Cooperative Design – Page 8

March 28, 2024March 28, 2024

Two Biblical Stories and Human Nature

Today is Maundy Thursday of Holy Week. The day of the Last Supper and Jesus’ arrest in the Garden of Gethsemane.

Events on this and subsequent days include two intense examples of human motivation not limited to strictly spiritual contexts. Rather the story shows how any individual might react to events in their own life.

Prophets and Honor

Every social system has ways of recognizing the successful and the benefactors of their profession. In credit unions a major event is the Herb Wegner dinner, the occasion for presenting lifetime achievement awards to honor selected leaders.

These traditions salute individual’s values and/or performance that fulfill the goals of the industry: profit, service, innovation, growth or even longevity. Some goals are very tangible, others more qualitative.

Those Without Honors

But whose contribution does not get honored? The topic is raised at least twice in the New Testament:

In Mark 6:4 Jesus said to the crowd, “A prophet is not without honor except in his own country, among his own relatives, and in his own house.”

And, in Luke 4:24 (English Standard Version 2016): “Truly, I say to you, no prophet is acceptable in his hometown.”

Why this disbelief? Does familiarity breed contempt? Are we skeptical of any special insight let alone prophetic wisdom from persons we know well, have worked with over years. and who seemingly share the same experiences as everyone else? Why should one peer’s views be trusted over another’s?

There is an inherent caution to see those among us, whom we know well, as having special insight versus merely expressing a different opinion. Persons, often outsider who focus more on the message, are often more inclined to listen to these singular views.

Ordinary people can have extraordinary wisdom. Sometimes their outspokenness make them unpopular with those in authority or leadership. The “prophetic voice” is uncomfortable. It challenges current shortcomings often with a passionate hope for a different future. For those who are being challenged, this passion feels like anger.

I am not referring to the purveyors (often consultants) of innovation who promote operating improvements. The prophet’s concern is more deeply rooted in fundamental meaning and purpose.

The question for credit unions is, are there any prophetic voices challenging local or national priorities today? Who might they be? What is basis for their critique?

And if we can name none, what does that say about the state of our “movement”? Has consensus trumped wisdom?

The Thirty Pieces of Silver

A second example routinely pulled from Maundy Thursday is Judas’ betrayal of Jesus in the Garden for 30 pieces of silver.

Think of how often this metaphor is used to accuse someone taking an action for monetary or other rewards seemingly to betray their personal beliefs.

Rev. Megan Brown takes a more nuanced view of Judas’ motivation:

“Judas was not a peripheral bystander, but one of the twelve, the inner circle of disciples who had accompanied Jesus in his ministry and in a shared, communal life together.

Surely Judas knew the implications of his actions. Surely, he knew that the chief priests and the elders were growing weary of this rabble rouser, Jesus, and that they wanted him gone. This exchange, and the kiss that follows later are ominous moments in the life of Jesus and his followers. They leave one wondering about Judas’ motivations. “

Judas was a believer. Some have interpreted his action as driven by deep disappoint that Jesus was not radical or bold enough in his Jerusalem journey. The march from the Mount of Olives to the Temple should signal a rebellion against Roman rule, not a pacificist call to turn the other cheek.

Or, maybe he sensed that the multiple political forces mobilizing against this upstart rabbi from Nazareth were becoming too strong; so he decided to go to the other, more likely “winning” side.

Perhaps he was emotionally confused by the historical intensity of the Passover remembrance, the increasing crowd appeal of Jesus and the growing immanence of a life-making choice.

What we know is that Judas deeply regrets his actions, attempts to return the silver coins and commits suicide.

Judas shows us the very human side of intense hope and belief. Is this a movement that will go in the directions I believe it should? Is there another option to this leader’s course of action? How does one express dissent if convinced current directions are not the best?

How many initial “reformers” give up their quest from exhaustion, just to get on with life, and be comfortable with their peers?

Whether Prophetic Voice or Judas?

All movements have both personalities in their adherents. We all might cite leaders who took courageous stands or whom we believe compromised their duty to their followers.

That is what makes leadership so critical, and often controversial. It is also what makes public dialogue so vital.

We live in an era where there is continuing reinterpretation and debate after millennia about faith, whether Christian, Jewish, Muslim or just a value-centered life. While many believe that truth, when proclaimed, is universal; even some would challenge that assumption.

The one common approach that all faith and other “movements” followers have ultimately taken to succeed, is to pursue these issues in community. People aligned with one another agree to listen and learn together how their differing perspectives can arrive at common purpose or priority.

The Necessity of Community

Scott Galloway has put the power of relationships in a much broader context in his precent post Mammal.ai.

“Within and across species, relationships are essential to surviving and thriving. . .

“Humans have speedballed the power of relationships. Physically we are weak, slow, and fragile, with mediocre senses and absurdly long infancies. Yet, thanks to our superpower of cooperation, we’ve dominated our environment and become the apex of apex predators. There are more birds in captivity than birds in the wild. . .

“We are wired to seek and sustain relationships and cannot survive without them. The future of the human race won’t turn on space travel or climate tech, but on our ability to attach to others. A sense that we matter, that we can call on and be called upon by others to ease burdens and celebrate joy.”

It is not coincidence that the last moments of Maundy Thursday’s Biblical events were spent in community. Christians call it The Last Supper.

Music for Holy Week

Stabat Mater, by Antonio Vivaldi (1712). There have been many beautiful settings depicting the scene of the Mother of God standing in sorrow at the foot of the cross.

(https://www.youtube.com/watch?v=qQpWwMkGtj4&t=228s)

March 27, 2024March 27, 2024

An Observervation on the Difficulty of Gaining a Credit Union Charter

Oscar Abello is the senior economic writer for Next City. His focus is community initiatives that bring opportunities to those left behind by existing financial options. New credit union charters are an area of special interest.

His latest story is A Long-Awaited Black-Led Credit Union Finally Gets the Green Light. The subtitle is “after eight years of work, Arise Community Credit Union just secured Minnesota’s first state charter in over two decades.”

The announcement of this new charter’s background has been reported by the credit union press. Abello’s story focuses on the difficulties of the process. Here are some of his observations:

Chartering a new credit union today is like traversing a long-lost trail through the woods, one that used to be well-traveled but is now overgrown, littered with fallen trees and other obstacles no one has had to navigate in many years. Prior to 1970, there were 500 to 600 new credit unions chartered across the country every year. After a steep decline to near zero, the numbers have never recovered. Over the past 10 years, fewer than 30 new credit unions have been chartered across the country.

New Credit Union Charters

The annual number of new credit union charters issued nationwide by the federal government, as published in the annual reports from the NCUA.

According to Inclusiv, a network of credit unions that focus on community development, minority credit unions across the country are closing at the rate of one per week, making the new Arise Community Credit Union’s chartering even more urgent if that trend is to ever be reversed. (Editor’s note: all credit unions close at a rate of more than three per week). . .

Arise hopes to fill in the gap left behind by other more conventional banks and even other credit unions. Predatory lenders have jumped into the gap left behind by the retreat of the mainstream banking system from certain communities. African Americans are twice as likely to live within 2.5 miles of a payday lending storefront, compared with all Minnesotans. . .

Chartering a new credit union is a huge lift. It’s been nearly eight years of organizing for Arise, but it’s not uncommon for aspiring credit union organizers to take multiple years between initial conversations to raising startup capital to finally getting a new charter. The Association for Black Economic Power also had to deal with a leadership transition along the way — it’s now led by Debra Hurston. The new credit union has its own CEO, Daniel Johnson, who has deep family ties and professional ties to the Northside of Minneapolis.

It would have been easier — and quicker — for Hurston if her group just brought in an existing bank or credit union as a partner organization to provide access to credit and basic financial services to the Northside.

But Hurston says in surveys, town halls and just informal conversations over the years, the Northside’s desire for its own institution has only gotten stronger.

“The mistrust in the banking community, it’s not a small thing, and it can’t be fixed overnight,” Hurston told me last year. “We’re starting from the wrong spot…if I have to protest in front of you to make you treat me right. Something’s not right about that. So no one from our communities has ever asked me if we should just partner with a larger bank.”

Insight for Those Who Care

Abello’s reporting should be a boon to the credit union community. For as Robert Burns wrote of this ability to see what others may not:

O wad some Power the giftie gie us To see oursels as ithers see us! It wad frae mony a blunder free us, An’ foolish notion: What airs in dress an’ gait wad lea’e us, An’ ev’n devotion!

Music For Holy Week

Christ on the Mount of Olives, by Ludwig van Beethoven (1803)

(https://www.youtube.com/watch?v=5ZKWcn7bqsQ&t=41s)

March 25, 2024March 25, 2024

What Credit Union’s Can Learn from the FHLB System

This month the Congressional Budget Office (CBO) released a 27-page report analyzing the Federal Home Loan Bank System.

The significant chapters include an Overview, Financial Condition, Subsidies and Risks.

The FHLB system is the largest lender to credit unions. Hundreds of credit unions have capital invested in individual banks and rely on them as critical partners for liquidity and ALM management. At 2023 credit union borrowings reached a peak in the system’s history:

The Central Liquidity Facility

How can the cooperatively owned, tax exempt FHLB, created to serve the savings and loan system, thrive with credit unions while their own funded CLF plays no role at all? Certainly, the borrowing demand is there.

At February 2024, the CLF reported $913 million in total assets, equity of $862 million and one loan for $1.0 million.

A 5% return on the fund’s retained earnings of $42 million would pay all CLF’s operating expenses. It’s 4^th quarter 2023 dividend of 4.62% trailed the overnight market by .75%. Why aren’t members even receiving a market return on their shares?

More importantly, what can credit unions learn from the CBO’s analysis and the system’s response?

The CBO and FHLB Summary

Ryan Donovan, CEO of the Council of the Federal Home Loan Banks posted a reply #FHLBank to the CBO report: “it does a fair job of acknowledging the many things we have been saying.” He singled out a number of key success factors:

Private investors — not the government or taxpayers — bear the cost of any “subsidy” associated with the FHLBank system.

The FHLBank system plays a valuable role in providing liquidity to its members, particularly during times of market stress.

The benefits the system provides accrue not only to the members but to borrowers and the public. In fact, it says,

“Lower financing costs on FHLBs’ debt are passed along through lower rates on advances than members would receive when borrowing in private debt markets. In turn, competition leads members to offer lower rates to borrowers.”

“Because members are both owners and customers of FHLBs, almost all of the subsidy (after afford-able housing payments are deducted) probably passes through to them, either in the form of low-cost advances or, to a lesser extent, through dividends.”

The existence of the FHLBank system “reduces mortgage rates and provides liquidity to the housing market, particularly during period of financial stress.”

The FHLBank system poses very little risk to taxpayers. If one accepts the CBO’s figure of $600 million in federal tax exemption, the roughly $1 billion that the FHLBanks will distribute in affordable housing and community development grants this year seems like a very good investment for taxpayers.

Donovan concludes: The report stymies critics . . .because CBO makes clear FHLBanks pose little risk, they provide significant public benefit, the implicit guarantee is perceived by bond investors and the benefits of the system flow through to borrowers and communities.

The FHLBank system is poised to deliver $1 billion toward affordable housing and community development . . .We’re engaged every day with our members and other stakeholders on how those resources can be used most effectively. (end)

All these housing and community benefits should be possible with the CLF. Why isn’t this happening? What might a CBO report on the CLF say? Would anyone care?

Music for Holy Week

With each daily post I will be adding excerpts from some of the great classical music inspired by this Holy Week. Today’s is the “Resurrexit” from Berlioz Messe Solennelle.

(https://www.youtube.com/watch?v=K-RX0XtBBnw&t=29s)

March 21, 2024March 22, 2024

Charter Conversions: What Is the State of Credit Union’s Dual Chartering System?

One of the extraordinary advantages of a credit union charter is the choice of either a state or federal license. This choice has been a critical aspect in credit union’s expanding role in the economy and responding to changing market conditions.

So when I recently received a letter from the CEO of Harvard University Employees Credit Union (HUECU) announcing a members’ special meeting to approve a conversion to a federal charter, I was very interested in why the change.

Was this a one-off situation or an indicator of an imbalance in charter choice in Massachusetts?

A Current Study

HUECU reported $1.2 billion in assets and loans of almost $1.1 billion, serving 55,000 members at December 2023. Most operating ratios are in a stable to strong range: Net worth 8.5% Delinquency .65%, ROA .28 and operating expenses of 2.74% of average assets.

The loan portfolio continues its healthy growth in three distinct components: an alumni credit card with $44 million in balances, a $252 million student loan portfolio and $721 million real estate loans.

The CEO’s cover letter included five pages summarizing the pros and cons for the action:

Advantages:

Reduces multiple credit union exam and compliance requirements;
Potential flexibility with various initiatives, especially branching and CUSO investments;
MSIC insurance for all deposits above $250,000 will be continued, but is no longer required;
Easier to open branches outside the state;
A redefined and broader field of membership with a multiple FCU common bond to seek growth outside Massachusetts:
No state sales tax, lower supervisory fees, and elimination of state CRA compliance.

Disadvantages:

The costs of conversion including signage, changes in legal documents, and consultant’s fees totaling as much as $600,000;
Loss of local regulator accessibility and responsiveness;
Limited ability to influence national regulation and issues;
State law offers greater interest rate loan flexibility and longer maturities on other loans.

The special meeting requires a quorum of 18 members and a majority of votes by ballot or in person in favor to approve the conversion.

The CEO’s cover letter states the members will see no operational differences after the conversion.

In addition to my membership in the credit union, the CEO Craig Leonard encouraged members to call in with questions. I was given his email, and we talked for an hour this past Monday.

He outlined three priorities which he hoped to accelerate with this step.

Faster growth, beyond the Harvard community into other New England states and perhaps Florida;
Immediately draw in more savings especially as loan demand has always been plentiful—with an initial focus on the small business market;
Retain the Harvard name (Harvard Federal Credit Union), its strong brand and the relationship of its employees to the University and its benefit plans.

Craig said this topic had been raised several times as he perceived a lack of a “level playing field between state and federal” charters in Massachusetts.

The state is home to approximately 135 credit unions that rank it as the 12^th largest in total credit union assets. Of this total, 50 are state charters.

Both regulators have approved the credit union’s business plan forecast. It is now up to the members. Craig holds periodic town hall meetings with members because he believes “I work for you.” This Special meeting is March 26 at the Harvard Faculty Club.

While this may be a unique event, the balance and perceptions of charter advantages are an important metric on the soundness of the credit union system.

Whenever state or federal regulations become less responsive to their credit unions, charter change is a real option for many. It is one means of keeping regulatory accountability. It is also a spur to keep the multiple state regulatory systems, individually much smaller than NCUA. responsive to their local charters.

The State of Dual Chartering

The ability to convert from a state to a federal charter and vice versa remains a uniquely cooperative option.

In 2023 there were twelve charter conversions. Nine state credit unions (from seven different states) converted to FCU’s, two federal charters went to state and one state chose ASI insurance versus the NCSIF. The longest serving state charter was Mississippi’s Mutual Credit Union, founded in 1931. Two other Mississippi credit unions also converted to federal.

A choice of share insurance is also permitted in ten states which allow their charters to choose between ASI cooperative insurance or the NCUSIF. This option remains central to a real choice as well as validating the underlying the 1% deposit design of the NCUSIF.

Dual chartering option creates a check and balance, even positive competition, among regulators. It provides an opportunity for a credit union program as some states still do not have a charter option. However, the state system can often change more quickly to meet new market and member needs when response by NCUA may take years or in some situations, never happen.

The dual system is a critical aspect of credit union history. The first credit union charter was in 1909 for St. Mary’s Bank. Until the federal credit union act was passed in 1934, only state charters were available, and then limited to about two thirds of the states.

These state “startups” created multiple charter variations and operating authority. As there was no single example, charter details and oversight were sometimes drawn from already operating financial examples. For example, proxy voting is authorized by nine states, drawn from mutual S&L practice, but not an option for federal charters.

The Turning Point in Dual Chartering: The creation of the NCUSIF

The choice of either a fed or state charter from 1934 onward led to a 30-year period of rapid chartering across America. The states were often the laboratories for change, innovation and system leadership with local leagues and chapters forming potent political state-wide organizations. CUNA itself was an organization of state leagues, not individual credit unions.

The introduction of the NCUSIF in 1970 was led by a group of federal charters in the newly formed direct-member organization NAFCU in the late 1960’s. CUNA opposed this mandatory insurance requirement and supported multiple state-chartered alternatives to the federal program.

CUNA’s fundamental concern was that mandating federal insurance would inevitably create a single regulatory system for all charters. The diversity and choice created by dual chartering would be negated, if not lost all together.

The NCUSIF Override of State Options

This concern that the insurer could become a single regulator had a very quick example. Bob Bianchini, who was simultaneously President of the Rhode Island League and a member of the state legislature, encountered such an issue in the mid 1970’s.

NCUA refused to insure the NOW/checking accounts authorized for Rhode Island state charters. In response, the credit unions formed their own state chartered deposit insurance corporation. In Bob’s words:

The NCUA’s decision refusing to insure Rhode Island credit unions that offered checking account services to its members led to the creation of the private insurer RISDIC .. Seems to me there was never any specific law that would have led to that decision, but rather simply pandering to the commercial banking industry which claimed checking accounts fell strictly under their purview ..

RISDIC would have never gotten off the ground if Rhode Island credit unions that provided checking accounts to its members, could have obtained NCUA insurance.

The other RISDIC insured institutions were Loan & Investment companies. privately owned for profit financial institutions and it was one of those organization’s demise that led to RISDIC’s failure.

NCUA’s insurance power has led to other differences in regulatory interpretations. The insuring requirement has also been a major hurdle for groups seeking new charters.

Ultimately the major advantages of state charters continue to be their more accessible local regulatory oversight and the capacity to respond faster to changing market conditions.

The Final Word

The S&L crisis in the mid 1980’s resulted in that system’s failure of its state sponsored insurance options. It led some credit union leaders to back away from the credit unions’ insurance choice.

In a 1986 speech to the credit union league xecutives (ACULE), former NCUA Chair Ed Callahan, now CEO of Callahan and Associates spoke to the group. He described the importance of choice saying that “the insurer is the regulator.” His words are just as true today. Scroll down to the video.

“The Best Damned System in the Country”

March 15, 2024March 15, 2024

One State, a Credit Union CEO and Financial Literacy

According to the December 2023 Lane Report, a Kentucky Business Journal, there is change coming to the teaching of financial skills to students in the state:

Kentucky high schools maintain a C grade in a national report card on how well they teach personal finance, but by next year their grade may climb to a B.

Given a C in 2017, Kentucky maintains this grade in the updated 2023 National Report Card on State Efforts to Improve Financial Literacy in High Schools, issued by The Center for Financial Literacy at Champlain College in Burlington, Vt. . .

John Pelletier, director of the Center for Financial Literacy, says that by 2028, 23 states are projected to have an A grade. . .

“Kentucky requires high school students to take vocational instruction, which includes personal finance concepts,” says Pelletier. “The Class of 2024 will be required to take one or more courses or programs with financial literacy content, but implementation will be up to school districts.”

Pelletier says state policy makers are responding to families without financial safety nets during the pandemic, as well as to advocacy by educators, administrators, parents and students.

Prior to the passage of this bill in 2018, there was no specific financial literacy instruction requirement for high school graduation.

The Kentucky Department of Education now lists financial literacy resources on its website to assist schools implementing this requirement beginning in 2024.

The Advocacy Role by Credit Unions

At the recent GAC I spoke with a Kentucky credit union leader, a CEO for just ten years, who has put financial education at the center of the organization.

The credit union offers classes at local high schools, for military retirees and veterans, and for employees of groups the credit union serves.

The CEO has taught some of these classes. As a member and leader of the Kentucky league, the credit union community became advocates for this educational priority in Kentucky schools.

This financial education concern was but one of many initiatives this CEO shared about his short tenure. What impressed me was his focus on “connecting” with the many constituents the credit union reaches. He meets with the leaders of government and private organizations they serve, supports community and other credit unions in the state, and advocates for members’ financial well-being.

The History of Financial Education

His efforts are an example of a generation changing event. His role is more than managing the financial trends of a credit union, but uplifting possibilities for all across the state.

What I didn’t realize was how difficult this education priority was until seeing this brief, five minute history of financial education in America. It shows how educational priorities have changed since the Eisenhower era’s focus on math and science. Today the emphasis on teaching financial life skills is one area of strong bipartisan support.

(https://www.youtube.com/watch?v=0uvurQcj0fs)

This is how one CEO has provided leadership far beyond his membership. Yet without his credit union’s example and the practice of what he was seeking, the effort might not have been as successful.

Now all Kentucky students, and their parents, have the prospect of a “B” or even an “A” in this most important understanding of financial responsibilities throughout life.

March 13, 2024March 13, 2024

The Oscar Nominated Film Every Credit Union Should See

Nominated as best documentary for this year’s Oscar awards, The Barber of Little Rock is a must see for every credit union believer.

The film is the story of Arlo Washington’s personal commitment to bring financial services and hope to the black community of Little Rock, Arkansas.

The film produced by the New Yorker magazine is 35 minutes and can be watched online any time.

(https://www.youtube.com/watch?v=1amOPUn49aM)

Story upon Story

Arlo is a barber who converts his basic role in the black community to one of broader service. This story is told in this Next City article The Black Barber Opened the First Credit Union In Arkansas Since 1996.

The film is Arlo’s first person account filled with dozens of examples of hardship. hope, and grant making through the CDFI he organized to make loans.

There are numerous examples of what it means “to be banking while black” and why there is little trust in the existing banking system. The film provides a brief history of black efforts for economic equality from the post civil war promise of “forty acres and a mule” to modern day red lining in Little Rock-a city divided by inequality and a highway.

The film even shows learning empathy in the “two minute drill” where two former incarcerated men learn to “see” each other’s hurts.

A Potential for Every Credit Union: Economic Justice Rights Wrongs

The film is a study in self-help. It shows the need and power of putting money back into the community. “A tree is known by the fruit it bears,” says Arlo. “If you have all the money and wealth you want, and don’t make an impact, what do you have?”

The film’s many residents assert multiple times that economic opportunity brings freedom. One says that if this (model) catches on, it will become a threat because people can see what they can do to be free. There will be no more excuses for economic injustice.

People Trust Community FCU

The film’s story of Arlo’s efforts ends before the credit union he chartered is up and running. There is a picture of the building and sign, but no recognition.

At December 2023, the credit union reported total assets of $4.4 million, loans of $326,410 and 445 members. It has capital of 11% or $482,000.

The film was released just two months ago and has been viewed 352,000 times with 433 comments posted afterwards.

The impact of this enterprising person’s example is extending far beyond the borders of Little Rock. It is a wakeup reminder for every existing credit union of the potential to change people’s lives and the trajectory of their community.

Viewing this current effort should be a catalyst for conversations in every credit union trying to make a difference in their members’ lives.

March 11, 2024March 12, 2024

Who Is responsible for Cooperative Democracy?

Tonight, I will attend a special meeting of the members of a coop in which I participate. The purpose is to approve a change in the bylaws prior to the Annual Meeting. The change will reduce the number of board members from 15 to 12.

The bylaws have not been updated in 20 years. All changes must be approved by the members. Some background for the change was sent in advance:

While there’s no fixed rule on the number of Directors a Board should have for a group like ours, what makes sense is to have a size that’s both large enough to bring sufficiently diverse viewpoints and skills to bear on accomplishing the work of developing, guiding, and managing the organization, and also small enough to function effectively.

Given that Board service is a three-year commitment, it has also become more difficult to find members willing to stand for election each year. Twelve members will still assure that the Board is flexible and diverse, and provide enough hands to do the work required, while not overtaxing our use of member volunteers.

All members are encouraged to attend.

Sound familiar? Recruiting volunteer directors is a challenge for many organizations. What is different from credit union practice is that this bylaw change is being discussed and voted on by members. One person, one vote, A special meeting notice sent 60 days in advance.

Credit Union Democratic Practice

In almost all credit unions, bylaw changes are not voted on by members. This is the purview of the Board, which then submits changes for regulatory approval.

Members may not know of changes, even when it affects their fundamental role as owners in elections procedures or even the number of board members.

In a recent post I outlined how these non-public changes can go to the heart of member governance.

The two largest FCU’s quietly changed the required number of signatures for member nominations for the board. In both situations the change removed the 500-signature standard bylaw and replaced it with a percentage of members. For Navy this new signature requirement was 26,000 and for PenFed 5,800 based on their latest reported member counts.

Regional Director John Kutchey quoted in another context stated, the NCUA considers the right to participate in the director election process a fundamental, material right for members of a federally chartered credit union.

However, this fundamental change in these two federal credit unions was done without member involvement or any public discussion.

Democracy Depends on Participation

These behind the scenes reductions in member rights is how coop democracy dies, one small step at a time.

Without member governance, boards act like self-perpetuating trustees, subject only to their own sense of duty, versus accountability to member-owners.

Democratic practice is hard, requires patience and can be frustrating. But without it, the required annual board elections become a mere administrative re-appointment of self-selected nominees.

Governance is more than a democratic formality. It is fundamental to safe and sound oversight. By eliminating member involvement in these fundamental bylaw changes. NCUA is sowing seeds of future member discontent and failures of accountability.

The Annual Meeting Season

As credit unions enter this season of annual meetings and board elections, it is doing so in a political environment in which both camps claim the future of democracy is at stake.

What better way to remind members of our fundamental democratic belief for how we work together in society, than in our own credit union’s political process?

March 7, 2024March 7, 2024

Credit Unions Before NCUA, America’s Credit Unions or Share Insurance

Before the organizational titans of today’s cooperative system were created, there were tens of thousands of credit unions chartered by ordinary men and women. Who believed in extraordinary possibilities.

A living example of this belief is Rincones Presbyterian Credit union, chartered on January 1, 1960. This founding predates the “origins” of most of today’s credit union leaders.

At yearend 2023, the credit union was $5.2 million in assets with 804 members. It has three employees with an average salary of $32,745. Last year their loan originations increased 15.7% to total $2.3 million, the majority for autos.

Rincones in Spanish means a “small secluded valley,” or literally a nook. Located in Chacon, an unincorporated area of New Mexico with an elevation of 8,166 feet, harsh winters have given the area the name “Little Alaska.”

Their vision and mission are printed on the sign marking their “head office.”

Would credit unions be even more successful if they followed the Trust of these founders?

After all, that is what we print on all of our coins and currency.

March 5, 2024March 5, 2024

A Study of US Credit Unions

“. . .our results indicate a serious misalignment between the legislation that establishes the credit union mission (a tax exemption in exchange for meeting the credit and savings needs of consumers, especially those of modest means) and the actual performance of credit unions under that legislation.”

Brief extract from: Who Consumes the Credit Union Subsidies? (Queen’s Management School, Research Paper 2022/03 written May 10, 2022)