Banking on Financial Security

The recent ups and downs of Wall Street have plagued some of the country’s most respected financial institutions, but Georgetown’s very own credit union seems to have been relatively unscathed thus far. THE HOYA sat down with Dan White (MSB '09), CEO of Georgetown University Alumni and Student Federal Credit Union, to talk about whether the turmoil on Wall Street has had any influence on the student-run credit union.

What has the year been like for the Credit Union? It’s been a very busy but interesting year at the Credit Union with all that’s going on in the economy, and we’ve needed to quickly react to a number of the rate and policy changes. However, it’s been very rewarding and educational for our interns to experience working at a bank during these times.

Has the Credit Union been affected by the financial crisis or not? All financial institutions have been affected by the financial crisis, including the Credit Union. However, the Credit Union industry overall has remained relatively unscathed due to the safe and sound investment regulations set by the NCUA, our regulatory body. The Credit Union is in a uniquely safe financial position because our loans were made to qualified borrowers, and we therefore have an extremely low delinquency rate in our loan portfolio.

Has the Credit Union restricted lending during the current credit crisis? Unlike the commercial banks that have encountered serious backlash from “easy lending,” the Credit Union’s standards when processing loan applications have never fallen regardless of what our competitors were doing. I wouldn’t say that the Credit Union has restricted lending, but we are definitely sensitizing ourselves to the different types of risk that the average loan application of today’s credit markets brings to the table — mortgages that are higher than the value of the applicant’s home, mortgage balloon payments, the applicant’s occupation and whether that is or could be affected by the current and future job market.

How do the Credit Union’s lending rates compare to that of other credit unions or Banks? The Credit Union offers more competitive loan rates than most other credit unions and banks.

Did the FDIC deposit insurance increase from $100,000 to $250,000 affect the Credit Union in any way? Most of the Credit Union members were under the $100,000 limit and have remained under $100,000, so the Emergency Economic Stabilization Act hasn’t had a huge affect on the Credit Union.

Have you seen an increase in certificates of deposit from customers looking for safer investments? There have been a number of CDs coming in over the past couple of weeks since they are a completely risk-free investment and we offer competitive rates.

Can you confirm that there’s been an increase at all? Yes, I would say I could confirm that.

Has the Credit Union made any investments in mortgages, sub-prime or otherwise? The Credit Union does not offer mortgages. Instead, we have a referral program set up as a risk-free way of making money.

Has the Credit Union itself invested in any sub-prime mortgages? No.

With so many banks losing money, does it worry you at all to be working in the financial industry? I think that it’s important to differentiate all of the press around large bank failures and the Credit Union. Unlike most banks, we did not make risky investments or participate in large commercial lending or sub-prime lending in mortgages or cars. That being said, we are being more conservative this year and cutting expenses where we can, given the economic conditions.

Specifically, where has the Credit Union had to cut? I guess kind of like all across the board, in terms of internally, with human resource and marketing expenditures, as well as just looking to see where we can cut expenses operationally.

Does the financial crisis put more pressure on you to make sure the Credit Union performs well? For 25 years, we have offered the most convenient banking products and services available. We are committed to continuing to provide superior service in both good times and bad.

What do you plan to do after graduation? Do you plan to continue working in the banking industry? I’m not entirely sure what I want to do after graduation. While it’s much tougher to work in the financial services industry now, I still think that it provides a great learning opportunity for a college graduate.

Have you seen less people apply to be part of the bank? No, we actually saw a huge increase to be part of the bank. This semester, over 250 people applied for 15 teller positions.