Volume 29, Number 12                                                              July 15, 2009

HEADLINE NEWS

Littleton Mitchell: Civil Rights Activist; Credit Union Leader
     Delaware civil rights leader Littleton Mitchell died July 6 at the age of 90. Although the newspapers have been filled with articles and editorials about Mitchell’s contributions to Delaware politics and public policy, no mention has been made of his contributions to the credit union movement here in Delaware.    
     Lit Mitchell served as a credit union volunteer for 45 years. Originally he was a member of the Delaware Mental Health FCU and served as the board president of Health and Social Services FCU, before the credit union’s name became Delaware Alliance FCU. He still was an active board member at the time of his death, functioning as honorary parliamentarian and bylaws committee chair.
     Mr. Mitchell was recognized as Delaware’s outstanding credit union volunteer in 2002. Delaware Alliance FCU’s nomination letter, which was submitted by Betsy Cole on behalf of the credit union’s board and staff, made the following statement:

Where do you begin to describe the contributions a man of Littleton Mitchell’s stature makes to our credit union? His lifelong mission to serve the people of the state of Delaware is an inspiration. His dedication to his causes, including our credit union, is exceptional. He is the nicest, most humble, self-sacrificing person you will ever know. It is such an honor serving with Mr. Mitchell on the board of DAFCU. There is no one who is more knowledgeable on credit unions or deserving of recognition as a volunteer to a credit union in this state. While he has been given many an honor or award, he has never been recognized for his contributions to the credit unions with which he has been associated.

Mr. Mitchell received that honor the same year that Delaware Alliance FCU celebrated its 40th anniversary.

The Federal Minimum Wage Increasing Under the Fair Labor Standards Act
     The minimum wage is increasing to $7.25 per hour effective July 24, 2009. Federal minimum wage provisions are contained in the Fair Labor Standards Act of 1938 (FLSA). Delaware’s minimum wage will follow suit by rising to $7.25 also effective July 24, 2009.
     Employers are required by law to display an official labor law poster in a place accessible to employees and where they regularly pass. Delaware’s Wage Payment and Collection Act (19 Del. C. Chapter 11), Minimum Wage Act (19 Del. C. Chapter 9) and Discrimination in Employment Act (19 Del. C. Chapter 7) all have posting requirements. Therefore, your credit union will want to make sure to replace your current labor law poster with one that reflects the increase in the minimum wage.
     You can find more information about this law by going to the state of Delaware website: http://www.delawareworks.com/industrialaffairs/services/LaborLawEnforcement.shtml. A sample poster that you can download can be found at:
http://www.delawareworks.com/industrialaffairs/forms/pdf/09/posters/LLPosterEng07-09.pdf .

COMPLIANCE RECAP

Expulsion of Members
     Recently the League has had some questions regarding expelling members who have caused a loss to the credit union. To expel a member, a federal credit union (FCU) must call a special membership meeting solely for that purpose, give the member an opportunity to address the membership, and obtain a two-thirds vote of the members present at the meeting.
     As an alternative to expulsion, FCUs may limit the services available to members. The FCU Act grants all FCU members two basic rights: the right to maintain a share account and the right to vote at annual and special meetings.
     However, nothing in the act stops a credit union from restricting the availability of certain services. An FCU’s board of directors may therefore adopt a policy restricting members who cause a loss to the credit union to only a share account and a right to vote.
     Four NCUA opinion letters provide further insights about the efforts of credit unions to expel members who cause the credit union a loss, to limit credit union services to these people, or to publicize their names. In NCUA legal opinion letter 96-0530, the federal credit union asked whether it may adopt a policy to suspend all services and/or expel a member who has caused a loss to the credit union through bankruptcy. NCUA’s Office of General Counsel responded:

     The FCU board of directors may fashion a policy which restricts the number of services available to a member who has caused a loss to the FCU. An FCU is not precluded under the FCU Act or NCUA Rules and Regulation, from implementing a policy that denies most credit union services (e.g., ATM services, credit cards, loans, share draft privileges, preauthorized transfers, etc.) to a member whose bankruptcy results in a loss to the FCU. An FCU member, however, has a fundamental right to maintain a share account and to vote in annual and special meetings.
     Although a suspension of services does not violate the FCU Act or NCUA Rules and Regulations, an FCU’s right of suspension may be restricted by contract and by other federal and state laws. FCUs should contact their local counsel concerning compliance with the Federal Bankruptcy Act or other applicable state laws.
     Section 118 of the FCU Act (12 U.S.C. §1764) provides the two exclusive methods for expulsion of FCU members. Section 118(a) provides for expulsion by two-thirds vote of the members of an FCU present at a meeting called for the purpose of expelling the member. The member must be given an opportunity to be heard. There are no restrictions as to what reasons constitute cause for expelling a member under Section 118(a) of the FCU Act. [More information about the permitted contents in a notice for a special meeting is found in NCUA opinion letter 99-0317.]
     Section 118(b) authorizes the FCU board to adopt a policy of membership expulsion based on nonparticipation in the FCU. No membership meeting is required for expulsions under Section 118(b). An FCU cannot utilize Section 118(b) to expel a member who has caused a loss to the FCU. Examples of nonparticipation set forth in Section 118(b) are failure to vote in FCU elections, failure to purchase shares from, obtain a loan from, or lend to the FCU. Causing a loss to the FCU cannot be described as nonparticipation.

     In NCUA legal opinion letter 98-0404, the credit union asked whether it is permissible for an FCU to post the names of members who have caused a loss to the credit union. NCUA responded:

     Article XIX, Section 2 of the Federal Credit Union Bylaws requires the officers, directors and employees of an FCU to hold in confidence all member transactions and all information respecting their personal affairs. The posting of members’ names who have caused the FCU a loss would violate this provision of the Federal Credit Union Bylaws.

Note that even though this is a citation to the pre-1999 bylaws, the conclusion would be the same under the 1999 bylaw provision.
     In NCUA legal opinion letter 99-0448, the agency said that it is not permissible for an FCU to withhold dividends from a member's share account as part of a policy of suspending services to a member who has caused a loss to the credit union; to do so would violate NCUA’s Truth-in-Savings regulation, as well as the TIS Act.

Source: CUNA’s eGuide to Federal Laws and Regulations

Reg D Transfer/Withdrawal Limits Changed July 2
     The final rule that amends Regulation D, Reserve Requirements for Depository Institutions, took effect on July 2. The rule changes the limits on the allowable “convenient” transfers or withdrawals from “savings deposits.” The transactions are now subject to a limit of not more than six per month.

NCUA NOTES

Initial Provisions of Credit CARD Act Take Effect August 20, 2009
     The National Credit Union Administration (NCUA) said it has begun to work with the Federal Reserve to implement the Credit Card Accountability, Responsibility, and Disclosure Act of 2009.
     Portions of the CARD Act will become effective on August 20 of this year, with the remainder of the bill becoming effective on February 22, 2010.

Beginning August 20, 2009:
•    The time for sending a “Change in Terms” notice increases to 45 days (from the current 15 days).
•    Periodic statements are to be sent at least 21 days prior to the payment due date (current requirement is 14 days) or a payment may not be treated as late for any purpose. In addition, periodic statements must be sent monthly and must be due on the same day each month. This provision applies to all open-end consumer credit plans, including multi-featured open-end lending, HELOC, lines of credit and credit cards.
     The CARD Act limits credit card practices that include card issuers’ ability to increase interest rates and the fees that lenders charge for use of subprime credit cards.
     According to the Credit Union National Association (CUNA), the problematic issue for credit unions in the new credit card law is the new requirement to send periodic statements at least 21 days before payment is due. This 21-day requirement has been particularly problematic because, as the law is written, it would apply to all open-ended credit, not just credit cards.
     CUNA is working on this issue, discussing these operational problems with the Federal Reserve and raising credit union concerns with key staff on Capitol Hill.
     For CUNA’s analysis of the new credit card law, use the resource link:  http://www.cuna.org/compliance/member/download/eguide_regz_070109.pdf.

Credit Reporting Changes Take Place in 2010
     The Federal Trade Commission, NCUA, and other associated federal regulators have published final rules that will change portions of the Fair and Accurate Credit Transactions Act to allow consumers to directly dispute potentially inaccurate credit history data with the lender that provided that information to the credit reporting agency.
     The new rules – which an interagency release said were designed to “promote the accuracy and integrity of information” that can be used to determine an individual’s suitability for a job, a consumer loan, insurance coverage and some housing – also will require consumer information furnished to consumer reporting agencies to include information about the borrower’s credit limit. The rule change will become effective on July 1, 2010.
     The NCUA board unanimously approved this rule at its May 22 meeting. The agency said that the rule would be re-examined every three years, and reassessments and possible reforms of the rule will be ongoing.
     For the final rule, use the resource link: http://edocket.access.gpo.gov/2009/pdf/E9-15323.pdf.

CUNA Mutual Sells IRA Services
     CUNA Mutual Group has signed a letter of intent to sell its IRA Services division to Ascensus, a retirement services firm based in Dresher, Pennsylvania. The sale, expected to close July 31, is part of CUNA Mutual’s overall corporate strategy to simplify its business and focus on its core insurance business and products, the company said in a release.
     The 47 employees of the IRA Services division will become Ascensus associates when the sale closes. They will continue to work from the same location in Middleton, Wisconsin. CUNA Mutual acquired the IRA Services business from CUNA & Affiliates in 1999.
     CUNA Mutual Group provides financial services to credit unions and their members nationwide. Ascensus provides solutions for the retirement marketplace and is a division of Crump Group, Inc., a U.S. wholesale insurance distributor.

DELAWARE NOTES

Congratulations to the following two credit unions who celebrate milestone anniversaries in July:

PROVIDENT FCU  July 22 – 45 years
SUSSEX COUNTY FCU  July 22 – 50 years

Sussex County board chairman John Lewis (left) accepts 50th anniversary plaque
from League president Patrick Mahaney

Effective July 1, DELPART FCU has officially merged into AMERICAN SPIRIT FCU. Delpart served the employees of Chrysler Corporation, Parts Division, which closed down recently.

Congratulations to Donna Falk who retired as the manager of EDGE MOOR DUPONT EFCU on June 1.  

Beginning July 3, 2009, visitors at all DEL-ONE (Delaware FCU) branches have had the opportunity to enter to win four tickets to see Demi Lovato and special guest, Jordan Pruitt, at the Delaware State Fair on July 28.

In efforts to clean America’s highways, 27 employees of DOVER FCU recently gathered for the semi-annual “Walker Road Clean-Up,” part of the credit union’s Adopt A Highway sponsorship. Twice per year, the credit union team picks up trash and other debris along Walker Road to help beautify the local community. Dover Federal has participated in this community outreach project since 2001.

LOUVIERS FCU partnered with the Wilmington Blue Rocks and sponsored the June 6 game against the Lynchburg Hillcats. CEO Jim Everhart, Jr., threw out the first pitch at the game. Over 70 members, volunteers, family and friends attended the game.

Jim Everhart winds up at the Blue Rocks Game

EAGLE ONE FCU participated in the Claymont Coalition’s Annual Green Day Celebration on June 13. To promote safe disposal of personal documents, Eagle One FCU sponsored free shredding for residents. At the Eagle One tent, staff gave away free bottles of water and raffled off four sets of movie passes in random drawings.

Eagle One FCU staff at the Shred One truck: (l. to r.)
Jessica Machinsky & Ruby, Jim Maloney & CEO John F. King

EDUCATIONAL OPPORTUNITIES

July/August QuickBites Teleconferences
One-hour sessions run from 11 a.m.-noon:
■    7/21  Death of a Member
■    7/29  Credit Union Employment Issues
■    8/6    Top Ten IT Security Issues
■    8/19   Building Members from Indirect Borrowers
■    8/27   Preventing Elder Fraud
The two-hour session runs from 11 a.m.-1 p.m.
■    8/11   Fair Credit Reporting Act and Fair Debt Collection Practices Act
The fee for the one-hour sessions is $99; the two-hour session fee is $169. The deadline to register with Bernadette Hines: one week before the session.

Credit Union Volunteer Program: CU Marketing Strategy and Local Community Involvement – Two sessions: 1) Wednesday, August 5, from 5:30-7:30 p.m. at the League office; and 2) Thursday, August 6, from 4:30-6:30 p.m. at Del-One, 270 Beiser Boulevard, Dover. Volunteers will explore strategies to grow membership and to make a real impact on their communities. Fee: $95. Registration deadline: July 29.

Cards Council Session: “A House of Cards…A Look Inside the New Credit Card Law” – Thursday, August 27, from 10 a.m.-noon at the League office. John Kilduff will review the mandates of this new law and discuss how your CU can position your credit card program to continue to generate profits and manage risk. No fee for council members; $100 for non-council members. Registration deadline: August 21.

DEXSTA FCU has a Gardall Safe for sale, which will be available after July 31st. It has four adjustable shelves. The dimensions are (approximately) 52” high, 28.5” wide and 29” deep. If you would like more information, please contact Peg Conway at (302) 225-8330. 

League Activities in June

COMMUNICATIONS/PUBLIC RELATIONS

            Escheat Information/Reporting. League compliance director Susan Fallon has been in touch with the Delaware Escheat office to make sure that credit unions are in compliance with the state-mandated escheat reporting due in November. Each credit union should have received a packet of information on current regulations regarding this requirement. The League is willing to arrange an informational meeting between escheat officials and Delaware credit unions. Please contact Susan if you are interested in such training.

            Possible Media Exposure on Credit Card Legislation. The League has contacted the News Journal  business department about a possible article based upon the June 23 New York Times column, which compared credit cards issued by banks and credit unions in light of the new credit card legislation. We have suggested that the newspaper might want to compare local credit union card programs to local bank programs, using this column as background. Four Delaware credit unions have agreed to speak to a reporter on this issue, and Jane Bailey will be the League’s spokesperson. If the News Journal should not answer our request, we will submit the same information to the Delaware Business Ledger.

            Delaware League News and Risk Alerts. In June, the League emailed 21 news alerts. The majority dealt with the corporate stabilization issue, News Now articles, educational opportunities, compliance issues, and positive coverage of credit unions in the media. Three risk alerts were also distributed, including news of a recent attempted break-in at Delaware Alliance FCU.

            League Staff Travel. Patrick Mahaney and Jane Bailey attended Mid-Atlantic Corporate’s annual meeting in Gettysburg in mid-June. Thirty-seven credit unions participated, including Steve Cimo (Delaware State Police FCU) and Jerry King (DEXSTA FCU), who was appointed to Mid-Atlantic’s supervisory committee. Pat and Jane, representing the Delaware League, and the MD/DC Credit Union Association also met with NCUA Assistant Region II Director of Operations Herb Yolles on June 25 in Baltimore, MD. 

GOVERNMENTAL AFFAIRS

            Card Act. The Delaware League and CUNA are very closely following the issues surrounding the implementation of the Credit Card Accountability, Responsibility and Disclosure Act (CARD Act), especially with respect to a provision affecting open-end lending products (Section 106 of the CARD Act). CUNA’s compliance and regulatory advocacy staff have been in contact with staff at the Federal Reserve to express credit union concerns. CUNA legislative affairs staff have been in contact with sponsors of the credit card bill to get additional guidance regarding the Congressional intent of the provisions. Recently, the League emailed a memo prepared by Kathy Thompson and Jeff Bloch regarding some of these issues and the proposed rule as it now stands.
            The Credit CARD Act also mandates certain consumer-friendly lending practices. Credit unions are in a good position since they already practice many of the new mandates in the law. There is, however, room for education to see if all our credit unions understand the relevant parts of the law and how they will impact their card programs. The League has arranged for John Kilduff, vice president of credit union services for the Pennsylvania Credit Union Association, to present a session on this new law. This Cards Council session will be held on August 27 at the league office.

LEAGUE SERVICES
             
            Invest in America Update. Invest in America has announced that the GM and Chrysler member discount programs have been extended through December 31, 2009. In addition, Ford will begin a pilot leasing program in conjunction with the program beginning August 1, 2009. GM has also announced that for the month of July it is offering a $250 incentive in addition to supplier pricing.
            Invest in America (IIA) is now on Twitter! Twitter is a social online network that allows for up-to-the-minute information and conversation. Sign up for Twitter and follow Invest in America. Every time you log onto the Twitter site, you will receive breaking news and great feedback about the IIA program. Click on https://twitter.com/LoveMyCU to join this social networking site.
            More than 1,800 credit unions, including 17 in Delaware, are participating in “Invest in America.” Credit unions have made a total of 140,209 new auto loans, valued at $2.8 billion, during December through June by participating in this program. For more information, visit www.investinamerica.org.

EDUCATION

            Volunteer Leadership Conference. The Delaware League and the Maryland/DC Credit Union Association have completed a preliminary schedule of speakers for the Volunteer Leadership Conference to be held at the Clarion Hotel in Ocean City, Maryland, on October 23-25. We are pleased to announce that CUNA CEO Dan Mica will open the conference on Friday afternoon. Gigi Hyland, NCUA board member, and Jay Murray of Mid-Atlantic Corporate have agreed to be the keynote speakers on Saturday morning to address the corporate stabilization issue. Some of our other speakers on Saturday afternoon will be Troy Mooney, CUNA Mutual bond issues; Chris Pippett, board governance and due diligence; and Kathy Thompson, compliance issues with which supervisory committees should be familiar. We will also have Bank Secrecy Act training, and Pat Mahaney will lead a session on the 2009-10 Environmental Scan. Sunday will close with marketer Becky McCrary as our speaker. Registration materials will be mailed out in early August.
           
            Elder Abuse. The Delaware League has been contacted by the Delaware Attorney General’s office regarding Recognizing and Responding to Abuse of the Elderly and the Disabled. This past spring, the Attorney General’s office held training sessions for Delaware law enforcement and first responders that included the following:
            •  Recognizing the signs of senior abuse and understanding senior abuse dynamics,
            •  Exploring the correlation between senior abuse and domestic violence, and
            •  Response protocols (recognition, documentation, referral, investigations)
The Attorney General’s office is now reviewing methods of training employees of financial institutions about how to report elder abuse, which includes financial exploitation. League education director Bernadette Hines is planning to attend a meeting regarding this training the first week of August and would like any feedback, questions or concerns from Delaware credit unions to present at the meeting. Please respond to Bernadette by phone or e-mail by July 17th with your comments.

June Education Sessions

TOGETHER is published on the 15th and 30th of each month by the Delaware Credit Union League, 4 Quigley Boulevard, New Castle, DE19720. 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).