Fire Haze and Stanford University Chapel
Timeless Wisdom in a Timely Moment
“I feel the wind blowing, and it’s blowing in the favor of monopoly. You can feel it in tele-communications; you can feel it in banking. It is an ill wind.
Credit unions are small. Yes, very small. But it is vital that America not say they are too small to be worth the effort of keeping them around. Because if nothing else, credit unions keep alive a principle; that principle is freedom of choice.”
– Ed Callahan, June 1997
Part II: An Uncertain Future for Credit Unions
One Entrepreneur’s Effort to Create a New Co-op Model
“Encouraging the formation of new banks is another top FDIC priority. A key feature of any competitive industry is the ability for new startups to enter the market. In the banking industry, de novo banks are a key source of capital, talent, ideas, and ways to serve customers. They bring innovation and new energy to the industry.”
– FDIC Chairman Jelena McWilliams on June 12, 2019 at the CATO Institute
In the second part of this series, I share a case study of the regulatory difficulty cooperative entrepreneurs confront when trying to obtain and sustain a credit union charter. This contrasts with the FDIC’s very public effort to encourage de novo banks as a “key source of talent, ideas and ways to serve customers.”
Internet Archive Credit Union (2011-2015), while not set up by students, is perhaps one of the greatest missed opportunities for the American cooperative movement. Its demise is told in this video and article from the Internet Archive blog: http://blog.archive.org/2015/12/14/internet-credit-union-2011-2015-rip/
Leo Sammallahti, marketing officer for Coop Exchange, sent me his summary of this landmark effort:
Started by one of the founding pioneers of the internet age, Brewster Kahle, it attracted tech talent alongside experienced people from the financial sector. They had innovative ideas on how they could use technology to transform banking, motivated by a genuine passion to help people, not to make profits for themselves.
They managed to charter the credit union in 2011, but the regulations crushed it in 2015. Just one example – their total loan portfolio was restricted to $37,000 when they had $1,000,000 in reserve for bad loans!
I have only read their account of the events, simply because there is no one making the case that the regulations that crushed them were reasonable. Maybe someone knows something I don’t, and it makes more sense. But I’m afraid that is not the case. And if so, who suffers? Ordinary consumers – the same persons the regulations seek to protect but who now have a diminishing amount of choices where to put their money.
But here’s one interesting thing the founders mentioned that might give some hope. They said that technology makes it “easier”, not harder to start a credit union than ever before. Sometimes the reason why new credit unions are not considered is partly due to technology – the reasoning is that once you need sophisticated software instead of pen-and-paper to run a credit union, it gets more expensive to start one. But according to the founder of Internet Archive, the opposite is true.
American credit unions know how to lobby – they have had to defend themselves from attacks from the banks, perhaps one of the most powerful industries in Washington. Could some of that political power make it easier to charter new credit unions? From the average American’s point of view, it would hardly be an issue anyone would be opposed to, regardless of their political leaning. Can the movement afford to miss opportunities like the Internet Archive Credit Union?
FDIC Chairwoman McWilliams’ closing commitment to new charters at CATO:
“Finally we launched a nationwide outreach initiative focusing on de novo bank formation, beginning with a roundtable discussion in DC in December. We have since hosted similar discussions in each of our six regional offices, which have been constructive and thoughtful.”
Part I: An Uncertain Future for Credit Unions
Gen Z and the Movement’s Future: Users or Innovators?
Every product, brand, business, service, and even non-profit institution has the challenge of engaging the next generation of users. Or risk going out of business.
Coca-Cola’s marketing focuses on this never-ending generational transition. The One Day Last Summer ad series (from 2018) targeted Gen Z with a series of Vimeo shorts about high schoolers’ summer fun before college.
More Than Product Marketing
Coca-Cola also tapped into this generation’s social activism with the initiative summarized in the following release:
Coca-Cola launched the “Dear Future [Community] Challenge” inviting Gen Z and young Millennials to be changemakers and better their communities. The beverage giant has identified 15 communities across the U.S. where the company has bottling centers and other community stakeholders to partner with locals and address their concerns. Individuals ages 18-24 can submit proposals on how to strengthen these areas, and for residents outside those selected locations, there is a national competition. To help bring their ideas to life, winners will receive a $30,000 grant from the company as well as support and guidance from former Coca-Cola Scholar Foundation recipients and other community partners. Caren Pasquale Seckler, Vice President of Social Commitment for Coca-Cola North America, explains the engagement approach saying, “We really want to write the next chapter together with ‘Dear Future’ by engaging consumers and doing something together, [as well as] engaging all of our local partners in identifying all of the issues that are truly meaningful to them.” Coca-Cola is spreading the word with a “Dear Future” ad, which features employees and former scholars, as well as print, social and TV spots.
One University’s Approach
Individual colleges will also thrive or slowly expire depending on their perceived relevance to each new cohort of students. George Washington University in the heart of DC has long attracted liberal arts and science majors while being in the nation’s capital. But like a number of leading universities, it found that prospective students were not just interested in learning, but also applying their passions to start businesses and social enterprises. Hence the founding of the GW Office of Innovations and Entrepreneurship.
The Office sponsors an annual New Venture Competition:
The winners receive significant cash, mentoring, legal and in-kind support to carry their ideas to the next stage. The summer showcase provides another opportunity for startups to garner resources and external interest through the University. The nine winners from this summer’s 2020 GWSSA program are linked below.
These 8-12-minute pitches are classic models of the “elevator speeches” honed to attract investors. They demonstrate the iconic American spirit of innovation and inspiration as well as the necessary business disciplines to succeed.
- BladesWork Unlimited
- Cognitive Gym
- Culture Media
- Early Intervention Systems
- ecomadic
- HotMaps
- Ichosia Biotechnology
- Mesean Spices
- Rise Nutrition
- Songwriter’s Dream
The Credit Union Challenge
The cooperative challenge is not merely honing the Coca-Cola skill of attracting the next generation of “customers” but more critically, captivating those members who want to be credit union “entrepreneurs.”
Those students who want to fashion the credit union model for the needs and virtual world of their generation, not copy what has gone before. The GW New Venture Competition awarded one of its prizes three years ago to a group of freshmen who proposed offering a credit union uniquely designed to serve the needs of fellow students far into the future.
Are Credit Unions Missing Out on the Next Generation of Entrepreneurs?
Those freshman winners are now entering their senior year. They are transitioning the project’s leadership to underclassmen to continue the chartering effort. The challenges are not technical or even financial. They have completed all the policies and projections and raised the minimum level of donated funds NCUA said was needed.
But NCUA’s chartering process is endless. There is neither encouragement nor transparency. NCUA’s attitude appears to be “no one has a right to a charter;” regardless of circumstance. The practice is to extend the process until people just give up and go away.
Public companies and private universities have made significant changes to attract generation Z’s loyalty. And to continue their institution’s relevance and sustainability. Will credit unions just attract Gen Z as users or can it also include those who aspire to create the next evolution of the cooperative model?
Tomorrow: The fate of one credit union entrepreneur.
From the Field: Ideas for Increasing Voter Participation
The following comment from Leo Sammallahti, a coop enthusiast from Finland, was posted in response to “From the Field: Democratic Governance Makes a Difference”:
Voter participation in large cooperatives can be increased from the low level it is in the US.
I’m from Finland, where the most widely used bank is the OP cooperative, with 2 million members out of a population of 5.5 million. Around 15% of the members of the largest branch voted in the board election, where any member who would get a signature from 3 other members could stand as a candidate. From hundreds of candidates, 10 receiving most votes were elected – the votes are very contested!
This does not require a long tradition – Tipton and Coseley Building Society in the UK increased their voter participation more than ten-fold, from 1.7% to 18% between 2002 and 2009 by introducing donations per vote cast, online voting and pre-paid reply envelopes.
Here are few ideas how credit unions could do this in the US:
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- Contested elections
Have contested board elections. There are many credit unions that do, and they seem to be doing fine. Research should be conducted on what is the effect – would be great to hear your thoughts on contested board elections in credit unions.
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- Cooperate to increase member participation
Cooperation between credit unions by having them coordinate the the vote on same day in all or many credit unions, and work together to campaign to get members to vote. Maybe the shared ATM network could be used to advertise members to stand for board or vote in board elections by showing a message encouraging them to do so when they use the ATM and wait for their cash?
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- Pay credit union board members according to voter participation rates
Instead of board members being unpaid volunteers, pay them according to voter participation of the members. So if 10% of members vote, each board member receives 100$ per monthly meeting. If 20% vote, they receive 200$, etc.
To get paid more, one would have to encourage members to hold one accountable. There’s a lack of incentives for members to vote as #coop membership grows. Incentivising elected representatives to increase participation could help. It could incentivise engaging contests, as more votes for candidates not elected would increase the pay for those elected. Might be that it would backfire, and members would be *less* likely to vote if it meant paying the board more! But nevertheless, it could be tested in a low-risk way.
It would be a performance-related pay model designed uniquely to cooperatives that could not be adopted in conventional businesses.
Leo Sammallahti
Coop enthusiast from Finland, where 90% of the population is a member of at least one cooperative
Cotton Candy is to Food as NCUA’s EXIM Bank Announcement is to Policy
One of the late summer pleasures that has been cancelled around the country is the fair season. In some locales this is the state fair. In Montgomery County, MD, it is the Agricultural Fair.
These week-long events display the animals and products of an area’s farmers. “Livestock” ranging from cattle to rabbits compete for best of show. Winners are honored with blue ribbons on their stalls and cages. Exhibitions of colorful vegetable tables, bell jar canning displays, hand-made and knitted clothing remind spectators of a time when America was composed of smaller communities skilled in all the arts of self-sufficiency.
The Entertainment
In addition to animal races, judging contests and musical shows, there is the carnival of rides, 25-cent games of chance, and food.
The King of Fair Foods: Cotton Candy
Cotton candy and fairs are long time partners. But the product is only spun sugar. It is made by heating and liquefying sugar crystals. This liquid is then spun through minute holes causing the sugar to condense into fine strands. It is collected on a paper cone. Coloring and flavoring can be added to give the cotton-like texture a light blue or red shading.
Made on the spot with its gossamer texture, it is sometimes put in a plastic bag to keep up with demand. While superficially inviting, the product has no food value. Just hot air and a sweet taste.
NCUA’s New Policy Initiative
On June 9, NCUA Chairman Hood made a surprise announcement of the signing of a 3-year collaborative agreement “to bring small business and credit unions together and expand awareness about EXIM programs.”
The announcement was unprecedented. As the topic of Export-Import Bank of the United States (EXIM) lending was totally new, I FOIA’d NCUA asking for all agency documents for this unexpected “enterprise.”
The documents provided were already in the public domain: the Memorandum of Understanding, the June 9th press release, and Chairman Hood’s video statement the day of signing.
This “background” information included the following statements:
- “the discussions that led to this agreement began many months ago”
- “NCUA has had a long and constructive relationship with the Export-Import Bank”
- “the collaboration will be a great help to many hard-pressed entrepreneurs”
Given these statements, I asked the agency to confirm that I had received all the relevant documents about this new program. On August 9, the agency reconfirmed they provided all they have.
What to Make of this Policy “Initiative?”
The documents show no agency or credit union data or research to support this program. There is no trade association or credit union interest expressed. There is no example of any credit union member, whether small business or natural person, inquiring about this possibility.
The NCUA board was not part of this event. It was a solo signing by the Chairman, even though former Chairman McWatters had been nominated to serve on the EXIM board by the President in 2016.
NCUA had nothing to show the relevance of this program or “the discussions that. . .began many months ago.”
The Context for This Announcement
At this same time, credit unions were in the midst of vital Payroll Protection Plan emergency lending to help businesses and members through the largest quarterly GDP economic downturn ever recorded (the second quarter of 2020).
According to the article “Credit Unions Help Save More Than 1.1 million Jobs Through PPP,” credit unions in all 50 states and DC disbursed 11,424 loans exceeding $150,000 (1.73% of all loans in the $150K-$1 million category). Total balances of $3-8 billion had to be estimated because individual loan amounts in this size range were not provided.
For loans less than $150,000, credit unions granted 179,085 loans for a total of $4.67 billion. By number of loans, the credit union share was 3.29 percent, and by dollar balances 4.23 percent of all borrowers.
This analysis of Treasury Department data ends with the most active coop lenders:
Mountain America Federal Credit Union ($9.3B, Sandy, UT) originated more than 7,000 loans, more than any other credit union. Of these, more than 6,560 were less than $150,000. Greater Nevada Credit Union ($1.1B, Carson City, NV) originated the most loans of all credit unions in the larger loan category — almost 700 loans more than $150,000.
NCUA in This Time of Crisis
Credit unions are doing what they do best in a crisis: lending to members. As stated in the article, “credit unions played a larger role in lending to smaller companies, underscoring the movement’s commitment to Main Street business borrowers.”
By contrast in NCUA’s EXIM signing video, a bank spokesman says there “is nothing active now.” The banks chairman Kimberly Reed reported that the total financial assistance provided small businesses in 2019 was $2.3 billion. Credit unions, in the three months included in the Treasury data, extended over $9 billion in the critical PPP initiative.
NCUA has published nothing about this extraordinary effort. Instead, as this was being done, NCUA was spinning cotton candy. Irrelevant in both context and member need, this PR event was “just hot air with a sweet taste,” while credit unions soldiered on confronting the crisis at hand.
From the Field: Are Contested Elections Vital to Cooperative Health?
The following comment was posted by Leo Sammallahti, a Finnish advocate for cooperatives, in response to “The Key to Credit Unions’ Future: “Trust Each Other””:
I have tried to find but have not come across any research looking into whether having contested board elections has an impact on the performance of a credit union. Some credit unions that have them seem to do just fine. Yet if I’ve understood correctly they are rare in US credit unions. Imagine if only 10% of members of US credit unions would vote – that would be a massive democratic exercise of over 10 million Americans. That would demonstrate the cooperative difference to the mass membership in a way no advertising campaign can.
In Finland, with a population 5.5 million, the largest grocery chain is a cooperative owned by 2.4 million people and the most used bank is the OP cooperative, owned by 2 million people. 15%-25% of the members vote in the *largest* branch of these cooperatives. The US credit unions would mobilise over a million Americans for every 1% of increase in voter participation. Let’s not underestimate the impact of such a mass mobilisation.
Timeless Wisdom Following NASCUS’ 2020 Virtual Summit
“I think if you took the pulse of credit unions today, you would discover two feelings: worry over the growing authority of NCUA; and a desire for more flexibility than now exists under the charter options . . . The best remedy to this climate is a vigorous dual-chartering system, that is, both a vibrant federal chartering option and a vibrant state-chartering, non-federal share insurance. Danger grows if there is only one option. Such a climate breeds bureaucracy and lazy thinking.”
– Ed Callahan, May 2000
Should a CEO’s Last Act be Merger?
One pattern in the 150-200 credit union mergers occurring each year is CEOs nearing retirement, using merger as a “succession plan.” After decades of leadership, their final act is to dissolve the organization that gave them the top job of their professional career.
A CEO’s Responsibility and Fiduciary Duty
Every CEO contributes in multiple ways to the “ongoing concern” of the organization they are chosen to lead. These responsibilities include developing strategy, ensuring the trains run on time (performance), defining a culture, and acting as chief spokesperson for external contacts. All for the purpose of serving members better and ensuring the continuity of the enterprise.
Succession planning is integral to this purpose. This can be a process of nurturing internal candidates and/or using external consultants.
I am disappointed for members when I read that a CEO’s final act is recommending the merger of their independent institution. The credit union has been the platform for the CEO’s leadership opportunity, industry status and professional reputation for many years.
Instead of their role as a “relay” runner passing on the baton, their tenure becomes a “sprint” to the finish and no one else gets to run.
This appears to be the situation at Xceed Financial Credit Union ($942 million) where the CEO who took over in September 2006, sent an email recommendation to members this July. The letter announced (after 14 years as the leader), the best future course of the credit union was to merge with Kinecta FCU ($5.1 billion) “to better serve you.”
The Reasons Given Members
The email listed six reasons including “a broader product lineup, higher dividends, lower fees, more robust digital banking, full Saturday banking, and expanded branch network including 22 locations in Southern California.”
No comparative facts were provided other than citing the 22 additional Kinecta branches. Of Xceed’s current nine branches, only one is in Southern California. It would seem unlikely that members using Xceed’s locations in San Jose and Menlo Park , CA (several hundred miles to the north) or the six locations in Rochester, NY, Parsippany, NJ, and Leesburg, VA, would see this “expanded” network as “better service.”
The key logic justifying this step is “joining forces will give us economies of scale” and “the combined credit union will be the 35th largest in the country with approximately $6 billion in assets.”
So, after 14 years at the helm, the CEO and board determined the credit union was no longer capable “to effectively compete in the future or deliver the products and services that you need and want.” The only solution is to merge.
The CEO assures the members the loss of their independent charter will be OK: “I fully support this merger. . . I will also be staying on as president of the combined credit union and fully intend to ensure your needs and interests remain a top priority. . .”
This assurance seems questionable after telling members the credit union is no longer viable after the CEO’s 14-year reign.
Kinecta’s East Coast Base?
The July 16 joint press release reported the CEO of the combined operations would be Kinecta’s CEO. He is quoted: “This will be great news for members of both credit unions. . .and will enhance access for Kinecta’s east coast members.”
How important is this “east coast” member base? According to Kinecta’s HMDA filings, the credit union originated no mortgages in New York in 2019 and only 17 (1.1% of their total) on the entire east coast. In 2018, the numbers were 27 east coast mortgages (2.7%); in 2017 the total was 19, 1.4% of all mortgages. Again, the purported “east coast member base” rationale seems dubious.
Members Vote After NCUA’s “Approval”
The first sentence of Xceed’s member letter states that the credit union is “seeking approval from the National Credit Union Administration,” implying that this is an action that will be duly vetted by the regulator. Only much later is it stated that “you will have the final say when a member vote takes place early next year.”
NCUA’s role is administrative, not substantive. The most important function is to approve the required member disclosures of any financial benefits gained by Xceed’s CEO and/or other employees from the merger. Until then, these personal interests are secret.
How Can Members Assess This Recommendation?
Both the press release and member letter are filled with glowing promises that everything is going to be better. There are no factual product comparisons. How can members determine if this really is a bona fide action?
Is there a way to go beyond the marketing rhetoric and vacuous assertion that size makes us better?
Or is this just a convenient exit for a CEO and board unwilling to work through succession?
The CEO and Board’s Track Record
One way to assess these promises is to look at the track record of the leadership proposing this action. How has the stewardship of Xceed’s board and CEO in the last 14 years built the credit union and served members?
In December 2006, shortly after the current CEO was chosen, the credit union reported $734 million in assets; 70,588 members, 14 branches and a net worth ratio of 11.65%.
In the June 2020 call report the same numbers are $943 million in assets; 49,280 members, 9 branches and 9.91% net worth. Three of these four measures of institutional performance are in steep decline.
The credit union’s compounded annual (CAGR) asset growth for the past five years is a negative (-0.67%) per year. The CAGR for the 14-years is 1.39% or less than a quarter of the industry’s 5.77% annual growth in the same time period. The 1.39% annual growth also includes five mergers that added $200 million in external assets and over 30% additional members during this time.
The latest financial results are equally unsettling. In the June 30, 2020 call report, the credit union shows a year-to-date loss of $1.8 million. This compares to a positive $1.7 million for the first six months of 2019, a $3.5 million downturn.
Five Prior Mergers
During this 14 years of just over 1% annual growth, the CEO completed five mergers starting with two small ones in 2008.
On December 31, 2012, the merger of the $55 million Safeway Los Angeles FCU increased Xceed Financials’ membership by nearly 20% and added a branch in Norwalk, CA, according to Xceed’s press release.
Two other combinations were in 2016 with the $102 million Reach Credit Union, Menlo Park, CA, and the $29 million Postmark Credit Union in Harrisburg, PA.
The reasons provided in these mergers are the same Xceed now uses for combing with Kinecta: greater efficiency, larger lineup of products and services, and tremendous opportunities for growth.
After five mergers, the result is the credit union has lost over 20,000 members, recorded negative annual asset growth in the five most recent years, and reduced the number of branches from 14 to 9 since 2006.
As this member and branch downsizing occurred, the credit union’s total investment in buildings and fixed assets went from $6.5 million in 2006, to $23.5 million (350%) 14 years later.
Merging in a Time of Crisis
Xceed’s board and long-serving CEO are telling members they will be better off by turning their future over to a new board and senior management team to which they have no connection. Nearly six decades (since 1964) of member, corporate and community relationships are being jettisoned with no documented benefits or plan. Only marketing generalities.
This relationship history is especially vital during a once-a-century health pandemic and in the quarter the US economy recorded it largest GDP decline ever. From coast to coast, credit unions are stepping up efforts to respond to special member needs.
Members need their credit union now more than ever. A reliable financial partner with years of familiarity of their employer and personal circumstances, is an asset. Members impacted by today’s economy are counting on institutions they supported in better days.
They want to know their years of loyalty will be honored and their individual circumstances served when facing financial uncertainties beyond their control.
It is not size but relationships that matter. Whether the credit union is the largest, the 35th or has fewer than $10 million in assets, the key is being closer to the member than any other financial option.
Members’ confidence is based on the mutual understanding, “We are in this together.” When that value is lost, members vote with their feet. To believe a merger can reverse this shortcoming will just accelerate the steps out the door.
Neither the CEO’s letter nor the joint press release mentions anything of these immediate circumstances. That signals members’ interests are not the priority.
What’s at Stake? (“Far more than what meets the eye”)
The reasons for this merger are suspect. If the members’ best interests are not the case, what could it be?
The CEO’s words suggest the motivation. The first sentence starts, “I’m excited.” This emotion is cited twice more: “We couldn’t be more excited,” and finally, “I hope you share my excitement.”
These are the sentiments of personal ambition. This is hype hiding a $1.8 million six-month loss and the long-term decline of members and market presence. This is in fact a case study of “organizational entropy.”
A change is needed, but not that proposed in the “happy talk” letter. The merger reasons are not factually grounded. It hardly enhances “convenience” for members, the vast majority of whom are across the country and far distant from the new Southern California headquarters.
Proposal Contradicts CEO’s Own Criteria
Xceed’s CEO wrote a 2010 op-ed on mergers in the Credit Union Times with the following assertions:
“At the end of the day, credit union mergers must be based on what’s best for the member (of both credit unions). At Xceed FCU, although we operate across the country, we wouldn’t merge a credit union just for the sake of expanded asset size. There’s far more at stake than what first meets the eye. . . Mergers call for serious consideration and although I appreciate the unprecedented difficult operating environment we find ourselves in today-let’s continue asking the question “What’s in it for the member?””
That’s the question members should be asking. The CEO has disowned her own criteria: “We wouldn’t merge a credit union just for the sake of expanded asset size.” That statement alone should raise doubts not just for members, but across the cooperative system.
A Test of Cooperative Democracy
This is about common good versus private interest. Credit unions have shown they cannot be beaten from the outside, but they can be undermined from the inside. The essential bonds of trust, transparency and integrity which every credit union requires are hanging by a thread.
When something appears illogical, devoid of member consideration and not right, it is time to speak up.
NCUA has proven incapable of protecting members’ best interests in mergers. That responsibility will fall on concerned members, volunteers and employees. This is a test whether democratic governance can prevail. A cooperative system is sustained only if people are willing to stand up and fight for it.
When leaders seek to end the 50-year legacy from which they personally prospered, member-owners must confront this leadership abdication. The cooperative does not belong to any one CEO or board, but to all the members.
Call To Action
Cooperatives conquer challenges based on the will of their owners to do the same. They connect with persons who see more in their cooperatives than simply a banking channel, a kiosk, a website, a phone center, etc. These owners see an organization, a community, and personal solutions worth building.
COVID has accelerated our digital persona skills. Sound the virtual alarms via Twitter, Facebook, and all networked connections. The collective’s future is at stake. The proof of the cooperative difference will be democratic action to halt this sell out of Xceed Financial Credit Union.
For further analysis read: Thoughts on Mergers: The Tallest Candlestick Ain’t Much Good Without a Wick
The 19th Amendment Helps Enfranchise a Movement
The legacy of credit union pioneer Louise Herring (1909-1987) is vital to the creation of the modern day credit union movement. As summarized in her alma mater’s profile, she managed Kroger’s first credit union and founded a dozen more while helping to charter over 500 credit unions in her five decades of activity. To support these nascent charters, she formed local chapters, the Ohio League and the private insurance alternative known today as ASI.
Most importantly she was the youngest woman to attend the Estes Park Conference in 1934 which founded the Credit Union National Association.
More Than the Sum of Her Accomplishments
Through the force of her personality, she shared her passion for credit unions in all circumstances. The following is a story from the book Sharing the American Dream, published by the Credit Union Executive Society.
It is a small but typical example of how the 19th amendment created possibilities for women’s leadership benefiting all Americans far into the future.
Neither snow nor jail could stop Herring
by Louise McCarren Herring
This excerpt comes from the book “Sharing the American Dream,” from the Credit Union Executives Society.
I almost always organized credit unions at a change of a shift or before or after working hours. One night, I went to a meeting of teachers in Columbus, Ohio. The meeting ended about 9 p.m., and since I had scheduled a meeting with the Dayton, Ohio, police for early the next morning when the late shift went off and the first shift came on, I decided to drive the 70 miles to Dayton that night. Even though it was snowing and most people would have said in those days that it was foolish to drive at night, I started out.
I got to the outskirts of Columbus and saw a streetcar parked at what I thought was the end of the line. I passed the streetcar and was immediately stopped by the police for passing a streetcar that was loading and unloading.
An officer took me back to headquarters downtown where I was told I either had to pay a fine, post bond or go to jail. Because of the snowy night, many officers were sitting around either coming off duty or waiting to go on. They listened as I explained that I could do none of these things because I had to be in Dayton early the next morning to organize a credit union for the police force there.
As I explained what a credit union was and the good it could do for working people, the officers sitting around started to pitch money up on the table to pay my fine. I made each person who contributed to my fine give me his name and address so I could repay him. Finally enough money came in to pay the fine and I was dismissed, with a date to return to organize a credit union for them.
They thought the idea was so good they were willing to pay to have a credit union organized. It gave me the opportunity to tell them, as I have told so many groups, that no one should pay to get a credit union.
(Roy) Bergengren and (his colleague Edward) Filene had secured the laws and organized the credit unions as a public service. Those who received this service without cost or obligation had a responsibility to see to it that anybody who wanted a credit union should get it just as they did — without cost or obligation.
Bergengren often paid lawyers and other local people to organize credit unions. He never paid me because I felt it was a great privilege to organize credit unions in the hours I was not working on a full-time job.
The first credit union I organized was for the members of the Brotherhood of Railway Clerks. I knew nothing about organizing credit unions so I spent the entire meeting reading aloud the bylaws and explaining the brief but exciting history of the credit union movement. Later on, I was able to cut down the time it took to organize a credit union.