Member-owner governance is primarily exercised through the annual election of directors to the Board. One person, one vote.
The problem is this “democracy” by members is too infrequently practiced to have impact. In most credit unions there is no election contest-just approval by acclamation.
Below is an excerpt from Frontwave Credit Union’s monthly newsletter about this year’s board election. Six nominees for three seats. A month long voting period. Votes can be cast by ballot, on line or in person at any of the 13 branches in a special ten-day span.
The candidates’ biographies and statements of interest are linked to the voting information.
The process is transparent, widely communicated, and easy for members to exercise over the month long voting period.
A Center of Public Attention
What makes this very transparent contest even more remarkable is that Frontwave has been at the center of attacks for its courtesy pay (overdraft fees).
It began with a March 2024 KPBS investigative report: Frontwave Creit Union reaps millions in fees when young marines run out of money. Senator Elizabeth Warren with senators on both sides continued the attacks.
Prior to these assaults, Frontwave was the object of a class action suit several years earlier for its overdraft practices. The suit was settled in October 2024.
During this public criticism of Frontwave, the CEO Bill Birnie engaged in frequent conversations with the media and critics. He responded to the issues with why the credit union believed this was an appropriate practice.
This year’s election is taking place against this background of debate over fees. The members have their say. Incumbent directors and new nominees can put their views to the owners. That is what member governance means.
Just as important, when the credit union seeks member participation for supporting special needs or contacting a political representative, the leadership has established the routine of member participation.
Voting is the ultimate test of democracy. It creates an environment of trust and accountability. It is an essential part of cooperative design, but much underutilized and unappreciated.
As the father of an active duty Marine, I’m concerned with Front Wave’s business practices in assessing fees to these young people as they go through the process of becoming Marines. I hope the board is proactive in reviewing the sources of FW’s income stream.
When a young Marine runs out of money, FW makes a profit. FW relies on overdraft fees as a key source of income. In 2022, FW collected about $8 million in overdraft penalties, according to data collected by the state. That represented nearly 12% of its overall revenue — about triple the average among all state-chartered credit unions. A review of FW financial records shows it easily could have lost money in recent years without income from overdraft fees. The fee income stream is a TIDAL WAVE. Never shocked. Just disappointed.