ALEXANDRIA, Va. — Alliant Credit Union of Chicago has purchased the assets and assumed all member shares of the recently liquidated Kaiperm FCU of Oakland, Calif., the NCUA announced.

Kaiperm's former members will receive uninterrupted service from Alliant, which has $5.7 billion in assets.

Its latest financial report, filed June 30 with the NCUA, indicated Kaiperm had $95 million in assets and had lost $3.9 million in the second quarter. Its loan income had increased 2.5%, but its investment income was down 28.5%. Kaiperm had approximately 18,000 members.

Alliant is a state-chartered, federally insured institution headquartered in Chicago. It was chartered in 1935 to serve employees of United Airlines and has more than 216,000 members.

All accounts at federally-insured credit unions are insured up to at least $100,000 by the NCUSIF, which is operated by the NCUA. Certain retirement accounts, such as IRA and KEOGH accounts, are insured up to $250,000.

NAFCU Urges Change in Trust Rules

ARLINGTON, Va. — The NCUA should change its rules to eliminate the concept of a “qualifying beneficiary” of a revocable trust account, NAFCU said in a letter to all three board members.

The association wrote the agency after the FDIC approved an interim rules change to expand the allowable beneficiaries for such accounts to be insured. Under the change, friends, in-laws, cousins, nieces and nephews are allowed to be beneficiaries under these insured accounts. Previously, only spouses, parents, siblings, children and grandchildren qualified as beneficiaries.

“NAFCU is very concerned that without parity, individuals will take deposits from credit union accounts and place them in FDIC-insured institutions to take advantage of simplified rules regarding beneficiaries,” NAFCU President Fred Becker wrote.

Revocable trusts are accounts held by one or several individuals willed to a predetermined beneficiary at the time of the death of the owner.

Trades Suggest Changes in Accounting

WASHINGTON — The two major credit union trade associations praised the intent of proposed changes to the merger-related accounting rules but suggested some fine tuning.

NCUA proposed to implement changes approved by Congress in 2006 that clarified the definition of a credit union's net worth after a merger for purposes of prompt corrective action. It defines the continuing credit union's net worth as a retained earnings balance of the credit unions combined.

CUNA wanted to change the definition of net worth so that the resulting credit union's net worth includes “acquired equity, including the retained earnings after valuation at the point of acquisition.”

CUNA also urged the agency to clarify how it arrived at the valuation of retained earnings following a merger.

NAFCU wanted the definition of “mutual combination” to be revised so that the standard that mutual combinations provide economic benefits to members would be replaced with the “current best interest of the members” standard currently used by the NCUA.

They also asked that the proposed rule be clarified so that the resulting credit union–not the individual merging credit unions–meet the requirement that they be capable of being conducted and managed as a credit union.

The association also urged the NCUA to make changes affecting corporate credit unions to be consistent with generally accepted accounting principles.

Fed Bans Ex-Banking Exec From FIs

WASHINGTON — Donald W. Linville, a former senior vice president in the Jacksonville, Florida branch of Compass Bank, has agreed to a ban without admitting to allegations.

The Federal Reserve said the charges were based on his “alleged participations in violations of law, unsafe and unsound banking practices, and breaches of fiduciary duty including alteration of appraisals, loan applications and quarterly records in the bank's filings, which allegedly caused a substantial loss to the bank in connection with his activities as a loan officer of the bank.”

Housing Bill, Credit Card Regulations
Are at the Top of Fed Council Agenda

WASHINGTON — The recently passed housing measure and the proposed regulations expanding consumer protection for credit cards are up for discussion at the Oct. 23 meeting of the Federal Reserve's Consumer Advisory Council.

The housing bill set up a fund, financed by Fannie Mae and Freddie Mac, to provide government loans to help some of the victims of the subprime mortgage crisis refinance their mortgages. It also strengthened regulatory oversight of Fannie and Freddie that resulted in their conservatorship.

The council will discuss the implementation of the measure.

The credit card regulations that have been proposed include provisions banning interest rate hikes on existing balances, over-the-limit fees and double-cycle billing. The credit union trade associations have said many of the provisions would impose excessive regulatory burdens on their members and decrease the availability of credit.

The Federal Reserve, which proposed the regulations in conjunction with the NCUA and the Office of Thrift Supervision, has said it will issue final regulations before the end of the year.

Alan Cameron, president/CEO of the Idaho Credit Union League, is one of the 29 members of the council.

NAFCU Offers a Mixed View of
Proposed Reimbursement Changes

WASHINGTON — Proposed changes to the rules on government reimbursement of financial institutions for complying with certain information requests undervalue the compliance costs involved, NAFCU told the Federal Reserve.

NAFCU Associate Director of Regulatory Affairs Pamela Yu favors updating the costs but contended that the new reimbursement rates don't take into account the cost differentials in various parts of the country. She also suggested that the reimbursement rates be adjusted for a three-year period rather than the five years proposed by the Federal Reserve. The suggested $5.00 production charge for an electronic compliance is too low as is the 25-cent charge per-page for information provided in paper form, she said.

The regulations cover requests made by courts and government agencies for information on members' accounts under the provisions of the Right to Financial Privacy Act.

Secure Identity Systems CEO Ansley
Highlights Red Flag Regulations

BRENTWOOD, Tenn. — Secure Identity Systems CEO Brian Ansley held a Webinar to highlight some of the key issues financial institutions need to be concerned about with the Red Flag regulations.

Ansley pointed out seven areas financial institutions need to make sure they address when it comes to the Red Flag Regulations: an initial risk assessment; policy and procedures manual; new account authorization; valid addresses; anti-phishing; staff training; and ID theft protection for all security accounts.

Ansley cited a survey from Unisys that 50% of consumers said they would switch their financial institution for one that offered better protection against identity theft.

When looking for effective security programs financial, Ansley said, financial institutions should look for a fully-managed ID theft resolution, total ID monitoring, education and expense reimbursement insurance.