Weren't able to make it to Sin City last week where both the banks (BAI Conference) and credit unions (California/Nevada league annual-and where we assume there was less sinning) were meeting simultaneously? Here's some of what you missed:
* The banks aren't just unified in their message about credit unions before legislators. One banker told me that at the two banks at which he has most recently worked it was acknowledged they couldn't beat rival credit unions' pricing or levels of service. Instead, when confronted by a small business owner or customer who wouldn't move their business to the bank from a credit union, bank reps were trained to respond, "Yes, but they're just not very convenient, are they?"
* Dick Johnson, the former president of WesCorp who has since retired and now tends to the Richard M. Johnson Foundation, which was created to promote financial literacy, said one reason teaching young people about finances is so important to him is that he was never taught such lessons himself. I shared that story later with Ken Robinson, the retired president of NAFCU, who was on hand for the BAI show as a representative of Bear Stearns. Robinson noted that he, too, was never taught about finances when he was a young man, pointing out that many people in his generation had parents who never graduated from high school.
* Only at a bank conference: the first several rows of seating at the BAI show were reserved for special attendees.
* A topic of prime interest for credit union leaders is where rates are headed. Gene Sperling, the former White House National Economic Advisor under President Clinton, has some thoughts on just that question. "Right now, about 90% of our debt is held by foreigners. The risk is if at some point people become concerned that our economy is too risky, will they keep that money here. If they don't you'll have to raise interest rates."
He later added, "The problem with tax reform is it's very hard not to have any losers," and, "While the GDP has been solid, when you look at the typical family, it's not so strong."
But what most people at the California league meeting will remember most is the Q&A following a presentation by Sperling and Glen Hubbard, former chairman of the White House Council of Economic Advisors who has close ties to the Bush Administration. One woman took to the microphone and charged, "Mr. Sperling, I wish you would recognize that you lost the last election and get over it." As the audience murmured, Sperling responded, "Ma'am, with all due respect, we live in a country where we have an opposition and a voice." Sperling added that while he was in the Clinton White House he had vigorous disagreements with the Republicans, but never begrudged them the opportunity to voice their opinion. The response brought a strong cheer from the audience.
* The tsunami of pending CU CEO retirements that has long been predicted may be more of a small wave, according to one expert. "I think there will be a little bit of a bubble as some get close to retirement age, but because of their 401(k) (performance), they're not quite where they anticipated they would be in the 1990s," said Jim Cardwell, CEO of Cardwell, a Westlake, Ohio-based consultancy whose company won "Best of Show" from the CUNA Technology Council during the BAI conference. "Many CEOs are going to have to hang around a little longer to rebuild. If the economy does turn, then there could be a void. But the other side is that there is no shortage of talent in credit unions among management teams."
* Subscribe to the theory that all those deposits that have flowed into your credit union are from members just waiting for the stock market to improve? David A. Deberko, chairman and CEO of National City Bank, Cleveland, observed during the BAI conference that he's not among those subscribers. "Our customers want yield," he said. "I think those who say there is a vast amount of money just sitting in banks waiting to go back into the stock market are wrong. People want yield in a safe environment. We have made outbound calls to people to urge them to move their money into higher-yielding deposits."
* Henry Wirz, president of SAFE Credit Union and a member of the Public Advocacy Campaign Task Force leading the big media campaign that is to launch in California and Nevada in 2005, said many people-including small CUs-don't recognize what will happen if large CUs are ever taxed. "If you tax the billion-dollar credit unions, they will pull out of the CUSOs, and it would leave a hollow remainder," he said. "The cooperative structure would not be supported as the economies of scale are there only when all of us cooperate."
That public advocacy campaign may be coming just in time. During the Nov. 21 episode of The Simpsons, Bart Simpson was suffering through a lame birthday party that included as a gift from his father, Homer Simpson, of what every boy wants-a yard rake. The last item he unwrapped was a coffee mug emblazoned with the message, "Premiere Credit Union." Lamented Bart, "Man, this is the worst birthday party ever." Doh!
Frank J. Diekmann can be reached at fdiekmann
