Credit Union Times - October 1, 2008 - (Page 14) CREDIT UNION TIMES In Times of Crisis, CUs Can Lead the Way to Recovery EDITORIAL Sarah Snell Cooke, Editor-in-Chief 301-776-6262 / scooke@cutimes.com Donald Shoultz, Managing Editor 201-526-2331 / dshoultz@cutimes.com Claude R. Marx, Washington Reporter 202-370-4822 / cmarx@cutimes.com Myriam DiGiovanni, Senior Staff Reporter 919-303-2744 / mdigiovanni@cutimes.com David Morrison, Senior Staff Reporter 703-379-2626 / dmorrison@cutimes.com Michelle A. Samaad, Senior Staff Reporter 770-469-2698 / msamaad@cutimes.com Lindsey Siegriest, Staff Reporter 201-526-2332 / lsiegriest@cutimes.com Kristen Domenico, Layout Manager 201-526-2329 / kdomenico@cutimes.com redit union executives in private settings have begun whispering the “D-word” in discussing the current economic crisis: depression. While the first credit union in the United States was formed in 1908, a president named Franklin Delano Roosevelt felt that creating a federal system of credit unions was a good idea in 1934, on the heels of the Great Depression. I certainly wouldn’t put our country’s current financial status on that level, but there’s no denying there is a crisis. And credit unions are just as relevant today, if not more so, in providing services to those of modest means when they’re having trouble getting financial services anywhere else. The situation is ripe with opportunities for credit unions to play a role in the economic recovery of the American people and the nation. Credit unions are already doing their part to extend mortgages to those in need of refinancing from predatory subprime mortgages and providing loans to those who might not get them elsewhere, or at least at a much higher price. In just the last year, credit unions have doubled their foothold in the mortgage market; it’s still small, but there’s still plenty of time to take advantage of this opportunity while other credit sources are drying up. The current problems in the student lending market also present credit unions with an opportunity. Serving college students with no assets of their own and parents of college students who can’t afford to foot the entire bill–these are just some of the people credit unions were meant to serve. These are middle-income families plagued with rising home heating prices, high gas prices, growing grocery bills and struggling to pay for the skyrocketing cost of a secondary education. Along the way, credit unions should plan for losses. Just playing the percentages, if you’re going to loan more, you will lose more. Credit unions need to be sure they are mitigating their risks prudently by charging a high enough percentage rate for an auto loan to someone with B- or C-level credit, extending a loan to someone with little or no credit history based on other factors like rent and utility payments, and small-dollar loans to help repair a single parents’ 10-year-old vehicle so they can get to work. But if credit unions play their cards right–and by that I mean continue doing what they were founded to do–they could have much more to gain long-term than they might lose short-term. Providing services and EDITOR’S COLUMN Sarah Snell Cooke Editor-in-Chief Correspondents Senior Correspondent Jim Rubenstein jrubenscut@cutimes.com (480) 941-8135 Technology Correspondent Marc Rapport mrapport@cutimes.com (803) 917-5918 Correspondent-at-Large Eileen M. Courter ECourter@cutimes.com (813) 633-8540 Correspondent-at-Large Heather Anderson handerson@cutimes.com / (760) 481-3268 Special to CU Times Lisa Burden burdenlisa@yahoo.com / (410) 235-2556 (201) 526-2333 / tgreve@cutimes.com Thomas R. Greve, Publisher 859-692-2309 BUSINESS Teresa Barron, Advertising Coordinator Amanda Schuster, Audience Marketing Director 800-543-0874 PARS International Corp. 212-221-9595 ext 407 / David.Einziger@parsintl.com David Einziger, Reprint Sales PRODUCTION Georgia Barry, Director of Production 859-692-2195 Mark Joseph, Senior Production Technician 859-692-2215 Donny Roundtree, Production Technician 859-692-2101 Steve Johnston, Director of Manufacturing 859-692-2116 To email any staff member, use firstinitialastname@sbmedia.com, unless otherwise specified. (Example – to write John Smith, his email is jsmith@ sbmedia.com.) Summit Business Media Andrew L. Goodenough President & CEO Thomas M. Flynn Chief Financial Officer & Managing Director, Corporate Shared Services Thomas A. Fowler Executive Vice President & Managing Director, Media Division John Whelan Vice President & Director, Financial/Professional Services Group William F. Reilly Chairman Send Letters to the Editor to: editor@cutimes.com or Sarah Snell Cooke Credit Union Times 33-41 Newark Street Second Floor Hoboken, NJ 07030 Business Phone: Tel. (201) 526-1230 FAX: (201) 526-1260 loans now will create goodwill among the membership, generate priceless word-of-mouth advertising, and give lawmakers and regulators even more reason to give credit unions the authorities they need, despite outcries from bankers. Credit unions got an athletic leg up last week when Treasury Secretary Henry Paulson, a former investment banker–notably from one that is still in business–noted that credit unions would be among the tools used to help whip the economy back into shape. That came as the result of some intensive lobbying by the NCUA, CUNA, and NAFCU, but their work is certainly not done. After this week, after this year, as the country steers back out of the glare of economic meltdown, the lobbyists will need to hear all the stories of how each and every credit union served its membership, grew its financial strength and expanded its membership. Better yet, tell your lawmakers directly. These efforts, too, will provide a return on investment many times over when the Credit Union Regulatory Improvements Act or the next flagship credit union bill passes. One item I’ve read that caught my attention was that the community banks could get a tax break for losses incurred from their Fannie Mae and Freddie Mac stockholdings. I’m sure they deserve it, but what are credit unions getting out of the current crisis? Obviously not a tax break but, as part of the solution to a problem they didn’t create, credit unions deserve more than a pat on the back. Credit unions should decide collectively what they want from policymakers and then go get it. I also couldn’t help but notice that in President Bush’s remarks last Wednesday he highlighted Paulson’s Blueprint plan, the one that would eliminate a separate regulator for credit unions and others. This is absolutely something credit unions do not want– maybe credit unions should remind the Treasury Secretary of that. —Comments? E-mail scooke@cutimes.com Staking Out the Stats Research Shows Gap in Used Car Interest Rates for Latinos WASHINGTON — Last week, the Consumer Federation of American and its Hispanic America Saves initiative announced research analysis that showed a disparity in the interest rates on used car loans for Hispanic borrowers and rates received by borrowers from the general population. The analysis examined loans for used car purchases in 2004 and showed that Latinos paid a median interest rate on used car loans of 9% while the average interest rate for all Americans on used car loans was 7.5%. For new car loans there was little difference between the interest rates among Latinos and among all Americans. For new car loans Latinos had an average interest rate of 5.5% and all Americans have an average interest rate of 5%. Additionally, 18.5% of Latinos were likely to pay a used car loan rate of at least 15% where as only 9.2% of all Americans were likely to pay a loan rate that high. Angelo Gonzalez, Economic Independence project director from the Cuban American National Council, said that a possible explanation for the gap in interest rates is that there is a significant gap between well established Latino’s in American and new immigrants. He said that new immigrants are more likely to purchase used cars and the sellers are taking advantage of their inexperience. Many new immigrants are not aware that they can negotiate a loan off-site from a dealership and are being taking advantage of through on-site dealer financing. SUBSCRIPTION INFORMATION To Order: call (800) 543-0874 or write Credit Union Times, PO Box 14367, Cincinnati, Ohio 45250-9780. Credit Union Times (ISSN 1058-7764) is published weekly except for the final week of the year, by Summit Business Media, 5081 Olympic Blvd., Erlanger, KY 41018-3184 at $120 for 51 issues a year. Periodical-class postage paid at Covington, KY and additional mailing offices. Postmaster: Send address changes to Credit Union Times, PO Box 14367, Cincinnati, Ohio 45250-9780. Allow four weeks for completion of changes. Reproduction is prohibited without written consent. Credit Union Times, October 1, 2008 cutimes.com http://www.cutimes.com
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