CUs Urge Against Merging Financial Regulators
TOPEKA, Kan.-This state's CUs are urging the legislature to reject a plan that calls for merging the Kansas Department of CUs, the Kansas Banking Commissioner's Office, and the Kansas Securities Commissioner's Office as a means of savings money. The plan was proposed in a report by the Kansas Legislative Post Audit Committee, which projects savings of $260,000 in salaries, benefits, and operating costs. The LPA also found that there was an estimated $295,000 in other operational efficiencies the agencies could put into place independently, such as bank examiners working from home. Kansas CU Association "Kansas credit unions want and need a regulator that understands the unique regulatory challenges faced by not-for-profit financial institutions," said KCUA CEO Marla Marsh. "This report fails to recognize the philosophical and structural differences between credit unions and banks. Combining agencies and homogenizing the regulatory process could result in the loss of the fundamental differences between the two regulatory organizations."
NCUA Terminates LUA After Toledo CU Improves
TOLEDO, Ohio-NCUA said it terminated last week a Letter of Understanding (LUA) signed Feb. 16, 2006, by Toledo Metro FCU. The agency said the $29-million credit union has resolved the issues discussed in the LUA and improved its underwriting and compliance.
Credit Crisis Expected To Spawn Wave of New Regs
ORLANDO, Fla.-The fallout in the credit markets is expected by some analysts to sweep up credit unions with other financial institutions in new, risk-related regulations that will be atop the legislative agenda when a new administration takes office in Washington.
"I think this will probably be the year of risk," said JR Clemons, president of Harland's Risk Management & Compliance unit.
"Everyone in the organization from top to bottom must be focused on the issue of risk-credit risk, operational risk, portfolio risk. I think you can expect a big raft of new regulations and compliance to come down the pike. In today's financial institution, everyone is a chief risk officer. Credit policies are going to be pushed lower and lower into the organization as a result of the financial credit market," he said.
Harland's Sam Kilmer said the company is projecting financial institutions, including credit unions, should be prepared for a new level of required documentation. "There is a lot of anticipation that regulators are going to ask for more and more risk management," said Kilmer. "Regulators are going to be increasingly vigilant about transparency, and will want (credit unions) to show their process on the commercial side, just like they do on the retail side."
Centrix Insurer Files Suit Against CUs
DENVER-Lyndon Property Insurance Co., the one-time insurer for Centrix Financial, has filed a new suit against 37 CUs claiming they conspired with the failed subprime auto lender to milk more than $120 million in insurance payments from the company.
The CUs named were the biggest players in the failed $4-billion subprime program and include: Credit Union of Texas, Velocity CU, Corporate America Family CU, Landmark CU, Allegacy FCU, Credit Union 1, Financial 21 Community FCU, San Diego Metropolitan CU, Security Service FCU, Tech CU and Valley CU, among others.
Lyndon claims the credit unions failed to exercise proper underwriting standards when approving subprime auto loans, which were covered by Default Protection Insurance provided by the company, then failed to report the defaults to Lyndon, which would have either cancelled the policies or raised premiums to pay the rising default rates.
The scheme, according to the suit filed in U.S. District Court for the District of Colorado, was created by Centrix, with the willing knowledge of the CUs.
$130K Embezzlement Gets Probation
BUFFALO, N.Y.-The former chief financial officer for Buffalo Fire Department FCU was placed on probation for paying back less than half of the more than $130,000 she stole from the credit union.
Eve Hutchison, 44, told State Supreme Court Justice Christopher Burns she stole the money because her husband left her destitute after walking out on their marriage years ago.
Hutchison's lawyer presented the court with a check for $60,000 in the courtroom. In addition to placing her on probation for five years, Burns ordered Hutchison to begin making $400 a month in payments to cover her remaining $72,652 in thefts.(c) 2008 The Credit Union Journal and SourceMedia, Inc. All Rights Reserved.http://www.cujournal.com/ http://www.sourcemedia.com/
