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.