TUSCALOOSA, Ala.-If capital is indeed to protect against rainy days, then one person is advising credit unions to use it for those who are getting wettest.
William Jackson, professor of finance at the University of Alabama, who authored the Filene Research Institute's study, "Is the U.S. Credit Union Industry Overcapitalized?," suggested that credit unions use their capital now to make sure members have the services they need in a tight economy.
"Smart CU management will recognize that this current recession will be longer and more painful than the usual recession," said Jackson in a correspondence to Credit Union Journal. "This recognition should cause CU management to attempt to ease the financial struggles of their membership by providing new products and services that are geared toward helping their members reduce their (monthly) expenses...
"This is a time when CU management should consider ways to expand their presence...This is not a time for CUs to become overly worried about shrinking net income. The goal of the CU must always be to provide economic value for its membership. If that means allowing net income to shrink for a few years, you still do it."
