Utahn heads U.S. credit union group

The first Utahn to head the national credit union association says he's taking a couple of controversial positions regarding the current economy. And he expects to be a bit unpopular, even with some inside his organization.

Kris J Mecham, CEO of Deseret First Credit Union and now chairman of the Credit Union National Association, wants to see part of the taxpayer-funded recovery money aimed at financial institutions set aside for credit unions. They have not been included so far because they generally weren't involved in the subprime and other risky practices that have put banks and others at risk. They're happy not to share that blame.

But Mecham's pushing to see that some of the money is available to credit unions in affected areas, because problems are spilling over onto member-owned credit unions. "It has affected us in a substantial way as the economy continues to roll out in waves," he said. While they never lent more than 80 percent on aggregate value, properties they saw as being well-secured have been devalued.

Mecham said he wants the credit union movement to work through economic problems on their own, but they need "access to TARP funds to back up losses to our federal share insurance fund (NCUA) if we are unable to do it on our own."

Most of the credit unions, he notes, have said "we've never taken a dime and don't plan to. I'm the one who came back and said we don't know how bad it will get," said Mecham, who believes the Troubled Asset Relief Program gives a competitive advantage to some financial institutions to do some of the same transactions credit unions do.

He also believes that credit unions can help solve economic woes. "My first priority as chairman of CUNA is to work with the government as best I can — and the legislators specifically — to get the economy back on track." Member loyalty gives credit unions a lot of clout and genuine grass-roots capability, he said.

Credit unions lend a lot of money in their communities, Mecham said, but are hampered by a cap that limits member business loans to 12.25 percent of credit union assets. Mecham is lobbying to get that cap raised to 20 percent, in line with what banks and thrifts are allowed to do. "We'd like some parity," he said. If that happens, "we could put billions, by the stroke of a pen, into the economy."

What they don't want included in as part of the economic shuffling is a judge's ability to "cram down" a mortgage loan. Advocates want bankruptcy judges to have the power to reduce both principal and interest on a mortgage. "We from the credit union movement would like to be left out of that legislation," Mecham said.

Credit unions are also "cooperatives," a term he calls "misunderstood, especially in the for-profit financial settings." They work together to save each others' members money and provide convenience. For instance, shared branching is becoming more common. Under it, a member of Jane Doe Credit Union could walk into Johnny Public Credit Union, deposit a check, get some cash back and receive a receipt from Jane Doe Credit Union — as if that's where the transactions occurred.

E-mail: lois@desnews.com