Be Careful What You Wish For

Credit unions serve a great purpose. Credit unions step in for many to offer a hand up when consumers have been back-handed by other financial services providers. Credit unions don’t serve “the man.” They serve the people.However, credit unions aren’t always willing or able to help people who’ve gotten themselves into a financial pickle. Sometimes, the best thing a credit union can do for their members is to say “no” to a loan. And that certainly isn’t what a member wants to hear.Life isn’t tied up perfectly in a neat little bow. Right now many credit unions are facing declining assets, declining CAMEL ratings, increasing bankruptcies and charge-offs, and stagnant membership growth. Budgets have been tightened and for many, it’s the first time in their histories that they have had lay-offs. The news is not always good, and especially for credit union executives, that can be a bitter pill to swallow.Some Monday morning quarterbacking would say that this was partly foreseeable within credit unions, other financial institutions and the world economy. Of course home values could not continue on the trajectory they were on. Of course American consumers couldn’t continue to live off home equity. Now that the status quo has been ripped wide open, everyone is screaming and pointing fingers.Primarily, credit unions are feeling the residual effects of the financial crisis, like credit card defaults because a member declared bankruptcy to save their house from a subprime mortgage obtained elsewhere or funding the construction of a new home that the owners walked away from when it dropped 25% in value over the eight-month build. Other credit unions, like Norlarco and Huron River, pushed the envelope and paid the price, while the surviving credit unions are also paying for the rogues’ mistakes.The industry is torn on the corporate credit union issue. Some are saying let them burn, while others are begrudgingly willing to foot the bill through an NCUSIF premium. Still others are looking for significant restructuring. However, no one was complaining when they were taking advantage of corporates’ higher-than-market returns or competitively priced services. The corporates were able to do this in part because of their investments in the now much reviled mortgage-backed securities that the proverbial everyone was into.So no one’s perfect. Unbelievably enough (I say with tongue firmly in cheek), Credit Union Times has been accused of imperfection. We receive e-mails and hear comments that we’re being too tough, that we need to report more positive news. We receive e-mails and hear comments that we’re not hard hitting enough. You get the same thing at your credit unions: one member comes in and berates you up one side and down the other, but five minutes later another member is singing your praises and recommending you to everyone. Somewhere in the middle, you find the truth.Credit Union Times provides a service to the credit union industry. Credit unions need to stay up-to-date on industry events and issues just as they need retail delivery mechanisms or a compliance officer. Credit Union Times has not been in existence for nearly 20 years to serve as a cheerleader for the industry. Nor does the magazine exist to tear the industry apart or print information we can’t corroborate with solid sources. We are here to reliably educate and inform the industry, whether the news is good, bad or indifferent. We strive to get points of view from a broad spectrum and present them all for you to decide.So if you ever feel we’re missing something or overdoing something, definitely let us know but first consider what you want versus what you need.–Comments? E-mail [email protected]