The Good & Angry, The Profitable & All The Rest
Two-thousand ten has been dubbed the Year of the Angry Voter — or more appropriately, just the latest Year of the Angry Voter (But This Time We Really Mean It). A Tea Party movement is slowly coalescing (although, fittingly, some have left, angry at the party); some Democrats are angry President Obama hasn't gone "far enough"; Republicans are angry the President has gone "too far," and Libertarians and independents are angry the other two are still around.
Congress should not have been surprised then last week when credit unions rolled into town angry over provisions in the pending financial regulatory reform bill that would regulate card interchange. CUNA sponsored a short-notice National Hike the Hill after weeks of pressing lawmakers on the issue (and reporting that more than 250,000 contacts had been made before anyone started hiking). "We are hearing now that this is the largest grassroots push since the health care debate earlier this year," CUNA observed.
I'm sure that's just what any member of Congress or member of their respective staffs wanted to hear: Health Care Reform II. Keep in mind Congress is hearing plenty on the other sides of this issue from other groups: merchants, card processors, consumer groups, etc. Keep the amendment in. Get the amendment out. Just take a portion out. Just put a new portion in. It obviously depends on where one stands (or who is cutting the check to the PAC, the lobbying firm, the lawyers, etc.) as to whether the bill really is as advertised, the Restoring American Financial Stability Act.
Congress is left to sort out what is really best for the American consumer, and it's track record is not always good, while at the same time sorting out what is best for itself, where its rack record is better.
It's all nearly enough to make for the Year of the Angry Elected Official.
• Taking the term General Session literally, the CUNA CFO Council at its recent annual meeting had as its speaker Lt. General Rusel Honore (USA, Ret.)
Meanwhile, worth noting at the CFO Council meeting was that while it might strike some as the last place they expected to hear it, credit union philosophy and uniqueness and the fundamental reason for being all found their way into some of the debate and discussion at the meeting.
To be sure, much of the discussion was focused on revenue and that word one never used to hear at a credit union event, profitability. And as well it should be. Perhaps a few too many credit unions have been taking that "not for profit" piece a bit too literally, and when combined with the economy and those assessments and that 80/20 rule, have made a priority out of finding ways to "fairly" generate more revenue from all members, but especially the "80" who are riding the tails of the "20."
Those are the primary reasons, by the way, Credit Union Journal has invested so much of its editorial coverage in successful growth strategies-and will continue to do so.
Here are a couple of the statements I took notes of during discussions at the CFO Council meeting:
- "We are making sure our profitable members are taken care of," said one CFO. "Those members who are not profitable, we are 'burdening.' We are trying to get to the point where we are running the business as a business. I am trying not to sound like a heretic. But we have to make sure profitability on a per-member, per-product basis is secure."
Another CFO, one of many to acknowledge their credit union is frankly ill-equipped for many reasons to identify the actual value each member brings to the cooperative, observed, "We are in the process of identifying profitability. We are finding that we haven't captured all the data we need to identify who is profitable. Our first attempt is to identify who is unprofitable and then try to move them into the profitability category. We have to do something."On this latter point, what is interesting is the importance of understanding the profitability of each member and each product/service is hardly new, and the technology to do so has been around for decade. Setting aside certain factors such as FOM or sponsor group, why some credit unions have consistently grown and others haven't isn't really a CIA-level secret.
For a good long time many credit unions were able to post decent ROA numbers and put away reserves pretty much by turning on the lights. But the last two years have done much to separate those who understood what drives growth from those who, well, knew where the light switch was.
• Speaking of growth-drivers, a reminder that Credit Union Journal is seeking your nominations for Best Practices in Credit Unions and applications to participate in our annual and very popular Day in the Life of Credit Unions project (contact Lisa Freeman at firstname.lastname@example.org).
Frank J. Diekmann is publisher of Credit Union Journal and can be reached at email@example.com.