PALATKA, Fla.-Frustrated by the burdens of high unemployment and the lingering fallout related to the financial crisis, the CEO of a low-income credit union here is appealing to Congressional leaders and President Obama for help.
In a recent letter, Putnam County FCU's Bill Pember asked Washington leadership for "a real chance to resolve some of the dramatic issues facing our members today."
Pember told Credit Union Journal that he harbors no illusions that his letter will be read and acted upon, but "sometimes you get so frustrated that you need to at least try."
Since 1973, Putnam County FCU has been one of the most pre-eminent local financial institutions in this semi-rural segment of north Florida. The region's economic struggles are far from recent; the 2004 Census estimate determined that more than 33% of the population lives below the poverty line, but the housing collapse in the Sunshine State has done this area no favors. In his letter, Pember expressed concern for the $31-million credit union's continuing viability, though the institution is classified as "well capitalized" by NCUA, especially after hearing from a regional office that the regulator is hiring extra examiners.
"That isn't the sort of help that we need. I know they have a mission that is vital to the industry but when you have more individuals examining an already-difficult situation, you're worried about even more restrictive covenants applying. Additional scrutiny will not resolve the issues. There has to be an understanding that these are extraordinary times," he said.
"We're having to grant significant forbearance to many individuals. If I had kids at home and I had to choose between making an unsecured loan payment and groceries, I know what I would choose."
Cliff Rosenthal, President/CEO of the National Federation of Community Development Credit Unions, concurred that net worth concerns are real among most low-income credit unions as they are generally more vulnerable to prompt corrective action by their very nature. But he said NCUA is becoming more flexible by partially discounting the balance sheet impact of the corporate assessment and noted a recent supervisory letter that directs examiners to be more understanding of low-income CUs particular challenges.
"At the top levels we've gotten very good cooperation and this letter is very good, but we don't know yet if examiners will be honoring that. We know in some cases, we know they have not," Rosenthal said, pressing low-income credit unions to advocate for themselves and suggesting that if a particular examiner is not following the new guidelines, to take the complaint up the chain of command.
For his part, Pember simply does not want his CU to be lumped in with other financials in the eyes of Washington and the public. As a banker who left to "make a difference" in the lives of the underserved, he's concerned that the cooperative industry is changing for the worse.
"I remember when the movement as a whole seemed more consumer-oriented and I'm worried that numbers seem more important today," he said.
