BOSTON — During a Q&A with CUNA senior management at the trade group's America's Credit Union Conference here, the following questions were posed by CUs:
Q: We've read the positive national press about credit unions. Now, when do you think CUNA will really get serious and build a national credit union brand?
Dan Mica, CEO, CUNA: I'm ready today. But here's the deal. We've been looking at that, and the roundtable credit unions have been looking at that. We already have an "America's Credit Union" logo, and it's beautiful. There are two ways to do this. The [national] campaigns cost money, and the last time I checked it was $40 million to $50 million a year, with a minimum of five years. To put that in context, CUNA's dues are about $10 million. The other way to do it is we prepare the ads, and then distribute it to the leagues and the local credit unions. Most folks, particularly in this time, just don't have the money to run the ads.
We have looked at trying to use some of this viral marketing, which doesn't cost much. But for a traditional national branding campaign, we just don't have the money.
Q: (Directed to CUNA economist Bill Hampel) Bill, for years you espoused a capital level of just north of 7%. Things have changed. What kind of target do you think you will recommend moving forward?
Hampel: I have revised my view on capital, although not completely, and now instead of being comfortable with capital between 7% and 9%, I would recommend between eight and 10. What is going to happen in Washington, if anything, in the next year or so will be an increase in capital requirements.
As for secondary capital, I think Congress might be willing to allow access to secondary capital now that it realizes the importance of capital.
Mica: CUNA has done surveys that show a divide on whether secondary capital should be available to members only, or also to non-members.
Q: What about the growing federal deficit and the direction of interest rates and any related risks?
Hampel: The size of the deficit is not the only driver of interest rates. If the economy were booming, interest rates would be through the roof. But we don't see the economy growing that quickly. With mortgages, it's my sense from looking at the NCUA data so far, when interest rates hit lows a few months ago credit unions were selling those fixed rate mortgages. And I think they are wise for doing so.
Q: I understand that with federal student loans, if we make too much money we have to return money to the [Department of Education] As a result, student loans may not be as profitable or profitable at all. What is the issue?
John Magill, SVP, CUNA: Congress has indicated it is going to take over student lending. They do not want the private sector involved in student lending. So regrettably, we're on a real uphill battle to retain any student loans.
Q: Treasury has proposed that originators of mortgages should hold 5% to 10% of mortgages they issue. Does that pose an interest rate risk to us?
Mary Dunn, SVP, CUNA: I think this is a priority for this administration. They want originators to have a skin in the game. But, it's also true it's going to be an issue we're going to be working on to ensure credit unions are not harmed in that proposal.
