The NEW Vicious Cycle

by Ron Daly 

Imagine the Government as a big well from which you can draw as much money as you need. Okay, not YOU, per se, but a huge bank with billions of dollars in bad assets. 

So, they've already received billions from a Government that believes its citizens can't survive without said business. Whenever they run up against a wall, they come back (not by plane, obviously) and they ask the Government for more. The Government gives them more. The consumer gets nothing out of it. And so on. Welcome to the NEW vicious cycle!

There was an outcry of trying to find out how the was/is being spent, but I'm not sure we, the taxpayer/consumer, really want to know. For example, did you know there's someone taking up the time of our congressional leaders, telling those decision makers over and over again how important it is to give money to the big banks? Did you know that person was hired BY the big banks to stress the importance OF the big banks?

Yep, you guessed it - the banks that have been taking all your taxes and jacking up your credit card rates have stooped to lobbying the government for more money and more favors (click here for the AP article). 

Duh of the Week: Asleep at the Wheel

by Ron Daly

I could give this award to a number of people, but for some reason this was what ticked me off worse than anything.

President Obama took yesterday to meet with credit card industry leaders at the White House to start working on a credit card consumer bill of rights. A serious topic near and dear to credit unions and members alike which we talked about earlier this week. All was going pretty well, the discussion was said to be lively...and then this happened.

Click here to see "Larry Summers Falls Asleep...AGAIN" [YouTube]. 

Click here to read about it on ThinkProgress.org

  

Mind the Gap

by Ron Daly 

If you've ever been to London, you are familiar with this phrase that's meant to warn travelers on the Underground. It's a simpler, smarter way to say "don't fall into the crack between the train and the platform". It's become part of the culture there. 

There's a gap here in the states that needs minding, too. It sits between colleges and affordability and it was part of the carpool discussion this morning. The stock market has shrunk about thirty percent. The housing market has shrunk about thirty percent. People have lost/are losing money with every passing week and the value of a dollar is waning. Despite all of this, college costs are increasing year-to-year? According to the people at CU Student Choice (click here), the average gap between federal aid limits and the cost of public school education for four years is $29,356. For private school, $104,228. YIKES!

Minding the "gap" is what the credit union system is all about and we applaud those helping members fulfill their dreams or those of their children. Credit unions and CUSOs are doing a great job of filling the void left by the banks that can't figure out a way to apply their TARP money to help the consumer (sorry, but you KNEW I was going to go there) and I want to highlight the efforts of a few folks who are trying to make college more affordable in the credit union system (and there are plenty more)

How do you thank the customers that DIDN'T cause the crunch? Put the screws to them.

by Ron Daly 

Bank of America. Citigroup. American Express. What do they have in common? 

1. They received billions in bailout money (go here to see just how much)
2. They're jacking up interest rates on credit card users who don't pay the whole balance month to month.    

I've talked about my rates having been increased before (back in October - click here to read), this move doesn't surprise me...assuming a jump in rates is coming from a financial institution that hasn't taken in $25 billion in taxpayer money. They're getting most of my taxes this year anyway, and then they want to take MORE in the form of an increased rate? 

Let me clarify one point: we're not talking about people with poor credit. As outlined in the video at the bottom of this post, these are people who were rarely (if ever) delinquent and had a great credit rating. And these people, who have been paying off their balances, now face the burden of a higher balance because of their FI's inability to stay in the black. When is the consumer going to stop getting nailed to the wall by these companies and banks? 

Can I Buy Forever Stamps in My 401k?

by Ron Daly 

I bought three books of forever stamps when I was out the other day. Holding them in my hand on my way back to my car, the thought suddenly struck me...I was holding something valuable. 

You might think that a book of stamps is nothing special, but these aren't just stamps. They're forever stamps and mean you can buy them at today’s rate and use them any time in the future without paying the current postage rate. Forever. There are few products, outside of Twinkies, that will last that long. 

The USPS is in trouble, which we've known for a while, but they still sell these little beauties in any of their buildings. When the price of postage bumps in May 2009, I'll be looking at a 3 - 5% return on my forever stamp investment in less than a month. That's almost worth celebrating.

The Public-Private Investment Program : That'll cost ya...

by Ron Daly

The government is getting better and better at its magic act. Want to make bad assets disappear? Can do! Let's just shuffle them off of the balance sheet...and into the hands of another bank? Hmm...

A pair of articles in the CU Journal raise questions about the legitimacy and efficiency of the forthcoming Public-Private Investment Program, the most recent "Alphabet Soup" program from the Treasury. While the program has yet to be engaged in full and the kinks still need to be ironed out, concerns about fair play and conflicts of interest are already making financial managers and potential investors uneasy.

[Read the CU Journal Articles: "Should Banks Be Allowed to Play Both Sides?" | "Worries Expressed Over FDIC'S Mission" ]

Obviously, the health of the institutions in question is an issue for critics of the program. CitiGroup and Bank of America, banks that have been "bailed out" to the extreme, are not expected to buy more "Legacy Loans". But can a "healthy" bank really be determined at this point in the recession? And can adding "legacy" liability to your corporate scheme keep you in the black? Sure, if you can count on the government to be able to back the investments - which they're doing. Which raises its OWN questions.

Guest Author Robbie Wright: BarCampBank

Robbie Wright is the Vice President of the Credit Union Division for Nexcentri, a CUSO of Tampa Bay Federal Credit Union. Robbie is also one of the more prolific bloggers in the "CU bloggosphere", writing the blog The Life and Times of a Credit Union Employee. His insights on being in the employ of a CU and in the CU industry are honest and insightful, with a good eye for observation. His discussion in comments is usually lively, adding more background to the story as more CU professionals weigh in. Also an authority on "BarCamp", we've asked Robbie to walk our readers through the basics of BarCampBank Vegas, coming up at the end of April/Start of may. Robbie can be reached at robbie@nexcentri.com. 

Innovation.  Social media.  Core competencies.  All over-used buzzwords that seem to get discussed at every conference by some talking head that's paid to be there and has done the same dog and pony show for a year and a half.  Well, BarCampBank is here to change that.  Commonly referred to as the "un-conference", BarCamps have been around for a number of years and were initially popularized in Silicon Valley.  As Wikipedia puts it, "BarCamp is an international network of user generated conferences - open, participatory workshop-events, whose content is provided by participants."

Guest Author Melina Young: Get a Coffee – Save $300 Million

Melina Young is an owner and president of Credit Union Strategic Planning. Her research has been featured internationally and most recently at a symposium in India. She is a regular guest lecturer at the University of Washington. Melina is the project lead for one of the fastest growing small credit unions in the world. She bats 1000 at grant writing, securing six figures annually for credit unions. Of the five grants she authored in 2008, all have received funding.

Melina is also one of the bright minds behind the American Debt Relief challenge, the widget of which recently debuted at the top of CUJournal.com. To give you more information, we asked Melina to be a guest author and walk you through the ADR - how it came to be, who's behind it and where she and her group hope to go.  

Get a Coffee – Save $300 Million

"You won't believe the 4-hour coffee conversation I just had," my business partner Jamie Chase said to me a few months ago. "We are going to help credit unions grow their net revenue while saving consumers $300 million." Intrigued? So was I...

Over that coffee our friend Scott Butterfield described a balance transfer program to Jamie which saved the average family $200 a month. That's a table full of groceries or a car payment for most families. "Credit unions across the U.S. are running balance transfer programs," Jamie said excitedly. "What if we measured the national savings?"

In Full Flower: Credit Unions Raise Money for Children's Miracle Network

by Ron Daly 

I like to focus on the good news these days - as it's fairly scant - so I wanted to highlight an event that's happening this weekend here in DC. While the Cherry Blossoms are at peak and stunning to see, that’s not the big news. 

For about ten years now, Credit Unions for Kids and the Children's Miracle Network have been the beneficiaries of the Credit Union Cherry Blossom Ten Mile Run. The run is designed to be a fast-paced tour of the blossom-filled District for the runners and, over the years, has earned millions for the Children's Miracle Network. In 2008 alone, $1,016,000 was raised to help treat childhood diseases.