The average American lost $70,000 in lifetime income as a result of the 2008 financial crisis. Those losses, revealed in a new report from the Federal Reserve Bank of San Francisco, are an incredible price to pay for the negligence and corrupt behavior of big banks.
Even though banks have paid billion-dollar fines related to the financial crisis – totaling more than $174 billion – everyday Americans aren’t recuperating their losses. But guess who is: Banks’ shareholders.
Through mid-2019, banks plan to give more than $28 billion to shareholders through dividends and other payouts. Maybe that’s why banks saw their reputations fall this year for the first time in half a decade.
Credit unions are proudly different. As not-for-profit, member-owned cooperatives, credit unions focus on member services rather than stockholder enrichment. They look for opportunities to reinvest in their institutions and strengthen their members’ financial situations with lower rates on loans, educational programs and new products that will help members achieve their financial goals.
Despite challenging regulatory or economic landscapes, credit unions remain committed to serving consumers of all financial statuses and in all stages of life. That’s why we continue to grow – even as Americans become somewhat disillusioned with others in the financial services space.
In fact, credit unions increased their lending to members when they needed it most by making loans banks refused to: From 2007 to 2010, credit union business lending increased as a percentage of their assets while banks’ small business lending decreased. And credit unions have only continued to gain Americans’ trust. In the past 10 years, our industry has seen membership increase roughly 30% and assets grow almost 80%.
All this took place despite credit unions’ inclusion in regulations meant to prevent bad actors from engaging in the same activities that led to the 2008 financial crisis. These are regulations that have caused significant consolidation in our industry, and so we have fought back. And because of credit unions’ good work, we’ve seen the president sign into law the most comprehensive regulatory relief package since the enactment of Dodd-Frank. This package included numerous NAFCU-backed provisions that will allow credit unions to better meet their members’ needs – whether that’s through offering more member business loans or seeing some reporting relief under the Home Mortgage Disclosure Act.
The passage of these measures is a testament to credit unions’ dedication to their members. But our work isn’t done.
As we prepare for this year’s midterm elections, we must recommit to our advocacy efforts and focus on our proactive agenda to create an environment in which credit unions can grow. The progress we’ve made in recent months is promising, but that doesn’t mean we should slow down. Now is when we step up.
Elections bring new faces to Washington, which means some of you will have new representatives or senators. It’s critical to connect with current lawmakers and those running for office to make sure they know how their constituents – your members – are impacted by their decisions.
Offering real-life anecdotes about how your credit union is changing people’s lives, whether through home loans or education programs, is key to effective advocacy. Plus, it is important to share how various regulatory relief and reform efforts will help you serve even more in your community.
Roughly one-third of the American population currently relies on their local credit union to achieve their financial goals. But there are many more Americans that could and should benefit from credit unions’ products and services: The U.S. government has identified almost half of Hispanic and African American households as being unbanked or underbanked – meaning their financial needs are not being met. In comparison, less than 20% of white households fall into the same category.
Credit unions stand ready to meet the needs of these underserved communities, but some legislative and regulatory changes are necessary. And that is exactly what we’re advocating for – changes to short-term, small-dollar loans and field-of-membership reforms, among many others, so our industry can offer safe, affordable financial products to those who need them most.
We’ve seen our regulators and lawmakers be receptive to our efforts and offer reforms that will allow credit unions to continue to meet their members’ needs – a trend we want to continue.
This is where advocacy comes in. We need leaders on board and committed to achieving relief in order to realize these much-needed changes. We need strong relationships with decision-makers.
Relationship building comes second nature to credit unions. They do it every day with their member-owners. Policymakers are no different. The industry has proven its value, so now it is time to push for the healthiest regulatory environment possible to continue top-notch service to its members.
For more than 100 years, credit unions have proven they are committed to serving in the best interest of their members. This service hasn’t gone unnoticed. As the reputations of big banks dwindle in the eyes of consumers and as change is on its way to Washington, there is no better time to step up our efforts. Momentum is on our side. Let’s keep it there.
B. Dan Berger is President/CEO of NAFCU. He can be reached at 703-522-4770 or firstname.lastname@example.org.