CUs have numbers that for-profits envy--Mica

BOSTON (6/24/09)--Credit unions have numbers that banks and other for-profit financial institutions envy, said Credit Union National Association President/CEO Dan Mica Tuesday morning at America's Credit Union Conference and Expo in Boston.

Click to view larger image Holding up Tuesday morning's New York Times, Credit Union National Association President/CEO Dan Mica told America's Credit Union Conference in Boston that the article compares credit cards issued by banks and credit unions. "It shows that banks don't have to be ruthless, don't have to punish their customers, and don't have to charge higher fees and interest rates. They don't have to because they can study credit unions and see how credit unions do it right." He quoted the article, which said "the whole system of credit cards ought to take a look at how credit unions do it." (Photo provided by CUNA)

Mica made the comments prior to a question and answer session with CUNA's senior management and attendees. He discussed credit unions in the recession, credit unions vs. banks, and key legislative/regulative events impacting credit unions from Washington.

Lending in credit unions is up. "Banks are good for credit unions," he said. This recession is different because banks and for-profit institutions essentially shut down their lending and thus helped boost credit union membership, which is up by 1.6% He projected credit unions will have 100 million members in five or six years, but "if banks keep acting the way they do, (reaching that milestone) may be earlier."

Other points:

  • CUNA is getting support for its efforts toward member business lending legislation. U.S. Rep. Barney Frank (D-Mass.) supports the issue, which is on the legislative schedule but not finalized for next year. "We're going to get that legislation ready and if there's an open time or day, with Frank's support, we'll move that through," he told ACUC attendees.

  • Assets are up, largely because credit unions consistently beat banks in the area of consumer trust and fees. For 22 years, bankers' own surveys showed credit unions shining on consumer trust. "We won every year, so they stopped doing (the surveys)," he said. "They don't want another year where credit unions come out on top." Now, other groups have begun similar surveys and credit unions are at the top of those also. "Banks are as low as they've ever been," Mica said. Credit unions have the kind of delinquency numbers that the for-profits envy, he said.

  • Credit unions also are seeing a "newfound credibility" in Washington, which now has a "hyperactive" president and Congress pushing more bills and hearings. With the increase is an increase in the number of times CUNA has been invited to lend its expertise at a congressional hearing. "We're getting invited more frequently—six times in the past five months. And we're being asked, 'How did you do it?' and 'Tell us how you did that,'" he said.

  • CUNA has seen successes in what has not happened in Washington, Mica said. There's no CRA or cramdown this year, and CUNA has lobbied for a less dramatic interchange bill, and supported an independent National Credit Union Administration (NCUA).

  • "Corporate stabilization was a tough one, with a massive financial write-off for credit unions. About 80% of credit unions would have had a negative return on assets if legislation hadn't passed," he said. He also noted that if deposit insurance hadn't been expanded to $250,000 from $100,000, credit unions would have been hurt dramatically.

  • Congress is attempting to determine whether there are too many corporate credit unions, whether there should be any corporates all all, or whether there should be corporates but with restrictions in transactions. A systemwide task force representing all groups in the Credit Union System is addressing the issue, he said.

  • A plan to regulate all financial products through a federal consumer financial product agency that would provide transparency, fairness, simplicity and access has "caught fire in Washington," Mica said. "On their face, we are for these, but we have a very grave concern about how it's done. Others have said a hands-down 'no,' but we'll serve in good faith and reserve the ability to walk away from the table" if needed, he said. "This ship has left the dock. Everyone projects it will pass. If it passes as is, it is absolutely not what we want."

For more ACUC coverage, check out News Now's blog and Credit Union Magazine's Daily reports online. Use the links. The conference ends today.

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