Let me say one thing for the record. Justin Ho is good, and I am very grateful to call him a member of our team and, especially, a friend. He spoke on attracting next generation board members, and based on the buzz in the back of the room where I was sitting he hit a nerve. I thoroughly enjoyed watching seasoned board members find common ground and purpose with this 21-year old college student. Justin can be a real asset to any credit union interested in working with him on recruitment strategies, not only for board members but credit union members as well.
I have quite a bit more to "blog" about, but I am still collecting my thoughts after five intense days of strategic conversation. I will recap soon.
In the meantime, I have real concerns about the tone of recent trends in the financial markets - specifically with regard to headlines announcing yet more tightening of lending standards. Yes, we need to make prudent lending decisions, but you have to wonder if the trend is more overreaction than prudent decision-making. Is the banking community incapable of moderating its business practices? Wild swings in standards show a complete lack of sound strategic planning.
It seems to me that though considered more risk averse than the typical bank, credit unions are simply making good lending decisions. Yes, there are those credit unions that have made substantial errors in judgement over the last few years and that are paying dearly for it, but overall I see that many credit unions "losing money" due to provisions for loan losses are more or less taking market-based precautions in their loss calculations. They are not compensating for years of lax lending standards.
Over my consulting career I have encouraged clients to take on a bit more credit risk, expanding the pool of members to which they would approve loan requests. However, I would never suggest, nor should any credit union ever, take on risk that is not understood or for which adequate compensation for assuming such risk be unavailable. Furthermore, the level of risk assumed by the credit union must be a strategic decision, and the board and management team must operate within the boundaries of that level of acceptable risk.
I hope that credit unions keep making informed decisions on credit requests, decisions that take into account the full range of underwriting criteria. My fear is that many will tighten up as a reaction to "industry" trends, and in the process make the lives of the very people for which we were chartered to serve more difficult than they should be. I would love to be wrong!
