CHICAGO — Still more news is illuminating how the economic downturn is suppressing the card issuing activity of credit union competitors. The number of credit card offers banks send to consumers in direct mail has continued to fall.
The Chicago-based Mintel International reported that major card-issuing banks sent only 1.34 billion credit card offers to U.S. consumers in the third quarter of this year. This is 13% below the previous quarter and a full 28% below the third quarter of last year, the firm reported.
“Credit card companies have been cutting back direct-mail dollars for years, as they realize that blanketing Americans with credit card offers doesn't translate to increased sign-up or card usage,” explained Lisa Hronek, senior credit card analyst at Mintel. “But now, they're facing a two-fold problem that is much worse. Not only are consumers tapped out financially, but issuers are also facing record losses. They're scaling back direct mail to cope with unprecedented financial problems.”
Hronek expects credit card companies to continue reducing acquisition direct mail throughout the holiday season and into 2009. “Card issuers will focus on a narrower target audience, using refined marketing and more precise mailings to tap into people's true needs and desires.”
Meanwhile, a Federal Reserve survey found that about 50% of those surveyed reported that they increased their minimum-required credit scores on credit card accounts over the past three months. Over 60% reported that they raised minimum scores on other consumer loans over the same period.
A majority of respondents, about 60%, said they reduced the extent to which credit card accounts were granted to customers who did not meet their bank's credit thresholds. A similar percentage reported a reduction in granting other kinds of consumer loans for that reason.
About 20% of domestic banks reported having reduced credit limits on existing credit card accounts to prime borrowers. But roughly 60% of banks had lowered limits on existing credit card accounts of nonprime borrowers; no banks reported raising limits to those borrowers. Reasons for lowering credit limits included an uncertain economic outlook, a more conservative position on risk, a decline in customer credit scores, and missed payments by customers on credit card loans and other loans at their bank.

Thom Beck Named to
Maryland Task Force

ROCKVILLE, Md. — MCT Federal Credit Union President/CEO Thom Beck has been tapped to serve on the Maryland Financial Literacy Task Force created earlier this year.
Credit unions will have two representatives on the task force advocating for measures to make financial literacy education part of the school curriculum in Maryland. Joining Beck is Bert Hash, president/CEO of Municipal Employees Credit Union in Baltimore.
The task force's mission is to recommend ways to increase Marylanders' level of financial knowledge and promote financial literacy within Maryland schools.
“From what I've seen in my years working at credit unions, there is a great need to teach students about financial literacy. MCT has always been fundamentally committed to financial literacy, so serving on this task force is one way I hope to help bring this cause to light,” said Beck.
In April, Maryland Gov. Martin O'Malley signed legislation creating the task force, which received overwhelming support in the legislature. The bills were sponsored by Senator C. Anthony Muse of Prince George's County and Delegate Dana M. Stein of Baltimore County.

N.J. Bill Allows CUs
To Accept Muni Deposits

TRENTON, N.J. — Credit unions in New Jersey would be allowed to accept deposits from cities and townships, under a bill introduced by the No. 2 Democrat in the state Senate.
Senate Majority Leader Steve Sweeney introduced a measure on Nov. 13, which lawmakers could consider when they reconvene next year. A companion measure was introduced by Assemblyman Fred Scalera.
“It's time to make our public depository laws reflect today's reality that the financial strength of credit unions has grown significantly in recent years,” Sweeney said in a statement. “They deserve to be fully in the mix as public depositories and when they are, taxpayers will benefit.”
A law passed in 1970 limits municipal deposits to financial institutions insured by the FDIC.
“It would be good for credit unions and local governments if there is competition,” said Paul Gentile, president/CEO of the New Jersey Credit Union League.
But Gentile said achieving passage wouldn't necessarily be easy.
“It's not a slam dunk. The banks will oppose it. We have a chance of getting it through,” he said.

Allied, NSC Partner Up

WASHINGTON — Allied Solutions Specialty Lines has joined NAFCU Services Corps.' preferred partner program for bond and related insurance solutions.
The selection follows a nine-month process and rigorous evaluation by the NSC advisory committee, composed of credit union executives.
“The market for bond and related insurance solutions has become much more crowded in recent years, both in terms of coverage and cost,” said Patrick Touhey, senior vice president of Allied Solutions. “In addition, technology and the pace of change mean that risks are evolving ever more quickly. From a credit union perspective, that puts a premium on making sure that your coverage is as up-to-date and competitive as possible.”
Allied Solutions is an insurance and financial services company that has been working with financial institutions for more than 26 years. Allied Solutions has relationships with more than 2,600 financial institutions around the country.
NSC is a wholly owned subsidiary of NAFCU.

Daniel C. Moulton Moves To a New CPA Firm

MIAMI — Daniel C. Moulton is the newest partner at accounting firm Orth, Chakler, Murnane & Co.
Moulton brings over 30 years of credit union-industry experience to the firm.
His areas of specialization include credit union auditing, and consulting with board and supervisory committees on allowance for loan losses, CUSOs, generally accepted accounting principles, fraud, internal controls and unrelated business income tax issues.
“We are very excited by the addition of Dan as a partner,” stated Doug Orth, managing partner at Orth, Chakler, Murnane. Dan brings extensive experience and a consistent track record of providing superior client service.”
Moulton spent 18 years as vice president/director of auditing services at the Texas Credit Union League, overseeing approximately 250 credit union audits, conducting league workshops and conferences and serving as a speaker at numerous conferences and workshops.