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Help youth “grow their green”Continued from page 9pillars of financial freedom. As chapters of Floridacredit unions you have the opportunity to join theNational Youth Savings Challenge as a group withall credit unions within your chapter to be a partof the Youth Savings Challenge.In 2007, according to CUNA, 393participating credit unions reported more than$10 million in deposits from almost 72,000young members. Additionally, credit unionsalso welcomed more than 9,000 new memberaccounts.As a chapter this is a great time for you toencourage the credit unions in your chapterarea to play up everything they do year round toeducate youth and try to get them involved in theNational Youth Savings Challenge to “grow theirgreen.” These young members can make changeno matter how small their change is! Smallchange can make a difference whether saving theenvironment or saving for the future.One way for a chapter to motive credit unionsto become involved is CUNA is sponsoring adrawing for 10 prizes of $100 each to ten creditunions who report their results of the YouthSavings Challenge. The winning credit unionswill randomly select young members to receivethe $100 prizes.In 2007, 132 new youth accounts were opened in Florida during NationalCredit Union Youth Week and the National Youth Savings Challenge with atotal of new deposits of $96, 991.07The harvest is ripe for the picking to ensure our youth’s financial freedomand to help grow their green by getting them involved while they are young.They maybe young today, teenagers tomorrow but they will be your topdepositors and borrowers in the future! So, chapters challenge all Floridacredit unions to focus on young members during the National Credit UnionYouth Week because together we can do it better!At the chapter level you can promote credit unions to go to CUNA’swebsite and check for tools that will assist them in planning a successfulYouth Week of festivites. Visit finlit.cuna.org and select “Events.” You’llfind celebration ideas, poster and theme art, a “Got Green” coloring page,registration for the Saving Challenge, plus educational handouts and prizesfor sale.Questions pertaining to National Credit Union Youth Week and theNational Youth Savings Challenge may be directed to Philip Heckman,director of youth programs for CUNA, at 80.356.965, ext. 4088.Resources: CUNA.org, Office of Economic & Demographic Research, and brass/MEDIA.com16 FLORIDA CREDIT UNION NEWS
Investment terms definedContinued from page 5if the holder of the security never sells the security, the loss willnever be realized, assuming that it does not default. Because of therecent dislocation in the market, many credit unions are incurring asubstantial decline in the value of the securities in their portfolio. Ifthese instruments were designated as available for sale per FAS 115, thisdecline will appear as an unrealized loss in the equity portion of the creditunion’s balance sheet.Sub Prime Mortgages: A mortgage made to a borrower with poorcredit, generally defined as a FICO score of less than 620.Asset Backed Securities (ABS): A debt instrument created by placinga pool of receivables in a trust. The repayment of the security isprovided by the cash flows generated by the underlying receivables.Generally the receivables supporting the security are loans generatedby credit cards, student loans, automobile loans or leases, dealerautomobile inventories and mortgages. The instruments are createdto shift the credit risk inherent in the loans such that the senior bondholders are insulated from losses by the subordinate holders becausethe subordinate holders incur the losses first (the various classes arereferred to as “tranches”). Forms of credit enhancement include overcollateralization,excess spread or an insurance policy which guaranteespayment. Generally, the most senior bonds within a structure willreceive an AAA rating.Collateralized Debt Obligation (CDO): A CDO is a more complextype of asset-backed security credit product backed by a portfolio offixed-income assets, including asset backed securities (referred to as astructured finance CDO), corporate bonds or credit-linked references(referred to as a cash or synthetic CDO), or real estate. These assetsare also divided into tranches in order to insulate the senior bondholders from credit losses. During 2006 and 2007 many CDOs werecreated by using lower-rated real estate based (including sub prime)ABS. Due to the combination of the weakening performance of theunderlying collateral, poor liquidity in the market, and erroneouscorrelation assumptions in the CDO’s construction, CDO values havedeclined substantially during the current credit crunch. CDOs that arecollateralized by existing CDOs are called CDO squareds (yes, there areeven CDO cubeds).substantial losses and threatening their AAAratings. Recently Standard and Poors andMoodys confirmed MBIA and AMBACs ratingswhile Moody’s downgraded FGIC.Structured Investment Vehicle (SIV): A SIV is afund which generally borrows short by issuingcommercial paper to institutional investorsand then invests long, frequently purchasingasset backed securities. Many of these SIVswere created by banks and, when marketanxiety increased, the SIVs were not able toissue new commercial paper to replace whatmatured. Most of the assets supporting thebank sponsored SIVs have been placed backon the bank balance sheets.Using these definitions, we can summarizethe current state of the credit markets bystating: The market dislocation caused bydeteriorating performance in the mortgagemarket (especially the subprime arena) has ledto unrealized losses by holders of highly ratedABS. Holders of less highly rated (and less wellstructured)debt have experienced significantlymore real losses than were previously thoughtpossible, leading to the forced closure ofmany bank SIVs, the abandonment of the ARSmarket by many large broker/dealers, and thelikelihood of significant insurance paymentsfrom bond insurers over the coming years.Southeast Corporate is pleased to offerreaders a free Investment Glossary of Terms,simply email marketing@secorp.org with yourrequest.Bond insurers: Also referred to as monoline insurers, these areinsurance companies that insure (or “wrap”) bonds in order to ensurethey will get the highest rating s from the rating agencies. Originally,the companies began insuring that municipalities would remit thepayments required on the bonds they issued. Over the course of thelast ten years, these companies moved aggressively into the ABSmarkets and in particular the subprime and CDO markets, creatingSpring 2008 17
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Page 3 and 4: PRESIDENT’S COLUMNIt’s not just
Page 5 and 6: FEATURE ARTICLEpite economyf Invest
Page 7 and 8: COMPLIANCE Q&ACompliance CornerBy B
Page 9 and 10: CHAPTER CORNERHelp Youth “Grow th
Page 11 and 12: LEADERSHIPThe Leadership Councils o
Page 13 and 14: LEAGUE NEWSFlorida Credit Union Lea
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