Walk-out By Tex. Dems Likely To Doom Bill
AUSTIN, Texas-The state Senate last week approved a bill which would allow credit unions and banks to offer home equity lines of credit, but the mass walk-out by House Democrats makes it doubtful the bill will pass the House this session. "At this late date, the fact we're now sending this bill to the House; it's highly unlikely they'll be able to do it by the end of the session," Sen. Kip Averitt (R-Waco) a supporter of the measure, told The Credit Union Journal. The bill would expand the state's five-year-old law allowing home equity loans to also allow for open-ended home equity-backed lines of credit up to 50% of the equity in a home.
The bill is supported by a broad coalition of lenders, including credit unions, banks, and S&Ls. But last week's unprecedented flight of 50 House Democrats to nearby Oklahoma to prevent a vote on a controversial congressional redistricting plan has backed up House bills, making it unlikely that the HELOC measure will be voted on until the next legislative session in 2005.
Northwest Airlines' CU Gets Late Reprieve
BLOOMINGTON, Minn.- NWA FCU got a last-minute delay last week on the planned eviction by its corporate sponsor, Northwest Airlines, just seven-weeks before the scheduled expiration of its leases. The cash-starved airline notified the $1.3-billion credit union yesterday that it will extend the expiration date on leases on properties in Minneapolis/St. Paul and in Detroit from July 5, 2003 to coincide with the March 21, 2004 expiration of leases on the majority of the credit union's offices and ATMs on Northwest property. The state's biggest credit union has balked at the airline's demand to pay $6 million a year more in rent to continue operating seven of its 16 branches and 23 of its 31 ATMs on Northwest property, as well as continuing to use the airline logo, or face eviction from those properties.
The credit union said it is continuing to search for other properties to house those operations.
On The NCUA Agenda This Week
ALEXANDRIA, Va.-The NCUA board is expected this week to approve a new rule allowing well-run federal credit unions to invest in the broad commercial mortgage-backed securities market. The rule, known as Reg 703, will also allow those credit unions, qualified under NCUA's 'Reg-Flex' program, to invest in equity-linked options in order to offer products tied to popular indexes, like the Standard & Poors 500. The new rule will greatly expand investment options for federal credit unions, which are currently limited to investing in only those mortgage-backed securities backed by residential mortgages. The board is also expected this week to approve a final rule amending the standard corporate bylaws, and to review a final rule expanding the definition of "small" CU from one with assets of $1 million or fewer to those under $10 million.
U.S. Central Sees Deposit Flood
LENEXA, Kan.-U.S. Central CU said the continued flood of new savings into credit unions pushed its own assets to a new high of $41.4 billion on March 3, before ending the first quarter at $40.6 billion, or 27% higher than year-end 2002. This helped push net income for the corporates' corporate to $19.4 million for the first quarter, up 3% from the same period last year. Net interest income was almost flat, $24.2 million, compared to $24.1 million for last year's first quarter.
Robbers Leave Trail of Cash
MODESTO, Calif.-Four masked men robbed the Food Processors CU last week, leaving a trail of dropped cash in their wake. As the robbers entered, one employee ran out and hid across the street while the robbers tied up the other one and a member who was present. They then took an undisclosed amount of cash, some of which they dropped as they escaped in a stolen van. The van was found a few minutes later still running with some of the stolen cash inside.