Can a credit union go up against Wal-Mart in a battle in Congress over credit-card fees? Likely not, but the Credit Union National Association has a much better chance of doing so.
Steve Dahlstrom, president and CEO of Spokane Teachers Credit Union, who recently began a term on the board of directors of CUNA, cites such a challenge as an example of how the association can serve credit unions.
Otherwise, Dahlstrom says, "The whole credit union industry is in a state of flux."
CUNA, the country's largest trade association for credit unions, serves as the voice for the member-based financial institutions on Capitol Hill, representing about 90 percent of the country's credit unions, Dahlstrom says. He says the organization was instrumental in ensuring last year that credit unions could spread out over several years the special assessments they're required to pay to restore to fiscal health the National Credit Union Insurance Fund, rather than having to make far bigger single lump payments, as was originally mulled by members of Congress, Dahlstrom says. Interacting with members of Congress is particularly important for small credit unions, which make up the bulk of CUNA's membership, Dahlstrom says.
STCU expects to pay up to twice as much this year as the $1.5 million it paid in 2009 for the special deposit insurance assessment, he says.
Meanwhile, retailers have been lobbying Congress, to change regulations of the fees financial institutions charge them to process debit transactions, Dahlstrom says. It's an issue that can be handled better for credit unions by an industry group than by each credit union trying to get the ear of their representatives in Congress.
"Here's when an industry representative can go against Wal-Mart, whereas an individual credit union couldn't," he says.
The organization also provides feedback to regulators on behalf of its members as regulators develop new rules.
"CUNA provides industry commentary on proposals," such as on new regulations the National Credit Union Administration has proposed to redefine the role of corporate credit unions after several of them failed in the upheaval of the financial crisis, Dahlstrom says. STCU felt the sting of such a failure last year, when it reported a loss of $4.3 million for 2009 from its investments in corporate credit unions. Corporate credit unions serve individual credit unions by investing the deposits of individual credit unions and offering financial processing services to individual credit unions. Changes like that affect large and small credit unions differently, so the association works to coalesce the needs of its various members into a common voice, Dahlstrom says.
In addition to lobbying for credit unions in regulatory matters, CUNA helps its members interpret and implement regulations, and to ensure compliance, he says.
Dahlstrom, who will serve on the CUNA board through 2012, says it's a great opportunity for him to expand his knowledge of the credit union industry and to bring that to his position at STCU. Dahlstrom has held leadership positions at STCU since 1980, first as a vice president, and as its president and CEO since 1990.
He says he decided to run for the CUNA board spot when another director from the Western U.S. decided to leave his post early and a special election was called. A week after resigning his post, however, that former director decided he wanted it back, so Dahlstrom ended up campaigning against the incumbent director to finish out the three-year term.
"In our industry, being elected to the CUNA board of directors is one of the highest honors your peers can bestow on you," says Debie Keesee, chairwoman of the Washington Credit Union League and president and CEO of Spokane Media Federal Credit Union.
Dahlstrom says that while the new responsibilities require him to do some additional traveling, a lot of the meetings he will participate in are held by conference call or via Internet-based hookups.
So far, he's been appointed to the CUNA Ethics Committee. He hopes to be on more committees in the future, but says as a junior director, for now he's learning more than he's contributing, and he expects his learning will deepen his knowledge of national credit union issues.
"We'll get a lot more knowledge of what's happening nationally," he says. STCU is a Washington state-chartered credit union, while many other credit unions are federally chartered, and subject in some cases to different regulations. He says he enjoys participating in the action on Capitol Hill, and he's already met some interesting people, such as Alan Greenspan, former chairman of the Federal Reserve Board.
"They got to meet me, too," he quips.
Some of the biggest issues CUNA is dealing with right now include the possible reworking of corporate credit union structures, changing consumer credit card regulations, and the potential to expand credit union business loans.
First, CUNA must deal with changes that have become necessary or inevitable because of the failure of several corporate credit unions. Corporate credit unions have become risky investments for many small credit unions that had a sizable part of their assets invested in them. Those institutions, however, also provide functions, such as check processing, at a much lower cost than most small credit unions can afford on their own.
Larger credit unions like STCU can contract with the Federal Reserve Bank for such services, Dahlstrom says, but it's too expensive for smaller credit unions, which have low volume.
The NCUA essentially is looking to revamp the business model for those corporate credit unions so credit unions aren't exposed to as much risk of loss, Dahlstrom says. One possible model, for example, could be that the central credit union would be only a pass-through or broker for investments by smaller credit unions to diversify risk, Dahlstrom says.
Aside from the corporate credit union issue, there are three major issues that CUNA and the credit union industry are focused on, Dahlstrom says.
The industry is dealing with the impact of overdraft legislation, which limits or eliminates fees that financial institutions can charge people who overdraw their accounts with a debit card. It's also working to help its members implement new legislation that changes credit card rules and disclosure requirements for financial institutions, and it's focused on expanding the ability of credit unions to make business loans to their members, Dahlstrom says.
A lot of the changes surrounding credit-card disclosures, though not affecting the lending practices of conservative institutions like STCU much, still represent a big expense for credit unions. For example, they must reprogram computers to modify statements to include the newly required credit terms and other information such as periodic comparisons of how long it takes to pay off a credit card balance based on the consumer's payment level, and to notify and educate customers of the changes, Dahlstrom says.
"We've erred on the side of disclosure to the point where it's hard to do what you want to do," he says. Dahlstrom says, however, he'd like to see the required disclosures made simpler so people can understand what it is they are reading more easily.
CUNA has 24 directors, four in each of six regions who represent small, medium, and large credit unions, and the trade association.
Dahlstrom represents the 42 large credit unionsthose with more than $1billion in shares, or depositsfor the Western region, which includes Washington, Idaho, Oregon, Nevada, California, Alaska, and Hawaii. STCU is itself the 100th largest credit union in the country, with $1.13 billion in deposits, Dahlstrom says.
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