Given the current economic climate, credit unions are receiving a lot of media love lately. Here are a few snapshots:

TIME Magazine – Bad Times for Banks Mean Boom Times for Credit Unions

Business is booming for Ed Speed, which is a little odd, considering he lends money for a living. But that’s the story of credit unions nowadays, including the one in southeastern Texas that Speed runs, where real estate lending has doubled over the past five weeks, and auto loans are on track to grow by 40% to 60% in October.

Members-only non-profit credit unions are having their turn in the sun as years of sticking to boring, old-fashioned banking practices — they typically hold the mortgages they make on their own books and only dabbled in subprime — put them in a position to grab market share while national banks, auto finance companies, credit card outfits and private student loan firms cut back on loans. “In good times, you’d say these guys are much too conservative,” says George Hofheimer, chief research officer of the credit-union-focused Filene Research Institute. “But in times like these, it’s just what the doctor ordered.”

Lifehacker – Why choose a credit union over a bank?

With major instability in banking and unprecedented failures and buy-outs, it may feel like the only safe place to put your money is under your pillow. While even through buy-outs like Washington Mutual’s, your money remains FDIC-insured, this is a good time to consider an alternative to for-profit private banks—like credit unions.

The Consumerist – Are Credit Unions Really Better Than Banks?

Here’s the simple reality: Banks have shareholders who want to see a profit on their investment. So banks do everything in their power to get as much money from their customers as is legally possible while still remaining competitive with other banks. Here’s a case-in-point: Citizens Bank paid the Phillies $92 for the naming rights to their new stadium. Where did that money come from? Customer fees.

Most people just accept it. After all, what choice do they have?

I’ll tell you: Credit unions. The owners of credit unions are the members themselves. So there are no fat-cat shareholders to answer to. As a result, credit union profits are returned to members in the form of fewer fees and better interest rates.

Blogher – Five Ways to Safeguard Your Money Now

Consider a credit union: OK, they’re about as sexy as an accountant in a bow tie [An aside from Brent: Ouch]. But they offer several benefits: They have non-profit status, so they can offer services at lower costs than many banks—from late fees to bounced check fees. That translates to lower interest rates on loans (including mortgages), and higher interest rates on savings accounts and CDs.

How can credit unions best react to and prepare themselves for the newfound attention / opportunity / responsibility? Let us know what you think in the comments.

1. The Money Meltdown – A simple, clean site that breaks down “Everything you need to know about the global money crisis of 2007-?” Check the right side-bar for a daily links.
2. This American Life: Another Frightening Show About the Economy – A superb explanation of “what happened…including what regulators could’ve done to prevent this financial crisis from happening in the first place.” (Thanks to Brandon Ferguson for the recommendation.)
3. Planet Money – Daily blog and/or podcast updates on from the hosts of the above episode of This American Life.

Do you have any to add?

The NCUF activated CUAid.coop, an online giving center, today to collect donations for credit union people affected by Hurricane Ike.

The Texas Credit Union Foundation is asking credit unions to help by placing a link to CU Aid on their homepage. If you’d like to help, here’s a handy (unofficial) badge you can add to your site by copying and pasting the code below it:

250 X 200

<a href="http://www.cuaid.coop/" title="CU Aid: Donate to credit union people affected by Hurricane Ike"><img src="http://www.ihopeyouloveit.com/images/cuaid-ike-badge.gif" alt="CU Aid: Donate to credit union people affected by Hurricane Ike" /></a>

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<a href="http://www.cuaid.coop/" title="CU Aid: Donate to credit union people affected by Hurricane Ike"><img src="http://www.ihopeyouloveit.com/images/cuaid-ike-badge-sm.gif" alt="CU Aid: Donate to credit union people affected by Hurricane Ike" /></a>

The secured site accepts credit card and wire transfer donations.

In 2006, the NCUF raised over $3 million for Katrina relief. Pretty incredible.

First, a disclaimer: The folks at Currency Marketing are my friends, and so is Trey from TDECU, so my opinion is not objective. But still…this is just ridiculous.

For those who haven’t heard, a month ago Resource One Credit Union, located in my town of Dallas, TX, launched a cartoonishly blatant ripoff of Currency’s Young & Free Program , called MyLifeMyMoney. Pilcher covered it well at The Financial Brand.

I’ve been quietly rolling my eyes, but yesterday represented the last straw when they posted their call-to-action video, “K.I.S.S.“

As Pilcher pointed out last month:

MyLifeMyMoney copies essentially every component of Young & Free, including the overall strategy, the spokester’s responsibilities, the media used, and the incentives offered to the spokester.

Even the title “Spokester” is a word made up by Y&F Alberta’s Larissa.

So when I watched the latest video, and saw that R1 had even tried to (poorly) hijack the style of Larissa’s “The Difference Between Credit Unions and Banks” series, I was so bewildered all I could do was shake my head and cuss a little.

Let’s be clear: The hands-on-paper styling of the “Difference” videos were not original to Larissa, who borrowed it from Common Craft. However, she owned it, used it to deliver a message in a unique way to a new audience and used that style to create something original within the same style. She also gives credit to Common Craft as her muse.

A friend compared this to the film Multiplicity, where Michael Keaton copies himself and each copy is a little closer to eating glue.

There’s a difference between influence, homage, and a slipshod ripoff.

And again: It’s not like Currency invented calling for corporate auditions, Donald Trump and his pet hairpiece had been doing it for seasons. But they took a good idea and created something new.

I’ve created a slightly modified edit of R1’s K.I.S.S. video:

Collaboration is great. Influence is fantastic. Be inspired by great work. Borrow away. We can pull a lot of morals from this story, I’ll go with the least common denominator:

“If you’re going to steal, try not to do a pisspoor job of it.”

Trey’s posting regular updates on Hurricane Ike as it sets its swirling sights on his credit union. Check the TDECU blog .

Not the first time a CU has used social media to keep members in the loop during disaster. See http://blog.veritycu.com/search?q=power+outage&x=0&y=0 .

Good call.

The brilliant and sometimes hilarious folks at GonzoBanker have written up Gene Blishen as GonzoBanker of the Month. Gene is General Manger of mac-only Mt. Lehman Credit Union, located just outside of Vancouver.

If you work in the industry (or don’t, for that matter), Gene is a person you should get to know. He’s a creative, people-driven thinker, and if you have a conversation with him you’re guaranteed a head full of new ideas.

Read the article here.

(PS: If you’d like to idea-swap with him and a lot of other inspired industry folks, join us in September at BarCampBankBC.)

Currency Marketing announced today that the Young & Free program is now available to credit unions across the U.S.

Interested credit unions – or in some cases, state leagues – will receive a regional license on a first-come-first-serve basis (ex: “Young & Free Wisconsin”).

Has Young & Free Alberta been successful for 52,000-member Common Wealth CU ? Here are some numbers. In eight months:

• Over 1,900 Young & Free Checking Accounts opened.
• Average account balance of $1,422 in an account that pays no interest (they were hoping for $250 per account).
• Total in market PR-value of over $200,000 (calculated from print, online, radio, and tv articles/segments, brand mentions, and impressions).

I think replicating the success of Alberta’s program will be based on three things:

• Finding the right personality to represent each region. Larissa is a jackpot of creativity and charisma, will other CUs be so lucky?
• Providing spokesters with the perfect tightrope of freedom and direction. This is a high-engagement campaign, both for consumers and involved credit unions.
• Tying in a unique product. Common Wealth’s product, a free checking account, is hugely novel in Canada because they’re one of the only FIs to offer free checking. The U.S. market will need something a little sweeter.

That said, this program has the potential to tackle the CU “national brand/awareness” issue by digging in on a grassroots level. It’ll be like dropping paratroopers of relevance throughout the U.S.

For more details, check out Tim’s announcement post from earlier today.

I apologize for the lack of love OSCU has been receiving lately. As my Twitter-friends know, I’ve been on the road and elbow deep in on-sight client work pretty much constantly for the past month.

But I miss you. I do.

Here are three things we woulda/coulda/shoulda been covering over the past couple of weeks:

1. FinovateStartup

I wish to high heaven I could have attended FinovateStartup this year. But fortunately, I was able to stay in the live-action loop thanks to fantastic coverage by the following folks:

• Brad & Mark from The Garland Group / Banktastic. Their coverage includes reviews of each and every demo and video interviews of presenters.
• Ron Shevlin’s “Notes from FinovateStartup 2008,” in which he tells it like it is.
• Jeff Stephens from Creative Brand’s insightful series of posts.
• Christophe Langlois from Visible Banking’s collection of posts and video interviews. Aside – you should add this blog to your feeds.
• Live-action commentary from the Twitter militia.
• And, of course, the belle-of-the-ball, Jim Bruene from Netbanker’s write-ups.

Congrats to Jim on another hugely successful event.

2. Joe Lieberman introduced CURIA to the Senate

Anyone who knows me knows I’m not a legally or regulatorily-inclined person. I color with crayons and markers for a living. But after doing some research I realized how significant CURIA could be for CU’s ability to impact people. To quote the Cornerstone CU blog, CURIA, which stands for the Credit Union Regulatory Improvements Act, proposes to:

• Modernize credit union capital standards to permit more efficient capital management while allowing more earnings to be returned to members in lower costs and expanded services;
• Expand the ability of credit unions to make loans to finance their members’ local small businesses; and
• Permit more credit unions to offer needed services in lower-income communities that are not adequately served by other depository institutions.

Learn more about CURIA here.

3. Account portability

When I was at the GAC, I had an awesome conversation with Robbie Wright about data portability – the idea that your data from any given online service (from your Facebook profile to your online photos to your gmail acount) belongs to you and not the service. Groups like DataPortability.org are working to make this a reality, and web services like Wesabe and Mint have applied the same concept to transactional data.

So I was excited when Colin Henderson linked to Better Banking Blog’s write-up on ‘BPAY’s top-secret MAMBO project’:

...the top-secret BPAY proposal could deliver the bank account portability that Treasurer Wayne Swan so desperately wants Australian consumers to enjoy.

Instead of a bank account number and BSB, individuals would register for their own BPAY code which could be used to facilitate payments. Consumers could then port their number from bank to bank without the need to re-establish direct debits or credits, and use it to enable online payments.

Because of your collaborative nature, I think this is more relevant to CUs than banks. The closest thing I’ve seen to this in the states, outside of general back-end consolidation work (which is great), is Filene’s ‘Once a Member Always a Member’ i³ Project. But even that is limited in scope compared to the potential of account portability.

How member-empowering, representative of your cooperative structure, and incredible for retention would this be for credit unions?

• Going green might be a fad, but what about when it’s accidental? In an attempt to increase employee retention, Navy FCU accidentally built new “green” buildings that use between 25 and 40% less energy. They also decreased turnover from 60 – 17%. Double win. (“The Accidental Environmentalists” via Kottke)
  
  
• Visible Banking’s Christophe Langlois breaks down the 4 types of social media projects.
  
  
• Five credit unions, including Digital FCU, have enabled members to scan in deposits from home. (via NetBanker)
  
  
• Wells Fargo is rolling out vSafe, a web-based storage tool for important documents. vSafe will integrate with their online banking. As someone who loses everything important every time, I love this idea. (via Finextra)
  
  
• First New York FCU’s Walt Everhardt has done a great job of keeping the financial tips and advice coming over at his credit union’s blog.
  
  
• Vancity’s ChangeEverything is up for a much-deserved Webby. Show your love by voting for them for the Webby People’s Voice Award. (via Azaroff’s Blog)
  
  
• Bank of America is partnering with MIT to build a banking innovation lab. (via The Bankwatch)
  
  
• Filed under “another way credit unions make the goodness happen,” the Wisconsin State Treasurer’s Office wants to partner with the Wisconsin CU League to set up an alternative payday lending program. (via CUNA News Now)

In Monday’s briefing with Treasury Secretary Henry Paulson on the agency’s regulatory overhaul, Dan Mica said the proposed changes (which include the demise of the NCUA) could mean the end of credit unions as they are today, according to CUNA News Now.

The article goes on to explain Mica’s analysis of the impact on credit unions (and in the end, consumers):

• All institutions desiring federal deposit insurance – whether banks, thrifts, or credit unions; including state-chartered institutions – would be required to obtain the new “federal insured depository institution” (FIDI) charter (report p. 160);
• The recommendation would combine the five federal regulatory bodies into three – the National Credit Union Administration would cease to exist;
• Cooperative institutions could operate under the FIDI charter. However, to qualify for the tax-exemption, these institutions would be required to elect “community status” and meet a series of apparently stringent tests in terms of asset size, field of membership, and service to the underserved. It appears small banks also could meet such tests and claim the tax-exemption (report p. 161);
• A Presidential Executive Order may be issued to all federal regulators expanding an existing interagency working group and directing them to more closely coordinate during the current financial crisis. After the expansion, NCUA will still not be included;
• Finally, there is insufficient information about the new federal regulatory body that would oversee all payment systems.

Is Mica right? Is this the end of credit unions?

• Download the PDF of the Blueprint for a Modernized Financial Regulatory Structure here.
• Thanks to Trey Reeme for the phone call and dialogue about this.

• Financial Planning 2.0 with Voyant – “The software has been billed as particularly useful for generating “what if” scenarios and forecasts stemming from your current financial situation” (from TechCrunch).
  
  
• To the 68% of credit unions focused on reaching small businesses: take note of Bank of America’s social network for small businesses, launched and active since October of 2007.
  
  
• Netbanker reports that 50 Banks and Credit Unions Have Facebook Pages. Good call, or noisy call?
  
  
• West Bank’s brilliant social savings account SmartyPig “allows you to invite family and friends to contribute to your account, gives you additional incentive boosts from top retailers who sell exactly what you’re saving for AND 4.30% (APY) interest on the money you’re saving.” (via Netbanker)
  
  
• This months Forbes magazine features work by Self Help Credit Union CEO Martin Eakes, aka “Subprime’s Mr. Clean.” Martin is also the founder of the Center for Responsible Lending, a resource for predatory lending opponents.
  
  
• How to make a 9-year old feel like a financial failure: As glitzy as Australian Commonwealth Bank’s ‘Dollarmite’ Kids Club is, none of that matters when they’re sending rejection letters to children. (via Servant of Chaos)
  
  
• Get your heart in the right place with the 3 forgotten emotional drivers in financial services, brought to you by Ron Shevlin.
  
  
• Credit union-partnered peer-to-peer lending network Zopa is launching in Japan.

The Aite Group LLC reported that 33 percent of credit unions with over $100 million in assets are planning to convert to mutual savings banks. Likely these converted credit unions will ultimately become for-profit, stockholder-owned financial institutions.

One-third of this class of credit union represents $193.8 billion in assets, assuming the 33 percent of converting credit unions is spread across the 1200 representative credit unions in this class evenly. In turn that represents over a quarter (27 percent to be exact) of all credit union assets. One-quarter of the money in credit unions is on its way out the door.

In 2006, fee income exceeded return on average assets (page 4 of the 2006 report, if you’re interested) credit union-wide for the first time ever as CUs looked for ways to replace money drained away by compressed interest margins. Banks are using the same tactic.

At the same time, Nobel Peace Prize winner Muhammed Yunus is considering starting a credit union in the U.S. There are movements of varying size and momentum, but movements nonetheless, to provide alternatives to banks through such things as peer-to-peer lending, democratically-run, socially responsible banks, and account aggregation and financial planning using social networks.

Isn’t the message credit unions preach differentiating themselves from banks now even more relevant – even hip?

So, then…why leave?

The Wall Street Journal published an article titled “Beyond Payday Loans” last week, written cooperatively by political cartoons Bill Clinton and Arnold Schwarzenegger.

In the article, they discuss the $8 billion problem of payday lending.

Here’s a snippet:

Here is one initiative that can unite progressives and conservatives as well as business leaders and community activists: helping the “unbanked” enter the financial mainstream by opening checking and savings accounts, and working collaboratively with financial institutions and community groups to develop and market products that work for this untapped market. This will put money in the pockets of individuals and grow the economy. And it won’t cost taxpayers a dime.

Is it just me, or do Bill and Arnold seem to be channeling the credit union philosophy?

Two credit unions tackling the problem are Wright-Patt CU with their StretchPay loan and Prospera CU, with GoodMoney.

StretchPay is a short-term loan of either $250 or $500 available to Wright-Patt members. The loan comes with a low 18% APR, and is payable over 30 days.

GoodMoney, with branches located in Goodwill stores, offers short term loans at half the rate of the average payday lender, lower-fee check-cashing, bill payment options, wire transferring, and financial education through Goodwill’s Financial Information and Service Center.

Check out this video on GoodMoney from the 2007 Herb Wegner Awards:

Both initiatives stem out of the National Credit Union Foundation’s program REAL Solutions. Full disclosure, REAL Solutions is a client of ours – it’s how I’ve been exposed to some of the awesome things they’re doing for the movement. REAL Solutions is helping credit unions develop products to serve low-income and unbanked consumers.

When we were discussing this, Charlie asked this question:

Are CUs really helping people by making it easier and the rates lower, rather than helping people get into a better financial habit?

I think offering attractive alternatives to predatory lending is step one in the process, but it is kind of a band-aid on the greater question – How do you truly effect people’s financial behavior? Can it be done?

(Also, hat tip to Payment News for highlighting the WSJ article.)

If you’ve been itching to see how the collaboration between Zopa + credit unions in the US will play out, now’s your chance. Zopa US is up and open for anyone to create a profile and check it out.

Wondering what Zopa is all about? Click here to read Trey’s Zopa & peer-to-peer lending primer from two years ago.

It’s not the Beatles at Shea. Eventually, it could be bigger.

Zopa launched in limited release today in the US with a wider launch next week. Sure, the peer-to-peer lending site Prosper is already a player in the US market, strumming its own eBay-inspired, populace-driven power-ballads out for nearly two years. Zopa’s British Invasion brings a slightly different model to these shores.

Borrowers can apply for a five-year loan, with interest rates ranging from 8.75% to 16.99%, depending on their credit profiles. If approved, borrowers can get their funds immediately. From there, they can create profiles to explain their reasons for borrowing and can promote their profiles on the Zopa Web site, their own blog or other social-networking sites to appeal to friends, family and others willing to help them with their loans.”

Wall Street Journal, November 28, 2007

Six credit unions, including Forum Credit Union, will be matching the Zopa lenders and borrowers. In addition to P2P lending, US lenders can purchase Zopa-branded CDs to mitigate risk, an option not available to Prosper. Borrowers secure loans from this capital. It’s a familiar three chords, no?

It combines social media in a way Prosper hasn’t. It mitigates risk for lenders. It’s working through the CU movement. The Beatles borrowed from Elvis and Buddy Holly, and Zopa is innovating in its niche as well.

Of course, we’ve been listening to bootlegs and waiting for it to launch in these shores for over a year. Our fearless leader Matt provided some numbers in his September 2006 post. Netbanker.com says it could be a $9 billion market by 2017.

Keep in mind, too, that Zopa’s cost structure is significantly lower than banks and CUs, which has led Zopa to compare itself favorably with its US partners. Working with credit unions as a point of entry is a good strategic move for both Zopa, who gets regulatory assistance and the credit unions, who align themselves with a potentially industry-changing technology.

This invasion may not have the screaming teenagers or Ed Sullivan, but it is causing a small but significant uproar.