By Frank J. Diekmann
How appropriate that a brand new trade group called America’s Credit Unions is now official with the new year, because “America’s credit unions” have an image problem right now. A big and growing one.
The new group formed by the merger of CUNA and NAFCU has been accompanied by much fanfare and hyperbole about “transformation” and a “unified voice on Capitol Hill” and strength on the “national stage.”
But it isn’t Capitol Hill or the national stage where credit unions are getting crushed right now. It’s in states and local communities and online forums. And when it comes to some of the recent headlines, Ed Filene must be grimacing.
I get it--no one wants to start a new year on a negative note. New years are supposed to be about new beginnings and resolutions and leaving the old year and its problems behind. But America’s credit unions have a 2023 image problem that wasn’t drained with the champagne on Dec. 31, and the best resolution would be to do something about it.
What’s the troubling issue? There are more than one, but in a nutshell it’s the increasing perception credit unions have outgrown their roots as consumer-oriented, member-owned, local places that are all about helping the little guy (whether he’s under an umbrella or not) and instead have become “just like the big banks.”
Making the (Wrong Kind of) Headlines
Consider some of these news stories and headlines from just the last quarter of 2023:
- “While Leaning into ‘Good Guy Image,’ Credit Unions Charge Millions in Overdraft Fees” –KPBS News
- “Credit Unions are Making Money Off People Living Paycheck to Paycheck.” --Politico
- Navy Federal has Widest Disparity in Mortgage Approval Rates Between White, Black Borrowers” –CNN
- “The Navy Federal Credit Union Mortgage Scandal Reveals an Industry Wide Problem”–MSNBC (It’s a bit of an irresponsible leap to call the situation a “scandal” at this point, but fair or not, it was the headline)
- “Overdraft Fees, Long Associated With Big Banks, Are Big Business for Credit Unions, Too” –MarketPlace.org
The Bad News Bearers
It doesn’t stop there. A report issued by the CFPB in December found many college-sponsored financial products have “higher fees and worse terms and conditions compared to typical market products.” It based its findings on a sample of 22 financial institutions, a third of which were credit unions, finding one CU was the leader on fees in the product category.
Also in December, credit unions expressed their opposition to new legislation called the “Predatory Lending Elimination Act,” which would cap interest rates at 36%. Whatever the reason, credit unions are now opposed to financial predators? It was and is not a good look for America’s credit unions.
What Happened?
As if all that weren’t enough, throughout 2023 CUNA and NAFCU often found themselves standing on opposite sides of the fence from the various consumer groups on numerous issues. It wasn’t that long ago that CUNA and the Consumer Federation of America, for instance, would hold joint press conferences and issue unified statements on consumer-related issues. Now, they are often at odds. What happened?
In California, where the floodwaters have yet to recede from a report on how much some state-chartered CUs are charging for and making from overdraft fees, the state league issued a list of “talking points” credit unions can use in response. Here’s the first thing you need to know about talking points--they are never assembled when the talking is good.
Not Whistling, But…
I’m not suggesting America’s credit unions are whistling past the graveyard, but they do seem to be humming an awfully cheery tune outside the ER. And that will be especially true in the coming weeks and year as the new America’s Credit Unions trade group pulls back the curtain on their new and improved “advocacy” efforts, “synergies,” and, coming soon, a new logo.
A shiny new logo is not what America’s credit unions need right now.
On many occasions in writing about credit unions in this column I have found myself turning to the quote, “Every new idea eventually defeats itself by forgetting its original purpose.”
That’s always the challenge for any organization or cause, including those with such noble and altruistic roots as credit unions—not forgetting where you came from, or why the working folks put money in a cigar box in the first place, or what it was they needed (and now very much need) from their trade associations.
Some Irony
CUNA was formed 90 years ago in 1934 primarily as a national group to tie together what were then the more powerful state leagues and state charters. Just three decades later, in 1967, a group of federal credit union CEOs met at the Cockatoo Hotel in Los Angeles out of frustration over feeling underrepresented in Washington. NAFCU would be the result.
Now, the new America’s Credit Unions is all in on Washington. Its messaging is almost completely dominated by references to its lobbying, its “advocacy,” its presence on Capitol Hill. Its CEO is a former member of Congress.
Ironically, a half-century after that hotel meeting, America’s Credit Unions’ attention needs to turn around again and should not be focused inside the beltway, but outside. That’s where 99.9% of the members and their credit unions are, as are an equal ratio of the challenges.
The Hat Ain’t So White
Lots of mud is being thrown at the CU white hat and, sorry to say it, but much of it by credit unions themselves. In 2024 and beyond, America’s credit unions don’t need talking points, they need points of action, even if it involves acknowledging some difficult truths.
That would be the best 2024 resolution of all.
Frank J. Diekmann is Cooperator in Chief of CUToday.info and can be reached at Frank@CUToday.info. Mr. Diekmann is also author of several new book, including the brand new “The Last Lyric,” a humorous satire about a murder investigation at the Rock & Roll Hall of Fame in which every line of dialogue is either a classic pop/rock song title or lyric. Available on Amazon, Apple iBook, Barnes & Noble and Smashwords. Mr. Diekmann is also author of a non-fiction compilation of the very best & worst he has seen and heard in covering more than 500 CU meetings and conferences, “501 Name Tags: How Everything You Need to Know About Business Can Be Learned at a Conference & Forgotten in the Trade Show.” It is available on Amazon, Barnes & Noble, Apple, Lulu, and Smashwords.