Credit unions to pay for their day in the sun
February 15, 2009
Why are credit union executives frolicking around an exotic Caribbean resort while thousands of miles away, their industry’s leadership cries to Congress about “hard times” and the need for a TARP bailout?
That question — fair or not — will apparently be the central theme of an ABC News investigative report expected to air sometime this week.
According to a document provided to The Financial Brand, the Florida Credit Union League (FCUL) says an ABC News news crew was sent to the tropical isle of St. Kitts to spy on the 200 or so credit unions executives that were attending a CUES conference there. (CUES, for those who don’t know, is the Credit Union Executive Society, a professional development organization.)
The reporter’s assignment, it seems, was to show that credit unions are wasteful, self-indulgent spenders, no different than their smarmy bank brethren. For several days, the ABC crew posed as ordinary vacationers, filming credit union CEOs as they relaxed poolside and played rounds of golf.
The Financial Brand has previously written about the perils of participating in TARP, as well as the specific risks credit unions face should their requests for bailout money be granted. But this type of investigative report takes the demonization of financial institutions to a new level.
Reality Check: Apparently, you don’t even need to accept TARP money to get blasted by the press. Simply asking for it is enough to paint a big red target on your forehead. If you work in the financial industry, the news media — and perhaps the general public — expects you to live like a frugal monk.
ABC News has apparently contacted CUNA, the credit union industry’s official trade organization, for an interview. According to the FCUL, CUNA declined to participate in what they characterize as “ambush journalism,” arguing that anything said on-camera would be edited and distorted to fit the report’s biased and negative storyline.
Presently, it’s not known when the ABC News report will air, although it will likely be part of a 20/20 episode. What is fairly certain, however, is that the show will portray credit unions in an extremely unflattering light.
In anticipation of the piece, the FCUL sent a memo to the CEOs, board members, managers and marketing departments working in Florida’s credit unions. Titled “ABC News Investigative Reporter/Producer Ambush Interview Talking Points,” the document suggests responses to the inevitable questions credit unions will face after the piece airs. Among the points (some of them disputable):
- Credit unions have received no TARP money, and we are not seeking a direct injection of TARP money
- The only TARP money credit unions are interested in is a “backup” to the self-funded NCUA deposit insurance system
- If it became necessary to tap the TARP funds — something credit unions believe is highly unlikely — credit unions would then pay the funds back over time
- Credit unions view TARP as simply backup assistance for a narrow segment of the credit union industry that has suffered collateral damage in today’s troubled economy
- Credit unions didn’t make the toxic mortgages and liar loans that are at the root of the economic crisis
- Many who attended the St. Kitts conference are board volunteers who used their own personal vacation time to attend
Good thing the talking points were sent out, because the credit union industry can’t seem to get its story straight when it comes to TARP money. In a Credit Union Times article about the ABC News story, CUES president Fred Johnson said, “We told them [ABC News]…that credit unions have not asked for TARP money and [that] they got their facts wrong.”
Mr. Johnson, it would appear, has his own facts wrong. The credit union industry has been asking for TARP money over and over and over, dating back to November 2008. NCUA, CUNA and NAFCU have repeatedly pled their case in front of the U.S. Treasury, Congressional representatives, FOX Business, CNBC and just about anyone who will lend them an ear.
If Mr. Johnson did indeed tell the ABC News crew that credit unions haven’t asked for TARP money (hopefully not on camera), brace yourselves for one of the most painful, embarrassing, squirm-in-your-seat exposés you’ve seen in quite some time.
Key Takeaway: It’s not just “employee recognition events” (aka “parties,” aka “junkets”) that will get a financial institution skewered in the news these days. Apparently, conferences of any sort are now taboo for anyone working at a financial institution.
Bottom Line: In this economic climate, financial institutions now have to look at every single penny they spend. If you don’t carefully scrutinize each individual expense from the public’s perspective, you better prepare yourself for a lynching by a pitchfork-wielding mob.
Note to Financial Conference Planners: Forget Vegas, New York City, San Francisco or anywhere that the sun shines. Start thinking about towns in states like Kansas and North Dakota. In fact, you might even be able to score a couple of points by booking your next event in Detroit. Bah, forget about it altogether. There’s no point. You can’t pick a destination that will immunize you from the press, and no one has the money to go to any events anymore anyway…
[UPDATE: Fred Johnson, president of CUES, responds to the situation and provides some clarification in an official statement.]
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Previous related stories from The Financial Brand:
- Credit unions, welcome to the TARP bailout…
- When will the media’s infatuation with credit unions end?
- As if credit unions need another reminder…
- The media falls in love with credit unions
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Filed Under: Public Relations
February 15th, 2009 at 5:29 pm
Jeffry,
While I agree wholeheartedly with your position on TARP, I want to make sure that CUES does not get vilified for having a conference in St. Kitts.
CUES is a professional development organization. They do not participate in political affairs, lobbying, etc. They are, in my opinion, the one organization that pushes people out of their comfort zones (and time zones) to hear thought leaders from a variety of industries. This conference was aiming to do just that and give CEOs and their Board Chairs an opportunity to enhance their relationship for the benefit of their credit unions.
Since the dawn of the American corporation, conference locations were selected for one or more of the following: sunshine, casino, golf course, shopping, Walt Disney World or all of the above. CUES is known for their leadership and educational conferences. To get executives and volunteers to attend, you cannot hold a conference in Flower Mound, Texas – as lovely as it is as there as the name implies.
If one had the choice (as a reporter) to fly to St. Kitts to ambush CUES or fly to Kona to ambush The Volunteer Leadership Conference (hosted by the Paragon group the week prior) you’d naturally choose St. Kitts.
St. Kitts is more exotic AND there were CEOs in attendance, not just volunteers. You see, volunteers getting to go somewhere fun isn’t much of a story. Because “volunteers” have a heart of gold and the grand total of the annual salary a credit union volunteer gets is zero!
Oh sure, they may get a catered lunch or dinner once a month in the credit union basement but considering that they are volunteering their time to run a financial cooperative and taking vacation days to attend an educational conference, I’ll gladly subsidize a trip to St. Kitts.
Forget the fact that the Symposium was held at a Marriott hotel – by last check an American corporation. CUES arranged for valuable concessions from the hotel for attendees, saving them valuable credit union resources as well as their own personal funds. The conference was arranged more than a year ago – long before TARP, TAF, TALF and SIP. CUES considered cancelling – but doing so would have cost the organization multiple tens of thousand of dollars, something they can ill afford to do.
Credit unions based in the Caribbean also attended. Something that rarely happens as they have to travel much farther than their American counterparts and have significantly fewer resources to do so.
I’m sure everyone is going to cast a critical eye on future conferences. Just browsing through the CU Journal Upcoming Events page (http://www.cujournal.com/upcoming-events.html) – these caught my eye as something the folks at ABC might want to pick up and have some fun with….
CUNA Collections & Bankruptcy Conference – at MGM Grand in Las Vegas
or the Residential Mortgage shindig in St. Pete’s Beach, Florida. Or how about the Management Essentials at the Hard Rock Hotel in San Diego?
I was in St. Kitts when the ABC reporters showed up. I was asked to replace a last minute speaker cancellation. I didn’t see them though, nor did the estimated 150 CEOs and Board Chairs the afternoon that they were giving up their FREE time to sit in on the NAFCU or CUNA webinars updating them on the Corporate situation and the financial impact to them of recapitalizing the NCUSIF.
That’s right – ABC ambushed Fred Johnson while we were all listening to Dan Mica (or Fred Becker, depending on which webinar room you chose). I cannot fault Fred for his statements, or misstatements as you infer. Being caught off-guard by reporters with a video camera who are not interested in the truth is a stress-inducing event.
It makes me sick that ABC thinks they have a story AND that CUNA refuses to give a statement.
Dan Mica was fond of saying ‘“Credit unions are not part of the problem, but we can be the solution.” Unfortunately HE also is on record of asking for TARP. So which is it Dan?
Get him on film, not Fred Johnson.
CUES was just doing their job – professional development.
February 15th, 2009 at 6:05 pm
Here at The Financial Brand, I have two “personae.” As writer/editor/publisher of The Financial Brand, it is my job to share a story from a perspective that is engaging and relevant to my readers. I hold in reserve many of my personal opinions about things, casting as few subjective judgments as possible along the way. I think if you read the above article objectively, you’ll see I am presenting the story without taking a position on whether or not the St. Kitts trip was a good idea or not.
However, in the comments of my own posts, I feel it’s okay to share my personal reflections from time to time. This is one of those times.
I want to make this very, very clear: I think the kind of witch-hunt going on in the financial industry right now is ridiculous. As I’ve pointed out previously, there were a lot commitments made by financial institutions during rosier times — contractual commitments. Corporate jets were ordered, stadium sponsorships deals were signed, conferences were organized, annual employee events were scheduled, etc. I think it is completely unfair and unrealistic to expect the entire industry to abruptly halt spending on everything but non-operating related expenses.
One recent article stuck it to a bank for having a new branch grand opening after accepting TARP money. That’s total B.S. The bank had their new branch underway for at least 12 months prior to taking TARP money. What the heck were they supposed to do? Sell the branch??? It’s silly. Any attempt to draw a correlation between the new branch and TARP money (saying in effect that the bank used taxpayer money to build the branch) is utterly ridiculous. It’s exploitative, sensationalistic McCarthyism. It’s shameful journalism, and reflects the thinking of a small-minded people.
Businesses still need to market themselves. People still need professional development. Employees still need recognition. This includes financial institutions.
ABC News is in business to make shows that get ratings. They are not in business to make shows that are fair, balanced or accurate. ABC News may be comfortable dragging credit unions through the mud along with their journalistic integrity — that’s their choice. But simply because a story CAN be told a certain way does not mean it SHOULD be told that way, nor does it mean the story is CORRECT.
The American public wants to hold people responsible for the mess we’re in. ABC News knows this. So they’ll find the ugliest angle on whatever story they can find and spin the yarn that way. “Here folks! Here’s someone you can be mad at!” It’s manipulative and disgraceful. If they want to indict people in the court of public opinion, why not start with Greenspan? Or the ratings agencies like S&P and Moody’s? How about picking on people who deserve to go to prison? Can’t we at least start there?
Alas, my opinions about ABC News and their journalistic standards are not the focus of this website. Therefore, the article is limited to issues affecting the brands of financial institutions and nothing more. The fact that I find “ambush journalism” like 20/20’s report on credit unions inherently biased and unfair does not change the realities that financial institutions now face.
As far as Fred Johnson’s quote goes, well, I’m hoping either Jim Rubenstein at the CU Times got it wrong, or that it’s not really what he said. If he said it, it’s a mistake, and a big one. Whether he was under pressure or not seems immaterial to the magnitude of the misstatement (again, assuming he really did say it). If he did say it, I would hope that he contacted ABC News to clarify: “Credit unions have not yet received any taxpayer money from TARP.”
February 15th, 2009 at 7:13 pm
I know Flower Mound, TX is no St. Kitts (my wife teaches in Flower Mound) but CUES can’t claim to have world class can’t-live-without-it training and also claim that the only way to get people to attend is to hold it in an exotic place. You can’t have it both ways.
Now CUES is just an organization putting on a conference so you’re right, they should be shielded from much of the blame. (Although there are many organizations that have cancelled their conferences this year.) However, the Credit Unions that sent them are not off the hook. You really can’t expect the general public to be OK with this kind of thing.
If I tell my friend/dad/brother/anyone that my financial reserves are running low and I may need to come to him for a loan to fix it and then, the next day, hop on a plane for a scheduled conference on an exotic island, 1) I honestly can’t expect that I’ll be getting that loan in the future and 2) I’ve probably hurt that relationship with my actions.
That’s just how things are. Life isn’t fair or balanced. It’s not for the people losing their jobs in this economy and it’s not for the organizations that are asking for government money.
February 15th, 2009 at 11:10 pm
I really appreciate the way you think. Financial crisis occur due to improper wastage of money.
February 16th, 2009 at 4:16 am
I suspect we’ll see more examples of this type of ambush journalism. After all, it plays to the significant numbers of people who are losing their jobs, and the frustrated taxpayers who are witnessing a huge transfer of money to the “private” sector.
Also, you’ve got a banking industry that can’t possibly make itself look good – but they can make credit unions look bad. That’s really the only way they can muddy the water and hope to keep credit unions from gaining traction. So I’d be willing to put money down that a rep from a bank trade pitched this storyline to ABC – (does this make me the CU Cynic?)
February 16th, 2009 at 6:35 am
TARP has become a code word for waste and rewarding extravagance & irresponsibility. This story will be picked up and expanded if we continue to have CU regulators, CEOs and trade group leaders asking for TARP funds and then saying they didn’t.
February 16th, 2009 at 8:54 am
I suppose there’s no way we’ll ever know, but I’m very curious who tipped off ABC News about the CUES conference and who’s benefiting from them vilifying Credit Unions…
February 16th, 2009 at 11:08 am
@SRG – I don’t think anyone tipped them off, per se. You need only Google TARP and you will see credit union lobbying groups begging for it. I think the Corporate Stabilization issue brought it to a new level. Ended up on someone’s radar screen. Like GInny said – TARP is a code word for waste….
It’s easy to find out where credit union conferences are held – ABC has had so much fun with bank executive pay, perks and junkets – that’s why I think this story is kind of lame. I will be surprised if it gets any airtime at all.
February 16th, 2009 at 12:04 pm
People still need to go to conferences. CEOs need to talk with one another about what’s going on in the industry.” As the Skeptic suggested, how many would attend a conference in Billings, Montana vs. St. Kitts. The dialogue and learning opportunities grow exponentially when more people participate.
@SRG – Banks certainly benefit by smearing credit unions, but ABC News benefits by smearing anyone. “Ambush journalists” are Equal Opportunity Smearers — they don’t care who you are or what good you may have done in the past.
There’s an old newspaper joke about how the front page is for trashing people. You ruin someone one day on Page 1, then tomorrow you use Page 22 for running your corrections, apologies and exonerations. In other words, you lie on Page 1 and bury the truth. Every news person knows the truth isn’t what sells. Saucy scandals sell. If the scandals are true, well then, that’s just a bonus.
February 16th, 2009 at 12:18 pm
@Denise: Didn’t the St Kitts conference take place before the NCUA announced the CSP?
February 16th, 2009 at 12:34 pm
Nope. In fact, the news came the day before I left for St. Kitts. CUES was flooded with calls making sure that they knew this had happened and that it would be addressed at the conference.
I got a call on Friday the 30th from CUES asking if I would “punt” again with my content and agree to facilitate a roundtable on the issue.
Then when word came out that NAFCU and CUNA were holding webinars on Wednesday the 4th (at the same time, btw) CUES worked quickly with hotel staff to arrange viewing/audio AND had hand-outs printed up. For anyone who has ever put on a conference, you KNOW how difficult it is to make last minute changes to room set-ups, AV, etc.
CUES did a phenomenal job accommodating the constantly changing climate. Speaking of climate change….. it really started on Sunday – plan was to have an opening reception/Super Bowl party only to have the rains move in – and the party moved in at the last minute!
February 16th, 2009 at 3:01 pm
Crazy to see CUES cancel their conference today. I don’t think that may have been the best move as these conferences provides so much value and education to help the movement. I was not crazy about the idea that they canceled the conference ahead of this news story.
This whole thing with the ambush press kind of reminds me of some Anti-Flag lyrics from when I was in a punk rock band:
We gotta work to make the facts fit the false charges
Pull the wool over the eyes of the filthy masses
Stab the people in the back for the corporate choice
Roll the propaganda out using The People’s Voice
They talk it up all day, they talk it up all night
They talk until their face turns blue – Red white and blue!
But when the truth escapes the night and crawls into the day
We find the picture still askew
February 17th, 2009 at 12:47 pm
I agree with Jeffry that what is going on now with the media and the financial industry is a trifle unfair, but I also have to say that CUES as well as BofA and Wells Fargo have PR people on staff to whom they should be listening.
Anyone with a day’s experience PR — civilian or military (where it’s called public affairs) — understands the concept of media management. We, as PR professionals, are the ones better prepared to inform our superiors as to the public relations risk of certain activities. While an off-site meeting arranged to facilitate “out of the box” thinking may be understood as intended when given the 30 minutes you’d need to explain it, in the 12-second sound bites of today’s media it’s not defensible.
The common exercise in this situation is to consider “how would this look?” In other words, think like a reporter. Having worked with reporters at a newspaper for over seven years I find myself doing this constantly.
So, thinking like a reporter, here’s the picture: Your industry is faltering, your leadership is pleading a case for taxpayer money (incidentally, taxpayer money from many taxpayers who are now unemployed), and you have to vacation in St. Kitts to decide what to do next?
As I have told my marketing staffers for many years: Think about what you say or do. You can indeed be right and still be wrong.
February 17th, 2009 at 1:18 pm
I guess they didn’t cancel their conference, but their Golden Mirror Awards ceremony, disappointing…
February 17th, 2009 at 1:57 pm
Where’s the media when we roll out our free financial counseling programs? Where’s the media when we show up in classrooms to teach kids about good money habits? Where’s the media when we help other countries set up credit unions? Where’s the media when we set up VITA sites? Where’s the media when we walk 300 miles across the state to raise money for CMN? Where’s the media when we build a home for a veteran?
They want to smear an entire industry over one conference, because “The People Have a Right to Know.” Don’t those same people have a right to know about the good things we do to help society as a whole, in addition to what we do everyday?
But somehow that’s just not that interesting.
February 17th, 2009 at 2:16 pm
@Nathan – Excellent points. WWMT? Or, “What Would Members Think?” Also, “What Will the Media Think?”
@Where’s the Media – Controversy is the currency of the news media, whether they fabricate that controversy or not.
People complain about the “liberal media.” It’s not necessarily that reporters are a bunch of socialist, communist, Marxist, Havana-loving liberals. It’s that they HAVE to create controversy. So if 1,000 people are for an issue and they can find ONE person opposed, they will report it this way: “Support for [issue] grows, but some people are unhappy.” They’ll go on to talk about how “not everyone” is behind the issue. If they can find a second person, they’ll say, “Opposition to [issue] grows.” It’s manipulative B.S.
February 18th, 2009 at 2:01 am
UPDATE: Fred Johnson, CEO of CUES, issues a brief statement regarding the situation.
February 18th, 2009 at 10:40 am
I’m with the skeptic on this: “CUES can’t claim to have world class can’t-live-without-it training and also claim that the only way to get people to attend is to hold it in an exotic place”
When I worked at a community college, the big conference/event for web folk in higher ed was held in Rochester NY in October, and then after that someplace in the midwest. I don’t remember where exactly, as the only year I was able to go was when I got a proposal accepted to speak, and that year was Rochester. I barely left the hotel, except for one night on the town and a day of sight-seeing at the end. And it was a great experience, totally worth the time & energy. I learned a lot and connected with great people…including someone who lived across town from me, which we both found hilarious.
A really useful event will be useful no matter where it’s held, IMO. It definitely helps to get away from the day to day, but I don’t see why Billings (a lovely place with skiing nearby IIRC) or Flower Mound should provide any less of a break from the routine than Vegas or St. Kitts.
And it’s irritating to most folks because most working folks have no opportunity to do anything like that. For years I’ve heard a friend’s mom — who’s worked as a grocery checker all her working life — complain about her sister (a gov’t employee) going to conferences in Texas or Florida, because she just can’t see the point. It’s a basic disconnect in kinds of work, and in a time like this it gets under people’s skin even more than usual.
February 18th, 2009 at 10:48 am
Skeptic and Elaine – I can see how it looks bad to hold something like this in an “exotic place”, but what people are forgetting, and CUES President Fred Johnson points out in his statement (http://www.cues.org/pls/cuesp/!cues1.main), CUES is not just a U.S. organization and had a lot of participation from members local to that area they may not have if it had been elsewhere:
“This year’s conference, which we began planning in 2006, was held in St. Kitts because the location provided us with a reasonable travel distance for our members, and allowed us to work more closely with our Caribbean members. As a matter of fact, CUES members from Trinidad and Tobago and St. Vincent and The Grenadines attended the Symposium, and a group of Caribbean residents participated in a focus group to advise us on the creation of a Caribbean leadership institute. “
February 20th, 2009 at 11:37 am
It looks like credit unions have their panties in a bunch. Will you people take a step outside of your “industry”?! No one cares…and no one even knows if 20/20 will aire this crap…at least I haven’t seen any “news” on it. I’m sick and tired of people claiming the sky is falling. I suppose your planning a letter-writing campaign or an outright boycott against ABC, aren’t you. Hilarious! Lastly..if you’re going to post on a public blog, please do it in English. I have never seen so many acronyms in my life!
February 20th, 2009 at 12:14 pm
ABC = American Broadcasting Corporation
AV = audio/visual
CEO = Chief Executive Officer
CLF = Central Liquidity Facility
CMN = Childrens Miracle Network
CNBC = Consumer News and Business Channel
CU = credit union
CU HARP = Credit Union Homeowners Affordability Relief Program
CU SIP = Credit Union System Investment Program
CUES = Credit Union Executive Society
CUNA = Credit Union National Association
FCUL = Florida Credit Union League
IMO = “In my opinion”
NAFCU = National Association of Federal Credit Unions
NCUSIF = National Credit Union Share Insurance Fund
NCUA = National Credit Union Administration
PR = public relations (also press release)
TALF = Term Asset-Backed Securities Loan Facility
TARP = Troubled Asset Relief Program
VITA = Volunteer Income Tax Assistance
CEO = Chief Executive Officer
Please note: This is not necessarily a “public blog” simply because it is on the internet and requires no registration. The Financial Brand is a trade industry, B2B website written for executives working in the retail financial industry. Inasmuch, use of acronyms is to be expected.
February 20th, 2009 at 12:22 pm
[...] credit union industry. Presumably posing as vacationers on the island of St. Kitts, the ABC crew observed credit union executives engaging in Caribbean-type activities. First disclosed by Jeffry Pilcher, the segment is expected to air on 20/20 as early as [...]
January 5th, 2010 at 9:01 am
[...] Credit unions to pay for their day in the sun [...]
January 7th, 2010 at 7:29 pm
I am so glad that this one made your top ten! Your stories are almost all awesome, but this one was a personal favorite because it was a great non-story. I remember well the winter of 2009 when CUES and all the execs caught lounging instead of learning went into self-preservation mode. The great part of it all was that so many people had zero ability to step outside of their little movement and realize that 20/20 running a credit union smear story would be about as interesting as a CNN story about a livestock competition at a county fair in Des Moines. Come to think of it, seeing rednecks judge pigs would be a lot more interesting than an ambush poolside interview with some 90 year old board member or CEO from who-gives-a-crap 20million dollar CU.
CUES was pretty stupid to hold this conference and cancel the one in Denver for Marketing and Business Development professionals. I spoke with dozens of people who wanted to attend that one, but we all felt like CUES was hitting the panic button so they cancelled it. Shows how much I now care about CUES conferences, I don’t even know if they are holding a Golden Mirror marketing conference in 2010 or not… Their conference always was second fiddle to CUNA’s anyway so who cares?
Ah, the panic button. Gotta love it! And nobody hits it better than little credit unions who think the world is out to steal The Movement right out from under their age-spotted pruned feet!