“Climbing Ladders to Nowhere”

A reader sent the following after reading Ed Callahan’s last interview as Chairman of NCUA. In that conversation he focused on the relationships between the agency and credit unions.

Hey Chip – I am just reading this.  My husband and I were camping in the wilds of Utah with very sketchy service.  In the “old days” it truly was a partnership with the Agency. 

Being a CEO my entire career, I was always highly engaged with the Examiners when they were in my credit union.  It was always a very positive relationship where we learned from each other.  Unfortunately, it devolved over the years into an “I GOTCHA” encounter. . .

Losing Our Heart and Soul

Greetings Chip!  I continue to read your blog . . .  After the latest news about more Illinois credit unions merging, I finally felt compelled to write down my thoughts on this issue.

I will publish his thoughts in the future.  These are his opening paragraphs:

Credit union mergers have been happening for decades.  Some are forced by the regulators, some are voluntary, and there are a multitude of legitimate reasons.  But as I celebrate 32 years in this industry, it is still sad to see the number of credit unions that disappear every single year, and to see the pace of mergers pick up every year.  When we lose our small credit unions, we are losing the heart and soul of our movement that makes credit unions special.  

I know that no matter the size, credit unions are still member-owned, not-for-profit financial institutions.  But it is difficult to argue with the fact that as we grow larger, whether organically or through mergers, that members have less of a voice. . .  And I fear that we are becoming just another industry, instead of a movement.

No Longer a Movement?

There is no doubt credit unions are becoming more and more “mainstream.”  They tout their promotions with professional sports franchises, stadium naming rights and multiple business partnerships.

Growth is the dominant success indicator.  Credit union lobbyists argue in tandem with banks against the consumer protection initiatives of the CFP.  NCUA’s Chair cites the FDIC as a financial model for the NCUSIF and positions his supervisory initiatives  because that is how banking regulators act.

In becoming an important component in America’s financial sector, have credit unions also embraced the status quo?  Are they more concerned with protecting their achievements than addressing the economic inequities members face in the economy?

An observer might give examples on both sides of the “movement” issue.  However, I believe credit unions are not alone in their constant temptation to be seen as fully engaged participants in the so-called “free market.”

“The Only Game in Town”

Franciscan scholar Richard Rohr describes the ever-present allure of America’s economic system this way:

Most of us have grown up with a capitalist worldview which makes a virtue and goal out of accumulation, consumption, and collecting. It has taught us to assume, quite falsely, that more is better.

It’s hard for us to recognize this unsustainable and unhappy trap because it’s the only game in town. When parents perform multiple duties all day and into the night, that’s the story line their children surely absorb. “I produce therefore I am” and “I consume therefore I am” might be today’s answers to Descartes’ “I think therefore I am.” . . .

The course we are on assures us of a predictable future of strained individualism, environmental destruction, severe competition as resources dwindle for a growing population, and perpetual war. Our culture ingrains in us the belief that there isn’t enough to go around, which determines most of our politics and spending. . .

F. Schumacher said years ago, “Small is beautiful,” and many other wise people have come to know that less stuff invariably leaves room for more soul. In fact, possessions and soul seem to operate in inverse proportion to one another. Only through simplicity can we find deep contentment instead of perpetually striving and living unsatisfied. . .

St. Francis knew that climbing ladders to nowhere would never make us happy nor create peace and justice on this earth. Too many have to stay at the bottom of the ladder so some can be at the top. . .


A Reaction to Patelco’s Annual Meeting

One permanent change from Covid’s impact is that organizations now live in a hybrid world.   There is the continuing day to day in person contacts and multiple virtual options for meetings and corporate events.

For example, most churches no matter the size, continue to provide both in-person and simultaneous zoom or YouTube broadcasts.  Restaurants continue to promote takeout options in tandem with full dine in re-openings.

In some instances I have found even local persons reluctant to meet in person, preferring the remoteness of a zoom conversation.

The Digital Hybrid World

The virtual interactions are now a routine part of high school curriculum options.  I recently received a link to the InfoFlow morning news show from Montgomery County’s Blair High School.   This virtual broadcast replaces the morning home room announcement over the PA system.

The episode shows a news desk with two student anchors presenting daily updates.  About two minutes in there is an external report on a local historical project recorded by a school reporter in which I participate.  The full broadcast can be viewed here.

The next generation is living and practicing this hybrid reality as a normal part of their activities.

The Credit Union Application

This past Friday I virtually “attended”  Patelco’s Annual Meeting.  The video was primarily the Chairman and CEO talking at desks with senior staff members available.

The format was fully scripted, as are most annual meetings.  The minutes and numerous reports were referred to as being available on the website.  The CEO Erin Mendez gave a short update including graphs showing Patelco’s key trends versus its California peers and the top 30 credit unions nationally.   They showed Patelco’s  10.07% net worth and ROA of .77% for 2023, significantly stronger than the two peer groups.

The directors ”election” was a formality since there were just three candidates and three openings .

The most interesting point was the Q&A at the end of the prepared agenda.   There were perhaps ten questions posted in the chat that were answered by the CEO, staff and even the chair.  These included CEO and board succession planning, priorities for 2024, questions on investments etc.

This was the one chance for members to interact, even though under the control of the virtual operator.

My overall impression of the meeting was a feeling of “formal awkwardness.”  Opening comments were read.  There were motions to move and accept minutes and reports, but no visuals of the members doing so, just head shots of officials leading the meeting.

Patelco now has over 500,000 member-owners.  Several decades ago, the credit union made an attempt to connect with members by holding 50 “town hall” meetings, or one a week, at branch and other locations in their market area.   These conversations with members were led by senior staff. In at least once case the meeting was recorded on video.  The goal was to update members and to listen to their  issues or needs.   But most importantly, to be seen and be available.

Such public interactions take practice.   Once a year formal meetings with Robert’s Rules of Order are not a substitute for ongoing, open conversations with owners.

Such contacts are  the grassroots of democratic governance.   Leaders have a chance to demonstrate their skills and accountability; and most critically to earn members’ confidence for the entire leadership team.

An additional start to develop this competence might be quarterly hybrid town halls with the latest business updates and outlooks.   It is standard operating procedure for public and even private companies.  Just follow any of the quarterly reports being presented daily in this “earnings season.”

Credit unions have an even more compelling reasons for engaging in open member dialogues.  It is not about supporting the stock price or analysts’ ratings; it is a much simpler reality: “They own us.”



A Mother Supports Her Son in War

A letter sent to Music Mission Kiev (MMK) by a grateful Mother, Olga Alekseeva.

Thank you for your attention to my son Ivan, it is very meaningful and valuable to me. Ivan has a firm and clear civic position. Back in 2019-2021, he took my father to the shooting range organized by his fellow party members, and he took me to first aid courses. I was pleased with his perseverance, because it is better when a young guy is engaged in something socially useful than sitting in computer games. 

On February 24, 2022, on the third attempt, he got into the military commissariat – he was refused because he had no combat experience, poor eyesight (-5), and was not even on the military record.

Vanya was assigned to territorial defense. The first two months of the war in Kyiv were terrible – a curfew, shots were fired in the streets, rockets flew in Kyiv… while Vanya patrolled the city at a checkpoint. They lived in the gym on sports mats and sleeping bags – with whatever they had. 

In April 2022, they were transferred to the Chernobyl zone to dig dugouts and fortifications. They lived in abandoned houses. My friend, who has been living in America for more than 30 years, sent a sleeping bag and a thermal blanket. Vanya said that he is now so warm that he gave up the warm place by the stove to his friend.

Not long ago, Vanya wrote that his glasses broke. It is impossible to repair or buy new glasses in the forest. I mentioned this in Volodya’s office (MMK bookkeeper), and I was offered assistance for Ivan and his visually impaired colleagues. In response, MMK ordered glasses and lenses for 4 soldiers, one of whom was a chaplain. 

In April 2023, Ivan fell ill with Covid. I am grateful to God, the doctor was there and sent him to an infectious disease hospital, this was the next wave of the epidemic for soldiers. The military unit is a large gathering of people, leading to a very high chance of getting infected. I asked Serhiy if MMK could buy the medicine needed for viral infections for Ivan’s unit, because the small town they were stationed in, cannot cope with so many patients. Thank God, with the permission of the mission, we provided the military unit with the necessary medicines. 

In the past I was annoyed that Ivan spent a lot of time playing computer games, but now these skills have allowed him to control a drone. I am very proud of my son, but I am also worried for him. We had not seen each other in five months. What happiness when he stopped by home for two days recently, on the way for more training. Currently, he is studying for two weeks. Thank God I know he will be safe during this training time. 

I am very grateful to the MMK for the help it provides to our soldiers, wounded, affected refugees, for the monthly medicines for the soldiers in the hospital where I give massages, for the clothes that we provided two different times for the seriously wounded in the hospitals.

May the Lord bless everyone who helps and prays for the victory of Ukraine.



On Economic Forecasting and Future Predictions

Today’s economic headline:  U.S. economy grew at 1.6% annualized rate in the first quarter.

What does the number mean?  Here is a cautionary note:

Economists, businesses and pundits spent last year predicting a recession that never happened. How could so many get it wrong?    

The bottom line:  Predictions about the economy are more about what’s going on in the present than what will happen in the future. (Axios)


Chairman Callahan’s Last Interview at NCUA

“It’s a partnership and it works”

Knowing our shared past helps us to understand the present and envision the future.  History provides our sense of community.

From the May 1985 NCUA News, Vol 2, No. 4:

From the recent interview on NCUA’s Video Network, Chairman Callahan praised the NCUA staff, saying, “It’s all working, the team is in place.   There is a sense of confidence in the Agency, and it has infected the credit union movement with confidence as well.”

The Chairman is quick to credit examiners and other Agency personnel for the successes during his term: “Most people at NCUA have a good sense of where the Agency is going and how they fit into the picture.  People at NCUA get the credit for what we’ve been able to accomplish because they brought us to the point we are now.” 

He believes three years of unprecedented growth in shares, loans, capital and membership attest to the positive effects of deregulation and to the success of credit union managers and directors when given the opportunity to make their own business decisions.

As important as deregulation is to Mr. Callahan, increasing the examiner ranks and getting Agency staff out in the field, closer to credit unions is just as important.  “Deregulation actually increased our supervisory responsibilities,” he said.  “We told credit union officials ‘You run our institutions, and we’ll be there to help.’  It’s a partnership, and it works.”

P.S.  See the reference above to NCUA’s Video Network.  This interview was the final edition, number XXI.  If anyone has this recording in their credit union collection, I would appreciate making a copy.


One Member at a Time

What does personal service really mean when a credit union has over 63,500 members?

Weokie Credit Union’s Mission Statement is:

Change lives  in our community, one person at a time, by being the best place our employees have ever worked and our members have ever banked.

A Nurturing Voice

The CEO, Jeff Carpenter, gave permission to demonstrate how this is done, one member at a time, in this story from his March 2024 report to his team:

“Marlene is an elderly member who has been the victim of several recent frauds. The team got together to determine what WEOKIE might do to help (and not upset the member or violate privacy concerns). We determined that WEOKIE should try to get Marlene to add one of her children to her account, to help monitor the activity.

“It was also decided  that Rhonda would make the call and Jeff S. would be there to assist in case things went sideways.  Jeff’s take on the call:

“Rhonda reached out to Marlene this morning while Melinda & I listened in the office. She did an EXCELLENT job speaking with Marlene and conveying WEOKIE’s concerns about her account activity and how we can best help her to  keep her accounts safe. 

“After several minutes and a lot of small talk to  gain Marlene’s trust, Rhonda was able to get her to agree to add her daughter added to the account to help with her finances.  When I say small talk, it was over 50 minutes of conversation!  It was like having a long discssion  with a grandparent. You just let the conversation take its own flow and slowly steer it back to the intended purpose. Rhonda did awesome in this aspect.  Her Nurturing Voice truly shined in this interaction. 

“Rhonda maintained ownership all the way through by following up with Jessica at Main to:  provide the details, including Marlene’s vulnerabilities to fraud; the estimated time when the two members might come in; a commitment to follow up when the meeting is set; a request to be notified to facilitate a warm hand-off; an explanation about the Risk department’s approval of the exceptions with a clear understanding of expectations of the member; and how our role impacts the member’s well being.

“This effort involved six employees and shows the role of teamwork, several of our monitoring tools, and our commitment to making this credit union the best place Marlene has ever banked!  

“Special thanks to Joseph for sharing this member story and how Rhonda, Diane, Jeff S, Melinda, and Victoria worked together to take great care of Marlene.”

The Takeaway

That’s every credit union’s potential secret power:  serving every member, one at a time.


Credit Union Mergers and the Myth of Free Markets

Two conclusions excerpted from a long article by Jared Brock Mega-Landlords Busted for Using AI Algorithms to Price-Fix the Rental Market, on April 10, 2024.

I believe his observations apply to aspects of the cooperative system especially mergers of sound credit unions* now being presented to member-owners.

First: The free market is a myth.  

“The idea that the world would somehow be better off if there were zero rules protecting the masses from predatory investors is not only deluded and insane, but it’s unfathomably dangerous. A rules-free-market is a black market where the worst actors win.

“Capitalism is all about incentives, and investors have twisted the economy to incentivize extraction and exploitation.

Second: The modern rules-free-market isn’t what the father of capitalism Adam Smith meant when he said “the free market.”

“He meant a market free from parasites.

*  See Credit Union Times article of April 15, 2024, Five Illinois Credit Unions Announce Proposed Plans to Merge


Two Important Data Trends & Saying Goodbye

I. The history of the  overnight Federal Funds rate from 1954 through 2022 is shown in the chart below.   The sixty-eight year average: 4.62%.  The latest update for March 2024: 5.33%.

Source:  Fred.stlouisfed.org/series/fedfunds

II. Interest payments on US Treasury debt surpasses a trillion dollars in 2023.  The total interest paid last year was $1,062 billion.

From the Visual Capitalist article: “The cost of paying for America’s national debt crossed the $1 trillion dollar mark in 2023, driven by high interest rates and a record $34 trillion mountain of debt. . . As debt payments continue to soar, the Congressional Budget Office (CBO) reported that debt servicing costs surpassed defense spending for the first time ever this year.

Questions: What do these two datapoints suggest about the future level of interest rates?
On February 15, 2024 the NCUSIF Investment committee bought a six year, three month $650 million bond yielding 4.26%.  Is NCUA repeating the same IRR mistakes that led to the Fund’s two plus years of current  under performance?

Learning to Say Goodbye

A final selection from He Gets Us campaign.  The use of stories to communicate values.

How Do Credit Unions Communicate Values?

Cooperatives are designed around specific organizational principles and values.  The phrase people helping people is the classic assertion of the credit union difference.  But how can this value distinction, if real, be communicated?

Many organizations face this challenge, especially, those committed to doing “good” in society. Take the example of showing love.

Everyone has a love in their life.   In many instances this is another person-spouse, friend or soulmate.  In other circumstances it might be a longtime pet.  Or a passion so intense that it animates everything a person does-a lifetime committed to living a specific truth.

Imagine Love

The word love is used in many circumstances and about many activities.

How can this concept be communicated in art?

He Gets Us created an AI animated video with the prompt “imagine love”.  The result is a series of impressionistic heart shaped valentine-like drawings overlapping the page.

The program’s users then added a series of prompts.  These directed that love be shown the way Jesus talked about it-to feed the hungry, help the sick etc.   The result is a compelling series of tableaus that show specific scenes any viewer would recognize.

This artificial translation communicates. Some drawings may even inspire.  In these visualizations, love becomes an act, not just a feeling.

This brief video’s AI interpretation vividly contrasts the difference between belief and action.

Is It Art?

Are these creations art?  Or merely automated serial productions? Do they have meaning?

If this exercise seems too artificial, then ask, how is it you show your love?  For that is the question presented.

The AI exercise illustrates the difference between what we say and what we do.

This is a challenge all face daily, especially when leading values-based organizations.

Leaders in families, in organizations, or in life’s many daily roles know the difference illustrated in the video. For credit unions that is when people helping people is more than a slogan. It becomes the animating spirit motivating interactions with members.





The Power of Story

The video series He Gets Us relies on multiple methods to communicate a vision of common humanity in an era of cultural turbulence.

It was funded by a group of Christian business leaders who were concerned about  the relevance of spiritual values in a time when even religious communities have become part of the current impulse to take sides on every topic.

The videos push against this social divisiveness.  Several were among the most watched ads from the last two Super Bowls, an effort that some felt was not the best use of funds.

They are intended to be a conversation starter. To build a bridge to a culture increasingly dubious about the role of spiritual values in contemporary life.

Unconditional Love in the Hardest Times

The group’s longer first-person, authentic life stories are memorable. This five-minute video is an example of a mother and her family’s unconditional love.   Most of us have had the good fortune to experience this relationship as either a child or as parents.  But perhaps not with the burdens this family encountered.

The video suggests our lives are not just a series of insulated, unrelated events. Human stories reveal deep truths which we may know only in  part. They sometimes “speak” to us outside our conscious awareness.

Life Is How We Affect Others

The mother’s story shows a life of purpose a goal for which many aspire.  She tells of learning the necessity of humility, “how to set aside everything we know to honor, respect and love another human being.”

In doing so, it suggests all are part of the great human cosmic enterprise. Life comes full circle for everyone.  This narrative expresses the belief that we live in a world grounded in shared meaning.


A Credit Union Cares

This is a credit union’s story of caring for a member whose life has come full circle.  You can read The Rest of the Story here.