After a rough 2008 and 2009, conditions are slightly better this year for many credit unions. During his 10 years as NAFCU president/CEO, Fred Becker has observed many highs and lows in the credit union movement. Credit Union Times recently sat down with Becker to discuss a range of subjects.
Credit Union Times: How would you assess the condition of the economy and credit unions?
Fred Becker: We are still facing difficulties in the economy in terms of job growth and other areas and that is affecting almost every sector. For credit unions, the problems facing some credit unions are going to impact others, in terms of assessments that are being levied. And things could well go down before they go up.
CU Times: What have credit unions done well and not done well?
Becker: They've done a great job of serving their members but they haven't been as good about telling their stories. They also need to do a better job of adapting to the way that the model for financial services is changing. What will be the impact of the recession on the spending patterns of Generation Y? There is more volatility and it is a struggle to keep up. Credit unions can take their existing strategic plans and throw them out the door.
CU Times: What will the credit union landscape look like down the road?
Becker: Much to the shock of your editor and others like me, the merger rate actually went down a bit during the recession. But that said, there will continue to be a lot of changes in the industry that everyone will have to work hard to keep up with.
CU Times: How has the NCUA been reacting to these changes? How would you assess its approach to regulation?
Becker: Like everyone, it is struggling to keep up. But once the agency understood the magnitude of the problem it took a lot of effort on their part to sort things out. Though at times the staff wasn't attuned to things as much as it should have. But under [former Chairman Michael] Fryzel and Chairman Matz they've had increased transparency. Though they have had some encouragement in doing that from us.
It is good that all three board members have considerable knowledge and experience and that has helped the board navigate the crisis.
CU Times: How would you assess NAFCU's relationship with the NCUA?
Becker: We won't always agree with what the agency does but there is a dialogue. But the differences are no different than those that the ABA and ICBA have with the FDIC and other regulators. The ABA has had a big issue of the disconnect between what examiners do when they are visiting banks and the policies of the regulator. That sounds familiar with what we are dealing with, with the NCUA.
CU Times: After the oil spill on the Gulf Coast, some people said there was too close a relationship between the regulators and the oil companies they were charged with overseeing. Is that the case for credit unions?
Becker: No CEO has called me and said his or her examiner is too cozy with him in this day and age. Sometimes it is the other extreme.
CU Times: Have there been any surprises in what's come from Capitol Hill?
Becker: No, you could see after the last election that there would be an activist Congress and administration. We didn't cause the crisis, but we knew that lawmakers and the administration wouldn't always differentiate between the good and bad actors. We expected there to be a backlash against all providers of financial services. But we tried to minimize the damage; that's why we fought hard against the amendment giving the Fed the power to regulate interchange fees.
CU Times: Why have credit unions had such a difficult time getting what they've wanted from Congress, even though the trades have increased their lobbying and campaign giving?
Becker: There isn't always a correlation between campaign giving and legislative results. A large obstacle is that our industry is a small part of the overall financial services industry as a whole. And generally, what happens to our industry doesn't have a big impact on the overall economy. Therefore, we have difficulty getting people's attention we have a problem. The bankers tend to present problems that are on a much bigger scale and demand more attention.
That said, we have made progress in getting the cap on MBLs lifted. We would like things to work more quickly but Mr. Jefferson's system doesn't run that way. It is easier to stop something than start something.
CU Times: What do you foresee happening during the remainder of the year?
Becker: Regulatory reform is full employment for regulatory lobbyists. Once the new [consumer] agency is up and running there will be new challenges to deal with and new rules to interpret.
CU Times: What are the biggest unknowns?
Becker: Rules they may set for executive compensation and how federal regulators deal with issues of preemption.
CU Times: In view of all that's going on, how would you describe your mood these days?
Becker: Optimistic when I consider other financial services providers. It is raining out there and we are coping with the rain better than everyone else.
CU Times: Both CUNA and NAFCU laid people off last year-though CUNA laid off a larger portion of its staff than you-how would you compare the trade associations financial health?
Becker: I had been worried about making our budget this year in light of the economic difficulties and warned our board. I even asked the board if they wanted to revise the numbers and they said no. Fortunately, attendance at our conferences has been up. Our volunteers conference had double the number of attendees as last year and at the annual conference we are back to where we were before the recession.
CU Times: What impact will the change of leadership at CUNA have on the clout of the credit union movement and the chances of the associations merging?
Becker: People in credit union land make too much of the disagreements which often center on tactics rather than policy differences. We should find ways to continue to work together for the sake of the movement, and we are often able to work together on big issues. In my view, there will always be an organization that only represents the needs of federally chartered credit unions.