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CU System
Media blitz nets positive stories for CUs in California
RANCHO CUCAMONGA, Calif. (7/13/09)--A media blitz conducted by the California Credit Union League netted a wealth of positive print stories about California credit unions accepting IOUs (registered warrants) during the state’s ongoing budget crisis. Stories have run or will run in several of the state’s prominent newspapers and business journals, and national news outlets such as CNNMoney.com and the Associated Press. Daniel Penrod, the league’s credit union industry analyst, and Henry Kertman, league vice president of public affairs, also have talked to public broadcasting station reporters. Dan Mica, president/CEO of the Credit Union National Association, will represent California credit unions when he speaks on the Public Broadcasting Station program “Nightly Business Report” scheduled for Tuesday evening, the league said. Many large banks said they would not accept IOUs after July 10 (Los Angeles Times July 10). Most credit unions told the league they are accepting IOUs and are not putting a time limit on them, Penrod told the Orange County Register Tuesday. The league has not found any of the 490 credit unions in the state that will not accept IOUs, he said. As of Thursday, 78 credit unions confirmed they are accepting the IOUs, the league told The Press Democrat. “Credit unions are being very proactive in letting their members know they will accept IOUs,” Penrod added. “Credit unions are owned by their members. Some have specialized memberships, such as public employees or firefighters.” Although some credit unions might not be able to accept the warrants because of pressure wrought by the credit crunch, “the vast majority have higher capital levels built in to handle situations like this,” Penrod told the Register. Since many credit unions largely avoided the risky loans that afflicted banks, they can afford to hold the IOUs until the state pays them off, said the Los Angeles Times Friday. Santa Ana, Calif.-based SchoolsFirst FCU, one of the largest U.S. credit unions with $7.750 billion in assets and more than 400,000 members, will accept IOUs until the end of July, Derek Longshore, vice president of marketing, told the newspaper. The credit union then will re-evaluate its position on a monthly basis before deciding whether to continue with IOUs, the paper added. “We'll be eating up capital when we do that, but we have conservative financial practices and have been able to amass a great deal of capital,” Longshore told the Times. “I don’t know whether secondary markets are charging fees, but we definitely are not.” The majority of credit unions have not set a deadline to stop accepting IOUs, Penrod told The San Diego Union-Tribune Wednesday. Storefronts that cash checks for a fee will compete with the banking industry for California’s IOU business, Penrod told Reuters Tuesday. “I could see a lot of bank customers turning to a third-party source and losing a lot of their paycheck,” he added.
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