BIRMINGHAM, Ala. -
Kirk Cuevas, former chief of staff at and counsel for NCUA, and a principle partner of Dollar Associates, is among those who sees the economy continuing along the lines it has shown in recent months. He said it will be a “volatile market,” and foresees a continuation of “merger mania” both in the credit union sector and the larger economy.
The good news, according to Cuevas, is mergers “will put credit unions in the position to become dominant in the community financial services sector. There are no more local community banks. This will be a good thing for credit unions.”
For example, Cuevas noted a small business owner who wants a loan of $50,000 would be “hard pressed” to do so at a major bank. Banks target significantly higher dollar amounts, but CUs are “stepping up and filling that role” he said.
There will be more CUSOs and an increase in shared branching in 2008, Cuevas predicted. “This will help deliver services to the membership. The cooperative spirit helps make credit unions what they are today, and it is most illustrated in CUSOs and shared branching.”
Credit unions in 2008 will have better economies of scale and will be “fine” he said, adding, “That’s not to say there won’t be challenges and things to overcome. But if we manage it well and continue to look after the needs of our members and provide them quality services at reasonable rates, we will be fine.”
Meanwhile, Cuevas foresees potential for several important developments in Washington that credit unions must monitor. He noted the current Congress has placed a great deal of emphasis on consumer-based legislation, and while the intentions may be good, he cautioned, “We need to watch that, because sometimes that kind of legislation can be very costly and impose a regulatory burden. Credit unions will have to pay attention.”
One area where Cuevas foresees traction for CUs in the legislature is risk-based capital. He said the idea has been debated for a number of years, and he believes the time is ripe for credit unions to come under a risk-based capital structure.
“Congress has indicated it is willing to consider that sort of structure. My hope is this is the year the hearings and talk are over and risk-based capital for credit unions becomes the law of the land. Traditionally, credit unions are not as risky with their investments, and I think they will fare very well in that environment.”
As for the continued attacks by bankers and their lobbyists, Cuevas emphasized the importance of CUs continuing to tell their story and documenting how they serve members of modest means. The issue “will not go away,” he said, but he hopes “this will be the year credit unions tell their story more vocally and more often.”
“I’d like to see Congress fix the rules relating to underserved areas,” he declared. “It seems disingenuous to criticize credit unions for not serving underserved areas, when only multiple-group credit unions are allowed to adopt those areas. Community credit unions and single-sponsor credit unions should be allowed to go out and do what they do best–provide affordable financial services to folks of all walks of life.”
