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Interchange governance and more focus of global leaders panel
LAS VEGAS (7/14/10)—What lies ahead for credit unions in different parts of the world? The second of twin general session panels Tuesday addressed that issue at The 1 Credit Union Conference, the joint Credit Union National Association (CUNA) and World Council of Credit Unions (WOCCU) in Las Vegas this week.
Bill Hampel, senior vice president and chief economist at the Credit Union National Association, describes the U.S. credit unions’ governance structure in a panel discussion during Tuesday’s general session at The 1 Credit Union Conference, meeting this week in Las Vegas.
Like the earlier panel, panelists Louise Petschler, CEO of Abacus-Australian Mutuals and a WOCCU director; Bill Hampel, CUNA’s senior vice president of research and chief economist; and Hervé Guider, general manager of the European Association of Cooperative Banks, tackled the topic of board performance at the prompting of moderator and WOCCU director Daniel Burns, chair of Central 1 CU in Canada. “Australian credit unions are regulated to the same degree as banks and all financial institutions,” said Petschler. “Directors must pass a skills test to serve. If there aren’t sufficiently qualified directors on a board, the board may appoint other directors rather than wait for them to be elected by the members.” Guider agreed that directors must be able demonstrate both independence and qualifications before accepting a board position. While Australian directors are paid, European cooperative bank directors and U.S. credit union directors are unpaid. The U.S. also has no regulated standards for directors, said CUNA’s Hampel, who supported the importance of qualified candidates, but also offered a caution to the audience. “Having expertise on the board does not necessarily guarantee success,” he said.
Click to view larger imageTuesday’s general session of The 1 Credit Union Conference featured an international group discussing what lies next for credit unions around the globe. From left are panel moderator, Daniel Burns, World Council of Credit Unions (WOCCU) director and chair of Central 1 CU in Canada, with Louise Petschler, CEO of Abacus-Australian Mutuals and a WOCCU director; Bill Hampel, Credit Union National Association senior vice president of research and chief economist; and Hervé Guider, general manager of the European Association of Cooperative Banks. (Photos by World Council of Credit Unions)
The panel also touched on the impact that new interchange fees will have on credit unions. “Australia is the most regulated credit union system. We’ve dealt with the interchange issues for three years,” said Petschler. Credit unions lost $22 million in revenue but made $19 million in revenue from other reforms. For the system, it was not a major shock, but for some credit unions, it was.” The net net result has been less flexibility and higher fees for consumers, Petschler said. “It is an anti-consumer reform,” she added. Lack of member growth also became the topic of debate. Ironically, field-of-member qualifications that once helped U.S. credit unions grow have proven to be an impediment, according to Hampel. “Field of membership requirements used to be a severe restriction on credit union growth, but its legacy has proved to be just a severe nuisance,” said Hampel. “It retards growth and that growth would be greater if we could get rid of the restriction.” The group also discussed the recession’s impact on credit unions. The biggest challenge for U.S. credit unions, said Hampel, is “recovering from the recession. Credit unions themselves will be fine, but our members will be undergoing a long process of deleveraging. Credit unions must find new ways to respond to members,” he said.


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