In light of the economic recession financial institutions face increasing scrutiny. Perception is everything. President Obama recently called out extravagant business travel junkets to such far away destinations as Las Vegas as "the height of irresponsibility. It is shameful."
In light of such presidential chatter, the credit union community must question the timeliness of a credit union-sponsored, 10-day Mediterranean cruise conference aboard Holland America. Ports of call include Barcelona, Spain; Corsica, France; Monte Carlo, Monaco; Florence, Italy; Tunis, Tunisia; Valletta, Malta, and Pompeii and Rome, Italy. A cynic would wonder if the Cruise Conference will be providing seminars during the eight days in port? It appears the time spent on shore excursions will exceed the time spent in seminars. A critic might find the time invested at breakfast, lunch and dinner will exceed the time invested in seminars. President Obama found Las Vegas an extravagant business venue. One must wonder how exorcised the President would get if he only knew about a credit union 10-day Mediterranean Cruise.
Did Congress envision the savings credit unions realize from our federal tax-exempt status would be spent cavorting around the midnight buffet on Mediterranean cruises? Facing certain unknown NCUA assessments, is now the time to cruise the Mediterranean? The future of the credit union industry faces real threats; is now the time to cruise the Mediterranean?
Recently, Wells Fargo canceled a 12-day Las Vegas junket at the Wynn. Goldman Sachs caved in and canceled a Mandalay Bay Las Vegas junket. If Las Vegas is now considered over the top, where does that place the Mediterranean cruise. Educational conferences are good and our volunteer directors must receive continuing education. Let's be honest-this is not a conference experience. This is a sea-going experience!
Less-expensive educational opportunities exist. NAFCU is hosting its annual conference in Chicago and registration is less than $1,000 per person. The cruise conference is $2,995 based on double occupancy, plus round trip airfare to Europe. Don't forget the pricey shore excursion activities. The Euro has been pretty weak lately; maybe they can get good deals on Mmade-in-China gift shop items.
As lawmakers on Capitol Hill have scorned financial institutions such as AIG for hosting lavish spa retreats, now is not the time for credit union cruising. What would Congressman Barney Frank or Sen. Chris Dodd think? Just as importantly, what would your credit union members, struggling to keep their loan payments current, think? NAFCU and CUNA are busy trying to legislate additional fee income revenue streams by raising the MBL cap, raising CU payday loan fees and begging for secondary capital revenue rivers. Skeptics might question how much fee income generated from these revenue rivers will be used to wine and dine our volunteers on Mediterranean cruises? What would credit union cruise commentary look like on Dateline, 20/20 or 60 Minutes? A skeptical news reporter would call this cruise a junket. It is all about transparency. It is misguided, ethically questionable and wasteful.
The cruise conference speaker is the CEO of the host credit union and her husband. The California credit union hosting the cruise conference has a unique business model to share. It began losing money before it became fashionable. For three consecutive years (2007, 2008 and 2009) this credit union reported huge losses exceeding $32 million (three years combined). With a robust loan-to-share ratio exceeding 113%, this credit union reports a delinquency ratio of 7.4% (NCUA 3-2010 Call Report Data). This CU's management priorities might be better focused on land and not adrift at sea.
This defines misplaced priorities. Credit unions should be concerned about the perception of impervious, imperial credit union (swim) suits squandering member money under the pretext of any credit union cruise conference. If credit union volunteers want to cruise they should pay for it out of pocket. Using the credit union vault to pay for cruise travel in the midst of a national recession borders on criminal arrogance.
On behalf of the credit unions still standing I asked the CEO to cancel her participation in this boondoggle. The request was declined. The bags are packed. Let's hope the cruise sails off into the sunset without national media exposure by a skeptical news media critical of financial institutions, even if they are not-for-profit, tax-exempt credit unions.
Stuart Perlitsh, CEO
Glendale Area Schools FCU, Glendale, Calif.