PayThink

The regulatory restructuring debate has included its fair share of nostalgia for the days when investment and commercial banking were strictly separated—the days before lawmakers took a sledgehammer to the Glass-Steagall Act. But a new wall going up between the two may diminish the need for wistful reflection. Investment and commercial banks are sinking into an image war, with the winner’s prize going to the side that ends up less reviled by the public and lawmakers.

While credit unions have been faring better than many large banks and savings institutions in this current economy, it is now more important than ever to maintain member loyalty. Not only do credit unions need to solidify those member relationships, but they need to ensure those relationships are as deep as possible and profitable to the institution. How can this be accomplished?

I loved Frank Diekmann's column in the July 13th issue. I have believed for a long time that credit unions should first lift the value of the credit union space and then communicate and differentiate their individual brands. To win members from banks, we need to tell the larger credit union story. Though attempts have been made, we've never quite gotten it right because we've never found a way execute well on a national scale.

Checking into the Barcelona AC Hotel recently I was greeted with an announcement so shocking, so unbelievable, so completely unheard of, I stared blankly at the front desk clerk for a moment and then asked him if he would repeat what he had just said. Slowly.

If it indeed enjoys blood, the phantom squid plaguing the financial system must be feasting right now. Members of the financial media are tearing each other up over whether Goldman Sachs is good or evil, and the fight is providing an increasingly effective counterpoint to the mounting pile of stories about Goldman’s sickeningly large returns. The bank whose image problem stems from making too much money is getting a media boost that’s coming, ironically, free of charge.

There's evidence in today's Financial Times that idealists live on — on Capitol Hill. Sen. Mark Warner, D-Va., published an op-ed in the paper arguing for the creation of a single financial regulator. Released as the regulatory restructuring hubbub in Washington comes to a temporary halt and the last remaining lawmakers depart the District for their August recesses, Warner's piece demonstrates how very little progress policymakers have achieved in their attempts to fix a broken system.

This will be the Senate’s last week in session before the August recess; the House has already wrapped up its proceedings. Lawmakers will be ending an ambitious push on regulatory restructuring (not to mention healthcare reform) with less than they expected to accomplish, and that means summer homework. They’ll have plenty to chew on during the break. For one thing, the Treasury Department is insisting it will finally release legislative language on regulating derivatives this week so that members of Congress can review it over recess. There’s no set date and time for the announcement. Other activity on the Hill this week won’t be quite what was in July, but the halls of Congress won’t be completely silent yet.

It’s a pretty dense document, but it holds some important implications: Two economists have released findings showing a connection between better stock price performance during the financial crisis and higher capital requirements for banks. But the question remains: What measure of capital should reign supreme: Tier 1 or tangible common equity? The study’s method and results produce a quandary.

Last week there was a healthy reminder that if you want to know the shape your house is in, it can be a good idea to get out and take a look at it from down the street. You may need a coat of paint, after all.

I have read letters from Mr. Dennis Fisher (here and here) expressing relief that credit unions were not able to access TARP funds, much to the dismay of Dan Mica, CUNA, the CUNA Board, and the CUNA Governmental Affairs Committee (Marshall Boutwell, member) and I am sure other credit unions. I have read the letter from Mr. Marshall Boutwell, attacking Mr. Fisher and praising the work of Dan Mica in CUNA's efforts to place credit unions at an even greater risk by accepting "tax payer" funds.