Resume and Eulogy Virtues

Last week I quoted New York Times columnist David Brooks’ philosophy in which he distinguished resume virtues from eulogy ones.

Résumé virtues are what people bring to the marketplace: Are they clever, devoted, and ambitious employees? Eulogy virtues are what they bring to relationships not governed by the market: Are they kind, honest, and faithful partners and friends?

This past weekend I received a copy of a funeral message from a friend I have known since college. His wife of 28 years had died in January.  She had been chronically ill their entire marriage–some of the times were good, but others in and out of hospital.

He celebrated her spirit with these words:

She was the most selfless person I have ever known. I really believe she hung onto life all these years for us, and I hope the rest of my life will be worthy of her sacrifice, because it was not easy for her to stay with us. She gave her life for her friends and family.

Organizations Do Not Have Souls

In the life witness of Jan Karski which I described last week, I quoted his observation that “Governments do not have souls. Only people do.”  I believe his words are applicable to any organization not just “governments” which was the focus of Karski’s anti-Nazi Polish underground activities.

Doing the right thing is sometimes very hard.   Especially when one’s views set them apart from the prevailing practice or beliefs of the organizations in which they work or are members.

Puritan John Winthrop in this lecture (A Model of Christian Charity) prior to sailing for the new world, warned his fellow Puritans that their new community would be “as a city upon a hill, the eyes of all people are upon us”, meaning, if the Puritans failed to uphold their covenant with God, then their sins and errors would be exposed for all the world to see.

That biblical reference of “a city upon a hill” has been later used by four Presidents to describe their vision for America.

Cooperatives were endowed with the hope of being  “a city on the hill” in a country where individuals were often taken advantage of by the prevailing economic system. That system still exists today.

What the above examples suggest is that credit union design is not what makes the difference.  Rather it is the quality of leaders chosen to continue a firm’s legacy.

Being in the minority, such as living at the boundary between health and illness in the circumstance referred to in the funeral, is never easy.  But examples of resolution and spirit should remind us of the aspirations of our own better selves.




Looking for Credit Union Prophets

In America, the public has traditionally associated prophecy with forecasts about the future.

However their religious and political context  is quite different.  In past and present  societies, they are seen as troublemakers.  Richard Rohr, a Franciscan priest and founder of the Center for Action and Contemplation describes how this “truth-telling” might be viewed today.

After reading his understanding of prophets, I wonder if the credit union movement could benefit from this voice today?  Or is each credit union’s current profit more than sufficient?

The Prophet from Richard Rohr

“One of the gifts of the prophets is that they evoke a crisis where one did not appear to exist before their truth-telling.

“Prophets always talk about the untalkable and open a huge new area of “talkability.” For those who are willing to go there, it helps us see what we didn’t know how to see until they helped us to see it.

“It’s the nature of culture to have its agreed-upon lies. Culture holds itself together by projecting its shadow side elsewhere. That’s called the “scapegoat mechanism.”

“It seems the prophet’s job is first to deconstruct current illusions, which is the status quo, and then reconstruct on a new and honest foundation. That is why the prophet is never popular with the comfortable or with those in power. 

“Prophets are difficult to have around. No one wants to claim the title or do the work because of it. In this postmodern age, everybody is uncomfortable with prophets. They yell when you don’t want them to. They ask for trouble when you could avoid it. They don’t have a politically correct bone in their bodies….

“Prophets are leaders, but not leaders of their own choosing. Inevitably, they have some sort of . . . encounter. . .They’re quirky and more than a little weird. “

Please share any experience with credit union prophets which you have seen currently.  I would like to share their message.

Epitaph for THE Cooperative Book of Discovery

This post is a eulogy.  For 36 years credit unions were provided a comprehensive report on their collective progress.   That publishing effort grew in scope, analysis and detail while keeping the same title: The Credit Union Directory.  It is no more.

The Credit Union System’s Essential Resource


In 1986 Callahan’s introduced the first complete Directory of all active credit unions for the industry’s and general public’s use.   It was a complete census by state of every credit union, a task never accomplished in the eight decades since the first charter.

One reason for this gap was there was no centralized source for information.  NCUA’s call report included only federally insured data. There were approximately 1,800 cooperatively insured credit unions in over 20 states that offered a choice of share insurance.

Prior directories were periodically attempted.  One listed the  4,000 largest credit unions by assets.  Some state leagues published listings, but they were not for public use.

A Calling Card

The Directory was Ed Callahan’s  idea.  At great expense, Callahans had established a database of all NCUA data, augmented with cooperatively insured information. We believed the industry and public would beat a path to our door for the latest, most complete data on credit unions.

The company had an outstanding invoice for over $100,000 with a local service bureau that managed the information.  No one came knocking.  Ed decided we needed a “calling card” to let people know about our analytic capability.  Hence the first Directory, with 1985 data listing every credit union, was released at the  February 1986  CUNA governmental affairs conference.

The initial product was a literal directory organized by state listings in credit union alphabetical order.  The single line of information with the credit union was the CEO’s name, contact information and summary financial data:  total assets, loans, members and capital.

As the Directory became an annual effort, the content expanded.  Advertising was added to support production costs.  The concept of  a one stop information resource  became widely valued.  At least three other competitors entered the market:  NCUA printed and gave away a  state listing of its insured; Thompson’s added a credit union volume to their bank and S&L publications; and CUNA attempted its own version.

All subsequently dropped their “directory”  efforts.  For Callahan’s, this calling card expanded with more analysis and industry listings.  It demonstrated the firm’s software capabilities that eventually led to the development of Peer to Peer as the premier industry analysis product.

Annual  Publications:  The 2006 Example

The listings remained central, but the annual analysis expanded in multiple ways.

New reference material was included to give added value and market reach.  For example, the top 100 Canadian credit unions were listed in the belief this might open up a northern market.  It didn’t.  World Council information was presented showing the US totals in a worldwide context.

An example of this ever expanding effort is the 2006 edition which totals 646 pages in four tabbed sections.

Each year, the Directory’s cover was redesigned. A theme summarizing the movement’s progress was introduced .  In 2006, the message was Communities United by the Cooperative Difference.

The first tab, State of the Industry, presented the industry’s consolidated balance sheet and income statement, key trends and auto  loan share by state; 30 “best in class” leader tables;  an analysis of the corporate network;  a listing of CUSO’s, credit union auditors, leading technology providers and a list of mergers.  Contact information for all state and federal regulators, leagues and trade associations and Canada’s largest 100 credit unions were provided in just the first 125 pages.

Tab two was  the traditional listings provided by state.  Each state was headed by a five year performance summary and a top 50 by assets table preceding the alphabetical list of all the credit unions.  Seven pages were devoted to comparing state by state performance on key ratios.

The third tab was a cross reference listing where a user could look up credit unions alphabetically by name,  by city, or by the manager’s last name.  For example, seven Carlsons and 65 Johnsons.  Buffalo, NY, reported 42 credit unions with home offices in the city; Carmel, IN, had just two.

If one wanted a quick summary of credit unions by employment, the reader could look up credit unions that had Post Office or Postal, IBM, State Farm as a first name.  Or, if looking for parish-based credit unions, one would find 185 credit unions whose name began with St. (Agnes, et al ).

The final section was a buyer’s guide which showed 115 vendors serving the credit union community.   And helped to underwrite the Directory’s printing costs.  The sponsor for 2006 was Charlie MAC.  For those not familiar with US Central, this was a secondary market initiative for credit unions to compete with the government sponsored GSE’s.

The Incalculable Resource

Each edition attempted to list the major system components and the businesses serving credit unions.  To address concerns about timeliness of the data (publication occurred about 4-5 months after the financial information), Callahans in 2006 created a “Directory Online” with 24/7 access.  This digital version was updated with the latest financial as well as contact changes.

By publishing annually, the industry had a comprehensive set of performance benchmarks in one volume.   Who had moved in or out of the top 200?  How many credit unions have home offices in DC?  Or,  what states have the fastest growing coop system?  While the information was at a point in time, it was a starting place for limitless stories and analysis, then or in years later.

Leaving the Scene

Callahans last annual printed Directory was volume 36, published in 2021 using December 2020 data.  This edition had 221 pages including a 29-page buyer’s guide.

There was industry analysis with ten-year trends, leader tables, and peer group comparisons.  There was still a state-of-the-state section in which all the individual credit unions were listed.  Contact information was also provided for CUSO’s, Corporates, regulators, and trade associations.

There was no introductory analysis or theme, undoubtedly hindered by the Covid lockdown and recovery during the production cycle.

In 2022, there was no printed edition.  The industry trends, top 50 or 100 listings, the corporate network and state summaries are available online.  If printed, the  information would  total 132 pages.  There is no advertising or buyer’s guide.

Does It matter that there is no longer a printed Directory?

There are certainly virtual substitutes for some of the data listings and contact information.  One can search on NCUA’s site for peer information and trends.  Pulling other categories of information (CUSO’s, trade associations) would require someone with a knowledge of relevant  resources.  If interested in a year’s key industry events such as large mergers, charter conversions, bank purchases, or even newer data sets such as subordinated debt or goodwill, one would have to find a credit union database resource such as Peer to Peer.

The Directory’s function expanded assembling  performance and individual credit union data to serve as a starting point for insight and analysis.  At a macro level, the Directory was the only source for  ten-year financial trends and a two-year balance sheet and income statement that includes all credit unions, not just NCUSIF insured.

But the Directory was more than a useful compilation for quick reference.  It presented the industry’s multiple connections and comprehensive participants.  Each volume was a census of all key movement participants (by name and organization) and  an almanac of the  year’s trends.

Each edition presented the collective industry’s performance, information missing from all other yearend reports.  For example, NCUA’s Annual Report records its activities and financial audits, not credit unions’ role in the economy.  Trade groups report  their advocacy, education and  information services.  Individual credit unions promote their own success and accomplishments.

What is lost is the sense of cooperative identity, a shared destiny and a system with special purpose that serves over 100 million member-owners.   If one were to understand the history of the credit union system, especially the post deregulation era, the Directory would be the major resource.

This bridge connecting the past to the present no longer exists.  Each future writer or researcher will have to find their own way to the history.

The Directory memorialized multiple national, state and local  milestones for a movement whose future should be more consequential than its past.

Without this collective benchmarking, can there be a shared purpose? If one fails to celebrate birthdays, anniversaries or other key events, life goes on.  So will credit unions but with less of a sense of who they are and where they have come from.

A movement without a collective memory can slowly disintegrate into individual contemporary stories.   The shared destiny is lost as firms follow their own independent journey. A Community United by the Cooperative Difference no longer has a record of who they are.




Two Messages from Clayton Christensen

How would the author of “disruptive strategy” counsel credit unions in this time of rising rates and tightening liquidity?

I met Clayton Christensen  following his participation on an expert panel debating the future of higher education and its ever increasing costs.

His message was that college and post graduate institutions were subject to the same disruptive challenges that he had described in multiple businesses.  His theory explained why successful companies often fail even though they appear to have a dominate competitive position.

Further he announced, during the panel, that he would inaugurate such a disruptive effort at Harvard Business School with an Internet course based on his strategic  theory.   I asked if Callahans might talk with him to see if  this course might be a resource adaptable for credit unions.  He gave me his card, his administrative assistant’s name was on the back, and said to call and make an appointment.

Several months later a team from Callahans went to Cambridge.MA to meet his colleagues filming the course modules  for Internet delivery.  After taking the course and adapting concepts to the cooperative context, Callahans launched a course on disruptive strategy for the credit union market.

Even though Christensen died in 2020, today his course on disruption lives on as part of the Business school’s online offerings.

From the Bottom Up

The central theme of successful disruption is challenging market leaders from the “bottom up.” Credit unions might say from the “grass roots”up.

Successful firms generally grow beyond their initial markets and increasingly focus on more profitable segments.   They neglect early and familiar targets to go after more lucrative ones by expanding with more sophisticated and complex solutions.

Then their lower end markets  become vulnerable if new entrants better define the “job to be done”  and add value where the larger firm is no longer investing.  A new entrant gains a foothold at the lower end and can then relentlessly innovate to move up market.

His theory is a framework that asks questions and introduces concepts to sharpen leaders’ strategic intent.  It is not a model dependent on technology driven advantage, but one of business model disruption.

The cooperative design based on local, defined markets (members),  the values of service and collaboration, and self-funded financing is very compatible with Christensen’s theory. For many decades credit unions have been an example of his strategy playing out in consumer financial services.   Their success is measurable and market gains real.

However as credit unions became more financially self-sufficient and the focus on original groups lessens, market ambitions expand.  Today a number of credit unions seem to embrace the “top down” pursuit of more affluent consumers served by regional and national financial institutions.

Some credit unions openly proclaim multi-state, national,  and even global market ambitions.  Others purchase entry into new markets by buying banks or pursing mergers far distant from their proven success.

In doing so credit unions are sacrificing their  competitive advantage of alignment with members or groups.  These credit unions have become “market players” going wherever an opportunity appears, versus serving a distinct area or need.

The Liquidity Challenge

A current example.  Many credit unions today are facing liquidity pressures.  Slowing share growth, continuing loan demand, underwater investments and rising rate competition for shares pose new challenges versus the decade of easy money.  Some respond the way the big players do by bidding for money with CD rates currently in the 4.25-4.75% range and advertising openly for anyone’s cash.

Others have taken a look at their core strengths including local relationships, community presence, branch networks and the fact that many employers are looking for a special benefit to attract and retain employees.   Their back-to-future share growth with new members’s savings rely on credit unions’ core local advantages and reputations within communities that took years to establish.

A Second Message

The public reputation of credit unions rests partly on their values and democratic origins.  One CEO’s mission statement simply reads:  Do the Right Thing.  In the for-profit competitive consumer finance markets, this appeal is distinctive.  Value is about more than price or even great service.

The New York Times columnist  David Brooks  distinguishes between what he calls “résumé virtues” and “eulogy virtues.”

Résumé virtues are what people bring to the marketplace: Are they clever, devoted, and ambitious employees? Eulogy virtues are what they bring to relationships not governed by the market: Are they kind, honest, and faithful partners and friends?

In a YouTube video Christensen summarizes his understanding from his own life and work in a 2012 Ted talk How Will You Measure Your Life?  This 19 minute video opens with his discussion of why successful companies fail.  Then he extends the analysis to his own HBS classmates lives and the personal disappointments they have encountered while achieving material success.


The source of both corporate and personal disappointments is the same.  We live in a system that rewards short term achievements, investments that will pay off now, not in the years to come.  Creating successful relationships whether in family or businesses, does not result from short-term thinking.

He closes  with how to “measure” your life’s success at minute 17.  If you have only two minutes, listen as he presents what David Brooks calls the eulogy virtues.

Christensen’s Two Messages

Christensen’s  theory of disruption is a classic way of understanding credit union advantages from a strategic standpoint.  The framework focuses on long-term competencies combined with “job-to-be-done” tactics.

This approach asserts that it is not the demographic characteristics of the member that motivate market choices; rather it is what the member wants to accomplish that determines which financial firm the member will chose.

The second point is equally consequential.  Your “success” (personal and professional) will depend on “how well you help other people to become better.” Even if this just entails giving your business card to a stranger in the audience.

Both observations seem to me an endorsement of  a credit union “calling.”




Thinking About Money at the Start of the Year

At the beginning of the year, business firms, families and individuals take stock of their financial situation.  The results of last year are known. January brings the credit card bills from the holiday.  Taxes come due.

This year all segments  are reassessing their liquidity situation amidst rising interest rates and growing layoffs.

A Financial Disneyland

Since 2008’s financial crisis erupted, credit unions and members have been living in a financial Disneyland.  Interest rates were kept at historical lows.  The recent Covid response resulted in two years  of short term rates at or near zero.

The Fed’s monetary policy of quantitative easing flooded financial markets.  When capital no longer costs anything, most investments look safe. Returns on short term government securities or insured savings were most recently in single basis points. People and organizations tried new or speculative assets  such as meme stocks or crypto solutions.

The disciplines of long-term investing were overlooked. The risk-reward calculus became warped. Market and housing returns suggested only upside.  Everyone could become a winner.

What We Believe About Money

Call FCU has an unusual member financial education program.  It begins with a questionnaire.  The purpose is to learn your personality type, or in their words, “the strengths and weakness of your relationship with money.”

Everyone has a different approach and individual situations when the talk is about savings, spending and financial goals.   We live in an economy in which consumer spending drives 70% of the output.  Wealth, fame and power are the trinity of individual success for many in a capitalist economy.  Moreover if one achieves the first, the other two can be bought.

How a person or firms manage their finances express our values and ambitions.  So I think Call’s approach is an important first step in any person or organization’s approach to 2023.

One Organization’s Statement of its Financial Philosophy

Non profit organizations have a unique relationship to finances.  They are not in business to build wealth, but they must demonstrate stewardship to donors, or like private business, they can cease to exist.

The Center for Contemplation is a 501 C 3 founded by Franciscan Richard Rohr to put spiritual unity  as the center of religious practice.

The organization has published its organizational financial approach.  It defines this as a “complex process that codifies their relationship with money: how they  raise it, manage it, and spend it. Our financial philosophy centers on values concerning donations and the stewardship of resources. Those financial principles are:

  • We operate from a clear definition of “enough.”
  • We practice transparency.
  • We seek for money to never be the barrier to participation.
  • We understand exchanges of money first and foremost as vehicles for advancing our mission and message.
  • We commit to spend simply, equitably, and sustainably.
  • We lead with giving and generosity.

Should credit unions create their own statement of financial philosophy?  Is a business plan a sufficient roadmap?  Does operating in the context of cooperative design and values provide a complete picture?

Might a credit union’s leaders consider the CAC’s principles above and ask whether they describe their financial philosophy? I believe the exercise could be as revealing as Call FCU’s individual assessment.  For example, when has a credit union ever defined what “enough” might mean?

Amahl and the Night Visitors-How the Story Ends

In an earlier post about credit union’s most essential members, I quoted an aria from the short opera Amahl and the Night Visitors, Do Rich People Know?  The  mother lives with her crippled son. The three kings spend the night before continuing their journey.  The mother tries to take one small nugget and is caught stealing by the King’s page.

Here is how that confrontation works out in the opera’s final lyrics:

MELCHIOR (seeing what has erupted) Oh, good woman, you may keep the gold. The child we seek doesn’t need our gold. On love, on love alone he will build his kingdom. His pierced hand will hold no scepter. His haloed head will wear no crown. His might will not be built on your toil. Swifter than lightning, he will soon walk among us. He will bring us new life, and receive our death, and the keys to his city belong to the poor. Let us leave, my friends.

MOTHER Oh, no! Wait! Take back your gold! For such a king I’ve waited all my life… and if I weren’t so poor I would send a gift of my own to such a child.

AMAHL (pipes up) But, Mother, let me send him my crutch. Who knows, he may need one, and this, I made myself.

MOTHER (drawing in a breath sharply) But that you can’t, you can’t! Suddenly, Amahl begins to walk without his crutch.

AMAHL I walk, Mother. I walk, Mother.

First Things, First

As we enter a new year with both individual and corporate financial challenges, should we first ask what our relationship to  money is?  What “crutches” do we lean on to get us by?  What if we risked giving them away to find out who we really are, as a person and leader of a financial service?




Where does moral courage come from?  How do we learn it?

That was the question asked of the actor in the one-man play about Jan Karski.  His character was a  soldier, member of the Polish resistance, and diplomat during  the most extreme conditions of WW II.

Karski had a photographic memory and made detailed reports of conditions as a courier in 1940–1943 to the Polish government-in-exile.  Jewish leaders in  Warsaw requested he visit the city’s Ghetto and Belzec death camp.  They asked him to report what he had seen of the Nazi efforts to exterminate the Jewish people to the Allies.   He did.

He was captured, tortured by the Gestapo who sent him to a hospital. His SS captors hoped to break him to learn the details of the Polish underground movement.  He escaped from the hospital.  The Nazis killed all of 32 hospital doctors and nurses where he had been treated.

He spoke directly with Churchill and Anthony Eden, the British Foreign minister.   In the US he met with FDR plus national political, press, and Jewish leaders including Supreme Court Justice Felix Frankfurter.  In all his meetings he gave great detail of what he had seen. He  asked Allied political leaders in both countries to act, to stop the Nazi’s genocide.

His wartime efforts are presented in a film Remember This of this one-man play.   It has just been released in heaters and will be shown on PBS Great Performances in March.

Why Remember?

Karski’s story is about more than the Holocaust.  It is about human nature in all its greatness and horror.

His words, not just his personal example, live on as timeless and timely insights into human character.

In the film he observes, “Humans have an infinite capacity to ignore things that are not convenient.”

This looking away occurs beyond  the horrors of war;  it is true of everyday life.

He commented that “Governments do not have souls.  Only people do.”  Caring for fellow humans is not done by organizations, policies or even regulation.  That is the responsibility of the leaders and members of an organization. There are no market “invisible hands” doing humane work.

When he briefed  Justice Felix Frankfurter, the first person of Jewish faith on the Court, Frankfurter replied, “I don’t believe it.”   He was not calling Karski a liar; rather he could not comprehend how humans could possibly be implementing a plan to eliminate an entire people.

A “Living Relationship”

Karksi stayed in the US following the war.  Poland was occupied by the Soviet Union.  He could not return.   For 40 yeas he was a professor of International Studies and Polish history at Georgetown  University.

He was awarded the Presidential Medal of Freedom by Obama a decade after his death in 2000.

Even with this heroic story, one of the co-writers of the script on the faculty at Georgetown, confessed he had walked by Karski’s campus statue for four years and paid no attention to it.

That typical oversight is why stories need be told.  And for their relevance to today’s and future generations.

The actor in the film stated he has “living relationship” with his character.  Karski’s life resonates still.   It is more than a remembrance of an extraordinary person.  It is an example that inspires, even compels us, to ask about  at our own lives.

Our Witness Today

In the Q&A following the film’s showing at the Shakespeare Theatre in DC, the question was asked of the actor: How did Karski develop the moral courage to act in these extreme circumstances?

The actor replied that he thought it was from his mother, a devout catholic.

I believe that people learn their values from watching others.  Whether in extraordinary acts of courage or lives long lived in service to people, we select those qualities we want to express in own professions.

Karski’s example is helpful for those working in the cooperatives.  One of our distinguishing features is an organizational design based on values and collaboration. We are called to a higher standard than might be practiced in other firms.

Credit unions were intended to protect and serve those who are exploited by others.  Our meme is the little guy with the umbrella.  But how easy is it to ignore our cooperative roots and imitate institutions for which credit unions were intended as an alternative?

Do we transfer responsibility for outcomes onto the organization in which we work?   Karski reminds that only persons have “soul,” that is the capacity to do the right thing.

It is not the cooperative model that fails.  Human agency matters whether consequences seem trivial or of utmost concern.

What I find compelling about his example is that after Allied leaders failed to respond to the Holocaust tragedy he reported, he never blamed others for inaction.

His witness of moral courage was not a basis for faulting others.   He did the best he could so that future generations could benefit from his example.

That’s why the film is called Remember This.

Cooperatives, Credit Cards and Wealth Redistribution

Who pays for your rewards?  That was the question posed by a Federal Reserve study released in December 2022.

Their short answer is “sophisticated individuals profit from reward credit cards at the expense of naive consumers.”

The Federal Reserve study describes this outcome as a redistribution of wealth.  They calculate the result as an “aggregate annual redistribution of $15 billion from less to more educated, poorer to richer, and high to low minority areas, widening existing disparities.”

The full study is 84 pages, but the Conclusion is on pages 30-31.

“Those Who Know the Least”

How this happens is a replay of the long-standing practice that in American those that have the least, or know he least, pay the most for financial services.

The reason for this redistribution is differences in consumers’ financial management savvy.  The data “show that reward cards induce more spending, leaving naive consumers with higher unpaid balances. Naive consumers also follow a sub-optimal balance-matching heuristic when repaying their credit cards, incurring higher costs.”

The academic work supporting this documented result is summarized in this initial summary:

Consumers lacking financial sophistication often make costly mistakes.  In the consumer credit card market, such behavior can entail over indebtedness and sub-optimal repayments.

“Banks, in response, can design financial products to exploit these mistakes, combining salient benefits with shrouded payments. Naïve consumers might underestimate these payments and incur costs from usage.

“Sophisticated consumers, in contrast, might rake in the benefits while avoiding the payments and thus profit from usage. Such products can therefore generate an implicit redistribution from naïve to sophisticated consumers and thereby contribute to inequality.”

The Cooperative Challenge

Members need credit and/or debit cards for most routine transactions today.  The study documents the move away from cash payments. Credit cards are the most common way consumers transact daily and then  pay one bill at the end of the charge period.  A credit card is as important as a checking account for every consumer.

Most consumers are attracted by card rewards.  A card with only a low cost line of credit, is a difficult sale against the highly promoted barrage of reward programs.

These reward offers are not just from major banks.  The most popular cards partner with retail, travel and other services or products  to entice users to accumulate points that can be used to pay future purchases.

Cash back “immediate rewards” offer a 1-3% discount on purchases if points are not a consumer’s goal.

The Federal Reserve study shows that these benefit and rewards programs are paid for by consumers who are less adept at managing their finances.  For this user group the card becomes a loan with interest rates in double digits.  This interest income augments interchange fees and is the dominate source of bank card profits.

The Federal reserves describes these differing consumer card management habits as an income  “redistribution from less to more educated, poorer to richer, and high to low minority areas.”

Should Credit Union Card Programs Be Different?

What is a credit union’s responsibility in this wealth transfer process?   Should it not offer any rewards card and just maintain a low, universal borrowing rate for all users?

Members want rewards.  Is the response to develop multiple card programs to appeal to different segments?  Can credit unions really beat the best card offerings by highly visible national programs targeting high income individuals?

The Federal Reserve study documents what issuers implement as the universal profitability model for credit cards–borrowers pay for the benefits of those who do not carry balances.

With rare exceptions, most credit unions in their credit card offerings follow this banking model. Is this redistribution outcome consistent with cooperative purpose?

This is not a question of legality or even equity.   Rather it involves both strategic and values decisions.

If the intent is to serve all members with their diverse needs and circumstances, then marketing efforts will inevitably focus on the largest, strongest and most financially  attractive members.  They have bigger cars, larger mortgages, and higher family incomes.   This tier is every financial institution’s top priority.

To compete for this wealthier segment’s business with competitive loan and savings rates, the rest of the member base must pay more for loans and earn less on savings.  Risk based pricing is one tool used to implement this redistribution.

But is this the card model coops were intended to provide?   I don’t know the answer.  Credit unions were originally formed to serve different segments.   Today the goal for many is to serve the “whole market.”

The wealthy tend to be excellent rate shoppers. The less well-off tend to take what is offered. Is the result of an open-ended market ambition that no segment is served really well?  If so, is such a cooperative strategy sustainable?







Tech Layoffs and Lessons for Credit Unions

Organizational isomorphism.  That is a big word for the tendency of organizations in an industry to follow the herd.  Do what the other firms do and remain with the crowd.   To act contrary to the consensus is dangerous.   Staying in the herd protects individual reputation and accountability.

John Tippets, the longtime CEO at American Airlines FCU described this conforming tendency in his speech to the Navy FCU board in 2001:

One of the challenges of leadership is to constantly sort through popular ideas advocated by credit union peers. 

It seems that at every meeting, someone has a new fad or a new idea – they’re sure it’s the greatest thing since sliced bread!  A director will return from somewhere thinking he’s got the greatest idea; a staff member or a vocal member of the credit union will bring in great ideas. 

But many of these ideas do not fit.  For example, AAFCU has not felt comfortable about indirect lending; we do not actively participate in risk-based pricing; we do not see a fit for select employee group (SEG) expansions; we didn’t understand how dial PC banking could preserve our economics; and, so far, even credit cards do not seem to fit.  We declined to do these things because we haven’t been able to make them fit into our models. 

You have to make choices and you have to make trade-offs.

Layoffs in Tech:  Necessary or Herd Mentality?


Alphabet’s (Google’s parent) reported a 36% increase in 4th quarter 2022 profit to $20.64 billion.

At the same time as these record financial results, the company announced 12,000 layoffs  or 6% of its workforce.  The public explanation was over-hiring during the pandemic growth and doubling down on AI solutions in the future.

Why all these tech layoffs after record profits and rising revenue?   If the average laid off employee cost $200,000 per year, then Alphabet saved $2.4 billion, about 10% of one quarter’s profit.

It doesn’t compute. Here is one writer’s interpretation in an article The Tech Layoff “Contagion.”

The industry is having a midlife crisis. And that means once the crisis is over, a new era will begin. . . More likely, we are in an intermission between technological epochs.

Some argue that, as they wait out this intermission, CEOs are copying one another—laying off workers not simply as an unavoidable consequence of the changing economy, but because everybody else is doing it. “Chief executives are normal people who navigate uncertainty by copying behavior,”  writes Derek Thompson of the Atlantic staff.

He cites business professor Jeffrey Pfeffer, who told Stanford News: “Was there a bubble in valuations? Absolutely … Did Meta overhire? Probably.

But is that why they are laying people off? Of course not … These companies are all making money. They are doing it because other companies are doing it.”

Pfeffer believes this “social contagion” could spread to other industries. “Layoffs are contagious across industries and within industries,” he said in the Stanford News article. If so, the story of tech layoffs could end up being a much broader story about work in America.

A Cooperative Opportunity

Because credit unions do not have a stock price, they can resist  market expectations and respond in ways for-profit firms cannot.

In the 2008-09 financial crisis credit unions continued to lend to consumers, when every other firm pulled back.  Who would want to make auto loans  when all of the major US  manufacturers were threatened by bankruptcy?  Both GM and Chrysler were reorganized in 2009.  But credit unions continued to lend on these brands.

Sometimes crisis can motivate credit unions to become more of what they were designed to be: a counter cyclical option, to be there for members when other firms pull back, reduce staff, eliminate products and shortcut customer service.

A Strategic Misread

Another factor in the tech layoffs is the possible strategic misinterpretation of Covid’s impact  on consumer behavior and market evolution.  Derek Thompson suggests this possible misreading of the future:

Many people predicted that the digitization of the pandemic economy in 2020, such as the rise in streaming entertainment and online food-delivery apps and at-home fitness, were “accelerations,” pushing us all into a future that was coming anyway.

In this interpretation, the pandemic was a time machine, hastening the 2030s and raising tech valuations accordingly. Hiring boomed across tech, as companies added tens of thousands of workers to meet this expectation of acceleration.

But perhaps the pandemic wasn’t really an accelerant. Maybe it was a bubble.

Choices that Fit the Cooperative Model

Many credit unions also followed this same future assessment, investing in digital and fintech startups as the inevitable pattern for future success.

Yet the strength of credit unions is their member relationship, not their technology leadership.  Employees are the single most important aspect of this service advantage.  Laying off staff or other “potential recession’ cutbacks, could compromise credit union’s mission when most needed.

As Tippet’s explained he would sometimes shun the prevailing wisdom: We declined to do these things because we haven’t been able to make them fit our model.

Credit unions begin the year on a sound financial and earnings base. Whatever the economic and interest rate events in 2023  now is not the time to copy market expectations to cut back.   Especially by laying off those who make the difference when serving members.

Plus honoring a firm’s obligations to its employees If the economy turns sour, is the right thing to do.




Re-Imagining Federal Credit Unions’ FOM

In NCUA’s 1982 Annual Report Chairman Callahan’s  opening Foreward presented his approach to the Agency’s priorities:

“One year ago we were in the midst of a dialogue with credit unions about deregulation. . .our sense was that government was doing too much.  In the name of safety and soundness, we the regulators, had become overzealous. . .

In acting to change this direction, we were not advocating that credit unions should “do something” . . .Instead we tried to give credit unions self-determination . . .we tried to get out of their way. Government can’t react quickly enough to allow credit unions . . .to remain competitive.”

In every speech Ed reminded: “Deregulation is not freedom.  It is responsibility.”  To  a NAFCU conference he stated: “I think the vitality (in credit unions) comes from the initiative and ingenuity of the individual boards. Hopefully they’ll all do it differently so that the country’s eggs are not all put in the same basket. “

Reexamining FOM “Groups”

After NCUA approved the total deregulation of share accounts in April 1982, attention focused on the agency’s interpretation of the FCU Act’s common bond definition.   Callahan described this review in the Annual Report :

“Traditionally the agency viewed that “groups” meant an occupational credit union would be one sponsor, one employer period.  Groups within a well-defined neighborhood, rural district or community meant 5,000 people, then it meant 25,000 people; then we weren’t sure how many people it meant.  But numbers were all it meant. 

“We believe that this very narrow interpretation was probably far more insidious than the rules and regulations promulgated over time.   We have taken a more liberal view.  We think that if the law does not say no, it certainly leaves room for yes.  . . And so we think this interpretation is a far more deregulatory action than doing away with rules and regulations.”

Ed looked at the full scope of credit union history. Open charters were present alongside more  restrictive common bonds.  The practice in Rhode Island for example, was that their state charters could apply for statewide authority  to serve anyone who lived, worked, or worshiped via a bylaw amendment.  Many states had much more responsive FOM interpretations than NCUA allowed.

The result was that beginning in 1982 federal fields of membership became more flexible through senior clubs, multiple group charters and  allowing members  to  select from multiple credit unions, that is overlapping charters.

Still today, federal FOM changes are much more deliberate than most state processes. NCUA common bond oversight has metastasized as a  vestige of bureaucratic control.  Numerous vendors including former NCUA employees still offer consulting services to help credit unions seeking FOM change.

The Context for Callahan’s Reappraisal

Ed’s  belief in the importance of deregulating the common bond was shaped by his life experiences.  These include his thirty years as a teacher and administrator in the parochial school system; his six years overseeing the Illinois credit union system as director of DFI; and his belief in the unique self-help possibilities of cooperative design.

In  Illinois there were almost 1,100 state charters in 1977 when he became Director. He saw first-hand the challenges of unprecedented short term double digit rates.  The old economic and regulatory order was passing;  the need to change how credit unions responded to their members was urgent.

For example  in 1978 Sangamo Electric Credit Union in Springfield lost its sponsor when the company moved to Georgia. I was credit union supervisor and said the law required that we close or merge the credit union as it no longer had a sponsor.

Ed’s reply was: “The company moved, not the people. They need their credit union now more than ever.”  We changed the credit union’s FOM so it could continue serving members.

In these initial years at DFI we  saw how government regulation and process  at all levels had become so slow and bureaucratic that the members, the people credit unions were meant to help, were the last to be considered.

More Than an FOM Interpretation

In his speeches Callahan called the credit union system a “sleeping giant.”  He believed that all Americans should have a cooperative financial option.

During his tenure as Chairman, field of membership flexibility was just one aspect of credit union expansion.

New chartering efforts were encouraged with universities and colleges a point of emphasis to bring the next generation into the movement.

In November 1982 a group of credit union leaders met in Philadelphia to plan CUE-84.  This stood for Credit Union Expansion.  The  goal was  50 million members by the 50th anniversary of the FCU Act in 1984.  The honorary Chairman was NCUA board member Elizabeth Burkhardt.  In addition to the presidents of national trade associations,  leagues and  NCUA staff, the committee included the credit union CEO’s of Navy, United Airlines and the president of CUNA Mutual.

Spreading the word about credit union opportunity was more than an FOM change.  It was the  belief that helping grow members was in everyone’s and the country’s interest.

FOM: Inclusive, not Exclusive

Before deregulation, the public impression was that one had to be a member of a sponsoring company, association, or church to join.  That was often the case.  Ed wanted to turn that traditional view upside down.

He believed credit unions should be inclusive, not exclusive.   As he was often quoted,”I do not believe in THE common bond.  I believe in a common bond.”  That “a” was the responsibility of each credit union’s board and management to define and serve.

Many Different Frames- One Goal

Today there are as many practices of the common bond as there are credit unions.  The FOM is like the frames in the National Gallery’s thousands of paintings.  Every picture, every frame is different.   That diversity is the credit union system’s strength.

To see the common bond as an advantage or not, is to misunderstand the core of credit union success.

Credit unions are a prime example of the “relationship economy.”  We all connect in our lives with some group(s) to fulfill  a sense of  purpose.  As human beings we aspire to join together in productive, self-fulfilling ways.  We rely on others and they depend on us.

Credit unions are one option.  When led well, they become much more than “just a job.”  Or when members use the phrase, “my credit union,” more than a financial alternative.

Ed believed in credit unions as a community just as John Tippet stated in his 2001 speech to Navy Federal.

Ed’s lifelong leadership of multiple organizations demonstrate  the special skills required  to build  “communities”  of shared purpose. The FOM should be a building block for credit unions, not a regulatory stumbling block.

Fields of membership are a “frame” for credit union performance.  What occurs, the painting within the frame, is what makes each credit union unique.























Searching For Credit Union History

Three weeks ago I received a unique document.  It was John Tippet’s 2001 speech to Navy FCU’s board at their annual planning conference. John Tippets was then CEO of American Airlines FCU, now retired.

The presentation was typed in full along with the slides used.   John presented his credit union’s strategy and how he believed this implemented credit union’s unique design.

Ten years later (2011) Navy’s planning COO requested a copy. Now twelve years further on, I will share some of his thoughts. I believe they are an important example of a leader’s vision and provide important perspective today.

History Matters

The American historian David McCulloch wrote over a dozen books and countless speeches on transformative events (1776) and the people who played important roles.  His accounts are lively and compelling.  He drew upon stories from his subject’s diaries, letters, speeches as well as second hand press accounts recreating these past scenes.

As an author, he believed history was larger than life.   A country’s stories, he believed,  are its most critical  resource.  When well presented, often from original records, they enlarge the spirit and shape our understanding of who we are.  And what we aspire to become.

If one reads the Congressional Record transcript of Ed Callahan’s last testimony as NCUA chairman on April 24, 1985, there can be no question of his impact.  His eloquence, factual knowledge and even humor with the committee shows their respect of his leadership of NCUA during this very vital time for financial services.  The words recreate the event and provide, still today, insight into a leader’s talent.

Or read the July 16, 1982 hearing transcript of NCUA General Counsel Bucky Sebastian’s testimony before Chairman Rosenthal’s House Committee on Government Operations.  The Committee was investigating the failure of Penn Square Bank and its impact on credit unions. It had occurred just two weeks earlier. The back and forth between Sebastian and the Committee chair jumps off the page.  It shows clearly two very different understandings of the event and the role of government.   Bucky’s powerful argumentative style is on full display!

The Absence of Credit Union Records and Original Documents

The years 1981-1985 were pivotal in credit union evolution.  Their response to the economic crisis and the deregulation of America’s financial system was critically important for their members’ future.

These major events unfolded just as NCUA was still organizing itself as an independent agency with a three-person board appointed by the president.   Prior to this federal credit union oversight had been by a single Administrator housed within HEW.

In response to these changes, a separate credit union press of weekly or monthly newsletters was begun. These included CUIS (credit union information service), NCUA Watch, Report on Credit Unions and smaller commentaries. The trades wrote current stories in their weekly updates mailed to members.

These critical original documents from this period are hard to find.   I have contacted CUNA Mutual, CUNA, the Credit Union Museum and even the Library of Congress.  No copies of any of these written sources seem to be available.

Even more vital would be recorded speeches.  In this era all major credit union conferences would make cassette recordings of the keynote speakers and sell them to attendees to take home to boards and staff unable to attend.

A major event was CUNA’s Governmental Affairs Conference held every February at the Hilton Hotel. The NCUA chair’s speech would be a highlight.  I found a copy of Callahan’s 1983 and 1984 presentations.  But the most pivotal ones from 1982 and 1985 are missing.

State leagues and other conference organizers routinely recorded presentations by NCUA personnel as well.  Finding copies of these tapes is very difficult. The firms organizing the events have long ago moved on.  These live recordings are often seen as yesterday’s news when found in office records.

In this pre-internet period, NCUA communicated with its staff in six regional offices and the credit union community with a new media, VCR.   NCUA’s Video Network issued 21 productions over three years.  No copies can be found for many episodes. Neither NCUA nor the National Archives have the tapes of these critical updates.

Telling the Credit Union Story

Contemporary leaders are focused on creating their story rather than learning about the past.  Many of the participants from this critical 1981-1985 era have retired years ago.  Memories fade.  When their boxes of credit union experiences and keepsakes are opened by children or grandchildren, they rarely have any personal meaning for the family.  So out they go.

The founders of these earlier newsletters and conferences leave no legacy of their vital role of credit union events now forgotten.

But somewhere in a closet, garage, or basement storage area I believe some of these original records (newsletters, recordings, VCR’s) exist kept by those as memories of an important part of their lives—but even more consequential, I believe, as original sources of credit union history.

Can reader’s provide suggestions where some of this trove of credit union history exists?

I will be glad to digitize any records that a person wishes to keep.  The years of 1981-1985 are a turning point.

Parts of John Tippet’s 2001 statements on his credit union’s strategy will spark controversy.  It did then and it will today.   Some of the same challenges remain.  For the credit union story is always being updated.

Can you help me fill in some of the missing parts from an earlier era?  It will be entertaining, illuminating and educational.   Please let me know what you find or where I might look.