Second Guessing as Blood Sport

Editor-in-Chief Paul Gentile’s column in the June 28 issue demonstrates the temptation and danger of constant second-guessing that is rampant in our movement. Mr. Gentile is critical because NCUA Vice Chairman Rodney Hood had the temerity to address the N.C. bankers to let them know that there was a lot more we could accomplish by collaborating than by tearing each other apart in the public arena. Mr. Hood has a long history in banking, especially in economic and community development, and anyone who has spent any time with him has no doubt about his commitment to credit unions. I would not second guess his attempt to offer an olive branch, whether it is accepted or not, because a fresh new approach to reducing the damage that the banking industry is causing consumers in America through their trade associations’ actions is needed and welcomed. Journalists have a special pass to second guess and Credit Union Times has a long and laudable history of challenging the movement. Mr. Gentile questions NAFCU’s addition to their team of Dan Berger, a very successful lobbyist, who came from the ACB. He also questions their efforts to keep an open door with Congressman McHenry (R-N.C.) in spite of the provisions of a bill McHenry introduced (opposed by NAFCU) that strips NCUA of important authority and makes it easier to convert to a mutual savings bank without fully informing the membership of the trade-offs. Having personally testified for NAFCU on the Hill against the bill and having spent time with key members of the House Financial Services Committee in the process, I can assure you that we were far better off having a constructive dialog around the topic, primarily enabled by Mr. Berger’s efforts, than we would have, had we hurled our insults and turned away. The bill will not advance, we made some key policy points with the Chairman of the Subcommittee and maintained an open door with the youngest member of Congress who may be around for another forty years to either help or hurt credit union members. Mr. Gentile then turns around and defends an indirect subprime auto lending program under review by NCUA that priced loans at the top of the usury loan limit (federal and state). When most of us were charging 3.25% for a new car loan, this program was priced at 17.99% for members of FCUs and 23.99% if your state had a cap of 24%. He “feels sorry” for a program that was exclusively designed to make an ROA objective, and didn’t offer any financial counseling for a new “sub-class” of members so that they might hope to secure a market rate in the future. Where is the credit union or cooperative philosophy in that? Why not price to actual cost plus a fair return to maintain net worth? Are we to use the excessive returns from those less able to access affordable financial services to pay higher certificate rates to our more affluent members? But that had little to do with NCUA’s actions. No federal agency including NCUA is able to challenge a private program unless they have cause. Realistically, we should look to the rise in interest rates relative to the usury caps as a factor in the declining margins on this type of fee heavy program rather than scapegoat our regulator. But you can see how easy it is to second guess the second guessers. CUNA recently drew a line in the sand on the Reg Relief bill when the ACB sought to increase their business lending limits (or have no limit) while opposing any increase in limits for credit unions. Many in the movement applauded (OK, I admit I applauded) and said “it’s about time”. Others feel that we would have been better off working behind the scenes as we normally do. You could second guess either position. Over a decade ago, the key banker trade groups, the ABA, the ICBA and the ACB realized that they were shooting themselves in the foot over and over again in Congress, with their regulators, in the media and in the public eye by constantly jockeying for position against one another. The only remedy for second guessing is for more collaboration and less infighting. Credit unions will have to continue to insist that our trade associations collaborate rather than compete on key issues like PCA Reform and MBL limits. And Mr. Gentile, keep doing what you do. Marc Schaefer President and CEO Truliant Federal Credit Union Winston-Salem, N.C.