Tidings of Discomfort

To understand today’s blog, I would ask the reader to first look at this TV news report on credit unions from KPBS.  It is accompanied with a two-part written story by Scott Rodd, the station’s investigative report published on November 29, 2023.

The reporter has a good understanding of credit unions’ public image. His TV story opens with an interview from a  member who states “they (credit unions) are not supposed to be in this for making the big bucks.”


The link to part 2 of the second story is here.

Devasting Commentary

The story counters the long asserted public image of credit unions as serving the “little guy.”  The key data point is that credit unions are no different from banks when it comes to overdraft fees charged members,  even though cooperatives routinely present themselves as “better than banks.”
He quotes the CEO’s statement in  San Diego County Credit Union’s annual report that her goal is “putting people first and profits second.”   This would be an interesting ranking for any coop leader.

The reporter reinforces this contrast of public image versus organizational behavior by pointing out the CEO’s total compensation has “increased seven-fold over the last decade to nearly $12 million dollars according to the according to SDCCU’s latest financial statements.”

The articles provide examples from other area credit unions of the role of overdraft fees along with six figure CEO salaries. His thesis is that credit unions are not actually what they claim to be, “community-based alternatives to big commercial banks.”

Lessons from This Reporting

The two-part story was triggered by the first disclosure of overdraft fees required by all state chartered financial institutions in California.

By focusing on this newly disclosed datapoint, the writer suggests that credit union rhetoric and practice do not align because “these fees are typically paid by “the most vulnerable” customers.”

Several observations.  Compared with banks, credit unions are not as transparent in operational disclosures.  Member-owners have significantly less public information than do bank owners. This is not just about OD fees but many  other areas of operations including executive compensation.  Only state charters, not federal credit unions, must file a IRS 990 which requires compensation data be disclosed.

Lack of transparency prevents members from having critical data about their credit union’s performance, in both ordinary and special circumstances such as merger or buying banks.   Regular public information is also the best antidote to limit self-serving behavior.

Credit union leaders work in a capitalist economy.  Often it is difficult for those in coop leadership roles to overcome the residual lures of capitalism.  It is easier to adopt the priorities and practices of for-profit competitors than create the innovative options member-ownership offers.

The result of this investigative reporter’s story is “brand devaluation.”   It presents credit union as no different from the alternatives cooperatives were meant to counter.  It is a loss of real  value  in the both the public and political market place.

Talking to the Press

Repeatedly throughout his two part series, the reporter tells of his attempts to interview the leaders of the credit unions he is covering.  These efforts for comment include the California Credit Union League.

By not participating, credit unions reinforce the idea that they do not have an explanation or response to the writer’s point of view.

One leader is an exception: Bill Birnie, CEO of Frontwave. He goes on camera to talk about the credit union’s courtesy pay product. He discusses his current salary openly with the reporter.

He apparently was the only credit union person willing to engage on this sensitive topic.  The story was more than just OD fees and the members this affects. It goes personal by contrasting this practice with the compensation of those implementing the fees.

Leadership is more than trumpeting success. It  also requires a willingness to address criticism and possibly poor judgments. This is especially so when done in public where the critic may have the last word or “already has the story written.”

Leadership when confronted with alternative points requires character, a willingness to listen, and the courage to sit down with one’s questioners.

In this case, apparently only one person  was willing to stand up and be responsible.  I don’t think it was an accident that it was Bill, who came to credit union leadership later in life.  Here is a short synopsis of his career before coops:

Bill is a 25 year veteran of the US Marine Corps, retiring in 1997 at the rank of Sergeant Major with combat service in Operations Desert Storm in Kuwait and United Shield in Somalia.

Bill is an example of what it means when “we thank someone for their service” and what it brings to their subsequent civilian roles.

A Seasonal Song in a Time of Conflict

One of the most recognized Christmas songs is I Heard the Bells on Christmas Day.

On Christmas day, 1863, Henry Wadsworth Longfellow—a 57-year-old widowed father of six children, the oldest of which had been nearly paralyzed as his country fought a war against itself—wrote a poem seeking to capture the dynamic and dissonance in his own heart and the world he observes around him.

The words go from despair (There is no peace on earth,” I said;”For hate is strong, And mocks the song”) to hope:

Then pealed the bells more loud and deep:

“God is not dead, nor doth He sleep;

 The Wrong shall fail,

 The Right prevail,

With peace on earth, good-will to men.”

Here is Bing Crosby’s recording.



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