CUs in CA turn IOUs into Members

by Ron Daly

 

We're all aware of the big-time budget problems that are plaguing The Golden State. A cash-strapped California is having to offer IOUs to citizens and businesses that earned a tax refund. This system has been used before in 1992 when the coffers were empty, and will offer IOUs that mature in October of this year.

But not everyone likes IOUs. I refer specifically to the larger banks - your Bank of Americas, your Wells Fargos - who are refusing (at least as of this writing) to accept IOUs issued by California. Isn't that something? The banks that asked for billions in bailout money and came back for more aren't honoring IOUs. Huh. 

Well, as usual, where the big banks fail, CUs succeed. 

California CUs are ready, willing and able to accept IOUs from the state. [Read in the CU Journal]

From the article: 

"More than two dozen credit unions, including SchoolsFirst FCU, The Golden 1 CU, Travis CU, Yolo FCU, San Francisco FCU, Community First CU, Provident CY, SRI FCU, Kaiperm Diablo FCU, Contra Costa FCU and Chabot FCU, have announced they will accept the IOUs, some them indefinitely."

What a great opportunity. As Golden One CU President/CEO Terry Halleck said in this article:

"However, I believe it would be great for credit unions if the banks did not accept the Registered Warrants because that service shortfall and strategic misstep should then cause many bank customers to rethink their banking relationship," Halleck said.

A willingness to be there when the big banks aren't - the CU difference strikes again. 

How are you showcasing the difference your CU can make? Were you able to do what a bank was unable to do recently? Tell us about it. 

Pyramid: Standing the Test of Time

by Ron Daly

[Editor's Note - this story also ran on DigitalMailer's home blog. To learn more about DigitalMailer's products, business solutions and technology/industry news, visit http://www.digitalmailer.com/blog/ ]

 

I thought we'd highlight the good works and good reputation of a credit union that has been serving members for the past eighty-four years. 

Pyramid Credit Union in Tucson, Arizona has four generations of members and a life-long reputation of helping those who wanted a better financial future. Recently, an article about Pyramid was published in the CU Journal (click here to read "It's a Wonderful Life Really Does Still Exist in Tucson, Ariz." by Paul Lucas). At Pyramid's 80th annual dinner meeting, members celebrated the good works of the credit union and the credit union celebrated its diverse and long-standing membership. 

And what a story! At BarCampBank Vegas, friend and colleague Robbie Wright asked why everyone doesn't get their own credit union started. Some might have balked at the idea, but reading about Pyramid's humble beginnings makes the idea seem pretty smart to me. Lend a little, get a little more back, help out your fellow man. And they've kept the basic concept at their core for eighty years now. Keep up the great work, Pyramid. Here's hoping that everyone in our industry takes a page from your book and works to better their community and the lives of their members.

Does your CU have a great success story? Tell us about it in the comments section. 

Duh of the Week: A Fox to Guard Your Chickens

by Ron Daly

We've given this award to a few crooks before. Nothing like this, though. 

Let's talk about Max Ray Vision, the computer hacking expert hired by - get this - the Departments of Defense and Energy, the US Air Force and NASA to test their system security. The man who was sent to prison in 2001 for leaving vulnerabilities in these systems was re-hired as a government informant upon his parole. In the time he worked for the feds, he stole thousands of account numbers and PINs and distributed them on an info-trading website. 

Let's go back over that. 

1) He works for the government and hacks their websites
2) He goes to jail for compromising government information
3) When he gets out of jail, the GOVERNMENT HIRES HIM AGAIN
4) HE STEALS MORE INFORMATION AND GOES BACK TO JAIL

Who on earth got the bright idea of putting this guy back to work on the government dime? Who couldn't see that putting the chickens under the watch of the fox wouldn't work? 

You might think, faithful reader, that we're about to award Mr. Vision the "Duh of the Week" for his two arrests and his Dick Tracy-esque name. No. The "Duh of the Week" - and a high pole position for the "Duh of the Year" - goes to the Government for hiring this guy twice. And being caught with their fly down...TWICE. 

Enjoy the award, recruiting personnel for the Departments of Defense, Energy and NASA, respectively. Hopefully nobody steals it - especially the person you hire to protect it.

Now, if you'll excuse me, I'm off to rent a DVD copy of "Catch Me If You Can". 

SPECIAL: CUs are being recognized as great businesses (no, really!)

by Ron Daly

Well, it's taken some time, and we still have a long way to go as an industry, but more and more recently credit unions are getting recognized as great businesses. Take Shell FCU for example, who recently launched iLife to sweeping success and continues to serve its members in a way that really makes a difference. Click here for our previous article on DMI's home blog.

We were also excited to learn about Local Government FCU, who were recently applauded as one of the top business leaders in their area. From the article on their success: 

Local Government FCU was highlighted for the launch of LGFCU Financial Partners LLC, a CUSO that made $14.5 million in loans in 2008. The credit union also committed $50 million to purchase North Carolina municipal bonds to keep state infrastructure moving forward. Business Leader Media also recognized the credit union’s mortgage assistance and scholarship programs and the introduction of a Visa debit card that donates 50% of the merchant’s transaction fee from every purchase to the N.C. Association of Rescue & Emergency Medical Services. 

That's awesome. 

But I can't shake the feeling there are more - more CUs with happy members, more CUs that are giving that famous "Little Guy" a fair shake and a sturdy umbrella, more CUs that need recognition. Maybe they've already been recognized by their local press, their rotary club, the TV station in town...whatever it is, I want to know about it. 

This is important stuff, people. Too long, we've been laboring under the illusion that we'd be the financial world's "best kept secret" , and that we'd have to settle for what that brought for us. Why? Let's go show them that CUs are GREAT businesses, with GREAT intentions and GREAT results. 

Tell us your CU's recognitions in the comments section, or send us an e-mail.

Good Examples

by Ron Daly

Credit Unions were created to promote thrift, offer quality services to people of moderate income and create a sense of community through fair lending and strong member relationships. This set of standards, long a point of pride for credit unions, have also managed to make the industry profitable. The focus of individual credit unions is to serve their member communities, whether those communities are large or small. 

The lesson? You can be profitable without being too large or too greedy. 

Two people who discovered this? Ryan Bubb and Alex Kaufman, doctoral candidates from Harvard who shared with the New York Times their findings on credit cards from CUs (click here to read). To sum up: credit union credit cards manage to be profitable while already adhering to most of the rules laid down by the new CARD Act. Those folks who are concerned that credit cards will be unable to survive with the new requirements aren't paying attention to CU's, the authors say, who manage to do well without being too harsh on consumers. 

Where else can CUs make an impact by showing themselves a "good example"? How will you use this info to drive up business? 

Free Market or Flea Market? Government Paying for Junkers

by Ron Daly

Have you seen those commercials for "mail us your gold" things? You put old jewelry in an envelope, mail it to these people, and they send you cash. Or so we're lead to believe the thought that people would pay handsomely for your bits of scrap metal.  

Now from "gold" to "old" in the next round of the government trying to boosting the economy. If your car was made after 1984 and gets 18 miles(or less)-per-gallon, you could qualify for an incentive under the "Cash-for-Clunkers" program from the Government of up to $4,500. Seriously. Click here for the WSJ article. The idea is to take people's old, low mpg vehicles and turn them into...well, what DO they do with traded-in vehicles? Scrap? Recyclables? Monster-truck rally? Is the goal to re-sell them to a developing country? We can't sell them here - that's half the point. Trying to drive up sales of new vehicles and defibrillate Detroit is the overall aim of the incentive. So, what happens? They take in old cars and you go buy a new one - presumably one with a high fuel-efficiency. For cars, it's 32 mpg and under $45,000 to get a $4,500 incentive. Small trucks need no price restriction, 23 mpg minimum for the $4,500. Large trucks have no price restriction and only have to get 17 mpg for the incentive. 

My predictions for this:

1) It'll go through, but it won't be much help in saving the car industry OR lessening our dependence on oil. 

2) The one place it might be good for automakers (with a focus on American automakers)? Maybe GM can move some Volts and Malibu Hybrids, two vehicles that are focused on reducing carbon emissions. 

3) Lambourghini is going to start classifying the Gallardo as an SUV 

4) While captive financing will be offered by the dealers, Credit Unions will start to find ways to capitalize on the program to make sure that the industry keeps its fair share of the auto loan pie. 

Anyone looking at this already? Share your thoughts.

Funny Money: Why banks want to be our friend

by Ron Daly 

Redneck Bank, which I'm sure you've seen by now, is still alive and kicking. They're offering checking accounts of various types and they're the buzz of the finance news world for their tongue-in-cheek approach to banking. You can see their website here, complete with braying donkey, outhouse for "personal bidness" and lots and lots of Flash animation tutorials and info. (Note: they're not a "bank", per se, they're an extension of Bank of the Wichitas). 

Then, there's Ally, formerly GM's GMAC bank. They're putting out these commercials about kids who don't get why the "bank guy" isn't being fair. Ally is shooting to set itself up as the friendly bank, the kind that's looking out for the customers' best interest.

Tightwad Bank was closed and then reopened. According to this NPR snippet, they're offering debit cards with the word "Tightwad" across the top and trying to set themselves up as the "bank with a sense of humor".

What do they all have in common? 

Duh of the Week: A PennyMac for your thoughts

by Ron Daly 

Once upon a time, there was a giant lending house called Countrywide. When the financial crisis struck down a number of lenders in 2008, Countrywide was one of the first to go. Having gone through two years of controversies, lawsuits and accusations by the SEC, Countrywide had to be absorbed by Bank of America. BofA has decided to dissolve the Countrywide brand altogether, as thousands lost their homes and their mortgages due to over-inflated appraisals and bad lending and payment policies. 

But the story doesn't end there. The former Number Two at Countrywide, Stanford Kurland, decided to open a new vulture firm - nicknamed "PennyMac"  [click here for the CU Journal story].

The business model, as it's explained in this Business Insider article, works as such: PennyMac buys bad loans from busted banks or the FDIC for next to nothing, follows up with the homeowner and asks if that homeowner wants to keep paying for the loan at a reduced rate, then makes double the price they paid for the loan in profit. 

Stop laughing, I'm not joking. 

Brother, Can You Spare a MBA? Why You Shouldn't Freak Out Over Student Loans

by Ron Daly

I knew it wouldn't be long before I had to say something folks wouldn't agree with. 

There's a new proposal suggested by the Obama administration that would extend student loans directly from the Government instead of pushing the 97% guaranteed loans through banks and CUs. Of course, I always like to look at things from a Taxpayer's point of view. And how good is it to hear the Government is trying to save $94 Billion over the next ten years? Considering the billions and billions spent on bailouts, it's a welcome relief to hear that they've found one area where they can save some money.

Of course, the proposal is under fire from financial institutions and trade groups, who argue that this will mean less lending (read the CU Journal article here). 

Or will it? 

A Day to Remember

by Ron Daly 

I try not to get too sappy with my posts, but sometimes you just have to say something. 

With memorial day coming up, I'm sure most folks are thinking about the three day weekend. With all the added stresses compounding - gas going back up for the summer travel season, trying to figure out what to do with the kids who are getting out of school, making arrangements, fixing up the house, visiting family - it's hard to find a moment to remember why it's all here. 

I took a moment yesterday to think about the meaning of a thing like Memorial Day. It's a day of remembrance, not just for those who gave their lives for liberty, but for those who still fight today. The thought of these men and women fighting for the life of our country humbles me. I may be just like any other American, starting my summer and making my plans, but I always give pause to think about what the day is for and to appreciate my family and my home. 

When I started thinking about setting aside a day of memory, a day that's built for remembrance and reflection, I started thinking about the state of our country and the state of credit unions. I remember when I went to work for the credit union some years back, how I worked hard and how I got to where I am now. I remember when times were lean before now, and looking back helps me find new ways to shoulder my burdens in these days of recession and "doing more with less". I'll never say the current recession is a good thing - it isn't. Nothing good about nearly 10% unemployment and shrinking markets that can't find their feet. But if there's a silver lining to be had, look no further than a re-committed sense of purpose in our industry. 

The squabbles about having to expand our message, needing to be more competitive with banks and with each other, the need of more capital, and the future of the industry go on as you read this. But if one credit union (or bank... remember, too, that not all banks are created equal) has reached out to people in need and helped them - not with a donation but with a new direction -  it means we're remembering our core values. We were designed to help the man that's down, to enlighten those who didn't know before what they had to do to make their dream come together, to inspire someone to take stock in a community of borrowers that each had a share in the success. 

Sometimes I forget. It happens to everyone in this industry. But I took the time to remember. And I pledge to take a moment every day to remember not just the values of our industry but the values of our country. I will be a better neighbor, a kinder partner, a stronger leader. I won't take for granted the service and the goodness of the people that forged our prosperity and believed enough in our dreams and our passions to devote their lives to our country's protection.

I'm going to take the time to remember. I hope you will, too. Have a happy Memorial Day.