HEADLINE NEWS

      Summer is just around the corner, and everyone likes to dress more casually to ward off the heat. The League Governmental Affairs Committee would like you to help in this effort and raise money for credit union political action by giving your employees the opportunity to "dress down" for casual comfort during the months of June, July, and August.
      Credit unions are encouraged to participate in this event by allowing staff to make a suggested donation to the Credit Union Legislative Action Council (CULAC) for the privilege of wearing casual dress for the entire week. Each CU will define what casual dress constitutes, but the overall concept is to raise not only money but awareness of CULAC with employees and members.
     A packet containing instructions on how to participate has been emailed and faxed to all CUs, along with a form which will indicate that your CU wishes to participate. Please email or fax this form back to Alice Smith (alice@dcul.org) at the League office as soon as possible. New Castle County Delaware Employees FCU is the first CU to return the form.
     The money raised during Dress Down Days will be forwarded to CULAC, credit unions' national PAC, which collects funds from individuals to support credit union friends in federal election campaigns.
     Dress Down Days is part of the Governmental Affairs Committee's efforts to raise $4,303.73 this year to help the national CULAC contribution campaign.

Phishing Scams Hit Delaware CU Members
     In the past week, Delaware CUs have reported multiple email fraud attempts, known as “phishing,” that were initiated by email sent to CU members. In two of the cases, the emails appeared to be from the Credit Union National Association (CUNA) and the National CU Administration (NCUA). [These agencies now have fraud alerts posted on the home pages of their websites.]
     This type of fraudulent activity is the fastest-growing type of Internet fraud. These false emails ask the recipients to click on a link to verify their CU account information. If the recipient does so, the link takes the person to a “look-alike” website and asks for the CU account number and PIN, along with other personal data. The information is then used to steal identities, obtain cash, or create counterfeit credit cards.
     Educate members about the dangers of passing on private information. Member education is the key to CUs protecting themselves and their members from phishing. CUs can remind members:
§         That the CU would not send them an email asking them for account information.
§         Not to respond to any email requests for personal financial information and to delete any suspicious emails.
§         To never disclose any personally identifying information if requested from an unsolicited email or phone call. This includes CU account information, card information, Social Security number, mother’s maiden name, or other private information. They should never reveal a private PIN number or other passwords.
§         To be suspicious if they’re asked to enter personally identifying information into an unexpected pop-up window – no matter how “official” it might look.
§         To review CU statements for any unauthorized charges.  

COMPLIANCE RECAP

What’s the Hottest Compliance Issue? BSA
     Any credit union that's been through an examination lately can tell you that the Bank Secrecy Act (BSA) is the hottest compliance issue around, says Kathy Thompson, associate general counsel for the Credit Union National Association (CUNA), in the May edition of CUNA’s Compliance Challenge. A copy of this publication is included in the CEO/managers’ mailing.
     Interagency guidance in the form of frequently asked questions (FAQ) was released at the end of April to provide some additional nuance interpretations of banks’ and credit unions’ responsibilities under the USA PATRIOT Act’s customer identification program requirements. “We’re looking at them closely to see if any of these new FAQs would trigger any change in our advice on CIP compliance, especially involving loan participations and indirect lending,” Thompson said.
     CUNA plans to get into every twist and turn of BSA compliance at its compliance seminar scheduled for June 21-22 in Alexandria, VA. The seminar will feature federal and state regulators and BSA compliance experts from both the CU and banking industries as speakers. CUs can register at http://training.cuna.org by selecting “BSA Resources.” The cost of the seminar is $450.
     In addition, the League is offering monthly BSA training through Verisure webinars. In August, there will be a classroom session on BSA.

Shred Employee Information Before Discarding
     As of June 1, 2005, all employers will be required to shred any document that has personal information on it prior to discarding it. The requirement comes from the federal Fair and Accurate Credit Transactions (FACT) Act, which was passed in December 2003. According to USA Today, “The law requires the destruction – ‘shredding or burning’ or ‘smashing or wiping’ – of all paper or computer disks containing personal information that is ‘derived from a consumer report’ before it is discarded.” This law applies to all employers with one or more employees. Personal information can be a telephone number, address, Social Security number, etc.

TIS Amended to Address Bounce Protection Programs
     The Board of Governors of the Federal Reserve System is amending Regulation DD, which implements the Truth in Savings Act, and the staff commentary to the regulation to address concerns about the uniformity and adequacy of information provided to consumers when they overdraw their deposit accounts. The amendments, in part, address certain types of services – sometimes referred to as “bounced check protection” or “courtesy overdraft protection” – which are offered by many depository institutions to pay consumers’ checks and which allow other overdrafts when there are insufficient funds in the account. These services are typically automated services provided to transaction account consumers as an alternative to a traditional overdraft line of credit.
     Among other things, the final rule creates a new section to the regulation that requires institutions that promote the payment of overdrafts in an advertisement to disclose total fees imposed for paying overdrafts and total fees imposed for returning items unpaid on periodic statements, both for the statement period and the calendar year to date, and to include certain other disclosures in advertisements of overdraft services. The rule is effective July 1, 2006.

NCUA Warns of Risks Associated With Home Equity Lending
     NCUA’s Letter to CUs 05-CU-07 warns that CUs may not be fully assessing the risks associated with home equity loans and lines of credit. Financial institution regulators have found that in some cases credit risk management practices for home equity lending have not kept pace with the product’s rapid growth and eased underwriting standards. Active portfolio management is especially important for financial institutions that project or have already experienced significant growth or concentrations in higher risk products, such as high loan-to-value, limited documentation and no documentation interest-only, and third-party generated loans.
     Home equity lending can be conducted in a safe and sound manner with appropriate risk management systems. This guidance outlines the agencies’ expectations for sound underwriting standards and effective credit risk management practices for a financial institution’s home equity lending activity.

GOVERNMENTAL AFFAIRS

Proactive CURIA Bill Introduced in House
     The Credit Union Regulatory Improvements Act of 2005 (CURIA) – the long anticipated bill advanced by the Credit Union National Association (CUNA) to overhaul credit union regulations and improve service to members – has been introduced in the House by U.S. Reps. Ed Royce (R-Calif.) and Paul Kanjorski (D-Pa.). The bill number is H.R. 2317.
     Two key provisions of CURIA would implement a risk-based capital approach and raise the current threshold on CUs’ member-business lending. The bill also would facilitate service to people of modest means by allowing CUs to provide check cashing and money transfer services to those within their fields of membership who have not yet become CU members.
     CURIA would be the first major change to the Federal CU Act since 1998, when credit unions rallied to pass the CU Membership Access Act (H.R. 1151). Today’s bill expands and improves upon a similar CURIA bill introduced during the 108th Congress.
     Among its provisions, the bill would:
§         Raise the current 12.25%-of-assets threshold on member business loans to 20% of assets and allow the National Credit Union Administration (NCUA) to increase the threshold for defining a member business loan from $50,000 to $100,000.
§         Set risk-based requirements and revise the leverage ratios (minimum capital standards) established under credit unions’ prompt corrective action (PCA) regulatory structure. The proposed changes would make credit union capital standards comparable to those now in place for FDIC-insured financial institutions.
     We need to show the grassroots power of CUs by lining up as many co-sponsors as possible for this important bill. Please act now by emailing or calling Congressman Castle and ask him to co-sponsor H.R. 2317. You can send an email through CUNA’s grassroots action center: http://capwiz.com/cuna/issues/alert/?alertid=7589761&type=CO. Please also copy the League on your emails by sending to alice@dcul.org.

ID Theft Bill Proposed to Delaware Legislature
     George Fitzgerald, a member of the League’s Governmental Affairs Committee, was recently called to testify, along with League president Bob Walls, regarding a bill that would let Delaware residents “freeze” their credit reports against unauthorized inquiries.
     The bill, sponsored by Sen. Robert Venables, D-Laurel, came up for public comment on May 11. A two-year-old California law is the model for Venables’ bill and similar bills now being offered in more than 20 states, according to an article published in the May 11^th issue of The News Journal. Senate Bill 109 would let state residents “freeze” their credit reports, prohibiting anyone from making inquiries about a person’s credit. The freeze can only be lifted if authorized by the resident. The proposal is designed to help cut down on identity theft.
     Credit unions who are interested in supporting this legislation should contact League president Bob Walls.

Castle to Introduce ID Theft Notification Bill
     House Financial Services Committee members Michael Castle (R-Del.) and Deborah Pryce (R-Ohio) plan to introduce legislation soon that would require companies to alert consumers of any data security breaches that place their personal information at risk, reported Congress Daily AM (May 18).
     The bill would establish a uniform national breach notification standard that would pre-empt state laws. The news article reported that Castle and Pryce said that a national notification standard would help consumers protect themselves against financial fraud when their personal information is compromised. When a data breach occurs, unsuspecting consumers are at risk for identity theft and need a standard in place that will ensure that they receive clear instructions and assistance, Pryce reportedly said.
     The bill also would extend existing data security laws to third-party data collection companies and require companies to monitor the credit reports of customers whose data has been compromised.

DELAWARE NOTES 

Congratulations to the members, staff, and volunteers of the DELAWARE STATE POLICE FCU as they celebrate the CU’s 45^th anniversary on June 13. The CU has recently implemented eCU Technologies’ eStatements for its members. According to Blanche Jackson, vice president of administration, “Instead of calling staff about the availability of their statements, now members can simply access them online anytime they want.” The CU has been using eCU’s home banking solution for two years, so the move to eStatements was a natural progression, Jackson added.

The League received the following note from Marie Davis of DEXSTA FCU, “I am so humbled to have been chosen as the Delaware CU Volunteer of the Year. I have always considered it a privilege to be part of an organization that believes in the giving part of life, rather than the “taking or making” part. Being blessed to this extent is more than anything I could ever have imagined. Having my family with me to celebrate was such a huge part of the event in my life.”

Afleet Alex, the 3-year-old colt who trains at Delaware Park and who recently won the Preakness, is owned in part by Philadelphia FCU board member Chuck Zacney.

Delaware CUs have recently begun using the following Mid-Atlantic Corporate services:
CHESTNUT RUN FCU – incoming and outgoing wire notification
WILMINGTON POSTAL FCU -- Zephyr® ACH files/returns

EDUCATION OPPORTUNITIES

League Classroom Seminars in May/June
§         ACH Compliance Issues with Zephyr® ACH  and Mid-Atlantic Corporate. Wednesday, June 15, from 9:45 a.m.-noon. $20 per person. Instructor: Deidra A. Barton, AAP.

May/June QuickBites Teleconferences
6/9        Truth in Lending – Reg Z
6/15      Front Line Fraud Basics
6/23      Incentives for Lenders
6/28      HR Issues: Family Medical Leave Act
6/30      FACTA, FCRA & FICO (two-hour session)
     The fee for each one-hour session (11 a.m.-noon) is $99; the two-hour session (11 a.m.-1 p.m.) is $169. Unlimited staff participation at your own site. The deadline for registration is one week prior to the conference call. Call Bernadette to enroll.

Regional Training Events
§         Maryland League Convention/Education Day. On June 23, Dan Mica will speak. On Friday, June 24, there will be a variety of top-notch education speakers, including Steve Ford, son of former president Gerald Ford. Cost is $225, which includes entrance to all sessions, exhibit hall, lunch, and dessert social. For information, go to www.mdcul.org.
§         NCUA/DCUL “Knock Out Predatory Lending and Improve Your Bottom Line” PALS Conference. Thursday, July 7, from 10 a.m.- 3:30 p.m. at the Hyatt Regency in Baltimore. No charge. Call Bernadette at the League if you would like to carpool.
§         Penn State Judge/Bradley CU School. August 7-11, at the Penn Stater Conference Center Hotel in State College, PA. This leadership development program is designed to meet the educational needs of CU management staff. Fee: $645. Regis. deadline: July 22. 

One-Hour Compliance Webinars
§         Thursday, June 16, at 10 a.m. – Bank Secrecy Act and Anti-Money Laundering
§         Tuesday, June 21, at 10 a.m. – USA Patriot Act and OFAC
§         Wednesday, June 22, at 10 a.m. – CTR and SAR Form Filing Details
§         Thursday, June 23, at 10 a.m. – OFAC, CTR, and FinCEN Exemption Form Filing Details
The fee for each session is $100. For more information or to enroll, phone Don Baumann of the co-sponsor Verisure at 315-638-4334.