I was reading this article that trumpeted the successes of “old-fashioned” banks and I couldn’t help but think that credit unions are all over this. The article identifies how certain banks have played it safe in current economic markets.
These banks have maintained lending standards. Banks that have reduced or lowered lending standards to try to improve profitability have suffered. The banks identified in this article did not give in to that temptation. Credit unions do one better by maintaining their underwriting standards while still managing to reach out to the underserved.
These conservative banks have exited or stayed out of the residential mortgage market. Conversely, credit unions have been able to stay in the residential mortgage market without getting involved in subprime lending. Today a credit union is one of the best places where a consumer can go to obtain a mortgage.
Another tool of the conservative banks is to keep costs down. Credit unions keep costs down so they can give back dividends to members. It’s how credit unions are structured. Credit unions are legendary for watching the bottom line. It is part of being a nonprofit financial cooperative.
Credit unions own consumer lending. They are designed for it and they do a terrific job at it. Given today’s lending environment and the absence of trust in that environment, credit unions are more important, more competitive and more relevant than ever.
According to Javelin strategy and research, identity theft declined somewhat in the United States in 2007. Yet this crime still amounted to a $45 billion loss. I give seminars on identity theft and any information that would suggest that the crime itself is declining, even slightly, is great news, even though the FTC says ID theft complaints continue to rise.
Many people might think of identity theft as being solely a technological problem. However social engineering also plays a large role in identity theft. This is not to say that there have not been large data theft issues out of the control of the consumer with retailers and government entities. In terms of theft of data from individuals directly, social engineering is key. The largest example of this is probably Internet phishing. People will voluntarily send their information to thieves because they have been tricked into sending the information. Every week I get an e-mail allegedly from some financial institution asking me for account information. It is extremely difficult for most people to see outside their own immediate experience and notice someone trying to take advantage of them. Nowadays the threat is not just local as people from other countries are involved in perpetrating Internet scams.
People will write their pin numbers on their ATM cards and when the cards are lost and stolen thieves can easily use them. Today, not using a shredder at home can provide the user with access to a person’s data. Who knows what happens to that garbage after it leaves the curb?
Entire industries have sprung up to combat identity theft or at least its symptoms. There are services that help a person deal with the authorities, consumer reporting agencies and financial institutions. There are other vendors that tried to make it more difficult for an identity thief to steal information by placing a block on a person’s credit history with the consumer reporting agencies. Finally, insurance companies have begun offering coverage for the costs associated with identity theft.
So why is identity theft declining given greater threats and more exposure? Perhaps people are just being more careful. There is definitely greater public awareness of the problem. Certainly credit unions are spending more time and money protecting member information and helping to educate their members. Identity theft could decline even more if people stopped responding to e-mail phishing or telephone phishing and took even more care of their personal data.
Have you picked up a copy of The WWR Letter lately? The WWR Letter is a quarterly newsletter for the credit union industry published by Weltman, Weinberg & Reis Co., L.P.A. Recent issues have included articles on such topics as podcasting, advertising risks to credit unions, collecting delinquent courtesy pay and peer-to-peer lending, just to name a few.
Stay tuned for our next issue of The WWR Letter, featuring articles on: eBay Sales of Repossessed Cars, The Quest to Go Paperless and the Criminal Forfeiture of Vehicles.
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