Teresa Halleck, president and CEO
The Golden 1 CU, Sacramento, Calif.
Assets: $7 billion, Members: 691,932
It is an unconscionable disgrace that the federal government has infused massive amounts of capital into stabilizing the remaining mega-banks while the credit union industry has been left to wither and fend for itself like a starving and abandoned dog left in the desert. The economic fallout that has already occurred - largely due to irresponsible bank real estate lending practices - has substantially weakened industry earnings and net capital positions.
Our 90-million, taxpaying credit union members expect and deserve better than having our industry treated like a second-class citizen without a seat at the table, while the mega-banks enjoy a sumptuous feast at credit union and member expense.
It is no secret the mega-banks have used their massive capital infusion to increase their market share and long-term competitive strength against which each credit union must prospectively compete. The Treasury Department's "fend for yourselves" approach should be recognized for what it is - an assault against our industry's long-term viability. Make no mistake, it is a mirage to even begin to consider this "an opportunity" to have the credit union industry appear better than the banks. Consumers won't suddenly choose to do business with us because we didn't get TARP funds; members will choose to do business with banks if their rates are better than ours and their service delivery channels are significantly more convenient. The stark reality is the credit union industry needs and deserves a substantive capital infusion to strengthen our ability to weather this financial services storm and emerge viable for the future.
The current plan immediately weakens all federally-insured credit unions, undermines our safety and soundness, and substantially erodes our long-term competitiveness. Those are not the hallmarks of a prudent plan of action.
Brad Beal, CEO
Nevada FCU, Las Vegas
Assets: $799 million, Members: 81,981
I think it is unfortunate but necessary. The corporates play an integral role in the credit union system; we need the services they provide for a lot of good reasons. It is important to keep them sound and in operation.
(With an assessment of 62 basis points), in our case, that will be about $4 million, which is a big deal. It will reduce our net worth ratio down to about 12.5% from 13.1%. Certainly we can absorb it without any difficulty, because we fortunately are in that position, but it won't be pleasant.
Cutler Dawson, CEO
Navy Federal Credit Union, Vienna, Va.
Assets: $36 billion, Members: 3 million
This plan will unfairly impact natural person credit unions by making them pay for failed financial management at the corporate credit unions. The price tag for lack of appropriate management and oversight of the corporate credit unions should not be borne by natural person credit unions.
Navy Federal remains strong and well-capitalized, and we have every intention of remaining so. But we are very concerned about the negative impact this plan will have on many credit unions and their ability to help members - especially these days when credit union services are needed more than ever.
Marc Schaefer, CEO
Truliant Federal Credit Union
Winston-Salem, N.C.
Assets: $1.1 billion, Members: 175,000
In some ways, it's reaffirming. That's the way the system was designed. It's probably the best alternative that is out there. It's the reality of the market we have found ourselves in. Perhaps people will be more forthcoming. When the system is in jeopardy we all jump in to stabilize it. Certainly it will cause credit unions to evaluate their financial situation. I think it will cause more credit unions to consider merging. I think everyone is going to be very careful with mergers. I think that there still will be mergers.
In our case, we will have $7.5-million hit. This is certainly causing us to revisit our 2009 budget. We had good growth last year - approximately 10%.
We're not going to undercut or undermine. It won't necessarily be business as usual, but our operations plan will continue, which is to allow us to serve our members - nothing that will cut muscle or bone.
MORE@CUJOURNAL.COM
To read more comments from other CU CEOs, including Kit Snyder, Consumers CU, Oshtemo, Mich.; Chris Langley, Eastern New York FCU, Napanoch, N.Y., and Mark Zook, Marion And Polk Schools CU, Salem, Ore.Norb Kaczmarek, Erie FCU, Erie, Penn., go to www.cujournal.com and type "corporate rescue commentary" in the search function.
