HEADLINE NEWS

Bankruptcy Abuse Reform: CUs Anticipate Changes
     The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 will have a direct impact on credit unions in the near term, particularly with an anticipated increase in bankruptcy filing in the next six months and with new disclosure requirements for credit cards in the works at the Federal Reserve, according to the Credit Union National Association (CUNA).
     CUNA’s Mike McLain, assistant general counsel, cautions that “CUs should be aware that debtors’ attorneys will be recommending that debtors file bankruptcy before the new law goes into effect in mid-October 2005*, so CUs should expect to see an increase in Chapter 7 filings.”
     CUs should also consider that: (1) The new "means test" will result in less losses as more debtors will go into Chapter 13 debt repayment plans, rather than discharge their debts through Chapter 7; (2) Reaffirmation of debt agreement language will change; (3) There will eventually be changes in Regulation Z, Truth in Lending Act, disclosure requirements, including disclosures on the front page of periodic statements; (4) CUs will be required to provide a toll-free phone number for their members to call to find out how long it will take to pay off debts if they make only the minimum payment; and (5) CUs may continue to provide credit counseling to members, including discussing alternatives to a bankruptcy filing; however, bankruptcy trustees are responsible for approving credit counseling agencies that will provide mandatory financial counseling to filers.

* Most of the provisions of the Act, including such things as the median income test, the means test, elimination of the Chapter 13 super-discharge, etc., are effective on October 20, 2005. However, there are several provisions that are effective immediately. Refer to the special bankruptcy packet sent to all CU CEOs, along with this newsletter.                    

National Groups Reporting That New Law Is Anti-Consumer
     The new bankruptcy law contains a variety of changes that CUs have been seeking for more than two decades. CUs’ aim in obtaining the changes has been focused on one goal: To stop the abuses that cause credit unions – and thus their member/owners – significant and costly losses.
     However, since the law’s enactment, some long-standing critics have intensified their opposition, questioning the new law’s value to consumers, including CU members. Further, some have even mischaracterized the law as harmful to consumers, particularly those who receive child support or alimony payments.
     CUNA has developed talking points for responding to the critics. These can be used in explaining to your members or the public the facts about the new bankruptcy law. The talking points are part of the special bankruptcy resource guide sent to all CU CEOs.

Thanking Our Delaware Members in Congress
     Several members of Congress who voted for bankruptcy reform have told CUNA that they are being targeted negatively by over 500 organizations, such as www.moveon.org. These organizations have mobilized their grassroots to not only call, fax, and email these members, but also to call talk radio shows or write op-eds asking why members of Congress voted for legislation that will hurt regular Americans.
     Delaware credit unions need to contact the members of our delegation, who all voted for the bill – Senator Biden, Senator Carper, and Congressman Castle – and thank them for their vote. Reinforce why this new law is good for credit unions and in turn good for consumers.
     Contact the League office for mail, email, or telephone addresses for all three legislators.

COMPLIANCE UPDATE

Hear From Federal and State Agencies What the BSA Requirements Mean for Your CU
     As NCUA has vowed to increase its focus and enforcement of CU compliance with the Bank Secrecy Act (BSA) in 2005, CUs should take advantage of all available resources to ensure compliance.
     CUNA and NASCUS are offering a two-day intensive Bank Secrecy Act and Compliance Seminar on June 21-22, 2005, in Alexandria, VA. The BSA Compliance Seminar is intended to help CUs better understand:

     Information on this seminar and additional BSA resources offered by CUNA are available at http://training.cuna.org by selecting the link for “BSA Resources.” The cost of the session is $450.
     League Offers Monthly BSA Training. In addition to CUNA’s training seminar, the League continues to offer monthly Bank Secrecy Act, USA Patriot Act, and OFAC webinars through the Verisure company. Four sessions are scheduled again in May on May 19, 24, 25, and 26. The cost of the connections to these one hour sessions (10-11 a.m.) is $100 per event.
     Both Dawn Sutcliffe of Delaware Alliance FCU and Terri Keene of New Castle County School EFCU are using this venue to train their staff. Dawn’s comment: “I found the Verisure webinars covered the topic well and were convenient! It was great to be able to have the front line staff in the training session together so they could discuss what they were not doing to meet the requirements of the act and share with others the procedures already in place.” Contact Bernadette at the League for information on how to enroll.

NCUA Amends Its Rules Governing Security Program Elements
     NCUA is amending its rule governing security program elements to require federally insured CUs to include response programs to address instances of unauthorized access to member information. NCUA is also including guidance, in the form of Appendix B, to provide federally insured CUs with direction on ways to meet the new regulatory requirements. This rule is effective on June 1, 2005. To access this rule, go to NCUA’s website: http://www.ncua.gov/RegulationsOpinionsLaws/RecentFinalRegs/F-748.pdf. CUNA’s Final Rule Analysis also offers background, description, and requirements of this amendment. Go to: http://www.cuna.org/reg_advocacy/member/analysis/ncua_042905.html.

GAAP Guidance Issued for Re-Selling Mortgages
     NCUA and other federal regulatory agencies have released accounting guidance for CUs and other institutions that intend to sell mortgage loans they originate. Accounting Bulletin #05-01 reminds CUs of requirements under generally accepted accounting principles (GAAP). NCUA said the guidance does not apply to the majority of CUs that simply originate loans to members to hold in portfolio. Use this link to find the entire document: http://www.ncua.gov/GuidesManuals/accounting_bulletins/AB05-0503.pdf.

ATM Notice Requirements
     CUs that offer ATMs must take steps to verify that the required fee disclosures are being provided. Recent class action lawsuits have been filed against a CU and several large banks, alleging failure to make proper disclosure of fees charged to users based on the Electronic Funds Transfer Act.
     Reg E sets out requirements to notify individuals using ATMs of fees that will be assessed for the transaction. The act requires fees to be disclosed conspicuously and prominently on the terminal. Further, fees charged must appear on the screen or paper before the consumer is committed to the transaction. Violation of the rule could bring a fine of up to $500,000 plus costs and attorney fees based on the class action filing.

SYSTEM NEWS

Delaware Peach Blossom Prints Available for Sale
     The Delaware League has limited edition signed and numbered prints of the Delaware peach blossom painting that is proudly displayed at Credit Union House in Washington, D.C. Credit Union House commissioned the artist, Margaret Huddy, to create prints of the state flowers in all 50 states. As a result, the artist has allowed a limited number of prints of each state flower to be created. Print #1 is now framed and hanging in the League office.
     If you would be interested in purchasing an unframed print or would like to see the artwork, please stop by the League office or contact Bob Walls. The cost of the print is $295, with proceeds benefiting Credit Union House.

President Sends NCUA Nomination to the Senate
     President Bush has officially nominated Rodney Hood, a top executive in the Department of Agriculture, to the NCUA Board. Bush nominated Hood for the seat vacated last year by former NCUA chairman Dennis Dollar. That term expires April 10, 2009, according to the White House. However, a recess appointment of Hood still remains an option. Hood currently serves as associate administrator of the Rural Housing Service at the U.S. Department of Agriculture, which is the largest direct lender of loans in the federal government, according to USDA. His prior experience includes work with emerging markets, community development programs, and insurance.

Update on ID Guidelines
     The federal banking agencies and FinCEN have issued updated guidelines for customer/member identification programs. The "frequently asked questions" address issues such as who is considered a customer for escrow accounts, how banks/CUs should identify minors who open accounts, and whether data storage and processing is considered an "account" under customer identification regulations. More information is available on NCUA’s website: http://www.ncua.gov/RegulationsOpinionsLaws/BankSecrecy/BankSerecy.htm. The League will also send out a copy of this information to CUs.

Summer PALS Workshop to Combat Predatory Lenders
     NCUA Board Member Debbie Matz has announced a free Partnering and Leadership Successes (PALS) workshop to be held in Baltimore on July 7. The “Knock Out Predatory Lenders and Improve Your Bottom Line” workshop will focus on providing affordable alternatives to predatory lending and how CUs can win over loyal new members, strengthen their earnings, and knock out competitors who are making a fortune by preying upon potential members. Panels of CU leaders will share their best practices in meeting the cash needs of new members who previously relied on check-cashers or payday lenders.
     The workshop will be held at the Hyatt Regency on Baltimore’s Inner Harbor. As an added bonus, you might catch a glimpse of the World Series champion Boston Red Sox, who will be staying at the hotel during their four-game series with the Baltimore Orioles. The hotel is located just a few blocks from Oriole Park at Camden Yards.
     To register for the Summer PALS workshop, visit http://www.ncua.gov and click “PALS Workshop Registration, July 7, 2005.” Officials from large and small CUs are all invited to attend. The first 60 people who register through NCUA’s website can get a discounted room rate at the Hyatt for the evenings of July 6 and/or July 7.
     The Delaware League is one of the co-hosts of the conference.
Please contact Bernadette at the League if you would like to participate in car-pooling for the event.

Join Maryland CUs at the MDCUL Annual Meeting, June 23-24
     Delaware CUs are invited to attend the Maryland League convention. On Thursday, June 23, CUNA President/CEO Dan Mica will speak. Friday will be education day with a variety of top-notch education and motivational speakers. The luncheon speaker will be Steve Ford, son of former President Gerald Ford. The cost is $225, which includes entrance to the education sessions, exhibit hall, Friday continental breakfast, luncheon, and afternoon dessert social. Registration information will be found in this week’s CEO/manager mailing.

DELAWARE NOTES

Congratulations to Jennifer Miller, marketing director for DEXSTA FCU, and Thomas Zeberkiewicz, who were married on April 16.

Best wishes to Al Schmidt who retired as DOVER FCU vice president of operations on April 8. He had been an employee of Dover FCU for 28 years and had been a volunteer on several committees even before that. He was honored by his fellow employees at a luncheon.

LOUVIERS FCU marketing director Faith Simpers reports that the CU opened 32 new youth accounts during National CU Week in April. Parents and grandparents were encouraged to open these accounts, with several drawings and giveaways to encourage attendance.

Members of ICI AMERICA FCU contributed $114 to credit union political action during the CU’s annual meeting.

 Individual With Lending, Collection, Management Experience Seeks CU Position. Self-motivated individual with over 15 years in the credit union and retail banking industry seeks a position with a growing CU organization that provides members with the best member service. Experience as a vice president of lending and collections, indirect lender, mortgage loan officer, and head teller. Was responsible for implementing a lending platform which included Appro Loan Center decision engine, Loanliner.com internet lending system, and Loanlink lending call center. Knowledge of open/closed end lending forms from CUNA Mutual Group. Call Ruth at the League and ask for resume #05-04-05.

EDUCATION OPPORTUNITIES

League Classroom Seminars in May/June
§           Basic Teller Training for New or Recently Hired Frontline Staff. Tuesday, May 24. 8:45 a.m.-4 p.m. $150.         Instructor: Mary Moulds.
§          Tri-State Compliance Council meeting. Thursday, May 26, in Lancaster, PA. 10 a.m.-3 p.m. Fee depends on council status.
§           Supervisory Committee Training for Volunteers – Loan Reviews and Bank Reconcililations. Wednesday, June 1. 5:30-8:30 p.m. $80. Instructor: Idora Russell.
§           Account Analysis: Balance Sheet, Income Statement, Loan Analysis, and Interest Rate Spread (9 a.m.- noon) + Basic Budgeting Sessions (1-4 p.m.). Thursday, June 2. $90 per session or $170 for both sessions.
§          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.

One-Hour Compliance Webinars
§     Thursday, May 19, at 10 a.m. – Bank Secrecy Act and Anti-Money Laundering
§          Tuesday, May 24, at 10 a.m. – USA Patriot Act and OFAC
§          Wednesday, May 25, at 10 a.m. – CTR and SAR Form Filing Details
§          Thursday, May 26, 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.
 

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