While there are almost daily familiar rhetorical press releases announcing new merger intentions, actual causal motivations are rarely plainly stated.
Descriptions from other areas of economic activity provides some of the reasons for this ever increasing aspect of cooperative evolution.
CEO’s love unjust gain because money is their highest trust.
There’s nothing wrong with actively working (read: contributing actual value to others) and making a good living from it, but it’s wrong to turn a profit off the time, talent, effort, and creativity of others simply because you wield a capital advantage over them.
Where nothing is forbidden, nothing is required.
Executives are absolutely at a loss of what might happen if they stopped exploiting a gain off of others.
And the ultimate outcome for the member owners:
The chasm between credit union’s design and individual member benefit gets wider and wider.
Self interest has been around for thousands of years, Chip, so what’s new here under the sun?
Was your generation blameless in its stewardship of the industry?
Certainly not.
25 to 35 year CEO tenures with the last 5 to 8 being retired on the job, that’s a common case for the last 20 years, at least.
What has changed to get us here we are? It’s not self interest alone, that’s been persistent for too long.
I love your writing, thank you for doing it.
To Mike’s point, credit unions have been merging at a consistent rate of about 3% a year since the mid 1980s. CEO self-interest isn’t new.
I think the biggest issue with mergers is that there aren’t any “credit union idealists” helping credit unions with mergers. As a result, it has left a void for bad actors to fill and they have filled it. Mergers can, and often are, in the members’ best interest. The real problem is that they should always be in the members best interest. Too often they simply aren’t.
If your retirement plan is merging your credit union, then everyone has failed the members’ trust. You, the Board, the regulators, everyone.
Couldn’t have said it better, David. I hate seeing something along the lines of “the manager/CEO is retiring” as a reason for a merger. That’s a cop out. There’s plenty of good young talent that can, at worst, give it a shot…and at best, grow the credit union. There’s too many 30 year CEOs phoning it in and standing still while the world is moving around them. Boards need to know when it’s time to make a change, and do it before “Poor management” is the reason on the merger application.
As someone who spent years in public accounting auditing credit unions, I’ve seen this far too often. I’ve had well capitalized, successful Credit Union clients that the CEO would convince the board a merger was needed, and then actively seek out a merger partner that would give them the best retirement package. Or terrible CEO’s that ran a previously successful Credit Union in the ground due to their incompetency receive massive payouts as part of the merger agreement. Those funds should be distributed to the members instead.
As mentioned above, I believe a high percentage of acquisitions are in the best interest of the members. Too many board members are just there for the free dinners instead of acting in the best interest of the members, and preventing these occurrences.
100%