If Credit Unions Were Called to Capitol Hill

Last week, CEOs of some of the nation’s largest banks were summoned by Congress to defend their management of bailout funds. What would it look like if they called on credit unions?

 
 

When Congress summons the CEOs of eight of the largest financial institutions in the United States, you know things are going to get interesting. On Wednesday, February 11, the House Financial Services Committee heard from the CEOs of Goldman Sachs, JP Morgan Chase, Bank of New York Mellon, Bank of America, State Street, Morgan Stanly, Citigroup, and Wells Fargo. Representatives like Paul Kanjorski, Barney Frank, and Judy Biggert channeled the fears and anger of concerned citizens in the form of some aggressive questioning

I couldn't help but wonder how things might look if it were the CEOs of the ten top credit unions: Navy FCU, SECU, Pentagon, BECU, SchoolsFirst, The Golden 1, Suncoast Schools, Alliant, American Airlines, and Security Services. I'd like to imagine it would go something like this. (This did not actually happen, although the data was pulled from Callahan & Associates' First Look Program for Fourth Quarter)

Representative: Thank you all for appearing today in front of the Financial Services Committee. I'd like to start by taking a quick look back over 2008. As I am sure you all know, it was a brutal year. We’ve seen many financial giants fall. In response, Congress has passed several stimulus packages to get the economy back on its feet.

State Employees Credit Union: Well, 2008 was not such a terrible year for us. We actually saw our total assets grow by 11.28%.

Representative: I see you have been making use of TARP funds then.

American Airlines Credit Union: No, we are not currently receiving any federal funds. We were able to fuel our growth by attracting 19.41% in new shares and deposits.

Representative: Then how are you responding the to recession?

Suncoast Schools: We have been building reserves for times like these and are working with individual members to keep them in their homes. In addition, we've also helped our employees become extremely efficient in serving members, with members, loans, and income per employees each at an all time high—473.33, $4.82 M, and $409k respectively.

Representative: But this is a time when many Americans have shied away from the industry. They are afraid of what’s going to happen to their money.

Boeing Employees Credit Union: Not at our credit union. We've had a fantastic year for attracting new members, with year over year member growth at 11.21%.

Representative: There has been a lot of public outcry; the people are looking at your industry and see that credit is frozen and credit unions are simply not lending as much.

Security Services Federal Credit Union: What are you talking about? Outstanding balances at our credit union alone have increased by 13.43%. Our loan originations are up 9.98% over 2007. We are seeing our highest loan balance on record!

Representative: Part of what started this whole credit crisis was credit unions lending to Americans who simply could not pay the loans.

Pentagon Federal Credit Union: Are you sure you mean "credit unions"? Our delinquency rate is only 0.26%. That means 99.74% of our members are paying on time!

Representative: Then why do you need a capital infusion from us?

Alliant Credit Union: We don’t. Our credit union is currently maintaining a 12.69% net worth to asset ratio. We are very well capitalized.

Representative: Well, those are all of my questions. Do you all have any final comments?

Jim Blaine stands up and smashes a pink piggy bank. Credit Unions collectively respond:

Weighted Averages for Top Ten CUs

Assets Growth

7.49%

Share Growth

6.38%

Member Growth

5.86%

Loan Growth

5.04%

Delinquency Rate

0.94%

Net Worth Ratio

9.12%

 

Representative: (astonished) Credit unions really are the "most viable financial model in America!":

So maybe our dramatization got a little out of hand, but the real story being told by First Look 4Q data is that the asset leaders of the credit union industry are performing very strongly, especially given the economic climate. As some of the figureheads of our industry, it is important for these credit unions to perform well. While they may not be sitting in front of the House Financial Services Committee any time soon, we know that they will be well positioned if and when they do.

 

 

 

Feb. 16, 2009


Comments

 
 
 
  • The problem that we are going to run into is when the banks are nationalized and credit unions are taxed - where else is the government going to come up with the trillions of dollars to pay down it's debt. This was an amusing story; however, we need to be looking over our shoulder and making sure Uncle Sam doesn't send the tax collector's to our doors.
    Anonymous
     
     
     
  • Good dramatization of why CU's are a wonderful alternative to banking as usual. So why aren't CUNA, NAFCU, state leagues, et al coordinating on an all out PR blitz touting the same? We're missing a wonderful marketing opportunity!
    Anonymous
     
     
     
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    Anonymous
     
     
     
  • Amusing and insightful story. CU's stand head and shoulders over banks when it comes to servicing the financial needs of the community in a responsible manner. Sadly though, try adding a few corporates to your amusing story and the story isn't so amusing. The corporates were acting irresponsibily and like banks and have help create a mess for responsible CU's. How will the corporate CU's be held to account? And their answers to congress (via your little story here) would be interesting to say the least.
    Anonymous
     
     
     
  • I appreciate the sentiment of this article. Still, I dont see how any lender can weather this economic storm without having both auto and home loans going bad. Commercial RE is also a factor, and who knows what's at stake there.

    The numbers I read werent a 12% ratio, they were more like 2-5% on the CU where I'm a member.

    Dont want to be paranoid, but people are saying some scary things out there. I do think CUs will get more than anyone else, and FDIC will get bailed out because otherwise, its simply all over. Still, I dont see why CUs should be immune. Better off, OK, but immune, not possible.
    Worried party