Category: Observations

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Are Credit Unions Missing Out on the Next Generation of Entrepreneurs?

At colleges and universities throughout the country, entrepreneurship is being encouraged by administrators and embraced by students and professors.

There are new, for credit, academic programs in innovation and new business ventures. Universities routinely offer prizes for the best ideas. Competition among startup ideas are held within and among campuses throughout the year.

What is TigerLaunch?

One of the recently promoted competition open to all students is TigerLaunch.

Here is the description from the website: “Sponsored by the Princeton Entrepreneurship Club, TigerLaunch is the nation’s largest student-run entrepreneurship competition dedicated to building a network of student founders at the university, regional and national levels. TigerLaunch combines networking, mentorship and funding opportunities to craft a distinct experience.”

The site lists the most recent winners and discusses financial and mentoring support available to attendees.

Where Are Credit Unions?

Three years ago, several enthusiastic freshmen entered George Washington University’s new venture competition with the idea of starting a credit union. Their mission statement: “to strengthen the GW community by helpings students and alumni bank cheaply, build credit, better manage their finances and develop valuable skill sets that they can bring to their careers.”

Their concept placed them in the top ten finalists (from several hundred submissions) gaining them a small cash prize and free office space. The university issued a letter of support

So where is this initiative today? This all-volunteer effort with undergraduates and advisors donating their time, ideas and energy?

The quick answer: it is in NCUA’s bureaucratic bog for new charters. The organizers recently shared the documentation with me for counsel. The first draft of their operating policies runs over 70 pages and includes bank secrecy, foreign assets control, disaster recovery, vendor management and additional statements more relevant to their immediate operations such as a loans and collection policy.

A second document is for asset/liability and liquidity management. It runs 10 pages.

The credit union has also developed five years of financial projections. In the initial years the balance sheet will be less than $500,000 total assets. Their products will be simple, and all transactions will be virtual. They have identified and selected their principal vendor relationships and even signed an agreement with a core provider.

They have $10K in the bank and want to raise a total $40K in initial capital. The goal is to operate at breakeven, relying entirely on student volunteers.

They have not been able to meet in person with NCUA. Their goal at this time is to be operational by next May to work through startup issues before classes resume in the fall.

The Agency has slowed the process to a crawl with paperwork requirements, so much that the original entrepreneurs are now seeking successors for this effort when they graduate.

The Dearth of New Charters

Few would question the need for credit union services in communities across America. But the passion and vision needed are drained of life by NCUA’s bureaucratic process that results in few if any new charters each year. Meanwhile 250 or more charters are closed via mergers or dissolution because of morale and/or leadership failings.

Without new generations of leaders inspired by the passion to serve and make a difference and using the latest technology, the credit union option will become a “mature” industry in slow decline. It will end up cannibalizing itself through self-interested mergers, and seek growth via bank and other acquisitions, not by deepening relationships and value for members and communities.

Which start up effort would you back? The students participating in their university’s innovation fairs, or those trying to bring cooperative financial services to the campus?

The answer could be a harbinger about the relevance of credit unions for today’s newest generation of financial customers. Chances are they won’t be called members, except by American Express.

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Bob Minor: Mentor, Counselor, Volunteer and Friend for Over a Quarter of a Century

This week ends the tenure of Callahan’s longest serving board member, Bob Minor. He has been part of multiple organizational transitions including three changes of CEO leadership since being asked to serve, as a personal favor to me in the early 1990’s. This was a time when Callahan & Associates transitioned to become a leader in credit union analysis, strategy and collaborative initiatives.

Bob is a long-term Washington hand, having attended almost every Presidential inauguration starting with FDR’s second in 1936, a practice that ended with the current White House occupant.

He graduated with BA and MA degrees from George Washington University followed by career stops with quintessential Washington organizations: the CIA, Clark Construction Company, the National Education Association and the State Department. What tied all of these positions together was his lifelong interest in helping people make good decisions about their employment/career ambitions. These were often at critical transition points in the life of the organization or of the employee.

An Organized Committee Member

I first saw Bob’s skills as a member of the Columbarium Committee of the Chevy Chase Presbyterian Church in Northwest DC. We were tasked with evaluating whether a columbarium addition on the church grounds made sense, and if so, to carry out the proposal.

No member of the five-person group had first-hand knowledge for this project. But as we visited other church’s examples, talked with contractors and evaluated different options, everyone learned together. Bob’s vital contribution was that he kept meticulous records and understood how to succeed in the internal decision making within the church. He then played essential roles in the fundraising, construction and dedication, a time span of almost two years.

Seeing firsthand his ability to work within a committee as part of a larger organization, I asked Bob if he would volunteer on a new Callahan “Advisory” Board of Directors. Advisory, because at the time Callahans was a sole proprietorship, and all decision making and authority was mine.

I believed that if Callahans were to grow beyond the vision of a single person or team, we needed a governance/advisory process that would fill the director’s role required by most organizations.

The Rest is History

Bob and fellow board members, Randy Karnes, Rosemary Hardiman and Mark Elliott guided the company through the inevitable transitions any successful organization must navigate.

The single proprietorship became a 25% ESOP in 2003, followed by a management led purchase in 2014, and a 100% ESOP conversion in 2018. All these changes were new for us and required careful consideration. Bob was vital counsel in ongoing personnel successions including three CEO transitions. While internally focused these transformations took place at a time of unceasing change in the credit union system, Callahans reported on with its data, market share analysis, and editorial commentary.

Essence of a Volunteer: The Elder’s Role

Bob’s volunteer role was always positive. He provided continuity with firsthand knowledge of the company’s history and previous decisions. Staff members sought his counsel about their careers within Callahans or beyond. He was trusted by all to be impartial. His patience for circumstance reflected his deep respect for individual choice. His counsel was based on his wide-ranging experiences of public, government and non-profit employment.

As a member of Northwest FCU since his time as a CIA employee, he understood the potential for credit unions’ contributions and Callahan’s important role in the industry.

Unique, But Not Original

Bob’s service to Callahans is just one aspect of his life. He served as an elder, deacon, choir member and on multiple committees in his over 50 years membership at Chevy Chase Presbyterian Church. Through his decade long association with the career management consulting firm, Drake, Beam, Morin Inc., he advised and coached literally hundreds of persons in their career decisions.

Bob’s vital role at Callahans is that he understands, values and enhances relationships. After the striving and recognition that is so strong a motivation for many, Bob practiced the value that matters most in the end: how we treat our fellow human beings. And that is the reality that ultimately makes all organizations a success—or not.

In credit union land, Bob’s role was not original. The fiduciary and volunteer role of credit union directors can be a critical factor in their success and sustainability. Bob’s spirit can be amplified by thousands of examples in credit unions throughout the country. His departure is a reminder of how cooperatives depend on this dedicated stewardship and oversight. So, don’t wait to recognize this dedication at a retirement event; instead reach out and give your board a hug today!

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Thanksgiving for Life’s OMG Moments

I did not understand the OMG reactions in text messages when I first saw them. Did not know what it meant. And when I learned, thought it a cliché.

I have come to recognize that these three letters are the sender’s stamp for a special experience. A kind of shorthand for a secular prayer of joy, insight or even sorrow.

Some Personal OMG Moments

An Unexpected Win

This summer I was watching an iPhone video of the SRAA National Championships rowing finals in Dillon Lake, Ohio. The boys 8-person varsity entry from Wilson High School in the District was not supposed to be there. My sophomore grandson was in the two-seat. They had not made the finals in their qualifying regatta. But the coach petitioned and received an exception entry. They were seeded at the bottom of the teams.

As the finish of the finals was being recorded live on an iPhone video, the sound of the phone’s owner became louder and louder as they ran along the shore capturing the last two hundred yards. I heard again and again: “Oh my God! Oh my God! They are going to win!” And they did. Becoming national high school champions.

National HS champions

Coming in Second: Twice

As both a freshman and a senior, my granddaughter’s high school volleyball team worked its way to the state championship rounds. As a freshman they lost in the final championship match-second place. As a senior they finished second again in the Northern California playoff. After her final senior match she sent an Instagram post to her followers as a thank you for their support. The words that stuck in my mind: “There is not a single thing about my four years with M-A volleyball I would change.” I thought OMG, gratitude, even when coming up one match short of winning it all, more than once.

Recognizing a Busker

The concert of Richard Einhorn’s Voices of Light, a choral work accompanying Theodor Dreyer’s silent film The Passion of Joan of Arc, had ended. We walked to the parking garage with the crowd of other concert goers to take an elevator to our car. A tenor singer, still in concert dress, said to hold the elevator as everyone crowded in. He walked over to the busker, between 50 and 80 in appearance, who was seated, playing an accordion at the end of the long entry hall. The singer reached into his wallet and dropped a bill into the little box at the musician’s feet. One musician out of a chorus of over 100, completing a performance in a very modern concert hall with full orchestra and silent film, pausing to recognize a person performing for change, not applause, in a parking garage entry. OMG

Life’s OMG Moments

Every day we experience OMG events. Sometimes it is as simple as seeing again the stunning beauty of a tree changing seasons:

Or, it can be as grand as the communal expressions of disbelief and joy as the Washington Nationals won the world series.

Washington National’s logo (curly W) and team colors light up the National Cathedral during the World Series.

Thanksgiving is a moment, a pause, to share OMGs. Whether it is seeing family members who have been absent for a time, sharing food from recipes handed down through generations, or just being together around a traditional table, it is a celebration of gratitude. For life’s special moments and for each other.

But try to avoid the one OMG moment we all fear: OMG, I ate too much!

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Wisdom from the Field

“The primary purpose of MANAGING is to keep current systems functioning, while the fundamental purpose of LEADERSHIP is to produce useful change!”

Steve E. Kelly, President, Metrum Community Credit Union

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Impeachment Hearings and a Congressman’s Lament

Glen Taylor was a singing cowboy who worked as a country musician, construction worker, on sheet metal and as a carpenter.

He ran for Congress and lost in 1938, 1940, 1942, 1954 and 1956.

But he won a seat in the Senate in 1944 as a progressive democrat from Idaho. He was also the Progressive Party’s nominee for vice president in 1948.

He lost in his party’s 1950 primary after being called a communist.

In his farewell address for his one Senate term he described his political approach: “At one time, I stated on the floor of the Senate that I was going to vote my convictions, as though I never expected to come back. All I can say now is that I did vote my convictions and I did not come back.”

An observation true for today!

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Two Stories for Veterans Day

Veterans Day is a reminder of both the sacrifices and service of those who serve on active duty and the home front. These two vignettes capture courage in battle and the parallel commitment given by those praying for safe return to family.

Courage in Battle

Last week the New York Times reported the deep sea location of a destroyer escort sunk during the battle of Leyte Gulf in October, 1944.

While the article was about the technology used in discovery, the context of the battle was also summarized.

It prompted me to look up a fuller account, found here.

Two facts stand out from this description:

  1. The American task force, Taffy 3, was completely outgunned by the Japanese. “Just after sunrise on 25 October, Rear Admiral Clifton A. F. Sprague’s TG 77.4.3—call sign “Taffy 3”—the northwesterly-most task unit, made up of six small escort carriers, three destroyers, and four destroyer escorts, was stunned to confront four Japanese battleships (among them Yamato with her 18-inch main guns), six heavy cruisers, two light cruisers, and 11 destroyers.”
  2. So what did the Americans do in this naval mismatch? They attacked, again and again, launching three separate sea and air assaults during the morning long battle. “At this point, with the exception of John C. Butler, the escorts had expended all of their torpedoes. Given the dispositions of the two forces, it was also questionable if an advantageous firing position was even still possible. The destroyers and destroyer escorts had to resort to darting attacks at the Japanese cruisers while firing their guns, zig-zagging back and forth between the carriers and the enemy. Smoke screens partially shielded Sprague’s carriers, but the escorts were hit hard, yet remained underway and able to fight. “

And the outcome of this battle even with the loss of five ships and hundreds of lives was:

“The initiative, aggressiveness, and outright heroism demonstrated by Taffy 3, combined with determined U.S. naval air attacks, limited Japanese situational awareness, and pure dumb luck, the Americans had stymied Vice Admiral Kurita’s intent to destroy General Douglas MacArthur’s U.S. landing forces in the Leyte Gulf.”

Sam Cox, a retired Navy rear admiral and director of the Naval History and Heritage Command states in the Times article that as the U.S.S. Johnston DD 557 was sinking, the crew of a Japanese destroyer saluted the vessel.

“They didn’t think Americans had that kind of bravery,” he said, “so that surprised them.”

Serving at Home with Devotion and Courage

The most important event while on board a ship at sea was mail call. During the Vietnam War, deployments away from home ports, would extend for months. While away, there was no contact possible with home except letters. Military families serve along with their active duty kin. My wife wrote this letter while living “on the economy” in Hayama, Japan with our 15 month old daughter, Lara. Windham County, LST 1170, was supporting a Navy Seal and Vietnamese ranger outpost called Solid Anchor on the Cau Mau peninsula at the very tip of Vietnam. As Supply Officer, I paid the Seal Unit and their US support with military pay certificates (MPC), transported oven roasted turkey dinners to the base on Christmas and ran a ship’s store outlet selling boom boxes, current cassette tapes and geedunk (snacks). Mail deliveries aboard ship were by helicopter from Saigon on an irregular schedule.

February 2, 1971

Dearest:

It’s a “burr-freezing” morning as Lara and I say. Imagine her clinching her little fists and scrunching up her cute face and trying to shiver. That’s what it’s like. The thermometer has been in the mid-twenties at night, in the forties during the day. So it isn’t really cold but it sure feels it without any heat. . .

Even if June 1 is the beginning of a year unaccompanied tour, I’ll have a 90 day grace period so I can stay here and have our new baby and go back to the states 6 weeks later. In that way you may be able to see and hug the baby. If the ship isn’t in you may be able to take a little leave. The CO sounds like a compassionate guy. . .

Both Cindy and Margie (wives of shipmates) got mention in their letters that you were caught at Solid Anchor during the last mortar attack and that one American had been wounded but they didn’t know if it was you. I told than I had already heard from you and that you were only suffering from a mosquito attack. Please be careful. . .

Lara has just started another one of her biweekly colds so we have to stay in for a couple of days. I can’t figure out what I’m doing wrong—except maybe chilling her but it’s all her fault. She is the one that wants to stay out and won’t leave her mittens on. . .I’ll be glad when winter is over!

Mom sent me three more Montessori books so I’ve been reading–that’s why I haven’t written in a few days. . . Will write again tomorrow.

Love and Kisses, MA

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“ED” Talks for Credit Unions: Cooperative Ideas Worth Spreading

TED talks are a relatively new learning paradigm. Not only have these presentations expanded in both depth and breadth, but they have even become the curriculum for educational courses.

As described on their home page, TED is a nonprofit devoted to spreading ideas, usually in the form of short, powerful talks (18 minutes or less). TED began in 1984 as a conference where technology, entertainment and design converged, and today covers almost all topics — from science to business to global issues — in more than 100 languages.

Its mission is simple: to spread ideas. “We believe passionately in the power of ideas to change attitudes, lives and, ultimately, the world. On TED.com, we’re building a clearinghouse of free knowledge from the world’s most inspired thinkers — and a community of curious souls to engage with ideas and each other.”

ED Talks: a Clearing House for Cooperative Thinkers

I believe there is a parallel opportunity for such a resource in the credit union cooperative community. We have both a wealth of current leaders and historical examples that can be shared to educate and inspire change similar to the TED exchanges.

An “ED” Talk: Choice and Credit Union Success

In June 1986, the savings and loan crisis was beginning to emerge into a full blown industry debacle. Among the first causalities were the private insurance options available in several states (Ohio, Rhode Island) for mutual S&Ls. The closing of these funds led to concerns about the multiple private insurance options for credit unions.

In this environment of fear, Ed Callahan spoke to the summer leadership conference of the Association of Credit Union League Executives (ACULE).

He asserted that the five years of unparalleled success since deregulation proved credit unions had created the best financial system in the country. But there was a threat.

The industry’s success was based on choices. That vital characteristic was being undermined by “panic” and a failure of leadership.

Listen to this two-minute excerpt in which he makes the case with passion and logic for why choice is central to cooperative performance.

Best System:

The Insight for Today

Throughout credit union history there have been efforts to create single source solutions. Examples include state leagues, a one-stop option for required fidelity bonds, and a dominant service bureau data processing company (CUNADATA). It is easy to confuse a single, uniform solution as the best way to achieve cooperative system.

Ed states the years of success years after deregulation enhanced choice by opening up options that are now threatened by a monopoly share insurer.

His concern about no choice of a share insurer except the NCUSIF, is certainly as critical today as 35 years ago. For if this logic continues to prevail in credit union land and beyond, a potential next easy move is to have just one federal insurer called the FDIC.

While his example was share insurance, the message would be the same for all areas of credit union solutions. For choice to be sustained, leaders will have to be willing to support options even when their own organizations may not have chosen that path.

P.s. If you have an idea to share for your own “ED” talk, please send it to me at chipfilson.com.

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Political Polarization and NCUA Chairman Hood’s White House Video

Recently the White House posted a video of NCUA Chairman Hood praising President Trump’s economic program for benefiting African-Americans.

The video link and some of the subsequent twitter comments were reported by CUToday.

Stepping Into a Politically Divided DC and Country

The decades long trend toward more political polarization in both voter’s views and in Congressional debate and actions (or inactions) is not new. This approach to politics is a key factor of President Trump’s leadership style.

So it was not surprising that democratic Senator Sherrod Brown should question Hood’s video message in a letter seeking more information about the event.

The letter raises the issue of the wisdom of the Chair of an independent regulatory agency making such an overt political statement. No banking regulators, the FDIC chair, the OCC or the Chair of the Federal Reserve have made such endorsements. In fact Fed Chairman Powell, has repeatedly stressed the Fed’s and his independence. President Trump has responded by attacking the Chair’s policy priorities.

Past Behavior and Current Context

In the book It’s Even Worse Than It Looks, the authors Mann and Ornstein provide the history of the collision of American Constitutional practice and what they call the NEW political extremism. In Chapter 2, titled “The Seeds of Dysfunction”, the authors chronicle the impact of Newt Gingrich’s role on the political culture of Congress.

The following is an example of Gingrich and his team’s use of CSpan media to communicate their view of the “fat and pork laden” House:

A group of Gingrich allies calling themselves the “Gang of Seven” seized on the (House) bank scandal to take Gingrich’s confrontational tactics to new levels. Its ring leaders were Rick Santorum of Pennsylvania; John Boehner of Ohio, then only in his second year as a member; and Jim Nussle of Iowa. Their most memorable moment came when Nussle put a brown paper bag over his head while on the house floor, proclaiming that he was ashamed to be a member of Congress. . .  Gingrich’s goal of causing voters to feel enough disgust at the entire Congress that they would throw out the majority was within reach; he attained it a little more than two years later.

Today Jim Nussle is President of CUNA. So partisan tactics can be effective, or do they generate a counterforce that defeats its practitioner’s goals?

Credit unions have tried to forge a bipartisan appeal in Washington, even as prior Chairs have been politicians or supporters from one party or the other. The issue is not one of party affiliation. Rather how does the leader of an independent agency best represent the interests of credit unions in Washington? Will becoming an overt partisan help or undermine support for the cooperative financial option in Congress and with credit unions throughout the country? Is Nussel’s past behavior and current responsibility a positive or a cautionary example for how credit unions should navigate the ever increasing turbulent political currents of our time?

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Catching Up with Leonardo

This year marks the 500th anniversary of the death of Leonardo da Vinci. To mark this event a new exhibition of the artist’s works has opened at the Louvre in Paris, France.

Many of the artist’s most important drawings and sketches are in the show, except one. As reported in the Washington Post’s review:

“Only one major episode of Leonardo’s life isn’t covered in depth: the story of the enormous bronze equestrian statue made for his patron Ludovico Sforza, the clay model of which was supposedly blown apart by French soldiers after they stormed Milan in 1499.”

Grand Rapids, Michigan and Leonardo da Vinci

Few can travel to Paris to see this exhibit. However, Americans do have the opportunity to see the “one major episode” not in the exhibit.

Leonardo’s horse, constructed from his drawings, now stands in the Meijer Gardens and Sculpture Park in Grand Rapids, Michigan.

The story of how the largest sculpture ever envisioned in Europe came to this location is told in my blog:

Leonardo’s Horse: A Vision Outlasting Its Creator