President Obama's surprise decision to restore economic ties with Cuba will reverberate throughout the U.S. financial services industry, as Cuban-Americans send more money to their relatives back home and American companies start to conduct more business in the island nation.
The changes will likely be felt most acutely in Florida, which is home to more than two-thirds of all Cuban Americans, but where doing business in Communist Cuba remains politically fraught.
But the impact on U.S.-based credit unions remains unclear given the early status of the new development.
Obama announced Wednesday that individuals in the United States will be able to send $2,000 to Cubans each quarter, which is a four-fold increase from the current maximum, and that money transfers for the development of private businesses and humanitarian projects in Cuba will no longer require a special license.
In addition, U.S. financial institutions will be allowed to open correspondent accounts at Cuban financial institutions, and travelers to Cuba will be able to use their U.S. credit and debit cards. The list of products that U.S. businesses can export to Cuba will be expanded to include telecommunications devices, agricultural equipment for small farmers, building materials for home construction, and other private-sector goods.
The Obama administration's decision to loosen financial restrictions is part of a larger plan to restore full diplomatic relations with Cuba more than five decades after Fidel Castro rose to power.
"I believe that we can do more to support the Cuban people and promote our values through engagement," Obama said during a speech at the White House. "After all, these 50 years have shown that isolation has not worked."
(Obama finalized the agreement after a 45-minute phone call with Raúl Castro, Cuba's leader, on Tuesday.)
However, for South Florida-based credit unions, many of which have a heavy Cuban-American membership, it is difficult to see any immediate impact from thawed relations between two countries that have been enemies from more than fifty years.
Michael Raley, the CEO of Miami-based Baptist Health South Florida Credit Union, which has a large number of Cuban-American members, said he looks at normalizing relations with Havana as more of a "positive" than a "negative," but did not foresee any dramatic shifts in the operation of his credit union or other Florida-based CUs.
"We do not do international wire transfers here, but I think, longer-term, better relations with Cuba will lead to more Cuban-Americans in Florida sending more money to their family on the island," said Raley, whose credit union holds some $50 million in assets.
A number of Florida-based credit unions — including the $883 million South Florida Educational Credit Union of Miami — do provide international wire transfer services.
But Mara L. Falero, a marketing representative for another Florida-based credit union, the $164-million Miami Lakes-based Jetstream Federal CU, said that with respect to the latest news about US and Cuba, "the information is so new we haven't really had time to review it all and see what it means for credit unions."
Similarly, Richard Helber, president and CEO of Tropical Financial Credit Union, a $546 million institution based in Miramar, Fla., noted the details of what restrictions are being lifted are still a "little vague."
The details of the looser economic rules are expected to be finalized by Treasury and the Commerce Department in the coming weeks.
Though Americans will be allowed to travel to Cuba for various purposes, tourism will still be barred, as the decades-old embargo, which can only be lifted by Congress, will remain in place.
Helping Cubans Get Access to Financial Services?
But at least one Cuban-American credit union executive thinks opening up relations with Havana could have significant impact on helping Cuban people gain access to financial services.
George M. Poitou, the chief operating officer of $615 million SCE FCU in Irwindale, Cal., told Credit Union Journal that not-for-profit CUs are "less threatening" to the Cuban government than large U.S. banks.
"We are cooperatively owned, not driven by generating profit for a small group of shareholders and many of us are willing to offer micro loans to start businesses as well as small loans to individuals," Poitou noted
Poitou, who has relatives in Cuba who he sends money to fairly regularly, said: "Cuba is one of the hardest, and most expensive, places to send money and few remittance companies offer services to them."
For example, SCE FCU headquartered in Southern California with a strategic focus on serving the large Hispanic population of Los Angeles and surrounding communities offers remittances, but not to Cuba. Meanwhile, "some, but by far not all, offices of Western Union can wire money to Cuba," according to Poitou.
Poitou cautioned, however, that this change is so new and "frankly caught most of us by surprise so we need to take a bit of a wait-see attitude."
But he added that, as a CU movement, we should "begin the process of reaching out to the Cuban government immediately."
— Kevin Wack contributed to this article.
