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RILA memo is a perverse and misguided interpretation of CUNA’s economic forecast
In response to RILA, Dec. 11, memo ‘The Credit Union National Association Fears Improved Economy’
(December 11, 2014) — From CUNA President and CEO Jim Nussle:
Seriously? Credit unions helped their members realize $6 billion in financial benefits in the year ending June 2014 – and everything CUNA does is aimed at helping credit unions help their members. An improved economy is good for members, credit unions and for CUNA. This “memo” from RILA is, in that sense, just bizarre.
In the first place, the memo indicates a disturbing lack of understanding of the role delinquent loans and loan losses play in credit union operations – which typically indicate trouble for credit union members. Credit unions welcome lower delinquency and net chargeoff rates – they directly reflect stronger financial health for their members.
Secondly, in the current low-interest rate environment, revenue for all financial institutions has been squeezed. Programs such as overdraft protection and “courtesy pay” can ease the squeeze a bit, but (more importantly) ensure credit union members can cover their checks without incurring an embarrassing “bounced check.” It just happens sometimes.
Finally, data breaches at merchant locations have cost credit unions at least $90 million this year (based on results of CUNA surveys). In the case of the Target breach (which occurred in late 2013, and paid for by credit unions this year), credit unions have yet to see any reimbursements from that retailer as a result of the violation. Further, “chip and PIN” technology would have done nothing to prevent the Target breach or the one at Home Depot last fall (which cost credit unions $60 million). Maybe RILA thinks $90 million is no big deal – but, for credit unions, that expense may mean members realize lower returns on their savings and maybe even higher loan rates.
The RILA memo is a perverse and misguided interpretation of CUNA’s economic forecast, cobbled together to support the NACS, NGA, NRF, RILA agenda – which seeks to help merchants dodge responsibility for the losses they cause when they fail to secure consumer’s private data. The claims made in the memo are not supported by our forecast commentary. The leaps made in the document are, to us, a curious threat to any perception of reality.
Bottom line: CUNA and its member credit unions are committed to improving consumer financial health. NACS, NGA, NRF, and RILA seem entirely committed to preserving and improving merchant bottom lines – without regard to the costs borne by consumers.