Credit Unions and Democratic Practice

Credit unions are strong proponents of democratic values.   Until they have to practice them.

I was reminded of this reluctance in a press story of a recent merger approval.  When asked about the vote tally, the credit union did not answer how many of its 9,870 members supported their charter cancellation:

Members of the $137 million Embark Federal Credit Union in Great Falls, Mont., voted to approve a merger with the $1.7 billion Horizon Credit Union, the Spokane Valley, Wash.-based financial cooperative said in a prepared statement Tuesday.

Horizon did not disclose the final vote tally. The credit union did not respond by deadline on Tuesday afternoon to CU Times‘ request for the member vote count.

Reporting the vote outcome, but not the actual numbers, suggests the credit union does not want the totals known.  The credit union provides the veneer of democracy but not the facts of how many member-owners actually participated in this required step to give up their charter.

To paraphrase a term from writer Jared Brock, credit unions have become “cooperative oligarchies.” The word comes from the Greek oligarkhía, meaning  “rule by the few.”

Merriam-Webster ‘s definition:  “a government in which a small group exercises control especially for corrupt and selfish purposes.”

Democracy has rarely been tried by capitalists.  Can credit unions really go against the incessant drive for corporate dominance and consolidation of power sought by firms in “free” market economies?

Many CEO’s and credit union boards don’t want democratic governance. They want silent customers who will passively accept the  leaders who achieved their roles years, or sometimes decades, earlier.

What they ignore is that members are the political constituency to whom  fidelity is owed. Boards and CEO’s are nothing without members.  Members deposit the funds, borrow for loans, pay the fees and generate transactions that keep the credit union revenue flowing.

Member-owners are the reason credit unions exist.
Members keep the lights on.
Members create 100% of the wealth for their cooperative.

One would think it required practice to tell members the vote tally in this management initiated effort to give up their independent credit union charter.  Especially as the CEO was awarded a $100,000 bonus and continued employment at an increased salary with the continuing credit union.

Horizon Credit Union assumes Embarks FCU’s member capital of $14 million, (approximately $1,500 per member).   The members get rhetorical promises about the future.

Is this the democratic model that will sustain members’ belief in credit unions?


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