We live in an era of deep public distrust and overt, transparent corruption-by both public and private organizations and their leaders.
The public has increasingly learned to accept publicly announced wrong doings and self-dealings. The result is passive acceptance. The logic is these actions can’t really be corrupt because disclosure would result in accountability or at least push back bythose whose duty it is to oversee.
It’s Lonely with a Public Conscience
As these events multiply they become especially hard to oppose openly. Particularly when those in positions of responsibility, public duty and trust, take no action; or worse bless these overt acts of deceit and self-enrichment.
Taking a personal stand is very difficult when we can be accused of just increasing public division with our concerns, opposition or actions. It is often a lonely stance, takes courage and everyone has a life to get on with. Why confront organizations or individuals whose conduct is indefensible on any reasonable basis of fact or judgment?
But still some do question, oppose and take a stand.
Two Communications in this Era of Open Corruption
Yesterday I received an email from a “concerned citizen” I do not know. The person had just received a Notice of Merger. I will address the pro forma merger notice and disclosures in another post.
This is what the person wrote of his general concerns:
I am writing as a concerned citizen regarding the proposed merger of . . . This transaction warrants public scrutiny due to serious questions about executive accountability, board oversight, and whether members’ interests are being prioritized.
After presenting the details in the Notice that troubled, the writer states:
I believe the following questions warrant independent investigation:
- What decisions over the past several years led this Federal Credit Union to this position?
- Did the Board provide adequate oversight of executive leadership?
- How were the executive retention payments negotiated and approved?
- Were alternative options considered before recommending a merger?
- How does the Board justify these compensation arrangements to the member-owners?
The writer closes with this sentence: I believe these circumstances raise legitimate questions about governance, accountability, and fiduciary responsibility that merit independent reporting before members vote on the proposed merger.
In a calm, thoughtful and factual analysis (not included) this common citizen is saying the system is broken. Members are given no common sense understanding or factual basis to decide on this merger to end their charter and turn over total control to a distant organization
The SAFE-BECU Announcement
The second communication was BECU-SAFE’s joint public announcement of their proposed merger “approval’: The National Credit Union Administration, the Washington State Department of Financial Institutions and the California Department of Financial Protection and Innovation have approved the proposed transaction.
Those who follow the multiple posts and public comments on this event at SECU-Just Asking know there has not been a single objective fact or specific member benefit presented or documented, Instead only vague future promies are used to justify the transfer of this 85 -year, $4.5 billion credit union franchise to the total control of a third party organization with no local standing or organizational commitment.
This is a public robbery, One orchestrated by those charged with the duties of care and loyalty and then “approved” by those appointed to protect the public member-owner interest-the state and federal regulators.
This combined private and public leadership abdication is justified by this sentence: The final step is approval by SAFE’s membership, with voting information expected to be distributed in the coming weeks.
Except under California law, a merger requires the approval of the majority of all members, in this case over 245,000 owners. That outcome would never happen. Both credit unions know this. Therefore they will have negotiated an “understanding” that instead of this specific approval standard, the CDFI will be asked to waive this requirement. SAFE will request CDFI accept the outcome regardless of how many members vote asserting that the majority of those voting approved the merger.
The reality is that 98% of the vote is by ballot. In that Member Notice mailing the package of information will contain pro-merger marketing generalities previously issued, These PR claims will be vacuous in substance and facts. No contrary opinions provided, nor the formal legal agreements between the two boards.
What To Do?
The deep stench of overt corruption and the failure of public and private accountabilibty hangs over credit union land. We are living in a time when anything goes. These self-dealings and outright takings of generations of members’ accumulated wealth is a decade long effort. The stakes are just getting larger. California will be the next happy hunting ground for bigger and bigger deals.
Citizens are now seeing daily instances of bad behavior, openly proclaimed, overtly defended and without any norms or options as a check and balance. These “concerned citizens” are aware, but where do they turn for an “investigation. “
No Guardrails Exist
One of the most disappointing failures is those in positions of authority to even acknowledge the facts of these mutually privately organized robberies of members’ accumulated wealth and future direction. Here is just one of many analyses posted on SECU Just Asking that shows a side by side current financial comparison in which BECU shows lower performance than SAFE on every vital measure.
These predatory plunderings of the credit union system seem to have free rein. Billions of member assets get transferred to outsiders’ control with no concrete owner benefit or return-except to the dealmakers. The rule of law, the lack of regulatory oversight and missing director accountability demonstrate the absence of any formal or informal.constraints.
The consequences of this system-wide corruption can be ignored until a tomorrow that never seems to come. Then one day tomorrow comes. Someone decides not to be silent, speaks up and begins truth telling.
It could be a lawyer who still believes in the ethical norms of the profession versus the political and commercial benefits of going along with public wrong-doing. It could be a director rising above the expected uniformity of the self-selected board culture in which the person belongs.
Or maybe it takes a Senator to ask publicly why the whole member owned cooperative model has become a cesspool of deals that sell out members’ past success and future direction.
For it is not institutions that will save our rights, liberties and properties; rather, it is the individuals within those institutions who decide to stand up for the right and the rights of members. Or perhaps the members en masse take up their pencils or pitchforks to say we want to take back our credit union.