E-Central Bundles Up for a Great Loan Promo

by Ron Daly 

(This post originally ran on the DigitalMailer blog)

E-Central Credit Union in Pasadena, California recently used two DigitalMailer products to promote loan refinancing. First, they asked us to create a form using our secure forms server that could manage member information about car loans. The secure form server is the backbone of our Reg E Opt-In packages and is an effective way to manage sensitive information pertaining to your members. E-Central's form asks members for information about their current auto loan at a different financial institution and gives them information about how much they could be saving by moving their loan to E-Central. It even offers a $5 deposit for that member just for filling out the form!

Next, E-Central created an email marketing campaign that they sent to members and SEGs encouraging them to fill out the form. It included all the links to the online form, links to a PDF copy of the same form (for the folks who want to fill out forms by hand), and links to E-Central's website. Evan Hitchcock, E-Central's Marketing and Business Development Manager, includes his name at the bottom of emails going to his SEGs to let them know he's there for them if they need consultation or have questions.

We love to see our clients use our products in bold, innovative ways. If you have an example of how you've used DigitalMailer's products in conjunction and would like to show it off, send an email to info@digitalmailer.com and tell us about it.

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"? 

Information: The Number One Enemy of Bad Lending

by Ron Daly 

I recently learned about "Borrow and Save", a program started in Baltimore by the Neighborhood Housing Services, banks and the FDIC. The program allows underserved consumers to borrow as much as $1000 at an 8% interest rate, but requires that they go through a "financial fitness" class to get the money. 

This story from WAMU in Washington talks about one consumer who has already been helped by this program. 

"I grabbed the number as soon as I seen it. I said ‘I can’t believe this is happening.' This is what I want, way better than the alternative was," says Witherspoon.

The alternative was a cash advance loan with a double-digit interest rate. Witherspoon says he did that before and it took about three years to get clear of all the repayments...

Witherspoon used his loan to pay some bills and move to a safer neighborhood with his wife and grand-kids. But he says the financial counseling was more valuable than the cash. One lesson: pay yourself first.

"So now I snatch $40 out of my pay no matter what going to a savings account just to make sure I got a little extra that I don’t need or don’t touch. That’s a plus for me," he says.

Music to a former CFO's ears. 

Here's the cold, hard truth - folks in underserved/underbanked areas that take on payday loans aren't "borrowers" so much as "victims". The rates are ridiculous (650% APR, in some cases), the terms are ridiculous (loans rolled over after the initial period, which many lawmakers are seeking to end), and borrowers who are barely getting by are finding themselves further away from financial stability as a result. A little information goes a long way in getting folks who previously thought financial management was unattainable on the right path to recovery and eventual prosperity.

I know there are community CUs and specialty CUs that cater to folks like Mr. Witherspoon (mentioned in the story above), and if they have programs like this I'd love to hear more about it. I think CUs that offer programs/packages such as this are doing good work, work that should be mentioned and applauded. If your credit union offers similar programs and is fighting hard against the pull of cash advance and payday lending, let us know. We will devote a story to your credit union's anti-payday program and give you the credit you deserve.

Your thoughts and opinions are welcome, as always, in the comments section. 

HAMP Hampered

by Ron Daly 

The successes of President Obama's financial programs have been debated by pundits for the past year or so. Some say that progress is naturally slow in recovery and that the seeds of these initiatives will bear fruit for years to come. Others say that the programs have not helped enough in the short term to warrant their continued support. 

One program being debated currently is the Home Affordable Mortgage Program, or HAMP. A recent story from ABC News talks about the program - its proponents, its opponents, and its short-term success. 

Watch the video below. [EMAIL READERS - please visit the website to view the video. Flash player required.]

According to the online version of the story, only 116,000 homeowners have taken advantage of the $75 Billion program thusfar. Only 116,000 on a program designed to help 2 million? Why? Because bankers won't help customers and would rather foreclose. This has led some lawmakers to call the program a "failure" and has prompted the Treasury to suggest a stronger hand. If the Treasury and the Obama Administration had their druthers, banks would be required to see if homeowners qualified for HAMP help prior to foreclosure. Banks would only be allowed to begin the foreclosure process after a borrower had been officially unqualified. 

Your One-Stop GAC Wrap-Up

by Ron Daly 

Being based just a few miles outside DC has its advantages. Chief among them, we were able to pop in and out of the GAC and meet with our clients, our friends, and our fellow CUSOs. While we didn't hit any of the big talks or breakout sessions, we didn't feel out of the loop. Nor would anyone else, I would wager, as CU professionals from across the country that were attending the GAC were eager to share their thoughts via blogs, emails and social media outlets of all kinds. We thought we would do a service to our followers that might have missed some of the highlights of the week and try to bring all those links and stories together in one place. If you feel there's a link or two missing that might be vital to people reading along at home, leave us a comment with the link in it down in the comment section. 

BEFORE CONFERENCE: 

morrischris: For all you GAC attendees & burger lovers, there is a Five Guys about a block from the convention center. Thought you should know. #GAC10

A few enterprising CU professionals created a "hashtag" label for Twitter posts related to the GAC. If you want to see how the whole thing unfolded in 140 characters, go to Twitter's search page and search #gac10. 

Certainly one of the most talked about parts of this particular GAC was the "Crashers", a group of young CU professionals dedicated to making their CUs better. Crash the GAC was started by Brent Dixon of The Haberdashery and Filene, who took the idea to CUNA. CUNA offered a number of scholarships so that attendees wouldn't technically be "crashing" in the traditional sense, and Palmetto Cooperative Services LLC sponsored a number of beds at the DC Hostel for attendees. As Crashers went about the conference, they wore their custom CU*Swag shirts with their slogan "Five Star Leaders, Two Star Lodging". Having received a CU*Swag shirt (Jimmy won one and gave me his - It's a nice shirt!), I can say they'd be great for any CU that wanted to deck out tellers in some custom gear. 

HIGHLIGHTS FROM THE GAC:

aplusfcu: Packed crowd here at the GAC Opening Session. Lots of talk about job creation. #gac10 http://tweetphoto.com/12186755

The kickoff started with David Gergen, former presidential advisor and pundit, talking leadership in the Nation and in finance, and stating "The great American job machine is broken" and that innovation will be the key that gets it started again. 

CUNA President and CEO Dan Mica was greeted by a standing ovation when he took the stage for what will be his last GAC in said position. His talk centered around raising the MBL, the hot-button issue this year to be sure. His talk seemed well received by the majority of CU citizen journalists in attendance. [Read Dan Mica's opinion column here]

The MBL echoed throughout the conference, with more and more breakout sessions and private meetings devoted to its discussion. Gigi Hyland, also of the NCUA board, spoke her mind on day two about raising the MBL cap and the forward momentum of CUs through 2010, which she admitted would be a "tough year". She also gave due attention to the Crash folks, much to their delight. 

Debbie Matz, the newest chairperson from NCUA, took the stage to talk about what she felt should be key goals for every credit union in the nation, including expansion of online services and payday loan alternatives. [Some more thoughts from Matz in this article from cujournal.com]

CU_Ninja: RT @Paulsworld: Debbie Matz: 4 ways for CU's to succeed. Alt capital, biz lending, payday alternative and electronic services. #GAC10

There were quite a few impressive guests this year, including Joe Scarborough, Alan Greenspan, Ondine Irving, and even Reggie Bush snuck in at one point to the delight of attendees. Needless to say, if you weren't there, you missed out on a lot of interesting talk and a lot of insight. 

robwright: Hike the Hill! #gac10 http://tweetphoto.com/12386760

Wednesday was the day for attendees to "Hike the Hill", visiting with representatives and lawmakers from across the country on CU matters. Representatives Barney Frank and Spencer Bachus (MA and AL, respectively) stopped by Wednesday morning for a chat with attendees on Interchange Fees (which Frank said was not on the table) and, of course, more MBL talk (which Bachus said would be a tough fight for CUs to push through). Attendees then met with lawmakers to talk credit union issues, racking up pictures and stories along the way. 

Jimmy Marks, our CMD, and some of his Crashing buddies were also behind a "tweetup", a meeting of Twitter users in attendance. I'm told it was a big success and that there were some great conversations happening in the midst of all those young whippersnappers. 

FOR THE FULL EXPERIENCE: 

I couldn't possibly tell you everything that happened at the conference and around the conference - to do that, I'd have to start blogging Monday and not quit until the end of the week. Which the folks below did!

Carla Day of CU Chat Up was a one-woman GAC reporting supercomputer. She typed her poor thumbs right down to the knuckle on her Palm Pre, live-blogging and reporting events as they happened. To get a great recap of the whole experience, see her personal Twitter feed.  

To read about the full day's worth of events through Wednesday, spend some time with Rob Rutkowski's "That Credit Union Blog" which did a day-by-day recap. Read all about it here. 

The CU Water Cooler gang made time for a "Liquid Lunch" chat podcast, which can be heard here. 

If it gets summed up much better than this, let me know: 

Matt_Vance: At DCA getting ready to fly home. GAC has come to a close but the ideas, projects & action are just getting started #gac10.

Telling Potential Members to "Move It!"

by Ron Daly 

A new force is emerging in the battle for new members at CUs...from the pages of the Huffington Post comes the "Move Your Money" campaign. The goal: convince people across the country to move their money from any of the big banks to a community bank or credit union. 

moveyourmoney.info

When we first mentioned this, it was in passing, but we thought it was worth a whole post because of the traction it's been getting. We were interested to see our friends over at American Debt Relief Challenge wrote an article for Huffington Post about their good work getting folks to move their credit card balances to a CU. To date, almost $20 million has been saved thanks to balance transfers to a CU. 

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.

What Did We Learn?

by Ron Daly

2009 has been a year of learning. We've learned all about credit default swaps. We've learned how badly our new members had been treated by their former big banks. We've learned how to do more with less when it comes to marketing budgets, collections budgets, staff shortages - it's been a make-or-break year for the industry, to say the least. 

Here's some basic lessons: 

1) The amount of financial advice out there in the world is astounding. The quality of that financial advice is embarrassing. 

2) Just when you think our industry has hit the bottom of the problems we're facing from this recession, someone throws us a shovel and yells "keep digging". 

Let me cut to the point here...did you ever think we'd be looking at a time in our country when walking away from a mortgage was a good idea? How about a time when people recommended it? 

People like Dr. Brent T. White. A law professor at the University of Arizona, Dr. White recently published a paper titled "Underwater and Not Walking Away: Shame, Fear, and the Social Management of the Housing Crisis".  

His recommendation? The 15-million people with underwater mortgages should just walk. 

15 million people? Let's be optimistic and say those people only borrowed $300,000 on average. That's $4.5 trillion dollars that'll never be recouped. For better or worse, the housing market will never again be what it was. So banks and CUs won't be able to unload those houses, nor does the land beneath them necessarily mean anything to anyone, as developers in personal and business real estate aren't making any moves until the picture's less bleak. Whenever THAT is. 

What's more, it doesn't seem as though Dr. White is in the minority. This story from NPR.org highlights "walk-aways" and a service designed specifically to help them work toward a strategic default.

This isn't a new problem (that NPR story is from two years ago, when the bottom just started coming up at us). A segment of this Newsweek piece from March states: 

The study is based on the data of some 45 million properties that carry a mortgage, which accounts for more than 85% of all U.S. mortgages. The data was filtered to include only properties valued between $70,000 and $1.25 million. 

The most severe "underwater mortgages"—mortgage loans that are 125% or higher than the value of the property—are in five states: California (723,000), Florida (432,000), Nevada (170,000), Michigan (128,000), and Arizona (122,000). Underwater homes are of serious concern because for some homeowners there is little incentive not to walk away and allow the home to fall into foreclosure. Foreclosed homes drag down the prices of neighboring properties, possibly dragging more homes underwater. 

A veteran real estate broker in Las Vegas who declined to be named said that in 2004 there were only 2,000 homes on the market; now there are some 20,000 and growing. "Everybody became crazy," she said. "In certain areas [home prices are] off 60% from the peak. It's really sad because there's no equity and people can't refinance."

We're looking at a quicksand situation here. If people start walking away from their mortgages on "good advice" like that mentioned above, it will just topple what little is left of the housing market like a string of dominoes. And whatever happened to "promoting thrift"? We must not be doing a great job of that, considering the number of bad mortgages floating around out there. But, then again, maybe people weren't as willing to listen to us "conservative lending institutions" then as they are now. Is now the time to remind people that running away from your crummy mortgage will hurt you? When and how can we make people learn that cut-and-run won't do?

I haven't read Dr. White's entire paper, but I do know this - a default isn't a good thing. And no, I don't agree that you can recover from it inside of two years by paying down the balances on your cards and being otherwise responsible. Where do you live after you've been booted from your home? How do you start recovering? Because like it or not, those two years back to your healthy credit rating are going to be a tough slog.

I'm sure there is a great counterpoint as to why consumers should just walk away...I'd love to hear it.

Grasshoppers, Ants, and the CARD Act

by Ron Daly 

Remember the story of the grasshopper and the ant? The grasshopper sat back and didn't worry about winter until it was too late, the ant clambered to get more food to outlast the cold. In the end, the ant gets all his food and preparations in order, and winter never even comes and everyone's fine. 

Wait, that doesn't sound right. Wasn't the grasshopper supposed to be, quite literally, left out in the cold? Didn't all that preparation pay off for the ant who worked so hard to get it done? Maybe I'm thinking of the wrong story. Maybe I'm thinking of all the credit unions who worked to get their statements and documentation around HELOCs, Personal LOCs, and open-end credit adjusted to comply with the Credit CARD Act of 2009...and the CUs who somehow came out ahead by not trying to comply or waiting out the change to the bill. Doesn't sound fair? Few things are these days when it comes to regulation.