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.]