THE NORTH POLE-Giving your true love 12 days worth of Christmas gifts may have been immortalized in song, but they would likely be immortalized even longer in examiners' reports should loans be made to finance them.
It's an iconic piece of Christmas music: the Twelve Days of Christmas, with its gifts ranging from French hens to pipers piping to, best known of all, a Partridge in a Pear Tree.
For the average credit union member, nearly each of those 12 gifts would require a loan. So for this holiday season, Credit Union Journal asked lenders across the country to keep their tongues firmly in rosy cheeks and share their views on extending credit for such items as Lords-a-Leaping and Maids-a-Milking.
"This girl is getting a heck of a lot," observed Roy MacKinnon, VP-marketing for the $875-million First Entertainment CU in Hollywood, Calif., where they know a little something about exotic gifts. "She's getting these gifts over and over again, like 12 partridges in a pear tree. Not to mention all of the freaking drummers, pipers, and lords-a-leaping."
For 2011, PNC Wealth Management has estimated that the cost of the gifts in the Twelve Days of Christmas would be $101,119.84 (assuming 364 items, as they are repeated throughout the song). Buying each of the gifts just once, PNC Wealth Management said, would still run a Christmas-budget-busting $24,263.18.
Chris Oldag, EVP with City County CU in Ft. Lauderdale, Fla., said his credit union would not give the OK to borrow for the 364 items. "He'd be buying only one of each gift, and I think you can get the calling birds at PetSmart," said Oldag. "And for the eight maids a milking, just get eight people and pay them minimum wage for an hour-58 bucks."
In Charleston, W.Va., Pioneer West Virginia CU SVP/CFO Dan McGowan offered up a more Scrooge-like budget idea: "I'm sure there are 99-cent apps for things like ladies dancing and drummers drumming."
But if someone wanted to be extravagant, Oldag wondered if Danny Bonaduce would still climb up a pear tree as he used to do in personal appearances after his career with the "Partridge Family" TV show ended.
PNC Wealth Management reported the cost for an actual Partridge in a Pear Tree would be $184.99.
Sleigh Full of Issues
The hardest task, our holiday experts agreed, would be trying to underwrite the loan, whether it is for $20,000 or $100,000. Jennifer Cowles, VP of real estate lending for the $1.3-billion American Eagle FCU in East Hartford, Conn., said the easiest would be the gold rings. "And I'm sure we would offer a much better deal than Kay Jewelers or Jared."
But Bill Vogeney, SVP at the $3-billion Ent FCU in Colorado Springs, Colo., is not so sure those golden rings will maintain their value as collateral. "We could be facing a gold bubble. If the economy starts heating up and stocks take off, there will be people selling out of gold, so you could be upside down on these rings pretty quickly."
Meanwhile, other gifts in the song, such as performing artists, pose a sleigh full of underwriting and risk headaches, assessed McGowan. "They are problematic in that they could be relatively expensive. I don't think we've ever granted a loan for any sort of performing arts type of presentation. Don't recall seeing that in our loan policies-a purpose code?"
Vogeney contends that of the "living" gifts, the livestock present the biggest underwriting dilemma." I think anything you have to feed and mop up after does not fit into our loan policies."
"And what do you do if the animal dies," asked Cowles. "The lifespan of the animals may not last the life of the loan."
What too, if love fades away? "You would hope the fire lasts longer than Kim Kardashian's marriage," said Cowles.
But as our credit union team pondered how they could make such unusual loans, First Entertainment's MacKinnon, along with Paul Lucas, a branding consultant based in Fairfax, Va., came up with what they believe is the answer to this Christmas quandary. "Let the bankers do it," Lucas said. "Back in the banking go-go lending days, bankers loaned money on anything," asserted MacKinnon. "They turned rocks into gold, giving loans to people who worked for minimum wage $350,000 for homes in San Bernardino."
Both Lucas and MacKinnon surmised that banks would only make the loan under the stipulation that the performing artists all make a free appearance at the bankers' annual holiday party. "They might also try to get the birds from a poor farmer whose land they foreclosed on," said Lucas.
Drummers Drumming-On The Cheap
"I think they could get the drummers for cheap, too," offered MacKinnon. "The Unversity of Southern California marching band isn't headed anywhere for the holidays" (the football team is on NCAA probation).
But whether CUs know it or not, asserted Oldag, many have been making loans for a number of such unique gifts for a long time. "Every one of us has had some sort of Christmas special, unsecured loan that the member could use for the purchase for any of these things. We cheerfully issue credit cards to quality people and let them use the money as they see fit. And we finance people's wedding aspirations-either for parents helping their kids or for couples planning an exorbitant wedding. The idea of paying for 12 drummers or 11 pipers . . . I am sure we have made loans to pay for musicians."
Yet if the credit union cannot see its way to grant any or all of these loans for the 12 Days of Christmas, Pioneer West Virginia's McGowan offers an alternative. "If our love-struck member is insistent on a big-ticket item, we have some really good rates on car loans in the $20,000 to $30,000 purchase range."
