Katrina, Bankruptcy Make Top Headlines
ONE: Disaster Recovery. With credit unions in the U.S. still recovering from 2004's four hurricanes and Sri Lanka's CUs still cleaning up from the devastating tsunami, Hurricane Katrina roars ashore in the gulf destroying CUs and displacing thousands of members, many of whom have never returned. In New Orleans, some CU staff began living in branches. CUNA Mutual estimated the cost of Hurricanes Katrina, Rita and Wilma was $27.5 million.
TWO: Bankruptcy reform bill is signed into law after more than a decade of trying.
THREE: CUs dodge the bullet at a House hearing on tax-exempt groups. While the focus was on other not-for-profit entities, CUs would later come under the same congressional gun at a hearing on the CU tax exemption. And a name CUs hadn't heard in a while was resurrected: former NCUA Chairman Norm D'Amours testified at the hearing on the CU tax exemption. Though the exemption was left in place, Congress called for NCUA to do a better job of monitoring and measuring how CUs are serving the underserved, putting into motion studies and a survey by NCUA on the issue. The big question: just what does "underserved" mean.
FOUR: Two billion-dollar CUs in Texas (Community CU and OmniAmerican CU) convert to a bank, touching off attempts by NCUA to block the conversion, attempts by Congress to rein in NCUA and attempts by members to hold on to their credit unions.
FIVE: CUs have a political coming of age as CUNA's PAC breaks into the upper echelons of PACdom and CU representatives are invited to attend a number of gala celebrations held in honor of President Bush's second inauguration.
SIX: The data breach at BJ's Wholesale Club sparks a lawsuit by credit unions and pushes the debate of who enforces the credit card association's rules, which, had they been followed, would have prevented the breach. As data breaches would become increasingly common, CUNA Mutual would, the following year, launch an all-out effort to curb such breaches, making card security its Public Enemy No. 1
SEVEN: NCUA drafts a proposal for risk-based capital, calling on Congress to give the agency the authority to implement such a program. It's seen as one alternative to the "secondary capital" issue-something that CU's seeking to convert frequently cite as a reason for needing to do so. To date, Congress has not allowed for such a regulatory capital fix.
EIGHT: In the "shape of things to come" category outgoing NCUA Board Member Deborah Matz bemoans the slow membership growth throughout the CU movement-something that is still very much an issue for the movement today.
NINE: In the "shape of things to come" Part II, as gas prices soar to over $3 per gallon, CUs respond by offering special loans on hybrid automobiles, rebate offers and more.
TEN: Four CU vendors form Utah bank to buy card portfolios under the state's Industrial Loan Company Act, presaging controversy that would swirl (and continues to swirl) around the ease with which non-financial institutions can charter ILCs.