RESTON, Va. - Sallie Mae filed suit late Monday seeking a $900 million break-up fee from a group of investors that has balked at its $60-a-share, $25 billion takeover of the student loan giant. The suit comes after the group, headed by private equity fund J.C. Flowers & Co. and bank giants JP Morgan Chase and Bank of America, unilaterally terminated its agreement after passage of the student loan reform bill that will cut lender subsidies. The takeover group insists the new law amounts to a "material adverse effect" which will allow it to walk away from the deal. But Sallie Mae insists the new law will not have a material impact on its earnings, thereby obligating the group to pay a $900 million break-up fee for terminating the deal. Sallie Mae, formed by the government in 1972 to provide a secondary market for student loans originated by credit unions and banks, has since privatized and become the largest originator of student loans-in direct competition with its former credit union and bank customers. The two bank giants are the biggest competitors for Sallie Mae in the student loan market.

SAN FRANCISCO - Credit unions around the country have begun receiving stock, Class B shares, in the newly reorganized Visa Inc., representing the roll-up of Visa USA, Visa Canada and Visa International. But member/owners of Visa Europe have voted not to participate in the huge cards deal, a prelude to an initial public offering expected later this year. Instead, member financial institutions in Europe will receive stock in the new company, but will continue to run an independent payments network under a licensing agreement with the cards giant. More than 2,000 credit unions will receive Visa stock that could be worth as much as $1 billion in the reorganization. Many of the same credit unions reaped millions in profits after receiving stock in MasterCard in that company's 2005 IPO. Those shares have been among the hottest on Wall Street since then, quadrupling from their original $39-a-share price to over $160. Observers expect shares in Visa, a much bigger company, to go public at at least $50. In conjunction with the reorganization, Robert Hackney, president of Card Services for CUs, who was the credit union representative on the board of Visa USA, stepped down from the panel. Both payments networks are controlled by the biggest banks in the country, including JP Morgan Chase, Bank of America, Citibank and Wells Fargo.

ALEXANDRIA, Va. - Credit union giants, consumed in recent years with adding troubled small credit unions through merger, have been devouring large healthy credit unions in recent months. NCUA reported yesterday it approved several more mega-mergers, including: CommunityAmerica CU, Kansas City ($1.5 billion) with Midwest United CU, Blue Springs, Mo. ($170 million); Meriwest CU, San Jose, Calif. ($1.2 billion) with Golden Bay CU, Mountain View, Calif. ($210 million); and Xerox FCU, El Segundo, Calif. ($725 million) with Tiger FCU, the credit union for Federal Express workers ($60 million). That follows recent deals to merge Toyota FCU ($275 million) into Western FCU ($1.2 billion); Capital Power CU ($60 million) into SAFE CU ($1.4 billion); Torrco Employees FCU ($30 million) into Founders FCU ($1.2 billion), and the pending merger of Horizons CU ($35 million) into Security Service FCU ($4 billion).

ALEXANDRIA, Va. - Pentagon FCU is helping some of America's patriots realize their own dream with a grant program that helps them buy their first homes. So far, 14 families have been approved to buy homes with help from Pentagon FCU Foundation's Dream Makers program, a three-to-one matching grant. Eight of the grants have been approved while soldiers were fighting in Iraq or Afghanistan, or peacekeeping in Kosovo, according to Mary Lynn Stevens, spokesperson for the credit union's charitable arm. "It's very gratifying to help people who keep us safe get their piece of the American Dream," Stevens told The Credit Union Journal yesterday. The grants, available to any eligible soldiers or employees of the Department of Homeland Security, provide up to $5,000 in funds the recipients may use to pay closing costs or a down payment. To be eligible, applicants must have a household income of at least $50,000 a year and agree to attend a seminar on homeownership. The loans must be fixed for 30 years and include a down payment of at least 3%-but need not be with the credit union. "They can get a mortgage from anyone," said Stevens. Qualifications for Dream Makers first-time homebuyers grants can be obtained at the Foundation's website at pentagonfoundation.org.

SAN ANTONIO — United SA FCU said it has been approved by the Small Business Administration to offer expedited loans under the SBA Express Lending program.

SANTA MONICA, Calif. – An item in the Oct. 1 issue of The Credit Union Journal Daily news regarding Zag raising $13.5 million in new financing incorrectly stated that Zag owns credit union car buying service Autoland. Zag sold Autoland to Telesis CU earlier this year.

WHITE PLAINS, N.Y. – The leader of a gang that robbed Palisades FCU of $219,000 while wearing laboratory coats and surgical masks last week was sentenced to more than 14 years in prison. Hurgenes Pignard, also known as “Pop,” was sentenced to 175 months in prison for his role in the credit union heist and two attempted bank robberies. The gang modeled their robberies after the 2001 movie “Sleepover Bandits,” in which robbers would arrive at a bank employee’s house the night before, take a family member hostage, then rob the bank the next day. The sleepover plans went awry twice, but the gang did succeed in robbing the credit union on May 18, 2005, when Pignard and his accomplices, disguised and armed with pellet guns, stormed into the Pearl River branch of the credit union and tied up 12 employees and members with plastic ties before emptying the cash vaults. Pignard and four accomplices also convicted in the incident were ordered to pay $219,000 in restitution to the credit union.

MONETT, Mo. – Jack Henry & Associates announced its ProfitStars unit has acquired AudioTel Corp., an Addison, Texas-based provider of remittance, merchant capture, check imaging, document imaging and management, and telephone and Internet banking solutions. AudioTel supports more than 1,000 financial institutions with back-office and retail banking solutions. Financial terms of the transaction were not disclosed. Jack Henry said the deal will augment ProfitStars’ enterprise payments offering with AudioTel's thick/client remittance processing and lockbox solution, and will enhance the company’s 4|sight Check Imaging platform with AudioTel's branch capture solution. The deal is Jack Henry’s 17th corporate acquisition since 2004.

SAN ANTONIO, Texas – United SA FCU said it has been approved by the Small Business Administration to offer expedited loans under the SBA Express Lending program. The program guarantees 85% of a loan up to $150,000, and 75% for loans between $150,000 to $250,000. The $215 million credit union originally served employees of USAA and recently converted to a community charter serving surrounding Bexar County.

HEATH, Ohio – Hopewell FCU is celebrating October’s Domestic Violence Awareness Month by collecting old cell phones and donating them locally to victims of domestic violence. The phones will be donated to the New Beginnings shelter in Licking County. The credit union is collecting the phones at its two branches.

FRANKLIN, Tenn. – Nashville’s largest credit union, Southeast Financial CU, is building a new $7 million headquarters here, adjacent to Nashville. The $350 million credit union is in the process of completing its third merger in the last year, acquiring League Central CU in Chattanooga. The deal will give Southeast Financial three new branches and 11,000 new members, as well as League Central’s $27 million in assets.

RALEIGH, N.C. – North Carolina State Employees CU yesterday said it has contracted with PSCU Financial Services to offer prepaid gift cards at its 213 branches by mid-October, in time for the Christmas season. Cards will be available in denominations of $20 to $500. Unlike cash or gift certificates, a Visa gift card can be replaced if lost or stolen. These cards also offer the added functionality of providing the recipient with the means to view transaction history and available card balance information online.

ROME, N.Y. – AmeriCU CU said it will be offering its members insurance products through AFLAC. AFLAC offers cancer indemnity, personal accident indemnity and life insurance. The insurance products will be offered through the $600 million credit union’s wholly owned CUSO, AmeriCU Capital Management.

ALBANY, N.Y. – SEFCU said it has acquired The Colonial Insurance Agency LLC, expanding its fledgling insurance business. Under the deal, Colonial will be folded into SEFCU Insurance Group, the credit union giant’s wholly owned CUSO, which offers long-term care, disability and term life insurance products. Colonial Insurance offers a variety of commercial and personal lines through several major carriers. SEFCU, formerly State Employees FCU, has over $1.5 billion in assets and is one of the largest credit unions in New York.

DALLAS – The ongoing crisis in the mortgage market has lowered the confidence level of credit union CEOs in the economy. The quarterly survey, conducted by Southwest Corporate FCU, shows credit unions’ evaluation of their members’ financial condition slipped to just 23.9 in September, from 31.9 in July. The expectation for members’ financial condition six months from now also fell, to 24.6 from 31.9. The confidence index slipped across the board, with CEOs rating their own credit unions’ financial performance an average 57.5, down from 58.7 in July. "With all the attention lately from the housing slowdown, subprime mortgages and low loan demand, it would be reasonable to expect some apprehension from credit unions, particularly with CEOs' concerns pertaining to their members' present financial condition,” said Brian Turner, manager of Southwest Corporate’s Investment Advisory Service.

FORT MYERS, Fla. – An investor in one of the speculative homes in Cape Coral filed a new suit against Norlarco CU Friday, alleging the Colorado credit union engaged in a sophisticated fraud scheme to inflate real estate appraisals in order to qualify ineligible borrowers for home loans there. The suit, filed in federal court here, claims Norlarco lent money to investors knowing the investors could not repay the loan, but used inflated appraisals to qualify them anyway. The suit also names as defendants First Home Builders of Florida and its affiliate, First Mortgage Lenders of Florida, both of which have been acquired by home building giant K. Hovnanian Enterprises. The suit is similar to, but adds new details to, similar claims filed in dozens of suits brought in state and federal courts naming Norlarco, as well as Huron River Area CU and New Horizons Community CU, all of which have been taken over by NCUA in recent months. The parties to the suits are scheduled to meet in a public hearing at the U.S. District Court for the Middle District of Florida on Monday. New Horizons Community CU of Denver was sold by NCUA in a purchase and assumption agreement last June to Security Service FCU in San Antonio. The three failed credit unions had more than $500 million in residential construction loans to Cape Coral and adjacent Lehigh Acres, many of which have been defaulted on.

CUMBERLAND, Md. – A new ruling by the state treasurer’s office once again will allow area credit unions to accept payments for water and sewer bills, as well as tax payments. The ruling countermands an opinion rendered last summer that credit unions were barred from accepting such payments because they are not expressly allowed to do so–as banks are. But the state treasurer has ruled that credit union may continue to accept county payments, such as board of education activities funds, county property taxes, and water, sewer and refuse collection assessments. Officials in Allegany County, who requested the new ruling, plan to notify the area’s credit unions by letter. The second ruling was sought after numerous residents complained that they had been submitting payments at their credit unions for years and would be inconvenienced if the practice was barred.

DES MOINES, Iowa – Three credit unions will work with the World Council of CUs to develop a low-cost remittance program for Iowa’s growing population of immigrants. The three credit unions: Village CU, The Family CU and Greater Iowa CU, will work with WOCCU to develop a local version of IRnet for a planned statewide roll-out next spring. The pilot program was funded in part by the U.S. Agency for International Development. Since 2004 remittances from Iowa, most of them going to Latin America, have doubled to about $140 billion. The foreign-born population in Iowa has tripled since 1990 to about 110,000, most of it from Latin America.

DALLAS – An auto/savings account that forces borrowers to save at the same time they make a car payment was among this year’s innovations eyed for the credit union market by the Filene Research Institute’s i3 Innovation project. With the auto/savings account, members would be forced to add a specific amount to a saving account for every car payment. The seven innovations touted by the credit union think tank this year also included the “Savings Challenge,” in which members compete for the best savings performance. This program is being piloted in several credit unions. The innovators also proposed: an auto resource center to add to a credit union’s website to manage car ownership; community impact, a shared resource for community involvement programs; LOT&A MOT$A, an online destination for youth, with games and interactive financial material; Virtual Finance, an online resource for Gen Yers; and a financial site targeted at women.

SAN JOSE, Calif. - Credit quality at credit unions has yet to suffer some of the declines being seen in other markets, but that isn't to say loan officers aren't keeping an eye out for pink flags that might turn red.