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I can’t stay silent anymore on this issue and I know it’s going to ruffle a lot of feathers. So I’m going to approach it from a brand perspective. Brand is after all, your reputation. What you’re known for. And right now Credit Unions are getting a ton of unwanted press from the People magazine of the news world – USA Today.

Last week it was interest rates on “pay day loan” alternatives. This week it’s courtesy pay

On Tuesday I was speaking at the CU Association of New York’s annual meeting. My topic, “2009 Reasons to Question Everything.” I took a chronological look at CU press in the past 8 months. At best we look like we’re struggling under the weight of a corporate stabilization – at worse we look like greedy bankers hiding behind this statement:

“…courtesy overdraft is provided because, “If we didn’t, (consumers) would go somewhere else and get it.”

That quote is directly from this latest USA Today coverage. But on Tuesday when I showed the previous week’s coverage an audience member rose their hand and basically said the same thing. So rather than losing it I took a deep breath and turned that comment back to the audience. I asked them how they felt about this statement –

“If we didn’t provide payday lending and courtesy pay, our members would go somewhere else and get it.”

There was a great debate that ensued. It was a debate of values. And it came down to this – are you okay losing revenue to a banker/competitor by doing what’s best for the member? Some argue that gouging them less (400% instead of 600%) was best for the member. Others said they didn’t want any part of enabling that kind of dangerous behavior – they were still in the business of helping members live within their means. Then it shifted back to the year of “chasing ROA” and having no choice. Others sheepishly admitted to being addicted  – or dependent – on the revenue at this point and it would be really hard to replace it. 

As you head into your strategic planning sessions this year – I think it’s time to review your values. If you’ve framed the word “integrity” on the wall and still allowed yourself to subscribe to the “courtesy pay” without advertising so we don’t have to comply with Truth In Lending, you might want to rethink that word. 

I know that sounds harsh – but these are harsh times. You cannot temporarily inject your bottom line with bad profits and expect it won’t impact your reputation and the reputation of all credit unions. 

Remember, we were founded to promote thrift and to provide loans for provident and productive purposes only.

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August 2009