Bruen's Blog
MoDOT To Cut Highway Credit Unions
JEFFERSON CITY - MoDOT heard questions and complaints today in response to a January decision to separate from several highway credit unions.
Ten unions were told they had until September 30, 2010 to vacate their offices.
The credit unions say they were blind-sided by the decision and unsure why MoDOT would make such a move.
"You don't take a financial institution - its not like moving a bakery or a shoe store - there's a whole lot involved. So we thought why did they do this, and by September 30th?" noted Peggy Nall of the Missouri Credit Union.
Currently, housing the credit unions costs MoDOT rent and utilities.
The credit unions have offered to pay those costs, but the offer did not change MoDOT's decision to separate.
"Who owns the credit union?" asked Highway credit union member Forrest Wrisinger. "The employees and the retirees. It doesn't belong to the Commission. It doesn't belong to somebody outside the big corporation. It belongs to the employees and the retirees. And these are the one who use it. And these are the ones we should be taking care of."
MoDOT argued back, saying managing credit unions is not part of its core mission.
"Given the financial environment we are in as a country, there are risks and liabilities that we do not understand and we are not in the best position to manage," said MoDOT Director Pete Rahn. [Read story at KOMU].
First Tech Credit Union to merge with California peer
Oregon’s second-largest credit union announced Wednesday that it plans to merge with a California peer to become one of the 15 largest credit unions in the country.
First Tech Credit Union of Beaverton must first get the approval of state and federal regulators and of its 165,000 members before it can combine with Addison Avenue Federal Credit Union of Palo Alto, Calif.
The combined credit union would be called First Tech Federal Credit Union, and would maintain three corporate offices, in Beaverton, Palo Alto and Rocklin, Calif.
Its regulatory headquarters would be in Palo Alto.
First Tech and Addison Avenue are both employer-based credit unions that draw members from a number of companies and fields, primarily high-tech.
There’s no firm time line for the merger to proceed, but First Tech CEO Tom Sargent said he hopes that it will be complete by the end of this summer.
“It could be April, or it could be October, though,” he said.
The credit unions decided to merge after Sargent announced plans to retire this spring.
“Our board of directors sought a replacement who would lead First Tech with the same integrity, passion and commitment to innovation that Tom has demonstrated at First Tech for 25 years,” Carolyn Strong, board chairwoman, said in a statement. “During our search, we also explored other strategic alternatives, and a partnership with Addison Avenue presented a great opportunity.” [Read story at Portland Business Journals].
Low-Tax Texas Beats Big-Government California
No one would include Perry on a list of serious presidential candidates, including himself, even in the flush of victory. But in his 10 years as governor, the longest in the state's history, Texas has been teaching some lessons to which the rest of the nation should pay heed.
They are lessons that are particularly vivid when you contrast Texas, the nation's second most populous state, with the most populous, California. Both were once Mexican territory, secured for the United States in the 1840s. Both have grown prodigiously over the past half-century. Both have populations that today are about one-third Hispanic.
But they differ vividly in public policy and in their economic progress -- or lack of it -- over the last decade. California has gone in for big government in a big way. Democrats hold large margins in the legislature largely because affluent voters in Los Angeles and the San Francisco Bay area favor their liberal positions on cultural issues. [Read story at NationalLedger.com/by Michael Barrone].
Two stories about the wrong houses seized by Bank of America
Bank of America forecloses on house that couple had paid cash for
SPRING HILL — Charlie and Maria Cardoso are among the millions of Americans who have experienced the misery and embarrassment that come with home foreclosure.
Just one problem: The Massachusetts couple paid for their future retirement home in Spring Hill with cash in 2005, five years before agents for Bank of America seized the house, removed belongings and changed the locks on the doors, according to a lawsuit the couple have filed in federal court.
Early last month, Charlie Cardoso had to drive to Florida to get his home back, the complaint filed in Massachusetts on Jan. 20 states.
The bank had an incorrect address on foreclosure documents — the house it meant to seize is across the street and about 10 doors down — but the Cardosos and a Realtor employed by Bank of America were unable to convince the company that it had the wrong house, the suit states.
"Their own real estate agent told them, and nevertheless Bank of America steamrolled right ahead," said Joseph deMello, an attorney in Taunton, Mass., who is representing the couple. "This is a nightmare for anyone, and it affected my hard-working clients a lot." [Read story at TampaBay.com/by Tony Marrero].
Bank of America Hijacks Parrot, Forecloses Wrong House
Bank of America (NYSE: BAC) has a lot of explaining to do. According to a Pittsburgh, Pennsylvania woman, the bank took not only her home but also hung on to her parrot even after proof was offered Bank of America had the wrong house. The woman filed a lawsuit today against Bank of America.
Bank of America had ordered Snyder Property Services to ‘enter, seize, padlock’, ‘winterize’, and ‘take possession’ of the woman’s home because they believed it to be in default. The property service followed instructions and turned off the water, cut the power, and filled the drains with antifreeze. After the home was taken care of, the woman’s parrot was then taken from the home.
The woman, Angela Iannelli of Pittsburgh, arrived back at her home and found new locks on the doors, furniture and carpets that had been damaged, and her belongings strewn about. Most devastating, the parrot was gone. The plaintiff had been making her mortgage payments on time but contacted Bank of American, who did confirm the seizure of the home. They also admitted to knowing where the bird was located. The plaintiff states in her lawsuit that she continued to call to claim her bird but Bank of American told her to stop calling and hung up on her because they were ‘tired of hearing from her’. [Read story at AmericanConsumerNews.com].
SPOTLIGHT: LCRA Credit Union
About us: In the summer of 1940, the employees of the Lower Colorado River Authority formed a credit union to be known as the “LCRA Federal Credit Union”. LCRA Credit Union was formed as a not-for-profit financial cooperative to provide the members with a reliable place to save and borrow.
Since that time, LCRA Credit Union converted to a state chartered credit union and added a wide variety of services to make managing your money easy and convenient.
This notice is one the Credit Union's home page. I wonder how many complaints the notice encourages?
California is Doomed
California is doomed for two simple but profound reasons: the state's cost structure is too high for most businesses to survive, and it is a boom-dependent economy.
The dysfunctions crippling California would easily fill a volume: a dysfunctional Legislature that has been gerrymadered to protect virtually every seat; a dysfunctional proposition system which enables special interests to craft Protected Fiefdoms via the ballot box; recalcitrant public unions who don't see anything wrong with public servants getting 90% of top-pay in pensions while still earning big bucks as "contract employees," an enormous population of undocumented workers who pay only sales taxes, and whose employers pay no payroll taxes, either-- and that just scratches the surface.
I want to highlight two systemic, structural causes for California's impending bankruptcy as a state and as an "economy": a crushingly high costs structure and an economy entirely dependent on the next boom.
I know this sounds too simplistic to be meaningful, but I think there is much truth in this statement: Costs are too high because the guy before you paid too much.
In other words, you can't afford the $500,000 mortgage on the $625,000 house you bought in 2008 because the guy before you paid $550,000 for a house which sold for $140,000 in 1997.
These numbers are drawn from reality: our friends bought a small home in a desirable suburb in the San Francisco Bay Area for $140,000 in 1997. Yes, it was a fixer-upper and yes, our friends completely remodeled it. The fair value of the house after renovation was probably in the $175,000 to $190,000 range, tops. [Read story at SeekingAlpha.com/by Charles Hughes Smith].
Who would want to do banking business with the City of Los Angeles?
City of Angels Keeps Watch Over Banks
Los Angeles is cracking down on banks. City officials on Friday approved an ordinance requiring financial institutions that do with business with the city to report on their local lending, foreclosure relief and other activities in the city.
That could be big. With financial reform tied up in Washington, municipalities nationwide could follow L.A.’s lead to tighten the leash on banks. Under L.A.’s “Responsible Banking” initiative, institutions that handle the city’s nearly $30 billion in pension and other funds must report annually on their small business lending, community development investments and efforts to help stem foreclosures, among other things. Institutions that fail to comply could be barred from city business.
The ordinance requires banks to detail what steps they’ve taken to help keep struggling borrowers in their homes, including the number of mortgages they’ve permanently modified. In a related requirement, lenders must offer unemployed homeowners a minimum six-month forbearance on their loans or allow them to continue renting a property until it’s sold. L.A. officials will study whether to withdraw city deposits from any financial institution that fails to offer a temporary moratorium on foreclosures and renegotiate mortgages. [Read story at BNET.com/by Alain Sherter].
Should you stay with a bank or switch to a credit union?
In light of increasing credit card fees and loopholes in the CARD Act, fed-up consumers are ditching banks for credit unions to take advantage of lower interest rates, better banking practices, and consumer-friendly policies. Credit unions continue to have some of the best deals on credit cards as well as a consumer-friendly approach that is a welcome reprieve from exorbitant credit card fees and predatory practices. But just how do credit unions measure up against big banks?
The Up-And-Coming Contender
Credit unions, an alternative to brick-and-mortar banks, offer the same financial services as banks but are operate differently as member-owner, not-for profit institutions, which some argue makes for better service and bigger savings.
Credit unions are member-owned in that when you join you are considered a part-owner, whereas banks are owned by investors and operate for investors’ interests. Credit unions are considered not-for-profit because profits are distributed back to members in the form of lower interest rates and higher dividends; banks are for-profit because they make money for their investors. In essence, credit unions prioritize service and savings for its members, and are not in the business to pay off high-priced execs or hungry stockholders. Also, rest assured that it is still a safe place to keep your money, as credit unions under the National Credit Union Administration- similar to the FDIC– are insured up to $250,000 per account. [Read story at Credit Karma blog].
Climbing the Capitol Dome
At the GAC Conference earlier this month I had a chance to climb to the top of the Capitol Dome thanks to Congressman Brad Sherman. It is about 300' to the top ... just below the statute of the Lady of Freedom. The view in all directions is spectacular. //Chuck
San Diego’s credit unions ba$king in big banks’ financial failures
There’s no fat cats putting their grubby little paws all over your money,’ USA Fed tells potential members.
Member-owned credit unions have long positioned themselves as an alternative to large, corporate banks, stressing friendlier service, lower fees and competitive rates on both loans and deposits.
Following a wave of major bank meltdowns and takeovers in the past two years, credit unions are highlighting those differences more than ever, and credit union executives say they have seen an influx of new customers who switched from banks.
San Diego-based USA Fed pulls no punches when it comes to banks. USA Fed’s Website bears the logo “180˚ from banking,” and tells visitors, “USA Fed’s got all the stuff those big bad banks do, except there’s no fat cats putting their grubby little paws all over your money. We’re just regular folks working together to help each other save more!”
“It’s kind of an in-your-face, very overt messaging,” designed to appeal to the credit union’s core constituency of younger adults and military members, says Mary Cunningham, USA Fed’s president and CEO.
But the approach also seems to tap into public resentment of large banks and their acceptance of billions of dollars in bailout funds from taxpayers. [Read story at SanDiegoMetro.com/by Joe Tash].
Rebuttal to Keith Leggett’s blog post about member business loans and participations
Keith Leggett, ABA blogger, continues to criticize credit unions for investing in business loan participations. His recent “Goose Egg” blog post is the latest post on this topic. The usual complaints are that participations represent mission creep away from consumer loans to those of modest means, are not direct loans to a credit union’s members, and that credit unions and their regulators lack the expertise to ensure that participations are prudently executed. Although not all credit unions have handled their participation loans well, these banker complaints fall far short of being compelling reasons to block credit unions from investing in business loan participations.
The banker trade associations have a long record of labeling as “mission creep” anything that a credit union does to serve its members that differs from what a credit union did in 1934 when the Federal Credit Union Act became law. In reality, credit union business lending was not artificially restricted until the law was changed in 1998. And participations are counted toward the 12.25% of assets or 1.75% of capital cap on business loans.
Technically and semantically participations might not be made directly to members, but that doesn’t mean that members don’t benefit from their credit union’s involvement with participations. Participations are an alternative form of investing the credit union’s surplus funds that are not needed to meet the membership’s direct borrowing needs. Most credit unions would prefer to make direct loans to members, whether for business or other purposes. However, the current down economy has contributed to a significant drop in borrowing by members. The credit union has an obligation to generate income with those surplus funds to support everything it does for its members.
Most credit union business lenders recognize and respect the special requirements of direct lending and participations. To prudently engage in business lending participations requires specialized staff, compliance, legal and regulatory considerations – and often these are beyond the reach of smaller credit unions. However, with proper due diligence these smaller credit unions can cooperate in business loan participation programs operated by third party vendors and credit union service organizations. Regulators are also in tune with these special requirements – even learning from past mistakes -- and are continually investing resources targeted toward best practices safety and soundness supervision of these activities.
A credit union’s members are not negatively affected by prudently made participation loans or member business loans. Instead these assets fill in gaps in the credit union’s balance sheet. The restrictive and unreasonable cap on credit union member business lending, and its concurrent impact on participations, serves no legitimate public policy purpose. Increasing the cap means more loans to small businesses and the economy benefits accordingly. This is true whether of not the loan is a direct loan by the credit union or a participation that provides liquidity for another credit union to meet members’ business loan needs. The positive effect to the small business borrower, the local community, and the economy is the same.
Nevada FCU: never thought we would see the day when a rate sheet looked like this!
Bank teller works with baby on her hip
A Eugene credit union lets new mothers and fathers bring their babies to work for up to 8 months.
Jasmine Mathisen holds her 8 month old baby while she works at a credit union in Eugene.
EUGENE, Ore - Jasmine Mathisen has been bringing her son Remmy Mathisen to work for 5 months. Mathisen participates in her job's “Babies in the Workplace Program”.
Pacific Cascade Federal Credit Union in Eugene lets its employees bring their babies to work up until they are 8 months old or start crawling.
“Starting at 8:30am he'll come with me to work and then he's usually hear with me all day and so we're just a big family and everybody kind of pitches in and helps out,” said Mathisen.
But this program is not a child care facility at work. Employees monitor and even hold their babies while they are working.
“He's right behind me on the teller line and he's out here with me,” said Mathisen. [Read story at KVAL.com/by Arrianee LeBeau].
