Category: Cooperative Design

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Credit Unions Using History to Prepare the Future

Following is an introduction to a video lecture by historian Timothy Snyder  titled “What is history?”  (link) 

We speak often about history, but we are careless with the past. When we choose not to know what has happened before, we are also choosing not to influence what will happen after.

If we don’t care about history, we find ourselves in an eternal present, denied any sort of imagination about the future, and nurtured on lies about a past in which we were innocent.

History does not mean these misleading tales; it means a search for knowledge, using a certain set of tools; it means a process that enriches and humanizes, one that allows us to name things by their proper names.

Implications for Credit Unions

Whether you are a student at Western CUNA Management School or elsewhere, one purpose of education  is to understand the road to the present.

These stories are vital for both individual credit union success and for creating system-wide priorities.

For example, beyond the founding stories of committed credit union organizers keeping records in a drawer at the work site, how were future decisions on FOM expansion and leadership changes made in different eras?   What part of the legacy did the credit union preserve and what no longer applied?

Understanding an organization’s past events, both successes and disappointments, provides a perspective for future options. Most major decisions involve assumptions about options-those considered and others overlooked.

How Are National System Priorities Set?

The same benefits are available at the national level for system issues such as regulatory oversight, legislative changes in statutory authority or enhancing the cooperative purpose in American society.

Rarely do we look back to learn from the past.  Regulators do not  conduct postmortems of failures preferring to move on versus evaluate where change might be needed.  For example think of  instances when NCUA has described credit union failure as due to “fraud” or “lack of board oversight” instead of asking why these multi-year deficiencies went undiscovered in exams.  Using fraud or other credit union failure excuse deflects from  regulatory accountability.

How are national legislative priorities determined?  For example, the recently branded Credit Union Board Modernization Act included  in the 21st Century Road to Housing bill, implemented without the President’s signature?

The legislation transitioned federal credit unions to a “risk-based board meeting schedule” giving well-managed institutions the flexibility to meet just six times a year (with at least one meeting per fiscal quarter) instead of the previous blanket monthly requirement.

The legislation also targeted requirements for newer/lower-rated credit unions as follows: New (“de novo”) credit unions and those with lower supervisory soundness ratings (composite or management capability ratings of 3, 4, or 5) must continue to meet at least monthly to ensure proper risk oversight. (AI)

This is modernization?   Allowing boards to meet just six times per year is based on an NCUA process that reduces examination frequency for higher rated credit unions!   How do either regulators or boards  understand the state of risk by less frequent contacts?  And when something untoward happens, the solution is to meet more often?

Do either the volunteers or the regulators believe less frequent contacts are a “modernization” step?   Looking  at the recent and past failures (Jefferson Financial, Creighton, Unilever, etc.) and the two year plus NCUA exam cycle heading into the 1980 financial crisis, suggest the real problems do not arise from too many meetings.  It is just the opposite..

This “modernization” feels like a  PR effort to  convey legislative activity rather than addressing substantive  issues of volunteer and regulatory effectiveness.  Regulatory and board oversight are management and leadership issues, not a regulatory burden to be remediated.

History suggests the potential for real congressional change happens about once a decade.  The three person board (70’s), deregulation (80’s), Member Access Act (90’s),  and the financial crisis (00’s).

There are fundamental issues about the future of cooperatives including the role of the NCUA board (or even a separate coop federal regulatory system), the rights of members, the purchase of banks, the dearth of new charters and the merger payoffs schemes fueling consolidation.

With a knowledge of the past we know there will be an opportunity for major legislative change to further coop purpose and effectiveness.  But is anyone even thinking about that plan?

Could that effort be a topic for students in the final year of their credit union educational experience?  After all, it’s their professional future they would be shaping.

 

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Do Credit Unions Have Values?

At the Western CUNA Management Scoool, students are discussing the future of credit unions.  Is the cooperative system just another financial option for Americans or does it have a different public priority from its founding  and subsequent tax exemption?

Some assert what makes credit unions different is that the system is based on values.  Some would point to the seven or eight cooperative principles as one indicator of the difference from for-profits.

But can institutions have values?   America was founded on values, especially the freedoms and rights founders asserted were enabled  by democratic rule, that is the consent of he governed.

Are Organizations People?

The Supreme Court has repeatedly ruled that organizations (such as corporations and unions) are “legal persons” and possess First Amendment free speech rights. Landmark cases like First National Bank of Boston v. Bellotti (1978) and Citizens United v. FEC (2010) established that political spending and advocacy by organizations are protected forms of free speech.

But institutional design, or legal character,  do not guarantee virtuous conduct.  Individuals are the source for corporate decision making.   All organizations need individuals to participate and in some instance, to get their future back on track.  Even credit unions.

The Challenge of Power

Calling credit unions financial service providers is not incorrect, but the issue is why we believe that is credit unions’ defining characteristic.  The challenge is not that the description is wrong, but why is it the primary focus.

People can lead credit unions but may have their outcomes  set on the wrong things.  Some believe and act as if it the size of the balance sheet along with the supposed advantages of scale are the critical factors in credit union success.   Size denotes market power and can lead to market and financial dominance.

But credit unions succeed not with conventional approaches to market conquest, but with relational power.   That is the trust and service that promotes members’ financial well being.   Trust does not come in big or small packages.  It is present or not in an organization’s action.  A lesson Rudy Hanley used to guide his tenure at Schools First for almost 30 years.

Institutions don’t have values.  People do.  The responsibility for ethics and justice lie not in some abstract organizational concept, but  directly with the individuals who design, participate in, and regulate that system.

The democratic credit union governance can be an advantage in achieving this relationship power.  For democratic participation  should  enable constant debate to restate what ethical boundaries and values should be embedded in the financial rules of the game.   Is this how your credit union acts?

Discuss with your fellow students.

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Credit Union Strategy: Back to the Future with a Live Case Study

What is credit union’s most important strategic advantage?

Is it the tax exemption?  Their superior volunteer and professional ledership? The democratic member-owner design?  Their origins and long standing member relationships?   Is it superior size and scale?  The ability to buy out their for-profit competitors in private?  Or, the classic non-answer, It depends?

At this summer”s Western CUNA Management School, there will be discussions of strategy and the advantages credit unions bring to market competition.

Here is one perspective, not directly about credit unions, but which would certainly align with  many successful credit unions’ approaches.  As you read, ask what is the prevailing narrative for credit union strategy?  Does that approach fit your credit union?

From: Next City on Economic Development Models

As journalists, we’re constantly thinking about narratives. At Next City, we’ve been grappling with the question of how narratives change, or how new ones emerge. Part of the answer is ultimately doing the work it takes to do things differently than the way they’re done in prevailing narratives.

In one prevailing narrative, economic development is about “attracting and retaining” large corporations to “create better, higher paying jobs.” Tax incentives emerge to support deals that fit the narrative. Commercial or mixed-use lots that fall into city-owned hands get placed into the hands of whichever developer can assemble the “highest and best use” business plan, meaning they can attract the highest possible paying tenants.

So much of what I’ve come across over the past 10 years at Next City has been about doing economic development differently. Community power over land, worker power over business, local power over finance. All of the different models for how those basic concepts manifest have emerged from conversations on the ground about how the prevailing economic development narrative doesn’t serve their communities. 

Talk may be cheap, but it plays a role, too. The prevailing narrative about economic development gets reinforced through regular nationwide convenings of economic development professionals, urban planners, developers, and investors where attendees are all caught up in that same narrative. And they all play a role in implementing and entrenching it further.

Last week in the Bronx, I witnessed something I’ve seen only a handful of times, though it’s becoming more frequent in recent years: More and more of the people behind these models, people who are trying to do economic development differently, are finding resources to connect and share notes across different local contexts, from coast to coast and everywhere in between. 

There’s even a term they’re using to start describing this network of hyper-local initiatives: “trans-local.”  (one credit union CEO calls these efforts networks)There’s a lot they have to learn from each other, even if they’re operating in different legals framework and funding ecosystems. Parallels are quick to emerge, like the role of certain buildings or spaces as a sort of community organizing anchor that draws community members in to start having conversations about how they can play a role in doing things differently.

 

A Case Study Illustrating the Topic of Local Economic Development vs. Transfer of Leadership?

The following are links to a current, ongoing example about two opposing credit union approaches to community economic resilience:  Stay local or transfer leadership and resources to distant, out of area organization?

Many relevant financial facts and future claims are outlined in this series of blog posts about the proposed merger of the 85 year. $4.5 billion , Sacramento SAFE Credit Union with the $29 billion BECU whose main office is in Tukwila, WA,   (links)

Read or listen to claims for the merger versus the facts of the two credit unions’ current financial performance.   Which option would you think is in the members’ best interests?   How does your decision influence your approach to strategy for your credit union?

You can post your oinion  in the comment section-or use in your final year’s class  project.

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Credit Union Schools: What Should Students Learn from History

Yesterday began the 2026 Western CUNA Management School (WCMS) two week summer session. 
WCMS is one of several industry sponsored professional education opportunities.  The curriculum is covered over three years with the two week sessions for in-person classes and social networking experiences.
The on-campus portion is on the Pomona College campus with students living in dorms.  Classes are led by college professors, industry veterans and outside experts. WCMS has evolved over its 60 years as the credit union system, financial services and the economy have all undergone significant transformation.
The purpose has remained constant as presented on its website.

Developing Leaders

Advancing
Credit Unions

WCMS’s immersive curriculum blends academic rigor with real-world application. Graduates return as strategic, confident leaders ready to innovate, solve challenges & drive results.

The Test of Education:Knowing the Right Questions to Ask

How does any organization, industry or community assess the quality of its educational programs?  Is it basic organizational  skills learned? Applying technology to recurring management issues?  Analyzing financials or applying  other business oriented courses and strategic theories to coops?

Education evolves.  Curriculum is never static.  However the strength of a credit union based course should be the ability to understand  more about the unique cooperative model.  And how its evolution for over 100 years has created the current $2.6 trillion depository based non-profit financial system.

Enhanced skills are beneficial but often insufficient to fully appreciate the cooperative legacy that has been paid forward by prior generations to today’s aspiring leaders.

For the next two weeks I will periodically pose questions or topics that I believe would stimulate important discussion about the state of the industry today.

History Matters Because Credit Union Design Is Perpetual

This month’s CUSO Magazine is presenting various aspects of credit union founding events.   A recent article in the series documents the loss of contemporary printed publications created by the leagues, industry newsletters and even regulators.  (link).  There appears to be no central repository for personal, organizational or public records for future research.

Without an examined knowledge of the movement’s several eras, it is more difficult to understand and present future cooperative contributions.  The default strategy can just become adopting  competitor’s tactics, a surefire way to lose cooperative purpose.

The Final Exam Questions for WCMS Graduation

Because history can inform both present and future potential, the following would be my first questions for WCMS’s final exam.  It assess one’s knowledge of credit union history and its relevance for today in three brief essay answers.

  1. When Filene set out to form credit unions in the US having seen examples elsewhere,  what was his “theory of change” for American society?  Why did he believe a cooperative, credit union approach, was the best option among a number of new consumer focused financial experiments at the time?  

2. Why did Filene hire Roy Bergengren?  What did he feel the nascent movement needed in  Bergengren’s skill set?  Did the two founders  have  disagreements about how to proceed?  

3. Do these founding events have echoes in today’s credit union movement?  (Theory of change, strategies/tactic for movement success, leadership skills)

When History Changed a Critical  Understanding

These questions may appear to be more liberal arts versus business skill sets.  However this is the kind of discernment students will need when encountering practical challenges today and how simlar events were addressed in the past.

For example in 1982 when NCUA Chair Ed Callahan and Bucky Sebastian were seeking to understand the history of the field of membership in the Federal Credit UnionAct, they went to Massachusetts to learn about the movement’s founding practices.  They wanted to know the background of the concept. Was it about more than a legal interoperation of the word groups?

In Filene’s home state, a cradle for the early movement, they learned that most  initial state charters included local communities along with a sponsor.  The field of membership  was meant to fit individual circumstances not force prescribed boundaries or limits  on who could become a member.

That was the basis for their bringing greater regulatory flexibility to the FOM interpretation of the FCU Act.

More exam questions later this week.

 

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How Should Coops Measure Member Wealth: The Mean or the Median?

For over a year in their quarterly Trendwatch industry uupdates, Callahans has shown long term trends using both average ratios (the mean) as well as the median for industry level performance.

The mean is the weighted average outcome for all credit unions.  Obviously this approach gives more significance to larger institutions’ trends versus smaller.  The median shows the middle number where 50% are below and 50% are above the number being tracked. Here are two examples of these  analytical outcomes:

 

Callahan’s graphs illutrate these different  ways to present data.   While overall trend lines  may look similar, there is a real difference when interpreting individual circumstance  or peer comparisons.

The Impact for Credit Unions Member Analysis

Yesterday the web site Visual Capitalist published a chart that ranked the 30 Richest Countries in the World by average wealth per capita, that is total wealth divided by population.  The second ranking presented the mean or middle total for per capita wealth.

As one might expect America ranks second in average wealth at $695K per person, behind first place Switzerland at $910K.   America’s economy has long been one of the largest in the world in total and per capita. No surprise there.   On average Americans are well off.

The second column tells a different story.   When ranking by the median, the US number is  $69K per person.  That is 50% of population has less than that amount and the other 50% more.  That number places the US in 28th position out of the 30 countries, just above Greece and Germany.

No other country of the 30  in the UBS Glpbal Wealth Report ranking for 2026 had such a radical difference between the the mean and median average wealth per person.

The US reports the widest distribution in the  wealth ownership  gap between the very wealthy and the rest of the population.

The Credit Union Implications

This is not a new finding.  But it shows the extreme difference when placed in the context of other wealthy nations. Moreover, in America this wealth distribution disparity is growing.

In credit union analysis member participation is often calculated.  The result is frequently referred to as the 80:20 rule.  That is 20% or a small number of members contribute 80% or more of loans or deposits balances. These generally better off members are a much sought after class by all financial providers because of their impact on the firm.

But is an 80:20 outcome in member relationships where the credit union model is most effective?  Has your credit union looked at the mean and median income or net worth distribution of your members? Or in the market(s) you serve? Is the marketing priority to gain more profitable, higher balance  members or grow across all income levels?

The critical question is whether credit union business models and practices are contributing to and worsening the wealth gap, or trying to improve community equity?  Does a credit union’s fee structure, loan pricing policy and savings rates favor the well-to-do?  Do the less well off pay more for loans and earn less on their smaller savings balances?

One former credit union CEO who worked tirelessly to ensure there was not a wealth bias in the coop’s practice was Jim Blaine when he led SECU NC.  With his approach the credit union became the second largest in the country.  Pricing and fees were equitable for every member.

Measuring mean and median member income could be one of the most important indicators of credit unions fulfillling the movement’s public duty justifying its tax exempt status.  Or it might indicate the constant pull and siren appeal of the greater market’s for-profit forces.

How credit union’s respond to America’s growing disparity in its  distribution  ever increasing wealth could determine the movement’s future, that is either profit or non-profit.

 

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A Story that Illustrates an Entire Credit Union’s Mission

Sometimes a simple story can portray an entire philosophy, strategy or organization’s culture. No corporate manuals, strategic plans, or even special training sessions are needed.

For example in the Bible when Jesus says his second great commandment is to love your neighbor as yourself.  His critics ask, Who is my neighbor?   Jesus then tells the story  of the Good Samaritan.  It is about a traveler attacked and robbed by thieves, and left injured  lying alone on the road.  His fellow countrymen pass by. He is helped by a stranger, who is not from his country, religious tradition or ethnic background.

The following story  is the lead in a CEO’s monthly staff update.  It is long because the event was extended.  If you knew nothing more about this credit union other than this episode, you would surmise that it is probably very successful in traditional performance measures.  It is, but that is not the primary purpose. It succeeds because of a culture that tries to fulfill the special purpose of a cooperative charter for its members and communities.

My only edits are to protect the individuals named and the credit union’s identity.  I  would call it the story of A Credit Union Good Samaritan, because as in the original, the person assisted was not even a member of the credit union.

From a Cooperative CEO

This month’s story highlights Mary, a long-time shared-branching customer supported by Rose at our Central Avenue Member Center.

Mary is associated with an out-of-state shared-branching credit union and visits our location about once a month to withdraw a small amount of money. As an older individual, she prefers managing her banking in-person and occasionally stops in for general assistance. Over time, Rose developed a strong, trusting relationship with Mary.

One afternoon, Mary arrived visibly distressed. When Rose asked how she was doing,  Mary shared that she was feeling overwhelmed. She requested her account balance and withdrawal limit, and upon hearing the details, her anxiety seemed to increase. Mary mentioned needing to make a phone call to confirm something and stepped into the lobby.

While on the phone, Rose could overhear parts of the conversation. Mary sounded frustrated and repeatedly referenced taking cash to Walmart, which immediately raised concerns. After ending the call, she returned and requested to withdraw the maximum amount allowed.

Recognizing several red flags, Rose began asking thoughtful follow-up questions. Initially, Mary was hesitant to share details, explaining that she was sending money to her granddaughter. With patience and care, Rose continued the conversation, and Mary disclosed that she had been on the phone since early that morning with someone claiming to be from “FCC Loss Prevention.” This individual told her there were suspicious charges on her account and instructed her to withdraw funds to resolve the issue.

At this point, Rose explained the warning signs of a scam and expressed concern that the situation did not seem legitimate. Although Rose could not directly access Maary’s account because she is not a our member, she encouraged Mary to contact her home credit union using an official phone number to verify the claim.  Rose explained that if there were legitimate concerns, her credit union would be able to confirm and secure the account.

Mary agreed and returned to the lobby to make the call. As the situation progressed, Rose realized Mary had never fully disconnected from the original caller. The scammer quickly adapted their story, now claiming to be from Mary’s credit union after overhearing the conversation. Rose could hear Mary  beginning to question the caller, asking how to confirm their legitimacy, while the scammer continued to pressure her to withdraw funds and go to Walmart.

Seeing Mary becoming increasingly overwhelmed, Rose stepped in. She located the official contact information for Mary’s credit union, asked a colleague to cover her station, and invited Mary into a private office so they could call together. First, Rose ensured that Mary had fully disconnected from the scammer, despite being told not to hang up.

Together, they contacted Jean’s credit union directly and confirmed there were no unauthorized transactions or issues with her account. The credit union also shared that they had seen an increase in similar fraud attempts. Fortunately, because Mary had not shared sensitive information, no further action was necessary beyond documenting the incident.

Afterward, Rose helped Mary save her credit union’s official phone number in her contacts and block the scammer’s number.  Mary expressed deep gratitude, sharing that the scammer had attempted to convince her to withdraw and send nearly $11,000. She acknowledged that without Roses intervention, she likely would have followed through.

This experience reinforces the importance of vigilance, empathy, and proactive service. Protecting individuals—whether they are members or not—requires awareness, patience, and a commitment to going above and beyond.

This is a powerful example of how our credit union lives out its mission and purpose every day. Through care and compassion, you transformed a moment of fear and confusion into one of hope, stability, dignity, and safety for someone who needed it most.

 

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Freedom and Credit Unions as America Celebrates Her 250th

One of America’s founding ideals is captured in this poem with its familiar and oft-quoted  final lines from her “silent lips:.”

The New Colossus

Not like the brazen giant of Greek fame,
With conquering limbs astride from land to land;
Here at our sea-washed, sunset gates shall stand
A mighty woman with a torch, whose flame
Is the imprisoned lightning, and her name
Mother of Exiles. From her beacon-hand
Glows world-wide welcome; her mild eyes command
The air-bridged harbor that twin cities frame.
“Keep, ancient lands, your storied pomp!” cries she
With silent lips. “Give me your tired, your poor,
Your huddled masses yearning to breathe free,
The wretched refuse of your teeming shore.
Send these, the homeless, tempest-tost to me,
I lift my lamp beside the golden door!”

Emma Lazarus, written in 1883, on the Statue of Liberty

Freedom, Liberty and Opportunity

One of many possibilities beyond the  “golden door” was begun some 25 years later during one of America’s earlier progressive reform eras.  St. Mary’s Bank, the first credit union,  was organized in 1909 by a priest to help workers in a factory  with small personal loans.  From that small seed, today’s cooperative financial system has grown to $2.5 trillion serving tens of millions of American consumers.

More than seventy years later, a new era of credit union potential was launched. This new chapter was described  by the Chairman of NCUA in his Three Freedoms speech to the Massachusetts CUNA league’s Annual meeting on November 3, 1984.

Freedom is commonly understood to be free from something that limits or controls an individual’s actions by fear, want, arbitrary rules or sometimes coercion.

But freedom also  enables individuals and society to undertake collective efforts essential for living in communities in which interdependency is crucial for the well being of all. This “empowering” opportunity is how Callahan  described the transforming outcomes of deregulation for the credit union system.

The changes in government’s role had provided a new context where credit unions were enabled to make decisions not previously open to them.  The upshot of these multiple efforts were described as three freedoms

* Freedom of security: credit unions have their own unique cooperatively structured  insurance safety net (NCUSIF) and liquidity fund (CLF).

* Freedom to compete: credit unions could now make their own business decisions on products, services and interest rates for members;

* Freedom to serve: credit unions now decide who their membership will include (FOM choice).

Cooperative  design combines individual choice in an interdependent-cooperative financial system founded on self-help, self-governance and self-reliance. Not private capital or ownership  or government subsidy.

By 1984, the foundation had been set for a quarter century of  deregulatory leadership by cooperatives until the regulatory backlash from the 2008 financial crisis.

With its focus on personal financial opportunity, credit union purpose promotes  the country’s founding pursuits  of life, liberty and happiness.  Cooperative choice is a special American innovation entered though Lazarus’ golden door.

A Sleeping Giant Within the New Colossus

In his many credit union presentations, Ed  Callahan described credit union’s future potential as a “Sleeping Giant” or “America’s best Kept Secret.”

This was also a vision in an American folk and labor protest song written in 1948 by Les Rice.  He was an apple farmer in Newburgh, New York, who also served as president of the Ulster County chapter of the Farmers Union.

He wrote a song out of frustration during the post-WWII years. As small-scale farmers were being squeezed by large agricultural corporations that dictated the prices for produce and overcharged them for supplies.

The lyrics in The Banks Are Made of Marble contrast the  labor of working-class people, including farmers, seamen, and miners, with the vast wealth of the banking and corporate elite.

The repeating chorus points out the stark inequality: the vaults are filled with the wealth that the working class sweated for, while real people struggle.  The last two stanzas predict the rise of banks owned by the people:

I’ve seen my brothers working,
Throughout this mighty land,
l prayed we’d get together,
And together make a stand.

Then we’d own those banks of marble,
With a guard at every door,
And we would share those vaults of silver,
That we have sweated for!

(https://www.youtube.com/watch?v=umMTkHnnJag&t=13s)

 

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Credit Unions and America’s 250th Anniversary

As we head to this Saturday’s national celebration, this week’s posts  put credit unions’ role in the context of the country’s ongoing pursuit of “life, liberty and happiness.”

The country’s fulfillment of its ideals has not been a straight line for either individuals or our collective accomplishments.  Independence and interdependence in our common life often seem at cross purpose.

Credit unions operate in an economy dominated by capitalist ownership and the incessant drive for financial success, individually and corporately.   The cooperative way is a decision we must actively choose for ourselves.

As one commentator observed:  It is almost impossible to turn away from what seems like the only game in town (political, economic, or religious), unless we have glimpsed a more attractive alternative. It’s hard to imagine it, much less imitate it, unless we see someone else do it first.

Cooperatives are designed to meet individual needs with collectively managed resources in a democratic structure.  Theory and practice unfortunately do do not always align in specific cases.  As in the country at large, credit unions must constantly strive to achieve their goal of enhancing members’ economic freedom.

Doing the Right Thing and  Me-First Ambitions

Credit unions’ ongoing challenge to be an alternative to the dominant ethos is not new.  It is a struggle for individuals in all generations as described in this story-poem.

Grandma Shorba’s Ragamuffin Stew

by Freya Manfred

During World War II, Grandma Shorba
handed plates of bread and meat to strangers
who asked for work in exchange for food.
After chopping wood and mending fences,
the lean, stoop-shouldered men went on their way.
“May God watch over them,” Grandma said.

I was glad I didn’t have to follow them
down the long train tracks silvering west.
I didn’t want to sleep beside a strange campfire
around the bend, in the next world.
But I worried how they’d survive, and asked
my parents if they could live with us.

My begging only made everyone nervous.
Maybe Grandma’s stories of The Good Samaritan
and the Loaves and Fishes weren’t true?
If I’d been in charge, I’d have asked those men to stay—
but Gramma, who trusted God,
fed them, then sent them on their way.

The Eternal Striving for an Unclouded Day

We all have a dream in which life’s contradictions are resolved.  A home where we don’t have to face all the ambivalent choices of life  This dream of perfection. of “a city on a hill”  motivated America’s founders.  Credit unions are one example of searching for this “home where no storm clouds roam.”

Credit unions are  a uniquely American accomplishment.  In just over 100 years  an alternative, member-owned financial choice is thriving in a system dominated by privately owned, profit making institutions.   And in doing so they constantly strive to bring  “unclouded days” for members.

(https://www.youtube.com/watch?v=CE3nN6IvlGA)

 

 

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The Limits of Virtual Meetings and Relationships

One of the vital initiatives  Ed Callahan took as Chairman of NCUA was to take the monthly public board meetings “on the road.”  Over a period of two and half years, public  board meetings wewre held in all six regions. Often in locations that coincided with already planned league or national conferences.

For example the July 1982 board meeting was held in Chicago  at the same time as NAFCU’s annual meeting. That was the same weekend that the Penn Square bank failure occurred.  Because of credit union investments with uninsured Penn Square Bank CD’s, the Board meetingt attracted widespread interest.

Constituents Meeting Their Regulators

The purpose of these outside the beltway public events was to give credit unions a chance to attend meetings and see the board at work. In addition the visits often involved credit union conversations, local newspaper interviews, all which raised the profile of the credit union system and  the movements embrace of deregulation. The visit from DC raised the profile of an areas  credit unions and their contributions to their  their communities.

These interactions created awareness of NCUA’s activity and leadership.  It gave senior DC based staff direct conversations with credit union leaders on their home turf and in the various economic circumstances around the country.

Each board meeting was followed by an open press conference where Chairman Callahan and staff would answ questins from the media and credit union attendees.

Today’s Public Meetings

Yesterday’s NCUA board meeting was broadcast live, an effort going back years and accelerated by COVID’s cancellation of inperson events.  It is a practical way for many to watch a distant public meeting live or later by video.  While interaction is not sought, the slides and other presentation data can be downloaded by viewers.

Decades later this board live broadcast have replaced the on-the-road visibility which was discontinued after Chairman Callahan’s tenure ended in 1985.

But does it make a difference whether Board meetings are viewed via digital broadcast or in person in a physical serrting?

Why In-Person Matters

Tim Calkins is a marketing professor at Northwestern University’s Kellog Management School.  He uses remote learning sessions in both his class room lectures and private consulting assignments.

The Covid epidemic nade virtual delivery a necessity.  The use of remote, live virtual meetings has continued as an accepted option for many organizational inernal management meetings as well as public events such as member annual meetings.  Sessions can be  interactive and seemingly similar in content to in-person events with the same purpose.

Moreover, virtual  events can be a more effective use of time by both presenter(s) and participants.  No travel, recordings can be made at once, and AI edit summaries produced.  The reach can be  unlimited by audience size, location, or time zone.  What’s not to like?

Following is Tim Calkins’ assessment of why in-person still brings benefits that virtual sessions cannot duplicate from an article he posted last week:

The Project
Over the past quarter, I’ve had the chance to work with a leading company on a competitive situation. There were new entrants in their industry and the company was formulating a response. This was partly a strategy question and partly a political question: getting the team and the senior people on board.

I did the project remotely. I taught a class session for the team on Zoom, had multiple phone calls and then participated in two team planning sessions in a hybrid format.

The Problem
The project is winding down, and I’m not feeling great about it. I think I made a positive contribution, but not as much as I could have, for a very simple reason: I wasn’t there.

This wasn’t a problem for the class session; I can teach effectively on Zoom. It was definitely a limitation in the work session.

There were lots of problems with being remote. The first issue was that I couldn’t hear much of the conversation; I was picking up about 60% of the discussion. I could follow along but I missed some of the context. Then, it wasn’t easy for me to jump in; I didn’t know how I was showing up in the room, so I found it awkward to make a comment. I also couldn’t read the room. I couldn’t see how my comments were being received. Were people nodding and agreeing? Or rolling their eyes?

Perhaps most important, I wasn’t there for the open times: before the meeting, during the breaks, after the meeting. These liminal times are critical when it comes to influencing and building relationships. During a break one can follow-up on a comment, ask a question to clarify a point or just build a relationship.

In hindsight, I should have insisted that to take on the project, I had to travel to the company for the key meetings.

I didn’t do this because my schedule has been hectic, so travel would not have been easy. And the company didn’t request it; they routinely did hybrid and remote meetings.

The Learning
My takeaway is simple: don’t do a strategic project if you can’t be physically present.

I don’t need to take on company projects; I only accept a new program when I think I can add value and will learn something.

Going forward, I’ll pick and choose with a bit more care. I’ll still teach remotely, but I’ll only do strategy working meetings when I can be in the room.

The Opportunity for NCUA or Any Board with Public Accountablity

Might a new NCUA Chairman revisit the idea of taking Board meetings on the road?  Such events could accelerate relationships, learning about local credit union circumstances and most importantly, building trust that can only be created person to person.

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Kyle Hauptman’s Final Call as a One-person NCUA Board

If Senate hearings proceed as planned and Trump’s nominee for the next NCUA chair is approved, todays board meeting will be Hauptman’s final time as NCUA’s solo leader.

As he departs,  NCUA situation is like a suitcase without a handle, or wheels.  The agency is being led by a single person, not the prescribed board.  Its operataing capacity has been reduced by a DOGE induced, staff designed elimination of 20% of its workforce.

Flooding the Zone

Hauptman’s major initiative has been to “flood the zone” with over a dozen regulatory revews  addressing such urgent issues as banks purchase of credit unions versus the operational realities of credit unions purchase of banks.

The agency continues to publish  a repeating loop of bureaucratic processes such as banning people from further activity in credit unions or periodic issuance of credit union data.  When the nexr administrator opens the suitcase, he is likely to find little addressing critical cooperative  or administrative management issues, e.g. the effectiveness of agency examinations.  One indicator is the growing list of summary liquidations from sudden discoveries of significant, long term large operating deficits.

Hauptman has held board meetings “only as necessary.”   His solo tenure of almost 15 months is an example of the shortcomings of a single administrator  without either credit union context or regulatory experience.  However that resume gap is not unique to him.

The Knowledge GAAP

Such appointments, especially as Chair,  mean the learning curve for new leadership is extended and  there is total dependence on the bureaucracy’s agenda.  More critically, there is a lack of relationships and knowledge of the credit union system and its different leadership elements.   It narrows the understanding of issues from both an historical perspective as well as key differences about current system priorities.

The result is that the cooperative system’s uniqueness and capacity are underestimated.   Critical issues are viewed from the more familiar perspective of the banking system.  And the siren call of some lobbyists for the false standard of “parity” becomes a basis for decisions.

A Vacuum in Dual Regulatory Oversight

There has been a vacuum in regulatory leadership at both the state and federal levels for some time.  It is hard to think of a comment or action taken in either system that addresses important trends and issues in a considered manner. The issues silently observed include purchases of banks, the merger frenzy driven by CEO payouts, the absence of real member governance rights, and zero transparency in credit union strategy and cooperative accountability to owners.

Leading NCUA is not a one-person job,  It requires  both administrative oversight plus  constant  dialogue and initiatives with credit unions, collectively and individually.

An Empty Suitcase

Right now NCUA’s suitcase is pretty light.  It may be easy to lift without a handle.  But sooner or later the movement will experience the consequences of a regulatory system that  has no cooperative agenda or engaged oversight.

As the regulatory grasp and  staff effectiveness erode, this will  create a series of reactive responses to ideological/political priorities or to inevitable external problems or crisis.  The system will be at the mercy of events without informed and committed regulatory leadership.