Long A Quiet Presence, CUSOs Seeking To Raise Their Advocacy Profile

Register now

LAS VEGAS-In a few short months since Jack Antonini took the reins at NACUSO, the once-quiet trade group has worked to raise its profile in terms of advocacy.

"The comment letters (to NCUA) are a new thing for us," he said during NACUSO's Annual Conference here. "I joined in December and there were issues popping up at that time. I called many of our largest members and they said, 'We need a voice that represents CUSOs.'"

Antonini said CUNA and NAFCU represent the entire credit union industry and do it well, but the specific concerns of CUSOs often get overlooked. "We don't want to duplicate their [CUNA's and NAFCU's] efforts, but we want to be heard," he said.

NACUSO recently penned comment letters on three areas: the "double assessment" of credit unions and CUSOs under the proposed corporate rule, imposition of broker/dealer oversight burdens on credit unions, and incentive-based compensation arrangements.

According to Antonini, "The double assessment was a terrible thing to do to credit unions for being creative and collaborative and forming CUSOs. The broker/dealer issue also is a real problem because credit unions were told to police broker/dealers. This leads to liability, so we wrote a letter saying it was inappropriate to put the burden on credit unions. NCUA actually agreed with us in a response letter. The whole industry benefitted by NCUA acknowledging it was guidance, not regulation."

As for the executive compensation regulation, Antonini said NACUSO's position was CUSO executives should not be "swept up" in the Dodd-Frank Act, when CUSOs clearly were not the intended targets of the legislation. "These are the issues we felt needed to be addressed. We will continue to be active in regulatory advocacy."

Cost-Effective Innovation

Antonini said CUSOs are becoming an increasingly attractive option in a time of low rates, tepid loan volumes and squeezed margins. He said CUSOs "keep costs down and generate income." CUs that have CUSOs, he asserted, are more profitable than those that don't and serve their members better.

"CUSOs also help in risk-sharing, and helping little credit unions keep up with technology," he declared. "CUSOs will continue to evolve and they tend to be innovative. Even single-owned CUSOs often have multiple credit union clients. Innovation is always costly and takes a while to pay off, so a CUSO is a good way to go," he added.

Antonini said he hopes credit unions will spend the next 12 months being opportunistic. He pointed to social media and other innovations as driving a change in the delivery of financial services. "Where the economy goes will drive what types of CUSOs are formed," he predicted. "Hopefully, we will see an improved economic environment."

Antonini said recent studies have found consumer dissatisfaction with banks. Although CUs currently hold only 6% of total assets, 66% of bank customers are at least considering switching financial institutions.

"So there is a big opportunity there," he told Credit Union Journal. "We need to not fight with each other and get those bank customers."

For reprint and licensing requests for this article, click here.
MORE FROM AMERICAN BANKER