Thompson: Credit unions 'safe, sound and ready to lend'
By Brian E. Clark
The Badger State's credit unions are riding out the current economic storm remarkably well, according to the head of Wisconsin Credit Union League who declared his institutions "safe, sound and ready to lend."
Brett Thompson, president and CEO of the League, said Wisconsin credit unions are in good shape because they stayed away from toxic subprime mortgages and other exotic loans that have brought down some lenders.
"We stuck to making very conventional mortgages and are doing quite well," he told WisBusiness.com in a March 3 interview, noting that the Wall Street Journal and other national publications have cited credit unions for their "safety and soundness in these difficult times."
"Our focus has not been on chasing big profits, but more on serving our members and the communities they live in," he said.
WisBusiness audio"Historically, we do well in hard times because we do not hold back making loans to members," he added, noting that credit unions were formed during the Great Depression.
"And because credit unions have been good stewards of their member-owners money, they chose not to make sub-prime loans, which created some of the issues for other types of financial institutions.
"So all in all, I think we are safe, sound and ready to lend," he said.
Thompson called the recent takeover by state regulators of Cudahy-based Prime Financial Credit Union "unique and isolated." He said that didn't reflect on other credit unions. State officials have said Prime Financial was seized because of a "management structure issue" and that an investigation is underway. No details have been provided.
"Its deposits continue to be federally insured," he said. "I'm not aware of it being a part of a pattern or concern over credit unions in general."
In fact, he said, Wisconsin credit unions are thriving.
Over the past 12 months, Thompson said Wisconsin credit unions have had the second-highest asset growth of credit unions in the United States.
In addition, they had the highest loan growth over the same period and the sixth-highest membership growth in the country, bringing total membership to 2.2 million.
Thompson, a lawyer who has been with the League for eight years, said depositors are insured up to $250,000. He also said he believes credit union members are saving more in recent months because of financial insecurity.
Thompson said his group and credit unions nationally are pushing for an end to what they call an "arbitrary lending cap preventing many from providing important financing to small businesses when it is needed the most." To change that rule, credit unions are lobbying Congress and the Obama administration.
At least 13 credit unions in Wisconsin are up against the cap, which restricts credit unions from holding no more than 12.25 percent of their assets or 1.79 times their net worth, whichever is lower, in member business loans.
"Credit unions here in Wisconsin have historically always made small business loans," he said. "Many of them can point to the initial minutes of their forming meetings where some of their first loans were to a local small business.
"Unfortunately, credit unions currently have an artificial cap on the amount of business lending they can do. The 12.25 cap has no business or economic justification.
"If it were lifted, credit unions could inject $10 billion of new credit in our economy in just one year," he said. "That form of stimulus would be at no cost to our taxpayers."