Volume 26, Number 11                                           June 15, 2006

HEADLINE NEWS

Credit Freeze Bill Passes Delaware Senate
     On June 1, the Delaware State Senate passed the credit freeze bill, which many Delaware credit unions support. The bill's title is "An Act to Amend Title 6 of the Delaware Code Relating to the Clean Credit and Identity Theft Protection Act.” The bill, which was revised prior to passage, creates protections for Delaware credit consumers and was passed unanimously by the Senate.
     The act will permit consumers to "freeze" access to their credit files. A credit freeze will help stop the financial consequences of identity theft that involve the credit report. This will help protect not only the personal financial assets of credit union members, but also credit union assets which are used for loans. Since identity thieves cannot access the credit of their victims without validated access to the victim's credit history, a "credit freeze" should help to stop identity theft.
     By January 31, 2009, the Senate version of the bill would require that consumer-authorized access to credit histories (accomplished through a PIN number or password) would take no longer than 15 minutes. The bill does allow each consumer reporting agency to charge $20 for the consumer's initial personal identification number or password.
     The bill is now being considered by the Delaware State House. The Delaware League, spearheaded by George Fitzgerald and Patrick Mahaney, has been the leader of a coalition - "Delawareans for a Security Freeze" - to help promote passage of the bill. Currently the coalition is made up of 94 organizations and elected officials. Delaware coalition members include 21 credit unions: American Spirit, Chestnut Run, Delaware, Delaware Alliance, Delaware First, Delaware State Police, DEXSTA, Dover, DPL, Eagle One, First State, Louviers, New Castle County Delaware Employees, Newport Site Employees, Provident, Seaford, Southern Delaware Postal Employees, Sussex County, U-Del, Wilmington Police and Fire, and Wilmington Postal. CUNA Mutual Group has also been a strong supporter of this legislation.

League Provides BSA Training Tools
     The League has added a new video/DVD resource to its lending library to help CUs train staff members on the Bank Secrecy Act. The new resource was produced by the Texas CU League, and Delaware CUs were offered a chance to purchase copies for their own libraries last month. In fact, there is still one VHS copy of the resource available for sale (please call Alice Smith). The League will retain a copy of both the VHS and DVD versions for other CUs that might want to borrow this resource, along with the BAI training tape that is also available. Both training tapes are approximately one hour in length and discuss the various CTR, SAR, and other reports that must be filed. Each contains short vignettes to dramatize specific situations. Using the accompanying materials, viewers will quickly learn specific situations to watch for in order to be compliant with the regulation. CUs that pre-ordered copies of the BSA training resource should receive their orders by the beginning of July.
     CUNA Offers BSA Webinar. With examiners resolving to place the Bank Secrecy Act atop their priority list for the year, the June 28 BSA and Customer ID Program Requirements Webinar will help staff ensure their CU is compliant with program requirements prior to exam time. In addition, staff will learn when and how to complete a Currency Transaction Report and Suspicious Activity Report, due diligence and control procedures, and potential penalties for non-compliance. The session will be held on Wednesday, June 28, from 2-3:30 p.m., and the cost is $219 for unlimited participants. To enroll, visit training.cuna.org or call 800-356-9655, ext. 4249. 

NCUA LETTERS TO CUs

§     Letter 06-CU-08: Financial Trends. This letter reviews credit union financial trends for the first quarter of 2006.
§     Letter 06-CU-09: Treasury’s GoDirect Campaign. NCUA Chairman JoAnn Johnson’s letter raises awareness of the benefits of direct deposit and encourages CUs to actively promote these services to their members, especially in areas which are traditionally affected by hurricanes.
     Across the United States , approximately 12 million citizens continue to receive federal benefit payments by paper check, which increases the risk of interrupted payment in the event of an emergency. In the aftermath of hurricanes Katrina and Rita, the Treasury Department and the Social Security Administration (SSA) worked tirelessly to distribute benefit checks to recipients who were displaced by the hurricanes, but those who were using direct deposit received prompt access to their payments.
     The letter encourages credit unions to participate in Treasury’s GoDirect campaign, which ensures that citizens will receive their federal benefits without interruption. Credit unions can partner with the GoDirect campaign and receive more information by visiting www.GoDirect.org and by calling toll-free: (800) 333-1795.
§     Letter 06-CU-10: Information System & Technology (IS&T) Program.This updated program, a part of NCUA’s exam process, results from significant changes in technology and revisions to NCUA Rules and Regulations. Examiners will use the IS&T Questionnaire Workbook to complete their review and will tailor their review based on a credit union’s risk and answers provided on appropriate questionnaires.
     The questionnaires will concentrate on CU internal networks and services. In many cases, this oversight is not outsourced to third parties. CUs that internally manage networks and services should complete those questionnaires. Third-party providers can assist with questionnaires. This analysis can assist in the risk assessment process as discussed in NCUA Rules and Regulations, Part 748, Appendix A. These comprehensive questionnaires focus on various risk factors (strategic plans, transactions, compliance and reputation) and also on data security, intrusion, access, third party providers/vendors, auditing, disaster recovery, and risk assessments.     
     For copies of any of these letters, go to http://www.ncua.gov/letters/letters.html.

OTHER COMPLIANCE ISSUES

NCUA Top Examination Issues
     The Credit Union National Association has released an article detailing the National Credit Union Administration’s areas of focus for examinations in 2006. Topping the list are non-traditional mortgages, indirect lending, Bank Secrecy Act compliance, and disaster recovery. Kathleen Thompson, CUNA’s senior vice president of compliance, sat down with Joy Lee, NCUA Director of Supervision. In the interview, Lee explains that while there are many issues of concern to NCUA, the common thread is that these concerns can be allayed if credit unions are doing their due diligence reviews adequately. More information about NCUA’s “Top Examination Issues” can be found in CUNA’s June Credit Union Magazine. Click here to access the article

New Underwriting Guidelines
     In an effort to reduce significant credit union plastic card fraud losses, CUNA Mutual Group is implementing new underwriting guidelines and requirements and reminding CUs to strictly adhere to existing plastic card security and claims documentation requirements.
     Credit unions with CUNA Mutual’s plastic card coverage reported $89 million in fraud losses in 2005, and 2006 losses are already significantly worse than last year’s pace.
     The new guidelines, which were communicated to policyholder credit unions in a detailed letter, are designed to protect the viability of plastic card programs and to ensure the continued offering of this coverage for CUs. Specifically, CUNA Mutual is asking credit unions to:
■    Ensure plastic card security requirements and best practices are in place.
■    For all Visa and MasterCard branded plastic cards, ensure that CVV/CVC is being validated on all magnetic stripe authorizations – including debit PIN transactions.
■    Follow claims and recovery documentation requirements – or claims will be denied.
■    Effective August 1, ensure implementation of 24/7/365 fraud monitoring, a 24/7/365 response capability, and the ability to identify high-risk activity and block or decline transactions when necessary.
     In addition, CUNA Mutual will begin filing rate increase requests with insurance regulators as a means of maintaining the viability of the company’s plastic card insurance coverage for CUs.

CREDIT UNION SYSTEM

CUNA Sends Out Disaster Preparedness Tools to States
     The Delaware League has received a package of “disaster preparedness tools” from CUNA that are designed to help CUs deal with the impact of any possible natural disaster. “These tools will support CU efforts to set their plans to face disasters and emergencies – whether hurricanes or some other occurrence,” said CUNA President/CEO Dan Mica.
     The League will distribute the tools to CUs on an “as needed” basis depending on a local need. The package includes a CU disaster checklist, an “emergency financial first aid kit” for members, information on contributing to the National Credit Union Foundation*, along with other information.
     CUNA has also unveiled a toll-free telephone number for CU members to use to obtain information about the status of their CU in the event of a disaster or crisis: 1-877-CULOCAT (1-877-285-6228).
     If your CU is interested in learning more about the disaster preparedness tools, please contact Susan Fallon or Alice Smith at the League office.
* The National Credit Union Foundation has recently earned the National Charity Seal from the Better Business Bureau’s Wise Giving Alliance, which shows the Foundation’s commitment to strong accountability, ethical practices, and sound stewardship of donor funds.

Filene Research Institute Releases Three New Reports
     The Filene Research Institute has released three new reports about three distinct credit union issues: secondary capital, a product concept involving gift registry accounts, and an opportunity to grow membership using word-of-mouth.
     First, Secondary Capital Products: An Assessment of Member Interest, examines member interest in secondary capital products for CUs, specifically a long-term certificate of deposit (CD). Although secondary capital products are not widely permitted in U.S. credit unions, the research may furnish insights should future regulations permit this unique product.
     Also, a thought provoking Filene i³ Investigative Report explores Gift Registry Accounts for Key Life Events: A Radical Leap for Credit Unions? This report explores how consumers today use gift registries to celebrate births, graduations, and weddings and offers insights on how CUs can design accounts to align with these celebratory moments in their members’ lives.
     The final publication is an executive summary regarding an i³ innovation project: MoneyWorks. The project enables CU members to throw fun at-home CU parties to grow membership and use the powerful word-of-mouth, multi-level marketing approach similar to Pampered Chef^® or Tupperware^®
     Detailed information on the two i³ projects can be found on the Filene website: www.filene.org. In addition, the League has all three publications in our lending library.

CU Leadership School in PA
     For 52 years, the Penn State Judge/Bradley Credit Union School has provided leadership development for CU executives, management, and staff. For those who do not want to commit two weeks to go to CUNA’s CU Management School, this might make a great alternative.
     The 2006 school will be held August 6-10 at The Penn Stater Conference Hotel in State College, PA. The two-year format allows students to focus on core leadership skills and choose from two tracks – basic management (for those aspiring to be leaders) and advanced management (for experienced CU leaders). Further information about the school is available by calling Alice at the Delaware League.

DELAWARE NOTES

Our condolences go out to the family and friends of  Howard Fisher, who passed away on May 14. Howard spent many years as treasurer and clerk for DELAWARE V.A. FCU.

DELAWARE FIRST FCU again hosted Alex’s Lemonade Stand in the CU parking lot on June 9 to benefit pediatric cancer.

Diane Sawyer, a teller at DPL FCU, was featured in a News Journal article about women nationwide who share the same name as “Good Morning America’s” anchor.

Loan officer Sherry Ford of DELAWARE ALLIANCE FCU recently attended CUNA’s Consumer Lending School in Maryland.

League EVP Jane Bailey was featured twice in the May 31^st issue of Credit Union Times. Jane had her letter to the editor published regarding members losing out when credit unions sell their credit card portfolios. In addition, Jane was interviewed for an article about the dissolution of the CUSO originally formed by Delaware credit unions.

NCUA recently granted five community charters that cover major U.S. cities, including Philadelphia. In the past two years, NCUA has granted charters that encompass 14 cities, including Wilmington. Both DELAWARE FCU and DPL FCU have charters for the city of Wilmington.

Credit Union Manager Position Available. Delaware V.A. Federal Credit Union, a $2M financial institution, is seeking a manager for its Wilmington office. This position is responsible for the total administration of the office, supervision of office staff, coordination of activities, and strict adherence to CU policies and procedures. The candidate should possess strong verbal, written and accounting skills. Previous experience in a CU or other related field is required. Excellent interpersonal skills are a must. Full benefits and competitive salary offered. Applicant can email the resume to patricia.price@med.va.gov or mail it to Veterans Hospital Administration, 1601 Kirkwood Highway, Wilmington, DE 19805, Attention: Pat Price.

EDUCATIONAL OPPORTUNITIES

June/July QuickBites Teleconferences

One-hour sessions – 11 a.m.-noon
◘       6/27  Dealing With the Death of a Member
◘       7/6    Community Marketing
◘       7/11  Internal Employee Fraud
◘       7/19  What If They Say No? – Cross-selling
◘    7/27  Collections

One-and-a-half hour session – 11 a.m.-12:30 p.m.
 ◘      6/20 Plastic Card Fraud

Two-hour session –11 a.m.-1 p.m.
◘      7/25  CU 101: An Introduction to Credit Unions

The fees for the one-hour sessions are $99; the 1½ hour session is $109; and the two-hour session is $169. Deadline to register: one week prior to the session. Call Bernadette to enroll.

Informational Meeting on Shared Branching – Wednesday, June 28, from 10 a.m.-noon at the League office. Register with Jane immediately.

DCUL Human Resource Council – Tuesday, July 11, from 10 a.m.-noon at the League office. Attorney Robert Nagle will speak on 1) litigating discrimination claims, including age discrimination and affirmative action and 2) recordkeeping requirements. The session is free to registered HR Council members; $75 per person for non-council members. Lunch is provided. Registration deadline: 7/3.

DCUL Cards Council – Wednesday, July 12, from 10 a.m.-noon at the League office. CUNA Mutual staff member Irene O’Sullivan will speak on minimizing credit card losses. The session is free to registered Cards Council members; $75 per person for non-council members. Lunch is provided. Registration deadline: 7/7.

CU Member Seminar on Reverse Mortgages. The League is hosting this member education seminar at the League office on Thursday, July 13, from 6:30-8:30 p.m. If you would like to market this seminar to your members, contact Jane Bailey.

One-Hour BSA Compliance Webinars
These courses are now being offered in an “on demand” format – hook into them at the time and place you choose. The next set of live webinars is:
            6/20       CTR/SAR Forms Completion
            6/22       OFAC, FinCEN, CTR Forms
These sessions begin at 10 a.m., and the fee is $125. For more information, phone Don Baumann of the co-sponsor Verisure at (315) 638-4334.

TOGETHER is published on the 15th and 30th of each month by the Delaware Credit Union League, 4 Quigley Boulevard, New Castle, DE 19720. Information to be published should be sent or phoned into the League no later than the Monday of the week preceding the publication date. Telephone: (302) 322-9341 or (800) 292-7875. This newsletter can also be found on the League website: www.dcul.org. Hard copies of the newsletter will be mailed to each credit union CEO/manager for distribution to those without computer access. Readers can receive a reminder when the newest edition is posted to the Web by emailing susan@dcul.org. Editor: Alice Smith (alice@dcul.org).