Chip Filson
From Scott Galloway:
“The undoing of many powerful people is that they enter a hermetically sealed bubble of fake friends. Enablers, not people concerned with their well-being. When the Elon-Twitter debacle started this spring, I wrote a post about power.
“My thesis: Power, unchecked, is a psychological intoxicant. OK, this isn’t so much a thesis, as it’s scientifically proven. Research shows power causes us to downplay potential risk, magnify potential rewards, and act more precipitously on our instincts. In other words, you lose your ability to self-regulate; you need others to do it for you. . .”
The solution: Every day, every one of us needs to ask ourselves an important question: Who keeps it real for me? Who will push back, who will tell me I’m wrong … who will save me from myself and the psychosis that’s led to so many successful people’s fall from grace. ”
Example: Ed Callahan had Bucky Sebastian as his “wingman” in work and life.
Photo from 1971- mom, dad and baby Lara.
On the US Navy pier, Yokosuka, Japan. My ship, the USS Windham County (LST 1170), had just returned from Vietnam deployment. Homecoming. An unbelievable joy.
At a recent class reunion, one of my peers admitted to “failing retirement.” His projects and interests kept him busier than a full time prior job.
It reminded me of this story:
An old physician, Doctor Gordon Geezer, became very bored in retirement and decided to re-open a medical clinic.
He put a sign up outside that said: “Dr. Geezer’s clinic. Get your
treatment for $500 – if not cured, get back $1,000.“Doctor Digger Young, who was positive that this old geezer didn’t know beans about medicine, thought this would be a great opportunity to get $1,000. So he went to Dr. Geezer’s clinic.Dr. Young: “Dr. Geezer, I have lost all taste in my mouth. Can you please help me?”Dr. Geezer: “Nurse, please bring medicine from box 22 and put 3 drops in Dr.Young’s mouth.”
Dr Young: ‘Aaagh! — This is gasoline!”
Dr. Geezer: “Congratulations!
You’ve got your taste back. That will be $500.”
Dr. Young gets annoyed and goes back after a couple of days figuring to recover his money.
Dr. Young: “I have lost my memory, I cannot remember anything.”
Dr. Geezer: “Nurse, please bring medicine from box 22 and put 3 drops in the patient’s mouth.”
Dr. Young: “Oh, no you don’t — that’s gasoline!”
Dr. Geezer: “Congratulations! You’ve got your memory back. That will be $500.”
Dr. Young (after having lost $1000) leaves angrily and comes back after several more days.
Dr. Young: “My eyesight has become weak — I can hardly see anything!”
Dr. Geezer: “Well, I don’t have any medicine for that so, “Here’s your $1000 back” (giving him a $10 bill).
Dr. Young: “But this is only $10!”
Dr. Geezer: “Congratulations! You got your vision back! That will be $500.”
*Moral of story* — Just because you’re “Young” doesn’t mean that you can outsmart an “old Geezer”
(by Jim Blaine)
George Orwell masterfully described the erosion of values and the rise of exploitation in his classic novel Animal Farm. The book written in 1945 is a satire of the decline in the Russian Revolution from idealism to the overlord State of Stalinism. To Orwell, what the Revolution had become in post-WWII Russia bore little resemblance to the high hopes of 1917.
In case you’ve forgotten the plot; in Animal Farm the slothful, tyrannical human proprietor of Manor Farm is overthrown by his much abused and neglected farm animals. The revolutionary animals quickly come to realize that when united in cooperative effort, they are quite capable of sensibly managing the farm and their own affairs.
Each animal, by nature and design, has different capabilities and unique qualities. Separately they are weak. But, cooperatively, working together; the united effort becomes far greater than the sum of the individual parts. Each animal contributes in full measure, in its own special way, to the overall success of the enterprise.
The cows and chickens provide milk and eggs for food. The sheep provide wool for cloth; the dogs provide protection; and the horses provide strength for plowing. The pigs, who seem to be the brightest, provide direction and management (surprise, surprise!).
Every civilized society, every social movement, every cooperative effort needs and creates a set of guiding principles – a social compact, a credo, a charter which explains shared beliefs and values. The animals of Animal Farm were no different. They carefully crafted rules for their new social order and painted them on the side of a barn for all to see.
Over time, several incidents occurred which seemed to be out of keeping with those original purposes. The pigs were found sleeping in the former owner’s bed; alcohol reappeared at social gatherings of the pigs; an animal who complained about the changing values was killed; and the pigs seemed to be working less and consuming more than their fair share.
When the animals returned to the barn to review their original principles; they found, much to their surprise, that those principles somehow had evolved into something a bit different!
The pigs, however, were always there to explain away questions, concerns and objections. Bad became worse at Animal Farm! Eventually, when the animals returned to the barn, they found a whitewashed wall with just one remaining principle.
“All members are equal, but some members are more equal than others.”
“Isn’t that what we originally revolted against?,” some quietly asked.
So, what’s the point? In the beginning, there were several essential ideas which formed the core values of the credit union movement: one member, one vote; cooperative; non-profit; equal service to each member; consumer advocacy; volunteer leadership; unstandard answers; shared concerns; us not me.
Hey really, what happened…
On a recent trip I talked with a CEO to find out how the credit union was responding to four events: Covid, interest rate hikes, liquidity and the regulatory environment. Here are my notes.
CU still on hybrid work model. Employer sponsor went all remote, but is now back in person, with little remote. The community around the head office, especially retail shops, became a ghost town. Kept all branches open, but back office staff is still mostly remote.
Expect hybrid work to continue. Commute for head office is a minimum of 30-60 minutes. Labor market extremely tight especially for retail.
Have re-evaluated every customer facing position including salaries, variable incentives, paid lunches and increased job tiers.
The 30-year fixed rate mortgage is now at 7.5%. Member interest has evaporated and don’t see it coming back until late 2023. Increase in second mortgage demand.
Member spending is still strong and credit card volume has surpassed pre-pandemic levels. Will recession hurt consumer spending? Labor market great for employee, but creates inequities with current staff.
Biggest concern is inflation’s impact on costs and operating expense structure. Large increases in vendor contracts which have the ability to pass through costs based on a CPI index. In some cases this will be 8.5% to as high as 15%. Fortunately, we have caps in our contracts but many credit unions do not.
We are a unionized shop with approximately 70% of employees covered under a labor contract. Sponsor negotiates contract and we will have to see what happens to those costs.
Have difficulty selling to secondary market. Rates are extremely volatile day to day. Our mortgage pipeline is down 60%. Refinancing has all but stopped.
In ’20 and ’21 had share growth of 20% and 13%. Money stayed with us. This year members feel it’s time to spend. Grown only 2% in shares so far, but may end up flat at the end of the year.
Even though originations are lower, loans are staying on the balance sheet because there is no refinancing.
Paying up for CD’s: 11 month at 3.25% and 15 month at 3.5% with a minimum of $5,000.
Actively monitoring our wholesale funding sources. FHLB is about 100 basis points more expensive than CD’s. Also have brokered CD’s with SimpliCD.
So far this year ROA is at 80 basis points down from 92 bps in 2021. But for our 28 state peers over $500 million, the average is closer to 50 basis points.
Our top operational priority will be managing expenses.
State chartered. All exams remote. The beginning of the year I was really concerned about the NEV test that would put us in the extreme risk category. But they have backed off with just a “high” rating.
Definitely a different level of NEV risk now and more pressure on liquidity.
Looking past current events there are two items. Should we move beyond our sponsor’s brand and FOM to open up markets for further growth? We have several special loan programs, credit card and provide financial literacy events. Sponsor brand is ours as well. So not a simple issue.
Secondly, we have always been a state charter; would a federal charter be an option for the future?
However our biggest challenge going forward is to control operating costs.
The first question in many gatherings is, where are you from?
I answer Springfield, Illinois which is where I finished high school 60 years ago. The class gathered again this past week, the first time since the 50th reunion.
The experience is truly a re-union. I was able to interact with the city, the school and classmates. The event reconnected past recollections and the present. The impressions may even continue to shape the future for some or all.
Michael De Sapio has written about the importance one’s local community:
We spend much of our time concerning ourselves with places and people far removed from us. The things closest to us, by contrast, often become negligible and disposable. If you make an effort to reconnect with your neighborhood, town, and community, you may come to see your home in a new light—hallowed by time and … and history, and perhaps even imbued with heroism or romance.
Reunions remind attendees of the influence of the place we once, or maybe still, call home. It made a difference in who we are today.
Abraham Lincoln defines Springfield’s soul. On February 11, 1861 he delivered a farewell address to his fellow residents. He would never return. His parting words are remembered for their emotional honesty. They illustrate his debt to a place that helped shape who he was.
My friends, no one, not in my situation, can appreciate my feeling of sadness at this parting. To this place, and the kindness of these people, I owe everything. Here I have lived a quarter of a century, and have passed from a young to an old man. Here my children have been born, and one is buried. I now leave, not knowing when, or whether ever, I may return. . .
Springfield is flat, except for the meandering of Lake Springfield at the outer edge. The sky and corn or wheat/hay fields on the way seem to stretch to an endless horizon.
The city’s topography is a geometric with one-way streets to facilitate traffic. But there are few cars, even in rush hour. Downtown is dominated by buildings whose former lives are now lost in their current role as state office buildings. Vacant lots are paved over for parking; but we never saw a lot filled.
(Capital spire and former State Armory)
The city is so level that sounds travel great distance. Amtrak and freight trains still run through the center of town along 4th Street, day and night. The doppler effect of train whistles’ signals this constant coming and going.
We were stopped at a railway crossing for a freight train consisting of only flatbeds carrying one or two shipping containers. I counted a freight car passing every second. The gates were down for over five minutes. And there was even a second engine in the middle of the train for more power. The train extended for at least three miles.
There is a church bell in the center of town that sounds every 15 minutes and strikes the hour. This passing of time is heard throughout the downtown.
The capital building dominates the skyline. Empty lots, some still grass but most paved over, were meant to accommodate people driving to work. But the legislature is out of session. The elected representatives and lobbyists have gone. Offices are quiet and often closed. The town seems empty even on a work day. Is this the mirror side of working from home?
Sixty years ago Springfield was a manufacturing and business center, as well as the state capital. Allis Chalmers and Sangamo Electric had manufacturing plants. Franklin Life and Horace Mann had their corporate insurance headquarters near the city center. Frank Lloyd Wright designed a prairie style home in the same area.
Today state government and the service sectors dominate. A modern downtown brick constructed Methodist church is now the office of the Springfield Chamber of Commerce, complete with steeple. The state capital is across the street.
Tourists trace Lincoln’s legacy beginning with the two blocks reconstructed as they existed in 1860 around his home. The Old State Capital and new Presidential museum and library are major draws.
Health care and new community and college campuses are additions to the city’s evolving economy.
The density and intensity that is characteristic of larger cities is absent in Springfield.
The pace feels more akin to farming than to the modern workday culture. Saturday’s farmer’s market in downtown was the most crowds we experienced. Lots of younger people were here as well, both shopping and making a living. Every stall is carefully ordered in its presentation, except for water color paintings.
Amongst these every day events, there is a feeling of something more consequential about the town. Lincoln’s heritage is central. The spirit of the place which formed him still animates today. Patient and timeless lessons seem to grow in this center of flatland farms of corn and endless, open sky.
The Springfield poet Vachel Lindsay referenced this spirit in his 1914 poem Abraham Lincoln Walks at Midnight. Both the sense of place and Lincoln’s profound insights seem timeless, especially relevant to today’s events.
It is portentous, and a thing of state
That here at midnight, in our little town
A mourning figure walks, and will not rest,
Near the old court-house pacing up and down. . .
A bronzed, lank man! His suit of ancient black,
A famous high top-hat and plain worn shawl
Make him the quaint great figure that men love,
The prairie-lawyer, master of us all. . .
His head is bowed. He thinks on men and kings.
Yea, when the sick world cries, how can he sleep?
Too many peasants fight, they know not why,
Too many homesteads in black terror weep. . .
He cannot rest until a spirit-dawn
Shall come;—the shining hope of Europe free;
The league of sober folk, the Workers’ Earth,
Bringing long peace to Cornland, Alp and Sea.
This reunion reconnected us with a momentary phase of our lives. Springfield’s special history sits amidst an ever evolving generation of new enterprises. Revisiting our one-time home sparked new insights. A place alive with past and present activities busily weaving a new future.
In later blogs I will share how my high school has changed, yet still remains the same, and impressions from former classmates.
The largest, most powerful land animal is the elephant. In many of their traditional habitats in Asia and Africa, their numbers are falling due to the loss of their traditional habitat and poachers.
The Elephant Whisperer is the story of a person who lived with elephants on a game preserve to try to preserve a “rogue” herd.
The author Lawrence Anthony devoted his life to animal conservation protecting the world’s endangered species. He was asked to accept a wild elephant herd on his Thula Thula game reserve in Zululand. His common sense told him to refuse, but he was the herd’s last chance of survival: they would be killed if he wouldn’t take them.
To win the herd’s trust, he had to convince the Matriarch of the herd. The eldest female is the leader, until she relinquishes it. He slept in his Land Rover near them until they accepted him.
In the years that followed he became a part of their family. In creating a bond with the elephants, he came to realize that they had a great deal to teach him about life, loyalty, and freedom.
He learned elephants mourn their dead , and recall the time lapse of a year to the day of death to assemble round the remains. When Lawrence Anthony died in 2012 , they gathered to mourn him.
Elephants care for newborns together. When one is unable to stand up to nurse, they surround to help lift her up to the mother. Sometimes realizing the infant needed more nutrition, they would seek out Lawrence and his team.
The elephants thrive very much together, protecting and playing with each other but ferocious if threatened. They will accept help from humans they trust.
An iconic picture of this group effort is when the herd will lie down to sleep for several hours each day. As shown below the matriarch is at the top, the smaller, younger elephants protected by the older ones. Most importantly, the picture shows how each member stays touched by another as they sleep.
Is there a lesson for cooperatives from this natural behavior of the world’s largest land animals?
