Since late 2007 one of our presentation slides covering regulatory issues has included this statement:
The trend is toward more regulation and oversight of traditional services. “New” credit union services may face a more reluctant regulatory audience, and income-producing products such as courtesy pay may be under the gun.
Interestingly, Bloomberg today had this to say about Fed Chairman Ben Bernanke's testimony to legislators:
In another sign of tighter regulation to come, Bernanke said supervisors should have authority to bar new financial products that may be destabilizing to markets.
Chairman Bernanke is certainly talking about such exotic products as credit default swaps and the like, but my concern is what could be defined as "destabilizing." It really depends on the person writing the definition. Taken to an extreme, there are credit union products that could be classified as "destabilizing" and therefore subject to a greater regulatory scrutiny.
I know that there are many leaders within the credit union community that believe certain products (such as courtesy pay and payday loans) should be purged from the credit union system all together. Whether that assessment is right or not, I think we can all agree that members should have the say over what should and should not be offered at "their" credit unions rather than politicians/regulators far removed from having to serve the day-to-day needs of consumers making that determination.
I believe that consumers can be the greatest regulator if given the chance. They are already responsible for the rise and fall of many a company. If they don't like something, they move on - enriching the new while teaching a lesson to the old. The problem, as I see it, is that they have been taught not to worry about that responsibility for a range of services and activities. They have been taught not to care about the strength of their financial institutions, because regulators have taken on that responsibility. They have been taught not to be concerned with the safety of airlines, because regulators have "made sure" that every plane in the air is in top condition. They have been taught not save for the future, because the Washington is "saving" for them.
The net result is a misplaced trust that drives consumers to accept certain promises as truth even when those promises have no such foundation.
To be honest, I trust the wisdom of members to tell us what we should and shouldn't offer via their basic consumer response to true competition. We need to make sure, however, that they are aware of their responsibility and encouraged not to abdicate it to anyone or anything else.
The alternative is more misguided regulation, which in my opinion only serves to further remove people and institutions from the responsibility of their actions. We cannot afford any more of that.
Power to the people.
