SEC Rules That Calif. IOUs Are Securities

California's IOUs are securities, and holders and buyers of the registered warrants are protected by the provisions of the federal securities laws that prohibit fraud in the purchase or sale of securities, the SEC said on July 9.

In addition to the antifraud provisions of the federal securities laws, other parts of the federal securities laws also apply to the purchase and sale of the IOUs, according to the SEC. Persons acting as intermediaries between buyers and sellers of the warrants may need to register as brokers, dealers or municipal securities dealers, or as alternative trading systems or national securities exchanges.

“The IOUs are obligations of the state of California, are negotiable, and bear interest. The staff's view that the IOUs are securities does not affect California's right to issue or repay the IOUs,” the commission said.

Broker-dealers, as well as any potential secondary markets, should be aware that the requirements of the securities laws and the rules of the Municipal Securities Rulemaking Board apply to the IOUs, according to the SEC.

The agency said although the IOUs are labeled registered warrants, they are not registered with the SEC. There is no registration requirement that applies because the IOUs are municipal securities.

Many credit unions in California have said they will honor the state IOUs, while banks placed a time limit on accepting them.

CUSO Financial Intros Excess Capital Campaign

To help credit unions find investment vehicles for the flood of deposits flowing into the industry, CUSO Financial Services LP has launched an excess capital campaign.

Among its offerings is the broker-dealer and investment adviser firm's trading opportunities program, which allows credit unions to purchase government agency bonds and capture some of the concession paid on these new issues. New-issue agency debt typically comes to market with a concession that is paid to the selling dealer, according to CFS. The CUSO said it shares that concession with the credit unions in an effort to help them increase margins. The San Diego-based CFS is also working with its credit unions to help them identify members' deposits that could benefit from better allocation.

The CFS program development team has produced free marketing materials for advisers and management to help raise awareness of the investment program offerings to both staff and members including advertisements, e-mail, Web site splash pages and other collateral.

Since introducing the deposit alternative program less than two months ago, CFS said it has begun to work with more than 35 of its more than 120 credit unions on the initiative. These investment programs have identified nearly $1.8 billion in excess deposits at their credit unions, according to the CUSO.

Addison Avenue Goes With Wesabe Social Platform

Addison Avenue Federal Credit Union will be using Wesabe's community application to allow members to offer each other support and financial advice.

The $2.3 billion credit union in Palo Alto, Calif., will use the Wesabe Springboard solution to give its members access to the thousands of Springboard users worldwide now engaged in discussions on topics such as paying off debt, smarter spending and buying a house.

“When you look at Wesabe's Groups section, the value is immediately apparent-nearly every question is met with sound advice and supportive comments,” said Stu Fisher, senior vice president of e-commerce at Addison Avenue FCU.

“Online banking is absolutely central to Addison Avenue-only 30% of our members ever visit a branch. With such an internet savvy and geographically diverse group, we see Wesabe as an innovative way for our members to help each other reach their financial goals,” Fisher said.

In addition to the social interaction, Wesabe Springboard gives consumers a dashboard view of their account data and personal finances-guiding them towards value, savings and goal completion.

San Francisco-based Wesabe said it now provides personal finance management and social networking solutions to more than 6,000 financial institutions.

LA DOTD FCU Strolls Down Main St. for a New Name

The $103 million LA DOTD Federal Credit Union is changing its name to Main Street Financial Federal Credit Union to reflect its growing, diverse membership.

Chartered in 1939 to serve employees of the Louisiana Department of Transportation and Development, the credit union has since grown to serve more than 200 SEGs and more than 18,000 members.

“Just as the Louisiana Department of Transportation and Development has evolved and improved, building the infrastructure to connect the state of Louisiana, the credit union has been building financial highways to improve members' quality of life,” said Cary J. Anderson, president/CEO of the Baton Rouge, La.-based credit union. “By connecting members with the resources they need, we're providing a roadmap to take them toward their financial dreams.”

Main Street Financial FCU Chairman Judy Wascom said it was time to adopt a new moniker that was more inclusive, but, “It's also vital to us to remember our roots.”

“We believe Main Street Financial connotes the strong family and financial values that are at the heart of the credit union,” Wascom said.

The new name was scheduled to be used beginning July 20.

Nexcentri Adds Online Banking

Nexcentri LLC, a CUSO of $279 million Tampa Bay Federal Credit Union, is now offering a new online banking solution it calls Cinch!

The solution is a first for the eight-year-old provider of software consulting and development services. Among its first users are its owner credit union and $75 million E 53 FCU in Linden, N.J.

“As soon as we saw the interface to Cinch!, we knew that we had found our new online banking provider. The application is so easy to use and extremely flexible,” said Cathy Tirri, the New Jersey credit union's chief operating officer.

Cinch! is affordable and offers multi-factor authentication, multi-user roles, account transfers and summaries, SMS and e-mail alerts, utilization reports and a flexible look and feel, its developers said.

“Nexcentri LLC is majority owned by credit unions for credit unions and although we're for-profit, we will not price gouge at the expense of credit unions going under and merging at a rapid rate,” said its president/CEO Jason Holloway. “Online banking is no longer a luxury; it is a must-have in today's environment. Given the fact that it only costs $500 per month, isn't it time?”

Overdraft Fees in ABC News' Spotlight

A July 8 ABC News segment on overdraft fees featured the rates that credit unions and community banks charge compared to large national banks.

Michael Moebs, president of Moebs Services, spoke on a new survey from the research firm of 2,000 financial institutions that showed a rise in the cost of overdraft fees.

“We see a big gulf between what I like to call the Wall Street banks and the community banks and credit unions,” Moebs told the reporter, adding that big national banks charge $33 while credit unions and community banks charge between $25 and $27. Banks have collected $36.7 billion in overdraft fees, more than triple the amount collected in 1992 at $11 billion.

Nessa Feddis, senior counsel in the government relations division of the American Bankers Association, told ABC News that overdraft fees are intended to encourage people to manage their checking accounts.

“It's not that different from a parking ticket. If the fee for parking in a fire lane were $5, fire trucks would have a lot harder time getting through,” Feddis said.

Transaction sorting, which is the practice of
clearing charges in any order, is becoming more
common at banks, ABC News reported. Critics have
said it may lead to overdrafts that are beyond the customer's control.