Freedom is not a state; it is an act. It is not some enchanted garden perched high on a distant plateau where we can finally sit down and rest. Freedom is the continuous action we all must take, and each generation must do its part to create an even more fair, more just society.
—John Lewis, Across That Bridge
Honoring Those Who Took Action
Citizens marching in Bunker Hill, Massachusetts on Independence Day 2025
Remembering the Minute Men’s Call to Action
The 4th of July, 2025 Kyiv Ukraine
People take shelter overnight in an underground metro station during Russian missile strikes.
An American Who Answered Freedom’s call in Ukraine
A portrait of fallen U.S. volunteer fighters and flags among Ukrainian ones at a makeshift memorial to Ukrainian servicemen and international volunteers killed in action on Independence Square in central Kyiv on July 2, 2025.
From the Kyiv Independent July 3, 2025: As Russia ramps up missile attacks, US halts promised air defense shipments to Ukraine. Kremlin welcomes reported pause in US arms shipments to Ukraine, says it brings war’s end closer.
An Anthem Sung Around the World Honoring Today’s Independence Fighters
On this 4th of July, all freedom loving people will stand at the national anthem for one country. Its people are on the front lines defending the right of all persons to determine their political destiny.
Listen as this anthem is sung from the New York Island to the Baltic Sea by the largest choir in the world.
Before our July 4th patriotic celebrations, I want to pesent a cautionary note about the insecurities of those who wield great power.
Russia’s invasion of Ukraine has many lessons for America. I want to suggest a moment of political parallel in Russia’s conduct with an evolving situation in America. In both cases a senior, powerful wealthy political insider decides to oppose the leader who gave him national standing.
Elon Musk is an intelligent, driven, iconoclastic person capable of great business innovations and disruptive technology accomplishments.
In 2024 he decided to go all in on the presidential race. He became the leading donar to Trump’s campaign, at an estimated amount of nearly $300 million. For this contribution and other practical benefits, Trump appointed Musk as the anointed but unconfirmed leader for DOGE’s radical government downsizing.
Musk’s team wielded a wrecking ball across all government. He gave political cover for the persons confirmed by the Senate who were theoretically in charge of individual agencies. They could now fire people and shut down programs at will. For example, the Agency for International Development’s (AID) closure and transfer of any minor leftover functions to the Rubio-led State Department
The Parting of Ways
Elon’s service certainly benefitted his several companies with government and foreign contracts. These include expanded agreements with Space X, Tesla and the Starlink satellite communication system, especially from new country signups during trade talks with the US.
But ultimately these two men’s egos could not fit in the same room. Elon departed in June to focus on his companies. But he couldn’t help but take some parting and subsequent shots at Trump’s policies. He was especially outspoken on deficit spending in the reconciliation bill which also ended much of the government’s support addressing climate change.
Musk then threaten to oppose members of Congress who supported Trump’s positions on critical legislation. At one point he mentioned the possibility of funding a new “center” party to support his preferred policies.
Musk used X and Trump Truth Social and his presidential pulpit to clash publicly. The exchanges grew so heated that Trump recently said his administration should “DOGE” Musk’s government contracts. And perhaps research his citizenship application to see if he can be “denationalized” of his US citizenship and then eligible for deportation.
The Wagner group had been a major ground force fighting to help Russia conquer Ukraine. However he gew increasingly frustrated with the Russian military leadership, openly criticized the Russian Defense Ministry for corruption and mishandling the war. He said the reasons Putin gave for invading were lies.[19]
On 23 June 2023, he launched a rebellion against the Russian military leadership. Wagner forces captured Rostov-on-Don and advanced hunderd of miles toward Moscow.[20] The rebellion was called off the following day, and the criminal charges against Prigozhin were dropped after he agreed to relocate his forces to Belarus.[21]
On 23 August 2023, exactly two months after the rebellion,[22] Prigozhin was killed along with nine other people when a business jet crashei jusr north of Moscow.[23]The Wall Street Journal cited sources within the US government as saying that the crash was likely caused by a bomb on board (Source: Wikipedia in Italics)
Comparable Political Events?
Musk and Prigozhin soared to the top of their country’s political authority with money and demonstrated success managing the critical levers of power in each society.
Prigozhin eventually turned on Putin but appeared to have reached a truce by undertaking some of Putin’s business and military “chores” in the Middle East and Africa. But Putin wasn’t taking any chances with this mercurial outspoken leader even when he re-pledged fealty. He was killed despite the public appearances of a political settlement.
Trump has threatened all of Musk’s business empires if he continues to speak out. Especially should Musk support political candidates who would oppose Trump’s endorsed supporters.
When a leader’s temperament, actions and words all speak to his goal of total authority, there is no place for opposition. Particularly when the critical words and deeds are public. And from persons who have proven political influence. If someone gets in the way of the leader’s total power, then they must go to exile, either politically or geographically, Or be totally neutered by some means.
It took Putin just two months to end any facade of a truce with Prigozhin. Trump’s timeline and methods may be different. But for every authoritarian leader one fact is true: uneasy lies the head that wears a crown.
It is increasingly hard to call an organization which serves retail customers without first navigating a series of AI driven questions about your needs.
Sometimes these automated phone trees work well; but many times people call because of a specific need that does not easily fall in one of the menu of options.
Many credit unions believe personal service is their ultimate advantage. Several credit unions share stories they send staff to illustrate the organization’s culture they believe to be their competitive difference. Here is an example from June.
The CEO: A long-time member took the time to call me to rave about Monica and tell me she doesn’t even rate shop anymore. She then forwarded me an email that she sent to Monica.
The member’s email: I want to take a moment to thank you—from the bottom of my heart—for being the absolute best mortgage advisor in the world. Working with you is not just a transaction; it’s a relationship built on trust, care, and genuine connection.
You are incredibly thorough, patient, and kind. Every time I’ve needed something, you’ve been right there—quick, clear, and supportive. You always know just what to say and when to say it, and that gift has brought so much peace to what can often be a stressful process. I trust you completely when it comes to my loans. I don’t even consider going to other lenders—I come straight to you.
You’ve earned that trust with your humility, consistency, and deep care for not just the business side of things, but for me and my family as people. You remember the details, the milestones, and the little things that matter. That personal touch sets you apart in every way. As my life changes, you’ve remained a constant. You are the go-to, hands down. No one else matches your competence, your capability, or the heart you put into your work.
It’s clear you love what you do, and that love shines through in every interaction. I am incredibly thankful, honored, and truly Blessed by Jesus to work with you. Your presence has been a gift.
This credit union’s performance exceeds their peers consistently on all financial and net promoter score indicators. While AI phone trees and “live” chat may be a solution for some activities, it will not be the means to build relationships with members.
The public facing role of leaders is especially vital during two important circumstances–when there is a transition at the top and during a crisis or moments of great uncertainty.
NCUA’s current situation meets both tests. There is the unprecented removal of two of the three board members by President Trump. This was followed by the immediate departure of up to 250 agency personnel as a cost savings ploy. And as noted below, there has been a sudden increase in credit union regulatory closings.
NCUA’s public responsibility includes timely and informed transparency about events under the agency’s control. There is uncertainty about who is on the leadership team. Who is making critical decisions? How can we trust that NCUA’s actions or inactions are being properly considered or just carried on by rote?
Four FCU Closures in 60 Days
Since April 30, NCUA has taken possession of four FCU credit unions. Two were liquidated outright, one conserved and the other merged. This is a very high number in just two months in a relatively stable operational environment.
The four with summary data from the March 30 call reports are:
Name Date NCUA Action 1Q ‘25 Assets 1Q Net Worth
Unilever April 30 liquidated $ 47 million 9%
Aldersgate June 18 conserved $ 10.6 million 10.2%
Soul Community June 20 liquidated $308K 100%
Butler Heritage June 30 merged $9.6 million 4.92%
Some notes on each case.
For Unilever this immediate liquidation without a conservatorship, suggests a major financial loss similar to the Creighton FCU $13 million shortage in June 2024. NCUA has provided no explanation for the sudden insolvencies in either case.
Aldersgate with 10% capital, was chartered in 1956 to serve the Methodist church employees. It was conserved without explanation or even notice of who is now running the operations. NOTE: this morning NCUA stated it liquidated the credit union.
Soul Community was chartered on December 9, 2024. At March, it reported 21 members with $308K in assets, but no loans or expenses. All capital. How can a new charter which naviagates NCUA’s arduous charter steps including both credit union mentors and examiner oversight, end up stillborn?
Butler Heritage is the one example of financial underperformance, but still with 5% net worth. An ironical message on the credit union’s website assures members they are in good hands with NCUA oversight:
BHFCU is charted and supervised by the National Credit Union Administration. NCUA performs annual examinations of the credit union’s records, policies, and procedures. This ensures the credit union’s financial soundness and verifies operations are conducted in compliance with applicable laws and regulations.
This number of regulatory closings in two months is highly unusual. The lack of any factual information about these FCU’s circumstances is unsettling.
This failure to inform the public undermines trust in NCUA’s supervision, not to mention a credit union’s reputation with sponsors like Unilever. These are, or should be, unusual events. No one is explaining them.
The silence raises the question whether NCUA is using their authority to coverup supervisory or examination shortcomings with NCUSIF funding. Were there annual exams? Supervisory contacts?Especially troubling are the similarities between Creigton and Unilever’s sudden dramatic losses of published net worth.
The Importance of NCUA Board Meetings
In this time of leadership transition and growing uncertainty, public board meetings are critical to understand what the agency’s leadership is focused on.
For the past 18 months, NCUA’s board meeting schedule has been at best erratic. In 2024 Chairman Harper was on medical leave for several months and Ostka on maternity leave.
Even when a full board was present, the substance was limited and hard topics or discussions avoided.
In the first six months of 2025 only two public meetings have occurred. One was with the full board in February and Hauptman’s solo meeting in May.
The NCUA has said the schedule of future board meetings is “tentative.” In a June 6th press announcement the Agency stated: dates of NCUA Board meetings should be considered tentative until the issuance of a formal meeting notice. All future meetings’ agendas and schedules are subject to change at any time.
Some have gone further to assert there is no requirement to hold a monthly meeting period. Rather board meetings need occur only when the need arises.
Public NCUA board meetings are both a responsibility and a recognition that the Agency’s leadership is accountable to credit unions and the public.
Some credit unions have asked to end their mandatory monthly board meeting. At this point I yield my pen to Ancin Cooley.
His response to the suggestion that board meetings should be optional applies to both credit unions and NCUA. They are an inherent responsibility of what it means to be a board member as he explains below:
Monthly Board meetings are not the problem.
They serve one critical purpose: cadence.
That cadence builds a culture of reporting, transparency, and member-focused accountability. It keeps the board engaged—not just symbolically but structurally. It’s a space to learn, ask, challenge, and listen. It’s where the member’s voice is supposed to show up.
And if your board meetings are dragging or bloated? There are better ways to fix that than eliminating the meeting altogether. . .
There is a free-market capitalism running its playbook inside the cooperative movement. . .
We are watching it unfold in full view:
Opposition to mandatory succession planning.
“Fiduciary duties of Credit Union Directors” 12 C.F.R. § 701.4? Routinely unenforced—more decorative than functional.
Supervisory committees? Once a critical layer of oversight, now neutered and marginalized—weakened to the point of impotence
Each move—on its own—can be rationalized.
But taken together? It’s a pattern. A roadmap. Its “open season” on credit unions. . .
Let me get ahead of the most common rebuttal:
“It’s just removing the requirement to meet monthly. A credit union can still choose to meet every month if it wants to.”
Yes, technically, they could.
But that’s not the point.
This isn’t about convenience or choice. This is about institutional welfare.
There are some safeguards you don’t leave to chance, because they protect the collective health of the system.
That’s why we don’t suggest seatbelt use. We don’t recommend elder abuse protections. We mandate them—because of the public trust at stake. . .
This is the cooperative movement. And with that comes a higher standard of care—because the people advocating for these changes did not build these institutions with their own money. They inherited them. And now they’re chipping away at the very frameworks that make them trustworthy.
I would hope all NCUA staff would read his words. Public duty is a public trust. Regular public board meetings are an essential aspect of an NCUA board member’s obligation to well and faithfully discharge the duties of the office.
Last week CUSO Magazine announced an imaginative collaborative initiative. The editorial team pronounced July as credit union historymonth.
They issued a call for all to submit aticles, photos and other examples of signficant events in their history with the movement.
Here is the invitation:
Calling all credit unions! We at CUSO Magazine are officially declaring July to be Credit Union History Month, where we’ll be sharing articles on our industry’s history all month long!
To showcase the credit unions and individuals that contribute to our history and make our industry so unique, we’ll be spotlighting credit unions and credit union champions throughout the event.
Does your credit union have an interesting history? Do you have a teller who never fails to make a member’s day? Do you know of someone or a credit union in the industry doing something great? Let us know!
Email us at editors@cusomag.com, or go to cusomag.com/submit-a-story. Share what credit union or individual you believe deserves some recognition! Let’s make July a celebration of all credit unions do!
A Geat Idea
I love this imaginative effort. In every garage, storage closet, and crammed bookshelf, credit union believers have left some keepsake of a special occasion. It may be a cassette tape of a speech from a conference, a special edition of a cu publication that mentioned them, or perhaps the handout from a speical event. For example, the plastic encased credit union stamp honoring the 50th anniversary of the FCU Act in 1984.
As we remember our history and how we got to today, it can only make us proud and more inspired learning about people’s special moments with the Movement.
I would hope the participation is so voluminous that CUSO Magazine will need to increase their publication schedule from once per week to perhaps a daily to share all the examples from personal archives.
I’ll be making contributions. For example a copy of Harold Black’s last interview as an NCUA board member in 1981 and his future ambitions. Or a brief history of the first credit union share insurance fund started in 1956 in Illinois.
We all hve special moments and people whose efforts we recall years or decades later. I’m all in. Are you?
At the moment there are two strong politcal drivers animating government and the public. One is the very anti-government, “chain-saw” wing of the Republican party. The second force is represented by socialist Zohran Mamdani (let’s make it free) surprise victory in New York’s democratic mayoral primary election.
Both want to overturn the status quo represented by existing institutions.
Most credit unions would not support either approach. They seek regulatory reflief from CFPB or some NCUA proposals (succession planning). But by all means let’s keep the status quo on taxation and our anyting-goes business models.
To date the only dramatic disruption of the credit union status quo was Trump’s dismissal of the two democratic NCUA baord members. NCUA is now overseen by a single administrator. I do not inclde the DOGE inspired staff cuts as change since credit unions have been assured it will be business as usual at the agency.
However is this the time to play it safe, preserve advantages and avoid any major organizational rethinking? Or is it possible to chart new courses for the cooperative system and credit unions?
The Regulatory Relief Approach
In August 2014 Mark McWatters joined the NCUA board filling the republican minority position. Fifteen months later in February 2016 he presented a 30 minute speech to CUNA’s GAC meeting in DC.
His speech offered 21 ideas for “regulatory relief.” Many of his suggesions would sound familiar today-extended exam intervals, due process on exam appeals, total review of regs, an IG exam hotline and freeing corporate credit unions from post crisis constraints.
This is the entire 30 minute speech often interrupted by audience applause. It would be fair to say that not much changed from this list.
(https://www.youtube.com/watch?v=LOssnO8QOnQ)
A Better Way-Challenging Assumptions about Change
To prepare the coop system for what’s ahead challenging current assumptions will be critical.
It all starts at the top by asking does anyone really believe NCUA is effectively fulfilling it’s Mission?
“Protecting the system of cooperative credit and its member-owners through effective chartering, supervision, regulation, and insurance.”
Or it’s Vision?
“Strengthen communities and protect consumers by ensuring equitable financial inclusion through a robust, safe, sound, and evolving credit union system.”
The current NCUA chair states the agency is just an “insurance company.” And every board member repeats the mantra that their “north star” is to protect the insurance fund.
Can anyone identify any NCUA efforts to strengthen and grow the role of cooperatives for Americans?
Why not embrace this disruptive politicalmoment to create a eoop system that truly serves Americans better than competitors? Are the prevailing assumptions about growth, scale and competitive advantage even valid?
Can we ask new questions? And propose options that would reignite the power of the cooperative model?
Here are some ideas being debated.
Separate the insurance-collective capital role of the NCUSIF from NCUA. Create a public-private corporation ( like the congressionally chartered Coop Bank) with a board of credit union and public appointees to offer savings insurance and (re)capitalization roles.
For those who still seek the comfort of federal oversight, authorize the option of FDIC coverage, similar to the Industrial Loan Charter option.
NCUA would be a bureau in Treasury responsible for federal chartering and FCU exams. Its role would also promote credit union expansion focused on chartering and coop entrepreneurial initiatives.
Strengthen member-owner roles in credit union governance and oversight through greater transparency, established member-owner rights in bylaws and explicit member ownership of the coops collective capital.
Convert the CLF to become a coop central for liqudity in partnership with the corporate system. It would facilitate access to the secondary market and be under the oversight of the separate Insurance fund board.
Permit charter conversions to for-profit models provided members receive their accumulated capital in full upon approving the conversion.
These are initial ideas. Now is the time to rethink how current trends and, members financial needs can be the basis for a re-designed cooperative system. Also to be pondered is what roles should established support organizations play?
Now is not the time for the tired phrase of regulatory relief. We’ve been there time and again. Rather now is an opportunity to re-design the coop system so that it can bring out its best promise for the future of its member owners.
The close of the NATO Summit meeting in the Hague yesterday was characterized as a success for the future of the alliance. And its continued support for Ukraine.
Even President Trump appeared to endorse the all-for-one commitment of countries to defend each other’s territory if attacked.
Why was the meeting so successful including Zelenskyy and his team’s conversation with Trump?
The Change of Tone
One analyst has traced this relationship improvment to what Zelenskyy wore to the NATO meetings and social events.
His suit – or lack thereof – was a central point in a blowup between the two leaders back in February.
Trump advisors asked Zelenskyy’s team multiple times that he should ditch his traditional military attire when visiting the Oval Office. The U.S. president was irked that he didn’t wear a suit.
This point was he subject of this Instagram folk ditty by rongello:
For four decades (1979-2017) the State Employees Credit Union was led )by Jim Blaine. He believed in the power of cooperative design, principles and purpose to provide members a better financial option.
His approach was so successful that SECU soared in his tenure to become the second largest credit union in America. At March 30, 2025 the credit union reported assets of $55.3 billion, members of 2.8 million with 275 branches (one in every county) employing 8,100 FTE positions.
Growing a Unicorn
Blaine’s studied belief in the power of cooperatives infused dozens of operational and strategic decisions. He eschewed mergers preferring to partner with other credit unions such as Latino Community and Local Government FCU to support a strong state eco-system of credit unions.
His focus was strictly within North Carolina, not seeking to invest outside the members’ home state. Within the FOM the focus was on those who were unlikely through economic circumstance or financial understanding to get a fair deal from traditional for-profit consumer financial options.
Creative Product Designs
His implementation of these beliefs resulted in some unusual product decisions. The lending focus was on home loans as the best way to build long term member wealth. Products such as credit cards and checking were simple, low cost and without flair. He created the only 529 on balance sheet college savings option by a credit union in America.
He provided off balance sheet investment options in a partnership with the Vanguard Mutual Fund family of low-cost index funds. The credit union founded its own life insurance company for inexpensive term life insurance. Through a $1 a month checking account debit he funded the largest credit union directed 501 C 3 foundation. Annually it donates tens of millions to organizations serving the needs of citizens and communities throughout the state. These grants were the credit union’s primary marketing effort-an example of earned versus bought media.
As the credit union system adopted risk-based lending, where a member’s loan rate was determined by their credit score, Jim fiercely resisted this almost universal pricing practice. He believed the model was discriminatory and perpetuated some of the consumer lending practices coops were meant to counter such as, those who have the least, pay the most for their loans.
Likewise, he did not believe in indirect auto lending in which the dealer set the member’s loan price based on the credit union’s buydown rate of the loan paper.
Internally the credit union grew large by staying small. The 275 branches were given authority to make and collect loans for their communities. They were aided with local advisory councils of members for decisions on scholarships, grants and even denied loan appeals. Vacancies were first filled from promotions within. No commissions or bonuses were paid to staff-just follow the principle of doing the right thing for the member.
Most importantly the credit union’s capital investments were always on behalf of members or the local community. From a surcharge free ATM network for all users, not just SECU members, to housing a museum in its main office building, to the Foundation’s investments in low cost teacher housing options, the money was to benefit owners and their communities, not for the institutional prestige of SECU.
Many organizations including large credit unions use their home market as a resource to open up into areas outside their core. Members’ resources do not go back into the local economy that funded their initial success, but into new markets.
Jim’s “old-fashioned” approach was not one emulated by others. He battled NCUA time and again over capital adequacy. “Anything over 7% is stealing from the members” was one of his truisms. At March 30, 2025 the net worth ratio was 10%. In short, while reporting superior market impact and financial performance, his approach was seen by most peers as archaic, impractical and not with the times.
The Two CEO Succession Rule
One observer has asserted every successful credit union coop is only two CEO successions from losing their strategic heritage and advantage. When he retired in 2017 Jim’s successor was his CFO Mike Lord. A good description of Jim’s ten operational priorities and the succession evet is in this creditunion.com report. The torch was passed to a believer who had worked at SECU for 41 years, or as one headline read, “Only the Lord could succeed Blaine.”
But when Mike Lord retired the board went outside the credit union apparently seeking a change agent with a different vision for the future. Jim Hayes took charge in September 2021 leaving the $2.2 billion Andrews FCU as CEO. He had previous positions at WesCorp and NCUA.
Members Challenge the New Direction
The October 2022 SEU Annual meeting was going according to the agenda until the other business item. At that point former CEO Blaine, now just a member, rose with a prepared statement.
He asked how recent credit union actions were in the best interests of SECU members. The event and issues are described in this blog, SECU Members’ Spirits Awaken. The members approved Blaine’s two motions. one asking for a response to the six areas of concern. The second read: The Board update, publish, and make available to all member-owners its’ Strategic Plan for SECU no later than 90 days prior to the 2023 Annual Meeting.
Six months after credit union fireside chats and other communications responding to the motions, Jim launched a public blog SECU-Just Asking! He re-presented the issues that energized members and employees had asked him raise at the Annual Meeting.The blog became the platform for members nominating their own candidates for board openings at the 2023 Annual Meeting.
Members Electing Directors
In 2023 the concerned members nominated three candidates who supported their views for the open board seats. Around 14,000 members voted in the contested election in which all three board nominated incumbents were ousted. The members had succeeded in challenging the changes via the election process.
In 2024 the election was again contested and almost 100,000 members voted. This time the incumbents were reelected, but the top alternative candidates received almost 30,000 votes. SECU spent substantially to promote incumbent s in this second contested election.
The 2024 meeting was broadcast live on YouTube. My closing blog observation was: One cannot help but come away with the feeling that this year’s event was a reaction to the two prior meetings where the board must have felt things moved out of their control. This time the outcome which had some excellent content, especially the member questions, was an exercise in the power of incumbency.
The Public Debate Continues
Since the launch in March 2023, the Just Asking blog has cumulative views of 2.53 million and 14k posted comments, according to Blaine. He says interest peaks as the board election cycle gets under way in July/August. Currently views average around 2,500 per day.
By any measure it is a blog followed by a significant number of SECU members and one presumes employees. The blog is a unique member-owner effort in its longevity and substance trying to influence the credit union’s direction .
Jim Hayes, the new CEO implementing the changes challenged in the October 2022 Annual Meeting, left in June of 2023. The board promoted the long- time COO Leigh Brady who has continued most of the internal and member-facing changes.
The controversy has somewhat slowed the credit union’s momentum. When Mike Lord left in August 2021, the credit union was $50 billion in assets versus today’s $55 billion (a 2.5% cagr)
A New Unicorn for Coop Believers
Today as SECU evolves into a traditional credit union provider, it remains a Unicorn for another reason. It is the only large credit union to have contested board elections for the past two years. This member-owner involvement is unique and yet what the coop design was intended to ensure. The members’ role using the democratic principle of one person, one vote, is the critical governance function.
Member choice in contested elections is essential to active owner accountability versus the habit of internal succession controlled by sitting board members.
Democratic organizations (or countries) rarely fail because of external market competition. Rather most failures come from within. They are leadership and commitment shortcomings.
The two CEO successions from failure observation is a critical issue for credit unions. Financial failure is very rare, but failure to grasp and enhance the unique business design and principles that are the foundation of every credit union can be quickly lost. New visions and corporate aspirations can take credit unions away from their special strenths.
Credit unions were founded with no capital, just human passion, When that initial belief is not sustained, the accumulated net worth can just become the CEO and board’s treasure chest, not a member-enhancing resource.
Controlling Member Involvement
SECU’s policy and financial performance continue debated in daily posts, The credit union’s primary response has been to limit or eliminate the members’ role in the annual meeting activity.
In the last two years SECU’s board has changed its bylaws to better control the annual meeting and election processes. The agenda has been closed to open member discussion. The timing and procedure for member nominated candidates in elections have been shortened making it more difficult for non-incumbents to get on the ballot.
In short, the board has tried to shut down the effort that raised the original concerns in 2022. The unique coop member governance check and balance on credit union priorities is being stifled to the point of elimination. And following recent blogs, the NC state regulator is trying to avoid any oversight of the board ‘s efforts to eliminate all member governance rights.
Why this Members’ Unicorn Effort Matters
This issues profiled by Blaine are not an isolated concern. Other credit union members are facing similar challenges in being heard. Rarely does a merger go by without some members asking why? Bank purchases using members’ accumulated capital rewards bank owners, not the credit union’s owners.
The future of the country’s second largest credit union has implications for the cooperative system as member-centric financial alternatives. Members are seeing investments disconnected from their well being or traditional purpose.
When owner involvement is silenced at required annual meetings, a credit union’s future is in the control of self-selected, perpetual unelected volunteers. That is a dangerous separation of responsibility from accountability when owners are left out.
There is now over $250 billion in collective reserves under credit union boards’ control. Keeping the 100 million coop member-owners from influencing how these funds are used will bring temptations from all corners of the capital markets, brokers and hedge fund investors.
Boards will feel free to do whatever they choose, initiatives unhindered by either principle or purpose. Dramatic visions of power and influence financed with billions of members’ collective wealth willl be in play.
With members seen as only customers, just a means to greater ends, the cooperative alternative will have lost its way.
Speaking Truth to Power
From Socrates and throughout Old Testament stories, the prophet’s voice has been a source of wisdom and discomfort for those in authority.
The idiom “a prophet is without honor” comes from the New Testament. It refers to someone whose message is not appreciated by their own community.
It takes unusual courage to make a public stand against those in authority. When done by someone with expertise and experience, they will be accused of failing to give others their turn at the wheel.
Blaine is blunt even caustic at times in his writing. He does not believe in nuance. When others are not direct, he will call out lies.
He believes coops were designed and have the responsibility to correct a fundamental flaw in consumer financial services. In his words, “those that have the least or know the least, pay the most for financial services in America.” The problem has only gotten worse as income inequality continues to grow.
Credit, that is consumer borrowing, is the most important way for almost all to succeed in a free market economy. There are no scholarships for life’s essential purchases.
Yet when CEO’s and Boards’ tenures grow to oversee hundreds of millions or billions in assets, it is tempting to gravitate towards those well-off in life. Making Tesla or Lexis auto loans is a better opportunity than members needing to buy a car at an Enterprise used car sale.
Events will influence how Blaine’s initial six concerns will resolve. Local Government FCU, now Civic, has ended their partnership with SECU at great cost to both sides. Risk-based pricing may or may not increase SECU’s consumer loan share. The question is whether real estate lending continues to be a priority or whether it will convert to just another “conforming” service.
Blaine’s most recent effort to request the North Carolina regulator to preserve the rights of members in overseeing their coop may seem ironical given his history of battling NCUA when CEO.
But that issue is the bottom line now, not differing judgments about products or services. SECU is at a turning point, already taken by most. Will the rights of member-owners to be heard with their elected leadership be upheld? Without that check and balance, there will be billions of dollars of members’ collective resources without any accountability.
I will give Blaine the last word from this brief statement on the role of regulation in 2010.
Forty-six credit unions managing over $3.7 billion in assets cancelled their charters in the first quarter. The credit union’s data is from December 2024 call reports. Because they closed their doors, the credit unions filed no data for March 2025.
The 256,000 members with with $2.4 billion in loans, have now lost their own institution some with histories serving generations. List with loan totals.
These credit unions ranged in size from the $560 million LA Financial to as small as $3,000 Asbury FCU in DC. This pdf with ROA and net worth is shown from largest to smallest by assets.
Not Financial Failures
On this listing, the weighted average net worth of the group was 10.7% at December. Many had equity ratios much higher than this. Two had net worth exceeding 30% including Gibbs Aluminum (KY) at 33% and Telco Roswell New Mexico at 34%.
Only 7 had a net worth ration below the 7% well- capitalized benchmark with the lowest two at 4.9% and 4.2% of assets. Six of these had negative ROA’s in 2024 but all were still solvent.
If these are not financial failures, why were the charters ended, largely by not entirely, via mergers?
Some would explaine that this is just the “creative destruction” that economists describe as an essential outcome from competition in a capitalist market system. Underperformers are forced out of business and replaced with better options. This is a necessary and healthy culling that makes capitalism strong, innovative and prosperous for the greater community.
While there is an element of truth in this dynamic, cooperatives are supposed to be an alternative to the winner takes all mentality of market competition. These coops are long standing with charters that go back over 100 years in some cases.
Two Internal System Weaknesses
I would suggest that these charter failures, and they are just that, of financially sound firms results more from cooperatives’ internal shortcomings, not external competition.
One critical deficiency is the lack of system support for some of these smaller credit unions who have decided to give up. Surrendering charters versus adapting to new opportunities costs the industry between $100,000 to $500,000 each time a charter is lost.
Those amounts are the range of donated capital NCUA now requires for chartering a new credit union. These 46 charters have a total “market” value as much as $23 million at the higher required capital level. For example, Arise Community CU opened its doors on Juneteenth 2025 with over $1.0 million in capital donations.
New charters are extremely difficult to achieve with NCUA approving only 2-4 per year. It would seem in everyone’s best interest, but especially leagues, CUSO’s, vendors and others supporting coop options to find ways to preserve or transform existing charters to those willing to take the reins of leadership. Press reports have said NCUA has over 90 new charter requests in various stages at this time. This suggests public interest in coops is still widespread.
Benign Neglect?
A tiny example of this system weakness, or neglect, is the smallest credit union on the list, Asbury at $3k and 100% capital. The 100% net worth suggests that the credit union has been self-liquidating for some time. The credit union still has a web presence via a third party. It was not invisible.
More tragically when one looks up Asbury’s history, the credit union was chartered in 1945–it is over 110 years old and insured by NCUA in 1972. Virtually invisible and surviving, but ignored by the system that created it.
The More Common Deficiency: Leadership Failings
The second largest credit union failure is NextMark FCU (VA) with $550 million in assets and 16.3% net worth. The CEO and board requested members approve a merger with Apple FCU, which took place in the first quarter.
The failure of this long-time, financially well-off and large institution illustrates a second aspect of the industry’s self-inflicted errors. There was no compelling financial, business or other shortcoming motivating this charter closure. The CEO Joseph Thomas had served as President/CEO since October 1994 a period of 30years and 4 months before becoming Executive Vice President at Apple via the merger he orchestrated.
During his thirty years as CEO Thomas also served on many industry organizations. These positions include: a CUNA board member for 8 years; a board member of CUMA a DC mortgage CUSO for 22 years; Board member and immediate past chairman of the Virginia Credit Union League for 12 years; board member Worldwide Foundation for Credit Unions 7 years to the present; and board member for the World Council of Credit Unions, 5 years. also continuing.
NextMark gave Thomas a platform and standing to aspire to these positions of wide spread credit union national and worldwide responsibility. But now this opportunity and potential service paths are closed. There is no successor CEO asThomas pulled up the ladder he climbed to participate in these other opportunities. The independent charter ceased operations.
Mergers such as this destroy cooperative professional and volunteer leadership roles in communities, within the credit union system, across the country and, in this case, worldwide. Fewer coop leader positions mean fewer voices and examples of professional excellence representing credit unions.
It is at best ironic that those who seemed to have benefited significantly from their CEO leadership role, would close this path that was opened for them. What kind of leadership perspective did he bring to these other system responsibilities?
But this tragedy goes further than the opportunities for credit union volunteers and professionals in their communities and beyond. The following public comment is one member’s response to the merger proposal. It clearly shows that members know this kind of ending is not why credit unions were founded.
Her description is one of betrayal, not just of the cooperative principles, but moral failings by those with fiduciary responsibility to the member-owners. Here is her perceptive description of why this merger is so tragic and wrong not only for these members, but also for America’s coop system (subheads added).
I recognize that the merger is likely a foregone conclusion, and the number of votes cast by members will be minimal.
My experience with the NextMark Federal Credit Union dates back to 1977 when it was known as the “Fairfax County Employees Credit Union.” Over the following 20 years of membership in the Credit Union and employment with the Fairfax County Government, I served several years as a member of the Credit Committee and the Supervisory Committee.
The general concept of a credit union, combined with a defined field of membership, the value of working toward the common good of the members, and loans based on character, were central to the success and satisfaction of the credit union members. The credit union grew, as did the Fairfax County employee base.
A Change of Focus
At some point in the late 90’s or early 2000’s, the field of membership expanded in scope, the name changed to the commercial generic “NextMark” and our credit union began to resemble a commercial bank, with limited on-line offerings and variable customer service. Nothing terrible, just a move far from the underlying values of the credit union movement.
The specific observations that I believe should merit regulatory review, are the substantial financial incentives offered to several key staff members, contingent on completion of the merger. The amounts seem very high, but of greater significance is that these payments are contingent on the merger, which these key staff members are urging members to approve. I am aware of nothing that casts any doubt on these key staff members’ sound character or integrity.
Gross Conflicts
The issue is a gross conflict of interest created through this incentive process. These senior staff and volunteer members have a fiduciary responsibility to the credit union members, including advising on significant business decisions and implementing structural changes, such as mergers. The existence of contingent incentive payments for completion of the merger would seem to conflict with the fiduciary responsibility to the members. It would seem that a more sound approach might be to delay the negotiation of pay and benefit incentives until after the membership vote.
Old Fashioned Thinking
Maybe everything is fine just as it is, and such incentives are likely commonly accepted in the commercial banking and business arena. Credit Unions are supposed to be a little different – although that may just be old-fashioned thinking.
End comment.
A final note on this merger: Senior staff and the CEO received according to the Member Notice “pay adjustment distributions to meet the continuing credit union’s salary bands, long term retention bonus, incentives already established, deferred compensation benefits, or severance opportunities” totaling almost $900,000.
The members received a $12 million bonus dividend for approving this combination and free transfer of their $409 million in loans and remaining equity to another firm. How might these resources been re-invested in the credit union for members’ future or even seeding a dozen or more new coops?
The credit union cancelled its future and distributed a token portion of its value that members created to be paid forward to benefit future generations.
Can a coop system with such behaviors routinely approved at all levels, ever hope to survive in the future? Should it?
This latest SECU Just-Asking! blog illustrates a growing tactic by credit union boards to limit or end member-owner involvement in governance. As explained below, the method is to unilaterally change the credit union’s bylaws to effectively stifle any member initiated election or annual meeting involvement.
Tomorrow I will show how this effort now in its third year has evolved at SECU.
The Full Blog (shading added)
Ms. Katrina Ray, N.C. Administrator of Credit Unions
June 20, 2025
Re: NC Credit Union Division Failure To Protect Credit Union Member Governance Rights
Dear Administrator Ray,
North Carolinians, who are member-owners of state-chartered credit unions under your supervision, are at risk of losing their legal and statutory governance rights. This has become a safety and soundness issue for the 3+ million credit union members who hold over $60 billion in North Carolina credit unions.
As Administrator, you are not unaware of this situation given the extended controversy within our State. I would like, however, to give you a summary of what has occurred, using State Employees’ Credit Union, of which I am a member, as the example.
Lets focus on the SECU Annual Meeting: 1) In 2022 (and in all prior years back to 1937) SECU members could speak, offer resolutions and make motions at this business meeting, 2) in 2023 speaking rights by SECU members were restricted and the meeting agenda was altered to eliminate member participation in “new business/old business” discussions, 3) in 2024 the ability of members to speak was eliminated, only non-substantive resolutions were permitted, and the standard business meeting agenda was again curtailed.
In looking to the 2025 SECU Annual Meeting, a written request was submitted for a copy of procedures for SECU members to submit substantive governance resolutions in advance of the meeting for publication and consideration by the SECU membership. No procedures exist. SECU noted that advance resolutions would not be accepted at the Annual Meeting and that such resolutions could be submitted only via a separately called “special meeting” of the membership. This further restriction on SECU member governance rights was a novel invention and of course no policies or procedures for such a “special meeting” exist.
As Administrator, you are given credit for authorizing these eliminations of SECU member governance rights via the bylaw amendments approved by NCCUD on 6/30/2023. The specific amendment you approved was: “… (iii) authorize the Board to establish upon notice to the membership policies and procedures governing the order of business, format and conduct of the annual meeting.”
It would appear that the SECU Board has used your general amendment authority as cover to purposefully curtail the legal, statutory governance and ownership rights of SECU members in their credit union. This has created an explicit safety and soundness risk for the future of all North Carolina credit union members.
If as Administrator, you did intend to authorize this abridgement and curtailment of credit union member governance rights; you have created a business entity unique among all insured financial institutions in the U.S. and have authorized governance practices which would be illegal among most public U.S. businesses.
This unparalleled and growing impairment of basic shareholder-rights is being followed carefully by the credit union and banking communities in North Carolina and on the national level.
Would hope you would use your statutory authority to address these issues on behalf of all 3+ million North Carolina credit union members.
