FIS had been a partner in the failed attempt to launch an industrial loan corporation, or ILC, which would have existed to purchase credit union card portfolios. Creating or partnering with a buyer, or becoming a buyer themselves, has been the strategy that a number of card processors and card processing CUSOs have adopted to counter the card portfolio sale trend. If FIS adopts such a strategy it will be the last of the major card processors or card processing CUSOs to do so.

Frank Selker, president of Asset Exchange and one of its co-founders with CEO William Koo, argued that the purchase could be understood almost as a hedge for FIS in the sales arena.

"Look, they know and we know that some credit unions are going to sell their card portfolios for any number of reasons and there really isn't anything that a card processor or consultant or broker is going to be able to do to change that. By partnering with us at least FIS can make a little money from the sale. Right now, they don't make anything," he said.

But is it realistic to suppose that Asset Exchange would be really able to broker the sale of card portfolios processing with FIS now that they are owned by FIS? Both Selker and Koo argue yes and that, in an apparent paradox, the purchase by FIS allows

the firm to be more independent in its card

portfolio evaluations.

Both men noted that critics have long charged that brokers like Asset Exchange cannot really offer unbiased advice to a credit union considering selling its card portfolio because they used to only get paid if the portfolio sold.

Asset Exchange always countered the criticism by arguing that it put the interests of the credit union first and that never told a CU to sell or to hold a portfolio. But it did acknowledge that under the system of charging the buyers the brokerage fee it only made money when portfolios sold.

And the money can be significant, often between 2% and 3% of the portfolio price, often hundreds of thousands of dollars, though the firm has never revealed any specific amounts

it made from any portfolio sale.

In February, Asset Exchange revealed a policy that it said it began putting into place in 2006 where it began collecting fees from credit unions rather than from portfolio buyers. The fees were not as high as those the firm used to charge portfolio buyers, but they served to make clear that Asset Exchange worked solely for the credit union. The firm's purchase by FIS only continued that policy shift, firm executives maintained.

"From our perspective we can now be more independent, not less," stated Koo. "Now our income does not depend on whether or not a credit union keeps or sells its portfolio. We can offer a completely unbiased evaluation."

Bream agreed, noting that if a credit union is determined to sell its card portfolio–and in fact needs to do so for some urgent reason, FIS already has a policy of helping to facilitate those sales.

Industry Reaction Uncertain

Firms which have been active in the credit union card portfolio market reacted with a degree of uncertainty to the news.

Perhaps the firm poised to most uniquely benefit from the sale is Brookwood Capital, the other independent portfolio brokerage that has served the credit union space.

"From our perspective the news about the Asset Exchange sale will just help to further distinguish us in the market," explained Tim Kolk, managing partner with the firm. Kolk noted that while Brookwood will not be the only independent broker of CU card portfolios, it will be the only one whose card brokerage services are core to its business plan. "There are some other independent firms who might act as a broker for a credit union client's card portfolio occasionally, but that is not one of their primary lines of business. It is ours," he added.

Kolk wondered if Asset Exchange might have a problem working with portfolio buyers now since it is owned by a processing competitor to some of those buying firms, but Selker and Koo noted that even after the sale Asset Exchange had been able to help credit unions broker card portfolio sales and that none of their credit union clients or portfolio purchasers had stopped working with the firm after they learned of the sale.

Ondine Irving, a noted card consultant who has been working with credit unions on improving portfolio performance said she saw the Asset Exchange move as another sign that the card brokers are realizing more money can be made helping credit unions

keep and improve their card portfolios rather than

sell them.

She pointed out that card portfolio sales have been essentially flat and that there are now cases of credit unions that had sold their portfolios looking to get back into issuing again.

"The market is a lot different now from when credit unions used to believe that the only thing they could with an underperforming card portfolio was to sell it," Irving said, "and when helping CUs sell their portfolios is your bread and butter, that might have to change."

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