HEADLINE NEWS

Bankruptcy Reform Passes House!
     The U.S. House of Representatives passed the long-awaited bankruptcy reform measure on April 14 by a vote of 302-126. The House passed the Senate version of the bill, S. 256, which was supported by credit unions. All three of our members in Congress – Senator Carper, Senator Biden, and today Congressman Castle – supported the bill. The bill now goes to President Bush, who has indicated that he will sign the measure into law.
     CUNA, the League, and many Delaware credit unions have actively lobbied for support of the legislation and repeatedly testified in favor of bankruptcy reform. S. 256 makes it more difficult to file for Chapter 7 bankruptcy protection, allows credit union members to voluntarily re-affirm debts with their credit union, and includes mandatory financial education provisions.
     “This is a big win for credit unions,” states Alice Smith, director of communications and public relations. “The advocacy efforts made by credit unions paid off, and we’d like to thank everyone who worked to advance this important bill.”  

Walls Defends Biden/Carper’s Bankruptcy Reform Support in News Journal
     Delaware Credit Union League president Bob Walls recently had an editorial rebuttal published in The News Journal, defending Delaware senators’ support of the bankruptcy reform bill, after a scathing opinion piece against the legislation.    
     Mr. Walls wrote the rebuttal in response to an opinion letter entitled “Biden, Carper turned their backs on fellow Delawareans,” which appeared in the Sunday, April 3, News Journal.
     Mr. Walls responded to the opinion letter written by Andrew Slater, a member of The News Journal Community Advisory Board, which criticized Senators Joseph Biden and Thomas Carper for supporting the Bankruptcy Abuse Prevention and Consumer Protection Act (S. 256). In his response, Walls stated, “Credit unions recognize that bankruptcy is a legitimate way for those who truly need extraordinary means to address indebtedness. But only the obligation of the debtor disappears; someone else pays for the loss.”
     In making his rebuttal, Walls pointed out that credit unions “have suffered record levels of bankruptcies for several years and have observed too many members walk away from their debts, although many can pay back something.” He said that, in 2004, 40% of all credit union losses were attributable to bankruptcies, equaling more than $900 million in losses.
     According to Walls, “Delaware credit unions want to thank Senator Biden and Senator Carper for having the courage to enact legislation that will have a positive impact on the financial lives of many Delawareans.”

CU Education Opportunities in May and June
     The League will be hosting a number of seminars in May and June that provide training for front-line staff, management, and volunteers. All sessions will be held at the League office. All CUs will receive registration forms for each session.
     Implementing a Service and Sales Culture: Step by Step Instructions – May 5. This full-day session will be held from 9 a.m.-3:30 p.m. at the League office. This topic, highlighted at the League annual meeting, will help every CU manager or supervisor (from CEOs to head tellers) learn how to begin to set up a sales and service culture in their CUs. Cost: $125. Presenter: Carolyn Warden.
     It Ain’t About Sex Anymore: How to Avoid Getting Into Trouble in the Workplace – May 12. This session is designed for CU supervisors or human resource managers: learn how to promote a hostile-free work environment and avoid employee harassment complaints. Registrants can choose from one of two sessions: 9-11:30 a.m. or 1-3:30 p.m. Cost: $100. Presenter: Peggy Daniels.
     The ABCs of Being a Teller: Basic Teller Training – May 24. Mary Moulds from the New Jersey League returns to present her annual training for new frontline tellers and member service representatives. Time: 8:45 a.m.-4 p.m. Cost: $150.
     Supervisory Committee Volunteer Workshop – June 1. The League continues to offer detailed training of various supervisory committee responsibilities. This session will cover general CU accounting, bank reconciliations, and loan reviews. Instructor Idora Russell will provide new information not presented in previous training held in 2003 and 2004. Time: 5:30-8:30 p.m. Cost: $80.
     Account Analysis and Basic Budgeting – June 2. Financial administrators and CU managers are encouraged to attend both of these sessions. Morning session: 9 a.m.-noon. Afternoon session 1-4 p.m. $90 per session or $170 to attend both.

COMPLIANCE RECAP

Is Bounce Protection Guidance More Than Voluntary?
     Is the National Credit Union Administration's (NCUA) "best practice guidance" on overdraft, bounce protection and courtesy pay programs just voluntary guidance or should CUs really be following it?
     In the last issue of Together (March 30), we reported that NCUA and the banking agencies issued guidance on these programs in February 2005. NCUA said in a letter to CUs, "[C]redit unions should be aware these ‘best practices’ are minimum expectations for the operation of bounce protection programs."
     The Credit Union National Association (CUNA) believes "best practice guidance" really means "just do it."
     "When members repeatedly access bounce protection, CUs should advise members about less costly products and consider suspending access to bounce protection ... CUs must thoroughly review decision software used by the vendor, verify appropriate referrals are provided to less expensive options, and ... monitor vendors to be certain that fee income is not increased by manipulating payment order or taking other action that is not disclosed to members."
     Effective July 1, all examiners will be required to complete a checklist on how a CU's bounce protection program conforms to the agency's best practice "guidelines."
     "A credit union can be expected to be written up for not doing so. NCUA's General Counsel recently said that if the agency finds that CUs are not following the recommendations of the guidelines, then the agency will consider if a regulation is necessary," advised Kathy Thompson, CUNA’s associate general counsel. "We expect the agency will circulate the new checklist to CUs, probably as a Letter to Credit Unions, before July 1."
     "A federally insured credit union offering a bounce protection program better closely study the agency guidelines and make changes in its program as appropriate or be prepared to defend practices that do not conform to the agency's enumerated ‘best practices,’” Thompson added.
     More compliance information is contained in CUNA’s April Compliance Challenge, which the League has mailed to all CUs.  

CUs Must Comply With Servicemembers Civil Relief Act
     The New York Times recently reported that even as active-duty military personnel are serving their country, some financial institutions have been going after them for unpaid debts, although a longstanding federal law prohibits it.
     The Servicemembers Civil Relief Act limits the financial obligations of certain individuals in military service during their period of active duty (full-time service with the U.S. military). The Act also limits the judicial remedies otherwise available to credit unions and other lenders while borrowers are protected by the act – especially foreclosures and repossessions.
     A CU member who is appointed, enlisted, or inducted into the Army, Navy, Air Force, Marines, Coast Guard, officer of the Public Health Service (when detailed for duty with the military) or has received orders to report for federal active duty with the Reserves or the National Guard is covered by the Act. The Act does not relieve the obligations of an active duty servicemember to repay his or her debts. Rather, it recognizes that the ability of some individuals to repay loans will be lessened as a result of going on active duty. As a result, the Act requires lenders to reduce the interest rate on loans to a 6% maximum (inclusive of fees) on obligations incurred prior to active duty, including joint obligations incurred prior to active duty (e.g. credit cards, home equity lines of credit, home mortgages, car loans, share-secured loans and signature loans). The rate must be effective when the person goes on active duty or receives orders to report for active duty.
      Under the Act, property that is security for an obligation entered into prior to the start of military service cannot be foreclosed upon, repossessed or sold without court approval. Similarly, shares pledged cannot be applied to payments without court approval. Although the interest rate limitation applies only if the serviceperson's ability to pay is materially affected as a result of going on active duty, the burden is on the credit union to prove in court that a serviceperson is not eligible.
     For a more in-depth look at the law, credit unions should refer to CUNA’s e-Guide:
http://www.cuna.org/compliance/member/eguide/eguide_sscra.html

SYSTEM NEWS

HMDA FAQs Available
     NCUA, along with the federal financial agencies and the Department of Housing and Urban Development, has released a set of “Answers to Frequently Asked Questions” (FAQs) that address the new home loan price data disclosed this year for the first time under the Home Mortgage Disclosure Act (HMDA). This release coincides with the date that lenders must make their HMDA data available to the public upon request. The FAQs will aid users of the data with their evaluation and interpretation of the data and are posted on NCUA’s website at http://www.ncua.gov/news/press_releases/2005/NR05-0331.pdf.

Creditors Cannot Seize IRAs
     On April 4, the U.S. Supreme Court ruled that creditors cannot seize Individual Retirement Accounts (IRAs) when people file for bankruptcy protection. IRAs, therefore, join pensions, 401(k) plans, Social Security, and other benefits that are tied to age, illness, or disability and are afforded protection by bankruptcy. Citing a substantial tax penalty imposed for withdrawals before an IRA holder turns 60, the court ruled that IRAs shouldn’t be treated any differently than the other types of retirement vehicles because the benefits are tied to people’s age. The ruling affects 16 states and the District of Columbia, which do not have state laws protecting IRAs. The remaining 34, including Delaware, have separate state laws on bankruptcy protection.

Delaware -- A Tax-Friendly State
     Alaska again took top honors as the most tax-friendly state for residents, according to an analysis by the Tax Foundation (CNN/Money, April 11). New Hampshire came in second, while Delaware took third place. The foundation measures what residents pay in income, property, sales and other personal taxes at the state and local level, divided by per capita income. The rankings also factor in the percentage of business taxes that are passed along to state residents via higher prices, lower wages or lower profits. Maine tops the list of the least tax-friendly states, followed by the District of Columbia, New York, Hawaii and Rhode Island.

More Bank Secrecy Act Training
     NCUA examiners in 2005 are increasing their focus on whether CUs are complying with all aspects of the Bank Secrecy Act (BSA) and its many regulatory requirements.
     At CUNA's Governmental Affairs Conference, NCUA said that CUs that are written up by their examiners for BSA compliance shortcomings which are not corrected within 90 days will be subject to serious enforcement actions.
     The League and CUNA’s training programs and resources will help ensure that your BSA training requirements have been met before your examiner walks in the door.
     Webinar training at your own CU. The League has joined with the Verisure organization to present monthly BSA webinars. The cost of each session is $100, and you can register by calling Don Baumann at 315-638-4334. All sessions are at 10 a.m.
§           April 21 – Bank Secrecy Act
§           April 26 – USA Patriot Act and OFAC
§           April 27 – CTR & SAR Forms Completion
§           April 28 – OFAC, FinCEN & CTR Forms
CUNA is holding a BSA Webinar on April 26 from 3-4:30 p.m. Cost: $219. For more information, go to
http://training.cuna.org/elearning/webinar/EW04265_fct.html
     CUNA will also hold a BSA, OFAC, and Patriot Act Compliance Webinar for front-line staff on July 13 and again on July 20, from 1-2:30 p.m. Cost: $219. For more information, go to
http://training.cuna.org/elearning/webinar/EW07205_fct.html
     Resources available through the League. Susan Fallon can provide CUs with sample BSA policies that have been provided by NCUA. In addition, the League library has two resources that contain sample policies: CU Model Policies: A Framework for Compliance and The USA Patriot Act Guidebook: Complying with the Member Identification Requirements of the Bank Secrecy Act.

Webinar on Rising Rate Environment
     CUNA will also host a session on “Consumer Lending in a Rising Rate Environment” on Tuesday, May 10, from 2-4 p.m. The sessions will feature expert analysis from Ph.D. economists and industry professionals. The cost of the webinar is $219. To register, go to http://training.cuna.org/elearning/webinar/EW5105_fct.html

DELAWARE NOTES
     Doug Rainey, editor of The Business Ledger, mentioned his background with credit unions and why our industry supports bankruptcy reform in his editorial in the April issue of the newspaper.
     BauerFinancial, Inc., an independent bank rating and research firm, has issued updated BauerFinancial™ star ratings for the nation’s 8,975 banks and 9,128 credit unions based on the most recently released financial data (12/30/04). The star ratings are assigned based on the financial condition of the institution. The ratings range from zero to five-stars, with five-stars being the highest. Delaware CUs earning a “superior” five-star rating are:
            American Spirit FCU
            Chestnut Run FCU
            Delaware FCU
            DEXSTA FCU
            Dover FCU
            DPL FCU
            DuPont Stine-Haskell Employees FCU
            First State Refinery FCU
            Milford Memorial FCU
            New Castle County Delaware Employees FCU
            New Castle County School Employees FCU
            Sussex County FCU
            Wilmington Postal FCU

Rate Board Available. Perryville V.A. FCU has a rate board they would like to donate to a small CU.
Contact Phil Randall, 410-642-6037.

EDUCATION OPPORTUNITIES

May Quick Bites Calls
5/4        Netiquette: Email Communications. 11 a.m.-noon. $99.
5/12      Open-End Lending. 11 a.m.-1 p.m. $169.
5/17      Introduction to Business Lending. 11 a.m.-noon. $99.
5/25      Lose the “We Don’t Sell” Attitude. 11 a.m.- noon. $99.
The fee for each session includes unlimited staff participation at your own site. The deadline for registration is one week prior to the conference call. Call Bernadette to enroll.

One-Hour Compliance Webinars
§           Thursday, April 21, at 10 a.m. – Bank Secrecy Act and Anti-Money Laundering
§           Tuesday, April 26, at 10 a.m. – USA Patriot Act and OFAC
§          Wednesday, April 27, at 10 a.m. – CTR and SAR Form Filing Details
§          Thursday, April 28, 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.

Mid-Atlantic Corporate Education Sessions
§           “Where Are You With Check 21 Initiatives? What Is Next?” Conference Call. April 19. 11 a.m.
§           “Measure ALM Risk Effectively” Conference Call. April 28. 11 a.m.
§           “Increase Your Return on Assets” Conference Call. May 10. 11 a.m.
To register for any of the listed education events, contact Mid-Atlantic’s marketing department at 800-622-7494, ext. 3106.

League Classroom Seminars in May/June
§           How to Implement a Sales and Service Culture. May 5. 9 a.m.-3:30 p.m. $125.
§           Avoid Sexual Harassment Complaints. May 12. Two sessions: 9-11:30 a.m.; 1-3:30 p.m. $100 per session.
§           Basic Teller Training. May 24. 8:45 a.m.- 4 p.m. $150.
§           Supervisory Committee Training. June 1. 5:30- 8:30 p.m. $80.
§           Account Analysis (9 a.m.-noon) + Basic Budgeting Sessions (1-4 p.m.). June 2. $90 per session or $170 for        both sessions.

May 5-7 Collections and Financial Counseling Conference. The Capital Area Collection Managers Roundtable and the National Capital Area Financial Counselors Roundtable will host their 10^th annual education conference at the Hershey Lodge in Hershey, PA. There will be plenty of networking opportunities. For more information, contact Brenda Thompson at 800-487-5582. Or visit www.cacmrg.org for seminar topics. Fee: $325.