CU Times Correspondent-at-Large
CHATSWORTH, Calif. -- Telesis Community Credit Union CEO Grace Mayo said gas prices are so high in Southern California that commuters are changing their habits.
"We're seeing a cultural change here in driving patterns as a result of gas prices," Mayo said. "Everyone who can is using our Metro rail and bus systems, and our employees are car pooling more than ever. And, we've seen more motorcyclists on the road and more people riding bicycles to work."
According to gas price tracking Web site gasbuddy.com, the average price of 87 octane unleaded was $4.44 per gallon in Los Angeles County as of June 9, up from $3.88 only one month ago.
Mayo, a motorcycle enthusiast, said even she's considering biking to work to save on fuel costs. In fact, so many are garaging their gas-guzzlers, Mayo said her $600 million credit union has seen an increase in voluntary surrenders and repossessions of SUVs and inefficient cars. And, she said, Telesis is not the only one.
Lin Holcomb, president of the California Credit Union Collectors Council, concurred with Mayo's report, saying her members are reporting widespread increases in surrenders and repossessions.
"I've heard reports from numerous credit unions that members are calling and saying 'we can't afford it, come pick it up', and as gas prices go up, more members will be doing it," she said.
Holcomb said gas prices have not only dug into household incomes, they've resulted in smaller paychecks, too.
"We've heard there's a lot of downsizing going on out there," Holcomb said. "In fact, I just spoke to a woman who has a part-time job at FedEx. She used to work 25 hours per week, and they've cut it down to five hours per week, because gas prices are hurting FedEx, too."
Holcomb, a special service manager at $120 million Pasadena Federal Credit Union, said it's a matter of basic budget numbers: members are working fewer hours and bringing home less income, while trying to absorb a higher cost of living.
"People are trying to keep a roof over their head, the utilities on and food on table. Everything else comes after that, including car payments," she said.
Holcomb said PFCU has been spared the loan losses that have befallen other California credit unions, but her fellow collectors haven't been so lucky.
"They're trying to be creative, trying to help members as best as they can, but they also have to be realistic," Holcomb said. "You can't give a member a $30,000 loan at zero percent interest with a payment of $50 per month, you just can't do it. But you have to find something beneficial that allows the member to keep their dignity."
Collectors are also reporting more members declaring bankruptcy, especially those upside down on mortgages and autos, because their lack of equity makes a declaration of insolvency easy, she said.
And, despite PFCU's good numbers, even some residents of prestigious Pasadena are struggling.
"I don't care if you're in Pasadena, Beverly Hills or Bel Air, people are having issues no matter where they are," Holcomb said. "Just look at the news that Ed McMahon, who you would assume is worth millions, is in foreclosure. This is a man who refinanced his property and did what a lot of Californians did. Sure, most people don't have $4.8 million mortgages, but it's same principle for Ed McMahon as it is for the guy from Pasadena who makes $100,000 a year or the average Joe who makes less."
Henry Kertman, vice president of public affairs for the California Credit Union League, knows first hand the effect gas prices are having in the budgets of members. Kertman has a 130-mile round trip commute from his coastal home in southern Orange County to the league's offices in suburban Rancho Cucamonga, located in San Bernardino county.
A couple of years ago, my wife and I traded in our gas hogs for a Toyota Prius and a Honda Civic, both hybrids," Kertman said. "It seemed like a smart thing to at the time, but it seems very smart now."
Kertman has worked under a telecommuting agreement with the league for several years, working from home one day per week; though thanks to technology, his member credit unions probably don't realize it. He said the league has received more interest from employees seeking to telecommute not only to offset gas prices, but because new neighborhoods built in the last housing boom have increased traffic. Not only does it make for a longer commute, but the longer a car sits in traffic, the more gas it burns.
"When we moved to the new league offices in 2000, I-15 was wide open and it was easy to take that route," Kertman said. "But for last few years, that's been the freeway you avoid, because there was such a housing boom along that route, now many of us zigzag through side streets to avoid it."
Mayo said she hasn't instituted any new telecommuting plans, but is granting some leeway in schedules to allow for bus and train schedules, as well as encouraging car pooling. And for the past year, she's been rewarding employees with gas cards.
"If we really want to incent employees, we give them gas cards instead of the Starbucks gift cards we used to," Mayo said. "It's a sign of the times, that basic needs trump what I call plushy needs."