I don't worry too much about people who kill the messenger. I am a spokesperson for credit unions.
Part of my job is to hate on the big banks. They keep making it so easy. I am also tasked with celebrating credit unions. That's pretty easy, too.
Think about it: credit unions have a Positive Image because of a track record demonstrating financial responsibility, giving consumers a voice through ownership – our consumers are “members” – community service – Credit Unions for Kids funds children's hospitals across the county, and the organization was founded right here in Oregon and Southwest Washington – and teaching financial literacy to 8th graders – BizKid$ was founded in Washington with credit union donations.
Credit unions are not-for-profit. Instead of paying dividends to greedy Wall Street stockholders, we pay back the members – most of our credit unions still offer free checking and free debit cards. Our members don't have to drive around looking for a branch; most of our credit unions are networked so members can deposit or withdraw from thousands and thousands of credit union ATM s across the county. Did I mention that's free? Some of them even reward you with gifts for using your debit card. Need a car loan? Chances are you interest rate is better at a credit union.
We don't pay a fat-cat board of directors. Our boards are all volunteer, every last one of them. I read in the Portland Business Journal recently that people who sit on two local bank boards are getting between $40,000 and $70,000 per year, in addition to salaries from their real jobs, for being on a bank board. No wonder bank customers pay $20.00 a month for checking accounts. LOL.
Taxpayer bailouts? Not here. Our credit unions, as not-for-profit institutions, are not eligible. So on the pretty rare occasion that a credit union isn't going to make it, the other credit unions step up. Most of the time, member service is not interrupted. We pay for our own insurance fund, too. Our accounts, like those deposited in big banks, are generally insured up to $250,000. Congress writes check to the FDIC, but not to us.
“For the most part, credit unions did not make really stupid decisions,” Michael Barr recently said to a group of Northwest credit union leaders as he recalled the irresponsible bank actions that led to the recession. Barr was hired by the Treasury to write the Dodd-Frank legislation designed to reform Wall St. You can certainly argue that it's not working the way it was intended to – it resulted in 20,000 pages of regulations our industry struggles with, some of which keep us so busy, we can't have as much member focus as we'd like. The audience appreciated Barr's insight but I can't say there's much buy in to the over-regulation engulfing our credit unions. We were painted with the same brush that was supposed to remodel big banks.
One of the consequences of Dodd-Frank is a rule limiting the fees retailers pay every time a consumer uses a debit card to make a purchase. It's called a “swipe fee.” On average, card issuers were getting .40 for transactions, and that's been cut in half for institutions with assets of over $10 billion. That's the impetus or maybe the excuse for Bank of America's “economic suicide” decision to start charging its customers $60.00 per year for debit card privileges. It doesn't affect most credit unions – yet – because of our asset size. But here's why we fought that rule: we urged Congress at the time to stop and study the impact it would have on the public. We doubted merchants would refund any of the debit card swipe fees to shoppers. And we just knew it would force some financial institutions to start charging those same shoppers for debit card services. So they'd end up paying for debit card services twice: once at the cash register and again in monthly fees.
Debit cards are preferred by shoppers who don't want to carry cash or pay to write checks. Offering them is a great service to consumers and a real benefit for retailers.
Here's a fact the public may not know about the swipe fees. They pay for the expense of offering debit cards. That includes the insurance that protects consumers from fraudulent purchases. It also includes the cost of re-issuing cards after a breach. One of our Northwest credit union CEO s reported that the breach on Michaels' craft store customers alone, cost his credit union $200,000 to fix.
We fell 12 votes short of winning the argument on swipe fees. With no research or consumer impact study, the Senate voted to immediately enforce the so-called interchange rule. In fact, all four of our Northwest Senators voted against consumers. Now our worst fears are coming to fruition. Just ask Bank of America customers.
What do you think would happen, if the next time you buy something with a debit card, you asked the cashier to give you back the 20-cents his store is saving?
I am not siding with the big banks. They're clearly deciding that rather than absorbing the lost fees by cutting board compensation or stockholder dividends, they'll take it back from the same public that bailed them out.
I am instead calling on Congress for more thoughtful regulation.
Given their track record, I don't think we'll see any change overnight. But credit unions will maintain a Positive Image and you can benefit. Credit unions are a smarter choice for consumers. Not all offer the same services, but chances are, there is one near where you live or work that will offer exactly what you want. Log onto www.asmarterchoice.org and find the one that fits.
Welcome. We want you.
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