They had to wait until August, but America's credit unions just knew they'd get national media attention, and why wouldn't they? It's the movement's 100th anniversary after all, and banks have been headed south more often than a New York retiree come November (more than 70 failures so far-banks, not retirees). So when USA Today turned its four-color-attention to credit unions, the coverage was naturally about - drumroll, please - high NSF fees and what was reported as lackluster payday loan alternatives.
Were credit unions' reaction measured in keeping with USA Today's style, it would have been as a pie chart with a blue slice showing 85% unhappy, a red slice showing 12% outraged, a green slice showing 2% were firing off letters to the editor, and a white slice representing the inevitable 1% who just "don't know."
Less-than-positive coverage wasn't limited to the nation's newspaper. Loren Steffy, writing in the Houston Chronicle, shared how he had received a letter from his Dallas-based credit union saying it was seeking to "give me one less thing to worry about."
"Immediately, I began to worry," wrote Steffy, who is a columnist with the paper. "The more I read, the more red flags I saw. The credit union...automatically enrolled me in something called 'Overdraft Privilege.' Red Flag No. 1: Beware banks offering privileges for which you didn't ask."
Credit unionists, who typically cringe when they're called "banks" likely didn't mind so much in this case. Going on to talk about how overdraft protection is a "fee grab" and is really "overdraft exploitation," Steffy said his CU's program was "typical" (its overdraft fee is $33) and called the entire business "predatory."
After further criticism that his CU had automatically enrolled him and required members to "opt out" rather than "opt in," Steffy called the claim by the CU's marketing department that the overdraft protection plan is designed to "to cover you in the event of a haphazard mistake - not to encourage careless spending," a "bold-faced lie," saying careless spending is exactly what such plans encourage.
Before you start sending me or Mr. Steffy letters (he has a blog at blogs.chron.com/loresteffy) over how many members use such "courtesy pay" programs, how much money they "save," how many folks "appreciate it," none of that is the lesson to be learned from the negative media. Instead, in keeping with USA Today's format, the real bullet-pointed takeaways include:
- Don't just focus on the positive coverage credit unions have merited in 2009, and there's been plenty, because it feels good. All of us remember the negative far longer than the positive, and you must be vigilant in responding.
- Don't just angrily dismiss every criticism. If, as Ed Filene observed, "Progress is the constant replacing of the best there is with something still better," then ask yourself, "Do we price our overdraft protection as reasonably as possible? Has the fee income it represents become intoxicating? Might we offer something 'still better?'"
- Don't tell your story once and then check that job off the list. Communication of your CU's story can't stop. Ever.
- And, of course, there's the most important lesson of all, as the Houston Chronicle story demonstrates: never allow members of the media into your FOM.
* From the Sad Irony Dept.: I received an e-mail from a company touting customer satisfaction software and surveys that began, "Hi Warren." In another e-mail, the subject line shared this insightful gem: "One key to beating recession: keeping your job." Finally, a recent press release noted that the housing market was slumping most in "the western states of California, Nevada, Arizona and Florida." The latter, of course, being west of the Bahamas.
* From the Bizarre Irony Dept., this announcement from an NCUA Fraud Alert last week: "A federally insured credit union has reported receiving a bogus Letter to Credit Unions...The subject of the fraudulent letter itself is a purported NCUA Fraud Alert."
* During the World Credit Union Conference in Barcelona, the economy was not surprisingly the subject of a lot of discussion. During the meeting, this quote was shared: "Innumerable data bear witness to the breakdown of many monetary institutions caused by dangerous transactions contracted in the follow up of a reckless search for profit...Managers of these big banks who are found to work full time with all their strength have to be paid very well. Their salaries should...not be dependent on the society's profits, but be fixed independently."
And which contemporary critic of capitalism and Wall Streeet issued this critique? According to WOCCU's Dave Richardson, who shared the quote, it was German CU pioneer Frederich Raifeissen in the mid-19th century.
But Richardson offered up another observation that, at least for U.S. credit unions in the audience, was much more relevant, though I wondered how many actually picked up on it. The crisis among some corporate CUs and the related costs to both natural-person credit unions and the NCUA has been severe. WesCorp and U.S. Central essentially failed and are being operated under conservatorship. But all of it might have been avoided had not those institutions, and the CUs that invested in them, been so enamored with chasing yield, according to Richardson. "Do you know what the trade-off was at U.S. Central for investing in a MBS that did not have a government guarantee, vs. buying a treasury bond," he asked. "Seventy-five basis points for five years. So they would buy five-year mortgage backed securities. That's 3.75% more, or $3.75 per $100. The question for you is, is it worth it?"
Frank J. Diekmann can be reached at fdiekmann@cujournal.com.
