McLEAN, Va. – Rates on 30-year mortgages rose for a second straight week–a sharp rebound after hitting a four-month low–while ARM rates moved lower. Average rates for 30-year, fixed-rate loans rose this week to 6.42%, from 6.34% last week; while the average for 15-year, fixed-rate mortgages climbed to 6.09%, from 5.98%. The average for the five-year ARM fell to 6.15%, from 6.21% last week; while the average for the one-year ARM dipped to 5.60%, from 5.65%.

RESTON, Va. – Shares in Sallie Mae rose more than 9% yesterday, even after a buyout group walked away from its $25 billion takeover but left the door open to a lower acquisition price. The group, which include private equity fund J.C. Flowers & Co. and bank giants JP Morgan Chase and Bank of America, said in a statement, “We have told representatives of the Sallie Mae board that we are open to discussing a revision of the transaction that reflects this new environment." The statement came after the student lender insisted the group should stand by its $60-a-share offer, even after new legislation, signed yesterday by President Bush, will cut heavily into lender subsidies and guarantees. Sallie Mae said it measured the impact of the new law against that of similar legislation described during negotiations on the huge takeover and concluded the changes would reduce "core earnings" net income by only 1.8% to 2.1% annually over the next 5 years, not enough to qualify as a material adverse event needed to terminate the buyout agreement. The buyout group could be forced to pay a $900 million break-up fee if the deal doesn’t go through. Salle Mae shares closed up $4 yesterday at $49.12, still 18% below the agreed-upon price.

SAN FRANCISCO – Patelco CU, the nation’s 11th-largest credit union, said it is abandoning its short flirtation with private deposit insurance and returning to the coverage of federal insurance under the National CU Share Insurance Fund. The credit union cause a major stir in 2002 when it fled the federal insurance system for the coverage under ASI, the only surviving private deposit insurer. Dennis Adams, president of ASI, yesterday told The Credit Union Journal of the Patelco move: “The credit union has indicated some change in their business strategies. They're healthy and safe and so are we. We are fine with it.” While ASI hates to lose its biggest customer, Adams said there are some benefits as it helps the company reduce its concentration in California and improves its capital ratio. The move comes a month after a report in The Credit Union Journal Daily that Patelco lost $8.3 million last year caused a major stir among credit unions. Patelco representatives did not return phone calls seeking comment.

ALEXANDRIA, Va. – The NCUA Board yesterday approved the merger of Southwest Corporate FCU with Northwest Corporate FCU, one of several pending corporate combinations. Southwest Corporate, based in Dallas, will be the surviving entity and will manage $15 billion in assets and serve 1,500 credit unions. The merger is expected to be completed by the end of November.

ALEXANDRIA, Va. – Over the popular objection of credit union executives, the NCUA Board yesterday approved new rules to open up the internal books, records and minutes of board and committee deliberations to rank-and-file members. The new rules, part of a package aimed at bringing more transparency to credit union operations, will allow any group of members to petition for access to internal records for legitimate reasons. The rules, which attracted broad opposition by credit union managers and the trade groups, will not provide access to the compensation of management, as that issue is being contemplated in another proposal. NCUA Chairman JoAnn Johnson said the rules do not create any new member rights, but clarify what has been in existence for federally chartered credit unions. "The members of the federal credit union own the credit union," said Johnson. "As owners, the members have the right to inspect the credit union's books, minutes and records when they have a proper purpose." The new rules will allow any group of members to petition for access to books, records or minutes for "significant corporate purposes," as long as the access would not harm the credit union, its members or employees. In a nod to opponents of the measure, NCUA raised the top threshold for access by a petition of at least 1% of members to be at least 20 and not more than 500 members, from the original proposal of not more than 250 members. Signers of the petition must have been a member of the credit union for at least 180 days. NCUA still is mulling at least one other transparency proposal to require disclosure of management compensation during mergers, but avid opposition by credit union executives and the trade associations may persuade the agency to defer or postpone action on that rule.

RACINE, Wis. – The FBI yesterday was searching for two men who kidnapped the manager of a Landmark CU branch Wednesday night at her home, then yesterday morning forced her to open the branch and its cash vault to rob the credit union. The suspects apparently forced their way into the manager’s home and bound her adult son, then tied her up as well when she got home a short while later. The two men wore stockings over their faces to hide their identities. Neither the manager nor her son was physically injured. The two live a few miles away from the branch, according to police. An undetermined amount of cash was stolen.

WASHINGTON – Leaders of the House Financial Services Committee this week pulled from consideration enacting new curbs on overdraft protection after a withering lobby from banks and credit unions. Committee leaders, including the chief sponsor of the bill, Rep. Carolyn Maloney from New York, were doubtful they had enough votes to pass the measure in light of the opposition, Capitol Hill sources told The Credit Union Journal. Their opposition put the credit union lobby in a difficult position because Maloney, who is chair of the Subcommittee on Financial Services, will have final say on whether to hold a hearing on CURIA, the credit union regulatory relief bill. Maloney does have the support of the credit union-backed consumer lobby, the Center for Responsible Lending, on the overdraft protection bill and is expected to move for a vote on the bill at a later time, perhaps as early as next week. The bill would bring overdraft protection programs under the Truth in Lending Act, requiring that fees be included in computing the annual percentage rate, and require that consumers opt-in, or sign up for, overdraft protection.

ALEXANDRIA, Va. – The NCUA Board yesterday approved a request by Consolidated FCU for a broad community charter, but forced the $150 million Portland, Ore., credit union to surrender its South Carolina operations serving a low-income community. The NCUA action will allow the credit union to serve more than 1.6 million people surrounding the city of Portland, but requires it to give up it so-called underserved communities because of federal law. The Federal CU Act requires federal credit unions that convert to community charters to give up their select groups and also bars community charters from serving underserved communities – such as the one in Seneca, S.C., which Consolidated now serves as a select group. Provisions of the credit union regulatory relief bill, or CURIA, would address this situation by allowing credit unions to keep their select groups after converting to community charters and by allowing community charters to add underserved areas, just as multiple group charters can. NCUA Chairman JoAnn Johnson alluded to this dilemma before yesterday’s vote, saying there is only one other federal credit union that serves the low-income community. She hoped other state charters will step into the new vacuum. Under yesterday’s action, Consolidated FCU will still be able to serve existing members at its South Carolina branch, but will not be able to accept new members.

DAYTON, Ohio --NCR Corp. is spinning off its Teradata warehousing division into a separate company Sunday, leaving its core financial self-services unit on its own again. Teradata's stock will begin trading Monday on the New York Stock Exchange under the ticker symbol TDC. In NCR's post spin-off world, ATMs will account for 66% to 75% of the NCR's profits. Teradata will be comprised of the company’s data warehousing operations.

CHICAGO – The Federal Home Loan Bank of Chicago said yesterday it has received an unusual cease and desist order from its regulator, the Federal Housing Finance Board, which will prevent the Bank from repurchasing or redeeming capital stock without the consent of the regulator, in order to maintain the Bank’s capital. The Chicago Bank is currently in discussions with the Finance Board regarding the terms of a consensual cease and desist order, but we cannot predict whether the Bank's Board of Directors and the Finance Board will reach agreement as to the terms of a consensual order, the Bank reported. Meantime, the Chicago Bank, saddled with more than $34 billion mortgages it acquired under its secondary mortgage market program, Mortgage Partnership Finance, continues to negotiate for a merger with the FHLB Dallas, the Chicago Bank said.

RESTON, Va. – A group that agreed to acquire Sallie Mae notified the student loan giant yesterday it no longer plans to complete the deal at under the terms of the $60-a-share agreement, throwing the $25 billion deal in doubt. Sallie Mae, the nation’s largest student lender, said it does not believe the group, led by private equity fund J.C. Flowers and bank giants JP Morgan Chase and Bank of America, has a contractual basis to repudiate the deal and it intends to pursue all remedies available to it under the law, including a $900 million break-up fee. Sallie Mae said it does not agree with the buyers that the recently passed College Cost Reduction and Access Act of 2007 amounts to a “material adverse” event that would allow the group to terminate the giant takeover. Sallie Mae estimated yesterday that the new law will cut between 1.8% and 2.1% off of its net income over the next five years. Shareholders of Sallie Mae approved the deal last month during a special meeting. Sallie Mae shares closed down yesterday almost 3% to $45.01, well below the $60 takeover offer, indicating that investors don’t believe the deal will be consummated at the agreed-upon price.

COULEE DAM, Wash. – Coulee Dam FCU said David Schmidt, its president and CEO, will retire in December after 35 years with the credit union. Schmidt came to the credit union the day after Labor Day 1972 and was promoted two years later to succeed Byron Edgett, who moved over to and still runs Spokane CU. During Schmidt’s tenure, the credit union’s assets went to $67 million from just $1.2 million.

WILLIAMSPORT, Penn. – Horizon FCU is holding a Pampered Pet contest at each of its branches. Members can enter their pet by submitting a photograph and two items from the Lycoming County Society for the Prevention of Cruelty to Animals’ wish list, available at branch offices. Members who do not wish to enter the contest also are encouraged to bring items from the wish list, which will benefit the local SPCA's branches.

ERIE, Penn. – Erie FCU said it has received a $10,000 grant from the Pennsylvania CU Foundation to fund its financial education program. The credit union has partnered with the Erie Times, Newspapers in Education, Junior Achievement of Western Pennsylvania, United Way and Penn State Erie in a financial literacy project that actively involves 6,000 students in 65 schools and their families within the local community. Credit union employees will serve as guest speakers in classrooms and after-school programs to bring hands-on financial literacy education to teachers, students and parents.

SANTA MONICA, Calif. – Zag, the parent of Autoland, a popular online car buying service for credit unions, yesterday said it received $13.5 million in new equity financing. The company plans to use the additional capital to expand its offerings, including end-to-end transaction capability it plans to introduce later this year. Since launching in April 2005, Zag has raised over $46 million in equity capital and additional acquisition debt of $21 million for a combined total investment of $67 million.

CONCORD, Calif. – State regulators have issued a cease and desist order against financially ailing Cal State 9 CU, which wracked up $9.1 million in losses in the first half of the year. The credit union reported more than $26 million in loan delinquencies at mid-year, most of those real estate-related loans, for a delinquency ratio of almost 7%. Officials with California’s Department of Financial Institutions would not disclose the contents of the rare C&D, telling The Credit Union Journal the order is confidential. Officials with the $375 million credit union did not return phone calls seeking comment.

MOUNT LAUREL, N.J. – Shares in PHH Corp. traded up slightly yesterday after shareholders overwhelmingly approved the takeover of the largest mortgage bank for credit unions by GE Capital. But the shares still traded 16% below the $31.50 a share price of the takeover, indicating great doubt by investors that the deal will be completed. Investors’ doubts were fueled last week when private equity giant the Blackstone Group said it was having trouble raising money for its end of the buyout, an acquisition of PHH’s mortgage business, which includes the remnants of CUNA Mutual Mortgage it acquired in 2005. As a result, PHH owns more than $12 billion in residential mortgages originated by credit unions and has relationships with more than 2,000 credit unions. Under the original terms of the deal, GE Capital is supposed to buy PHH Corp. for $1.8 billion, then retain PHH’s fleet management business and sell the mortgage business to Blackstone. Some investors are wondering if GE will want to complete the deal if it cannot sell the mortgage business, which consists of a $150 billion servicing portfolio, 11th largest in the country. PHH shares closed yesterday at $26.32, up 2% after the shareholder vote.

SAN FRANCISCO – Visa yesterday rolled out a new “fob” payment device, no bigger than your thumb, which can be used to replace the ubiquitous credit/debit card. The Visa Micro Tag is designed to attach easily to a key ring, and allows cardholders to pay by simply waving their Visa Micro Tag in front of a contactless payment terminal without the need to physically swipe or insert the device into a point-of-sale terminal. Visa Micro Tags display the Visa Brand Mark and contactless indicator and a Visa account number is not required to be embossed or printed on the device, providing an additional layer of security for consumers carrying a Visa Micro Tag in visible ways, such as on a keychain. The fobs can be easily manufactured and personalized as part of an automated manufacturing process similar to that of standard cards. This helps issuers control costs while more readily providing a new payment choice to Visa cardholders. The Visa Micro Tag also can be made into a variety of shapes and sizes, from flat to three-dimensional, delivering innovative payment product design options. To celebrate the roll-out, Visa is giving away 1,000 Micro Tags loaded with $15 to San Francisco Giants fans entering AT&T Park's Field Club level today.

WASHINGTON – CUNA was working with key lawmakers yesterday to limit the potential effects of a bill that would bring overdraft protection fees under the Truth In Lending Act, thereby counting the fees in the interest rate. CUNA lobbyists were working with members of the House Financial Services Committee to get the bill amended so the newly computed interest rate on overdraft protection would not violate the 18% ceiling set by NCUA. The Committee put off a vote on the bill until next week because of other pressing business. Both CUNA and NAFCU insist the bill’s provisions, which also include a requirement that members opt-in to the service, could force thousands of credit unions to scrap overdraft protection programs. Their pleas come as the credit union-backed Center for Responsible Lending is supporting Congressional efforts to reign in overdraft protection, which they say has become a big profit center for both credit unions and banks.

RIVERWOODS, Ill. Discover Financial Services, spun off last quarter by Morgan Stanley, said third quarter earnings fell 16%, as the parent of Pulse EFT set aside provisions for loan losses and booked $5 million in costs related to the spin-off. The company also reported a pre-tax loss of $67 million for its international cards operations. Discover, spun off from Morgan Stanley on June 30, reported net income of $202 million, or 42 cents a share, for its fiscal third quarter, down from $241 million, for the same period last year. Discover, which has more than 50 million card holders, also operates the Pulse ATM and debit network and the U.K. card business Goldfish, which has been struggling through a tough credit environment in Britain. Since trading in its shares began July 2, the share price has declined more than 30%, from $29.15, to $20.25 yesterday.