In light of the poor economic and budgetary shape the city of New York is in, they are facing tax cuts to schools and the removal of programs. To help combat this shortfall of funds, and most likely for some good publicity, some strippers from Long Island are asking for a “pole” tax. Boiling down to a cover charge or door fee, stripping establishments would collect the fee with the specific purpose of sending that “tax” back to a local school. While entirely voluntary, the group of stripping advocates are lobbying to make this tax required by the state.

Sin taxes have existed for years on cigarettes, beer, liquor, tobacco, and the like while very few states have a stripping tax currently on the books. Some may call CRA a sin tax as well, forcing banks to reinvest, or pay a special tax depending on one’s point of view, into their local community. Seeing as credit union taxation is such a hot topic, what would happen if a CU stepped up and asked to be voluntarily taxed? A credit union could come out and say, “Because we care about our community so much, we’re going to pay a voluntary tax of 1% of our net income into the general school fund.” Would some CU’ers freak about calling it a tax rather than “community involvement”?

Dan Mica announced his retirement plans in late 2009, but has been tight lipped about his destination until now. As a former Congressmen, Mica has very unique insight into how the political process works and how best to accomplish the goals of an industry. Keith Leggett, a senior economist with American Bankers Association, has been critical of credit unions and the NCUA in the past, especially in regards to business lending, corporate credit union issues, NCUA governance, and field of membership restrictions. In reference to the recent creation of a new low-income designated credit union, Leggett had this to say, “…I guess being a rogue agency is part of NCUA’s culture.”

While some may be initially shocked that such an avid credit union supporter would be joining forces with what many describe as an enemy of the credit union industry, the combination of their unique skill sets could be advantageous for credit unions and banks.

It will be interesting to see how this plays out in the industry. With Mica partnering with Leggett, could it be viewed as him jumping ship and getting in bed with the ABA? On the other hand, Leggett may be viewed has suddenly having a soft heart for credit unions. Either way, the pair will have a tough boat to row, potentially polarizing any potential clients. The industry will watch with anticipation once the company is launched in January 2011.

Here’s the full press release.

Google announced today their new Google Public DNS service.  For those not in the know, recursive DNS, which is what Google is offering, is simplistically a phone book.  It translates “Mr. and Mrs. Johnson” to 800-555-5555.  Applied to the internet, it translates cuemployee.com to 74.208.31.243, which is the IP address of the server running my blog.  As is the Google norm, it is free.Every computer you use to get on the internet has to use a DNS server and normally these are managed by your ISP, but there are other options.

Enter OpenDNS.  They’ve been around for a while now and provide both a free DNS service as well as paid options.  With their free option, you as a consumer get very fast resolution when you type a domain name in and it is smart enough to send you to the correct page when you type in google.co.  When a domain name is mis-typed or does not resolve, you are directed to one of their search pages which contains ads, by Google of course.  Here’s an example.  So OpenDNS pays for their servers, staff, etc by the AdSense revenue they gain from their sponsored search pages.

So what do you do when the company that pays your bills goes into the exactly same business you are in?  Does OpenDNS now race against Google for the fast DNS resolution?  Nobody can compete on price since it is already free.

Sounds familiar, doesn’t it.  How are credit unions supposed to differentiate their free checking accounts from one another?  I’m sorry, is it a checking account, share draft account, or a spending account?  Is your checking account free-er than your neighboring credit union?  Wait, you focus on member service, so that’s your differentiation, right?

SEC bans short-selling

Fed takes control of AIG

Treasury set to bail out Fannie Mae, Freddie Mac

The founding ideals of our country are so closely tied to the basic premise of credit unions (member-owned, democratically controlled) that I now can see how credit unions will be different in the future: they won’t exist.  Whether the threat comes from the Treasury Department’s Blueprint for a Modernized Financial Regulatory Structure, which omits the NCUA from the President’s Working Group on Financial Markets and merges the NCUA with the new FDGA (Federal Deposit Guarantee Administration), or some new “measure” that the government takes to shore up the markets, credit unions will face a major threat if the government continues to bail out large financial institutions.  

Imagine telling our members where they could spend their money at.  Oh, I’m sorry, we have a corporate agreement with Chevron and you can’t buy gas at Shell or BP.  Mister Member, we’ve noticed you’ve spent too much money in Vegas and Atlantic City in the past few months so we’re going to put your assets in control of the credit union to insure proper usage.  Crazy you say, right?  AIG messed up and rather than letting the people who took the risk get hammered, the government is bailing them out.  Banning short selling is even more shocking to me than that.  

This is a silly argument, but what would happen if a CU told their members where they could spend their money?  The members would leave.  Or using the US-credit union analogy again, we’d use our democratically elected officials to change the rules.  

I’ll leave you with a quote from the 10 Planks of the Communist Manifesto:

Centralisation of credit in the banks of the state, by means of a national

bank with State capital and an exclusive monopoly.

Apparently we are self-absorbed and we need to learn how to use a knife and a fork.  I don’t know about you guys, but I never had my parents speak to my college professors because I didn’t like my grade.  Oh and we have no idea what it is like to be at work at 9 o’clock and have someone hand us work.

Complete and utter one-sided BS.

Clips from the actual show: Part 1 & Part 2

Here’s the piece from 60 Minutes

Thoughts from 37Signals

YouTube Parody

Credit unions now need to carefully observe their balance sheets and manage appropriately if they are asset or liability sensitive.  All of those CD promos did good things for liquidity, but CU’s are going to be hurting if they are long on those CD’s.  Expect to see those CD promo rates drop as well as those wonderful money market funds.  Hold on to your balance sheets, it is going to be a wild ride!