As Markets Deliver Tough Love to Bank Stocks, Time for Credit Unions to Deliver Some Clear Messages to Members

Unless you’ve been on Mars, you know things are really bad in the banking sector & the US economy. The markets have punished bank stocks, credit continues to dry up for consumers, and the failure of IndyMac Bank caused a depression-style run on deposits.

Meanwhile inflation & unemployment are creeping up, gas is $4 a gallon and most experts agree that the economy is going to be a tough slog for a lot longer than many of us first thought. In short, it’s ugly out there, folks.  

With so much pessimism in the headlines, it’s little wonder that some credit union members are wondering about the safety and soundness of credit unions. Our compliance department has fielded multiple calls from affiliated credit unions looking for resources on the NCUSIF so they can soothe the nerves of some anxious members.

To respond, the League put together a press release for the NC media spelling out two key differences: our ability to lend in this environment due to our structure and the lack of risky loans in our portfolios … plus the insurance guarantee afforded credit union member deposits through the National CU Share Insurance Fund.

It remains to be seen if reporters will pick up on these differences and report them … but regardless, this seems like a good time for credit unions to be talking about these differences with members.

Here’s what we came up with, in cooperation with CUNA & NCUA. Feel free to use any of this info if you like.  (Kudos to Mark Wolff and the team at CUNA for their work on the safety & soundness document.)  

Also, here’s a link to to the home page of the Carolina Postal CU web site. CPCU posted a special message on their site letting members know their deposits are protected. (Special thanks to Deb McLean.)

There’s a lot of things for folks to worry about these days … but the health of their credit union and the safety of their deposits is definitely not among them.

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14 Responses

  1. Hail yes, Jeff. Great call from the NC league in that post – some great pull quotes from John, including:

    “Credit unions did not make risky loans like others did, and so their loan portfolios are performing well despite the economy.”

    That’s the message that members need to hear.

  2. Trey: Thanks, man! You CU folks are the ones doing the good work – keep wearing that white hat!

  3. Great post Jeff. I wrote a letter from our CEO to our members about this exact thing yesterday. Our Call Center took quite a few calls yesterday about share insurance and the safety of their funds.

    This is something all of our members need to hear, we need to reassure them of our soundness. Most importantly we need to communicate our focus is on people not profit that why we didn’t stick our fingers in the subprime pie.

  4. Great post Jeff.

    Via the Councils, I’ve come across this CU CEO blog post from Kansas:

    http://hopewellfederal07.wordpress.com/2008/07/15/is-my-deposit-safe-at-the-credit-union/

    Pretty cool.

    I’ve heard second hand that members are even calling CUNA about this! Luckily, we can say just what you said in the NC League release.

    There was never a better time to join a CU!

  5. @Matt: That’s a great idea! This kind of situation is not easy to go through and no-one wants the economy to struggle. But there are some clear differences credit unions offer – and now’s the perfect time to talk them up!

    @Christopher: Thanks for the blog link – Al does a great job with the blog, and that’s a great post for folks “in the trenches!”

    A lot of people don’t know CU deposits are federally insured (and some think they aren’t!). I love how Al tackled that issue head-on.

  6. Cammie told me you responded to our post-thanks for the shout out to us. Would love to get on your blog roll at some point. We also have ESI insurance as well, and really want to focus on folks deposits being safe.

    By the way Christopher-we’re in Ohio, not Kansas!

    Thanks again!

  7. @Al – thanks for saying hi and for leaving a comment. Your blog has been added to the blogroll.

  8. Great Job League! You got right on it which is the exactly what we in the trenches need – pro-active instead of re-active – education-ive(?) vs defensive!

    BTW that adorable Savvy Saver has posted some of those quotes from John on our Brighter than a Bank Blog at http://brighterthanabank.blogspot.com/. check it out!

    oh and Nice work Hopewell Federal too (in Ohio!!!)

  9. @Diva Deb: thanks for tipping us off to the calls of concern you were getting, plus the coverage FDIC insurance was getting in your local media!

    And “The Prez” appreciates the Savvy Saver love. 😉

  10. Thought I would pass along a link to this story from Broward County, FL. The credit union folks quoted did a wonderful job of laying out some reassuring messages in a state that has been hit hard by the housing downturn. Nice work!

    http://www.floridatoday.com/apps/pbcs.dll/article?AID=/20080717/NEWS01/807170331

  11. For those who might be interested, NAFCU is offering a free webcast (for both NAFCU members and nonmembers) next Friday that will address share insurance and the NCUSIF. CUs can sign up here:

    http://www.nafcu.org//Content/NavigationMenu/Events_Education/Audio_Conferences/Share_Insurance_Webcast.htm

    I’ve been blogging about share insurance the past few days (and I will tomorrow). Here’s a link to the Blog’s Share Insurance posts:

    http://nafcucomplianceblog.typepad.com/nafcu_weblog/share_insurance/

  12. Great post. I’m forwarding on.
    Anyone have thoughts on this that ran on CNNMoney? I found it a bit concerning, even though the overall message is good. Here’s why.
    Since there’s only one very high profile bank failure doesn’t this make CUs appear to be in BIGGER trouble? What do you think?

    NEW YORK (CNNMoney.com) — Gerri Willis answers reader’s questions.
    1. How safe are credit unions?
    Is it possible to find out about credit unions? How safe are they at this time? – Willie, Florida
    Credit Unions are just as safe a bet as banks are. Instead of the FDIC guarantee, you have the NCUA to back up your accounts up to the same amounts.
    The NCUA stands for the National Credit Union Association. According to them, there have been six credit union failures so far this year, but as long as you have $100,000 or less in an individual account or $250,000 or less on a retirement account, you’re insured. Plus, credit unions may have marginally better interest rates and rates on CDs, savings accounts and money markets.

  13. Great article. This is the time to get the word out about credit unions–just as your blog tagline indicates.

    General Mills FCU just launched its blog, More Than Money, this week and this was the topic of our opening article written by our CFO. Getting the word out about credit unions may just be part of the silver lining of this economy downturn.

  14. @Winter: thanks for stopping by and leaving a comment! Interesting item from CNN.com. Hopefully, credit unions will be proactive in reaching out to reporters & editors so that people are informed about how things are going in the CU movement relative to much of the rest of the banking industry.

    @Missy: Congratulations and best wishes on the blog! And I agree with you – this is a definite moment for credit unions to step up and define themselves.

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