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: 

Let's Talk About Money

by Greg Crandell

[Editor's Note -- Ron Daly is off for the week, so Greg Crandell, DigitalMailer's Executive Vice President, is stepping in for a guest post.]

I'm certain my kids are going to cringe if ever they read this, but I'd be remiss if I didn't start out with this phrase. 

IN MY DAY...people didn't talk about how much money they were making or what they were doing with it. The most chatter that went on about a person's money matters happened when your neighbor drove home with a new boat dragging behind the car. Hopefully on a trailer, because there's no faster way to ruin a boat than by dragging it down a rough street. 

But the times, they are a'changin', as they so often do. People are becoming more open, sharing their thoughts via Twitter, their home movies via YouTube, their hobbies over Etsy and their...well, everything via Facebook. Facebook surpassed Google in total visits to its homepage a few weeks ago and, as CNBC says, it's "a sign that the web is becoming more sociable than searchable".

Even as the world wide web begins to bring people even closer together, online banking becomes a greater part of people's finance management. Of course those realms are going to overlap, but to what effect? 

CUNA to Administration: Where Do CUs Fit In?

by Ron Daly 

For the past few weeks, CUNA has been striking out at the Obama Administration's new Small Business Lending Fund plan. The plan, which would distribute $30 billion in unused TARP funds to 8,000 community banks, doesn't mention credit unions as a potential business lender or alternative to community banks. 

From the above Fox News story:

Senior administration officials say the Treasury Department, SBA (Small Business Administration) and other White House officials and community bank groups worked on this legislation together and will affect banks that have between one billion and 10 billion dollars in assets.

CUNA, upon hearing the details of the President's plan, registered its outrage in a series of posts and stories on its website and in the CU Times. CUNA President and CEO Dan Mica registered his disappointment with further bank investments and is asking for face time with President Obama to speak on behalf of CUs across the country.

From CUNA News Now: 

"Credit unions have been making loans over the past year and can make even more if legislation expanding their capacity to make small business loans is enacted. I hear credit unions say: 'Don't just subsidize the banks; let us help this country get back on its feet--without using taxpayers' money,'" [Mica] added.

Business lending caps have been a hot topic for credit unions in the past year. A recent Washington Post article about CU business lending has this quote from a Treasury rep about bringing CUs into the fold: 

"We work very closely with credit unions and we have put forward a number of initiatives to help small businesses, but we are always willing to explore new ideas," Andrew Williams, a spokesman for the Treasury Department, said Monday.

We're eager to hear your opinion about the Small Business Lending Fund. If the business cap needs to be lifted, or increased, are the ramifications going to be so dire for banks? And what if the cap ISN'T lifted? Credit Unions nationwide have been doing more to lend to businesses with their own money. Do we really want to get in on the bonanza of $30 billion in TARP leftovers, or just keep up our "thanks but no thanks" attitude and lend to businesses as much as we possibly can without the cap disappearing?

Tell us your thoughts in the comment section.

Getting Carded

by Ron Daly 

It used to be that "getting carded" had to do with proving your age. Now, it's realizing your credit card has gone completely screwy. Whether it's jacking up interest rates, shifting due dates or monkeying with the fees, the big lenders are doing their darndest to card you and hoping you'll screw up so you have to pay through the nose to fix it. I've been carded, but then again I'm the kind of guy who can manage my money and maintain my credit rating. Where this kind of thing gets scary is when it comes to the unbanked or underbanked out there who don't have a lot of options when it comes to credit.

It's stories like this that really upset me - ones about subprime lenders that actually have the nerve to charge nearly 80% APR (click here to read the full story). 

Knowing that their customer base is already prone to credit errors and defaults, subprime lender First Premier is gaming the system ahead of new legislation in February that cuts down outrageous fees but, apparently, not an outrageous interest rate. 

Can no one out there reach the folks who might be thinking this card is their only solution? Isn't one of those cardinal rules for CUs that we should be serving the underserved and promoting thrift? There's nothing thrifty about paying a 79.9% interest rate. 

Recently, credit unions have been getting their share of good press with a focus on interest rates and credit cards. CNN Money correspondent Gerri Willis recently covered this same territory in her feature on CUs, highlighting fees and interest rates at the average credit union versus the average bank. The media is getting warm to the idea of doing personal business and managing money at a CU. Start using that good press to bring in new members. 

Tell us about some of the ways you've been helping folks that have been "carded" in the comments section.

Passing the Buck

by Ron Daly 

Wonder why the largest banks in America continue to post profits during these trying times? It’s because they are great at passing the buck (or the bill) on to consumers and small business owners alike. While we were all focusing on the Credit Card Act of 2009 the past few weeks, a story came out on how some banks are sending bailout bills to biz customers (click here).To summarize...

In May, the Federal Deposit Insurance Corp. (FDIC) assessed the nation's banks $5.6 billion to restock its insurance fund after costly bank failures, reported Dow Jones News Service (July 29). It was noted that JPMorgan Chase & Co. paid $675 million out of second-quarter earnings and Wells Fargo & Co. paid $565 million. "But those two banks, along with many others, are passing their FDIC bills to some business customers," the article said. Other banks are burying the cost in the compensating balances at they are requiring business accounts to have in their accounts. 

 Looks like another great opportunity for credit unions to outshine banks when it comes to business banking. Small businesses can’t get the working capital they need to grow and they are getting slammed by fees and poor service. 

How can the CU industry simplify business banking and take advantage of the ill will small business owners have? Are CUSOs like the one in the news this week (click to read about Small Business America), which offers member business loans, deposits and other services to small businesses the answer? 

The questions that linger in my mind as small business owner and loyal credit union fan - Why do credit unions continue to sit on the sidelines when opportunities present themselves? And, for those CUs in the game - Why do we make it so hard for business owners to use credit unions?

Free Money – Well, Sort Of

by Ron Daly

Just returned from a family vacation at the beach and wanted to share a "Free Money" story. Like most families on vacation, I quickly ran out of the cash in my pocket and needed to hit an ATM. While sitting in beach traffic one afternoon I tossed my iPhone to my wife and asked her to see if there were any credit unions in the area. Figured if I was going to pay an ATM fee to get some cash I might as well keep it in the CU Industry (yes, I bleed credit unions!) 

Better yet, I asked her to go to our Credit Union’s Free ATM locator (NWFCU.org) on their site in Northern Virginia and see if there were any surcharge- free ATMs we could use. She plugged in the zip code of the traffic light we were sitting at and bingo. We found that within three blocks of our hotel was my new friend Carolina Trust FCU. 

Their free ATM saved us about $10 in ATM fees over the course of the week. In a few short minutes we found free money offered by a credit union. Americans spend approximately $10 Billion a year in ATM transaction fees. WHAT CAN YOU GET TO BUILD THIS OUT? 

Think of all the money we could save our members if we educate them on finding and using surcharge-free ATMs. Think how aggravated the banks would be if no one used their machines and paid them the $2-$3 per transaction they earn. 

I don’t know which one is better!