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March 3rd, 2009 at 2:27 pm
It is hard to imagine a scenario where the corporate credit union system completely ceased to exist. Small and medium sized natural person credit unions that use Payment systems (ACH, draft processing, settlement, etc.), liquidity and liquidity management, investment services, such as term certificates and broker/dealer services and Coin and currency services really need these services. So there is good justification for some type of regional network of corporate credit unions to exist for small to medium sized credit unions. But what do the Large natural person credit unions need?
Some large credit unions need payment systems, liquidity services, but do they really need investment services, broker dealer services, or coin and currency services?
What I do not think the large natural credit unions need is too many national corporates tripping over each other to try and please the top 100 credit unions by asset size.
We need less corporates with national charters. Corporates appear to be spending more on marketing to its potential clients than they spend on analysing their investment holdings. Corporates are tripping over each other and spending way to much money to garner market share. Yet that are not spending enough time actually helping improve the overall credit union system.
How can we change the focus????
March 4th, 2009 at 11:06 am
I don’t believe we need a corporate system at all. I think there are enough service providers in all areas to fill the void if the corporate system were to be eliminated. It will be a painful process, yet in the long run I believe it will be cheaper for all natural person credit unions going forward. I also believe larger credit unions may have an opportunity to create new lines of business in providing correspondent “banking services” to small and medium credit unions.
March 4th, 2009 at 11:28 am
Victoria
A follow up question. Would you feel differently if the FHLBs were no longer a viable source of liquidity and structured borrowings for natural person credit unions?
March 4th, 2009 at 1:41 pm
I am not sure I would feel differently. I think in the short-term liquidity might be more expensive but what I am still trying to figure out is how much money natural person credit unions will need to pay to recapitalize the system, beyond what we are paying to “stabilize” it. If you factor in the possibility of dumping more money into corporates just to be able to have access to liquidity it can get to be very expensive.
March 5th, 2009 at 1:42 pm
As a small credit union, we absolutely need the services that the corporates offer. I completely agree with Greg’s comments so no need to repeat. While there are other service providers that offer the same services, isn’t/wasn’t the point that we created our own system to provide services to us? I’m not saying we created the issue as they are responsible for managing the funds but, what’s to say other service providers aren’t or won’t be faced with the same issues.
September 2nd, 2009 at 4:15 am
Excellent site, keep up the good work