The changes set in motion by Trump’s presidential transition are putting credit union’s public reputation to the fore. The administration’s executive appointments promise reviews of previous assumptions about many areas of public policy.
All interest groups are jockeying for influence to either protect the status quo or gain a new advantage.
Credit unions lobbyists and ICBA are already fighting over whether credit union’s federal tax exemption should be examined. The exemption is an important issue. But how is that topic framed for public understanding and the credit union story told?
Should the credit union legislative strategy be to defend the status quo or to propose an agenda to expand the singular mission of credit unions?
A Wonderful Life Story
During the holiday season the film It’s a Wonderful Life is replayed over and over. It captures the spirit of a community when asked to support their local thrift. As summarized in a Marketplace article, the movie’s setup is straight forward and familiar to anyone in 1947 who lived through the 1930’s depression era’s banking crises:
George and Mary Bailey are about to leave Bedford Falls for their honeymoon when the unthinkable happens. Their taxi driver points out an apparent “bank run” at the Bailey Bros. Building & Loan Association. Trouble is, the building and loan isn’t a bank. To keep it afloat, George has to convince his friends and neighbors to withdraw only what they need to get by — then pays them out of his own pocket. So much for that honeymoon.
The rest of this Marketplace article is a succinct history of the S&L industry, how it differed from banks, and its demise as a separate financial segment in the 1980’s.
The article then asks what institutions today are filling the role of the Bailey Bothers for their communities. I expected to find a credit union example or two in this follow on “encore.” Instead Marketplace host David Branchicco reprints a podcast interview introduced as follows:
While buildings and loans are all but gone nowadays, the concept of community-driven finance is not. In New York City, one such institution is Carver Federal Savings Bank, which is designated as a Community Development Financial Institution and a Minority Depository Institution by the federal government. The bank, formed in the 1940s by members of some of the city’s predominantly Black neighborhoods, is headquartered in Harlem and says it seeks to help develop traditionally underserved communities.
The interview with Carver Federal Savings Bank CEO Michael Pugh discusses his focus. He states 80 cents of every deposit dollar is reinvested in the community. Other points Pugh makes in the interview include:
I think the unique proposition for us is that because we are for-profit, but we have this mission component, it allows us to continue thinking on both sides of our brain, being mentally ambidextrous, if you will, and considering the fact of mission and margin in every decision that we make.
Because we’re hyperlocal, our colleagues live in the communities that we serve. We believe that those personal relationships and the access to us really helps to significantly reduce the risks.
Customers within our core market that choose to bank with us really understand the mission and what we’re trying to do. . .
Where are the Credit Union Examples?
This Marketplace interview positions this for-profit CDFI designated bank as today’s successor of the community spirited leadership portrayed in the Wonderful Life movie.
Yet there is nothing Carver FSB is doing that hundreds if not thousands of credit unions do as well or better. Yet that was not the example profiled.
Credit unions will define their public reputation or let others do it for them. Coops are in a moment when major credit unions advertise during national TV sporting events, rename stadiums with their brands and invest members’ capital to buy out bank shareholders. These business initiatives are helping propel the issue of whether credit union’s regulatory advantages should appear on Congress’ agenda.
It is not sufficient to just oppose and defend the status quo, letting opponents framie the topic. Rather the response must be a compelling message about the uniquely valuable contribution credit unions make for their members day in and out.
When credit unions present their public personas like most other financial providers, the mission component is omitted. Without this message, the member-owned model can be presented as just another consumer option.
It is the mission that warranted the tax exemption from day one. Isn’t that the reason to sustain the cooperative difference now?
Here is a long-30 minute example of the story credit unions should be telling. It is about economic warriors for their community, The Barber of Little Rock is a video by New Yorker magazine. This community CDFI lender received a credit union charter two years ago.
(https://www.youtube.com/watch?v=1amOPUn49aM&t=14s)
Or this example from credit unions.com. A Helping Hand for the Homeless.