 2008 will be a year when we focus on contrasts and character. Political campaigns will attempt to contrast the differences of ideas and solutions among the candidates seeking our support.
From these contrasting concepts, we will hope to understand the true character of the candidates. Character is critical, because we will not witness most of the actions our elected leaders will take. We must have confidence that their character will guide them to act wisely and in our best interests, even when we are not looking.
The current mortgage crisis shows that contrasts and character play critical roles in financial institutions as well.
As you know from the many news stories on the subject, 2007 was a unique and difficult year in the financial world. What the headlines are not shouting is the fact that the true character of many financial institutions was unveiled as the magnitude of the mortgage downturn unfolded.
A telling example of character is the estimate that, nationwide, almost half of the “sub-prime mortgages” originated in the last 2-3 years went to people with good credit scores. These were people who could qualify for mortgages that would have been better for them in the long run, but the “sub-prime” product generated more profit for the lender, so they were steered in that direction.
Customers were disadvantaged because they did not understand the details.
This situation has created difficulty for many of our neighbors, and we will continue to see the effects of this in 2008. The ultimate irony is that many of these lenders are now soliciting their customers to refinance these loans to generate even more profit.
It is said that the true test of character is demonstrated in what one does when no one is looking. You should be able to trust your financial institution with your household’s financial well-being, even when you are not looking. The current mortgage crisis demonstrates that the quest for maximum profits can compromise that trust.
In contrast, the character of Space Coast Credit Union causes us to act differently. How do you know that this is not simply a marketing pitch? Because our very nature is different. We do not merely serve customers; we are our customers. We are literally made up of the communities we serve, because we are owned by those we serve.
Our commitment to our members (ourselves) is that we will always act to ensure that the financial cooperative of which you are a member provides the services that you need, in a manner that protects you.
I will leave you with a caution for 2008: As economic conditions continue to pressurize earnings, watch for an increase in fees charged by banks. Two particular items to watch for are "courtesy pay," which authorizes debit purchases or ATM withdrawals even when you do not have funds available, then assesses a "courtesy fee," and the shortening of grace periods on credit cards, which will propel more customers into paying finance charges.
We stand ready to assist where we can. We are not doing anything out of the ordinary by functioning in your best interest, even when you are not looking. It is simply our character.
Douglas R. Samuels
President/CEO
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