A Cooperative Community Park

Collaboration is the unique cooperative advantage. What one credit union would be unable to do, several working together can accomplish.

This latest example, a cooperative community park adjacent to Los Alamos Schools Credit Union’s new head office, was enabled by seeds planted almost a decade earlier.

In 2012 Del Norte CU learned that members believed their cooperative structure mattered. Their Net Promoter Score surveys revealed that “promoters” valued service and that the credit union was locally owned–a co-op not a bank.

Their marketing department used that finding to differentiate themselves. In Los Alamos, New Mexico where DNCU in 1954 began serving the Los Alamos National Lab employees, they discovered three other co-ops: Little Forest Playschool, founded in 1951 by the wives of the Los Alamos National “Labbers,” Los Alamos CO-OP Market and the newly formed Bathtub Row Brewery CO-OP.

In just one meeting in a coffee shop, adding Zia and Los Alamos Schools Credit Unions, all agreed that co-ops should support each other. Over the years they worked together to invest in their communities, serve their members and educate the public about the cooperative difference. https://www.keepitcoop.com

Building a Cooperative “Commons”

Matt Schmidt, CEO of $23M Los Alamos Schools CU purchased land in the town’s center to build out a new main office. The site included adjacent space that Matt believed could be converted to a CO-OP Park and community gathering place.

The concept was reinforced by the pandemic. “Isolation, he stated, had led to a craving for connection.”

The two-phase plan includes a community gathering space, outdoor concert stage and room for a beer garden. It was a bigger concept than his credit union alone could realize, so Matt approached the Keep It CO-OP group. They gave their immediate support.

Cooperative Education

Each contributing organization believes cooperation among cooperatives is vital. Matt said the group and this project are like planting seeds. “We trust they will grow, for these projects show our belief in each other and the community.”

Matt believes his credit union’s focus on educational employees and students makes its role in informing the community about cooperative design even more appropriate. “This shared space allows us to tell the story of why you should join a co-op; the value we bring together. It is a concept that could be adapted to any community in America.”

A gathering place in the wake of a pandemic that drove us apart.

*The six cooperatives in Los Alamos that make up the Keep It Co-Op movement have deep roots in the history of Los Alamos, New Mexico. They are:

Little Forest Playschool. Founded in 1951 by a group of local moms in the American Association of University Women. The first playgroup was composed of 15 children and cost 10 cents for juice and supplies. Little Forest is a cooperatively managed preschool for children aged two to five. Children are given the opportunity to learn the same way they do naturally, through exploration and play.

Del Norte Credit Union. Founded in 1954 as Los Alamos Scientific Lab Credit Union and serving as the first financial institution in Los Alamos. The organization became a community charter in 1981 and expanded financial services and offerings to surrounding communities.

Los Alamos Schools Credit Union. In January of 1955, Ruby Meaders founded the Los Alamos Schools Credit Union out of her home just after the unveiling of the “Secret City” of Los Alamos. She was more than glad to help with the need for non-governmental businesses like grocery stores and financial institutions.

Zia Credit Union: In 1955, a group of approximately 200 individuals from Zia Company, support contractors for the Los Alamos National Laboratory, organized and founded Zia Credit Union as a special interest group, a common practice for that time in the credit union movement. The contractors felt they needed their own financial institution. In 1975, management at Zia CU decided to expand its field of membership by serving the entire community.

Los Alamos CO-OP Market. Opened in 2011, their mission is to serve Los Alamos County and surrounding communities by providing fairly priced, wholesome foods and other goods in an ecologically sustainable, socially responsible and economically appropriate manner.

Bathtub Row Brewing CO-OP. Thanks to three years of hard work and the investment of its membership, Bathtub Row Brewery CO-OP was up and running in 2015 as Los Alamos’ first craft brewery and the fourth cooperatively run brewery in the United States.

Note: Thanks to Denise Wymore who alerted me to this project.

Timeless Wisdom: Effective Public Policy From the Bottom Up

Our movement does not exist because it was created from the top down.  Rather it was created from the bottom up.  We did not tell Congress we wanted to be “safe and sound” institutions.   We always knew that if we were lending to our members there was risk involved.  Serving came first; safety and soundness was a means to the end of serving.

Ed Callahan, Callahan Report, May 1999

A Picture Where Words Matter

On January 4th the NCUA board published a request for information (RFI) seeking “input on how best to streamline and improve agency communication with its stakeholders.”

This formal 8-page process listed dozens of existing communications, loads of data and website activity as examples of current efforts.

Below is my “comment” using a 1982 Agency photograph.

It shows NCUA Chairman Ed Callahan holding an open press conference following the monthly board meeting. In the picture are representatives from CUNA, credit union newsletter writers, and NCUA personnel including the Public Affairs Officer. This was standard agency practice for all board meetings in DC and on the road. Senior staff would attend as necessary. Responding to credit union and press interest was more than an obligation as a public servant; it was also an opportunity to listen and learn how the agency was viewed.

When is the last time an NCUA board member held an open press conference? Or did a Q&A following a speech?

Real communication occurs when a person engages in a “dialogue” with their audience. It demonstrates the presenter’s ability, confidence and mastery of their subject.

Communication, Like Leadership, Starts at the Top

Authentic communication is not a public relations strategy. It is leaders willing to expose their ideas in public discourse.

To improve the agency’s presentations, the place to start is at the top. Forget the typed out scripted board exchanges, the deluge of press releases, the flood of email updates.

Schedule monthly, or more frequent, zoom or in person conferences welcoming all comers, especially the press. Bona-fide conversations are the heart of real communications.

The best way to learn what is on a person’s, or industry’s mind, is to listen. In real time. With live people on Zoom or in-person.

Will the new NCUA Chairman lead by example? Or with press releases?

Following is an American Banker article from 1984 reporting on NCUA and credit union’s progress.  The story is built around an interview with Chairman Callahan and the policy of deregulation.

Callahan mans the credit union helm through the seas of deregulation

Author: Robert B. Lieberman
Date: Apr. 9, 1984
From: American Banker(Vol. 149)
Document Type: Interview
Length: 673 words

WASHINGTON — When Edgar F. Callahan became chairman of the National Credit Union Administration in 1981, one of his first moves was to initiate a battle for deregulation of credit unions.

Many politicians and regulators were skeptical, Mr. Callahan recalled in an interview, in part because of the financial problems of the airline and trucking industries under deregulation. “There are still people saying it [deregulation] is bad,” the 55-year-old agency chief added.

But since Mr. Callahan began his six- year term in charge of the agency that charters, supervises, and insures more than 11,000credit unions, deregulation has occurred. It has come primarily in the form of interest rate ceilings being eliminated from the accounts of federally chartered CUs.

The results? Membership, loans, and savings in CUs are growing, while operating fees charged CUs by the agency are shrinking. Among the specifics:

* In 1983, savings at federal credit unions grew to approximately $75 billion, a 20% increase over 1982.

* In 1983, insured loans were up 15% from 1982.

* Membership in CUs grew by more than one million during that same period.

“We think we’re well into deregulation,” Mr. Callahan said. “A lot of needless government intervention in business decisions of credit unions is being put back into credit union hands. Credit unions have now broadened their base so that they are better prepared for the economic uncertainties of the future.”

One sign of this came when Vice President George Bush’s task force on streamlining the financial services industry recently decided that there is “no need to alter or change [credit unions] in any way at this time.”

And President Reagan sent the NCUA chairman a letter in 1982 congratulating him and credit unions for solving problems with “self-help solutions.”

Not everything has been coming up roses for credit unions and Mr. Callahan, though.

For the past two years, the NCUA has levied extra insurance premiums on credit unions to add liquidity to the National Credit UnionShare Insurance Fund. Many members opposed the added fees. Said one member in a letter to the NCUA, “Assessment of additional or double premiums each year is a stiff penalty to pay, especially for the small credit unions such as ours.” Similar comments called for an alternative method of strengthening the fund.

And last November, Ernst & Whiney independent auditors released a report saying, in effect, that the NCUA did a shoddy job of estimating losses relating to credit unions before the fiscal year beginning in October 1982 and in reporting those losses at the end of the year.

“Willing to Discuss Issues”

Still, credit union managers generally laud Mr. Callahan and the NCUA.

“He has been accessible and willing to discuss issues with credit union managers,” says Terry Spence, president of the Rockwell Federal Credit Union.

“I wish he was still here in Illinois,” says Gene Artemenko, president of Chicago-based United Airlines Credit Union.

Mr. Callahan supervised hundreds of credit unions as Director of the Illinois Department of Financial Institutions from 1977 until he was appointed to the NCUA in 1981.

Regarding the future, the NCUA is now supporting a bill before Congress that it says will strengthen the credit union insurance fund without basing premiums on risk factors, which the agency says cannot be equitably administered. The industry is divided on how to base the fund. Many credit union members support risk-based premiums.

In addition, he said, state and federal examiners are scheduled to meet for the first time as early as the beginning of next year to discuss ways of improving their trade.

Mr. Callahan, who once held three jobs at the same time and who says he is “used to hustling,” has a varied background. It includes positions as Illinois Deputy Secretary of State, a math teacher and part-time football coach, and a school principal.

He now boasts of having two families, one with over 40 million credit union members and one that includes eight children.

“Just keeping up with a family of eight has kept me running,” he jests.

A 50th Anniversary “Framing Story”: Tomorrow—We’ll Meet You There

A “framing story” gives people direction, values, vision, and inspiration by providing a framework for their lives. It tells them who they are, where they come from, where they are, what’s going on, where things are going, and what they should do.

“The story we believe and live in today has a lot to do with the world we create for our children, our grandchildren, and our descendants hundreds of years from now.” – Richard Rohr

One Annual Report Celebrating 50 Years

Communicating an organization’s yearly results is hard. This CUSO’s 30-page 2020 Report to Owners is one of best conceived documents I have seen.

The information is accessible at a glance, easy to follow, well-organized and delivers a powerful message. That is a difficult task when telling one year’s performance let alone summarizing five decades.

The details go from artistic portraits of the leadership team to the prosaic summary of financials with ratios showing two decades of double-digit balance sheet growth.

It portrays a 50-year timeline from 1970 as WESCO, the origin story, to today’s footprint . The current scope is outlined on a US map, showing a “Community” in 25 states, of 179 credit unions, serving 1.9 million members with just 290 employees.

More than Portraits and Numbers on Paper

To have meaning any report must tell a story. One that uses that past and present to prepare for tomorrow. Throughout the pages are words of timeless wisdom:

  • “Ownership sets us apart”
  • “Participation is an investment”
  • “A community with power to influence and nurture the organization”
  • “Cooperative ideas that work for anyone, anytime, anywhere”
  • “Members define their success. . .therefore members define our success”
  • “A bond of fellowship, commitment and loyalty”
  • “The way we use the investment of patronage must multiply”
  • “Driven by a set of principles—coops are distinct from all other enterprises”
  • “A constant work in progress, a place for dreamers, planners, innovators and even sometimes for anarchists”
  • “Be passionate and fairytale careers will be made”

As for the next 50 years: “A cooperative is a magical thing. A consumer’s audacity to reach out and grab ownership-the means of production-for themselves can change everything. It’s magical because often the consumer doesn’t even realize what they own and the power of that ownership. It just is. Powerful.”

To see the entire Report, visit https://www.cuanswers.com/about/report-to-owners/.

I Wish I Thought of This Tag Line

“When we lose small, we lose big”

This phrase is not about the continual decline of smaller credit unions via merger and the lack of new charters.

Rather it is the advertising lead for Goldman Sachs 10,000 Small Businesses initiative. This is an investment to help entrepreneurs create jobs and economic opportunity by providing greater access to education, capital and business support services. The firm states more than 9,700 business owners have graduated from the program across all 50 states in the US, Puerto Rico and Washington, D.C.

A Simple Cooperative Counterpart

Is it possible for the cooperative system to emulate these “small,” bank-supported start up efforts by repurposing charters under new leadership when incumbents give up? Why not identify groups in the community willing to bring fresh passion and ideas to the existing charter framework?

Despite the pandemic, new business startups are booming. On the other hand, 200-250 smaller, decades-old credit unions close each year. There was only one new charter issued in 2020. The NCUA approval process takes years.

One “big” loss is that credit union entrepreneurs are unable to be partners with local business enterprises pursuing the American dream. More consequential, without the energy and innovation from startups, the ultimate BIG loss could be the ending of the unique cooperative financial system.

Credit Unions: Two Members Debate Cooperative Democracy

Freedom and democracy. Most believe these two concepts are inseparable. How could any society be considered free if the people do not have a real say in how they are ruled?

Government operationalizes these two ideas. There are multiple theories (conservative, liberal, libertarian, et al) and personal views on government’s role and authority.

Combined these foundational ideas are both powerful and fragile. However, current and historical events demonstrate the need for “eternal vigilance.”

The ritual of inauguration, the peaceful transfer of power and leadership changes, is the outward sign of the democratic covenant between citizens and their government.

Credit unions were conceived on these two foundations. Freedom means the opportunity to control one’s resources in community, to enhance economic opportunity. Especially in a market economy dominated by large private firms pursuing their financial self-interest, not the consumers.

Democracy is how this collaborative alternative to private wealth creation is to be governed. One person, one vote, with leaders chosen from and by the members.

A Credit Union Crossroad?

As many countries have shown, economic progress can occur without democratic government. China is a current example. Democracy is not just a set of bylaws or regulations that automatically self-execute. It is a process administered by those in authority. That oversight can be faithful to the concepts or manipulated while all the time professing democratic values.

America’s credit union system is at crossroads in democratic governance. For annual elections are frequently nothing more than exercises in self-selection by incumbent boards. Voting in mergers is a process manipulated to discourage informed choice let alone active member engagement.

The result is that many large credit union boards govern like self-perpetuating “trustees” as for a hospital, university or other not-or-profit organization. Access to leadership positions is tightly controlled. Institutional and individual success supersede the role of member-owners. Accountability is simply executing member transactions safely.

Recently two long standing credit union members exchanged emails on this erosion of cooperative democracy. One’s concern was the absence of board elections; the second member had just experienced the unanticipated downsides of a merger.

Two Members’ Thoughts on the State of Credit Union Democracy

I was copied on their exchanges which are edited for length.

One Member’s Critique of Board Elections

If the credit union directors were challenged, each would probably explain that anyone can serve on the Board of Directors and that is true. A nomination requires a petition signed by 500 credit union members; a completed application packet (with materials only available on request for a short period of time) and the approval by a “Nominating Committee” whose names cannot be disclosed.

The details and application packet are only posted once a year in January and are removed from the credit union’s website in May. The materials must be submitted to the nominating committee 90 days prior to the annual election which is scheduled in May. This gives the applicant just weeks to prepare for a nomination. The nominating committee then determines the names to put “in nomination”. For years only one name per open seat has been recommended avoiding any elections. From 2004 through 2018 there were only three open seats.

By creating a path riddled with obstacles with no term limits, the Board of Directors has created a culture of exclusion that ensures these same seven individuals will be able to continue sitting as directors for their lifetime while controlling the process for those who may serve alongside them.

A Member’s Cites Athenian Democracy

Last night right after reading your critiques (of credit union board elections), something dawned on me. Would you be familiar with ancient Athenian democracy? I want to test an idea with you.

I was “browsing” – in an old store, in an old town, when I came across a volume entitled The Constitution of the Athenians, written by Aristotle. I remember, vaguely, learning about the ancient world in history class in high school.

I stood there flipping through pages when I came to the chapter on Aristotle’s constitution. I was immediately stunned by the most unexpected aspect of the Athenian democracy. Get this: They did not elect their leaders; they were selected by lot!

Yes, literally drawn by lot. I’m talking about shards of old pottery that were used as tokens to be drawn at random to select the 9 archons. Naturally, my first response was one of utter disbelief that just anybody could be the material of solid leadership for a nation, much less the one system of governance touted as the prototype for modern democracy.

I finally caught onto the idea that it might be safe to regard most people as competent enough to lead. Especially if a lot of other eyes are watching them in a transparent process.

Curiosity drove me to devour the rest of that constitution. Checks and balances were built into that system to prevent the sort of mayhem and corruption one might conclude would be the possible outcome of a system of leadership drawn by lot.

Archons only served certain weeks of certain months of the year, at randomized times. At the end of their one-year term of service to Athens, they were subjected to an audit. Every dime had to be accounted for, and every decision made had to be justified.

Here’s the bottom line: In some 2 centuries that Aristotle discusses he notes that there were only 2 very brief periods of corruption, largely due to these systems of controls which he lays out in exquisite detail.

So, I have to wonder… if such a system could work for centuries, where democracy was first tried out on live subjects, then could it work for a credit union.

How would a credit union apply these procedures?

An outside auditor would draw however many names to fill the board, all performed in front of a live membership audience (even by Zoom if necessary).

We would select persons for the board to serve for certain periods, but no one would know exactly who, when, or in what order. This would prevent anyone from taking deleterious actions, since other board member (also randomly picked) would be relieving them next, whose duty would be to check that everything was in order upon their taking their turn at the helm.

Each board member would be accountable, individually, by way of a public audit of their activities during their staggered and unpredictable periods of duty.

Any dealings with other organizations — such as potential mergers, e.g. — would be open to question and discussion at that time.

The key is that members of the CU could only serve ONCE, and only for a limited period of service.

Term limits would prevent endless manipulation and personal betterment on the backs of members of the coop. The end of endless terms. The end of non-diversity, since board members will be chosen at random from applicants desiring to serve. The end of unilateral and secretive decision-making without membership input. Those self-serving possibilities stand little chance this way.

I believe this model has a chance of working. At the very least, any alternative system to the current approach would be a welcome improvement.

PS As an interesting aside, recent research into Koine Greek seems to indicate that the word democracy does not mean “the people rule” as is often purported. It more accurately appears to mean “the power of the common people” — and note that the word common is essential here. The word democracy intends all-inclusiveness, and I strongly feel that this point is perfectly relevant to cooperative systems of governance.

The First Member Responds

The “bottom line” is simple…the credit union is not bound by anything, so the directors operate their credit union like the Politburo. The NCUA provides broad guidelines for elections that would provide each of the over 1 million members an opportunity to serve in a board position. Instead, the credit union has chosen an election path that makes it impossible for anyone, other than the incumbents to serve. Consequently, you have a board made up of individuals who have served for over 20 years and will never give up their seats. The most recent vacancies were a result of death and illness.

The Proponent of Cooperative “Athenian” Democratic Reform

You are right; perhaps the board is not required to perform its duties in any particular fashion. But what sort of model would one use to ensure that members will never again be abused the way they have been historically? My ideas are an attempt at implementing democracy, albeit in a manner unlike what passes for democracy in the world today.

Judging from the lukewarm response, I’ll take that as a cue to push this no further.

The First Member

My lukewarm responses are based on the fact that fighting this is an uphill battle. Personally, I will continue to push. The best way to ensure that members will never again be abused by a group of leaders who value their power over diversity and democracy. That’s my objective.

My Takeaway: Term Limits

By law NCUA board members are limited to one term, a maximum of six years. Or until a successor is appointed. All three board terms are staggered.

Is NCUA’s Board structure an application of Athenian democratic governance described above? Should term limits apply to credit union boards? What is the role of “common people” in a cooperative organization?

FOM: a Regulatory Vestigial Organ

NCUA and a few state regulators still profess fidelity to the field of membership concept. Credit union competitors love the idea as a political attack weapon.

The first credit unions were begun with open, community service areas. Only later were specific FOM requirements introduced by law.

Now the last bastion of this formerly sacred concept, is getting a new charter. NCUA’s process is one of attrition.  Few applicants survive the regulatory obstacle course; most give up.

Bureaucratic instincts die hard. The impulse to stretch the process interminably is because it is somebody’s lunch pail .

I was reminded of this anachronistic obsession by a CEO’s reaction to FOM commentaries on NCUA’s recent “updates.”

“Depending on your point of view, these are trade groups guarding the gates like an old dog tied to a tree; or the NCUA winning a shadow boxing match with banker’s lobbies swinging at ancient windmills. It’s a time of political theater where trades and regulators prop up their dues.”

Everyone Is Welcome

A second reminder was this website:

The Largest Credit Unions Anyone Can Join https://www.depositaccounts.com/credit-unions/anyone-can-join/

This website, Deposit Accounts–“a different kind of bank account comparison site”–is apparently supported by Lending Tree. Under each credit union name is the link “how you qualify” describing how anyone can join.

The list ranges in size from Cadets FCU in Buffalo, NY at $14.8 million to PenFed in VA at $26 billion. Some are federal and some state charters. All have a member option open to anyone.

The purpose of the listing is described as follows:

Overview of the All-Access Credit Union List

The list is now updated daily. By default, the list is ordered based on asset size. Click the column title “Credit Unions” to order alphabetically or “Branches” to order based on the number of branches.

Click on the name of the credit union to visit our hub page for that credit union. The hub page lists all of my blog posts for that credit union. It also includes the credit union rate tables, financial health, branch locations and readers’ remarks.

A Reminder

Before deregulation credit unions would frequently use the phrase, “my members,” to assert, and no one else’s. Today members have choices even among credit unions. These listings remind us that credit unions succeed not simply by whom they serve, but how they serve their member-owners.

From the Field: The Source for AI?

A CEO shared some new data runs his team had prepared. The analysis was trying to identify potential auto loan prospects. His response:

“Love to have some thinkers give me 20 more routines for the programmers to crunch on. Where are the people who are thinking like AI?”

Hamilton: The Credit Union Connection

The family of Lin Manuel Miranda, the creator of the historical musical Hamilton, is from Puerto Rico.

His extended family still lives there. As a child he would visit Vega Alta, his family home in the summer.

One of the local economic institutions is VegaCoop, a credit union. (https://vegapccoop.com/auth/login?lang=en_US)

The credit union was founded by Ignacio Miranda, the great grandfather of Lin Miranda.

It is one aspect of credit unions’ presence in Puerto Rico. Over 100 of these locally chartered cooperatives are regulated and overseen by COSSEC.

There are 7 NCUA chartered credit unions* with headquarters in Puerto Rico providing banking services from 33 branch office locations as of January 2021. These federal credit unions have a total of 90,209 members with over $935 million assets. Finally, there are branches of US based credit unions such as Baxter (BCU) with full operations.

The Miranda Influence

The story of Vega Alta, Miranda’s family, and the economic problems in Puerto Rica are summarized in this NBC news story from 2016. It includes a clip of a school children performing one of the songs from the musical.

Hurricane Maria devastated the U.S. territory on Sept. 20, 2017, ultimately killing at least 2,975 people; it was the deadliest U.S.-based natural disaster in 100 years.

Over 200,000 Puerto Ricans left for the mainland, many temporarily and some permanently. Island residents had no full power for almost a year. The health system was overwhelmed, and an understaffed forensics sciences department couldn’t keep up with the bodies piling up. Not much progress has been made since.

Puerto Rico’s Economic Plight

Lin-Manuel began advocating for Island relief in the form of a restructuring of Puerto Rico’s $70 billion debt in 2016.

“I write plays. I am an artist. I figure out what words rhyme. I never asked for this role,” said Lin-Manuel, “I don’t know what else to do when your people are suffering and you have a giant light on you. All you want to do is just take the light and reflect it on them,” as he described his strong ties to the Island.

The Credit Union Opportunity

The Island’s circumstances have only worsened since these financial and natural disasters. The question: is there a way for credit unions or leagues to partner with the Puerto Rico credit union system and strengthen the cooperative self-help economic model? And invite Lin Manuel Miranda’s participation?


*Seven Puerto Rico FCU’s at September 30, 2020

Rank State Name assets
1 PR Caribe $483,643,621
2 PR VAPR $233,042,199
3 PR Puerto Rico $166,796,050
4 PR Universal Coop $27,950,406
5 PR Borinquen Community $16,249,885
6 PR Glamour $4,245,800
7 PR Puerto Rico Employee Groups $3,343,064
Totals for 7 institutions $935,271,025