ST PETERSBURG, Fla. — Does the new credit card law put more pressure on CUs to consider selling their credit card portfolios? Not necessarily, according to those contacted by Credit Union Journal.
"We've not heard anything about this," said Glenn Schechter, director of credit services for PSCU. "The bill will not put economic pressure on credit unions, other than platform changes that everyone will have to make to adapt to the new law, but not something that will force a sale."
In Iowa, The Member Group's Jeff Russell said back-office issues might push some CUs to consider selling, especially those whose card portfolios are not a strategic product. "Credit unions will have to decide if it is worth the operational time to bring it up to compliance. It is another factor to weigh."
Robert Hackney, president of CSCU, argued credit unions should examine the numbers before making any rash decisions. He noted the May issue of Cards and Payments magazine reported the aggregate Visa/MasterCard issuer pretax profit last year was 3.82% as a percentage of average outstandings.
"Even though 2008 ROA was down from 4.16% in '07, 3.82% is substantially higher than the ROA a credit union could earn on any mortgage, auto, or home equity loan," he said. "Given credit unions' need to rebuild capital resulting from the bailout assessments, I would suggest that organizations such as CSCU and the press need to get this kind of independent research in front of credit union executives that a well-managed credit card program can help them rebuild their capital."
