I don’t usually talk much about the Podcast on this cite, but we had some excellent discussion yesterday on topics that I know are generating a lot of interest throughout the movement. We had Attorney Joe Melchione (who represented Wings Federal Credit Union in a recent, well publicized transaction) on as our guest and we discussed how a credit union can avoid a hostile takeover. We also talked about what directors must do in terms of discharging their fiduciary duties to their members if such an event occurs.
We also talked about a lot more so if you haven’t heard the Podcast or haven’t listened in a while, please check it out.
Filed under: bank secrecy act, compliance, contracts, credit unions, directors, disaster recovery, liability, seminars
For those of you who were wondering what Rob Rutkowski was up to on the seminar front this fall, the following information should be helpful. Rob will be presenting at the following seminars over the next several months:
September 11-12, 2007
Presentation: CUNA/OCUL Mini-Seminar Series
Topic: Lending Compliance Issues
Contact: Amy Bollman, abollman@cuna.coop
September 18-19, 2007
Presentation: Louisiana Credit Union League New Laws & Compliance Conference
Topic: “Director and Officer Liability”, “Negotiating and Reviewing Vendor Contracts”, “Legal Aspects of Credit Union Accounts”
Contact: Jennifer Green, jgreen@lcul.com
October 2-4, 2007
Presentation: Trabian/FORUM Solutions Partnership Symposium
Topic: “When Does a Credit Union Need Legal Counsel?”
Contact: Kristi Lowell, kristil@forumcu.com
October 20-22, 2007
Presentation: CUNA Volunteer Institute
Topic: “Compliance for Directors”, “Bank Secrecy Act”
Contact: Laura Vodak, lvodak@cuna.coop
November 14, 2007
Presentation: Nebraska Credit Union League
Topic: “Disaster Recovery”, “Dealing with the Death of a Member”
Contact: Amy Shaw, ashaw@nebrcul.org
Robert Rutkowski is a Partner in the Brooklyn Heights operations center of Weltman, Weinberg & Reis Co., L.P.A. He is responsible for managing the firm’s Credit Union department and Corporate & Financial Services Practice Group. He can be reached at (216) 739-5004 or rrutkowski@weltman.com.
Filed under: credit unions
The following is an article reprinted with permission from the Summer 2007 edition of The WWR Letter:
How the Credit Union Movement Has Changed Over the Last 45 Years
By: Bob Weltman, Esquire, Senior Partner of WWR
My history with the credit union movement started back in 1962. I had just finished a six-month tour of duty with the National Guard and moved back to Cleveland to start law school. My father, Maurice Weltman, approached me with the opportunity to become Treasurer of Menorah Federal Credit Union (“MFCU”) in Cleveland. He thought I’d be good at the job because I had served as Treasurer for my fraternity in college and had a good grasp of numbers. I eagerly took the position.
Back in those days, credit unions operated much differently than they do today. When I first came on board with MFCU, I carried the ledgers around in a tin box. Everything was manual. The credit union was ‘located’ wherever a member could reach me at any particular time. If they needed to withdraw or deposit money, I would take the ledger box to them. Over the years, I continued to work part-time for MFCU, assisting with marketing the credit union to different member groups and watching MFCU grow. The job fit in very well with my position at WWR, as even back then, the Firm represented financial service organizations on creditors’ rights issues. Through MFCU, I became more involved with the credit union movement in Ohio, attending meetings for the Cleveland chapter of credit unions, which is the governing body of credit unions in the Cleveland area.
After a few years, I had a small following of credit unions that would come to me for legal advice. I was approached to become part of the Board of Directors of the Cleveland chapter and was later elected to the Board. During my time there, one of my most significant accomplishments was the revitalization of the Cleveland chapter school- a series of educational business courses for credit unions. In just one year, my ad hoc committee was able to increase attendance at the sessions from under 10 per quarter to nearly 500 people.
Over the course of many wonderful years, I witnessed numerous changes. Back in the 60’s, credit unions were unique, quite different from banks and savings & loan associations. As non-profit organizations, the credit unions and their members embraced their separate identity and didn’t have to compete with the banks. Due to their non-profit status, credit unions weren’t subjected to many of the regulations facing banks and other financial institutions. Over the years, however, advances in technology, increased competition and rapid growth in the financial services industry started to affect credit unions. Many mergers took place, and credit unions found themselves having to offer more services to their members, including items such as credit cards, home equity loans, etc. Credit unions that may have traditionally only accepted members from particular schools or churches now had to cast a wider net in order to remain competitive, expanding their field of membership to include other members of the community.
Although many things have changed over the past 45 years, some very important things have not. I continue to see a lot of loyalty within the credit union movement and a commitment to maintaining their group-orientated status. But they can no longer operate out of a tin box. Today’s credit unions are built on brick & mortar and offer many of the same modern conveniences as banks. They are subject to the same evolutionary changes affecting other financial institutions and will need to remain a step ahead in order to stay competitive.
Robert B. Weltman is Senior Partner of Weltman, Weinberg & Reis Co., L.P.A. and focuses his practice in the Complex Collections department. Mr. Weltman is located in the Cleveland office. He can be reached at (216) 685-1040 or rweltman@weltman.com.
Everyone knows that checks can be held for some amount of time, but I often get questions as to what the exact rules are. Various disclosures of the CU’s availability of funds rules can be found in the lobby, in notices on preprinted deposit slips, and perhaps in the member agreement as well.
I’d like to go through the rules here on the blog for a quick and easy reference. I will list the various types of instruments under their particular availability requirements and then I will describe the exceptions.
Next day availability:
· Cash deposits made in person to an employee of the depository CU.
· Electronic payments received.
· Treasury checks deposited in an account held by a payee.
· Postal money orders deposited in an account held by the payee of the money order and in person to an employee of the depository CU.
· A Federal Reserve Bank or Federal Home Loan Bank check deposited in an account held by the payee and in person to an employee of the depository bank.
· A check drawn by a state or a unit of general local government and deposited in an account held by a payee of the check, in a depository bank located in the state that issued the check, or the same state as the unit of local government that issued the check, in person to an employee of the depository CU, and with a special deposit slip or deposit envelope, if such envelope is required by the depository CU. (If you’re going to require it, you have to provide it).
· A cashier’s, certified or teller’s check deposited in an account held by a payee of the check, in person to an employee of the depository CU and with a special deposit slip or deposit envelope, if such slip or envelope is required by the depository CU.
· A check deposited in a branch of the depository CU and drawn on the same or another branch of the same CU if both branches are located in the same state or in the same check processing region and the lesser of $100 or the aggregate amount deposited on any one banking day to all accounts of the customer by check or checks not subject to next-day availability under the law. This is what we mean by up to $100 next day availability.
Second business day following the banking day on which funds are deposited:
· Cash deposits not made in person to an employee of the depository CU.
· Checks not deposited in person that would otherwise receive next day availability as described above.
· Local checks.
· Treasury checks not meeting the above next day availability requirements.
· Postal money orders not meeting the above next day availability requirements.
· For FRB or FHLB checks, state or unit of general local government checks, cashier’s, certified or teller’s checks, if any of these is a local check that does not meet the above next day availability requirements.
Third business day following the banking day on which funds are deposited:
· Funds deposited in an account by a non-local check in Utica (Federal Reserve Office 0210, 0280) and Kansas City (Federal Reserve Office 0865, 2865).
Fifth business day following the banking day on which funds are deposited:
· Non-local checks.
· FRB or FHLB checks, state or unit of general local government checks, cashier’s, certified or teller’s checks or checks deposited in a branch of the depository bank and drawn on the same or another branch of the same bank that are non-local and do not meet the above next day availability requirements.
· Deposits at nonproprietary ATMs.
One business day extensions:
· You can delay what is available for withdrawal by cash or similar means (including electronic payment, issuance of a cashier’s, certified or teller’s check or other irrevocable commitment to pay) by one business day, but $400 of that money must be available for withdrawal by cash or similar means not later than 5:00 pm on the business day on which the funds would otherwise be available and this is in addition to the $100 next business day availability.
· Deposits in Alaska, Hawaii, Puerto Rico and the U.S. Virgin Islands if deposited in an account branch of a depository CU located in these places and deposited by a check drawn on or payable through a paying bank/CU not located in the same state as the depository CU.
Exceptions:
· New Accounts. There is a lot of confusion concerning what this really means. You don’t get any additional time for cash and electronic payments. FRB or FHLB checks, Postal money orders, traveler’s checks, state or unit of general local government checks, cashier’s, certified or teller’s checks still follow the above rules for the first $5,000 and any amount in excess of that must be available not later than the 9th business day following the banking day on which funds are deposited. Everything else may be held. If a member has no accounts at the CU for at least 30 calendar days and creates an account, that account is new for 30 calendar days.
· Large Deposits. For local and non-local checks (but not cash and electronic payments) you may extend the hold placed on a day’s deposits of checks over $5,000. You get to pick the part of the deposit to which you apply this. The commentary provides a good example:
If a customer deposits $2,000 in cash and a $9,000 local check on a Monday, $2,100 (the proceeds of the cash deposit and $100 from the local check deposit) must be made available for withdrawal on Tuesday. An additional $4,900 of the proceeds of the local check must be made available for withdrawal on Wednesday in accordance with the local schedule, and the remaining $4,000 may be held for an additional period of time under the large deposit exception.
· Redeposited Checks. There are exceptions to this exception. This exception does not apply if the check is returned due to a missing indorsement and redeposited with the indorsement now supplied or if a check is returned because it is post-dated and it’s no longer post-dated when it’s redeposited.
· Repeated Overdrafts. The hold rules on local and non-local checks don’t apply if any of the member’s accounts are repeatedly overdrawn. An account is overdrawn if on 6 or more banking days within the preceding 6 months the account balance is negative or would have become negative if checks or other charges to the account had been paid or on 2 or more banking days within the preceding 6 months, the account balance is negative, or the account balance would have been negative in the amount of $5,000.00 or more if checks or other charges to the account had been paid.
· Reasonable cause to doubt collectibility. This is perhaps the trickiest of the exceptions. Under the statute, you can hold local and non-local checks beyond the normal hold periods if you have “a reasonable cause to believe that the check is uncollectible from the paying bank.” This “requires the existence of facts that would cause a well-grounded belief in the mind of a reasonable person.” The problem is you had better be right. You can’t just base it on the class of the check or class of person depositing the check and you have to tell the person why you doubt the instrument is collectible.
· Emergency conditions. Local and non-local checks can be held for a reasonable time in the event of communication, computer or equipment interruption; another financial institution’s suspension of payments; war; or an emergency condition beyond the control of the depository credit union.
Understand that when you exercise these exceptions, a notice needs to be sent that complies with the terms of 12 CFR 229.13. Otherwise, that’s check holds in the briefest terms I can muster.
