I think you can make big $$$ with TARP Cliff notes!

by Ron Daly

I’m serious, it is getting so hard to keep track of all the initiatives, who is asking for what, who is mad at whom, what the trades are saying and what all the big CUs are saying about TARP, SIP, CLF and all the other acronym programs. I heard one CEO tell a consultant a few weeks ago that they would gladly pay for a weekly executive summary of everything going on with this issue. Not a bad idea for someone else to run with! 

Of all the articles out there, I think that Steven Syre’s article in the Boston Globe “Paying a giant’s price” is worth reading for some perspectives at credit unions in the northeast. The starting teaser line...   

"So why are credit unions suddenly on the hook for an investment meltdown that could easily cost the entire industry the kind of money it earns in a whole year or even more? The answer isn't about mistakes made by credit unions. Those small institutions are paying a price for decisions made somewhere else by someone else, calls that seemed reasonable at the time but worked out very badly. It's one more new spin on the familiar story about broken credit markets and the damage that trickles down to hurt people far from Wall Street." 

And his ending...

"Recklessness by financial giants caused most of our problems. Your local credit union is paying a price just the same" 

The Boston Globe article is worth a look. 

Reading this article, I began to reflect on thirty years in the world of credit unions. I've gone through gas crises before, I've gone through major weather events, I've gone through two Gulf conflicts and two Presidents Bush. But this? I don't recall ever having to do this kind of thing before, and I don't know the best way to go about it. I suppose, at this point, we just have to choose the move with the least detriment to the industry. The CLF is quickly becoming a favorite of both CU lobbies and credit unions in general (click here for article), which can't be said about the trade groups' previous initiatives (click here for article). We've talked plenty about the efforts made by NCUA and other organizations to stabilize corporate credit unions (read about our evening with Dan Mica here), and Filene Institute is encouraging CUs to take advantage of the recent stimulus package (read about it here). 

As I said above, I don't know what's "right" for the situation. But what's wrong, both for natural person and corporate credit unions? Waiting too long to make progress and stabilize the industry. The media, as we discussed in yesterday's post, is not going to see the difference between corporates and NPs and is going to bury us alive if we don't get our act together.

If anybody has THE solution, leave it in the comments section below this post.