto the measure.

Health Savings Accounts (HSAs) and High Deductible Health Plans (HDHPs) are facing a House Ways and Means subcommittee hearing on May 14. While proponents of the plans suggest that the accounts help control overall health care spending as the individual has a greater stake in the payment, opponents point to a Government Accountability Office (GAO) report that found that average HSA enrollees have incomes three times the national average, and contributions that doubled withdrawals, calling into question its actual, versus intended, purpose.

Robbed:

• Les Bois FCU, Boise, Idaho, Thursday. A man walked into the credit union at about 3:00pm Thursday, then demanded and left with an undisclosed amount of cash. A man matching his description was seen casing the area several hours earlier. No one was injured.

Arrested, Arraigned, Charged, or Sentenced:

• Nothing to report today.

Executive Summary - 8 May 2008

By Christian Mullins

Executive Summary:

Gary B. Wolter has announced his plans to retire from the Alabama Credit Union League after serving 42 years as their CEO, a position he has held since age 27. Wolter began his career at the ACUL as a field representative in 1962, accepting the CEO position in 1966. At the time, he was the youngest League CEO in the United States.

New York State Credit Unions are lobbying for the ability to accept deposits from local and state government units, something only available to commercial banks at this time. The law governing these deposits was enacted in 1909, before any credit unions were established in the state. Three pieces of legislation are currently being considered that would loosen the regulations, with other non-commercial banks eligible to accept the deposits as well.

Robbed:

• Nothing to report today.

Arrested, Arraigned, Charged, Sentenced:

• Nothing to report today.

Executive Summary International - 7 May 2008

By Christian Mullins

Australia:

Later this month, fifteen individuals representing the credit union industry will travel to Cambodia to provide insight and help strengthen the CU movement in that nation. Australia’s credit unions have evolved from offering credit to those who can get it at mainstream banks to offering a real alternative, and they believe that Cambodia can develop a similar system.

Canada:

While skimming scams in North America are relatively rare, an undetermined number of Winnipeg residents have fallen victim to exactly that. The scam, which involves installing a credit/debit card ‘reader’ that harvests your card’s information while conducting a transaction, has affected at least two financial institutions. Winnipeg police are investigating the matter, and cards suspected of fraud are being canceled. The skimmer’s location has not yet been determined.

British Columbia’s credit unions had a positive overall performance in 2007. B.C.’s 48 credit unions earned $261 million before taxes and dividends, assets jumped 9.5%, and while mortgage loans compromised 68% of their combined lending portfolio, loan delinquency rates (90 past due or longer) remained a low 0.21% of total loan value.

India:

A group of executives representing rural credit cooperatives recently visited Las Vegas to learn more about America’s Credit Unions and how they operate. Executives in India want to reform the credit union system, specifically by separating the credit unions from the government entities that run them. The largest credit union movement in the world (in terms of total members and institutions) wants a system more like that of the U.S.: regulated, but not run, by government.

Ireland:

CUNA Mutual, based in Madison, Wisconsin, USA, opened a new European headquarters in Dublin on May 1, and announced it was expanding their operations on the continent. In addition to the Dublin office, CUNA has international operations in Australia, Canada, South Korea, and Latin America.

United Kingdom:

The credit crunch has continued to have a devastating effect on Britain’s homeowners. Last year, 95,374 repossession orders were issued, the highest since the housing crash of the early 1990s. With a general economic downturn combined with 1.4 million homes facing renegotiated rates, 2008 looks to be even worse. The Bank of England estimates that the average rate on a renegotiated loan will jump 2.5%.

Executive Summary - 7 May 2008

By Christian Mullins

Executive Summary:

Proving that nothing is off limits when it comes to fraud, a scam from individuals claiming to be from the IRS has surfaced in Western Massachusetts. The scam is in email form, asking the individual to complete a form to ensure the proper deposit of economic stimulus checks. Both the Internal Revenue Service and Greylock FCU have posted scam warnings to their websites.  It is currently unknown how many individuals have been victimized by the attempts.

Real estate website zillow.com released startling statistics for the state of the nation’s home owners. According to their research, 51.6% of homes in the United States purchased in 2006, when prices peaked, are ‘underwater’, or worth less than its mortgage balance. It isn’t much better for homes purchased in 2005 or 2007, with 42% and 45% of homes underwater, respectively. Two of the hardest hit cities are Las Vegas, Nevada, and Stockton, California.

Robbed:

• Nothing to report today.

Arrested, Arraigned, Charged, or Sentenced:

• A man responsible for the robbery of People’s Community CU in Vancouver, Washington April 28th and again on Monday has turned himself in to police. Lucas Smith, 26 is believed to have acted alone in both robberies.