April 2008

Issue 4

To our member credit unions,

Overwhelming Support

Last month, Treasury Secretary Henry Paulson released his agency's blueprint for restructuring the financial institution's regulatory structure. This news was not well received by credit union supporters. This shows widespread understanding of the detrimental effects of the new structure to credit unions.

As the regulatory structure stands right now, there are five regulatory bodies, the Federal Reserve System (FRB), Federal Deposit Insurance Corporation (FDIC), the National Credit Union Administration (NCUA), the Office of the Controller of the Currency (OCC), and the Office of Thrift Supervision (OTS). Essentially the long-term recommendation of the plan will be to combine these into three regulatory bodies where NCUA will cease to exist. Credit unions, banks and thrifts will be placed under the same financial institutions regulator, a new Federal Insured Depository Institution (FIDI). To those involved in the credit union movement, this means that credit unions will in effect, become banks.

Immediately after this proposal was released, the credit union community came together and gathered support. A grassroots effort from League Presidents, Board Members and Committee Members from around the country voiced their concerns about the restructure plans. Credit unions have now received support on this matter from the top-down, including Chairman of the House Financial Services Committee, Rep. Barney Frank (D-MA), who was quoted in a hearing for HR 2046 where CUNA Board Secretary Harriet May was a witness, "Please tell my good friend and former colleague Dan Mica not to worry about the Treasury proposal to eliminate credit unions. We would never do that."

This shows how strong we are as a movement and how important it is to give your credit union a voice.

Legislative & Governmental Affairs Update

CURIA vs. CURRA

For the last six years, the credit union industry has been actively seeking regulatory relief by lobbying for the passage of the Credit Union Regulatory Improvement Act, also known as CURIA. In the current Congress, CURIA (H.R. 1537) has gathered 149 co-sponsors and on March 6^th, CURIA was heard before the entire House Financial Services Committee.

On March 3^rd a new credit union regulatory relief bill was introduced known as the Credit Union Regulatory Relief Act or CURRA, H.R. 5519. CURRA was introduced as a way to get some of the provisions from CURIA, but also eliminate some of the more controversial parts as well. These provisions, which include PCA Reform and a modest increase to the MBL cap, have been the two main areas of CURIA that the ABA and other banking groups strongly oppose.

While we continue to seek the support of CURIA, CURRA is expected to be the first package of credit union regulatory relief legislation to move through the House of Representatives in the 110th Congress. It may even be paired with a similar bill providing regulatory relief for banks and thrifts.

The new CURRA bill would:

Permit the purchase of investment grade securities by federal credit unions.
Increase the investment limit in credit union service organizations.
Exclude from the member business-lending cap any loans to nonprofit religious organizations.
Allow the National Credit Union Administration (NCUA) to establish longer maturities for certain credit union loans.
Give the NCUA greater flexibility in responding to market conditions.
Permit, under certain circumstances, a federal credit union converting to a community charter to continue to serve groups outside the community.
Enable credit union participation in the Small Business Administration's 504 programs.
Permit federal credit union to add service to underserved areas regardless of original field of membership.
Permit federal credit unions to provide for short-term payday loan alternatives for nonmembers within a the credit union ' s field of membership.
Permit a federal credit union to expel a member for cause, and to institute term limits for board members if it so chooses.
Encourage small business development in underserved urban and rural communities by providing for the exclusion of member business loans made in underserved areas from the business lending cap .
Provide an exemption from pre-merger notification of the Clayton Act.

The new CURRA bill would NOT:

Modernize credit union capital requirements by redefining the net worth ratio to include a risk- based asset approach to Prompt Correction Action (PCA).
Increase the current limit on credit union MBLs from 12.25% to 20%, and permit the National Credit Union Administration (NCUA) to increase the threshold for defining a MBL from $50,000 to $100,000

If you have any questions regarding CURRA or CURIA please contact Austin De Bey at your League.

Political Affairs & Grassroots Update

I Didn't Know Project Zip Code Could Do That!

The Credit Union National Association and your State League have teamed up to offer a free program called Project Zip Code (PZC). This software program helps you better serve your members in many ways.

By participating in PZC, credit unions of all shapes and sizes enjoy another marketing tool to continue their high level of service to members. PZC allows credit unions to match their membership to federal and state districts so the credit union can determine how many members live in specific geographic areas. The credit union can use this valuable information for internal marketing purposes like examining the feasibility of shared branching or determining the best locations for branch expansion and ATM services, based on the geographic concentration of membership.

Not planning any shared branching, ATM expansion, or other marketing initiatives in the near future? No problem, PZC has other uses which are critical to the health and long term strength of the credit union movement. PZC matches your membership file with federal and state district information allowing you to identify which (and how many) of your credit union members live in each respective district. This information is extremely valuable when you're meeting with Members of Congress or state lawmakers. Many lawmakers do not know how many credit union members live in their district. Participating regularly in PZC and sharing this information with your elected officials is an important part of being a strong credit union advocate!

Your information is safe and secure with Project Zip Code. No personal data or individual member information leaves your computer. The counts, or number of credit union members matched, are uploaded to a secure section of CUNA's website. All of your credit union member data remains confidential and secure on the computer where PZC is run. Project Zip Code is compliant to the privacy laws created in Gramm Leach Bliley.

The next set of PZC CDs are on their way to your credit union now. To participate in this program, or for more information, you may contact Joy Audet at your League.

Advocacy at It's Best

Saturday, April 12^th approximately 15 individuals representing three Arizona credit unions and the League participated in a CD-3 Campaign Walk, collecting qualifying signatures to put Congressman John Shadegg on the ballot again this fall. The event was very successful. The Campaign staff and the Congressman were pleased with number of credit union volunteers who came out to show their support. Congressman Shadegg stopped by First Edition Community Credit Union, were the group met, to personally meet everyone and thank the group for their support. Everyone then disbursed to targeted neighborhoods in small groups to collect signatures and support for two hours. The day's efforts resulted in close to 100 signatures. The walk was followed by an informal lunch hosted by Canyon State Credit Union. It was a successful advocacy event for Arizona credit unions! Special thanks to those credit unions who showed commitment to our advocacy efforts and participated in the event! Arizona Federal Credit Union, Canyon State Credit Union and Desert Schools FCU.

Credit Unions In the Community

National Social Responsibility Recognition Award Programs Help To Demonstrate The "Credit Union Difference"

As in past years, the National Recognition Awards Program has a special significance. But as we move into a new era, one where the credit union industry will be a major player in the political arena, it's more important than ever to recognize that credit unions are unique providers of life-line financial services for millions of working Americans.

Developing and entering your social responsibility project helps your local community -- and its representatives in state and federal government -- better understand the credit union difference. The greater the understanding of this difference, the greater chance that the credit union tax exempt status will be preserved and accessibility to credit unions guaranteed for all consumers.

Since 1987, the Dora Maxwell Social Responsibility Recognition Award has honored credit unions for their charitable works in their communities. Some credit unions have ongoing programs and establish a special relationship with local social service agencies or school programs. Other programs address many different needs in the community. No matter the size or scope of a project, each participating credit union builds its reputation as a good corporate citizen along the way. Credit unions enter the Dora Maxwell Award program in one of seven asset categories or the chapter.

Beginning in 1990, the Louise Herring Award for Philosophy in Action has commended credit unions that make exceptional efforts to include credit union philosophy in their daily operations and member service.

Programs that provide financial education to particular member groups within the credit union or special assistance to low-income members struggling to pay heating bills, for example, are clear examples of the philosophy that sets credit unions apart from other financial institutions. Entrants in the Louise Herring Award program compete in three asset categories.

Send your entry to Sandy Watts, Director of Community Outreach by August 15, 2008. First place winners will advance to the national competition. National winners will be honored at the Governmental Affairs Conference in Washington, D.C., in February 2009.

By entering the National Social Responsibility Recognition Awards Program, you're accomplishing many goals: you are helping your community and your members, and showing lawmakers that credit unions are something special -- and should remain that way.

Entries forms are on our website at www.azcreditunions.coop or for more

information, contact Sandy Watts.

Regulatory & Compliance Update

This Month in Compliance

NCUA Warns of Scam Targeting Credit Union Employees

A new scam targeting credit union employees was discovered this month. Emails, purporting to be from a governmental agency or credit union, contain an attachment, which appears as an invoice or complaint letter. Once opened, software is installed on the user's computer that records keystrokes and gives criminals access to sensitive and confidential information.

For more information: http://www.ncua.gov/FraudAlert/2008/08-FRAUD-04.doc

Fraud Scheme Involves False Claims of Identity Theft

NCUA issued a fraud alert warning credit unions of a scam, which involves persons filing a false identity theft claim in order to improve their credit score and acquire new credit. Details about this scam and how to avoid it may be found at: http://www.ncua.gov/FraudAlert/2008/08-FRAUD-05.pdf

New Guidelines Proposed by Freddie Mac and Fannie Mae

In an effort to ensure independent and reliable home appraisals, several agencies have proposed new guidelines. These guidelines seek to prohibit lenders from unduly influencing appraisers. Freddie Mac and Fannie Mae are seeking credit union commentary on these guidelines. CUNA's Comment Call and a copy of the guidelines may be found at: http://www.cuna.org/reg_advocacy/reg_call/rcc_040808.html

FinCEN Notes Increase in Suspected Mortgage Fraud

Over the past year, FinCEN has noticed a dramatic increase in Suspicious Activity Report filings concerning suspected mortgage fraud. This increase was most noticeable in states such as, Arizona, Illinois, Florida, and California. The complete FinCEN report is available at

http://www.fincen.gov/MortgageLoanFraudSARAssessment.pdf

New Proposed RESPA Rules

The Department of Housing and Urban Development recently released proposed rules to amend the Real Estate Settlement Procedures Act (RESPA). The proposed rules seek to improve the clarity of the mortgage process and decrease settlement costs for borrowers. CUNA is seeking your input as to how these changes will affect your credit union. Let your voice be heard. CUNA's proposed comment call can be found at: http://www.cuna.org/reg_advocacy/reg_call/rcc_032108.html

In This Issue

Legislative & Governmental Affairs Update

Political Affairs & Grassroots Update

Credit Unions in the Community

Regulatory & Compliance Update

Homes For Our Troops

System Advocate Spotlight

Press Releases & Clippings

Election Center 2008

Upcoming Events & Important Dates to Remember

May 7^{th, 2008}

VOS Education Dinner

Airport Hilton

May 13^th, 2008

SO AZ Education Dinner

Tucson Sheraton

May 15th, 2008

Real Solutions Parters Meeting

Program: Reaching Youth & Young Adults

Black Canyon Conference Center, Phoenix

Contact: Sandy Watts, 602-264-6701 x202

May 15th, 2008

Compliance Network Breakfast

8:30 AM to 11:30 AM

Phoenix: Location TBD

May 16th, 2008

Compliance Network Breakfast

8:30 AM to 11:30 AM

Tucson: Location TBD

June 12th-14th, 2008

ACUS Annual Meeting

Starr Pass Resort & Spa: Tucson

July 15th-25th, 2008

Western CUNA Management School

Homes for our Troops

homes for our troops The excitement of the election year continues and before we know it the National Conventions will be here. Upholding the credit union philosophy of people helping people and serving the underserved, this will be the third election cycle that credit unions partner with a non-profit organization to participate in a specific Philanthropy project in the convention host cities. In 2000, credit unions partnered with National Endowment for Financial Education (NEFE) in Los Angeles and with Habitat for Humanity in Philadelphia. In 2004, credit unions partnered with the National Child Identification Program to distribute free Child kits in both host cities, Boston and New York.

For this election year CUNA has coordinated a philanthropy project in both of the convention host cities. Credit unions from around the country will have the opportunity to participate in the Homes for Our Troops project. As credit unions, we will be working together to raise the money to build a specially adapted home for a returning disabled veteran in each of the convention cities, Denver, CO and St. Paul, MN. This is a unique project that will truly make a difference in the lives of the individual, the family and the community. The individual needs of the soldier and his or her family are assessed and considered before construction of the house even begins.

Arizona credit unions have been given a goal of raising $2,900 collectively; although, the overall goal from the host states and leagues combined is $300,000. Please take this opportunity to show your support. You can donate online by clicking the link below.

Or checks made out to Homes for Our Troops may be sent to Richard Gose's attention at CUNA. Please contact Richard Gose at 800-356-9655 x 6714 with any questions.

REAL Solutions

Programs to help credit unions provide real services to real people. Now offered through your Arizona Credit Union League. Click the icon to inquire about the most up to date information regarding this exciting new product.

System Advocate Spotlight

Shining Credit Union Individuals

Representaitve
Bill Konopnicki (R-5)

Representative Bill Konopnicki serves the 5^th legislative district of Arizona where he has lived in Safford for over 35 years. Rep. Konopnicki serves as the Chairman on the committee for Financial Institutions and Insurance. He is an individual at the State Capitol that has a lot of decision making power for credit unions.

For those of us in credit unions, it is good to know that when thinking about the credit union difference and the history and ideas that credit unions support, Rep. Konopnicki is an individual that credit unions can support. He is an individual who shows common ground with the credit union philosophy in many ways. He is pro-small business and has been a small business owner in his town of Safford for 30 years. Additionally, Rep. Konopnicki has a long history of community service. Rep. Konopnicki also serves on the Commerce Committee and Judiciary Committee and is most interested in Rural Arizona, and promoting economic development and planning for the future of Arizona.

CURIA Update

149 Co-Sponsors