One on One with Dan Mica, CEO of the Credit Union National Association
Tuesday, July 14, 2009
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SUSIE GHARIB: Joining us now to talk more about this, Dan Mica, the CEO of the Credit Union National Association, The Washington trade group representing most of the nation's credit unions. Mr. Mica, welcome to Nightly Business Report."
DAN MICA, THE CEO, CREDIT UNION NATIONAL ASSOCIATION: Thank you. It's good to be with you.
GHARIB: Sounds like credit union, finally being impact bid this financial crisis. How serious is it?
MICA: I wouldn't call it serious at all. I would put it in perspective. Our default rate is around 1 to 1.5%. Other financial institutions would love to have that. Credit Unions are doing extremely well. We are like everyone in this economy seeing some collateral damage. But we're very strong, we are lending, we're growing, in fact, the population of the U.S. is growing at a 1% of the year. This first half of this year we've grown at 1.5%. Savings is flowing in the highest we've seen in 18 years. So there are a few spots, as there are in every industry or business, that have some rough edges. But credit unions by and large are doing extremely well.
GHARIB: But you heard Jeff's report where he's saying with many credit union members are now at risk of losing their jobs, many of them. There's a chance they'll default on their loans. So aren't some credit unions at risk of failure?
MICA: Any bank. Any credit union. Any company that is dependent on payments from a consumer who loses their job is going to have problems. But we've been very fortunate as was mentioned we're very conservative in our underwriting, and we've worked with our members and our customers are our members and they're our owners. So where as others may just write off a loan, we try to modify it, extend the terms, change the terms. We do everything we can to work with a member, and therefore we haven't had the kind of default rates. As I indicated, 1 to 1.5% on mortgages is extremely low in this financial situation.
GHARIB: What about credit unions that are operating in the big housing hot spots like Florida, California, Nevada: How exposed are they?
MICA: Well, obviously those are our areas of concern. But even there we're seeing what we would call green shoots. We're seeing areas where it's starting to stabilize, it's not as good as it should be, but many credit unions in these areas are doing very well. Some are having a difficult time, but they're working it out with their members. Their capital ratios are pretty strong. Yes, he'll have some concerns in some specific areas. But nationwide, credit unions are doing extremely well.
GHARIB: As you know, the big banks had to go through the stress tests that were mandated by the U.S. Treasury. Why is it that credit unions haven't been stress tested?
MICA: Well, first of all, we are credit unions, the most highly regulated financial institutions in the United States.
GHARIB: So are banks
MICA: Actually the federal government did a study and said credit unions are regulated even more than the banks. Second, we didn't cause any of these problems. We didn't do the no-doc loans. We didn't do the liar loans. We stuck to our standard by and large and the chairman of the House Financial Services Committee, Barney Frank put it succinctly. He said if everyone in the financial services industry conducted themselves like credit unions, we wouldn't have this situation in the first place. So they're saying in effect, and he said you're the dog that didn't bark You did everything right. You were getting a few problems, but you're the example, not the problem.
GHARIB: You know that in Washington there's this whole move afoot to have new regulations, new rules for the financial system and I know you're opposed to any new regulation for credit unions. Tell us why?
MICA: Well, we have not said we're opposed to any new regulation for credit unions. And I will tell you the administration, I just met with officials yesterday, said that some of the regulations they're proposing wouldn't be on top of current regulations, but they would be in place of. And we'd be interested in that. If they could eliminate it. But I don't care whether you're a credit union or a bank, if you have 50 pounds of regulations and then they want to put another 50 on it, you say wait a minute, the burden gets too heavy. We want to do what's best for consumers, and that's what's best for consumers, and that’s who we work for. We want to do what's best for our members. But we want a reasonable amount of regulation and we want complete transparency and access for our members. And simplicity in forms, all of what the administration is talking about. But that extra 50 pounds, if it's not needed, saying we’re going to work against it and work to modify it so its works to everyone's advantage and good public policy.
GHARIB: All right, let's leave it there. A subject to be continued. Thank you very much Mr. Mica, for coming on the program.
MICA: Thank you.
GHARIB: My guest tonight Dan Mica, CEO of the Credit Union National Association.
