Category: Local Effect

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Thrivent Bank’s Post Credit Union Strategy

On June 1, 2025 Thrivent FCU converted to a state issued Industrial Loan Chatered (ILC) bank with FDIC insurance.   There are only 24 such charters  operating in the US,

The process took three years and had to be approved by the credit union’s member-owners with at least 20% voting on the change.. The conversion resulted in the full payout of the members’ collective equity, plus a bonus dividend on shares.  The full details are reported in the post Thrivent Members Approve Sales to a Bank. 

Thrivent Bank’s Sponsor

In its June 2 launch announcemnt, Thrivent Bank reported $1.09 billion in total assets.  It is a wholly owned subsidiary of Thrivent Financial.

The parent company,Thrivent Financial for Lutherans,  is a member-owned, fraternal benefit society.  It is a non-profit , managing over  $193 billion in administered assets,  with a tax exemption based on religious affiliation.

According to Thrivent Financial’s 2024 Annual Report, it holds $18 billion in capital and serves 2.4 million members. Its primary products inlude insurance, annuities and health care programs.  The Report has statistics on its community contributions and volunteer efforts.

The parent company’s CEO said the new charter: “combines our legacy of trusted financial advice with a modern, client-first banking solution. Thrivent Bank will help us build relationships with younger clients earlier in their financial journeys – who we can then serve throughout their lives.”

The Bank’s Strategy

In a November 12, 2025 interview with a Banking Dive reporter, the CEO outlined his focus. The conversion  “aimed at broadening the financial institution’s reach nationally and attracting new clients.”

Located in Salt Lake City, the bank is digital only with no branches.

The CEO. Brian Milton’s value proposition is to combine its digital platform with  live personal advice and  the financial expertise of the Thrivent  organization:  “everything that we see out there seems to be having to pick one of those two,”

The new web banking platform is still under construction.   The current site provides a fairly standard listing of consumer services.  Savings rates would appear to be at the lower end of the market.  Auto loan rates are based on a matrix of model year and loan term.

The bank’s business financial services  appear targeted to the non-profit sector:

It takes organization, planning, passion and vision to run a business, church, school or charity. It also takes the right financial institution to help you navigate the nuances of business and nonprofit banking. Whether you’re a new or established business, church or foundation, business banking tools from Thrivent Bank will help you every step of the way.  

The one unique prodict focus would be its specfic contact center for studen loans.

A Strategy Combining the Best of Credit Unions and Banking

The web site is still under construction so there is not a lot to see at this time. The CEO stated the bank would rely on ouside vendors to meet its technology (presumably digital banking) solutions.

The banking charter gives the possibility of national reach for younger geneations of retail customers. Those at the beginning of their financial lives may not be the sponsors prime target for insurance products today.  Rather loans may be their first financial need along with basic transaction services.

The bank’s differentiation will be personal service: “We’re not going to be putting bots in front of clients, The human piece is extremely hard to replace.”  This approach is called “purpose based advice.”

The de novo has a lot going for it.  A 120-year old non-profit financial sponsor-owner with deep pockets; the experience and start up relationships from the credit union; and a philosophy of service seeking life-long member relationships.  It has an affinity client base from the parent as an initial focus.

The critical question is whether a digital only delivery strategy can effectively compete with local, personal credit union service centers staffed with experienced personnel.  Being present in and an active part of the communities served is both the foundation and special advantage of credit unions.

Digital offerings for most credit unions, compliment but do not replace  the option for in-person service.  And community presence and involvment. In the few cases where digital-first is the primary go to market effort, those credit unions are struggling compared to the performance of their more grounded peers.

The Thrivent Bank is very unlikely to fail.  The real question is how successful the digital only strategy will be? And at what cost to create a clear value advantage for users?  Especially in a virtual world where options are just a click or AI search away?

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From the Field: Lending in the Member’s Best Interest

First, a recent CEO’s update to staff on the federal governments shutdown and the credit union’s response for members:

SHUTDOWN ASSISTANCE: The credit union is offering numerous options to members impacted by the government shutdown. We are offering unsecured loans based on the member’s normal net weekly or bi-weekly pay with a 7.25% APR up to 12 months. We have also extended the interest free period to 90 days and allow for a term up to 48 months to assist even more members  through this tough time. From the beginning of the shutdown through November 1st, we helped 387 members with total loans of approximately $1,911,167.00. We have also processed a considerable number of skip payments for members without any fee.

An Impact Maker Counsels a Member Not to Make a Loan

CEO’s introduction: This month’s Impact Maker is a great example of living our mission and doing good for people. We’re a lending organization and love to help members with their borrowing needs. But any loan needs to be in the members’ best interests.  In this situation, not making the loan was the better decision.

“Tammy recently spoke with our member, Betty (name withheld), who expressed interest in opening a Home EquityLine of Credit. Over the course of the conversation, the member divulged that she was taking out this loan to give funds to her daughter for flooring and renovation expenses.

Tammy dug in further – uncovering that the member really didn’t want to do this loan or assume another loan payment given her fixed income but was being pressured to do so by her adult daughter.

Tammy listened to the member’s situation but advocated against taking out a loan she wasn’t comfortable with, and explained to the member the loan options available to her daughter, should she want to apply in her own name.

Later on, the member texted to Tammy, detailing that her daughter was screaming and banging on her door, irate that Betty wasn’t moving forward with the loan. Tammy continued to support and encourage the member, advocating for her safety and for her choice to do what is best for her own financial situation. 

Betty was extremely grateful for this support, thanking Tammy for her “thought provoking” conversation.”

A Member’s First Credit Experience

This CEO’s story is about Jose (name withheld), who was aided by Isaiah  a financial coach at a local Member Center. 

“Isaiah opened Jose’s membership in February of 2024 at the  Member Center. Jose is an older gentleman with very limited credit for his age, but he wanted to start building it. Isaiah was able to help him obtain a $500 First Time User Credit Card in addition to his checking account and debit card. 

The member would reach out to Isaiah from time to time and update him about his credit score. Overtime, Jose was able to qualify for a higher credit limit. He started the process of trying to buy a car. However, he was challenged by his limited credit history, car prices and the loan to value on the cars in which he was interested. 

Overtime, Jose continued to pay on his new credit card and qualified for a larger limit again, but he still was not having success with purchasing a vehicle. Isaiah worked  to get him pre-approved for a dollar amount and began reviewing specific vehicles with their price and loan to value compared to blue book values. Finally, Jose found a vehicle he liked and qualified for.  The credit union approved his financing. 

Recently, the loan was closed, and Jose was driving his “new” car. The loan took over a year and the credit building process was over a year and a half. 

Thank you, Isaiah, for your persistence and caring approach with Jose. You lived out our purpose to build hope by being a caring financial partner.”

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A Departing CEO’s Lament

Starting an odyssey to change cooperatives.  Before you read this CEO’s statement from LinkedIn, consider a brief thought from Emily Dickinson, By a Departing Light:

By a departing light
We see acuter, quite,
Than by a wick that stays.
There’s something in the flight
That clarifies the sight
And decks the rays.

A Course Change By a Credit Union CEO

 I have always been a bit of a square peg struggling to go into a round hole. I have always pushed against the grain regardless of my role. Sometimes that has been appreciated. Other times, it has been criticized.

I have debated for years how I can best serve this wonderful industry. In a space that is riddled with hypocrisy and attrition, I have concluded that I am of more value outside the bubble than inside.

I’m not only stepping down as a CEO. I’m stepping away from working inside credit unions altogether.

There is never a good time. There are always what ifs. Unfinished work.

December 18th is my 25th anniversary in the credit union industry.

In my 25 years, we have lost more than 50% of our neighborhood or community credit unions across the country.

So what are my motives? Family. Opportunity. Change. Fit.

Change. Something has to change.

I could sit in a credit union trying desperately to conform to my round hole. To complacency. To status quo. To fit.

Or…

I can dedicate myself to change. Change to challenge complacency. Change to disrupt the status quo.

I’m betting on myself. For my family. For opportunities. But also for a chance to make an indelible change to our industry.

If we want future generations to know credit unions, we must be about the work of saving them.

If I am fortunate, I have 25 years left in my career. During that time, my priorities will be God, Family, Career. In that order.

The second half of my career will be focused on finding as many ways as possible to help our credit unions win. Creative Strategy. Next Level Results.

I won’t stand by idly watching credit unions get regulated out of existence or go quietly into the night.

So this is not a goodbye. This is a hello.

I am not leaving the fight. I’m just getting started.

November 14th. I close one door so that I can run through another.

See you then.

(James McBride, CEO, Connects Federal Credit Union)

 

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Should My First Military Home be on the National Historic Register?

Anerica has a housing shortage.  Many different solutions are being offered.  During my initial assignment to the Navy Supply School in Athens, GA, the only available housing on arrival was a trailer home.

My wife who was seven months pregnant and I lived there for several months until base housing became available.  Little did we know that we occupied, albeit briefly, an example of America’s housing creativity from WWII as explained in An Unexpected Idea for Preserving America’s Mobile Homes. 

This ability of trailers to quickly mobilize wherever and whenever needed was again on display following the passage of the GI Bill. Look at aerial photos of postwar college campuses; chances are you’ll see rows and rows of trailers nearby, providing on-demand housing to new students and their families.

Today there are over 21 million manufactured housing homes.  Some are temporary, but most are permanent residences.

Home to 21 Million Americans

Recently the digital journal Next City posted a long article about how manufactured housing/mobile homes could become an integral part of solving America’s housing shortage.  Here are the opening paragraphs:

Punctuating the country is an unknown world of mobile home parks that are often seen but rarely recognized. These communities are everywhere: scattered along highways, in urban crannies in California, Florida, and the Sunbelt, on exurban territory from the Northeast to the Pacific Northwest, next to factories, farmland, mines and military bases. Blink and you’ll miss them. The National Register of Historic Places certainly has.

There is not a single mobile home or mobile home park in the National Register — a glaring omission that, if addressed, challenges the preservation field to join the fight for affordable housing.

Over the last hundred years, mobile homes have housed millions as and where needed. Today, they are home to 21 million people, or about one in every 16 Americans. They are legitimate and permanent parts of the American landscape. Even so, city officials, historians and preservation professionals have largely disregarded mobile homes, and their residents, as aberrations.

A Role for Credit Unions?

The article provides the history of the transitiion from “trailer” to mobile homes to manufactured housing and notes:

The truth is, mobile homes are not very different from the average suburban home. The vast majority do not move once they are sited, nor do their residents. Some 71% of mobile home residents own their homes, higher than the national homeownership rate for all forms of housing. The biggest difference is their affordability: On average, a new site-built home costs four times as much as a new “manufactured” home.

These manufactured home estates have become an attractive investment for private equity:

In recent years, some of the largest private equity firms, including Blackstone, Apollo Global Management, and The Carlyle Group, are making big “recession-proof” bets on mobile home parks. Between 2014 to 2022, investors purchased 800,000 lots, representing nearly 20% of all mobile homes — double the rate of private equity ownership of apartment units.

Some credit unions have been active in leding to this sector for years.  Credit Human in San Antonio developed a national speciality with manufactured housing sellers for financing these purchases.  They report holding 22,329 loans totaling $1.459 billlion at yearend 2024. These loans however, are different from the standard site-built, stand alone residence..

What is unique to mobile homes is that they are still classified as “chattel,” or moveable personal property — such as a car — rather than real estate. This means that not only do mobile homes decrease in value over time, but that residents, even those who own their home outright, must still pay rent on the land underneath.

And the private equity trend has brought new problems besides the traditional challenges of zoning and site ownership:

By increasing both lending and rental rates, investment firms are squeezing the vulnerable at every turn. As private equity moves in, costs and delayed repairs pile up. Parks purchased by investors have seen rents and fees balloon. Evictions have increased, as has wholesale destruction to make room for redevelopment. . .

One solution the article referenced is cooperative ownership.  However, the Next City article proposes putting long term mobile home locations on the National Register of Historical Places.  The idea in brief:

To potentially be listed in the National Register of Historic Places, properties must meet certain criteria, including historic significance to a time at least 50 years in the past. Given their contributions to mid-century American history, the argument for the significance of older mobile home parks is easy to make.

But the designation is not easy to achieve.  In the meantime credit unions can help sustain this housing option by financing and supporting the traditional buying and selling process that underwrites all home ownership.

The immediate opportunity would be to visit the mobile home sites in your community, talk with local dealers (if any) and become familiar with the financial needs of the residents.   It is a national need with local markets-a perfect fit for credit union solutions.

I’d be interested in examples from credit unions that have experience serving these members and their communities.

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46 Credit Unions Close their Doors in Q 1 2025

Forty-six credit unions managing over $3.7 billion in assets cancelled their charters in the first quarter.   The credit union’s data is from December 2024 call reports.  Because they closed their doors, the credit unions filed no data for March 2025.

This total of closings is much higher than the 35 mergers NCUA reported in the first quarter.

The 256,000 members with with $2.4 billion in loans, have now lost their own institution some with  histories serving generations.  List with loan totals.

These credit unions ranged in size from the $560 million LA Financial to as small as $3,000  Asbury FCU in DC. This pdf with ROA and net worth is shown from largest to smallest by assets.

Not Financial Failures

On this listing, the weighted average net worth of the group was 10.7% at December.  Many had equity ratios much higher than this.  Two had net worth exceeding 30% including Gibbs Aluminum (KY) at 33% and Telco Roswell New Mexico at 34%.

Only 7 had a net worth ration below the 7% well- capitalized benchmark with the lowest two at 4.9% and 4.2% of assets. Six of these had negative ROA’s in 2024 but all were still solvent.

If these are not financial failures, why were the charters ended, largely by not entirely, via mergers?

Some would explaine that this is just the “creative destruction” that economists describe as an essential outcome from competition in a capitalist market system.  Underperformers are forced out of business and replaced with better options.  This is a necessary and healthy culling that makes capitalism strong, innovative  and prosperous for the greater community.

While there is an element of truth in this dynamic, cooperatives are supposed to be an alternative to the winner takes all mentality of market competition.  These coops are long standing with charters that go back over 100 years in some cases.

Two Internal System Weaknesses

I would suggest that these charter failures, and they are just that, of financially sound firms results more from cooperatives’ internal shortcomings, not external competition.

One critical deficiency is the lack of system support for some of these smaller credit unions who have decided to give up.  Surrendering charters versus adapting to new opportunities costs the industry between $100,000 to $500,000 each time a charter is lost.

Those amounts are the range of donated capital NCUA now requires for chartering a new credit union.  These 46 charters have a total “market” value as much as $23 million at the higher required capital level.  For example, Arise Community CU opened its doors on Juneteenth 2025 with over $1.0 million in capital donations.

New charters are extremely difficult to achieve with NCUA approving only 2-4 per year.  It would seem in everyone’s best interest, but especially leagues, CUSO’s, vendors and others supporting coop options  to find ways to preserve or transform existing charters to those willing to take the reins of leadership.  Press reports have said NCUA has over 90 new charter requests in various stages at this time. This suggests public interest in coops is still widespread.

Benign Neglect?

A tiny example of this system weakness, or neglect, is the smallest credit union on the list, Asbury at $3k and 100% capital.   The 100% net worth suggests that the credit union  has been self-liquidating for some time.  The credit union still has a web presence via a third party.  It was not invisible.

More tragically when one looks up Asbury’s history, the credit union was chartered in 1945–it is over 110 years old and insured by NCUA in 1972.  Virtually invisible and surviving, but  ignored by the system that created it.

The More Common Deficiency: Leadership Failings

The second largest credit union failure is NextMark FCU (VA) with $550 million in assets and 16.3% net worth.  The CEO and board requested members approve a merger with Apple FCU, which took place in the first quarter.

The failure of this long-time, financially well-off and large institution illustrates a second aspect of the industry’s self-inflicted errors.  There was no compelling financial, business or other shortcoming motivating this charter closure.  The CEO Joseph Thomas had served as President/CEO since October 1994 a period of 30years and 4 months before becoming Executive Vice President at Apple via the merger he orchestrated.

During his thirty years as CEO Thomas also served on many industry organizations. These positions include: a CUNA board member for 8 years; a board member of CUMA a DC mortgage CUSO for 22 years; Board member and immediate past chairman of the Virginia Credit Union League for 12 years; board member Worldwide Foundation for Credit Unions 7 years to the present; and board member for the World Council of Credit Unions, 5 years. also continuing.

NextMark gave Thomas a platform and standing to aspire to these positions  of wide spread credit union national and worldwide  responsibility. But now this opportunity and potential service paths are closed.  There is no successor CEO asThomas pulled up the ladder he climbed to participate in these other opportunities.  The independent charter ceased operations.

Mergers such as this destroy cooperative professional and volunteer leadership roles in communities, within the credit union system, across the country and, in this case, worldwide.  Fewer coop leader positions mean fewer voices and examples of professional excellence representing credit unions.

It is at best ironic that those who seemed to have benefited significantly from their CEO leadership role, would close this path that was opened for them.  What kind of leadership perspective did he bring to these other system responsibilities?

But this tragedy goes further than the  opportunities for credit union volunteers and professionals in their communities and beyond.  The following public comment is one member’s response to the merger proposal. It clearly shows that members know this kind of ending is not why credit unions were founded.

Her description is one of betrayal, not just of the cooperative principles, but moral failings by those with fiduciary responsibility to the member-owners.  Here is her perceptive  description of why this merger is so tragic and wrong not only for these members, but also for America’s coop system (subheads added).

I recognize that the merger is likely a foregone conclusion, and the number of votes cast by members will be minimal.

My experience with the NextMark Federal Credit Union dates back to 1977 when it was known as the “Fairfax County Employees Credit Union.” Over the following 20 years of membership in the Credit Union and employment with the Fairfax County Government, I served several years as a member of the Credit Committee and the Supervisory Committee.

The general concept of a credit union, combined with a defined field of membership, the value of working toward the common good of the members, and loans based on character, were central to the success and satisfaction of the credit union members. The credit union grew, as did the Fairfax County employee base.

A Change of Focus

At some point in the late 90’s or early 2000’s, the field of membership expanded in scope, the name changed to the commercial generic “NextMark” and our credit union began to resemble a commercial bank, with limited on-line offerings and variable customer service. Nothing terrible, just a move far from the underlying values of the credit union movement.

The specific observations that I believe should merit regulatory review, are the substantial financial incentives offered to several key staff members, contingent on completion of the merger. The amounts seem very high, but of greater significance is that these payments are contingent on the merger, which these key staff members are urging members to approve. I am aware of nothing that casts any doubt on these key staff members’ sound character or integrity.

Gross Conflicts

The issue is a gross conflict of interest created through this incentive process. These senior staff and volunteer members have a fiduciary responsibility to the credit union members, including advising on significant business decisions and implementing structural changes, such as mergers. The existence of contingent incentive payments for completion of the merger would seem to conflict with the fiduciary responsibility to the members. It would seem that a more sound approach might be to delay the negotiation of pay and benefit incentives until after the membership vote.  

Old Fashioned Thinking

Maybe everything is fine just as it is, and such incentives are likely commonly accepted in the commercial banking and business arena. Credit Unions are supposed to be a little different – although that may just be old-fashioned thinking.  

End comment.

A final note on this merger:  Senior staff and the CEO received according to the Member Notice “pay adjustment distributions to meet the continuing credit union’s salary bands, long term retention bonus, incentives already established, deferred compensation benefits, or severance opportunities” totaling almost $900,000.

The members received a $12 million bonus dividend for approving this combination and free transfer of their $409 million in loans and remaining equity to another firm.  How might these resources been re-invested in the credit union for members’ future or even seeding a dozen or more new coops?

The credit union cancelled its future and distributed a token portion of its value that members created  to be paid forward to benefit future generations.

Can a coop system with such behaviors routinely approved at all levels, ever hope to survive in the future?  Should it?

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A CEO on Leadership and Legacy

I received the following from a credit union CEO  reacting to recent examples of mega-mergers.  The credit union’s market approach is clear:

From the Credit Union’s Website 

Why eat at a local restaurant? Why support your local non-profit? Why help out a neighbor? Simple: you care about your community, get better service from people you know, and want to feel good about the way you spend money. At our credit union, you’re a member, an owner, and a participant in a local, not-for-profit financial cooperative. Our cards look pretty awesome, too.

His Comments On Mergers

While I’m saddened by the loss of credit unions in number, I also believe each CU must do what’s right for them.  However, because the reasons given for these recent mega-mergers are fairly boilerplate no matter the size, I suspect that $20b won’t be “enough.”

As a CEO of a smaller shop, the thing I find scratchy is the tendency of some larger shops to take an imperialist posture combined with hubris. As they say in parts of the south: You ain’t all that.

During a multi credit union event hosted locally,  a rep from a larger shop told one of my star employees, “you know, credit unions your size are going away.”

Size Is Not What Members Seek

The thing is, a credit union at $20b is still a smallish bank. In my market, I have BOA, Wells, Chase, etc… Who cares what size you are – just don’t be a jerk.

I think the big shops need to get over themselves and, quite frankly, some little guys need to quit complaining about how hard things are.

My immigrant grandfather opened a restaurant 75 years ago and it’s still going strong. Business has always been tough! When people use that excuse, I always think that the real problem is a leader who can’t rise to the challenge rather than the challenge is too great. Ego won’t allow a leader to admit they might be the problem.

A Legacy, Not a Payday

Obviously, merger has also become a retirement plan for many…and that stinks. My goal: when I retire, pass the baton to the next gen…I’d rather have a legacy than a fat payday.

 

 

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CDFI Helps Savers Choose How Their Funds Are Loaned

The top 25 banks in the US had total assets of $21.1 trillion at December 2024.   Number 25 was Ally Financial Inc. which is $192 billion in size.

The largest bank was JP Morgan Chase & Co. at $4.0 Trillion.

The largest credit union is Navy FCU which reported  $ 181 billion at year end. The total size of  the cooperative credit unions was $2. 3 trillion.

The bottom line is that credit unions will never win by trying to be bigger than the many options consumers have.  Rather, they have to be better.

Using Their Local Advantage

Last week I presented an internal change in Vanguard’s fund management that gave their investors the option to vote their individual share ownership as they wish. This change empowers each share owner to chose a voting option rather than follow Vanguard’s traditional policy.

Could credit unions give their shareholders the opportunity to invest their savings in specific credit union loan programs?

Now, a CDFI bank has a program to do just that.  A March 25, 2025 Next City article reports how Sunrise Banks’ new net zero banking program lets customers put their money where their mouth is.

It started because one employee, Laura Wildenborg, had spent “spent 10 years taking kids on field trips to go rock climbing or cross-country skiing across the region, all to inspire children to love and care for the environment.”  She is an avid outdoor enthusiast and concerned about the environment.

She pivoted to banking after receiving her MBA in 2020.  She wanted to bring her prior interests to her new career.  This was her approach:

Wildenborg serves as a project leader for Sunrise Banks’ net zero banking initiative, which launched in July 2024. Net zero banking refers to the investment in projects that will reduce or eliminate carbon emissions.

Customers of the bank can opt in and allow their deposits to be loaned out only to net zero projects. Since launching its net zero program, Sunrise Banks has received $5.5 million in deposits and has loaned out nearly $22 million.

The  article gives several examples of customers being surprised to know they can choose how their deposits are used.

Wildenborg says one customer shared that he never thought about what the money in his bank account was used for.

 “With this program at Sunrise, we put that money where our values are, which means in the projects that will reduce carbon emissions — in turn having a positive impact on our community and environment.”

It’s Not the Size That Makes a Difference

Sunrise Banks, headquartered in St. Paul, Minnesota, lends to residents and small businesses in underserved communities.  It has $2.3 billion in assets and $2.1 billion in deposits, making it the 15th-largest bank in the Twin Cities.

Here is a video that describes their approach to the community.  Their motto is our success depends on the success of the communities we serve. Note the use of the word “movement” in the video.

(https://www.youtube.com/watch?v=B5C14WIqmC8&t=68s)

This organization focuses on its local impact and connections, not its size.  That used to be the credit union advantage.  Is that still the thinking?

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The Source of Credit Union Power: Members Rally to Rebut Banker’s “Hit” Article

“You will pry my credit union from my cold middle class dead hands.”   Words of defiance from a credit union believer. One of hundreds of comments posted last week.(source below)

A leader’s ultimate success much depends on how the person manages the instruments of power.  For some in authority, the point of power is to use it to expand one’s dominion.  Using requires building up an institution’s size, scope of activity and resources to control or dominate.

However, there is another leadership model.These individuals believe that the role of authority is empowering others.  Credit unions at their most effective are subversive of status quo structures. They organize from the bottom up.  By the grass roots, not by investors hoping to make money.  No capital, just personal sweat equity, time and collaborative effort to accomplish common purpose.

This counter-cultural, not-for-profit cooperative design is also the key to  credit unions’ latent political power.  Here is a case study from last week of what this looks like in practice.

Responding to a Newspaper Opinion

Last week the Washington Post published an Opinion article by the former chair of the FDIC, Sheila Bair, titled:   Tax-free credit unions are thriving at public expense.  Her bank in Chesterton, MD, The Peoples Bank, accepted a purchase offer from a Massachusetts credit union “using some of their untaxed income.”

Her article referenced other examples of credit union branding and expansion.  Her recommendation was to level the playing field with community banks by taxing credit unions.  Otherwise, she warned, ““Give them an inch and they’ll take a mile.”

I had used the credit union’s purchase of “her” bank as an example in a blog Time to Ask WHY.  My p;oint was to illustrate the bigger public stage on which credit union actions are now viewed.

I did not foresee the  Post’s readers’ reaction to her article.   When the postings were stopped 253 comments had been submitted, almost all from credit union members.

The members universally defended their credit unions, called the article a “hit” piece, and provided hundreds of firsthand examples of how credit unions provide special member value.

Following are a few examples of the readers’ responses unleashed by this former banking regulator’s critique of credit union’s tax status.

From a bank customer and credit union member:

I have business both with a major bank and a credit union-right now the rate on my major bank credit card is 27.99% (they cut my rate a whopping 2% from 29.99% a few months ago!)

Right now, the rate on my credit union credit card is 8.99%

 You can probably surmise from the above anecdote who gets most of my business… 

From a 30 year member::

I have been a credit union member for 30 years. No hidden fees, low interest credit card, interest on my checking and savings, no service charges, talking to real people, great service, the list goes on and on. I would prefer to never have to deal with a bank again. I’m sure big banks would love to crush credit unions.(Reader comment ratings:  Provocative/Thoughtful 61)

From a member with mortgage loans for 37 years;

I’ve had a mortgage since 1988 on my successive residences, usually with an escrow account to pay property tax and homeowners insurance. Refinancing in 2012 with a credit union was the first time I managed to persuade my lender to include California Earthquake Authority premiums in the escrow account associated with my mortgage.

I’ve been much more satisfied with the service I’ve received from a credit union than from any of the big banks I’ve patronized over the years…. 

A Question posed: The difference, who cares more about you?

Ask yourself a simple question. WHO cares more about YOU as an individual? A big bank or the credit union where you are a member?

Notice that YOU are a member of the credit union – not just a customer. With banks – YOU are just another income source.

A question: Why the article?

Of all the non-profits that exist (and ALL credit unions are non-profit) – why attack the one group that actually takes care of their members instead of pushing propaganda as part of a political agenda?

 Attacking the for-profit Washington Post:

Wow, taking a shot at non-profit banking!?!? Proof once again that the Post is in the bag for corporate interests. Where is the guest opinion on the mis-deeds of for profit banks? Instead of recommending that credit unions return to stricter membership rules, or limit their ability to purchase commercial banks, you go right for their non-profit status. I have not used a for profit bank in 25 years. Thankfully almost everyone on Capitol Hill banks with the Congressional Federal Credit Union (as do I) so they understand the value of a credit union. 

A comment on the Opinion author:

As others have pointed out, Shelia Bair was chair of FDIC during the 2008 financial meltdown. She was a major architect of the TARP bailout of Chase, Bank of America, Wells Fargo, and the other big banks. 

This is an unadulterated hit piece against Navy Federal Credit Union, which is competing with the big banks directly in their consumer banking business. 

How and When Is Member Power Mobilized?

The comments extend for another 240+ reader reactions.   These words are not lobbying jargon, irrelevant numbers or cliches.   They are from lived experience motivated by personal feelings.

Implicit in these words is a readiness for action.  This potential  is the real source of credit union power, not the amount of PAC dollars donated.  It is the member-owner-voter’s relationship with their credit union.

This foundation of the movement is a latent,  “sleeping giant”-a phrase used by Ed Callahan during the 50th anniversary of the FCU Act in 1984 and afterwards.  Deregulation had placed  the responsibility for the future of credit unions back where it started, in the hands of boards and members, not the federal government.

The Immediate Challenge

America is in an era of political disruption. The issue of taxation will undoubtedly arise in several contexts.  But the real challenge of crafting a new beginning, a rethinking of who we want to be, is much greater.  And it may be beyond the grasp of those who seek only to defend the existing co-op status quo.

What is necessary are new models to tackle critical opportunities for clarity about credit unions’ future role in the American economy and members’ lives.

The country is hungry to reset foundations, recommit to fundamental values and for new generations of leaders who can innovate with cooperative design.

We should avoid marketing our fear of change to garner internal support, but rather take this fluid moment to rally our members for a renewed vision of what we can be.

And like the initial founders, or the change makers who led deregulation, this new era can be both frightening and enlightening.  This redesign may involve both government/regulatory relationships and new realities for industry participants taking  responsibility for our future.  It may entail new organizational relationships and partnerships.

If one looks closely the seeds for a new future are already there.  Some have been planted by those seemingly old school; others are in the enthusiasm of a generation that seeks to change the world.  Our skill will be to identify those whose directions empower others with their vision, versus those intent on enhancing their existing legacy returns.

Let the conversations begin.   If you have any doubts about what members value, just go the article and read some of the several hundred more comments.   The members’ voice is there if we really listen.

 

 

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Showing the Difference with Deeds

Each month several CEO’s send me their monthly  staff updates.  These discuss the latest financial results, status of key projects, employee information, milestones and external event engagements.

These provide valuable local examples in a movement often described by the latest financial numbers, the next big merger (or bank buy) or a grand new marketing partnership with a professional sports team.

Despite radically different asset sizes, these reports share one common opening, retelling a member service story or two.  The CEO’s use these to demonstrate the culture they want the credit union to uphold. Here is an event triggered by a rollover IRA request.

Demonstrating our Purpose

Recently, Carrie visited our member center seeking help to transfer an IRA from another bank. She appeared frazzled and unsure about the steps she needed to take. Through patience, empathy, and active listening, we began to uncover the deeper reasons behind her unease.

She shared that her husband had passed away unexpectedly in his sleep the day after Father’s Day. He had not been sick. His death had blindsided their family.

Left to navigate the aftermath, she was overwhelmed by the financial responsibilities suddenly resting on her shoulders. She needed to transfer her husband’s IRA, open a new rollover account to avoid penalties, and manage the yearend timelines and logistics — all while grappling with profound grief.

As she spoke, it was clear she was struggling. The holidays had been particularly painful for her children. With the new year just a few days away, she felt the weight of 2024 closing and the uncertainties of 2025 looming ahead.

Jackie and her colleague, Becky, guided Carrie through every step of the process.  They explained  the IRA transfer, the required paperwork, and  timing to ensure everything was completed smoothly.

But more than that, they gave her space to share her story, her fears, and her heartache. They listened as she reflected on her loss and the daunting responsibility of building a future for her family without her best friend and soulmate by her side.

Before she left, they gave her their contact information, assuring her that she could reach out anytime she felt overwhelmed.  Jackie committed to following up with her to confirm  everything was in place and to check on her progress.

When Carrie walked out of the member center, she carried herself differently—less burdened, more focused.  She deeply appreciated all the support, knowing she was not alone in navigating these challenges.  She felt she had a team behind her ready to help.

This experience is a reminder of the profound impact we can have when we combine our financial expertise with genuine care and compassion.  It is moments like these that underscore the importance of what we do: being there for our members as trusted partners during life’s most difficult transitions.   Thank you Jackie and Becky for this great effort demonstrating our purpose. 

My Takeaway

As future options of the credit unions system come under debate In DC with the new administration, how do we present the credit union difference?   I believe it is with stories about our member-owner mission.  It is the difference we make in members’ lives that make cooperatives special.

PS:  In case you assume this must be a smaller credit union, the CEO leads a $10 billion coop serving over 500,000 members.

 

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Who Tells the Credit Union Story?  What Story?

The changes set in motion by Trump’s presidential transition are putting credit union’s public reputation to the fore. The administration’s  executive appointments promise reviews of previous assumptions about many areas of public policy.

All interest groups are  jockeying for influence to either protect the status quo or gain a new advantage.

Credit unions lobbyists and ICBA are already fighting over whether credit union’s federal tax exemption should be examined.  The exemption is an important issue. But how is that topic framed for public understanding and the credit union story told?

Should the credit union legislative strategy be to defend the status quo or to propose an agenda to expand the singular mission of credit unions?

A Wonderful Life Story

During the holiday season the film It’s a Wonderful Life is replayed over and over.  It captures the spirit of a community when asked to support their local thrift.  As summarized in a Marketplace article, the movie’s setup is straight forward and familiar to anyone in 1947 who lived through the 1930’s depression era’s banking crises:

George and Mary Bailey are about to leave Bedford Falls for their honeymoon when the unthinkable happens. Their taxi driver points out an apparent “bank run” at the Bailey Bros. Building & Loan Association. Trouble is, the building and loan isn’t a bank. To keep it afloat, George has to convince his friends and neighbors to withdraw only what they need to get by — then pays them out of his own pocket. So much for that honeymoon. 

The rest of this Marketplace article is a succinct history of the S&L industry, how it differed from banks, and its demise as a separate financial segment in the 1980’s.

The article then asks what institutions today are filling the role of the Bailey Bothers for their  communities.  I expected to find a credit union example or two in this follow on “encore.”  Instead Marketplace host David Branchicco  reprints a podcast interview introduced as follows:

While buildings and loans are all but gone nowadays, the concept of community-driven finance is not. In New York City, one such institution is Carver Federal Savings Bank, which is designated as a Community Development Financial Institution and a Minority Depository Institution by the federal government. The bank, formed in the 1940s by members of some of the city’s predominantly Black neighborhoods, is headquartered in Harlem and says it seeks to help develop traditionally underserved communities. 

The interview with Carver Federal Savings Bank CEO Michael Pugh discusses his focus.  He states  80 cents of every deposit dollar is reinvested in the community.   Other points Pugh makes in the interview include:

I think the unique proposition for us is that because we are for-profit, but we have this mission component, it allows us to continue thinking on both sides of our brain, being mentally ambidextrous, if you will, and considering the fact of mission and margin in every decision that we make.

Because we’re hyperlocal, our colleagues live in the communities that we serve. We believe that those personal relationships and the access to us really helps to significantly reduce the risks. 

Customers within our core market that choose to bank with us really understand the mission and what we’re trying to do. . . 

Where are the Credit Union Examples? 

This Marketplace interview  positions this for-profit CDFI designated bank as today’s successor of the  community spirited leadership portrayed in the Wonderful Life movie.

Yet there is nothing Carver FSB  is doing that hundreds if not thousands of credit unions do as well or better.  Yet that was not the example profiled.

Credit unions will define their public reputation or let others do it for them.   Coops are in a moment when major credit unions advertise during national TV sporting events, rename stadiums with their brands and invest members’ capital to buy out bank shareholders. These business initiatives are helping propel the issue of whether credit union’s regulatory advantages should appear on Congress’ agenda.

It is not sufficient to just oppose and defend the status quo, letting opponents framie the topic. Rather the response must be a compelling message about the  uniquely valuable contribution credit unions make for their members day in and out.

When credit unions present their public personas like most other financial providers, the mission component is omitted.  Without this message, the member-owned model can be presented as just another consumer option.

It is the mission that warranted the tax exemption from day one.  Isn’t that the reason to sustain the cooperative difference now?

Here is a long-30 minute example of the story credit unions should be telling. It is about economic warriors for their community,  The Barber of Little Rock  is a  video by New Yorker magazine.  This community CDFI lender received a credit union charter two years ago.

(https://www.youtube.com/watch?v=1amOPUn49aM&t=14s)

Or this example from credit unions.com. A Helping Hand for the Homeless.