Saturday, April 28, 2012
Another CU Opposes S 2231
Another credit union CEO expressed opposition to Udall bill (S.2231). Dale Kerslake, president and CEO of Cascade Federal Credit Union, Kent, Wash., in a letter to Senate leaders noted that most credit unions are ill-prepared for such expanded business lending authority and far too many credit unions simply can’t afford the additional risks that business lending poses to their balance sheets. Read the letter below.
Thursday, April 26, 2012
Bill Would End Frivolous ATM Lawsuits
House Financial Services Committee members Blaine Luetkemeyer (R-Mo.) and David Scott (D-Ga.) on April 17 introduced legislation (H.R. 4367) that would protect banks and credit unions from frivolous lawsuits by repealing the outdated requirement that a placard must be attached to ATMs stating that a fee may be charged.
The placard disclosure is duplicative because the actual fee also appears on the ATM video monitor before the transaction is completed. But if the placard isn’t attached, Regulation E (Electronic Funds Transfer Act) permits successful class-action plaintiffs to recover the lesser of $500,000 or 1 percent of the ATM operator's net worth plus attorneys’ fees and costs.
As a result, some people have removed placards, photographed ATMs without them and filed lawsuits.
In a February letter, ABA and six other trade groups asked the House Financial Services and Senate Banking Committees to pass a bill repealing the placard requirement because such lawsuits were growing precipitously and could reduce both the number of ATMs and consumer convenience.
This is a bill that both banks and credit unions can support.
Read the letter.
Read the bill.
The placard disclosure is duplicative because the actual fee also appears on the ATM video monitor before the transaction is completed. But if the placard isn’t attached, Regulation E (Electronic Funds Transfer Act) permits successful class-action plaintiffs to recover the lesser of $500,000 or 1 percent of the ATM operator's net worth plus attorneys’ fees and costs.
As a result, some people have removed placards, photographed ATMs without them and filed lawsuits.
In a February letter, ABA and six other trade groups asked the House Financial Services and Senate Banking Committees to pass a bill repealing the placard requirement because such lawsuits were growing precipitously and could reduce both the number of ATMs and consumer convenience.
This is a bill that both banks and credit unions can support.
Read the letter.
Read the bill.
Tuesday, April 24, 2012
First Tech's Sargent Earned Almost $7.8 Million
Another credit union CEO was handsomely rewarded in 2010.
According to First Technology's 2010 Form 990, Thomas Sargent had a compensation package of almost $7.8 million.
The Beaverton, Oregon credit union reported that Sargent's base compensation was $235,000. In addition, he received $2,974,680 in bonus and incentive pay and$4,491,447 in other compensation.
According to First Technology's 2010 Form 990, Thomas Sargent had a compensation package of almost $7.8 million.
The Beaverton, Oregon credit union reported that Sargent's base compensation was $235,000. In addition, he received $2,974,680 in bonus and incentive pay and$4,491,447 in other compensation.
Monday, April 23, 2012
Texans Reality Check
Credit Union Journal is reporting that that Texans CU turned a profit of $5.9 million for the first quarter of the year.
Credit Union Journal quotes Keith Morton, NCUA Region IV Director and Agent for the Conservator, as saying that "{w]e see significant progress in all of these areas (reduced expenses, streamlined operations, retooled infrastructure, and began the process of returning Texans to the core credit union business model), and we are very encouraged by the credit union’s positive financial results for the first quarter of the year."
While it is true that Texans Credit Union reported a profit, the credit union is still critically undercapitalized and delinquencies continue to rise.
Total delinquent loans rose $5.1 million during the first quarter going from $74.3 million to $79.4 million. Loans more than a year past due went from $4.5 million to $21.3 million and loans 6 to 12 months past due went from $19.8 million to almost $40 million.
Texans Credit Union only charged off $1.1 million during the first quarter. You would expect to see a jump in future charge-offs as you are talking about over $61 million in the six month or more past due bucket.
Moreover, the improvement in profits are due to a significant decline in its provisions for loan and lease losses during the first quarter compared to a year earlier. During the first quarter of this year, provisions for loan and lease losses increased by $807,000 compared to almost $14.4 million a year ago.
Credit Union Journal quotes Keith Morton, NCUA Region IV Director and Agent for the Conservator, as saying that "{w]e see significant progress in all of these areas (reduced expenses, streamlined operations, retooled infrastructure, and began the process of returning Texans to the core credit union business model), and we are very encouraged by the credit union’s positive financial results for the first quarter of the year."
While it is true that Texans Credit Union reported a profit, the credit union is still critically undercapitalized and delinquencies continue to rise.
Total delinquent loans rose $5.1 million during the first quarter going from $74.3 million to $79.4 million. Loans more than a year past due went from $4.5 million to $21.3 million and loans 6 to 12 months past due went from $19.8 million to almost $40 million.
Texans Credit Union only charged off $1.1 million during the first quarter. You would expect to see a jump in future charge-offs as you are talking about over $61 million in the six month or more past due bucket.
Moreover, the improvement in profits are due to a significant decline in its provisions for loan and lease losses during the first quarter compared to a year earlier. During the first quarter of this year, provisions for loan and lease losses increased by $807,000 compared to almost $14.4 million a year ago.
Another Credit Union Speaks Out Against Udall Bill
A Michigan credit union executive last week urged Senate leaders in a letter to oppose legislation (S. 2231) would more than double the credit union business-lending cap.
Dennis Moriarity, treasurer-manager of Unity Credit Union located in Warren, Michigan, said he is concerned about the increased risk the bill would impose on credit unions that don’t make business loans, or aren’t interested in exceeding the business-loan limit.
“The exposure is to our reserves and retained earnings, which could eventually be confiscated to pay for the mistakes of lenders who are unfamiliar with the complexity of business lending, or who might ignore risks in pursuit of revenues,” he said.
The risk from increased business-lending authority “could spell doom for many credit unions that, by association, become liable for the decisions of others without any opportunity for input in those decisions,” Moriarity added.
Dennis Moriarity, treasurer-manager of Unity Credit Union located in Warren, Michigan, said he is concerned about the increased risk the bill would impose on credit unions that don’t make business loans, or aren’t interested in exceeding the business-loan limit.
“The exposure is to our reserves and retained earnings, which could eventually be confiscated to pay for the mistakes of lenders who are unfamiliar with the complexity of business lending, or who might ignore risks in pursuit of revenues,” he said.
The risk from increased business-lending authority “could spell doom for many credit unions that, by association, become liable for the decisions of others without any opportunity for input in those decisions,” Moriarity added.
Saturday, April 21, 2012
Editorial: Reveal CU CEO Compensation
An April 20 editorial appearing in the Honolulu Star-Advertiser has called on federal credit unions to disclose the pay of their top executives.
Read the editorial (paid subscription).
Read the editorial (paid subscription).
Friday, April 20, 2012
AEI's Proposal to the Udall Bill
Alex Pollock of the American Enterprise Institute has advanced a modest proposal that would increase competition while ensuring competitive fairness.
Alex Pollock proposes raising the cap on business lending for credit unions, but make such lending taxable.
Read his blog post.
Alex Pollock proposes raising the cap on business lending for credit unions, but make such lending taxable.
Read his blog post.
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