Category: Co-ops in Capitalism

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Should the Past Matter? Mission and Co-ops

How important is the knowledge of an organization’s past for a new leader?  Isn’t the responsibility of any CEO to take a firm forward from the present to the future?  Moreover, can’t one rely on existing staff and members to affirm what is important to know from history-if needed?

This is not a hypothetical situation.  Credit unions will sometimes choose new leaders with no connection to the organization or even to credit unions.  An example is BECU’s new CEO. One current NCUA board member and the newly nominated member waiting Senate confirmation have no prior association with credit unions.

How History Informs the Present

Recently I attended the 300th anniversary of the “founding” of the Bethesda Presbyterian Church.  The date of 1723 is somewhat arbitrary as there are no specific records except the journeys of itinerate ministers who came from Philadelphia to Cabin John and Bethesda to hold services.

According to the cornerstone, a new church building was constructed in 1850 on the tallest hill in the area after the original 1829 structure was destroyed by fire.  The church was called Bethesda.  It was named after the pool of Bethesda in the biblical story of the lame man waiting to be lifted into healing waters.  That eventually became the name of the town that grew up in the area.

The 1850 church and Victorian era manse occupy four acres which includes a cemetery.  The Presbyterian church founded there, moved to a new location in 1925. Various other congregations have used the buildings since.  In 2019, the entire site was abandoned.  The buildings and surrounding grounds have had no maintenance.

Nevertheless the buildings have received an Historic Site designation which prohibits it from being developed as a commercial or residential project today.

The church has seen some historic moments.  During the Civil War confederate cavalry occupied the site before union soldiers drove them away.  Abraham Lincoln is said to have visited the church.

The building contains the original beautiful sandwich glass windows.  There is a slave quarters in the rear back balcony of the church.  The original bell was stolen from its moorings in October of this year.

Besides its long historical role, why should this past matter to modern day Bethesda?  When we moved here in 1982, the town was still small, marked by single and double story buildings surrounded by  family homes and apartments.  The metro had not opened.  One could drive in and park on the lot at the Hot Shop in the town’s center.

Today Bethesda is a developer’s dream with twenty story multi-use condos and offices multiplying like rabbits.  No small parcel is exempt from this vertical expansion, except for the Tastee diner that sits at the foot of Marriott’s World Headquarters.

Reason for Resurrecting the Site

What does an abandoned, overrun hill with two deteriorating buildings mean to this new mecca of upscale commerce and residences?

In a talk during the 300th anniversary celebration of the Church, a local volunteer historian presented his thoughts on why preserving a community’s history matters.

The church is old and freighted with history.  Which begs the question of why we are here, celebrating it.  To me, the answer is that shared history is an important part of what defines a community. We can only understand and celebrate what we are when we understand and appreciate how we came to be. And we look to the past to prepare for the future because, as James Burke wisely observed, “there is nowhere else to look.”

In the end, it doesn’t matter that we can’t pinpoint the founding date of this congregation.  What matters is that the history of Bethesda Presbyterian Church and its (original) Meeting House is literally the history of Bethesda—its rise, its growth, its weaknesses, its redemption.

No other building or institution comes close.  How did we begin?  Look here. How did we cope with slavery and its legacy?  Look here.  How did we evolve from a farm hamlet to a suburb to an urban center with all the strengths and challenges that brings.  Look here.

Credit Unions, History and Mission

Credit unions have played an integral role in their members’ lives and what it means to be part of a “community” initially called a “field of membership.”

It is not the buildings and products that define a coop, but rather belonging to a group whose mission is to take care of each other, even today.  Members bring their history, sometimes their entire lives, contributing to keeping it going.

That continuity of mission is why credit unions exist.  When that history is forgotten, ignored or seems irrelevant to the present, that is when we begin to lose our future.

A credit union can be much more than a financial institution; it is a means of creating and sustaining a “community” that cares about each other.  And whose history will have “its rise, its growth, its weaknesses, its redemption” just as this Bethesda spiritual congregation has experienced in its 300 years.

 

 

 

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Belief and Understanding: A Lesson on Cooperatives

This past weekend I learned about leadership at a rehearsal for the Messiah.  No, this not a blog about harmony.

In Washington D.C. the National Presbyterian Church organizes an annual community choir to sing the Messiah’s Christmas story during the holiday.

The chorus has no auditions, entails five three-hour rehearsals and a full weekend of dress rehearsals and the public performance.   This ambitious, one time assembly is led by the Church’s  long time musical director  Michael Denham.

This year’s chorus will number about 120.  It includes people of all backgrounds, from different faith traditions and no church connection.  They join together for the joy of singing Handel’s oratorio in this season.

In addition to the disciplines of the music, stresses on notes, cut offs for phrases, tempi and dynamic level Denham will explain the importance of the text.   This past Saturday his description of what he was seeking musically has relevance to all of life.

The tenor soloist opens the Messiah with two arias.  The words are from Isiah:  Comfort Ye My People and Every Valley Shall be Exalted.  The chorus then enters to affirm the prophet’s message singing: And the Glory of the Lord.

The chorus’s words, from Isiah, assert the truth of the Isiah’s prophecy:   The glory of the Lord shall be revealed, and all flesh shall see it together.

Denham focused on the words we were singing.  They are affirming the message of the tenor’s arias.  The words say why this prophecy is true.     The chorus sings because, The mouth of the Lord hath spoken it.

Denham acknowledges the many spiritual and secular backgrounds of chorus members.  In singing these words his expectation was clear: “ I’m not asking you to believe the message, but I am asking you to understand what is being said.  The words have meaning.”

Belief and Understanding In Cooperative Leadership

The most important competency for a cooperative leader is their understanding of cooperative design and its advantages.   Without this “grasp” one will rely on habits learned in other professional roles:   banking, government service,  lobbying or perhaps non-profit experiences.

Ideally one hopes that understanding brings, in due course, belief in the purpose and roles enabled by cooperatives.

If a leader has only a superficial understanding based on generalities such as “people helping people” or “protecting the insurance fund,” then other management priorities, learned elsewhere, will dominate one’s goals:  power,  personal ambition, institutional growth.  Effectiveness is measured by criteria other than how members’ and community well-being is  advanced.

For example in NCUA’s public board meetings last week I listened for reference to cooperative differences when discussing the budget, the NCUSIF’s financials and the state of the industry.

I recall no comments referencing the advantages of cooperative differences and design.

The Cooperative Journey

Credit unions were meant to be apart from the  market driven, capitalist culture which dominates American society.  And many individual’s personal goals.

Coops are about a community or group’s collective efforts working together.

The results are intended to be paid forward for the benefit of future generations, not cashed out for  momentary personal profit.  This inherited legacy is often taken for granted.  New leaders forget how their institutional roots were planted.    They honor themselves for what they have accomplished rather than acknowledging the inheritance of others’ labors.

Understanding cooperative operations is about much more than the mechanics of a financial institution.  It takes time and experience to learn  the history and how an institution’s success is intimately intertwined with the relationships with the people who own it.

The primary goal of a credit union is not institutional achievement or market dominance but a place  where people can thrive and fulfill their dreams. That is not the ethos of capitalism where competition is about winning and losing, taking over one’s competitors, maximizing profit and outperforming the market.

Credit unions are about life lived in community.   The design facilitates self-help and awareness of shared purpose.

They are also institutions that facilitate gratitude and at special moments, celebrate the joys of life together.  Especially in this season.

This understanding is a journey.   It is not learned from books  or from courses and certainly not gained when one achieves a  leadership responsibility.   Familiarity with the credit union story is certainly helpful.  Skills with the mechanics of management are essential.

But belief in the power of cooperatives, like other beliefs, is an awareness that occurs over time.   It is sharing experiences with others and seeing their stewardship and in some cases, the impact of their life’s work.

When cooperative belief joins with understanding, the result can change the world.  For that capability we should be grateful. For in much of the world purpose is equated with individual success.  Whereas for cooperative credit unions meaning arises in community.  That is something for which we should all be thankful.

 

 

 

 

 

 

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A Reader Writes on Mergers and Group Think

I  have written several  posts critical of merger rhetoric and the lack of any shared or concrete member value.

A senior executive who  participated in one of these events sent his reaction, which he asked remain anonymous:

My current belief (call it a strong opinion, loosely held ala Jeff Bezos) is that credit unions need to progress while returning to basics. Progress with less traditional banking/teller line activity, prioritize financial wellness and remote banking experiences. Return to basics with more transparency, increased collaboration and innovation.

It seems to me that in the pursuit of progress, the trend is to become tight-lipped. The other undeniable trend is the belief that scale is absolutely necessary and that the only viable method to scale is to merge/acquire. I don’t agree with the trends, but I don’t have anyone around me who seems capable of an open debate on the matters. 

Our greatest threat today, IMO, is group think.  Well…At least I hope you don’t mind me keeping the conversation going with you.  Currently, I have to stay off the record here.  I want you to know that I’m reading…and learning.  

Group Think & Credit Union’s Future

When internal staff are uncomfortable with the direction of their credit union, this is a sign those closest to the action see  problems.  But it is hard to speak up against a leaders who do not encourage dialogue, let alone dissent.

CUToday publishes periodic updates on proposed mergers with the details sent NCUA. Most are well-capitalized, many are small, but focused. Below is one data point that especially stuck out from each merger summary:

Name                                                Charter Date

Freedom Community CU, Fargo, ND:    1954

Mt. Carmel Church FCU, Houston, TX:   1954

Virginia Trailways FCU, Charlottesville, VA: 1949

Airco FCU, Pasadena, CA:      1957

Mt. Lebanon FCU, Pittsburgh, PA:  1936

Parkside CU, Westland, MI:   1953

United Methodist of MS FCU, Booneville, MS 1961

Elevator FCU, Olive Branch, MS:  1967

G.P.M. FCU, San Antonio, TX:  1970

Our Sunday Visitor Employees FCU, Huntington, IN: 1968

Lubbock Telco FCU, Lubbock, TX:  1940

The list goes on.  These credit unions have navigated  multiple economic crisis, technology evolutions, deregulation and regulatory backlash.

Yet their leaders have given up, even with strong balance sheets and decades of member participation.

These are not financial failures.  They are failures of morale.  The greatest threat to the coop system is not external, but internal.  The belief that the legacy of multiple generations of human investment they inherited, no longer matters.

Like any behavior, the more the pattern of giving up occurs,  the more acceptable the option appears.   Ed Callahan described this challenge as the danger of self-fulfilling prophecies.  If you think your team can’t win, you will probably lose.

The concern above was from a career professional about his credit union and group think.  To address his worry, he is looking for leaders who believe in the advantages of cooperative design.  And who realize it every day to further the legacy their predecessors handed to them.

FDR observed,  “Humans are not prisoners of fate, but only prisoners of their own minds.”  What better time for leadership that believes in creating the future, rather than surrendering to  “tight-lipped group think.”

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The Onboarding Process of a Credit Union Leader

Credit Union Times has been publishing  multipart interviews with Tru Stage’s new CEO, Terrance Williams.  He has a long resume, but is from outside the credit union industry.

He is not the only recent external CEO arrival.  Another newcomer in a major credit union role is Beverly Anderson who became BECU’s new CEO in December 2022. Her professional resume is almost all in banking.

For “outsiders” onboarding is a critical  leadership process for someone new to the cooperative system.  Currently a major transition is underway at NCUA as  new board member Tanya Otsuka will shortly succeed Rodney Hood’s whose term expired in August.

Similar to these new CEO’s, she has no direct experience with credit unions.  Rather her background is mostly as an FDIC employee.  While not CEO, she will have a significant responsibility in overseeing and managing NCUA’s priorities.

What Makes an Effective Executive Onboarding?

Both new credit union leaders above have been quite open with the press discussing their backgrounds and how they are making the transition to their new responsibilities.

Here is an excerpt from Tru Stage’sTerrence Williams on his leadership approach:

“I often talk about the fact that leaders who push change for change’s sake are likely to meet with doom or demise. Because I guess change for change’s sake is not something that’s worthwhile. But change to ensure that you are evolving to maintain relevance, to ensure that you are continuing to adapt to the ever-changing needs of members is really what’s paramount for us …

We have a lot of work ahead of us collectively to figure out how we ensure we create a level of relevance with the next generation of future members, and ensuring that we are designing processes and solutions and tools that align with their needs and how they wish to interact.”

Similarly BECU’s Beverly Anderson gave an extended CU Times interview describing her transition to becoming a first time coop CEO:

“What’s exciting about this role is, one I’m a first-time CEO, two I’m in the credit union movement for the first time, and three it’s my first time at BECU and here in the Pacific Northwest.  . .

“The first six, seven months or so have really been about listening and learning. I did 30-plus deep dives with the organization, used that time to get to know the team and have them get to know me, and learned a lot about the business.

“The second thing I did was begin to understand the movement. It was very clear when I started using language like ‘profitability’ and ‘ROA,’ and people very quickly suggested I use some different language. It’s helped me to understand that the movement is in fact very, very different. Our return is around return to member, not necessarily return on assets, and that was a very big shift and pivot, but one that I quite relished.

“The third thing was getting to know my board – I have a new kind of boss and leader, a board. . .they are encouraging, engaging, experienced in their own right, and they have a lot of support and commitment for this organization.”

Important Steps in an NCUA Board Member’s Onboarding

Following are a number events that could mark NCUA board member Otsuka’s approach to her responsibilities. These cues will come from the statements and actions she takes in the initial days of her tenure. They include:

What is her understanding of the role of the credit union cooperative system?  How does its purpose as a non-profit, tax-exempt, member-owned system fit  with other financial options?

Who is on her team as advisors?  What is their knowledge and experience with credit unions?

How does she learn about the credit union constituencies she is serving?  Who does she see or visit on her first forays into the system?

What points of view does she bring to credit union issues?   Does she ask for data, seek options, and/or reference experiences from prior responsibilities?

What is her view of an NCUA board member’s role?   Is it a part-time or full-time job?  An in-the-office or show-up-for-Board meetings responsibility?  Is her focus on high level policy generalities or demonstrated interest in concrete operating outcomes and results?

Also, how transparent is she about the learning process that goes with any newly installed senior executive?  Does she give unscripted interviews?   Is she candid about her approach and areas for learning?  Is she available or kept in situ by the agency? 

The bottom line is whether Otsuka will become the Chairman’s doppelgänger in her board role? Or, as an outsider with a new generation’s vision, bring fresh hope and enthusiasm  to the credit union system?

When one reads the interviews of Terrance Williams of Tru Stage and Beverly Anderson at BECU there is a sense of confidence, commitment, and positive leadership energy.

That is what one would hope for in any NCUA board member, but especially at this juncture of credit union opportunity and challenges and NCUA’s peripherality.

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The Lack of Public Confidence in America’s Institutions

Polling routinely tracks the decline in trust Americans have in their institutions, both public and private.  From a September 2023 Pew Research Report: “Fewer than two-in-ten Americans say they trust the government in Washington to do what is right “just about always” (1%) or “most of the time” (15%)

In the private sector, this distrust can accelerate business uncertainty, or lead to failure.  When economic challenges combine with  the ever present potential for market disruption, continued  success can seem more tenuous.

One area where these negative forces have all combined is in America’s newspaper industry.  One of the survivors is  Arkansas Democrat-Gazette, owned by the Walter Hussman family,

I recently heard him speak about how his paper has continued to succeed in this “dying industry.” Today the daily edition publishes the third or fourth largest amount of news stories after the national editions of the NY Times, Washington Post and Wall Street Journal.

The challenges and Response

In his remarks Hussman said the peak in newspaper ad revenue was $60 billion in 2006. Now it is less than $10 billion.  Many local papers and national chains such as Gannett have been purchased by hedge funds or outside investors.  Their business model is to provide “less and less” and ask customers to pay “more and more” to maximize their financial return, not the newspapers’ role for the public.

The separate Democrat newspaper bought out its Gannet-owned competitor the Gazette in 1991,  becoming the dominant  statewide publication.  Hussman’s view is that national news and sports are available everywhere.  What matters to his readers is local reporting.

To meet the disruption of both advertising and readership by social media, several years ago Hussman converted the six daily editions to an online format only, with just the Sunday paper still in distributed in print.  He provided free iPads to all subscribers. Teams of employees travelled  throughout the state to show customers how to use the online format.

That digital offering is continuously upgraded to include videos and other editorial material and links that would not be feasible in a print edition. Another factor in the conversion: “Today’s younger readers want the news to find them.”  The cost is $39 per month.  The savings in both newsprint and distribution costs has allowed the paper to remain profitable.

But what about the public’s general mistrust of all news media, both print and broadcast.   He cited that only 16% of the public trusts the media.   Everyone can choose the source today that most closely aligns with their views reinforcing existing “confirmation bias.”

Publishing Operating Core Values

Hussman described his firm’s response to this pervasive mistrust.  Every edition contains a brief Statement of Core Values, summarizing the organization’s approach to reporting.  Here are excerpts:

Credibility is the greatest asset of any news medium and impartiality is the greatest source of credibility.

. . . a news organization must not just cover the news, but uncover it.  It must follow the story wherever it leads regardless of any preconceived ideas. . .

The pursuit of truth is a noble goal of journalism.  But the truth is not always apparent or known immediately.   The journalist’s role . . .is to report as completely and impartially as possible all verifiable facts so that the reader can . . . determine what they believe to be the truth.

. . . as much as possible, there needs to be a sharp and clear distinction between news and opinion.

A newspaper has five constituencies. . . readers, then advertisers, then employees, then creditors, then shareholders.  As long as the newspaper keeps its constituencies in that order, especially its readers first, all constituencies will be well served.”

The Core Value Imperative

Hussman told the story about stating his core values when asked by a major television news network executive how to move his channel to a more neutral political public perception.

Most organizations, even credit unions, talk about and publish lists of value.  In many instances they affirm common sense principles such as integrity, openness, impartiality, etc.

There is a difference between virtue signaling efforts and core operating  principles as described by Hussman.

For the past week I have published brief excerpts from the Coach’s Playbook, a series of core operating statements by Ed Callahan.  Note that none of these was a list of personal values; rather they were the operating priorities he followed in multiple leadership roles with credit unions.

The difference between the two approaches is revealed when persons in authority fly from their responsibility to do “the right thing.”  Some will fall back on legal distinctions, some on tradition and others assert their positions of power or control of resources.

Banking on Values

Today is a celebration of Banking on Values, a global movement to change how finance can make change.

Their founding purpose:  “Banking is a powerful force.  From social equity to climate emergency the banking sector has a choirce; either ignore and exacerbate these issues or work together to overcome them.  . . banks must think bolder.”

Do credit unions today think bolder?   Are their values expressed in actual operating priorities?  How would they “square” their oft stated goals of growth and scale with the purpose to be a member-first design?

No one can question credit union financial success, the system’s stability and the avoidance of significant operational failures.   But is that what members and the country need at this time?

Can operating core values reignite credibility in purpose, or will we continue to float along with the rest of the financial sector?

Lip service to what credit unions should be will provide neither cooperative advantage nor market differentiation and success.  That is not the path of how we got to where we are today.

 

 

 

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Wisdom: The People’s Movement

The People’s Creation

“We don’t have to concern ourselves when people ask, “but what did Congress intend us to be?”  Our movement does not exist because it was created from the top (i.e. Congress) down.  Rather it was created from the bottom (i.e. the people) up.

We told Congress what we intended to be: cooperatives that would try to serve the needs of their members, whatever those needs might be.” (pg52)

Note: The Coach’s Playbook is a collection of the thoughts of Ed Callahan as a federal and state regulator, innovator and credit union CEO.  The book was published by Member Value Network.

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Wisdom: Running Lean

           On Running Lean

“I started my career as a football coach. Something you learn from coaching is that people can do more than they think they can.   They can be faster, work harder and do more than they thought possible when they got up in the morning.

“When I arrived at Patelco, I reviewed the numbers.  The credit union was sending 10% of income to reserves and returning 4-5% to members as dividends.  Patelco was bloated and did not know it.

“I set a new goal: 10% to reserves 28% to expenses and 62% back to the members,  To get that 10-28-62, everyone had to work leaner and better.  Nothing was considered sacred.” (pgs 22-23)

Note: The Coach’s Playbook is a brief collection of the thoughts of Ed Callahan over his 30 plus years in credit unions. The book was published in 2006 by the Member Value Network.

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Wisdom from The Coach’s Playbook

                  On Members

” Most economic institutions exist for the capitalists, who are a tiny minority compared with the body of customers.   In such an economic system as now exists around the world, people do not come first.  Money does.

Credit unions are different and always have been. We never came together with notion of making money, but with the notion of helping people and improving their lives.” (pg. 7)

 

Note: The Coach’s Playbook is a short collection  of Ed Callahan’s observations.  These were collected from his writings and talks working in credit unions:  eight years as a regulator  (including Chairman of NCUA from 1981-1985), co-founder of Callahan & Associates, and as CEO of Patelco.   The book was published in 2006 by Member Value Network, a spontaneous “collection” of credit union leaders and consultants.

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Credit Unions and Public Banks  

On September 18, 2023 an organizing group Friends of the Public Bank of the East Bay  (PBEB) announced the hiring of a its start-up CEO, Scott Waite.   This is a brief announcement by Waite on YouTube.

Waite is a credit union veteran having served over 20 years as Patelco Credit Union’s  CEO.  More recently he had turned around Central State Credit Union which had been operating for four years under regulatory constraints.

PBEB has raised $1 million and is undertaking further fund raising.  Four local jurisdictions – Alameda County and the cities of Richmond, Oakland and Berkeley – are supporting the effort contributing financially to the bank’s groundwork and business plan.

The intent is to seek a bank charter with FDIC insurance to open by 2024 or early 2025. The goal is to facilitate local governments’ reinvestments back into their communities. As a wholesale bank, PBEB will partner with community banks, credit unions and CDFIs to finance affordable housing development, small businesses, the renovation and electrification of existing buildings, and the ability of cities and counties to refinance their municipal debt locally.

More Efforts Underway

On September 29, the online reporting site, Next City, posted a summary of the history of public banking and the growing interest in major cities across the US.

A Victory For Public Banking

A public bank in California’s East Bay is gaining more momentum to become one of the first public banks to start operating since the state-owned Bank of North Dakota got established in 1919. It is the first public bank to hire a CEO in the last 100 years.  Interest in establishing public banks has grown significantly in the last decade but many organizers continue the long push to get one created in their cities.

In an earlier article Next City described efforts of mayoral candidates in Chicago and Philadelphia to make public banks part of their electoral initiatives.

Organizers in New York also want to create a city-owned wholesale bank which was the subject on an article in Credit Union Times, Public Banks: An Important Idea Whose time is Overdue. 

The author, Melissa Marquez, CEO of the $37.7 million CDFI Genesee Co-op FCU, pointed out the public banks are not competition but “would partner with us to increase our capacity to lend, grow and meet our communities’ needs. This partnership model is effective precisely because it leverages the proven expertise of local lenders and the scale of public deposits.”

She pointed to the century long record of the Bank of North Dakota, a public bank with over $10 billion in assets.   From its 2022 Annual Report:

BND had “a record $5.4 billion in loans to the state’s farmers and ranchers, business owners and students in North Dakota and record profit  of $191.2 million in 2022, up $47 million from 2021.”

Her article  cited statistics from the Institute for Local Self Reliance that  “the Bank of North Dakota has fostered the highest rate of community banks and credit unions per capita in the country.”

She added: “The New York Public Banking Act (S.1754/A.3352) would create an appropriate regulatory framework for enabling localities, such as Rochester or New York City, to apply for a special purpose charter for a municipal public bank. They will be charter-bound to reinvest in equitable economic development in low-income communities.“

The article also cites the history of the CDFI programs as a model for a new, locally focused financial institution system:

“30 years ago, the federal CDFI Fund was established during the Clinton Administration as a part of the U.S. Treasury. There were naysayers and name-callers then as well. But three decades later, thousands of successful CDFIs are operating in urban, rural and native communities across the country, and CDFIs enjoy broad public support across political and other divides.”

Why Public Banking Could Take Off

Scott Waite explained his decision to lead the PBEB as a “grass roots movement meeting the moment.”  The bank will partner with other institutions to ensure public funds are reinvested locally.  His three areas of initial support are affordable housing, renewable energy and small business lending.

PBEB cannot be a retail bank.   As a wholesale firm they will rely on other community financial institutions and firms to initiate projects for joint financing.

I believe there are two factors that suggest public banks could succeed.

The first is that the increasing consolidation of financial institutions.  This means that locally owned and directed firms are becoming less and less prominent in major American cities.

When I worked at the First National Bank of Chicago ( 1974-1977), the city had three major local banks:  First, Continental and Harris Bank plus dozens of correspondent banks under Illinois unit banking charter limits.  Today I know of no major locally owned bank that calls Chicago its headquarters.

Yet municipal and country governments manage hundreds of millions of dollars that are all deposited in for-profit institutions, whose priorities may not align with how local governments might see funds used.

Just as credit unions were formed by tapping into the steady flow of wages for military and public employees in earlier generations, public governments and authorities are now focused on the wholesale use of funds with local partners.

Secondly. government today is big business.  Public contracts for roads, health care, schools involve overseeing hundreds of millions of dollars in dedicated public spending.   Some of these same skills will be required in overseeing new institutions for local financing. In many cases the expertise is already there or readily available such as Scott Waite’s hire.

In one instance, credit unions have already chosen a public banking option. The Midwest Corporate Credit Union serving North Dakota voluntarily dissolved in 2011 after the multiple uncertainties driving the new corporate regulations. They did so because “North Dakota credit unions had access to the Bank of North Dakota that provided many of the services of a corporate credit union without having to maintain a capital share.”

Just as the FHLB system has become the preferred liquidity lender for the credit union system not the CLF, public banks may accelerate their role in local financing projects that are now too large for one institution to undertake.

Scott Waite believes credit unions should embrace these efforts as it will facilitate a greater local role for their members’ funds.  And just as important, the underserved needs are growing in cities across the country, so that innovative initiatives will be critical.

We’ll know the concept has taken hold when there is a public banking support organization such as Inclusiv for CDFI’s.

 

 

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The Challenge of Being a New Coop CEO

Leadership changes are necessary to sustain every organization’s success.   Sometimes changes at the top work well; other times they come with drama and uncertainty.

New CEO’s, especially if brought in from outside an organization, will have a healthy disrespect for the status quo.

But no one wants a job they disrespect.

So the critical performance standard is the leader’s vision of the future.   Is the person equipped with the right motivation, not just relevant professional skill sets?  Or, are they chosen just to break from the past?

A  Difference, If Understood

Credit unions as cooperatives can teach and illuminate human possibility.  But it can only do so to the extent that leaders are determined to use the design for those ends.

Otherwise, it becomes nothing more than an aggregation of financial accounts in a marketplace full of options.