WASHINGTON-The finger-pointing and hand-wringing credit unions are doing over the economic challenges facing them could end up doing almost as much damage as the 62-basis point assessment that sparked it all.
A variety of credit union leaders at CUNA's GAC talked about the damage being done to the cooperative spirit of the movement, and it's ability to continue fulfilling its mission to serve members.
"It's easy to say, this is not my problem, I didn't cause this problem," said CUNA President Dan Mica. "But this is a situation where perhaps we should be saying, 'there but for the grace of God go I.' There are credit unions who deserve our help. Credit unions in Southern California, Florida, Arizona that were well-managed operations, good credit unions that had the rug pulled out from under them. Let's not point fingers, let's put our arms around each other's shoulders."
In the "what a difference a year makes" category, Suncoast Schools CEO Tom Dorety reminisced about when he took over as CUNA chairman one year ago.
"A year ago, our biggest issues were member growth, the need for collaboration and getting a hearing on CURIA [CU Regulatory Improvement Act], and we thought we were busy," Dorety said during his last official presentation before turning the gavel over to the new CUNA Chairman, Deseret First FCU CEO Kris Mecham. "Now we look back and think those were the good old days. Southwest Florida was already immersed in recession, and now it's everywhere."
His own credit union located in one of the areas hardest hit by the housing bust, Dorety related how Tampa, Fla.-based Suncoast Schools FCU has been responding to the economic challenges.
"We are trying to keep our focus on members. In the past, we kept the narrowest interest rate spread as possible to give back as much as we could," he said. "Times have changed, and being at the epicenter of the mortgage mess, this changed the focus of Suncoast. We had to make tough choices. We increased the rate spread, increased our fees and cut expenses that we thought were already reasonable, even running off deposits to decrease our asset size. This is not fun."
For some time, credit unions in the so-called Sand States were alone in these challenges, but not anymore. "Now, with the worsening economy and the immediate write down we face [from NCUA's proposed Corporate Stabilization Plan] a lot of other credit unions are looking at having to do the same things."
Still another concern is that credit unions will cut back on the one thing everyone cuts first in times of trouble but shouldn't: marketing.
"I started my career in marketing, and it's always the first thing you cut-or never had," said CU24 CEO Jim Park, relating the old saw about the man who had a little store and started growing the store with advertising. Until his son came to him and said there's a recession and they should cut advertising to reduce expenses, and not long after that, the store stopped doing as well, and the father told the son he was right, there was a recession after all. "Now is not the time to pull back. Do not cut marketing," Park suggested.
