There is usually another side to most stories

Things are happening so fast in the world of credit unions that it is easy to forget that there is usually another side to most stories involving CUs. Here's one example: NCUA is being taken to task for increasing its staff and annual operating budget at a time when the number of credit unions and more specifically, the number of problem credit unions, is steadily declining. Particularly at issue are 34 examiners who the credit union trades are claiming were brought on board for the Y2K crisis that didn't happen. The point is being made that they should no longer be needed. Eliminating them and in general holding the line on staff additions would also have a positive impact on the regulator's operating budget, according to critics. The other side of the story: While the NCUA budget debate rages on, most state and national credit union organizations that serve that same declining credit union base, have been adding many new staff and implementing substantial operating budget increases. In some cases, the number of staff is double and the added budget dollars considerably over what they were when there were twice as many credit unions requiring association services. In fairness, credit union trade groups and professional organizations are offering a greater variety of programs and services to a much more demanding and sophisticated clientele. Thus, while there are far fewer credit unions to serve, those that are still around have shown a need for more bang for their buck. Just one of many examples: the banking lobby has become so intense that the size and expertise once available at the trade group level would be hopelessly outgunned in facing the challenges and workloads of today. Then there's the new technology needs. However, couldn't the same thing be said on behalf of NCUA's claim that more staff and program dollars are needed? In other words, if credit unions have progressed to the point where they need more outside staff and budget support, could it also be concluded that the same rule of thumb applies to the regulation of the safety and soundness of credit unions? Taking this approach a step further, credit unions have also boosted staffing totals and operating budgets considerably in recent years. Admittedly, there is an important distinction to be made between CUs and the groups that they fund to serve them and regulate them. The number of members served by credit unions has grown at a faster rate than the staff at credit unions. So have the number and complexity of product and services offerings available to those members. The other side of this story then appears to be that every entity seeking more staff and credit union operating dollars needs to make the best possible case for themselves, or they will end up playing strictly defense such as NCUA is now doing. Here's another example of a story with another side: The Wall Street Journal reported recently that major banking institutions finished the millennium with great fourth quarter earnings. Among reasons given for the buckets of black ink was a healthy increase in fee income, as much as 31% for one large bank. Chase Manhattan Bank, number two in the country, saw fourth quarter earnings increase 46% or $1.68 billion. While sitting in their counting houses counting all the money, banking industry executives and lobbyists at both the national and state level, still found time to continue to whine about the "unfair competition" from credit unions because of the lack of a "level playing field." Could one assume that without credit unions allegedly eating into their profits that the banks could have really made some big money? The other side of the story is that despite unrelenting attacks on credit unions, the banking industry is robust and flush showing little actual damage by credit unions. Here's another example: Prompt Corrective Action (PCA) is a topic much on the minds of credit union CEOs and industry lobbyists and regulators these days. The banking industry is also keeping close tabs on developments to make certain that H.R. 1151 imposed handcuffs are fastened securely enough so that credit unions can be further held in check as competitors. Despite being such a hot topic, there is growing evidence that those who set policy for credit unions may be far from up to speed on this issue. One of many illustrations: At a recent credit union conference with a high percentage of volunteers in the audience, I asked the group point blank how many were familiar with the PCA issue. Only a smattering of hands besides those of credit union CEOs and management staff went up. The temptation is to blame volunteers for not keeping abreast of crucial issues that have the potential to cause major problems for credit unions. The other side of the story is that many credit unions are not doing a good job close to home of educating their own directors. Instead, they send them off to a conference and expect that to do the job for them. It obviously hasn't turned out that way. And a final example: A review of the last 10 years of NCUA call report data shows clearly that credit unions as an industry are enjoying substantial growth. In 1989 total assets were approaching $200 billion. They have more than doubled and are now approaching $450 billion. The other side of the story is that the real growth is being fueled by fewer and fewer credit unions. The 80/20 theory (20% of the credit unions have 80% of the assets and members) is becoming the 85/15 theory. The top 250 credit unions have gradually captured a greater percentage of total industry assets. They now represent over 42% of the total. There are many more examples. Be skeptical and ask questions. There almost always is another side to the story. Comments? Call 1-800-345-9936, Ext. 15, or Fax 561-683-8514, or E-mail mwelch@cutimes.com.