TARP Banks Missing Payments! Time to Send the Repo Man?

by Ron Daly 

Read this article the other day: "More Than 90 Banks Miss TARP Payments". According to the article, 91 banks and thrifts skipped the May TARP payment, seventeen more than those that missed payment in February and 36 more than those that missed their payment in November. 

I don't know how that makes YOU feel, but I'm guessing you're not slowly clapping at your computer, impressed with the great strides made. I'm guessing you're in a state of disbelief and, like me, you find it insulting that for eight of these banks this is the FIFTH MISSED PAYMENT. 

Now, before I get too steamed, let's be fair - according to Treasury Secretary Tim Geithner, banks have repaid about 75% of the TARP money they got back in 2008 and the start of 2009. The impact on the taxpayer is expected to be around $105 billion all in all, which is down from an initial estimate of $341 billion. So not all the news is bad news on the TARP front.

But still - five missed TARP payments? How does any bank get away with that? I know you're not all "money people", but five missed payments on anything else nets you a visit from the repo man. 

Your car loan's not paid up and you haven't taken steps to talk to the bank? They're coming for it. Some big, burly guys are going to roll up to your driveway, put the thing on a wrecker and take it back to the branch. Simple, right? 

It's more complicated for banks. The CNBC article calls out Midwest Banc Holdings as an example of a bank that just couldn't cut it: 

In some cases, small banks are renegotiating the repayment terms. Midwest Banc Holdings, for example, agreed to swap $84.8 million in preferred shares issued under the TARP program in 2008 for $15.5 million in common shares. That would have meant an 80 percent loss for the government—and the U.S. taxpayer—on the initial investment. But the swap was contingent on the bank raising more private capital, which it failed to do. Regulators seized the bank in May.

Is there not more that can be done? Are we just going to have to eat the losses without any upside? AIG has already cost us something in the area of $180 billion, for which we get nothing. Foreclosures and housing numbers are still in rough shape and many "toxic assets" have yet to be dealt with by their holders. The oversight panel can keep an eye and raise concerns, but where's the repercussion for those that don't make the payments? While we're all so busy looking for "asses to kick", let's point our foot at those institutions who balk at repaying the taxpayer for OUR investment.  

What do you think? What do we do with banks that haven't paid? What do we "repo"? 

More Ads Coming Out of More Credit Unions - Will It Mean Business or Backlash?

by Ron Daly 

The New York Times did a run-down of credit union ads and the new face of credit union marketing Friday of last week.  The article (in my opinion) goes back and forth between "about time" and "really?" in terms of tone. There are some praise-worthy notes and some jabs that feel a little more like condescension than reporting. But maybe that's just me. 

This was accompanied by a "Bucks" blog post with videos and PDF versions of "anti-bank" campaigns from different CUs around the country. 

I really liked the above ad from America's First FCU. It's got an "anti-bank" element to it, but it ends on a high-note and isn't vitriolic. One aspect of many of the ads featured are actors pretending to be bankers. Really? You really can't come up with one single real-life example of "bankers behaving badly"? Watch the video below:

Visit msnbc.com for breaking news, world news, and news about the economy

Remind me: When's the last time a group of credit union employees tore up the highway in a Lambo? 

There are folks who are concerned all this "bank bashing" is counter-productive. One such person is Jason Sherrill, who wonders if this method of advertising has lead to more people being against financial institutions altogether...and to consequences such as the Durbin amendment. 

I want you to tell me what to think about all this. Are these anti-banking campaigns going to have a negative effect on membership and on our credibility as an industry? 

I set up a simple survey via our online survey tool that will collect your data and I'll print the results when I have an "n group" of 50 voters. 

Talk to me, credit unions. What say you?

Go to http://tinyurl.com/soapsurvey1 and tell us what you think.

[Thanks again to friend-of-the-blog Jeffry Pilcher and The Financial Brand for bringing these stories to our attention.]

Don't Become Mr. Shoehorn - Approaching People on Their Terms

by Ron Daly 

There's one of those guys at every party. Nobody's sure whose friend he is. Nobody knows where he got that leisure suit. And he's trying to get in on everybody's good time - jumping into conversations, telling jokes nobody gets that aren't that funny anyway, and insisting everyone do the macarena. He doesn't just want to enjoy the party and get to know people, he's got to have everyone's attention or he. Will. Die. 

His name is Mr. Shoehorn, and he's spoiling it for everybody. 

Mr. Shoehorn gets an email address

Why bother talking about this guy? Because he's everywhere these days - the Internet has given him a new place to thrive. In the past 20-25 years, email has evolved from fun convenience to necessary communication channel. But the one thing that will never change is the presence of spam. Sure, change all the policies and add all the filters you want, but it's not going to stop spammers - they'll just keep shooting it out there. 

In a recent article from eMarketer, consumers were eager to share what they wanted from an email marketing messages. The results weren't surprising: 

Interchange Fees and Credit Unions - Members Taking Action

by Ron Daly 

Interchange fees are the topic of many blog posts in the industry these days. Some posts are for changes, some are against, some are matter-of-fact and some are downright angry. One alarming article released yesterday says that 90% of yearly interchange revenue could be lost, which comes down to "$15 to $35 per debit card per year". 

CUNA has been pressing the issue in its daily News Now emails. Today's story deals with the Treasury and what Dan Mica called the "most serious threat" facing CUs at this moment in history. But it was a different story (and a different reaction by our company's clients) that caught my attention. 

Read this excerpt from the News Now article, "Grassroots interchange opposition, strong and growing":

WASHINGTON (6/2/10)--While the halls of Congress have emptied for the week, grassroots credit union advocacy regarding interchange legislation continues this week through both legislator-led town hall meetings and credit union activism on several fronts.

One of those fronts is a Credit Union National Association-backed effort to verbally and electronically reach out to representatives, and this communication effort resulted in over 80,000 individual contacts as of Tuesday.

CUNA is asking credit union backers to urge their legislators to oppose federal intervention into the current interchange rules. An amendment offered by Sen. Richard Durbin (D-Ill.) which was successfully added to the Senate's regulatory reform package would direct the Federal Reserve to issue regulations to govern interchange fees charged for debit card transactions. CUNA has recently said that this rule change forces the Fed into the role of a price-fixing body, when interchange fees should be driven by market forces.

State credit union leagues have also chipped in to back credit union concerns, and Virginia- and Louisiana-based credit union leagues are among those that have joined state-level small banking associations to publicly oppose federal interchange intervention.

Some examples of emails sent to members, compelling them to call and email their leaders and take action: 

From Horizons North Credit Union: 

 

From Shell Federal Credit Union: 

 

From Belvoir FCU : 

 

They're simple emails with a simple message: "Interchange is going to hurt the credit union. Contact your leaders now and tell them to act in our mutual best interest."

What does it cost you to send an email to your members? Hopefully, the answer is "not much". How much will interchange fee changes hurt your CU? The answer is probably "a lot". Risk versus reward, people. Members need to know about things like this and when it comes to asking them to do something as simple as sending an email, that's only about three minutes of their time. Never hurts to ask, right?

So, here's your million-dollar-question-of-the-week: What's your credit union doing to encourage calls and letters to legislators from members? Tell us about it in the comment section.