Katrina Hit The Gulf, But It Needs To Be Heard In DC
Katrina is a name we hardly knew three weeks ago. Yet, it is now synonymous with one of the worst disasters in U.S. history. Thankfully, the number of credit unions directly affected by Katrina was limited to 139-17 in Alabama, 26 in Mississippi and 96 in Louisiana. But that does not count the hundreds of additional credit unions that may have branches or members located in those areas.
The good news is that most of the credit unions, including many of the hardest hit, have already resumed operation in some fashion. With each passing day, more and more of the credit unions in the New Orleans area that we could not even contact in the days following the flooding are reporting in. What has been gratifying to NAFCU is the way the credit union community has banded together and put into practice the principle of "people helping people." Through donations of equipment, technical support, mobile branches, shared service centers and staff, many of these credit unions are now up and running-and again serving their members.
At NAFCU, we are raising money through the NAFCU Foundation to help in the Katrina relief effort and have received thousands of dollars in donations to be given directly to the Red Cross. Many of our members have generously offered in-kind support, including hardware and software assistance, furniture, office space and call center resources. We have been referring these offers to the NCUA, which has been doing an excellent job of coordinating the effort to get these credit unions back online as quickly as possible.
NAFCU has also emphasized to both federal regulators and members of Congress that the credit unions most devastated by Katrina will need flexibility and understanding (within the bounds of safety and soundness) as they rebuild their operations. Credit unions will certainly need added regulatory forbearance to meet their members' needs-many of whom were scattered to multiple evacuation sites, no longer have a mailing address or even a place to call home.
Congress will be examining a number of options to help financial institutions respond to the disaster, including: providing guarantees on checks cashed by non-members with minimal (if any) identification, lifting the federal deposit insurance limit for Katrina-affected areas, waiving Federal Reserve Board fees associated with coin and currency and wire transfer services, providing relief from Prompt Corrective Action constraints, providing consumer loan payment deferrals and authorizing "fresh start" borrowing programs.
There will be much debate over how best to help the thousands of displaced Gulf Coast residents. Uppermost on our minds will be how to ensure that credit union members continue to be served-that they have complete access to their accounts and are treated as humanely as possible when it comes to repaying loans.
Quite frankly, it will not be "business as usual" on Capitol Hill this fall. The normal appropriations process has been put on hold to address the immediate costs of recovering and rebuilding from Katrina, and work on many of the legislative measures that credit unions care about such as CURIA, regulatory relief and the government-sponsored enterprises reform bill will likely be delayed as well.
So as over 400 NAFCU members descend on Washington this week for our annual Congressional Caucus, the message we need to send to the Hill is that credit unions stand ready to help with the relief and recovery efforts. This is also our opportunity to talk to members of Congress about the work we've already done, and will continue to do, to help those who desperately need our assistance now.
As I write this, NAFCU Vice Chair John Milazzo is helping in the recovery in Louisiana. John is president and CEO of Campus FCU in Baton Rouge, and so he knows firsthand how devastating the hurricane has been to the Gulf Coast region.
In the days following the storm, John described in e-mails to us the toll Katrina took on his credit union, which has three branches in New Orleans:
"I was able to get word that one of our branches in New Orleans is high and dry, although still inaccessible, while two others are still underwater. All our ATMs, save one, are underwater and not accessible, as are the flooded branches.
We are optimistic that we will be allowed to visit the sites in a couple of weeks to retrieve cash from our vaults and any documents and belongings that are salvageable.
"Our staff have been accounted for and are scattered throughout the region. Some will not return as they lost everything and have nothing to return to. I have received countless offers from credit unions all over the nation, as well as some of our business partners, to find them employment and housing. I get goose bumps thinking of the outpouring of support we have received from our friends, colleagues and just plain strangers in this time of need.
Some Have Lost Everything
"We continue to assist other credit unions that have lost everything. We are housing the University of New Orleans Federal Credit Union in our LSU-Baton Rouge main campus facility. Their members will be able to receive nearly full financial services in our location. We have another New Orleans area credit union that is interested in working with us, and we will do what we can for them. We are also foregoing our planned move into 2,300 square feet of office space in our Ops Center and giving that space to LSU's Health Sciences Center. We are getting pretty good at adapting to new challenges as they present themselves."
John and countless others in the credit union community are working to help in the recovery, and they are a testament to our cooperative principles. It is a story that bears repeating when we visit with members of Congress this week and talk about the "people helping people" spirit that makes credit unions unique financial institutions.
Fred Becker is president and CEO of NAFCU, Arlington, Va.