Consumers Want to Help Credit Unions Grow, but...

Despite an improving economy and growing consumer confidence, there’s still turmoil in the financial world of millions of consumers. The American Consumer Council (ACC), a non-profit consumer education organization, calculates that nearly 32% of all consumer households remain “financially under-water” as a result of the 2008 Great Recession.

According to ACC’s president, Thomas Hinton, “Millions of consumers and American households are still paying the steep price for the irresponsible actions of those major banks and Wall Street investment firms that betrayed consumers and caused financial devastation during the Great Recession. Its repercussions will be felt for another decade.”

And so, it should come as no surprise that millions of consumers have been drawn to credit unions during the past six years. CUNA announced that credit unions surpassed 100 million memberships nationally, according to data collected from credit unions in CUNA’s June 2014 “Monthly Credit Union Estimates.”

In the past 12 months (June 2013 to June 2014), credit union memberships expanded by 2.9%, compared to 2.5% in 2013 and 2.1% in 2012, according to CUNA data. Credit unions added a total of 2.85 million additional memberships over the past year - the largest reported increase in more than a quarter century. And, in percentage terms, the 2.9% increase was the fastest since 2000, according to the CUNA analysis. However, according to CUNA, there was some negative news. Some 54% of credit unions experienced a decline in their membership numbers during the second quarter of 2014.

ACC’s Hinton, said, “This surge in credit union membership growth is just the tip of the iceberg, but it could be blunted if the NCUA fails to allow associations like ACC to continue to partner with credit unions.” Hinton noted that the NCUA has proposed new associational common bond policies that will hurt consumers by limiting their ability to join credit unions through legitimate associations like ACC.

Hinton said, “It makes no sense for the NCUA to create more regulatory barriers for consumers who desperately need and want the financial services offered by credit unions. There’s no question that credit unions have been a life-saver for millions of consumers since the Great Recession as banks are limiting their consumer lending and focusing resources on commercial businesses. Almost half of our new ACC members say they want to join credit unions, but the federal regulators are making it too difficult with their punitive policies and anti-consumer attitude. It’s very frustrating for consumers and credit unions. We don't understand why the NCUA is undermining the very industry it is sworn to protect and sustain.”

Hinton also addressed the need for credit unions to appeal to a new pool of potential members. “When you consider that only 14% of the Millennial Generation (ages 14-28) belong to a credit union, there are millions of young consumers that need to know about the benefits of credit unions. But, if the NCUA makes it too difficult for Millennials to join credit unions, they’ll just go online and deposit their money in a big bank. The end result is credit unions will lose the overwhelming majority of the Millennial Generation to banks, and the financial needs of young consumers will be hurt in the long term.”

The American Consumer Council currently partners with over 47 credit unions across the nation to provide financial services and educational programs to its 148,000 members. ACC has asked the NCUA to continue to allow federally-chartered credit unions to add established national organizations like ACC as associational SEGs.

Mark Wilson is a marketing and public relations manager for the American Consumer Council. He can be reached at: info@americanconsumercouncil.org

Why Are No Bankers in Jail?

It’s been two years since the Great Recession ended according to the experts. This is despite the fact that millions of consumer are still suffering the financial pain and consequences of the Great Panic of 2008 that was brought on by a handful of greedy bankers and investment firms. Oddly, no one has gone to jail for their involvement in bringing on the Great Panic of 2008.

Apparently, the Department of Justice concluded that no crimes were committed; there was only bad judgment on the part of the Wall Street bankers and investment firm executives who perpetrated the fraud on the American public.

How does the federal government expect consumers to have faith in our financial system when some 50 or more banking executives and investment firm managers knowingly rigged the system for their own selfish benefit, and caused devastating financial hardship for millions of honest Americans, who lost their jobs, savings, and homes as a result of “poor judgment” by these scoundrels?

While the federal government believes a debt has been paid in the form of nearly $80 billion in settlements from the banks and investment firms who were culpable in this fiasco, consumers don’t see it that way because the average consumer will not see a penny of that $80 Billion. That money will go into the federal treasury. Once again, the guilty go free and the American consumer gets pickled.  It's unbelievable considering it was the American consumer who bore the brunt of the losses in the form of home foreclosures, lost savings, forfeited retirement funds, and lost jobs and wages. And still, no one has gone to jail for their actions.

To complicate matters, once-respected auditors and tax accountancy firms were also culpable in cooking the books and providing misleading financial reports to shareholders and the government. But, they too, have walked away from this travesty with a mild slap on the wrist.

So, if you want to know why so many Americans are disenfranchised with the “system,” you need look no further than the halls of justice. They’re empty.

What Economic Recovery?

Despite a record-setting stock market and stronger job growth, most Americans don't think the economy has improved in the past year, according to a survey released Thursday by Rutgers University researchers. Michael L. Diamond (mdiamond@app.com) offered the following assessment based on the Rutgers research report.

The grim assessment paints the picture of a stressed-out work force that is likely to spend money only cautiously, keeping a lid on economic growth, the authors said.

What do you think: Has the economy improved this year?
"I was surprised to see people are even more negative than they were 18 months ago," said Carl Van Horn, director of the John J. Heldrich Center for Workforce Development at Rutgers.

The Report comes from a survey of 1,153 workers nationwide, taken between July 24 and Aug. 3 — a time frame that included a barrage of stories about global unrest. But it sheds light on a disconnect between statistics that indicate the economy is gaining momentum and Main Street workers who aren't benefiting. The Rutgers report is titled "Unhappy, Worried and Pessimistic: Americans in the Aftermath of the Great Recession." Among the findings:

• Two-thirds of Americans think the economy is the same or worse than it was a year ago, and 73%  don't expect it to improve in the next year.
• 33% think changes in their standard of living caused by the housing bubble's collapse and the recession that followed will be permanent.
• 78% has little or no confidence that the federal government can help.
• Only one in seven believe the average American is happy at work.
"They're really still suffering the consequences of what happened during the recession," Van Horn said.

Good and Bad Statistics:
The report helps explain a series of data that on its face is a paradox. The Standard & Poor's 500 this week has flirted with record levels. The nation has added 1.6 million jobs during first seven months of the year, the strongest job growth since 2005. And, its unemployment rate has declined from 8.2 percent in March 2013 to 6.2 percent last month.

But retail sales in July were flat from the previous month. And, personal income growth, particularly from wages, has been sluggish.

Consider the negative responses to this key question:
How do you describe Americans at work?

Happy: 14%
Well Paid: 18% 
Lazy: 23%
Productive: 43%
Highly Stressed: 68%
Not secure in their jobs: 70%
Source: John J. Heldrich Center for Workforce Development at Rutgers University

Overall, these response paint a very gloomy picture among consumers, who are responsible for generating almost 70% of the economic spending and growth for America’s economy. 

Is there a solution? 

According to the American Consumer Council, three things can be done to improve the economy and encourage more consumer spending: First, there’s a genuine need for more jobs. ACC supports a job stimulus program that provides tax-break incentives for American companies in the form of a tax credit for every new job they create. Secondly, ACC wants to see less government regulation, especially for small businesses (under 100 employees) to encourage hiring. Finally, ACC supports an immediate increase in the nation’s minimum wage with gradual increases over the next three years to $10.50 per hour.

Given the dismal attitude of so many consumers, action is required now!

Too Many Consumers Don't Feel the Recovery

When the Great Recession began in 2007, the negative economic effects and consequences were immediate. Millions of consumers lost their jobs, homes and spending power.  Five years later, in 2012, the so-called experts declared the Great Recession was over.

However, in 2014, some seven years later, there are still too many consumers suffering from the negative impact of the Great Recession.  Although our economy is growing at an annualized rate of 4.2 percent, the good news isn't reaching the average consumer. Why not? There are three key indicators that tell the real story.

1. Wages are depressed. Since 2007, the average price of basic goods and services including clothing, food and housing has risen by 15 percent. Compare that to a 9% overall increase in wages for salaried employees during the same period. If you consider the 22% of consumers who rely solely on their minimum wage jobs for income, this group has fallen behind by nearly 12% in terms of their income purchasing power since 2007. Adding insult to injury, a recent Rutgers Poll reveals that 57% of respondents have "less or the same amount of earnings and savings today as they did five years ago." In other words, nearly 60 percent of American consumers are cash poor. This is not a good sign.

2. Consumers have lost faith in the American Dream.  Before 2007, over 70% of consumers indicated they believed it was possible to live the "American Dream" -- that is, get a quality education, find a good job, earn enough money to afford a home where they could raise their kids, and have some money left over for retirement or a rainy day fund.

Today, when asked that same question, the number of consumers who still believe in the American Dream has fallen to less than 40 percent. This statistic is alarming because it undermines the very foundation of our nation's economy. If educational opportunities, quality jobs and housing prices are out of reach for 60% of Americans, our nation is quickly becoming "the land of haves and have nots."

2. Consumers Can't Get Loans  Before 2007, borrowing money was easy, perhaps too easy. But, consumers were able to go to their banks and get an auto loan, a college loan, or money to remodel their kitchen. Today, main street banks are not lending money to most consumers because their credit scores have taken a serious hit due to the Great Recession. It's a vicious downward spiral.

While credit unions are trying to come to the rescue and help consumers borrow money, federal regulatory agencies like the National Credit Union Administration have all but frozen the ability of credit unions to enroll new members. This means that millions of American consumers, who seek the financial services of federal credit unions, can't even become members because the federal regulators won't allow federally-chartered credit unions, which they regulate, to add new members through  existing portals like associations and other legitimate groups.

It's a system that is terribly broken and antiquated for today's consumers, not to mention the emerging Millennial Generation comprised of over 75 million consumers between the ages of 14-33 years old, who rely exclusively on the Internet and "financial apps" for their banking needs. Why are federal credit unions being denied the opportunity to serve this group of consumers? It makes no sense.

These are the cold facts. They tell a much different story than what our political leaders and financial experts have been spouting for the past three years. Consider this. If you went to your doctor because you were sick, and they gave you a 50-50 chance of recovery, how would you feel?  The simple answer is "not optimistic!" Well, millions of  consumers are feeling the same way -- not optimistic!

So, here's the bad news. When the American Consumer Council recently asked its members if they were optimistic for their economic future, only 4 out of 10 responded "yes."  When 54 percent of America's consumers tell you that their financial status is "worse today than it was seven years ago," that's a clear indication that the Recovery is not over for most of us. It also calls into question the integrity of those political leaders and financial experts who have declared "good times are ahead for America." My question is, "Which America are they talking about?"

About the Author:
Thomas Hinton is president and CEO of the American Consumer Council, a non-profit consumer education organization with over 148,000 members.  Contact: tom@americanconsumercouncil.org