PayThink

Ten years ago a Starbucks opened next to a coffee shop in Kansas City, Mo. Today, the coffee shop remains, but the Starbucks is closing its doors, according to the New York Times. Reportedly, Starbucks is struggling across the country, facing slowing sales and increased competition. Howard Schultz, who built the chain, has resumed control in an attempt to revive sales. “Mr. Schultz has said he wants to refocus on the ‘customer experience,’ recapturing some of the magic...He said the company’s decision has been ‘too driven’ by improving same-store sales rather than consumer needs...” The Times wrote. “What we hear from consumers more than anything else is, ‘It’s not that I don’t like Starbucks, it’s that they are no longer relevant to me as they used to be because I’ve changed and they haven’t changed with me,’ Schultz was quoted.

Being a Seattle resident and living in Starbucks’ hometown, their strategies and actions are often first applied here. Like credit unions they want to continually differentiate themselves and create individual community relevance while promoting a strong international brand. It goes without saying that they have been extremely successful as they are a household name in North America and across the world.

Consider the irony that charter choice has become all but extinct in the credit union movement, and then along comes the Treasury’s proposed Blueprint to consolidate banks and CUs with its requirement of a common federal charter for national banks and federally chartered thrifts and CUs.

Credit Union Journal gets the letters. And the e-mails. And the “off-the-record, and you didn’t hear it from me, but...” whispers of concern. And when it comes to one issue, so, too, does NCUA Board Member Gigi Hyland.

As housing sales continue to plummet in 2008, pressure is increasing to get more profit out of mortgages. Existing home sales were down almost 600,000 units in 2006-2007, and while levels are moderating, the boom is clearly over. Wholesale and direct lenders, title insurance companies, plus thousands of real estate attorneys therefore must develop new business practices that streamline core processes and cut costs. One recent development is the deployment of remote check funding to gain a further advantage in the marketplace.

Imagine for a moment your local school board has announced a plan to somehow compensate themselves, but they decline to provide further details, saying only that everyone will just have to trust them. Or, let’s say a local government agency is pressed to be a little more forthcoming on what that budget line item “management rewards” might entail, but it, too, says there is just no need to do so, arguing it would invade some people’s right to privacy.

Remember the good old days when visionary people got together and started the credit union movement? Well, I don’t either. After all, the first “credit unions” were established in Germany in the 1850s (I’m old, but not that old). Their mission, lo’ those many years ago, was to help common folk who weren’t being served by the banks of the time, and guess what? it still is!

In December 2003 I wrote a piece on how consumer debt affects CUs that observed, “CUs will also want to be careful [to] resist ‘chasing’ loans with questionable credit, just as they should resist ‘chasing’ yield in the investment portfolio.”

As I write this column the Dow just plunged 400 points because the price of oil went up–again–to a record high. The oil news, the Dow, mortgage foreclosures, skyrocketing food prices, and unemployment fears. The news today is filled with reasons to fear for our economy and to predict job losses and more loan defaults.

Consider the observation, below, for a moment: