Category: Co-ops in Capitalism

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FDIC Reports $12 Billion Fund Decline for First Quarter;  NCUSIF Stable and Growing

On June 23, the FDIC released its quarterly financial update as of March 2023. The Fund had fallen by $12.1 billion to $116.7 billion, or a ratio 1.11% of insured savings.

The largest factor in this decline was an increase of $16.7 billion for the loss provision expense for the two bank failures and potential shortfall on the resolution of First Republic.

The Fund’s revenue was primarily from quarterly premium assessments of $3.3 billion (83% of total).  Earnings from investments were only $661 million.   In addition to the loss provision and operating expenses of $508 million, the fund realized a loss of $1.7 billion on sale of investments.

The FDIC’s Assessment Practice

The quarterly premiums are calculated on average consolidated total assets minus tangible equity, not insured savings.   This assessment base is $20.7 trillion or twice the $10.5 trillion of insured deposits at the end of March.

These quarterly fees are not a single rate for all banks.   Rather for the first quarter they are based on CAMELS score and balance sheet complexity.   The range from a low of 2.5 to 42 basis points of each bank’s assessment base.  The annualized total premium for the entire banking system using the first quarter total is approximately 6.4 basis points.

The FDIC presents no other information about the quarter such as a standard balance sheet, income statement and cash flow reports.   So it is not possible to track other performance indicators such as the total loss provisions and management of the FDIC’s investment portfolio.

The March quarter was the first significant bank failure in at least the past eight years as shown in the historical table II-C.

The FDIC’s conclusion about its financial situation is that it will return to its statutory minimum reserve ratio of 1.35% under the DIF Restoration Plan approved on September 2020 by the required time frame of September 2028.  What is unstated is how high the quarterly premiums will be will have to be to make this goal.

The NCUSIF’s Status

NCUA posts the NCUSIF’s monthly financial statements for public review.  The latest is for May 2023 and shows a stable fund  with positive earnings $70.2 million which is an increase versus the prior year’s $67.2 million.

This result is due to the $50 million increase in revenue from the rising yield on investments.  This offset a $14 million increase(16.5%) in operating expenses and a $10 million higher loss provision expense compared to the first five months of 2022.

The fund’s retained earnings as a percentage of insured shares has stayed stable throughout the first five months at .297. Adding the 1% required deposit gives a normal operating level of almost 1.3%.

The most challenging part of the NCUSIF’s management is the investment portfolio which reports a YTD return of 1.76%.   The overnight portfolio shows a yield of 5.23% for May but the remaining $18.4 billion earned only 1.4%.

The investment portfolio’s market value is $1.4 billion below book.  This fall equates to 27.7% of the NCUSIF’s retained earnings.    As the fund continues to add to its overnight total, the average duration has slowly declined to 2.86 years at the end of May.

Learning By Comparison

The FDIC’s premiums will continue to be an open-ended fee paid quarterly to build back the FDIC, a process that will continue for the next five years.

The NCUSIF is at the traditional NOL of 1.3%.  As it adjusts the management of its investments, the Fund’s primary source of income, this should result in credit unions looking for a premium from their cooperatively designed fund in the years to come.

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An Initial Reaction to the NAFCU-CUNA Merger

I have just read the general announcement.  But am looking forward to learning the details, plans and benefits as these become available.

Here are my first thoughts.  The members of both organizations will vote on the mergers.  This is a good precedent for all coop mergers.   That way the details and commitments are explained to both constituencies.   When only the merging entity votes, the acquiring firm is exempted from commenting, or even committing, to what the intended benefits will be.

The Loss of Competing Views

Competition in ideas can result in more and better options for credit unions.   NAFCU as the # 2 trade association had to always “try harder.”   This was especially important in critical moments of legislative and regulatory change when there were different “proffers” or options presented by each trade group responding to congressional or administration views.    One need only recall the give and take in passing the CUMAA in 1998.

NAFCU’s origin story in the early 1970’s was to advocate for a federal insurance option, a  position on which CUNA was extremely skeptical.   CUNA feared federal insurance would mean the dual chartering system and cooperative solutions would be subjugated to federal control and uniformity.   Both trade groups were right.

As any CEO who has merged their credit union will testify, mergers are acquisitions, not “marriages of equals,” or other PR pseudonyms.  CUNA’s culture, priorities and politics will be, absent explicit goals, the continuing model.

The Importance of Details and Plans

This first step of mobilizing political consensus at the board and CEO level for a merger is the easy lift.  Most mergers defer the messy details until after the deed is done and the surviving leadership takes over both organizations.

Intentions, promises of shared goals, enhanced capabilities, reduced costs-in sum better value for the members-are never identified or stated.  Just rhetorical promises, sometimes sugar coated by adding several directors from the old organization to the new.

Details matter when change of this magnitude and circumstance occur.  What I will be seeking in this process is how the merger will address the top two or three strategic issues facing credit unions and the future of the cooperative option in America’s financial markets.

Every party serving the cooperative system will have a different vantage point from which to provide their priority.   In my view, this strategic assessment should be the number 1 task for this most consequential change in how America’s credit unions will be represented going forward.

Some strategic issues might include:

  • What should be the role and voice of the member-owner, now largely absent, in the evolving credit union model? NCUA prefers consumer protection not member rights.  Credit unions have removed members from any meaningful role in the governance process.
  • How will the continued trends in consolidation and absence of new charters be addressed?
  • Can the unilateral and “me-first” approach of NCUA be transformed to a more collaborative, cooperative effort for oversight and project priority?
  • How can the credit union system be more engaged in addressing the key challenges members face in their communities from affordable housing, student debt overload and fair financial options?

Priorities may vary across the numerous cooperative organizations.  However, without identifying these issues, the merger outcome could be samo-samo.

Ed Callahan used to observe, people will do what they know.  Meaning they revert to the actions with which they are comfortable.   In this case a single national trade association could result is just more resources devoted to political lobbying, PAC’s and PR tacking with each change in the political and economic winds.

Without a plan for what the system should strive to be, a CUNA-NAFCU merger could just perpetuate the status quo but absent an important forum for dissenting views.

 

 

 

 

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Reporting Coop Success In the Glare of Live Market Updates

This is the season for reporting quarterly earnings by all public companies.  Even credit unions must file their 5300 financial updates with the regulator which are then open to the public.

These many forms of quarterly financial reports are required by law and regulation.   For stock companies, shareholders, traders, investment funds and market analysts, the daily news is dominated by the ups, or downs, in company performance. Here is one example of this reporting frenzy:

Earnings season marches on

This week brings another busy slate of quarterly earnings reports, from tech giants to restaurant stocks. Apple and Amazon are the biggest names due up, along with Starbucks and CVS Health. Earnings this season have so far defied expectations and have been somewhat stronger than expected. Here are the big names on deck . . .

None of those big names will be credit unions.  Credit unions are required in their bylaws to post a monthly financial report in a conspicuous place in the credit union and file the quarterly 5300, but few will provide a public description of these results.

Credit union have shareholders, as do all public companies.  The members’ interest in the performance of their firm is the same as the owners of a bank or any other firm.   How is my ownership benefitting me versus other options?

For stock companies, the market readily evaluates this performance as documented by changes in the daily stock price.   Analysts evaluate the current results and make their “calls” about whether a stock is a buy, hold or sell.  Explaining a firm’s quarterly performance to all market participants is an important skill for CFO’s and CEO’s of all companies, even the smallest.

Credit unions generally provide no such reports or future forecasts (guidance). There is no stock price to provide market feedback.   But is the interest of the member-owners any less deserving than those of public companies?  Is the responsibility to coop shareholders by the credit union’s professional staff any less than to a publicly traded or even a private firm?

When Credit Unions Did Speak Up

In the March-April closures of three banks led by Silicon Valley’s failure, credit unions launched major PR campaigns to assure their members that they were sound.  CEO’s stated there were no parallel circumstances in the coop industry.  Some credit unions devoted a major part of the Annual Meeting to this public concern.  Some of these updates highlighted the credit union’s percentage of insured shares, or capital levels, or liquidity.  The message was to assure members the credit unions were able and willing to continue meeting their needs.

I believe each quarter’s financial filing is another opportunity for credit unions to tell their special story.

What Do the Numbers Mean For Me?

Numbers matter and presenting the credit union’s financial position and key trends is a beginning.   The most important message, just like a public company, is to tell what the numbers mean to the individual owner.

How has the credit union enhanced the value it brings to members?  What investments has the credit union made and what was the member benefit?  As the interest rate environment remains high, what changes has the credit union made to its rates?

Members will assume their credit union is safe and sound, or they would have left.  Credit unions will often announce events, such as branch openings, sponsorship with a local sports team or venue, and even the comings and goings of senior management.  These PR events and community engagements matter, but are not the same as the quarterly status report.  At this time everyone presents their financial results-so how did our members specifically benefit?

The Radical Cooperative Model

Since the 2008-2009 financial crisis, there has been a singular focus within financial systems on stability.  Financial outcomes are all that matter.  The more capital the better.  The only equity that matters is net worth, not social responsibility.

Financial performance is evaluated by the money made, not by the people served.  The relevance of a coop is becomes  its size, its growth and its superior numbers.   A credit union that focuses on what it helped members accomplish becomes a radical act.

Transparency is the key to member-owner confidence and trust.  And competitive advantage.  It is as important for coop leaders as it is for those whose performance is judged daily by the fluctuation of share price in the market.

However credit union’s quarterly numbers are not merely about financial outcomes but for how the performance aligned with the aspirations of members.  Coops should be presenting the values and partnerships that demonstrate their role in communities beyond the conventional financial success measures.

We should be holding up a model that is better for individuals, especially those often unaware of better opportunities.  The quarterly updates should show how a credit union’s purpose is more than making money.   It is a report on the difference made for the members.

A Renewed Commitment to Using Numbers to Say Who We Are

As all three major U.S. stock indices closed higher for July, the S&P 500 and the Nasdaq mark their fifth consecutive months of gains, and the Dow is riding a 14-day winning streak, its longest since 1987; however  cooperatives have a different benchmark to report.

Our momentum is not market driven, but member focused.  There will be a big new batch of corporate earnings the rest of this week not to mention the July jobs report due Friday.

Instead of  live market updates, we should be offering our reports of improved member lives and opportunity.   That is the difference coops should make.

 

 

 

 

 

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How This Story Ends May Show the Future of a Unique Coop System

Oscar Abello, economic editor at the non-profit reporting site Next City, finds instances where credit unions provide “solutions for liberated cities.”  In his latest coverage, the event is a six plus years effort to charter a new credit union for North Minneapolis.

However the end of the story is not clear.   Will there be a new community financial institution, or will the process be stillborn?

Abello poses this fundamental question:  The travails of Arise Community Credit Union, set to be Minnesota’s first Black led-credit union, raise the question: How hard should it be for communities to have their own financial institutions?

The link to his analysis posted on July 11th can be read here.  While recent events are promising, the charter has yet to be granted.

I have three takeaways from his description of this new chartering effort.

Three Lessons

  1. New charters require people with passion and commitment, that is entrepreneurs who believe in their cause. His article profiles Daniel Johnson the CEO-designate who left a successful financial career to serve a clear community need where businesses have been “disinvesting” for years.

Johnson’s motive for leaving his career security: “The community said,(after George Floyd’s death) ‘We don’t want another park. We don’t want another place just to throw flowers. We want something more tangible, something that we can have as an institution that will be around long after we’re gone.’”

  1. In addition to the community’s decline, the market timing was right as Minnesota had just capped payday lenders at 50% APR: One fact: “The average borrower took out nine payday loans, at an average loan amount of $365, and was charged an average of 197% interest per loan.”

The process is not easy as Abello describes:  But chartering a new credit union today is like traversing a long-lost trail through the woods, one that used to be well-traveled but is now overgrown or littered with fallen trees or other obstacles no one has had to navigate previously.

Prior to 1970, there were 500 to 600 new credit unions chartered across the country every year. After a steep decline to near zero, the numbers have never recovered. Over the past ten years, fewer than 30 new credit unions have been chartered across the country.

Changes of leadership, loss of local funding from foundations, the challenges from Covid have led to stops and restarts.   The  Minnesota Credit Union Network and AAUC have stepped up to help.  Credit unions have contributed to a $1.0 capital fund and pledged deposits of several million when up and running.

NCUA is apparently requiring $3.0 million in committed capital based on the credit union’s projections to be $10 million in assets in three years-or a 30% net worth ratio.  This capital base would equate to 50% of the first year’s asset goal of a $6 million balance sheet.  This is an amount not required by law, regulation, or common sense.

In addition to this enormous fundraising barrier, the requirement distorts the fundamental dynamics of self-help for a new charter.   Raising capital encourages investments in fixed assets and operational capabilities that may not be required for years.  It discourages the boot-strapping and learning that must occur when a new  charter reaches out to find the best ways to serve their community.

  1. The chartering process is failing the communities which most need credit union support. Abello points out that “out of 4,700 credit unions across the country, only 500 are self-designated minority credit unions.”

The executive director of the Minnesota Credit union foundation has a new goal from this effort: “One thing that we’re working on right now is coming up with a playbook because the chartering process is quite complex, and really trying to take the learnings that that we’ve had working with Arise and trying to come up with a resource that’s going to be helpful for additional groups going forward.”

Abello tentatively answers the question he posted at the beginning with this observation:

“If a community wants it, if it can prove there is a market for such services that no one else is meeting, and if it can marshall the necessary financial, professional, technological and other resources necessary to pass regulators’ muster, then for now, any community has the right to try and answer the question for itself.”

The obvious answer is few would want to navigate this obstacle course before even entering the market’s fray.

Why did CEO-designate Johnson decide to join a startup in this context of financial consolidation, established competitors and bureaucratic barriers:  “It’s important for people to be able to see that an institution has planted a flag that really represents them and isn’t driven by stockholders.”

In other words:  You own it.  But will that motive be enough to overcome a process that discourages new coop charters?

How this story ends may be a harbinger for the future of the unique credit union financial system.

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Trego Montana, Population 805: Where Members are on Center Stage

If credit unions are about the members, then it follows that members are the best way of telling a cooperative’s story.

This short video is credit union storytelling at its best.  It captures the viewer’s attention for it shows members serving their community.

(https://www.youtube.com/watch?v=D-53C6_2Tsc)

I asked Elizabeth Kozar, marketing manager at Whitefish how this approach was developed.  Here’s her thoughts on why this media is so effective.

Authenticity and Connection

Short-form documentaries provide an opportunity to capture the authentic experiences and lives of Whitefish Credit Union members. By showcasing real people and their personal narratives, the Credit Union aims to establish a strong emotional connection with the audience.

These stories humanize the Credit Union, allowing current and potential members to relate to the circumstances and challenges faced by others in their community. 

Engaging Visual Format

Documentaries, even in a short form, offer a visually compelling way to present narratives (especially being in beautiful NW Montana). By combining interviews, real-life footage, and relevant visuals, the Credit Union can create a captivating storytelling experience. The medium helps to engage viewers and hold their attention, allowing them to immerse in the stories being told. 

Storytelling’s Impact

Humans have an innate inclination towards stories, as it helps us make sense of the world and creates emotional connections. Good stories inspire, motivate, and educate an audience. By using short-form videos, we can effectively convey the triumphs, challenges, and values of our members.

Building Trust and Credibility

In an era of increasing skepticism and mistrust, transparency and authenticity are crucial for financial institutions. Short-form documentaries enable the Credit Union to showcase our continued commitment to our members by highlighting real experiences. By sharing these narratives, the Credit Union demonstrates their dedication to serving their community and building trust.

Differentiation and Branding

In a competitive financial landscape, Whitefish Credit Union aims to distinguish itself by leveraging storytelling. The use of this form stands out from traditional marketing approaches.  It delivers content that resonates with our audience. The videos create a distinct identity and position the credit union as an institution that values its members’ experiences.

 How Did You Identify Members to Profile?

To find members for the videos, I reached out to Whitefish Credit Union’s branch staff to gather information about individuals with compelling or unique experiences. By leveraging the staff’s personal connections, I identified potential candidates who had faced challenges or benefited from the credit union’s services.  

Respecting privacy and obtaining consent, the team collaborated to select the most diverse and relatable stories.  This collaborative effort resulted in a collection of authentic videos that highlight the positive role of the Credit Union on its members’ lives. 

The reach and impact of the Member Story videos is magnified with a multifaceted approach.  

For each video, a dedicated webpage is created that features a story write-up, accommodating those who prefer reading over watching.  We leverage :30 and :15 second clips from each story for various platforms, including broadcast TV, YouTube ads, and social media channels which expands our audience reach. 

Members also promote their stories allowing greater depth of use. Bob Marshall Wilderness Foundation played their story at the beginning of their film festival this year reaching an audience far beyond our traditional marketing channels. Ninepipes Museum has their Member Story on their homepage. 

The Future

Whitefish intends to continuously explore for new examples of inspiring narratives of members in their communities.

These stories document a larger reality.  When members’ lives are the center of a credit union’s messaging, the unique and unmatchable power of cooperative design is celebrated.

Members’ stories mirror our lives, the ups and downs.  This couple’s story captures the spirit of Montana and life’s challenges: Working with their hands: the farrier and his wife.

(https://www.youtube.com/watch?v=UaaiAne8Vz4&list=PLnh8CdRSC2lh353cuh6lb2WyLL94XW6uu&index=13)

Credit unions exist to foster community through trust and engagement.  These short-form documentaries are an art, portraying humanity at its many crossroads and living life with passion.

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The Story of the First De Novo Mutual Bank Charter Since 1973

Next City is a non-profit national news organization focusing on  greater economic, environmental, and social justice in cities.

Its economic correspondent is Oscar Abello who has written several stories on credit union chartering efforts.   The excerpts below are from his description of a new mutual bank which opened in October 2022 and today has $44 million in assets.

This de novo start up is a fascinating story.   It also is a contrast with a very similar credit union effort, Maine Harvest FCU.   The credit union closed after two plus years of operation to become a new department within Five County Credit Union, in Bath, ME.

Here is Oscar’s introduction to his story about this new mutual:

“Banking was social long before it was anything else. Five thousand years ago, on the plains of ancient Mesopotamia, farmers, merchants and artisans conducted business with each other based on credit, with others they trusted as committed members of a community. The earliest writings found are clay tablets on which people essentially kept each others’ tabs. It was something early human beings did as part of surviving as a civilization, or even as a species.

“For all the problems and shortcomings of the U.S. banking system, perhaps the one redeeming quality it ever had was how much it relied (until recently) on local relationships built on trust.

“Fast forward to today. Many things have changed, but can banking still be part of how we address challenges together as a society? Today’s story offers an example that points to yes. Is the banking system supposed to have a social mission in addition to purely financial goals?”

How To Build A Bank To Scale Up Local Food Ecosystems

I was intrigued by Abello’s brief history of the mutual charter and its demise.  An additional takeaway is why it was believed preferable to a credit union for the founders.

It is also the story of Charley Cummings and his wife, who had a vision of creating a new, sustainable, local food system.

They  had found a financing gap in the market and  thought a mutual was the best solution. Excerpts follow.

“That  gap in the market for small- and mid-scale producers and also other value chain participants wasn’t well addressed by farm credit either, like manufacturers, distributors, consumer brands, trade brands,” Cummings says.

To fill in that niche, Cummings landed on a very old solution: a mutual bank. It’s a bank that doesn’t have conventional shareholders. Instead it’s owned and controlled by its depositors, similar to a credit union.

It already has more than a thousand depositors and $44 million in assets, including loans to farmers, organic food production facilities and even a project to build a solar array over a sheep grazing meadow to add some income for the farmer. 

“The reason we’re structured as a mutual is because it’s intended to be permanent,” Cummings says. “The mutual bank model has proven its longevity and the structure gives the impact mission of the (mutual) bank teeth from a governance perspective in a way that shareholder ownership does not.”

A Brief History of Mutuals (excerpt)

Mutual banks emerged as a way for working class or poorer households — often recent immigrants — to pool their savings, earning a modest amount of interest while investing in each others’ homes. They clustered in the northeast because during the 19th and early 20th century it was the country’s most populated region, with new immigrants coming over from Europe in waves. . .

The Federal Deposit Insurance Corporation today lists 427 mutual banks across 43 states, though they’re still largely concentrated geographically in the northeast, Ohio or Illinois. Without the pressure to grow and generate profits for shareholders, mutual banks are mostly smaller institutions focusing on a specific geographic market. 

Why Not a Credit Union?

Cummings did look into starting a credit union, which is a much more common example of a cooperatively-owned and -governed financial institution, but there are a few reasons why it wasn’t quite a fit. Regulators generally don’t allow new credit unions to do commercial lending in their first two or three years. Beyond that, current laws limit credit union business lending to 25% of their loan portfolios unless a majority of their members come from low-income census tracts. These restrictions just didn’t make sense for a new financial institution whose core business was going to be agriculture and food businesses. 

For many decades, banking regulators and policymakers got caught up in an ideological backlash against the mutual bank model, fueled by the idea that all companies including banks were better off putting profits for shareholders above all else.

It took more than the usual amount of convincing just to give Walden Mutual the chance to find startup investors who would be willing to limit their own returns so the bank could retain enough earning.

The Funding Source for the Mutual

It turns out having a clear social mission protected by a mutual structure was a big draw for the growing segment of ESG investors — the acronym is short for “environmental, social and governance.” Walden Mutual was able to, in essence, borrow nearly $25 million for startup capital from investors who know they cannot profit later from selling an ownership stake in the bank.

With an FDIC-insured bank, he says, you have an entity with a lower cost of capital than the government itself. “Our theory of change is that by lowering the cost of capital for these types of farms and businesses, we can really help the ecosystem to grow.”

“There’s nothing more strategically aligned in financial services than saying to a potential depositor, ‘hey, there’s nobody else here, we work for you and in your best interests,’” Cummings says. “Whereas with a shareholder-owned bank, that is not always the case.”

There is much more in the full story which you can read here.

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Here They Go Again!

Two years ago I described Frontwave Credit Union’s call for members to serve as elected directors.  The result was ten candidates running for three open board spots.

The members had a 30-day window to vote online or to turn in written ballots at a branch. When voting the members were able to post comments about the election procedures. Here is one:

“The voting process is great reading all candidates listed in the process I didn’t know them, but by reading their bio gave me an idea of what they are all about. love it.”

The entire nomination and voting experience was an eyeopener for the credit union’s leadership, especially the backgrounds and motivation of members wanting to serve.

The Year’s Update

This week I received the credit union’s third quarter Briefing newsletter.   In  CEO Bill Birnie’s Notes column was the following paragraph.

If you’re interested in making an impact on Frontwave’s future, consider applying for nomination to our Board of Directors. You know that feeling when you’ve got a great idea that could make something better? Here’s your chance to bring your ideas to life and make a real difference in the future of our credit union.

There was a special “call out” link in the newsletter with a similar invitation  headlined Calling All Fighters:

Are you ready to make an impact on our credit union? Here’s your chance! We’re on the lookout for active Members who are eager to play a role in shaping the future of our credit union. If this sounds like you, why not apply for a nomination to join our Board of Directors?

When you check the learn more link this comes up:

Our members make great leaders

Our Board isn’t made up of a group of faceless executives in glass offices. Instead, they’re all Frontwave members, just like you. They volunteer, you elect them, and they don’t get paid a penny. Their mission is to set the overall direction of the credit union and make sure it operates in the best interest of its members. So what have these folks been up to lately? Take a look at our 2022 annual report

Want to join this amazing group of volunteers? We’re looking for a few good folks to join our crew.

Then here’s how to get involved.

Open Positions:

Board of Directors: THREE positions with 3-year terms

If you are an active member and are interested in applying for nomination, you are invited to submit an application by clicking the “Apply for Nomination” button below and completing all required documents.

Three Months for Receiving Applications

The credit union makes the process transparent, public and easy to follow.   There are four documents that anyone can read and complete on line.  One is the Statement of Responsibilities for either Board or Supervisory Committee Member.

The Member Application, Statement of Consent (to the responsibilities of the position) and Conflict of Interest (yes or no checkbox for seven potential conflicts) must be filed by September 29, 2023.

The nominee then hits the submit button to forward the completed documents to the Nomination Committee.

A Cooperative Democratic Election

I have seen no more transparent, public and accountable  election process.  The credit union:

Actively seeks member participation;

Provides clear and easy to complete forms if interested;

Allows time for interested persons to learn more to decide whether to throw their hat in the ring.

This is an example of cooperative democracy in action.  Members are the foundation of every credit union’s resilience. The elected board is the connection to ensure the members’ voice is heard.

The clarity and simplicity of the process is heartening. Seeing this leadership approach  inspires confidence in Frontwave’s and its members’ futures together.

If every credit union election were as straight forward  as this $1.4 billion and 122,000 member coop’s, the entire  system could be reenergized.

 

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Fanfares for the Common Man on July 4

One of the most frequently played musical tributes in July 4th concerts is Aaron Copland’s Fanfare for the Common Man. 

He wrote Fanfare in response to a 1942 request from  the conductor of the Cincinnati Symphony Orchestra as the US became became fully involved in World War II.

As a musical form, a fanfare is usually a brief, musical introduction to some  noteworthy person, ceremony or event.  Fanfares announce the appearance of Royalty in Europe, open the  Olympic games, precede important national or military occasions and celebrate events such as the dedication of a memorial or new public space.

By this time Copland had  composed a wide variety of scores for orchestra, dance, film and drama that portrayed uniquely American sounds. Compositions such as Rodeo, Billy the Kid, Appalachian Spring evoke scenes of our country from the expansive West to the modern city.

Here is an example of Copland conducting Hoedown from the ballet Rodeo.  Get ready to dance along with him on the podium!

Copland considered multiple names for his new composition including “Fanfare for the Day of Victory,” “Fanfare for Our Heroes,” “Fanfare for the Spirit of Democracy,” “Fanfare for the Paratroops” before Fanfare for the Common Man.   The phrase had been used by Vice President Henry Wallace who called the 20th century the Century for the Common Man.

The music is martial, dramatic, easy to follow and heroic in feeling.  He wanted to honor the ordinary people who were doing the fighting and dying in the war.   It is still the most popular piece in patriotic concerts.

One person upon hearing the music wrote:  I would love this as the anthem of humanity, the song of farmers, cobblers, men who were raised from the land, staring into the night sky at the fat moon and saying, “I am going there,” and never once doubting his words.

The version which follows is the one that you will hear across the country today.

(https://www.youtube.com/watch?v=h_V-rqckzFg&t=10s)

Another Salute to the Common Man

Few of us will compose music to communicate a vision.  Most will use the spoken or written word.   What follows is from a life dedicated to Copland’s Common Man:

“My life has been centered around my family, my wife Jean, and credit unions. Why credit unions? Because I could never accept that in America those who had the least and knew the least should always pay the most for financial services.

“I believe that credit unions were created to correct that injustice. In the words of Thomas Paine – a true revolutionary in all respects –“I have always objected to wealth achieved through the misery and misfortune of others”.

“That economic injustice continues to thrive in our financial system today. Credit unions remain the alternative, the best hope, the answer.

“We all confront an uncertain future, and many folks would like to rewrite the past. You and I know we cannot change the past. But if we have credit union leaders with integrity, courage and character; we most certainly can reshape the future…but changing the future is very hard work.

“Arthur Ashe, the great American tennis player, described the credit union leaders we need. Ashe said: “ True leadership is not the urge to surpass all others at whatever cost, true leadership is the urge to serve all others at whatever cost.”. . .

(The words by Jim Blaine, former CEO of State Employees NC,  to the African American Credit Union Coalition upon his induction to its Hall of Fame)

Two tributes on July 4th  to celebrate liberty for all and especially the contributions of the Common Man.

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What Does America Mean to You?

The 4th of July is every person’s chance to celebrate the nation’s birthday.  The occasion is a fun day for most, often marked with words about the special country which we share together.  And once again to honor our collective vision.

The Declaration of Independence is the focus of many speeches. Its opening words remind us of our founding ideals: We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.

Since 1776 we must acknowledge that the words are still aspirational, never fully realized.  America’s freedom is an unfinished project.  The fundamental challenge is ever present:  Are ordinary people capable of governing themselves?

The Commercial Appropriation

This spirit of the pursuit of happiness has also become entwined with  America’s commerce. In the post WWII federal highway infrastructure project, the car became a symbol of this open ended personal possibility.

In 1976, Chevrolet was the most popular car in the USA. General Motors crafted a slogan with video declaring that Chevy and the USA were one and the same: “Baseball, hot dogs, apple pie, and Chevrolet.”  The company even tried to appropriate baseball’s 7th inning stretch to celebrate its brand leadership.

Today, crowds stand to sing God Bless America. Perhaps a triumph of ideals over markets?

The Declaration and Credit Unions

I believe credit unions are themselves an expression of America’s founding document.  They also represent what makes American enterprise so powerful.

Credit unions embody more than the Declaration’s opening words about life and liberty.  Cooperatives exemplify how the document’s intent is to be realized.  The very last sentence reads:

And for the support of this Declaration, with a firm reliance on the protection of divine Providence, we mutually pledge to each other our Lives, our Fortunes and our sacred Honor.

This mutual pledge of lives, fortune and sacred honor is every credit union’s founding ethos. Moreover, like America’s political democracy, the cooperative system depends on individuals committed to the principle of citizen self-rule.

The first generation of credit union pioneers. like the founding fathers. understood both the ideals and challenges of self-government.   Credit unions are started and sustained by volunteers.   They shared funds and a commitment to address common needs.

The initial dimes and quarters may have been small, but their impact on lives was real.   Like the political colonies, these economic revolutionaries knew each other.  They joined to spread their vision of financial self-help across America.

The Challenge

While the Declaration’s truths may seem self-evident, the democratic process is an ongoing experiment.  Today almost all credit union founders have passed on—will their basic principles be sustained?

The phrase of people helping people is repeated. But the practice of cooperative democracy is often missing.   Voting is the most important lever of a free people.

As Americans progress through each life’s varied experiences, we add to our understanding of what American means-individually and collectively.

In my mind, credit unions show how the Declaration became a reality.    While America’s political and economic justice are ever-present challenges, America would be much the poorer without the power of the cooperative example.

Have a fun and grateful 4th with family, friends, and colleagues to honor America, the greatest cooperative enterprise on earth.

 

 

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The Source for Credit Unions’ Greatest Peril

When concerns are raised about risks to credit unions’ future, the most common threats  are perceived to be “out there.”   The potential for recession,  a continuing rise in rates, cyber threats, technology innovations, or other external marketplace disruptions.

However the greatest challenges may not be external, but closer to home.   In a speech to a major credit union conference, a former NCUA Chairman described his five greatest concerns as:

  1. The combining of the deposit insurance funds;
  2. The possibility of merging the federal regulatory agencies;
  3. Doing away with credit union’s tax exemption;
  4. Abolishing the CLF and having credit unions go into the Federal Reserve bank;
  5. The FFIEC requiring expanding its regulatory disclosures for credit unions comparable to banks.

The concerns are from a speech by Chairman Ed Callahan to the 49th Annual Meeting of CUNA in 1983.  (Source Credit Union Magazine, June 1983, pg 10)

Two lessons.   What Ed describes is exactly the sequence of events that led to the demise of the S&L industry as an independent  financial system.  While the tax exemption was ended in the early 1950’s, the later changes occurred in just ten years beginning in the mid 1980’s due to the system’s inability to transform when facing deregulation.

Secondly,  the five  concerns were being considered  by  entities in Washington D.C.   These included commissions on governmental efficiency and reform,  congressional proposals following deregulation, and both Treasury and opponent’s questioning cooperative’s tax exemption.

These winds are still blowing in DC.   They blow harder every time  terms such as “level playing field” and “parity” are used.

Credit unions can continue to excel in members’ eyes. However, they could  lose in the  political marketplace if their primary goal is to have the same regulatory options as their banking competitors.

Why some in Washington will ask, do we need a separate agency to oversee the same activities?