PayThink

It’s no secret that credit unions are the only financial institutions that cannot raise capital outside of retained earnings. However, some may argue that there is no need for credit unions to raise additional forms of capital because credit unions are well capitalized and there is no crisis calling for alternatives.

The story about a member depositing methamphetamine into an ATM instead of cash raises concerns about risks arising from contaminated or unhealthy materials being deposited into ATMs, possibly exposing employees to unhealthy substances (CU Journal, Feb. 18). In opening up a deposit envelope like the one in this story, would airborne particles of illegally-refined meth pose a serious health hazard to the cashier servicing the ATM? What if the deposit was enclosed in a plastic zip-lock bag damaged during insertion into the ATM?

Someday, some smart person will coin a phrase that goes something like “what goes around comes around” or “those who don’t learn from history are doomed to repeat it,” or sayings to that effect. And someday those two scenarios will intersect.

Recently, U.S. Central has received its share of headlines regarding our financial performance during 2007 and the impact it has had on our debt ratings from Standard & Poor’s (S&P), Moody’s and Fitch. But despite these headlines, one point remains clear: As the only wholesale corporate credit union, U.S. Central is an important investment alternative and liquidity provider to its member corporates.

As a CEO, I am shocked to hear that so many credit unions are on the financial ropes, even in a taxless environment.

Recent Credit Union Journal articles reporting negative earnings for some credit unions in California are missing an important perspective. California credit unions, with more than 11% capital, are well positioned to manage the effects of the current economic downturn, and the amount of losses reported represent only a small percentage of total assets for most credit unions.

Although not-for-profit, “service-profit chain” analysis can and should be utilized in credit unions for the same reasons many other industries have implemented the strategy.

The most powerful research methodology sweeping credit unions today is based on a simple survey question: How likely is it that you would recommend ABC Credit Union to a friend or family member? Survey participants rate their responses on a scale from 0 to 10. Nines and 10s are “promoters” of the organization, 0-6 scores are “detractors,” and responses in between are disregarded.

Global warming may indeed be the long-term trend, but don’t try selling any Al Gore videos across much of the northern United States this winter (unless you can burn them). It’s been cold and snowing and snowing and cold across much of the country’s top half, and credit unions have been doing what they can to help warm both hearts and hands, everything from collecting mittens in Iowa to special deals on loans to buy heating oil in Massachusetts.

This is a true story. I preface it only because if I didn’t have pictures or witnesses I’m certain someone would accuse me of making it up.