Recalling Events of 9/11 Twenty-five Years Ago

“Do things you’re supposed to do.”

A credit union leader as well as a veteran of three US wars (WesCprp’s DIck Johnson) called to provide his thoughts. He said credit unions are faced with some exceptional challenges: 0% car financing, very low investment yields, heavy cash inflows. What should they do?

While  he had no crystal ball, his message was that people are depending on us to do our job-let’s do it. It is all right to cry,  to pray and to be fearful. But if this leads to closing up shop or people loosing jobs, then the terrorists are winning. We have to go about our business. Now.

The Economic Impact

There are two clear trends. Short term, events are going to be more difficult. Longer term, wars have contributed to pulling the US economy out of a potential  depression, recession or perhaps simple slowdowns.

Last week i was with a credit union team from Las Vegas.  The board’s primary concern was the Vegas economy. It is built on airline flights and discretionary spending where people want to be free of ordinary constraints. Layoffs at hotels had already occurred.

But at the same time, the board’s consensus was that the worst thing the credit union could do was to “do nothing”, that is to wait and see what events bring and then react. Their impression was that there would be unusual opportunities and to “go for it.”

Some Initial Steps Forward

The flags are flying everywhere-in branches, on websites and in media. There is a changed mood, call it patriotic, or a sense of community. People are united and in many ways lifted out of their individual priorities. There is a willingness to lead or to participate.

Communicating in all possible ways with members is more important than ever. They want assurance and the certainty that all is safe with their credit union and their funds. . .

According to the corporate numbers, credit unions are still seeing record cash inflows. This means the plain old checking and savings account services do matter.

Loans have always been the backbone of credit union results.  . .0% financing is here, which means the auto manufacturers are getting their profit out of the car sale not financing. We need to explain that fact to members as well as offer competitive rates. Many credit unions have 5.9% auto loans and that rate could go down to 4.9% before yearend. . .

the net result for the rest of the year will probably be a decline in earnings from the .96 basis points at midyear. That’s all right. A period of adjustment in ALM is normal.

A New Sense of Community

People and a nation were changed by September 11th. Credit unions will change too. One experience that continues to resonate  from the tragedy is a new sense of community. We care about New York. We worry about our military. Everyone is asking what they can do to help.

In the past, the credit union approach flourished in times of uncertainty. The Federal Credit Union Act was passed in 1934, building on experiences from over 20 states, to help members find collective strength to meet individual need during the depression.

I can think of no better time or place to be in the fall of 2001 then working in the credit union community.

While we now know that the economy has officially been in a recession since March, the primary event affecting this quarter was the September 11th terrorist attack and the subsequent pause of most consumer spending, borrowing and investing activity.