1. How are the government takeover of Fannie Mae and Freddie Mac and the bankruptcy of Lehman Brothers Holdings Inc. affecting credit unions?

The greatest impact may be the damage to the level of confidence that credit union members hold in our financial strength. I’m sure we’re all getting many opportunities to talk to members who are concerned about the safety and security of their savings.

2. Do you think the fallout from of Fannie and Freddie could impact the fate of one of the top priorities of credit unions: regulatory relief?

I hope so. I’m a long-time advocate of true risk-based capital, and these uncertain times amply demonstrate the urgent need for more precise measures of risks and needed capital levels to match those risks. The NCUA ‘risk’ calculation for PCA purposes is crude and misguided. For example, NCUA calculates our credit union’s over-25%-of-assets real estate portfolio as representing a 14% capital requirement. Yet, even in Las Vegas, one of the worst foreclosure markets in the country, our loss on real estate loans is far less than 0.5%.

3. Has the collapse of the subprime markets created opportunities or headaches for credit unions?

Yes; both have presented themselves. The collapse has brought unprecedented (and mostly unwanted) attention to the financial community. While most credit unions normally avoid the spotlights, they’re shining on us whether we like it or not. I think it’s up to us to seize the opportunity and put our best foot forward.

4. With lowered interest rates could some lenders become more active in the mortgage market, leading to a slowdown for credit unions?

More so than any other product, mortgages seem especially linked to cyclical activity. For years, SSSCU has focused on building our mortgage business no matter what part of the interest rate cycle we’re experiencing; the relative activity levels of others is not a critical factor.

5. With Nevada foreclosures at the top of the states how is Silver State Schools CU remaining profitable?

Foreclosures themselves have not significantly impacted our profitability. Although we have had more foreclosures in the past 12 months than in the previous 57 year history of SSSCU, foreclosure write offs aggregate less than $1 million for all 58 years. Our profitability struggles are rooted in the ancillary and cumulative effects of the troubled economy on our members – - high fuel, food, and product costs, and low or negative returns on retirement and investment accounts. These things are leading to slower payment on loans and smaller savings and checking balances.

6. How are you helping your members’ to address their financial challenges in these tough times?

Some of the things we’ve developed are new young adult products, a low-down ‘teachers only’ mortgage loan, and payday lending replacement and credit repair products. Since so many of our members are teachers and their schools seem to receive less and less funding each year, we’ve stepped up our sponsorship of at-risk schools by providing money, supplies, and direct student help (food, clothing, backpacks, etc.) for 19 schools near our branches.

7. Is Silver State Schools CU pursuing new mortgage business at this time and why?

SSSCU has never discouraged mortgage business from members. This is a core service for us; we’ve offered mortgages for many years and will continue to do so. Our focus is member service. Our members need mortgages, so we need to be there to provide them.

8. With the economy is such a state of flux how do you balance members’ needs while sustaining long-term financial success?

It’s impossible to balance the two, because members’ needs and the credit union’s long-term financial success are both on the same side of the scales. The counterweights to our mutual successes are risk, opportunity, prudence, greed, and inattention to details. Those are the items that need to stay in balance to assure credit union and member financial success.

9. Given today’s economy, do you think that this is the time for credit unions to seize the opportunity to enhance their current mortgage lending strategies?

I’ve always felt credit unions should offer products for consumers. A mortgage is a consumer product; usually the largest single purchase. Credit unions need to be in the picture as their member’s financial partner, participating in these types of important events in the financial lives of their members. We’re an approved lender for both FHA and VA, so we can offer a broader array of mortgage programs for our members.

10. Do you think there is a silver lining for credit unions in this wild and crazy credit crisis?

Great play on words – - ‘silver’ – - I like that. Of course there’s a silver lining! I live in ‘the Silver State’! This is the time for credit unions to ride in on their white horses and show their true colors – - all of our colors here at SSSCU just happen to be silver.

This entry was posted on Friday, September 19th, 2008 at 9:11 am and is filed under Point, CounterPoint . You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.