Boeing Employees' CU, Tukwila, Wash., has donated $1,000 to Foothills Youth Association, a small nonprofit organization in Bonney Lake that seeks to provide a safe environment for the youths to gather and interact. The check was awarded on behalf of BECU employee Neale Duren as part of the credit union's Employee Volunteer of the Year program. Electro Savings CU, St. Louis, Mo., raised funds and collected gifts for a needy family within the community. The family, with a single mother who did not speak English fluently and three children, had requested coats for the winter season, said ESCU staff. However, enough was raised at the CU that the coats were provided and other things as well. Staff members who delivered the gifts to the family included Rhonda Zalaudek, Julie Foulks and Lisa Campbell. Postal CU of Los Angeles, Calif., hosted its 2nd annual Youth Express Club open house during the holidays. Santa Claus (aka Rodger Smock and William Brinkley) and Santa's Elf (aka Georgina Duenas) interacted with the many children who attended. Children received lunch courtesy of McDonalds, cookies and gifts. CEO William Harris comforted one distraught little girl who hadn't received the skateboard she'd had her heart set on by going straight out and buying one for her. During the open house that was for both members and non-members, PCULA opened 378 new youth accounts, with deposits totaling $72,000. RCU, Eau Claire, Wis., has contributed to a cans & quarters drive to support the "Feed My People" Food Bank. RCU staff in March lent a hand to a community effort calling for donations of non-perishable food or "extra" change to help people in need through food pantries in 13 counties throughout Western Wisconsin, at this time of year when supplies generally are low. Melinda North, (715) 833-8106, is coordinating the effort. United Heritage CU, Austin, Texas, in cooperation with the American Football Coaches Association, has raised more than $14,000 on behalf of the Texas Child Identification Program. These funds will provide more than 8,800 Texas parents with free identification kits. Ohio CU League, Dublin, asked Ohio CU leaders to help out during a recent phone-a-thon and received $11,500 in pledges for CU political action in just four hours. Ohio's PAC trustees "dialed for dollar"s from the offices of the OCUL, during the System's 2nd annual fund-raising campaign. OCUL's goal for this year is $120,000. In addition, OCUL Summit Chapter members and the Lorain & Avon Lake branches of GenFed FCU, Akron, collected more than 31 pairs of shoes and $1,000 to help the needy during the holidays during their "Warm the Soles of Kids" project....

Arkansas CU League, Little Rock, hosted Republican presidential candidate George W. Bush during a recent stop-over. "I am a long-time supporter of credit unions," Bush said, during a meeting with ACUL President/CEO Craig Savell. "I believe people have to take responsibility for themselves, and big government is not the answer." Savell said he talked to Bush about the importance of CUs and how members have come to rely on these cooperative institutions. Franklin Mint FCU, Media, Pa., has held a ribbon cutting for its 15th branch office in University Technology Park in Chester. Health Services CU, Jacksonville, Fla., has opened its new national headquarters and member service center located near the Tinseltown Movie Theatre and adjacent restaurant complex in the Deerwood Park North office and retail complex. Members doing financial business at the new service center will do so via HSCU's new "Privateller." This system allows depositors to interface with system staff via video screen and telecommunications while providing depositors "the maximum in privacy and safety," officials said. Metro CU, Warren, Mich., staff recently invited local dignitaries and members of the community to the official opening in Lincoln High School of a new student-run CU branch. Multco CU, Portland, Ore., has bid a fond farewell to retiring CEO Bob Burns. Burns has led the $66-million asset, 10,000-member CU for 16 years. Orange County Teachers FCU, Santa Ana, Calif., invited 65 students to the FCU for the third annual Groundhog Job Shadow Day in early February. Students from Anaheim's Brookhurst Jr. H.S. and Santa Ana's Ceasar Chavez H.S. spent the day at the FCU observing staff members at work. "By reaching out to the work force of tomorrow, we can help students set goals and obtain valuable work experience," said Rudy Hanley, OCTFCU president/CEO. Pine Bluff Cotton Belt FCU, Pine Bluff, Ark., has selected HBE Financial Facilities to design and build its new $1.3 million home office. The facility is scheduled for completion in November of this year. The new office will be designed to resemble a train station in honor of the FCU's railroad membership. A tall vestibule will lead into a high-ceiling lobby with wooden beams, officials said. Tampa Bay FCU, Fla., has held a grand opening for a new "family-friendly" facility, which features interactive teller stations so that members may conduct business via interactive television screen and a telephone in a private station while children play in an enclosed playground that can be accessed only through the FCU's main lobby. There is a 4-lane drive-through with a 24-hour ATM and a secure 24-hour walk-up ATM, officials said....

The Wisconsin CUL and Wisconsin Bankers Association have reached a historic financial agreement compromise....Page 12...

PEWAUKEE and MADISON, Wis. - Just two months ago, they were sitting across from one another exchanging barbs. Now, in a historic and unprecedented move, the Wisconsin Credit Union League and Wisconsin Bankers Association have reached an agreement that will combine the league's Credit Union Consumer Choice Bill-S.B. 274-with the WBA's Universal Bank Bill-A.B. 563-that ensures passage of the resulting omnibus financial reform package before the state legislature adjourns. Representatives of the WCUL and WBA negotiated the agreement at the request of the Department of Financial Institutions Secretary Jack Kundert and Office of Credit Unions Director Ginger Larson. The Community Bankers of Wisconsin was also instrumental in the agreement being reached, said the Department of Financial Institutions. Ron Halvorsen, president, WCUL called the deal "historic" and noted that if the financial reform bill is approved, credit unions will benefit from putting into law current Office of Credit Unions' interpretations of credit union powers. "The substitute amendment is a good bill for the financial services industry and consumers of Wisconsin," Halvorsen told Credit Union Times. "That was our aim from day one when we introduced the original credit union bill. "It's not often banks and credit unions agree on anything," he remarked. "But in our meetings, we all came to realize there is a lot more common ground than anyone first imagined. That opened the door to drafting the omnibus package." Basically, the agreement modifies and streamlines some portions of S.B. 274. The Universal Bank Bill language-a localized version of the federal Gramm-Leach-Bliley Financial Modernization Act-will be added to the modified credit union bill. S.B. 274 was introduced in December 1999 by Sen. John Erpenbach (D-Middleton). An identical bill-A.B. 573-was introduced in the state House by Rep. Frank Lasee. It passed the Senate on Feb. 8 and was sent to the Assembly. A.B. 563 passed the Assembly on Feb. 9 and was sent to the Senate. Both bills remain pending. According to the DFI, Rep. Suzanne Jeskewitz (R-Menomonee Falls), chair of the Assembly Financial Institutions Committee predicts her 15-member panel will approve the compromise package. From there, the omnibus financial reform bill will go to the floor of the Assembly. Jeskewitz says if S.B. 274 is approved by the Assembly, it will go back to the Senate for concurrence. Among the provisions of the compromise substitute amendment to S.B. 274: * It restores the original definition of a credit union, but would retain the new cross-references to special definitions in sections 186.41 and 186.45 (the Senate Committee on Privacy, Electronic Commerce and Financial Institutions adopted this same language when they considered the original credit union bill.) * The original credit union bill would have given the Office of Credit Unions the authority to expand the field-of-membership for community charter credit unions to include non-continuous communities or counties. The substitute amendment restores the term "well defined" and requires that community charter fields-of-membership generally remain within contiguous territories. * The original bill modified the purposes and powers of a CUSO. The current statutory language restricts a CUSO to providing services primarily to credit unions and their members. The proposed changes in original S.B. 274 would have allowed CUSOs to invest in any company that does business with the CUSO in their ordinary course of business. The substitute amendment removes the new language, restoring restrictions on the purpose and function of CUSOs. The substitute also removes several proposed new powers for CUSOs. The substitute amendment retains changes to the business structure of a CUSO to reflect changes in business structure law. * The original credit union bill would have expanded the ability of a credit union to purchase certain assets. Those powers would be removed by the substitute amendment. * The original bill would have replaced the definition of `vicinal industries' with modified language describing employment-based eligibility for membership in a CU. The substitute removes the proposed changes. * The statutory definition of a family member is removed by both the original CU bill and the substitute. However, the original bill would have allowed a CU to establish that definition by policy. The substitute would require the credit union to establish all requirements of membership in their bylaws and the Office of Credit Unions must approve all bylaws. Other negotiated provisions of the substitute amendment include those concerning organization membership, Department of Agriculture, Trade and Consumer Protection (DATCP) exemption, privacy, and the Community Reinvestment Act (CRA) As a final agreement provision, the WCUL and the WBA have agreed to withhold for a two year period any new legislative proposals relating to the provisions removed from the credit union bill and CRA. Halvorsen is not sensitive to the substitute bill being labeled "a compromise." Even though there are provisions in the original bill that are not included in the substitute amendment, "everything in the substitute amendment is still an improvement over our existing credit union law," he said. Commenting on the compromise agreement between the WCUL and WBA, Kurt Bauer, lobbyist for the WBA said, "Everyone wins. The credit union league took out portions of the original bill we had problems with and left in sections they argued were necessary to solve particular problems. "Credit unions and banks represent a powerful constituency in Wisconsin," Bauer added. "This is an opportunity for the state lawmakers to do something for their constituents." At press time, Halvorsen said the WCUL had gotten indications that the state Assembly would approve the bill and he had every reason to believe the "Senate leadership will see the substitute amendment as a total package that's good for Wisconsin consumers." -...

Texas CU League's mortgage subsidiary, Foremost Mortgage Co. partnership to expand lending services to members..Page 18...

PORTLAND, Ore. and SAN DIEGO - Five years after opening its doors for business and building a direct lending presence with 700 dealerships and 116 credit unions in California, Nevada and Oregon, CU Direct Lending has expanded its visibility in southern California and the Oregon markets. Mission FCU-the second largest credit union in San Diego County-and Portland Teachers CU-the largest CU in Oregon-have joined the Credit Union Direct LendingT program. Mission FCU is the third credit union in San Diego County-and the largest in the county so far-to sign on to the CU Direct Lending system. MFCU has $916 million in assets, 23 branches in San Diego County and provides services to nearly 121,000 members in the educational community. John Parsons of MFCU said the credit union envisioned its members going to a dealer to buy a vehicle and decided that because "we want them to have convenience at any level of acquisition and financing they choose, including car sales. After examining CU Direct Lending's dealer screening process and infrastructure, we're certain our members will be able to get a good credit union-deal at the dealerships." Mission FCU went live with CU Direct Lending last month. Portland Teachers CU is scheduled to go live with the system in May. With nearly $957 million in assets and more than 130,000 members, Portland Teachers CU is the seventh credit union in Oregon to become part of the CU Direct Lending system. According to Kristie Nockleby, vice president of marketing, PTCU, credit unions account for less than 1% of auto loans processed in the state. "We're losing auto lending opportunities to the dealerships," she said. "The dealers are chasing members' auto financing and we're losing out because we don't have a presence in those dealerships. "With CU Direct Lending, we have a chance of getting the member's loan," she added. Not only are Portland Teachers CU's members excited about the new program, area dealers are also looking forward to it. Nockleby said since the credit union began speaking to dealers and alerting them to the service, PTCU has been approached by many of them inquiring about advertising on the credit union's Web site. "It's a winning product for everyone," she said. Credit Union Direct Lending funds about $160 million a month in loans. "This kind of lending is really a relationship building game," said Tony Boutelle, CEO, CU Direct Corp. and senior vice president, business services for the California Credit Union League. "It requires there be a relationship between the credit union and the dealer and the member and the dealer. It's an interesting process." Now that state-chartered credit unions in Massachusetts are able to offer indirect lending to their members, Credit Union Direct Lending plans to open its first east coast office in the Massachusetts Credit Union League's offices in Southbrough in the coming months. The company has hired two staff to work there. -...

SAN DIEGO-It is estimated that by year's end, more than half the cars on the road will be leased vehicles, yet credit unions have captured less than 7% of that market, said Tim Mauricio, vice president of sales and marketing for Credit Union Leasing of America (CULA) here, a leading provider of leasing programs targeted to the credit union industry. It doesn't have to be that way, he said. Credit unions may think a leasing program is too complicated, said Mauricio, who stressed the most important thing a CU can do to recapture that lost business is design a program with the member's convenience in mind. Many CUs have realized that developing a good relationship with a car dealer network is also a key to increased membership (through indirect sign-ups of eligible buyers) as well, he said. The convenience factor struck a chord with Ed Hays, manager of vehicle leasing and buying for Navy Federal Credit Union, the leader in CU car leasing, according to statistics provided by CULA. "Our program is attractive because we made our leases member friendly," said Hays. "No money down, no security deposit, no early termination penalty, free GAP coverage, 15,000 standard annual miles, and the member may purchase the vehicle at the residual value, no matter how high the market value is." Hays echoed Mauricio on learning to work with dealers. "One of the most important things a credit union can do in establishing a program is to establish relationships with dealers that will offer members a fair price, a no hassle buying experience, and will honor our position as lender. When the member calls us and wants a lease, we refer them to a specific dealership. We only do leases in the areas where we have large membership concentrations- pretty much everywhere we have branch offices," said Hays. "When a member calls in or visits a branch office for an automobile loan quote our representatives also let the member know what leasing the vehicle through Navy would cost. It is casually mentioned to every member what the actual cost would be. All telephone representatives are trained to do this and we are currently working on training all the MSRs in the branch offices to do the same thing for walk-ins." Letting the member know up front cost comparisons fits very nicely with the CU principal of service first, noted Mauricio, and CULA offers a full array of marketing materials to support that educational effort. It also reinforces the member's feeling of trust in the credit union, he said. "This is a competitive imperative," said Hays. "If the member walks into a dealership with the note, the dealer is going to try to switch or sell them a dealer lease. In our case, the member is armed with information to compare Navy's lease rates versus the dealer's. We do this to cover all our bases so we don't lose market share. And the dealers know they can't beat our lease rates." What does Navy do with cars coming off leases? "We bring the vehicles back here to resell to members, employees, or the public through word of mouth (employees or members friends and neighbors)," said Hays. After putting them through a 72-point check and detail, a service contract is added and the car is sold. "It costs us about $400 per car but if we were to sell them at an auction, we would loose about $2,000 to 3,000 per car .We are currently selling between 10 -20 off-lease vehicles per month." "Our current portfolio is over 5,500 leases and over $135 million. We average around 150 leases per month," said Hays. -...

SACRAMENTO, Calif. - If the saying is true that time is money, then it was never truer than now as consumers increasingly rely on the Internet to research and apply for car loans. Time is always of the essence when it comes to approving or turning down an application for a loan, but never so much as when it comes to online lending. At the click of a mouse, an applicant can switch from one Internet lender and access another who has faster online decisioning power. With so much loan dollars at stake, is it any wonder that the pace of alliances between dot.com companies and financial service providers continues at a frenzied pace? While the competition for consumers' online borrowing dollars continues, credit unions are also in the ring sparring with the other contenders. Fifty-five percent of Americans who buy a vehicle this year will use the Internet at some point in the process, according to J.D. Power and Associates, and that figure is expected to increase to 80% by 2003. Online Internet transactions are increasing even faster - nearly 3% of new cars were sold through the Internet in 1999. Consider this: Autobytel.com, which holds nearly 50% of online vehicle sales, topped $3.4 billion and over 3 million users for first quarter 2000 car sales. A company subsidiary, CarSmart.com, the online carbuying service for 200 credit unions, has joined with Creditland and eCoverage and created an online auto buying service, LookSmart Auto Center, that allows car buyers to research, get price quotes and buy and sell vehicles nationwide. But there is a caveat to this news: AnyTime Access, a leading provider of outsourced credit origination solutions to financial institutions, estimates that somewhere between 60 to 70% of applications processed over the Web can't be approved because of the lending institution's criteria, said Peggi Wood.. Considering credit unions' tight lending requirements, that translates into a considerable potential high volume of loans dollars that credit unions can lose to other online lenders if they don't have online lending services. Wood said AnyTime Access' recently announced alliance with Calender.com, an Internet vehicle financing provider was designed with time on their minds. Instead of waiting up to three days for auto loan decisions, Calender.com's clients who apply online and meet the automated underwriting criteria of their financial institution receive a decision on their application in about 90 seconds. Driving the faster turnaround time is AnyTime Access' fully-automated Internet lending tool, AnyTimeLenderT. The technology allows the company to incorporate a financial's lending policies into the system and ensures that loans that are underwritten are consistent with the regulations and policies of the respective client. Applications that don't meet the automated criteria are reviewed by an AnyTime Access loan officer in the company's call center. "Online lending is all about speed and efficiency, and we want to give credit unions the opportunity to compete for and recoup some of the vehicle loans they might otherwise lose to other financials actively participating with online lending," said Wood. The pairing of speed and efficiency was top of mind in a deal reached earlier this month between Pentagon FCU and CarsDirect.com. As a result of the arrangement, PFCU's more than 400,000 members worldwide will be able to research, configure a loan, buy, finance, warranty, insure and arrange for delivery of a vehicle all online, without ever visiting a dealer. The alliance is a boon for PFCU members many of whom are members of the military and find themselves in the position of returning to the U.S. from overseas without a set of wheels. Leveraging the alliance, all the PFCU-member has to do is apply to the credit union for financing, select the car and add-on features and place their order. CarsDirect.com does the rest of the work, including finding the car from its network of more than 2,000 dealers for the member's asking price. CarsDirect.com arranges for deliver of the car and keeps a small fee-ranging from $50 to $200-for itself. Forrester Research, Cambridge, Mass. described the online car sales market as having four distinct phases - general research, dealer selection, payment plans and insurance, and sale completion. Consumers tend to be slow to move beyond the first two states until they gain confidence in online transactions. That is where credit unions' education of their members comes in and helping them reach a comfort level with online lending. -...

MEDICINE HAT, Alberta, Canada - Two credit unions in central and southern Alberta, Canada have approved a merger that will create the second-largest credit union in the province. Parkland Savings Ltd., Red Deer is joining Community Credit Union Ltd. of Medicine Hat to form the new Community Credit Union Ltd. The new credit union will have approximately $1 billion in assets and serve 75,000 members in 21 branches. The largest credit union in the province is Edmonton's Capital City Savings and Credit Union Ltd., with $1.2 billion in assets. The merger is expected to be finalized by Nov. 1. Credit union officials said the new credit union intends to pursue mergers with other credit unions to expand their network of credit unions in communities throughout rural Alberta. There are currently 75 credit unions in Alberta serving 470,000 members with assets totaling $5.7 billion....

MCLEAN, Va. - Freddie Mac is drawing praise from lenders, federal legislators and consumer advocates for the series of steps it announced aimed at protecting borrowers from predatory lending practices. The steps include a ban on the purchase of mortgages with single-premium credit insurance policies and requiring subprime lenders to accurately and fully report their borrower credit files to credit repositories. Freddie Mac's announcement today puts the subprime lending industry on notice that there is no secondary market for predatory loans, said Rep. David E. Price (D-N.C.). Freddie Mac's ban on single premium credit insurance is accompanied by several other steps the company recently took to combat predatory lending. For example, in February, Freddie Mac became the first secondary market investor to require all lenders, including subprime lenders to report monthly borrower mortgage payments to all three credit repositories on loans they service for the company. Freddie Mac will monitor lenders' track record in reporting so that borrowers can obtain lower-cost loans when their credit improves....

RANCHO CUCOMONGA, Calif. - With the comment period window on NCUA's proposed privacy regulation due to close on March 31, the California Credit Union League sent a letter to the agency urging NCUA to expand its definition of an `affiliate' to include CUSOs and to allow compliance with the new rules to be optional for the first four-and-a-half months to ensure that CUs won't be burdened with the new regulatory compliance in the fourth quarter of this year. The league recommended that a CUSO be only 65%, rather than 100%, owned by credit unions to qualify as an `affiliate.' It also suggested that credit unions be allowed to both include the required annual privacy notice as part of their newsletter to their membership, and to consider a notice mailed to the home of a member as notice to all other members in the same household. Under NCUA's proposed privacy regulations, CUs do not need member permission to share member information with affiliates. Including CUSOs as affiliates `will better enable credit unions to meet the needs of their member-owners through the greater flexibility that the affiliate relationship provides in determining the use of member information," Chatfield offered. Chatfield also urged NCUA to adopt provisions for annual privacy notices similar to those in effect for Truth in Savings, and to create a distinction between information based on a member having a "customer relationship" and an "owner relationship" with the CU....

WASHINGTON - More than 100 friends of former NAFCU President Ken Robinson and folks he'd worked with over his credit union career came out March 23 to the Hotel Washington to wish their best to the gentleman they'd worked with and called their friend, and his wife Marie. Among the guests at Robinson's retirement party were NCUA Board member Dennis Dollar and NCUA Executive Director Carolyn Jordon, CUNA President Dan Mica, current and former staff of NAFCU and former chairmen of the association. Also present were congressional staff and heads of other trade associations including Diane Casey, president, American Community Bankers and Ken Guenther, president, Independent Community Bankers of America....

FEASTERVILLE, Pa. - Investors looking for answers to IGA Savings Bank's investment in BankZip.com may get them soon when the bank's 10-K is filed with the Securities and Exchange Commission. The 10-K is scheduled to be filed on March 31. The former I.G.A. FCU has come under heavy criticism from investment firms with a stake in the bank for investing $2 million in a dot.com company. The investors said they thought they were investing in a community financial, not a dot.com company. A spokesperson for IGA Savings said the 10-K should give investors a good explanation of the scope of the investment in BankZip.com and the reasons behind it. All along the bank has maintained that the investment in BankZip.com was necessary to serve its customers remotely. BankZip.com is an Internet banking alliance of community banks. IGA Savings has $200 million in assets and 23,000 customers....

FORT WORTH, Texas - A tornado that swept through the downtown part of the city the evening of March 28 killing four people and injuring 36, caused extensive damage to the main office of Educational Employees Credit Union. Bob Rogers, EECU president/CEO, estimated that the storm caused $5 million in damages. None of the credit union's employees in the four-story building were injured. Television reports showed the credit union's windows blown out and Rogers said the fascia on the building is gone. He was on the scene Wednesday night to move the credit union's computers. Once employees are allowed past police barricades, EECU will begin disaster recovery....

ARLINGTON, Va. - Gwen Baker-formerly regulatory compliance counsel for NAFCU-has been named NAFCU's Director of Regulatory Affairs, a position in which she'll assist in the development and implementation of the association's regulatory policies and interpret all rules and regulations affecting NAFCU-member credit unions. Baker joined NAFCU in 1998. She has assisted members with compliance concerns, as well as spoken on financial regulatory issues at NAFCU seminars and lectured for NAFCU's Regulatory Compliance School. Baker earned a Bachelors of Science degree from Virginia Tech University, Blacksburg. She holds a Juris Doctor degree and is a member of the Maryland State Bar Association and the American Bar Association. Baker replaces Suzanne Garwood who has accepted a position with a Washington, D.C.-law firm....

MADISON, Wis. - The World Council of Credit Unions (WOCCU) joined Development International Desjardin of Quebec, Canada and Socodevi-a conglomerate of 11 different cooperative development groups in Canada-in a March 15-debate concerning the United Nations Development Program/Special Unit for Microfinance's policy on the appropriateness of providing loan capital to savings-based microfinance institutions. The participants were asked to address how access to grant/loanable capital affects savings mobilization, governance structures, and growth and profitability. WOCCU representatives explained that the organization's position against external funding "is primarily an economic and institutional sustainability issue." Among the reasons they offered for their position were that "where a credit union relies solely on external funding for loans, the board of directors often does not assume the same level of ownership and responsibility for the financial health of the institution."...

DETROIT - The Internet may be gaining in popularity as a tool to research car prices and even purchase a new vehicle, but just how accurate are car and truck prices on the Internet? Not very, says a recently conducted study by CNW Marketing/Research. After comparing the prices of 86 different vehicles, representing 57% of all U.S. car sales from every manufacturer and every vehicle segment, the study found that new car and truck prices on the Internet, a key source for about half of all vehicle purchases in the U.S., overstated the actual price by as much as $888 on average. The study found that Kelley Blue Book missed by an average of $324, while Edmunds was an average $570 above the actual manufacturers suggested retail price (MSRP). For example, according to the study, for the Lexus LS400 luxury sedan with six options selected, each of the online sites surveyed except CarsDirect.com tallied an inaccurate MSRP. CarPrices.com scored the worst among the online sites - it overshot the MSRP by nearly $2,700. In addition, several Web sites reportedly charged for some equipment which is standard on a vehicle, or improperly allowed option packages to be added. -...

Albany, N.Y. - With five months to go until NCUA adopts as a final rule its definition of a "complex" credit union adopted as a proposed rule at the agency's Feb. 3 board meeting (CU Times Feb. 9), local NCUA supervisory examiners were on hand for a recent three half-day seminars presented by the New York State Credit Union League to help credit union officers, staff members and volunteers understand Prompt Corrective Action (PCA) requirements. At sessions in Albany, Manhattan and Batavia, NCUA examiners also explained the process of how a credit union falls under the proposed "complex" definition under PCA and how that will affect true net worth and capitalization. PCA, part of The Credit Union Membership Access Act, requires NCUA to develop a definition of a complex credit union based on the risk level of a credit union's portfolio of assets and liabilities. Under NCUA's current definition of complex, which it must adopt as a final rule by August 7, but doesn't take effect until January 2001, a credit union is complex if its assets are greater than the threshold percentage of assets allowed for a particular risk portfolio. "PCA is going to have a tremendous impact on how credit unions do business here on out," said Amy Colodny, vice president government affairs and association services for the League. "That is why the League put these sessions together around the state. We wanted to give credit unions as much information as possible to understand PCA and the proposed definition of complex and what it means to individual credit unions." NCUA supervisory examiners discussed the four complex threshold categories. Also discussed was the calculation of risk-based net worth which, along with a credit union's net worth ratio, determines an institution's capitalization category. Net worth restoration plans and discretionary actions were also covered for credit unions that will be labeled as undercapitalized once their Call Reports have been reviewed. "NCUA examiners did a great job in going through and explaining all the complex and capitalization categories and the ways to calculate net worth. They also explained that even if a credit union is well capitalized, it can fall into the complex definition when risk-based net worth is taken into consideration," said Colodny. One of the League's goals, through the seminars, was to make members realize that PCA is going to affect all business decisions. "The types of investments that are made, the types of products and services that are provided-these things can all tip the scale in making a credit union complex or not," Colodny explained. "In making decisions, you have to make sure you are well-capitalized." In attendance at the Albany seminar was Karen Ellis, vice president of finance at Sidney Federal Credit Union, Sidney, N.Y., who said everyone was inquisitive as to how PCA was going to affect their individual credit unions. "Credit unions should fully understand the PCA implications (change in net worth categories)," she said. "Any business decision and planning going forward may affect asset growth and capital growth." Sidney FCU, with 47,687 members, total assets of $143.8 million (end of February) and deposits of $126.8 million, has already filled out its PCA worksheet that is incorporated into the Call Report. "We know where we stand and we are comfortable with that, but things may change," she said. Ellis is referring to the April 18 deadline that NCUA has set to hear comments and feedback on the complex definition and risk-based net worth requirements. According to Colodny, this is another reason why the seminars were important. "Because the commentary period is still open, members had a chance to `kick the tires,' so to speak, and look at what complex means right now and make any comments they feel are appropriate to NCUA." "I think a lot of credit unions are waiting for the final ruling before they really start thinking about this," said Ellis, "but it's important that they start researching now and make comments while there is still time to do so." Overall, she said the seminar and NCUA examiner presentation were very helpful. Asked if credit unions will be given any leeway by NCUA when complex threshold requirements are calculated, Colodny responded by saying that the four established thresholds was NCUA's way of doing so. According to the thresholds, a credit union is complex if: it has more than 25% of assets in long-term real estate loan portfolios; it has more than 12.25% of assets in combined member loan risk portfolio; it has more than 15% of total assets in long-term investments portfolios; and it has more than 5% of total assets in the loans sold with recourse portfolio. "It is pretty unique that this kind of partnership exists between the League, NCUA and credit unions," Colodny continued. "It is commendable on the part of NCUA to come to the table and be part of the solution and show credit unions that it is interested in helping them get to where they need to be." -Birritteri@hotmail.com...

ANNAPOLIS JUNCTION, Md. - Sonic Automotive Inc., the second largest automotive retailer in the U.S., is piloting CreditConnectionT to automate its traditional dealership and Internet financing processes. CreditConnection electronically connects dealerships to credit bureaus and funding sources throughout the U.S. through the Credit Online network. Credit Online Inc. is a wholly owned subsidiary of Credit Management Solutions Inc., a provider of credit automation software and services, including Internet-based online lending and leasing technology. CreditConnection was piloted in the Columbus, Ohio area. At press time, there were 23 `electronic' lenders able to receive electronic loan and lease applications through the Credit Online network....

AGOURA HILLS, Calif. - If consumers dread facing a car dealer and negotiating for a sales-price, they might be surprised to learn the feeling is mutual. According to a J.D. Power and Associations "2000 Salesperson Satisfaction Study"T based on a representative national sample of more than 4,300 new-vehicle salespeople across all major manufacturers' nameplates, nearly a third indicated a strong desire for stress management training and 11% said they plan to get out of the business altogether. Consumers may also be surprised to learn that when new-vehicle price negotiations get down to the wire, their salesperson may be sweating just as much as they are, said Chris Denove, director of automotive retail/distribution analysis at J.D. Power. He noted that when a customer walks away from a deal, most salespeople don't make "a dime" on commission, no matter how much time they've invested on that customer....

WASHINGTON - Most car shoppers think the dealer's invoice tells how much the dealer paid for a new vehicle. In truth it's an inflated figure and Consumer Reports plans to disclose better wholesale information about dealers' costs to car and truck buyers. The magazine says it intends to disclose true wholesale prices of specific models after subtracting a secret dealer profit called `holdback' and other allowances typically buried in invoice prices. The invoice price typically includes the holdback-an amount that varies from brand to brand and can be as much as 3% of the full sticker price. The dealer pays the manufacturer the holdback, but the manufacturer reimburses the dealer. According to Consumer Reports, some dealer invoices also include allowances for dealer advertising and other costs. Subtracting out the holdback and other hidden items from the invoice price should give buyers a better chance at negotiating a good price, magazine sources say....

DETROIT - The automotive dealers industry group, National Automotive Dealers Association (NADA) will launch next month an Internet site, www.nadadealers.com, which will include dealers' invoice prices. Until recently, discussion by dealers of a vehicle's invoice price-the amount the dealer pays the manufacturer for the vehicle-was considered taboo....

Risk-based enterprises as a matter of course evaluate the level of risk involved in various categories of business they serve and underwrite each risk category accordingly. For example, life insurance companies require less documentation and even give lower rates to those who are younger or who do not sky dive as a hobby. The same approach applies on auto insurance for those with safe driving records. Physicians require office visits less often on patients with excellent health and family histories. Attorneys determine contingency or hourly fee arrangements based on the strength of a case. Even most credit unions have implemented risk-based loan policies. This begs a question. Why should NCUA as a regulator not do the same? As a safety and soundness regulator and certainly in our role as an insurer, we are a risk-based enterprise. Why should we not likewise consider effective risk management by those we regulate as a measure by which we can reward them with greater regulatory flexibility when they historically have performed well and therefore reduced our risk of their creating a loss to the insurance fund? NCUA can then appropriately allocate more of our regulatory efforts towards those credit unions with greater safety and soundness concerns and who therefore need more oversight, guidance and assistance from NCUA. This risk-based regulatory approach would not only be good business for a safety and soundness regulator. It is consistent with our statutory PCA mandate and would enable NCUA as an agency to better manage our limited resources by focusing more on the credit unions which need our help. At the same time, it could provide an incentive to credit union high performers to continue their exceptional level of financial performance. With the challenges of a new millennium facing both NCUA and America's credit unions, I think we should seriously examine such an approach and I believe RegFlex is the way to do it. RegFlex is an earned regulatory flexibility program based upon the realization that each credit union is different and therefore all NCUA regulations cannot be applied to each individual credit union in exactly the same manner. A "one size fits all" regulatory approach often results in less incentive to innovate in the member service arena and serves as a deterrent to extending service to folks from all walks of life. Because strong credit unions are hampered by some of the regulations put in place primarily to restrict activities which might be considered risky for those which are less strong, we recognize the need for some flexibility from the "one size fits all" approach by writing waiver provisions and pilot program language into many of our more restrictive regulations. But this is not the total answer because many credit unions refuse to pursue the time-consuming and often costly waiver process. Cumbersome process is many times within itself a regulatory deterrent to credit unions, and it is always costly in terms of the allocation of our own agency resources. In the dynamic marketplace of this new millennium credit unions must be able to respond rapidly and effectively to changing circumstances. Member demands are becoming more complex and the solutions offered by credit unions will likewise have to be complex, requiring both vision on the part of a credit union and flexibility on the part of its regulator. Credit unions cannot expect their members to demand fewer services simply because they are committed to cooperative credit. Let's face it. Members will demand more service and convenience. The credit unions will have to respond by providing it. NCUA must be pro-active by allowing it with only a minimum of regulatory red tape in those credit unions we regulate who have proven their ability to manage risk effectively. RegFlex is a regulatory policy which seeks to accomplish this purpose by establishing that credit unions who have earned a specified level of net capital strength (9% is the proposed figure) and have a proven risk management ability (CAMEL 1 or 2 for the past two exam cycles) should be given regulatory flexibility when dealing with certain non-statutory NCUA regulations that have minimal, if any, safety and soundness ramifications when applied to credit unions who meet those standards of performance. Among the non-statutory regulations with minimal safety and soundness risks which are under consideration for RegFlex eligible credit unions are the 5% fixed asset cap, certain limited investment restrictions, charitable contribution restrictions, limits on public funds and certain eligible obligation restrictions. RegFlex would provide strong credit unions with earned regulatory flexibility while at the same time providing an incentive to stay strong in order to maintain it. Just as unnecessary regulatory impediments can kill innovation, greater regulatory flexibility can empower innovation. The results of RegFlex will be an ever-growing number of well-managed credit unions with strong capital positions being empowered to expand their services to their entire field of membership with greater innovation, thus meeting the needs of all of their members much more effectively and with an ongoing incentive to remain RegFlex eligible so that they can continue to have this empowerment. Of course, should the ongoing examination and supervision process indicate downward trends in a credit union's performance, NCUA will have the right to pull their RegFlex eligibility in whole or in part at any time. Although admittedly the least popular aspect of the proposal, a diligent supervision program is essential to the success of RegFlex, as well as to NCUA's statutory charge to be effective as a safety and soundness regulator and as administrator of the share insurance fund. As always, we will maintain this as our top priority as an agency. Diligent supervision will continue - both as a vital safeguard as well as a powerful incentive for credit unions to stay strong. RegFlex will not change that agency commitment in any way. In fact, the standards for RegFlex eligibility are purposefully high, but they are certainly achievable. And as a safety and soundness regulator, NCUA should provide this type of well-reasoned and carefully studied incentive to encourage the credit unions we regulate to achieve and maintain these high standards. Studied internally at NCUA by a working group consisting of some of our best examination and supervision authorities, regional officials, legal and investment experts, RegFlex has been under careful evaluation for months. Focus groups from CUNA, NAFCU, NASCUS and the National Federation of Community Development Credit Unions have been involved in its inception. Without question, RegFlex has been one of the most intensely scrutinized regulatory initiatives in years, and its goal has always been to provide reasonable regulatory flexibility to as many eligible credit unions as possible within the always overriding and foremost commitment of NCUA to safety and soundness. Although we are seeking additional input to shape the best RegFlex regulation possible, I believe we are on the right track. At the proposed triggers approximately 3500 federal credit unions will be eligible for RegFlex, over 54% of which are under $10 million in assets. From these figures it is plain to see that RegFlex will benefit credit unions of all sizes and types. As members demand more from their credit unions in this dynamic marketplace, credit unions are faced with both a tremendous challenge and opportunity. So are we at NCUA. If we take a regulatory approach which is restrictive and inhibits the innovation necessary for credit unions to meet the needs of and extend their services to their members, NCUA might well contribute to the devolution of today's healthy and vibrant credit union movement into one that could unfortunately become recognized in the future as out-of-date in the member service arena. However, if we instead take the better approach of empowerment and even encouragement of credit union innovation through greater regulatory flexibility for those credit unions who have proven their ability to manage the risk involved, NCUA could open the door for a new era of credit union growth, viability and strength as the credit union movement reinforces itself in the forefront of the nationwide commitment to provide expanded access to quality financial services for all the folks who need them. RegFlex can be a significant and positive step in the direction of this much more desirable risk-based approach. The RegFlex proposal is presently under consideration by the NCUA Board and comments from credit unions are earnestly solicited and needed. We do not have all of the answers in Washington and those who are in the trenches of credit union member service each day can help us structure RegFlex in the most effective way to benefit credit unions while always emphasizing safety and soundness. Those who wish to officially comment on the RegFlex proposal may send their comments to Becky Baker, Secretary to the NCUA Board, 1775 Duke Street, Alexandria, Va. 22314 or may e-mail them to bbaker@ncua.gov. The official comment period ends May 21, 2000. This is a golden opportunity for America's credit unions to be involved from the ground floor in shaping a significant NCUA regulation. Take advantage and let us hear from you....

WORLD WIDE WEB - Credit Union Times' third annual credit union Web site contest, the eAwards, is now open for entries....

Another tax increase, a thunderstorm right after getting your car washed, and a steady rise in gasoline prices to over $2 a gallon, are among the things that would be on most everyone's list of things that are inevitable. But there is also an inevitable list involving credit unions. For example, some of us have been suspicious from day one regarding the real motivation behind a charter conversion that turns a credit union into a bank. From the start, it seemed inevitable that at least in some cases, an ulterior motive for converting to a bank would eventually surface. It has! Early on we asked questions. "For who's benefit?" we asked. "Why, for the sake of our members, of course," we were told. So who can argue with that? After all, members own the credit union and if they benefit by giving their blessing, who is to say that converting to a bank is a bad thing? "But," we cautioned, "do the members really understand (or care?) what they are being asked to approve?" Surprise! Surprise! The inevitable has happened. I.G.A. FCU, one of 11 former CUs now possessing a bank charter, has gone from being a medium size credit union serving its members to a stock-driven, takeover target. It now appears that its management and directors could become considerably wealthier when it all shakes out. As the who's-in-control controversy has heated up, the stock price has also gone up. Guess who owns large chunks of the increasingly valuable stock? If you guessed the chairman, members of the board, and the CU CEO, you guessed correctly. Tell me again how all of this maneuvering has benefited the members of at least this one converted credit union! And by the way, tell me how all the bickering over credit union ownership and strategic direction is benefiting the good image of all credit unions. A couple of other things are also now clearly inevitable. On the negative side, the greedy among us will see this as an opportunity to feather their own nests at their credit union by jumping on the conversion bandwagon. On the positive side, the ethical among us will proceed much more cautiously, if at all, but certainly not until member benefits are guaranteed first and foremost. Many credit union officials who could get rich will decide not to. It is also inevitable that today's page one headlines, like the I.G.A. FCU fiasco, no matter how intense a news event becomes, will gradually move to inside news pages. Eventually it will disappear out of the news loop entirely. It is inevitable that no matter how inflammatory certain actions are, they sooner or later fade away due to frustration, shifting priorities, and eventually a lack of interest. The moral of the story seems to be that when you are the focal point of controversial news, just wait it out. A current case in point is the well-documented, so-called NCUA hiring scandal. Not only are most credit union folks already weary of reading about what former NCUA executive director Karl Hoyle did, or didn't do, when, and to whom, they are also already losing interest in the rash of investigations, demotions, monetary penalties, and resulting staff restructuring at NCUA revolving around the "false duty station" actions that apparently have been commonplace at NCUA for years. Perhaps NAFCU's new CEO, Fred Becker, has it right when he describes the personnel mess at the federal regulator as an internal thing that needs to be dealt with decisively and quickly, as it has been. Credit union management and volunteers have enough really important matters closer to home on their credit union plates. Need more proof of how inevitable it is that today's headlines fade into oblivion? Remember the controversy surrounding the once-new NCUA headquarters building? Has anyone checked it out lately? And who can forget the turmoil revolving around Bob Swan's unceremonious departure from the NCUA Board? Bob Who? Or how the CapCorp situation was going to get resolved with NCUA having egg on it's face. Didn't happen. It was inevitable. So is the anticipated outcome of the ongoing flap involving the Polish and Slavic FCU. It will soon fall off the front page as will such other stories as privacy issues, not because credit union folks don't think they are important. They just grow bored with them and turn their attention to issues that appear to have a more obvious and important connection to themselves and their credit union. Wasn't it also inevitable that a new industry called payday lenders would pop up overnight and grow like topsy as some credit unions turned their backs on this market segment? Where there is a need, there is always a way, even if that way is outrageously harmful to those that can least afford it. On the other hand, when even credit unions rack up loan turndown rates of 30 to 40%, where else can those who turn to payday lenders as a last resort go? A loan shark by any other name is still a loan shark! Perhaps someone should invent something called a credit union? The list of what can be considered inevitable is long and getting longer. It is inevitable that the number of credit unions changing charters will accelerate, that mega-mergers among the very largest credit unions will start to take place shortly, and that even more CUs will change their names. Also, it is inevitable that the number of alliances of all types impacting credit unions will increase dramatically, that the credit union operations emphasis will be even more technology driven, that another rash of new vendors will discover the credit union market, that credit union fees (including ATM surcharges) will continue to escalate to cover costs, and that the credit union industry will sooner rather than later become as influential in Washington as the AARP and the NRA. Some things are simply inevitable....

Boeing Employees' CU, Tukwila, Wash., has donated $1,000 to Foothills Youth Association, a small nonprofit organization in Bonney Lake that seeks to provide a safe environment for the youths to gather and interact. The check was awarded on behalf of BECU employee Neale Duren as part of the credit union's Employee Volunteer of the Year program. Electro Savings CU, St. Louis, Mo., raised funds and collected gifts for a needy family within the community. The family, with a single mother who did not speak English fluently and three children, had requested coats for the winter season, said ESCU staff. However, enough was raised at the CU that the coats were provided and other things as well. Staff members who delivered the gifts to the family included Rhonda Zalaudek, Julie Foulks and Lisa Campbell. Postal CU of Los Angeles, Calif., hosted its 2nd annual Youth Express Club open house during the holidays. Santa Claus (aka Rodger Smock and William Brinkley) and Santa's Elf (aka Georgina Duenas) interacted with the many children who attended. Children received lunch courtesy of McDonalds, cookies and gifts. CEO William Harris comforted one distraught little girl who hadn't received the skateboard she'd had her heart set on by going straight out and buying one for her. During the open house that was for both members and non-members, PCULA opened 378 new youth accounts, with deposits totaling $72,000. RCU, Eau Claire, Wis., has contributed to a cans & quarters drive to support the "Feed My People" Food Bank. RCU staff in March lent a hand to a community effort calling for donations of non-perishable food or "extra" change to help people in need through food pantries in 13 counties throughout Western Wisconsin, at this time of year when supplies generally are low. Melinda North, (715) 833-8106, is coordinating the effort. United Heritage CU, Austin, Texas, in cooperation with the American Football Coaches Association, has raised more than $14,000 on behalf of the Texas Child Identification Program. These funds will provide more than 8,800 Texas parents with free identification kits. Ohio CU League, Dublin, asked Ohio CU leaders to help out during a recent phone-a-thon and received $11,500 in pledges for CU political action in just four hours. Ohio's PAC trustees "dialed for dollar"s from the offices of the OCUL, during the System's 2nd annual fund-raising campaign. OCUL's goal for this year is $120,000. In addition, OCUL Summit Chapter members and the Lorain & Avon Lake branches of GenFed FCU, Akron, collected more than 31 pairs of shoes and $1,000 to help the needy during the holidays during their "Warm the Soles of Kids" project....

Arkansas CU League, Little Rock, hosted Republican presidential candidate George W. Bush during a recent stop-over. "I am a long-time supporter of credit unions," Bush said, during a meeting with ACUL President/CEO Craig Savell. "I believe people have to take responsibility for themselves, and big government is not the answer." Savell said he talked to Bush about the importance of CUs and how members have come to rely on these cooperative institutions. Franklin Mint FCU, Media, Pa., has held a ribbon cutting for its 15th branch office in University Technology Park in Chester. Health Services CU, Jacksonville, Fla., has opened its new national headquarters and member service center located near the Tinseltown Movie Theatre and adjacent restaurant complex in the Deerwood Park North office and retail complex. Members doing financial business at the new service center will do so via HSCU's new "Privateller." This system allows depositors to interface with system staff via video screen and telecommunications while providing depositors "the maximum in privacy and safety," officials said. Metro CU, Warren, Mich., staff recently invited local dignitaries and members of the community to the official opening in Lincoln High School of a new student-run CU branch. Multco CU, Portland, Ore., has bid a fond farewell to retiring CEO Bob Burns. Burns has led the $66-million asset, 10,000-member CU for 16 years. Orange County Teachers FCU, Santa Ana, Calif., invited 65 students to the FCU for the third annual Groundhog Job Shadow Day in early February. Students from Anaheim's Brookhurst Jr. H.S. and Santa Ana's Ceasar Chavez H.S. spent the day at the FCU observing staff members at work. "By reaching out to the work force of tomorrow, we can help students set goals and obtain valuable work experience," said Rudy Hanley, OCTFCU president/CEO. Pine Bluff Cotton Belt FCU, Pine Bluff, Ark., has selected HBE Financial Facilities to design and build its new $1.3 million home office. The facility is scheduled for completion in November of this year. The new office will be designed to resemble a train station in honor of the FCU's railroad membership. A tall vestibule will lead into a high-ceiling lobby with wooden beams, officials said. Tampa Bay FCU, Fla., has held a grand opening for a new "family-friendly" facility, which features interactive teller stations so that members may conduct business via interactive television screen and a telephone in a private station while children play in an enclosed playground that can be accessed only through the FCU's main lobby. There is a 4-lane drive-through with a 24-hour ATM and a secure 24-hour walk-up ATM, officials said....