By Frank J. Diekmann
It’s amazing how today you can’t even get someone to look up from their phone and the latest fascinating Facebook post or tweet when five years ago it would have led to a question like, “Just how hard did you hit your head before you walked in here?”
In CUNA Mutual’s most recent Trends Report, it’s noted that its economists “are projecting loan growth to be 10.5% in 2015 and 10% in 2016 before slowing to 8% in 2017.” Before slowing to 8%! Right around the same time that report was being released Washington’s state regulator was telling the Northwest CU Association’s Amplify meeting that one of its concerns is credit unions that are approaching being completely loaned out.
It’s interesting how quickly we all adjust to good times, when during the recession economic performance was a near daily discussion.
Stop Me If You've Heard This Before
You could easily remove the words “community banks” and substitute “credit unions” in a new report called “Community Banking in the 21st Century,” which was released by the Conference of State Bank Supervisors (CSBS) and the Federal Reserve.
See if these statements don’t have a slight ring of familiarity:
* “Longstanding debates concerning the costs of bank regulation became more pointed following the introduction of remedial policies after the most recent financial crisis. There was no other issue on which bankers in the survey were more vocal,” the report states
* Smaller banks bear a burden disproportionate to their sizes—more than double the percentage for (larger) banks.
* “Small banks cannot afford to efficiently meet the same regulatory and compliance guidelines laid out for ‘big bank’ problems,” one banker is quoted as saying. “We are being forced to pay for all the same compliance as big banks without having ‘big bank’ income.”
* Increasing compliance costs, in the opinions of some bankers, were driven not so much by new regulations as by changes to old regulations. According to one banker, the cost “is in the changes, not in the regulation...the pace of the changes is the issue.”
* Bankers also expressed dissatisfaction with the Real Estate Settlement Procedures Act (RESPA), the Home Mortgage Disclosure Act (HMDA) and Dodd-Frank. HMDA was thought to be ambiguous. RESPA was criticized for its inconsistency and immediacy. Inconsistency also was mentioned often in the enforcement of Dodd-Frank, and bankers also faulted it for its complexity and inapplicability to small banks.
* “There has been so much coming at community banks, not only all the new regulations but constant changes and updates,” one banker said. “These changes have not only affected regulations but have changed entire processes and software. Banks are hung up on all the little technical details that are in the new regulations and there is very little, if any, benefit for the customer.”
Attention Land of Enchantment, Earth Calling
Have you ever avoided a trip to New York City due to fears of Godzilla? Los Angeles because Jack Bauer is always on a 24-hour path of destruction? Probably not. But one other interesting side note from the Community Banking in the 21st century report, which includes some state-by-state findings based on Town Hall discussions that were hosted among bankers, was this: Banks in New Mexico pointed to the “economic impact” of the now-concluded (but worth a good binge watch) TV series “Breaking Bad.”
“Breaking Bad provided benefits to the state economy via tax credits, but it left the rest of the nation with a negative perception of New Mexico,” bankers in the state suggested. “This negative perception has ultimately led to fewer business opportunities for industries in the state, including financial services and community banking.”
If someone in New Mexico actually made a financial services decision based on the show Breaking Bad, then it’s highly likely they’re abusing the substance Walter White was creating, and probably not a terrific customer/member prospect to begin with.
Coffee With Nut Cases
Jason Gay of the Wall Street Journal made this recent observation via Twitter: “There's a guy in this coffee shop sitting at a table, not on his phone, not on a laptop, just drinking coffee, like a psychopath.’’
Finally, A Little Context
One of the taboo topics in credit unions is competition with other CUs; many prefer the more politically correct “co-opetition.” I’ve always thought any CU that believes its primary competition is other credit unions is pretty myopic, so credit needs to go to Laura Eblen of Mazuma CU for putting all that into context.
During the recent CUNA OpSS/Tech Council meeting in Orlando, Eblen had a response worth sharing when she was asked about how other credit unions in her Kansas City market have responded to Mazuma’s radical rebranding. “Everyone knows that each credit union is serving a different niche market. As credit unions we need to quit fighting over that same 6%. What we should be going after is the other 94%.”
Well put.
Frank J. Diekmann is Cooperator in Chief at CUToday.info and can be reached at Frank@CUToday.info and @FrankCUToday.