Credit Unions Need to Talk About Their Success Stories!

I'm typing furiously this morning in an attempt to get out of the office by 11:00 am. I'm heading up to western NC to hear Kim Bohannon speak about disaster preparedness at the Western Chapter meeting in Waynesville tonight. (As an aside for League affiliates in NC, Kim has a lot of disaster preparedness tools and resources you can use in the compliance section of the web site. Contact her for more information.)

Before I head to lovely Waynesville for the chapter meeting, I'm going to meet up with Mike Whitmire of Ecusta CU. I saw Mike at State Capital Connections in Raleigh last week. In our meetings with NC legislators, Mike talked about how he lost his job at the Ecusta paper plant a few years back, and how the credit union helped him manage his financial obligations while he was looking for a new job.

What a great story - here is a guy who had two kids ... one in college and the other in high school ... and he needed to figure out what to do when the plant suddenly closed. Luckily, he had home equity to fall back on - and this helped him meet his obligations to his family, go to school and go into an entirely different career (accounting).

Mike didn't need a handout - he just needed a partner to help him navigate some tough waters. That partner was Ecusta CU.

After getting his degree, Mike ended up working for the credit union! Anyway, we're going to be doing a writeup on Mike's experience with job change and how Ecusta CU was there for him when he needed them most. (3/28: Edit to add that the story is now posted on the League web site.)

Isn't it great to have CU advocates with powerful stories like that when we speak with lawmakers?

There are hundreds (if not thousands) of stories just like that across NC - someone hits a rough patch financially, and the credit union is there to help the member help themselves. While these issues can sometimes be very personal in nature, credit unions need to continue telling stories like this.

Mike went to Raleigh to share his powerful experience, but I encourage you to talk about your success stories everywhere you can. From your web site to your newsletter, and from local reporters to the Rotary Club, credit unions should emphasize how we're different in very personal, specific ways.

A lot of times we complain that people don't consider us when they are thinking about their financial service choices. But what are we doing to highlight our niche in the financial services arena (namely, that we aren't a bunch of money grubbers)?

With stories like Mike's, we have a proud niche of public and consumer service -- but if we aren't willing to tell folks about it, credit unions can't expect a lot of new faces to show up in the lobby.

Of Starfish and Subprime Mortgages

I’m dusting off the soapbox and getting ready to climb on it here on a Thursday morning. For a random credit union league PR lackey like me, this is dangerous turf for two reasons. For one thing, the League is an organization that listens to its member credit unions before weighing in with an opinion – in effect, it’s your opinion that guides our priorities.

Secondly, I am writing to a credit union audience that is quite a bit smarter than me.

But the subprime mortgage story I'm hearing in the media has me a little ticked and I just can’t help myself. So here we go.

I recently heard a speaker reference the Loren Eiseley starfish story, which is taken from his 1978 book, The Star Thrower. In the starfish story, an older gentleman is walking the beach that is covered with hundreds of starfish washed up by the tide. He soon encounters a young man who is tossing the starfish one-by-one back in to the ocean. When the young man tells the older man he is saving the starfish, the old man remarks that with so many starfish littering so many miles of beach, the young man can’t possibly make a difference.

Upon hearing this, the young man picks up yet another starfish, tosses it into the sea and says, “It made a difference to that one.”

The starfish story reminds me of the unfolding wreck in the subprime mortgage sector. If you have not heard the specifics, the folks at the Center for Responsible Lending (among other organizations) have been researching some of the subprime mortgage products that some lenders (with Wall Street financing) have been using to make a ton of money the past few years.

Among these products is a 2/28 ARM mortgage that many customers in the subprime market have gotten the past few years. The loan includes a sexy “teaser rate” that allows people to buy bigger homes, often with little or no verification of their ability to repay the loan when the loan payment increases after two years. According to the CRL subprime loans, including the 2/28 ARM, accounted for about a quarter of mortgage originations last year.

As you might imagine, the 2/28 ARM this is a great way for mortgage companies to get rich at the expense of borrowers who would otherwise build more equity in their homes with a fixed rate mortgage. According to the CRL, this 2/28 ARM approach and its frequent flipping approach works (especially for the lender) if the housing market is appreciating, as it has done the past few years. People can count on having enough equity in the home for the mortgage company to re-finance the loan (guess who ends up with the equity …).

The problem comes in to play when the housing market cools down. People who previously could re-finance their loan or sell their homes instead get trapped in the mortgage, have their interest rate (and payment) adjusted violently upward, and end up getting foreclosed upon. According to the CRL, more than two million families nationwide are at risk of foreclosure in the next couple of years.

Two million families!

That two million families would risk losing their homes because of some greedy people is bad enough. But worse yet … and this is what really has me steamed … all the media focus has centered on the financial problems of the lenders who created the situation in the first place, with scant mention of the real people who face a crisis they may not even be aware of yet. The borrower’s side of the story remains largely untouched.

I’ve been to two meetings where the CRL presented this information to credit union people here in NC. It’s safe to say that, true to our “people-helping-people” philosophy, some credit union leaders are starting to grapple with what (if anything) can be done to help people who are caught in this mortgage trap.

I’ll leave those discussions to others, but it does occur to me that this is an opportunity for credit unions to use the PR process to tell the story with an eye to helping people who are in these terrible loan products.

I suggest that credit unions start talking about this issue with local reporters from the consumer standpoint. Let others focus attention on the impacts on Wall Street – this is a Main Street issue, and people where you live want and need to know the impacts of this story. Here are a few ideas about how you might approach this from a PR perspective, and why you should consider raising the issue:

• The word “subprime” sounds like a gristly piece of steak. It’s a depersonalizing label. This is a story about working families and people who live in your city. Be their advocate.
  
• Draw distinctions between your subprime lending program and those of the bad guys. You make loans to help people realize the dream of home ownership and build up assets. The bad guys make these exotic loans so they can build company and shareholder assets. In short, don’t expect people to know you’re different – it’s your job to tell them.
  
• On that same note, you might also outline how your credit union helps someone qualify for a mortgage (if they are not eligible at first).
  
• Perhaps your credit union has already refinanced a member out of a bad mortgage and they would be willing to participate in the story. Or, you could always have a loan officer share anecdotal information about who these subprime borrowers are and what you’re telling them.
  
• You can alert people who may be at risk that they may be able to get into a more traditional mortgage product. This is especially true since, according to the CRL, many people in these products could have qualified for a prime loan.
  
• You can gently remind people about the advantages of doing business with a local financial service provider.
  
• If we leave this story up to the banks, they’ll muck it up with bar graphs and gross domestic product projections.

Finally, please think about what your credit union can do to assist people in these mortgages. With the CRL estimating that quite a few of these people will have as much as 120% loan-to-value in these mortgages, you may not be able to do anything for many folks … but like the young man on the beach tossing starfish into the sea, it will matter to the people whom you can save from the rising tide of foreclosures.

My soapbox is now safely tucked away. Thank you for reading this.

The Little Guy Scores Big with NC CUs at GAC!

The NC hospitality suite at the recently-concluded CUNA GAC had a special guest visitor, as a four foot tall Little Guy held court over the comings-and-goings in DC. The Little Guy debuted on Congressional swearing-in day in January, as CUNA attempts to change the conversation on Capitol Hill. The League's John Radebaugh and Eric Gelly (pictured here) exchanged pleasantries with the Little Guy during his stay in the suite.

CUNA says the Little Guy is connecting in the halls of Congress, and if word-of-mouth in the hospitality suite is any guide, the Little Guy is making quite an impression with credit union people as well! Folks in the suite chatted about a lot of topics over the course of the GAC, but the Little Guy seemingly stole the show - he was the Hot Topic.

One NC volunteer waved around a foot-tall Little Guy with credit union info on the back and said he'd love the opportunity to get hundreds of them to pass out at his credit union. "Don't even put our logo on it," he said, " just keep the talking points on the back and give it to our folks. They'd love it!"

CUNA is going to share the details of a grassroots Little Guy campaign with state leagues in the next few weeks. This will be the next step in the campaign that will introduce him to a much larger audience.

The folks in Madison will ultimately have to make a decision as to the Little Guy's place in the credit union universe, but in the world of "Web 2.0" ... could it be that the Little Guy will wind up being a viral branding campaign for our movement?

If word around the hospitality suite is any guide, he's got a shot at it.

Shared Branching Gets Look by NC Media

Shared Branching got the best boost for the worst reason in 2005 as Hurricane Katrina devastated the Central Gulf Coast region. Despite terrible operating conditions in the days and weeks after the storm, Shared Branching allowed credit unions in the area to get needed cash into the hands of storm survivors , including some who were displaced hundreds of miles away from their homes.

In the months since Katrina, Shared Branching has gotten a fresh look by credit unions seeking a proven recovery tool in their disaster plan. The resulting growth of Shared Branching in NC has also provided a chance for credit unions to share the the benefits of the network with members of the local media. Recently, Premier Federal Credit Union's Asheville office worked with Asheville Citizen-Times reporter Mark Barrett to tell the Shared Branching story to the community.

The story shares the convenience of Shared Branching for credit union members, while making some key credit union points of differentiation from other financial service providers. While it does not lay out the disaster recovery element, it's a great story. And there's certainly more a lot more room for the Shared Branching story to be reported in the media.

To read the Citizen-Times story, go to http://www.citizen-times.com/apps/pbcs.dll/article?AID=2007702090310.

Until next time!
Jeff