things youre supposed to do.
union leader as well as a veteran of three US wars called
to provide me his thoughts. He said credit unions are faced
with some exceptional challenges: 0% car financing, very low
investment yields, heavy cash inflows. What should they do?
While he said he had no crystal ball, his message was that
people are depending on us to do our job-lets do it.
It is all right to cry and to pray and to be fearful. But
if this leads to closing up shop or people loosing jobs, then
the terrorists are winning. We have to go about our business.
are two clear tendencies. Short term, events are going to
be more difficult. Longer term, wars have contributed to pulling
the US economy out of depression, recession or just plain
I was with a credit union team from Las Vegas. The boards
primary concern was about the Vegas economy. It is built on
airline flights and discretionary spending where people want
to be free of ordinary constraints. Layoffs at hotels had
But at the same time, the consensus of the board was that
the worst thing the credit union could do was to do
nothing, that is to wait and see what events bring and
then react. Their impression was that there would be unusual
opportunities and to go for it.
Initial Steps Forward
are flying everywhere-in branches, on websites and in literature.
There is a changed mood, call it patriotic, or a sense of
community. People are united and in many ways lifted out of
their individual priorities. There is a willingness to lead
or to participate.
Communicating in all possible ways is more important than
ever. Members want assurance and the certainty that all is
safe with their credit union and their funds.
Some members are looking for counsel, whether this is for
their investments or because of changing job prospects.
unions, according to the corporate numbers, are still seeing
cash inflows. This means the plain old checking and savings
account services do matter.
have always been the backbone of credit union results. Some
areas may slow, but other areas, such as real estate refinancing
are picking up once again. 0% financing is here, which means
the auto manufacturers are getting their profit out of the
car price. We need to explain that fact to members as well
as offer competitive rates. Many credit unions have 5.9% auto
loans and that rate could go down to 4.9% before yearend.
temptation will be to search out above average yield. But
if it is there, there will be some commensurate risk.
The net result for the rest of the year will probably be a
decline in earnings from the .96 basis points at midyear.
Thats all right. A period of adjustment in ALM is normal.
A New Sense of Community
and a nation were changed by September 11th. Credit unions
will change too. One experience that continues to resonate
in all the facts from the tragedy is a new sense of community.
We care about New York. We worry about our military. Everyone
is asking what they can do to help.
past, the credit union approach flourished in times of uncertainty.
The Federal Credit Union Act was passed in 1934, building
on experiences from over 20 states, to help members find collective
strength to meet individual need during the depression.
I can think of no better time or place to be in the fall of
2001 then working in the credit union community.