Category: Mergers

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The New Credit Union Model: First Expand Members’ Economic Freedom– Then Become their Oppressor

Two evenings ago I received an email from Scott Rose.  This 25 year member of SAFE Credit Union had been prevented from speaking of his opposition to his credit union’s proposed merger with BECU.  He had informed the leaders of his intention to speak at the annual meeting.   Although the Chair recognized other members, he closed the meeting before allowing Scott to present his views even though aware of his intent.

Righteous Indignation

Scott was infuriated.  He disrupted the adjournment ploy, deeply angry and frustrated.  He had prepared a thoughtful statement presenting his views on the proposed merger’s impact on the collective future of his 245,000 fellow member-owners.

His pain was real.   It is the same deep emotion portrayed in David’s Psalm 52, The Deceitful Leader, opening stanza:

You cunning liar,  why publicize your evil need to harm the good?                         Your slanderous tongue is razor sharp honed to fulfill malicious plans;                  You love the lie and hate the truth.

Following is the statement Scott wanted to deliver at the SAFE Annual meeting before being silenced by the Chair’s abrupt termination. Judge for yourself the gravity of the issues raised.

Chairman Blumenfeld, Board Members, CEO Nabhani, fellow attendees                  (Subheads Added)

As SAFE leadership is well aware, I have made clear my opposition to this ill-conceived transaction from Day 1.  For those who do not know me, my name is Scott Rose and I have been a SAFE member for nearly 25 years. My sole interest today is to preserve SAFE Credit Union for future generations. I have no hidden agenda and no external financial interests.

A Betrayal of our Community

The Board of Directors’ decision to terminate SAFE Credit Union’s 86 year old charter is a betrayal of our community.  So is their plan to hand over all $4.4 billion in SAFE assets to Boeing Employees Credit Union.

The so-called “benefits” of this transaction, as cited earlier by Ms. Nabhani, pale in comparison to the irreparable losses that our community will endure if this deal goes through.

How can an organization seven times the size of SAFE possibly benefit our members and our communities?

Giving Away $400 Million of Member Wealth

For BECU, this deal is a gift. Free money! Who doesn’t like free? $4.4 billion in assets. $3.9 billion in member deposits!  $400 million in member equity!

Why would our directors agree to such a lopsided transaction?

I have met with Ms. Nabhani on two separate occasions for a total of nearly five hours.  During our discussions it became evident to me that SAFE leadership not only initiated and negotiated this merger in secret, but deliberately excluded any member participation.

Member opinions were not solicited, there were no surveys, and there was never any attempt to engage the membership. The sudden announcement of a merger last November caught every member by surprise.

Board ‘s Corrupt Election

What motivated our Board of Directors to pursue this deal remains a mystery to me.  But what is obvious is that this board does not represent and cannot speak for the members.

Only three of the current directors were actual SAFE members when they were nominated and elected to the board.  The other nine directors were not SAFE members in good standing, as required by SAFE bylaws, until just prior to their nominations. These actions deliberately circumvented SAFE bylaws with the clear intent to exclude actual SAFE members from participating in SAFE governance.

This fraudulent pattern of election manipulation has been occurring for more than a decade, and the current plan to terminate the SAFE Credit Union charter is a direct consequence of this corruption.

The Truth

The pending consolidation of SAFE and BECU has drawn attention at the national level. BECU is now the fifth largest credit union in the country, and will become the fourth largest after the SAFE takeover. Many experts believe that credit union acquisitions like this will invite further scrutiny by regulators and accelerate recent  congressional efforts to eliminate their tax-exempt status. But the truth is, if credit unions like BECU behave like banks, why should they be treated any differently?

Edward Filene was an entrepreneur who ran Filene’s department store from 1891 to 1928, but it was his pioneering effort to establish the credit union movement that is his most enduring achievement. Filene’s underlying philosophy was that a credit union is a member-owned cooperative that is legally and ethically obligated to act in the best interests of its members.

It is evident that SAFE leadership has chosen to disregard their fiduciary obligation to SAFE members by failing to act in their best interests.

BECU CEO’s Banking Resume

On a separate subject, during my discussions with Ms. Nabhani, I noted that Beverly Anderson, current CEO of BECU, gained all of her financial experience as a commercial bank executive at Wells Fargo and American Express. This explains why she lacks an understanding of the cooperative credit union philosophy. Her professed motto of “people helping people” is a just cover for her true goal of expanding BECU’s market dominance by engaging in the same predatory behavior she perfected as a banker.

Local Roots & Home Turf

We have many huge commercial financial institutions and these are readily available to anyone who wants them. But those of us who truly support SAFE Credit Union want a local institution with Sacramento roots. We don’t need the likes of BECU invading our home turf and shutting down our credit union.

Thank you.   (Subheads added)

What Happens Now?

This merger is a violation of every principle multiple generations invested to bring greater economic opportunity to the Sacramento community.  This transaction converts  members  into victims of the very institution they built with their eight decades loyalty. 

That is the cooperative way of always paying forward their legacy for the benefit of their children’s children

This transaction  is a heartless betrayal motivated by greed.  The CEO and Board signed a “definitive legal agreement” negotiated in secret with no member input, knowledge or involvement legally obligating this transfer of all SAFE’s resources-past, present and future.  Then SAFE’s CEO issued a press release announcing the deal as all but done and providing no transparency of anything about the process.   

There was no explanation why transferring all future operations to BECU was in members’ best interest.  Or why the half dozen or more local California credit unions who would be more logical partners to expand member value and convenience were not approached.   Nor what the CEO and board negotiated for themselves as the agents of this transfer.  

This is not the free market at work.   It is back office, private self-interested deal making to benefit insiders clothed in rhetorical promises without verifiable substance.

This is not economic freedom.  Instead the 245,000 members’ financial relationships, the 800  employees’ jobs and all local investments are being transferred to the control of a  leadership group that has no connection to, knowledge of, or  experience in the Sacramento community.  All $4.4 billion for free including $400 million member equity.  The members are not owners, just customers to be bought and sold to whomever the Board chooses.

How Much Longer?

How long must  members suffer in this current environment of private profiteering and  community plundering  of their mutual wealth and future well being?

This predatory destruction will  continue as long as  people of good will, courage and belief in cooperatives stay silent.  For human greed has no limits.  If the leaders of the movement don’t speak out, why should the public, regulators, legislators and  loyal members care?

It is time for those who believe in democratic, not autocratic leadership of credit unions, to take a stand.  Cooperative credit unions are an interdependent system.  Seemingly individual actions will affect the future of all others.

It takes only a few to change the course of events, because that is how all revolutions against misuse of authority begin.

Place Scott’s speech in the public record, with the California Legislature, in the public media, in the Congressional Record.  It is a stand made by a person of courage, principle and diligence.   It should be in every league’s newsletter and given to every state and NCUA examiner by the credit union.

For if one member of conscience and sound judgment has the fortitude and bravery to stand up, surely those who believe in the principles of the cooperative option can follow his example.  We call that democracy, a duty we all have if we want to really remain free.

 

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Boeing Employees Credit Union Culture and the Proposed SAFE Merger

On April 13, CU Daily reported on a conversation that SAFE CU long time member Scott Rose had with the CEO Faye Nabhani.   The article detailed Scott’s objections and the CEO’s response on SAFE’s new merger effort.  (link)

The proposal to transfer control of the $4.4 billion SAFE and its 245,000 Sacramento area members to Boeing Employees Credit Union has had coverage in the local press (Sacramento BEE) and on blog sites.   For example this post on SECU Just Asking lists four fundamental objections to the surrender of the state charter. It poses the question whether the California CU Regulator is Asheep at the Wheel? (link)

Much information has been provided by Scott and others about what  this charter loss would cost SAFE members and the community.   Less analysis has been provided about BECU’s leadership and financial trends.  Nothing has been  in the SAFE’s press releases about BECU’s performance, leadership culture, or strategy.

Last week I wrote a post describing BECU’s high cost culture resulting in an operating expense to asset ratio of 3.33%, much higher than the large credit unions in California.  The nine BECU directors were paid an average compensation of $118,000 in 2024 with he Chair receiving $154,000.   In California, state regulation prohibits director compensation which is the federal credit union legal situation

Insiders’ Opinions on BECU’s Culture and CEO

But what was new about the situation was the almost dozen responses to the CU Daily article by readers,  They all describe a very disturbing leadership environment at BECU.

They report  situations that only employees would be aware of.   Have these issues been discussed by the SAFE board? Has there been any onsite  due diligence?   Is this a leadership culture that one would want in charge of  245,000 members’ future?

Whatever the full story might be, there is a lot more  for members to know if their future should be put in hands of the BECU board and their
CEO’s recently  arrived senior team.

11 Responses  (link)

The 18 month no layoff should be little assurance. BECU needs those employees until they get on the same system. After they do, and when the SAFE CEO leaves at 18 months, there won’t be local leadership and no one to protect the local employees and community. Since BECU’s expense issue is so severe, there will be a lot of job reductions in CA.

Performative at best.

Glad these conversations are happening and that he’s asking the right questions—he’s pushing in the way more people should.

What’s becoming clear, though, is that the credit unions don’t really have strong answers—they just have strong PR. BECU, in particular, is very good at managing perception.

Underneath that, the leadership approach feels far more like a traditional bank than a credit union. The new CEO comes across as performative at best—saying the right things publicly, but not reflecting that same philosophy behind closed doors.

Internally, employees have described leadership as political and calculated—always saying the right thing publicly, but the moment anyone questions it, they’re pushed out, fired, or laid off.

BECU isn’t new to working the layoff systems with minimal NDA’s and severance packages. Last April, several employees were let go, and shortly after, nearly identical roles were reposted and filled—often through existing networks or familiar circles. All while moving forward with a costly (millions!) and terribly structured naming rights deal.

You can’t claim credit union values while operating like that.

100% a wolf in sheep’s clothing. Just because you “meet them and they said all the right thungs” doesn’t mean they are not well coach and performative AF. What that leadership teams says in public and what they do behind thr scenes are two very different things. . .

Anonymous says:

Someone from SAFE should ask why BECU’s General Counsel, Chief Auditor, Chief Risk Officer, Chief Impact Officer, and Chief Business Officer all decided to leave, more or less at once. Nothing normal about that.

Anonymous says:

Don’t forget the ENTIRE executive team that left within months of the new CEO coming on. It’s a revolving door in the C-Suite for a reason.

Most of the employees at BECU were very excited with this hire even knowing the CEO came from Wells Fargo, she seemed to say all the right things, talk about the movement, the members first philosophy, actually we all felt a little inspired and then reality hit.

3.5 years later BECU is a shell of what it was and there is no stewardship towards the CU movement AT ALL behind closed doors, it’s 100% toxic and performative. They have pushed out so many of the employees and leaders that made that place special.

So I am so glad Faye liked her and that Bev said “all the right things” but it is shallow and performative just like others have mentioned. She is a very very good actor in public, she very much slips up behind closed doors. To having the table slammed in front of you while profanities were flying to lying about how she was “listening” to employees with “listening sessions” but behind closed doors was saying “Gotta go pretend that I care about what they say” (jaw dropping really….) to being shushed in meetings for no reason, to tearing people up because they got one thing wrong in a speech she was giving.

The executive team is no longer local to Seattle, they live in Atlanta, New York, and LA – flying in on the companies dime with no connection to the region or any care about moving the community forward. Yes, they EMT and Board are being incentivized for a merger, so they chose a “SAFE” merger (pun intended) to get their bonuses and show they increased they asset size, cause their net growth is not great.

Anonymous says:

Good someone is asking the right questions. Fact is, Bev Anderson and her cadre of big bank execs she brought on Talk the Talk but don’t Walk the Walk when it comes to credit union values. She gutted the original EMT and slowly but surely pushed every exec who challenged what new operating values and the way people are treated out the door.

As another commenter said here, she’s amazing in public but behind closed doors treats people terribly. There is a verb in use at BECU now that you’ve “been Bev’d”, and that means she cursed at you, yelled threw a tantrum and most likely in front of your peers or even subordinates. Very inappropriate. Not to mention the Wells Fargo and Equifax background, hiring of other execs who have no clue about what Coops mean and ongoing performative gymnastics. It’s sad what BECU has become over the past few years. The board should be ashamed of themselves.

Time for More Facts on the Table

Four more comments follow, several as recently as yesterday.  This is an environment that needs to be brought into the discussion more than any data or numbers or rhetorical future promises.
The facts about  BECU’s new CEO’s leadership  actions are just a prelude to what SAFE employees, leadership and members will encounter if control of SAFE is turned over to her.
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Are Volunteers Still the Heart and Soul of the Credit Union Movement?

Many think of April as the month taxes are due.  For the untaxed credit union system there is a more relevant event.  In America,  April is volunteer month.  The country honors the millions of citizens who serve their communities and neighbors  by sharing their most precious resource—their time.

This volunteer spirit is a vital part of American history and culture.  Because the role of government was either nonexistent or limited in the country’s early years, citizens would  volunteer to solve common needs.  In 1736 Benjamin Franklin organized the first city fire department for Philadelphia, all volunteers.  Today 65% of the country’s fire fighters are volunteers.  Their collective effort is estimated to be valued at $50 billion if they were paid.

Down through history to the present day in every community, volunteers are at the center of vital social, civic and cultural activities   It is an essential part of American culture.  People take pride, have a sense of duty and enjoy the camaraderie these efforts offer. Just inventory your own involvements.

Cooperatives and Volunteers

The credit union movement was built by volunteers with governmental oversight  often rushing to keep up. In the beginning, volunteers borrowed their “authority” to start the first coop and called it St. Mary’s Bank.

This essential contribution to the coop system’s creation  is embodied in the public “definition”—non-profit, member-owned  and volunteer-led. Until recently, “volunteer” meant unpaid. which is still the rule for federally chartered credit union board members.

Volunteers’ Founding Role

Every credit union active today gained their charter from the sweat equity of volunteer organizers.  Often the first managers and staff were unpaid or seconded to oversee the effort while on the sponsor’s payroll.  The physical location of these coop startups was donated either by a sponsor or even in a person’s home.  These home-based coops were still common enough that in December 2013 the NCUA under Chairman Matz voted 2:1 to prohibit the practice in December 2013 board meeting. The effort was dropped.

The volunteer ethic is embedded in cooperative values.  The seven cooperative principles (now eight) all infer or embrace the ideals of self-help and mutual interdependence. The words of the first principle:  Credit unions are voluntary, not-for-profit financial cooperatives . . .

Today volunteers remain a vital component of credit union leadership.  One example of this energetic leadership potential is from a recent a linkedIn profile.  The student is donating part of her undergraduate career to a startup credit union on campus: Student at UNC Chapel Hill *4X World Record Mountaineer*3X TEDx Speaker*Blogger and Research Consultant*MUN Enthusiast*Cyclist* Runner-HM&FM*Badminton player*Artistic Roller Skater.

Concerns about Self-dealing in Coop Leadership

In the first fifty years of state charters, regulators were also worried about the temptations always present when managing other people’s financial resources.

In the early history of Illinois charters for example, senior managers, officers and directors could not borrow from their own credit unions for concern about self-dealing.  The solution was to create chapter credit unions providing leaders an independent coop alternative. While this prohibition was changed, the call report today still monitors the total number and amount of loans outstanding to directors, committee members and senior management.

Volunteers No More?

Unlike the federal system in 22 states the credit unions are permitted to pay directors, some with formal rules, other with authority more open-ended.

For example, several years ago I worked with a state charter where directors  met  three of four times per month in board and committee meetings. This  frequency was because compensation was based on the number of meetings attended.  Meetings multiplied.

One rationale for paying directors is the need for qualified volunteers.  A long- serving CEO whose directors were paid his entire tenure said the practice had the opposite effect.  Less attentive directors became harder to replace as they did not want to give up their extra income.

Paying  “Volunteers”

What can be learned from the increasing payments going to directors of state charters?  Are these credit unions better performing versus their FCU peers?  Are they more innovative?  Are directors contributing in ways that unpaid volunteers may not?

While these are important issues, I believe one factor and the historical concern is already obvious and concerning. Specifically, does paying directors distort decisions away from what is in member-owners’ best interest, into what is in leadership’s personal interest or benefit?

A Case Study

There has been much public commentary and analysis of the proposed merger between Sacramento based SAFE and Tukwila, OR headquartered Boeing Employees Credit Unions (BECU). An important difference in the two states’ chartering rules is that state charters can pay their directors in Washington but not in California which follows federal practice.

Boeing Employees Credit Union’s 2024 IRS 990 shows the total compensation for the directors as $1.065 million.  Chairperson Somberg received $154,375. The average pay for all nine was $118,352.  Each reported working six hours per week for the credit union which equates to a $380 per hour rate.

In addition, the former CEO Benson Porter who retired as BECU President in December 2022 received $931,665 with zero working hours.  The CEO Beverly Anderson who succeeded Benson reported working full time for  2024 compensation of $2,708, 880 or 17 times the average employee’s salary of $159,327.

One result from  this compensation culture is that BECU has one of the highest operating expense ratios to average assets at 3.33% much higher than every California credit union over $10 billion.  SAFE’s operating expense ratio in 2025 was 2.56%.

If SAFE directors were truly seeking a better performing opportunity, here are California based credit unions who are much superior to BECU in financial management and branch availability:

Golden 1 (Sacramento)         Assets: $21B   OpEx: 2.20%  Br: 62

SchoolsFirst (Tustin)             Assets: $35B   OpEx: 1.81%   Br: 69

Patelco (Dublin)                   Assets: $10B    OpEx: 1.84%   Br: 37

First Tech (San Jose)             Assets: $30B   OpEx: 2.83%   Br: 56

San Diego County (S. D.)       Assets: $10B   OpEx: 1.84%   Br: 44

Redwood (Santa Rosa)          Assets: $10B    OpEx: 2.28%   Br: 21

Logix  (Valencia)                   Assets: $10B    OpEx: 1.84%   Br: 37

Star One  (Sunnyvale)           Assets: $10B    OpEx: 0.73%   Br: 7

 

A second outcome  of this high expense environment  from one analyst’s review: members of BECU, on average, pay more for loans and earn a whole lot less on savings… The cost of operating BECU is @+15% higher than all other CU peers! (link)

Given this clear underperformance by BECU versus its peers and local California options, why did the directors of the $4.4 billion SAFE sign a “definitive merger agreement” to transfer control of all operations and all assets to an out of state credit union with no local connections, experience or proximity?

The definitive agreement has not been disclosed, except to announce that several SAFE directors will be given seats on the BECU board where in 2024 the average compensation was $118,000.  SAFE directors, as a California charter, are unpaid.

Who will benefit from  this compensation if the merger proceeds has not been disclosed. What is known from safecu.org and clicking  on SAFE management, is that only three of the current 12 directors were members prior to being nominated to the board of SAFE.  SAFE bylaws clearly state that nominees must be members in good standing.  In other words the board nomination and selection process would appear to be closely controlled if not irregular.

Following the money helps understand motivation. The new director compensation available post-merger raises important questions.  What are the conflicts of interest as SAFE’s board decided to transfer the entire future of this strong local Sacramento institution and its 245,000 members’ $400 million of equity gifted to BECU for free? Especially as BECU’s performance on most all critical financial measures trails large California credit unions and BECU’s national peers.

The Interests of Paid Volunteers

The founders of coops understood human nature.  Payments today to state credit union volunteers follow no common pattern or rules,  are limited in or disclosed long after the facs in IRS 990filings, and lack transparency and context.  In such circumstances human temptations are set loose.

Today there are very limited, if any, checks and. balances on volunteer compensation. As in the multiple situations where millions of dollars are paid to CEO’s who merge their credit unions,  the regulators  always seem to look away from these instances of self-enrichment. No one and no set of organizations will ever be perfect.  Moreover,  as BECU’s  results suggest, there is no relation between performance and director pay, especially at a high level.

The ongoing credit union merger free-for-alls are opening up this new form of compensation incentive payments.  If SAFE is approved, there will be lots of travel to California by credit unions whose boards are paid—think of Colorado and Washington as initial sources.

But the issue is more fundamental than old-fashioned corruption. The director pay practices in some state charters are leading credit unions to an even more critical cliff edge. Recall the public coop definition of non-profit, member-owned, led by volunteers.  It is “volunteers” that govern how the other two characteristics of coops evolve. Can paid volunteers be entrusted with protecting these two defining credit union charter characteristics when their own personal well being is involved?  Have credit unions morphed into  more for-profit leadership behaviors and rewards? But without market accountability?

What’s at stake in the SAFE-BECU proposed merger and in other similar director paid merger initiated combinations is trust in the cooperative system. For the oldest test of character is:  “If you have integrity, nothing else matters. And if you don’t have integrity, nothing else matters.” 

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A Credit Union Partner Speaks Up

Not every credit union needs to Merge

by Albert Howard  

,Over the past two months I’ve been hearing something that honestly breaks my heart about the credit union movement.

Several leaders at smaller, growing credit unions have told me they’re receiving unsolicited emails encouraging them to merge into larger institutions.

(I literally just jumped off a MiniBranch call with a local credit union CEO who just received an email today)

Sometimes these emails are framed as:
“Strategic partnerships.”
“Future sustainability.”
“Member opportunity.”

But in many cases, what’s really happening is much simpler.

Large credit unions are actively recruiting smaller credit unions to merge, and some of the individuals sending those emails are financially incentivized to do it.

In some cases, the incentive can be tens of thousands of dollars per successful merger conversation.

After a merger, the acquiring credit union may even bring the CEO on board to help identify and recruit the next credit union to merge. (As we have seen in a recent failed attempt thanks to the members)

I understand consolidation happens in every industry. But credit unions were built on something different.

Local leadership.
Local relationships.  
Local service.

Many of the “small” credit unions I work with are actually healthy, innovative, and deeply connected to their communities.

They don’t need to disappear.
They just need the right tools, technology, and support to keep growing.

So if you’re a CEO or board member at a smaller credit union and you receive one of these emails, my encouragement is simple:

Take a breath.
Ask questions.
Remember the mission you were built to serve.

Because the credit union movement doesn’t get stronger when independent institutions disappear.

It gets stronger when they succeed.
And there are a lot of people rooting for that.

So, to all the Small (Growing) Credit Unions out there fighting day in and day out for your members, Don’t Stop! Keep Fighting!

Be sure to reach out to Joshua Urbick, CCUFC and Doug Wadsworth who are doing some pretty amazing things!!

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The Member’s Voice On a Merger

ICCU  is an Idaho based state charter reporting $14.8 billion in total assets, serving 76,900 members via 63 branches and 2,000 employees.  In 2025 ICCU opened four new branches, two in Washington and two in Arizona. via a merger with Topcu.

CALCOE FCU, chartered in 1937, has $40 million in assets serving 4,000 members with its main office in Yakima, WA, and a branch in Moxee.  It is a strong credit union with deep local roots and a low income designation( LID).  At CALCOE’s Special Meeting on March 6, 2026, member voting closed on a merger proposal from ICCU whose main office is 345 miles and five hours driving time away.

This  long serving, successful community-owned and directed credit union exists no longer.  It is merely a branch operation now run by  the 18th largest credit union in the country.

Here’s what the members posted about the merger.

MOXEE COMMUNITY GROUP 🍻 
Brandon Roman

 January 18 

If you bank at Calcoe please get ready to vote as they are trying to merge with a different credit union. VOTE NO ON THE ICCU MERGER
Why CALCOE Federal Credit Union Should Remain Independent.
This merger permanently dissolves CALCOE. Members deserve the full picture before voting.
—

❌ No Direct Financial Benefit to Members

Members receive no payout or distribution of CALCOE’s accumulated net worth.
Net worth built by members over decades transfers entirely to ICCU.

—

⚠️ Executive Compensation Shows Who Truly Benefits

While members receive no financial benefit, only one person is guaranteed to financially benefit from this merger: CALCOE CEO Leslie Johnson.
Disclosed compensation tied to the merger includes:
Two retention bonuses of $13,600 each
A salary increase to $136,000
A long-term split-dollar benefit that could provide $30,000 per year for up to 20 years
No other member receives anything comparable. This creates a clear conflict of interest and raises serious concerns about whether the merger recommendation is driven by member benefit or personal gain.

—

🏛 Loss of Local Control

CALCOE is a locally governed Yakima Valley credit union.
After the merger, decisions will be made by a large, out‑of‑area institution.
Local accountability and member influence are lost permanently.

—

💸 Higher Fees & More Complex Policies Likely

CALCOE historically operates with lower minimums and fewer fees.
Large credit unions typically bring:
Higher minimum balances
More service fees
Less flexibility for members

—

🧱 CALCOE Is Financially Healthy

CALCOE has a higher net worth ratio than ICCU.
This is not a bailout or emergency merger.
A healthy credit union should explore alternatives before surrendering independence.

—

🛠 Technology Does Not Require a Merger

Modern banking tools are widely available through vendors and partnerships.
Many independent credit unions successfully upgrade technology without merging.
Losing local control is an extreme price to pay for services already available elsewhere.
—

⛔ Permanent Decision

Once CALCOE is merged, it ceases to exist forever.
Members cannot undo the decision if fees rise or service declines.

—

✅ Bottom Line

This merger does not benefit CALCOE members.
It does not provide a member payout. It does not preserve local control. It does not improve member ownership value.
The only guaranteed financial winner is Leslie Johnson, while members permanently lose their independent credit union.
Vote NO to keep CALCOE local, independent, and member-owned.
All reactions:

The Existential Question for America’s Credit Unions

Who benefits from these transfers of control of long accumulated member wealth?

From the member-owner’s point of view this is a leadership and institutional failure.  The merger  destroys the “hometown” local advantage that gives credit unions their competitive superiority.

The members have assessed the situation correctly.  Their leadership sold out. They will be credit union skeptics forever.   The legacy reputations and coop advantages are ruined for them.  The credit union system sustains another hit.

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Washington Post Opinion on Taxing Credit Unions

With exquisite timing during this week’s credit union GAC convention, the Washington Post published an opinion article with the title:TARGETING THIS $2.8 TRILLION TAX SHELTER COULD SOLVE A BIG U.S. PROBLEM

The opinion was authored by Scott Hodge, described as a tax policy fellow and past president of the Tax Foundation.

Hodge provides multiple examples of successful tax exempt, very profitable organizations such as AARP, the Academy of Arts and Science, the Kaiser Foundation Hospital system and the PGA as fellow travelers in the tax exempt panoply of unfair competitors.

Here is Hodge’s paragraph singling out the credit union exemption:

With more than $2.3 trillion in assets, the tax-exempt credit union industry has long outgrown its depression-era roots. Originally exempted to serve working-class people of “small means” who lack access to banking, credit unions are now indistinguishable from commercial banks. They offer mortgages, auto loans, credit cards and investment services—and they’re using tax free cash to buy banks. In the past decade, credit unions have purchased nearly 100 commercial banks, converting taxpaying businesses into tax-exempt ones. Imagine Gold’s Gym buying your local YMCA.  

His example of coops buying banks has logic and common sense.   As one observer has stated:

I’d invite anyone willing to discuss the original purpose of credit unions and why neither the FED, OCC nor the FDIC wanted to regulate them.

Short answer: Credit Unions are not banks. They are member-owned cooperatives created as a safety net and alternative to banks. As a result, credit unions were granted nonprofit status, were not taxed, and were placed under social services

But would that be a sufficient response to this recurring threat?

History of the Tax Exemption

State chartered credit unions received their federal tax exemption via an IRS ruling.  FCU’s are tax exempt in the Federal Credit Union Act.  One consequence of these two processes is that some states have passed franchise or other taxes on state charters.  Another critical  difference is public disclosures.  State charters must file an annual IRS 990 with facts on salaries and benefits of highly compensated employees and list all charitable donations  and political contributions.

Coops’ special service purpose  was endorsed by FDR in this 1936 note to the Treasury Secretary.  The Pesident  encourages publicity for these new institutions, supervised bythe Department of Agriculture, saying they are popular.

In the modern era of an Independent NCUA regulator, the agency’s first two board chairs were not hesitantin their support of  credit unions’ tax status. (photo from 1981. left to right Larry Connell, PA Mack, Ed Callahan )

Today’s NCUA board has been agnostic on credit unions’ tax exemption saying the issue is up to Congress.  This is similar to Board’s silence on the bank purchases referenced in the Post opinion even though NCUA approval is required for every transaction,.

How the Tax Exemption Formed the industry

For the first 100 years of credit union formation, all were started with no financial capital with minimal share donations by the organizers. Today NCUA requires at least $500,000 in equity  to receive a charter, but that is not how 99% of active credit unions today achieved their net worth.

Until NCUA insurance was required for all FCU’s in 1970, member shares were equity, ranking  last in payout priority  in the event of failure.  One of CUNA’s concerns about a federal insurance program was that it would reduce members’ ownership  attention.

During the bank holiday in FDR’s first year in office when many customers lost savings due to bank closures, credit unions noted that  not a single state charter failed in this period.  There were no FCU’s until 1934; but just  like the states, all member shares were at risk.

Federal share insurance was not passed because of member losses or credit union failures.  Rather it was a reward for performance that demonstrated member shares were as safe as insured deposits in banks.  It was not untill the mid-1980’s that the Public  Accounting Standards Board classified credit union shares as liabilities and not equity in GAAP presentationa.

The Imposition of Bank Capital Concepts

Even after multiple coop share insurance programs were available, until passage of the Credit Union Member Access Act (CUMAA) in 1998, reversing a Supreme Court interpretation of NCUA’s field of membership rule, credit union capital adequacy was determined on a flow, or earnings set aside requirement.

Net worth was created by allocating 6% of income into a statutory regular reserve account until that total was at least 4% of risk assets.  At that level,  the transfer was lowered to 5% until a ratio of 6% of risk assets (primarily loans) was achieved.  Retained earnings were on top of this required capital account.  The tax exemption on net income was a critical factor in coop net worth build up.

A 6% ratio of total net worth to assets was considered well-capitalized. However CUMAA changed the capital creation from a coop model to a banking concept. Now the required ratio was determined by  the amount of capital on hand at any point in time versus the flow of earnings into reserves. To be well-capitalized credit unions needed to have at least 7% net worth at all times.

For almost 100 years the tax exemption was critical to building total capital.  This was the sole source of credit union bet worth.  This process took time before startups could become financially self sufficient without sponsor support or location and convenience advantages.

Member loyalty was the intangible but essential foundation because  reserve accumulation could take a generation or more to become self-sustaining.  Growing a credit union’s balance sheet  from 1998 was now internally governed by the credit unions growth of equity, or ROE.

The Financial Ethos Today- CEO’s Born on Third Base

In  his brief history of FCU supervision,  Ancin Cooley points out (link) how this founding role of credit unions has been eroded as the founders and builders have left the scene.

Few CEO’s today have had to worry about building capital and ROE performance.  There is no external market accountability as there is no stock to be valued and traded.  The industry’s average capital ratio is 11%, far above the 7% well capitalized rule requirement.   Risk based capital measures are even greater.

Most newly hired or promoted CEO’s, especially in the three decades since CUMAA in 1998, are unaware of how the wealth legacy they now direct was built by  generations of member loyalty.

A baseball metaphor for this historical blind spot of incoming CEO’s is useful: “Some people are born on third base and go through life thinking they hit a triple.”

And so the focus of these newcomer CEO’s, often with board blessing, is how to take the credit union to a new institutional level.  Not how to enhance the well-being of the member-owners whose relationships were the unique foundation of cooperative success.

Excess capital makes the allure and seeming ease of purchasing banks or other third party assets, and moving beyond community to a financial intermediary,  a ready breakout strategy. With the help of brokers and financial consultants the option is hard to resist.  Organic growth seems so common place and difficult versus  using surplus funds to acquire assets originated by others.

Instead of fulfilling cooperative purpose, the acquisition or ‘”transfer of control” (mergers) of eternal assets becomes the go-to success tactic.  A coterie of consultants, lawyers, financial agents and lobbyists will facilitate these instant growth possibilities.

Responding to the Tax Exempt Challenge

Today GAC attendees will hear urgent  appeals for political action protecting the credit union tax exemption.  But  is that the best framing of the challenge?

Should the question intead be, if our organization were to  taxed, would that change our mission?  If the answer is yes, then maybe the first response is to discuss whether the vision-mission statement needs a review.

And secondly, what changes are needed for credit unions to continue their unique role for members, their community and in the overall financial markets whatever the tax status?

 

 

 

 

 

 

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To BEE or Not to Be: The Most Vital Question for the 2026 Credit Union Governmental Affairs Conference in DC

This week is the annual credit union political Woodstock festival in the Nation’s Capital.  There will be vendor halls filled with new and old names; speeches from industry leaders promoting unity and forecasting threats; praise from both sides of the congressional aisles; and non-stop breakfasts, lunches and receptions/dinners to catch up with peers.

Is it possible in this choreographed cacophony that the most important voice and movement issue may not addressed? The concern comes from 2,700 miles away, written by a longtime member-owner and printed  in the local newspaper, the Sacramento BEE.

In this week of celebration I believe this person is raising the most important existential issue facing the movement-will anyone pay attention.

https://www.sacbee.com/opinion/op-ed/article314780377.html

The Movement’s  Critical Issue

The Bee opinion is a current example of the increasing frenzy of secretly initiated intra-industry  acquisitions reshaping the unique structure and role of cooperatives.

The proposed SAFE-BECU  combination takes the future away from their member-owners.  It now rests in the control of self-appointed boards and management’s personal ambitions.  Regulatory oversight is entirely absent.

The Context for this 2026 Endgame

Existential moments in credit union history are not new. In February of 1982 Chairman Ed Callahan, in his first speech to GAC, asked CUNA President Jim Williams the most critical issues facing credit unions.  Jim used one word: “survival.”

At that time, the movement counted 20,784 credit unions with $72.3 billion in assets serving over 45 million members.  Growth had stalled.  Inflation with double digit interest rates and money market funds were taking away shares.  Credit union expansion a forgotten  dream,  investments (GNMA 8’s) were way underwater, and losses were looming high.

Drawing on his five years overseeing the largest state charted system in Illinois, Callahan proposed a new policy following credit union principles of collaboration, self-help, local advantage and ever enhanced member-owner value.  The resulting changes in NCUA institutional oversight and industry initiatives created a movement that not only survived but thrived,. The movement transformed to the market driven realities of open competition from the era of government issued licensing for protected financial franchises.

Today’s Threat Is  Internal

Today the nation’s 4,200 credit unions manage $2.5 trillion in assets for over 140 million members with retained earnings approaching $285 billion. The NCUSIF is overfunded.

Unlike 1982, the system’s present danger is neither financial nor the various external warnings  about fintech, stable coin options or other competitive innovation.

Today the existential end arises from two simultaneous practices. One is expanding efforts of self-destructive acquisitions of long-term large sound coops by their fellow credit unions. These efforts mimic the  old fashioned capitalistic efforts to gain market dominance by takeovers, not competition.

As described in the BEE opinion editorial, the deals are done in secret with payouts and new roles negotiated by the principals, their advisors and then signed off routinely by regulators. No one represents or protects the member-owner’s rights and financial interests in these deals rife with conflicts of interest.

There is a second social and political factor at work. Today’s  political ethos is the example of the strong, ambitious and single-minded pursuit of wealth and dominance, not democratic collaboration.  Traditional credit union virtues of cooperation and sharing seem naïve.  So leaders will bow their knees, compromise legacies of trust, to those in authority who in turn will stand aside as they pursue their goals of  industry superiority.

The movement’s future has been steadily removed from member-owners’ hands through self-perpetuating boards and CEO turnover whose successors have no obligation to the legacy they now control. These changes of control  transactions are now greased with payments in the millions of dollars from members’ common wealth.

Standing Up to  Self Destruction

Can this increasing  cooperative  cannibalistic destruction be challenged.? As more and more leaders are caught up in what one observer calls the emotional urgency of FOMO risk,  can credit unions’ unique purpose be revitalized?

Two sources of hope and example.

The first is a renewed vision and embrace of  what success looks like as a coop.  Here is a classic, timeless statement by a longtime, very successful CEO, now retired.  The Ultimate Vision:

(https://www.youtube.com/watch?v=tE_3-ipOiPE)

Will The Grassroots Rise Up?

The second factor must be the old fashioned calling that all Americans believe in democratic governance.  It is not the rich, those in positions of power or the inheritors of wealth that control our future.  But We the People.

Scott Rose, in his BEE opinion, is the example Doug Fecher said would be the test of credit unions’ ultimate success.  Scott is sounding an  alarm for his community’s future.  His effort is the same that has  animated the best of American patriots for 250 years.  On behalf of his 245,000 fellow owners, the greater Sacramento community and the missing regulatory oversight, he is alerting all of us to this takeover of not just his credit union but the entire  cooperative model.

His willingness to take a stand will create public awareness, debate and an uprising from  the grassroots.  For as he says, “member-owners, local leaders and potentially impacted community organizations must speak out.   What is lost is not simply and accounting abstraction—it is real control of wealth. . . Once approved, a merger cannot be undone.”

Will someone at tonight’s Herb Wegner award festival dare to honor the voice of this member-owner who is calling all of us to remember who we are and what we stand for?

The challenge is both present and ageless.  In words of the Bard’s most famous character:

To be, or not to be, that is the question:

Whether ’tis nobler in the mind to suffer

The slings and arrows of outrageous fortune,

Or to take arms against a sea of troubles

And by opposing end them.

 

 

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A Post Every Credit Union Employee Should Read

This is a CEO’s statement  from the monthly staff update:

Our credit union is in a very commoditized business of financial services, most of our products and services can be purchased elsewhere. So our difference is you, how we treat each other and our members to truly change lives one person at a time in our community.

And then a reminder of two guiding principles:  Every person has a story-do the right thing.

Recently consultant Ancin Cooley in a LinkedIn post described why doing the right thing happens rarely to employees in a merged credit union.

His  recent blog should be posted in the employee lounge of every credit union office.  Mergers of well- run credit unions not only eliminate a local grounded financial institution.  They also end employees’ investment in their professional future.   Following is his analysis of the impact of mergers on the most important “difference makers” in every credit union.

How Credit Union Mergers Rob the Next Generation  of What Was Freely Given to the Last (Attention!!! Millennials and GenZ)

The consolidation cheerleaders talk about member impact, technology investments, and competitive positioning.

The executives advocating loudest for mergers  built careers in an industry that had room for them. They were given opportunities for CEO, CFO, and CLO roles at shops, and VP positions at institutions that no longer exist because they’ve since been absorbed. Those jobs paid mortgages, put kids through college, and built retirements.

The Ladder They Climbed Is Being Pulled Up Behind Them

Every merger eliminates leadership positions—CEO, CFO, CLO, and VPs. Two credit unions become one, and half the top roles vanish.For early-career workers, this means fewer rungs up the corporate ladder to reach for. The CEO role at that $350 million credit union that could have been theirs in fifteen years? Absorbed into a $1 billion merger. Gone. “Good luck bud…”

For mid-career professionals who’ve spent a decade building expertise, the chair they were positioning for no longer exists. They did everything right.

The “Efficiencies” Folks Celebrate Are Your Career and Your Money.

When merger advocates toast economies of scale and eliminated redundancies, translate that: they’re toasting eliminated people.
Early-career workers lose the broad exposure that builds future executives. The young professional at a $200 million credit union who might touch lending, compliance, member service, and strategy? At the merged $3 billion institution, they’re a specialist in a silo, building narrow skills with no line of sight to leadership.

Mid-career professionals find their expertise deemed “redundant” when two departments become one. One compliance officer survives. One lending director. One marketing lead. Senior professionals get offered early retirement packages or the dignity of reporting to someone who was their peer last quarter.

The Mission Is Being Sold Off by People It Already Paid

Many younger workers chose credit unions over banks because they wanted work that meant something. The idea that finance could serve people rather than extract from them. Now they watch executives who built wealth and reputation on cooperative principles abandon those principles for scale and extraction. The same leaders who gave conference speeches about “people helping people” or “Main Street Values” now give conference speeches about “competitive positioning” and “Market Forces.”

To the Millennials, Gen Z, and future Gen Alpha workers in this movement: the path is narrower than it should be. And they owe you more than a picture with a politician and the ability to “crash” an event. But the mission that drew you here is still worth fighting for, and you might be the generation that reclaims and rebuilds it.

Every Person’s Chance to Act

Every proposed merger of a sound credit union depends on the overt support or quiet acceptance of staff.  In these situations, they are the first line of defense for “doing the right thing” for members and their communities.

Remaining  obedient or quiescent as leaders plan the demise of their institutions’ integrity and future will compromise the values underpinning both personal and corporate purpose.

Speaking up is never easy.  But that is what makes a democracy work in a credit union or a country.

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Today The People are the Press

Yesterday’s scripture reading was from the Sermon on the Mount. The lesson includes Jesus’s multiple teachings (Beatitudes) beginning with Blessed are the meek. . . Blessed  are the poor in spirit….

On the sign in front of the church, the  sermon title was Blessed are Those Blowing Whistles.

Individuals are doing more than making noise. People are recording and publishing videos, interviews and pictures of federal troop immigration occupations-and the resulting abuses and cruelties -in towns and cities across the country.

Citizen Journalists

The people have become the press, taking their first amendment rights of freedom of speech seriously.  They have used virtual channels and networks to post their stories and pictures.   It reminds one of the pamphleteers during the Revolutionary War.

But citizen journalism is not limited to tracking immigration abuses. Individuals are finding ways to raise concerns about their credit unions.

I am a three decade member of XYZ Credit Union. I was shocked by the proposed merger with YYY which was sprung on our community and membership without warning or advance notice.

I attended the annual membership meeting and there was zero mention of this. The Board of Directors has acted in secrecy and this sellout is now presented as a done deal.

 These kinds of deep worry are sent to my blog address two or three times per month.   Sometimes the opening will begin: As a former employee and long-time member of XXX I am deeply concerned about . . .

These members want to know how to amplify their voice.  And that is the first goal of the member-journalist, to make their concerns public and bring transparency to situations.

Several CEO’s even embrace these individual voices.  One publishes Net Promoter Score comments in the monthly staff update, but not just the 9 and 10 ratings, also the 4s and 5s which are often complaints about a service, policy or  member disappointment.

The credit union press primarily relies on the publicity releases of the industry.  Rare are the occasions for member comment except when picked up from a news story.  Or very occasionally from member comments opposing mergers.

Both credit union media as well as the public press rarely have the resources to pursue individual cases of self-dealing orworse.

Democracy Requires Speaking Out

In a democracy, and especially in organizations claiming to be governed by their members, they will find ways to speak out.  It is the American way.  And ultimately it will lead to organized opposition should their concerns be ignored.

With the emergence of local digital media, these stories are now receiving greater coverage. Here is an example from the Baltimore Banner, an online non-profit news source for the greater Baltimore community.

Project Salt Box: How citizen sleuths are monitoring ICE in Maryland

First they unearthed U.S. Immigration and Customs Enforcement contracts for 42,000 ready-to-eat meals coming to Maryland. 

Then they built a data map of how the federal Department of Homeland Security was distributing its funding.

Last week, two-month-old Project Salt Box and its seven-person team revealed what some say is a sign that an ICE surge could be coming to the state.

The group, which works to unearth and explain the public documents behind federal immigration enforcement, was the first to report on Tuesday that DHS had purchased a warehouse near Hagerstown. In correspondence with Washington County officials, federal officials described how they could retrofit the space to become an immigration detention facility. . . .

The American citizenry is finding its voice.   It will not wait for elections.  Rather it will seek to change leaders’ behaviors now.

Credit unions were nurtured in the grassroots of local activism.  They found sponsor support to create new collaborative options for their community.

This latent activism is just below the surface.  In the transfer of hundreds of millions of member equity and billions of assets to third party control, their voices will rise.  And they should.

Blessed are those cooperators who use whistles of words to rouse their fellow members to stand for economic justice for all. Future generations will honor them.

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The Power of a Single Person

Most of us bristle a little bit when we feel our agency is really limited and there’s nothing we can do about it,

One of the potential advantages of credit union democratic governance is that each person has an equal vote on the annual election of directors and mergers which end a charter’s life.

In both cases this potential for a single member to make a difference often creates anxiety and pushback by those in power.   A current example of this fear is the reaction  by the board of SECU (NC) to former CEO Jim Blaine’s repeated critiques of the credit union’s direction and lack of transparency.

After two years of contested board elections in 2023 and 2024, SECU’s Board made sure in 2025 there would be only the number of candidates as there were vacancies, thus ending a brief span of democratic member choice.

SECU’s conduct is not alone. It is the SOP for most large credit unions.   And in mergers, the process is even more controlling as there are billions of dollars up for “change of control.”

So can one person make a dfference when all the traditional forces are aligned against democratic practice, when regulators are AWOL and the members seduced by their unrequited loyalty to their coop?

One Person’s Effort to Challenge Exploitaton

History shows again and again that one person can change the world, one event at a time.  Here is the story of Bernard Devoto as told in Garrison Keiller’sThe Writer’s Almanac from Sunday, January 11, 2015.

It’s the birthday of historian Bernard DeVoto, born in Ogden, Utah (1897). He loved the wide spaces and big skies of the West, but he felt like an outsider in his hometown — he was raised Catholic in a Mormon town, and he was too bookish and unathletic to feel comfortable there.

He studied English at Harvard. After graduation, he taught at Northwestern and then at Harvard, although he never succeeded in his goal of becoming a full professor there. He wrote a novel, The Crooked Mile (1924), and dreamed of writing the Great American Novel. Then he wrote a book on one of his literary heroes, Mark Twain, a book called Mark Twain’s America (1932). It blended literary criticism and history, and DeVoto found he had a knack for nonfiction, and especially for history.

In 1935, he began a monthly column for Harper’s, “The Easy Chair,” which he wrote until his death. He covered a huge range of topics: the evils of McCarthyism, detective novels, the Civil War, railroads, the Western landscape, the best way to make a martini, and international politics. . .

In the summer of 1946, DeVoto took a three-month road trip through theWest. He had been writing about the West on and off for years, and had just finished two books set there — a novel and a history of fur trading. He wanted to revisit the place in preparation for a book on the Lewis and Clark expedition, and he thought he would write some essays during his trip.

He was horrified by the land abuse that he discovered there. The novelist Wallace Stegner, who wrote DeVoto’s biography, said: “DeVoto went West in 1946 a historian and tourist. He came back an embattled conservationist.” Commercial interests — especially cattle grazers and big timber — were attempting to take back huge amounts of public land, and DeVoto coined a phrase to describe it: a “land grab.”

Instead of the lighter travel pieces that he intended to write, he wrote a series of essays for Harper’s criticizing the assault on natural resources and the exploitation of wilderness. He described how politicians and businesspeople were conspiring with cattle ranchers to open public lands for grazing, and how timber companies were trying to clear-cut national parks.

In one of these essays, “The West Against Itself,” DeVoto wrote: “So, at the very moment when the West is blueprinting an economy which must be based on the sustained, permanent use of its natural resources, it is also conducting an assault on those resources with the simple objective of liquidating them. The dissociation of intelligence could go no farther but there it is — and there is the West yesterday, today, and forever.”

The preservation of Western land and resources became his life’s work. DeVoto lived for just nine more years after his summer road trip, but in that time he published more than 30 essays about Western conservation. . .

The Liquidation of Public Property

I chose this eample of one person’s influence because of the many parallels with today’s credit union’s practice of exploitive mergers.

In almost all these transactions now, members are showered with promises of future benefits while their legacy heritage is taken away and given without compensation to unknown third party control.

Credit unions like the natural wildness on public lands, grow organically from the ground up.  They must start with a core group of common interest to be chartered.  Afterwards it will take a generation or two of member loyalty to become self-sufficient.

Today these merged firms with millions and billons of dollars of asset growth funded with public purpose and tax exemption. are routinely chopped down  after generations of growth and prosperity.

These naturally created dynamic organizations are broken apart for their individual pieces of market value. The member-owners who supported these “forever” institutions are left with nothing except the rhetoric of marketing and PR phrases never defined and quickly forgotten. And the financial spoils are dispersed among the arrangers.

The question remains.  In a democratic institution can one person make a difference, sound the alarm and mobilize others to oppose this predatory behavior?

I’ll give an example of one who had the tenacity to throw back the covers on mergers.  Then see who else might be willing to come forward.