President’s Message: Protecting Consumers In Politically Turbulent Times
By Marc Schaefer, President and CEO of Truliant Federal Credit Union
Post 2016 elections, everyone is handicapping the impact of changes in public policy on their business. Financial institution stocks, especially for mega-banks, shot up in anticipation of reduced regulatory scrutiny and burden.
Some reduction in regulatory burden is not unwelcome in the credit union space. Public policy under the Dodd-Frank financial industry reform legislation failed to distinguish between large banks – who participated in creating the financial crisis by chasing profits through subprime mortgage bets – and member-owned institutions like Truliant who did not make mortgage loans to members who could not afford to repay them.
That Truliant, as a small financial institution at $2.1 billion in asset size, would have to follow all of the same regulations and reporting as Bank of America at over $2 trillion in assets doesn't make sense. Ironically, much of the prescription to avoid the next crisis actually missed the mark and made it more difficult to serve middle income consumers at lower cost. There is hope that future public policy will correct some of the missed opportunities to allow smaller, consumer-centric institutions like Truliant to better serve middleclass American families.
On the other side of the ledger, we need to be careful that the parties that engaged in predatory financial practices that severely disadvantage consumers are not allowed to reappear under the banner of unfettered free market policy.
There is a middle ground where consumers are well-informed and, to some degree, explicitly protected from abusive practices. Finance company practices like payday lending and high-cost short-term loans could all reappear and place consumers in the cycle of debt that bedeviled their ability to build sustainable financial foundations prior to the financial crisis.
Thoughtful yet reasonable constraints that allow consumers to make their own educated and reasoned choices, but prevent taking advantage of those least able to afford predatory costs, are appropriate. We also must take care that the banking interests don't attempt to change the balance that allows both institution types to flourish by comparing their for-profit, corporate structure to our not-for-profit, cooperatively-owned structure.
Under that structure, Truliant pays property taxes, our members pay taxes on the dividends/interest that we pay them, we pay payroll and other taxes, but we do not pay the same for-profit corporate tax as a stockholder owned bank. Our profits are shared back to our membership in the form of higher rates on savings/investment, lower rates on loans, low fees and enhanced member services.
Truliant will adhere to our mission to improve our member-owners' lives under all political and economic scenarios as we have done over the last 65 years. We will continue to proactively advocate for public policy that protects and advances our ability to serve our members both in the legislative and executive branches of government.
We may, from time to time, ask our members to weigh in with our national legislators on what Truliant means to you and your ability to build your financial lives. From better savings/investment and loan rates, to lower fees, to thoughtful guidance with the member's best interests at heart, we continue to differentiate ourselves from other financial institutions while providing true value to our members and their families.
When we look back on the perceived turmoil in the political sector, it is likely that Truliant members will have fared as well as or better than in the past as public policy impacting credit unions is developed and implemented.
We are committed to using our structure of member ownership as it was intended to continue improving member lives.