Category: Observations

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The Unmatchable Credit Union Spirit

This is a story of a credit union led by an extraordinary CEO.  It is so heartening that the writer prepared two articles to describe fully her accomplishments.

The headline says it all:  The Tiny Credit Union Powering Brooklyn’s Economy.  The author’s writeup illustrates the power of passion and commitment in service to a community.

This account is a beautiful gift for all who believe credit unions can do something special.  It demonstrates the good will created with a small amount of resources and dedicated leadership.

My summary is to encourage you to link to the full accounts.

Part I: How it Got Started

“With just $50 million in assets, Brooklyn Cooperative Federal Credit Union is a rounding error compared to the nation’s largest brand-name banks. But in terms of impact on marginalized communities, this tiny institution punches well above its weight.”

In this first segment, the writer, Oscar Abello, describes how the current CEO Samira Rajan -a graduate of Harvard’s Kennedy School of  Government became involved.

She joined the startup in 2001 in a catch-all position as an AmeriCorps VISTA volunteer program.  This paid her a stipend as the new credit union didn’t yet have enough income to offer her a salary.  She became a loan officer.  First loan she made, went bad.

In 2008 she became CEO.

The founding CEO Jack Lawson was a PhD student in economics at the New School in the late 1990s.  He was looking for a part-time job related to his research.  He received a grant from a local foundation to support his goal of organizing a credit union for the Ridgewood-Bushwick Senior Citizens Council.  Over time this startup evolved to become Brooklyn Cooperative.

Until his departure in 2008 he focused on seeking grants from local sources and the CDFI Fund to underwrite the startup expenses and “build the runway” for sustainability.

This process continues. Since Rajan became CEO, the credit union has received eight grants from the CDFI Fund, totaling $11.3 million.

Part II Focusing on Character Lending

The credit union today can underwrite loans with little to no collateral, to members with an average credit score below 650, and to members without social security numbers.

Residential mortgages for one to four family homes are more than half of Brooklyn Cooperative’s current loan portfolio.

But its small business lending efforts are especially critical for the credit union’s local impact.

Counting by the number of federally-guaranteed the Brooklyn Cooperative is ranked fourth, behind only TD Bank, Chase and M&T Bank.    The  cooperative’s average 7(a) loan size is $24,000.

The writer’s description of the CEO’s relationship with NCUA is also enlightening. This is Rajan’s candid opening comment:

“Every three years, we have literally a new examiner come in and they’d be like, we’ve never seen this before. Yeah, I know you’ve never seen that before. New examiners have to get their whole head wrapped around the fact that you’re going to be doing lending which is non-conventional, that you’re deliberately going to be lending, knowing that your loss rates will be higher than the normal and you’re going to be lending to borrowers who on paper don’t qualify. … It flies in the face of what apparently you’re supposed to be doing, which is lending only when you definitely have a 700 credit score.”

For the full account of this remarkable institution, read both articles.  At the close the author asks the following of his readers and those who work in the cooperative system:

Brooklyn Cooperative is proof that it’s possible to build a financially sustainable institution that provides credit for a variety of purposes to people and communities like those it serves — Black and Brown, immigrant, low-income. . .it raises the question: should there be more credit unions like this one across the borough? Or across New York? Or across the country?

Serving Strangers

During this season, the mail brings more requests for donations than Christmas cards.  There are two broad categories of asks.  One is the multiple nonprofits serving the arts or education-choral groups, museums, Chautauqua and public television.

More plentiful are the organizations serving human need:  Hope Hospital in Seattle, Achungo Community Center (Kenya), World Kitchen and dozens of local efforts to assist others, often strangers,  this time of year.

A carol that recognizes this ever present reality of human suffering is Christ in the Stranger’s Guise.   This arrangement by Karen Marrolli is from a summer choral workshop in Montreat, NC, and includes the words.  They portray for me, Rajan’s example of service to her community.

(https://www.youtube.com/watch?v=CM2Ii1GclOE)

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“Advent 1955”-Still in 2023?

A thought for the season by English poet John Betjeman: Advent 1955

The Advent wind begins to stir
With sea-like sounds in our Scotch fir,
It’s dark at breakfast, dark at tea,
And in between we only see
Clouds hurrying across the sky
And rain-wet roads the wind blows dry
And branches bending to the gale
Against great skies all silver pale
The world seems travelling into space,
And travelling at a faster pace
Than in the leisured summer weather
When we and it sit out together,
For now we feel the world spin round
On some momentous journey bound –
Journey to what? to whom? to where?
The Advent bells call out ‘Prepare,
Your world is journeying to the birth
Of God made Man for us on earth.’

And how, in fact, do we prepare
The great day that waits us there –
For the twenty-fifth day of December,
The birth of Christ?
For some it means
An interchange of hunting scenes
On coloured cards,
And I remember
Last year I sent out twenty yards,
Laid end to end, of Christmas cards
To people that I scarcely know –
They’d sent a card to me, and so
I had to send one back. Oh dear!
Is this a form of Christmas cheer?
Or is it, which is less surprising,
My pride gone in for advertising?
The only cards that really count
Are that extremely small amount
From real friends who keep in touch
And are not rich but love us much
Some ways indeed are very odd
By which we hail the birth of God.

We raise the price of things in shops,
We give plain boxes fancy tops
And lines which traders cannot sell
Thus parcell’d go extremely well
We dole out bribes we call a present
To those to whom we must be pleasant
For business reasons. Our defence is
These bribes are charged against expenses
And bring relief in Income Tax
Enough of these unworthy cracks!
‘The time draws near the birth of Christ’.
A present that cannot be priced
Given two thousand years ago
Yet if God had not given so
He still would be a distant stranger
And not the Baby in the manger.

Sir John Betjeman, CBE, was an English poet, writer, and broadcaster. He was Poet Laureate from 1972 until his death in 1984. He was a founding member of The Victorian Society and a passionate defender of Victorian architecture. He began his career as a journalist and ended it as one of the most popular British Poets Laureate and a much-loved figure on British television.

 Love’s Multiple Meanings

Craig Hella Johnson is an American choral conductor, composer, and arranger.  He was born on June 15, 1962, in Crow Wing County, Minnesota

One unique aspect of Johnson’s programming is his signature “collage” style, or composed programs that marry music and poetry to seamlessly blend the sacred and secular as well as the classical and contemporary.

In an interview he notes: Music is a spiritual language of the freest kind. It doesn’t matter what your denomination or nonbelief or tradition is, because it’s about connecting with something larger than ourselves. 

This work combines the well known Christmas carol Lo, How a Rose E’re Blooming, with a poem, The Rose.

This was the final song of our Christmas concert yesterday.  As you listen, it may bring a tear or two.

(https://www.youtube.com/watch?v=Qy53eILctNQ&t=12s)

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Tidings of Discomfort

To understand today’s blog, I would ask the reader to first look at this TV news report on credit unions from KPBS.  It is accompanied with a two-part written story by Scott Rodd, the station’s investigative report published on November 29, 2023.

The reporter has a good understanding of credit unions’ public image. His TV story opens with an interview from a  member who states “they (credit unions) are not supposed to be in this for making the big bucks.”

https://www.kpbs.org/news/quality-of-life/2023/11/29/san-diego-credit-unions-charging-millions-overdraft-fees

The link to part 2 of the second story is here.

Devasting Commentary

The story counters the long asserted public image of credit unions as serving the “little guy.”  The key data point is that credit unions are no different from banks when it comes to overdraft fees charged members,  even though cooperatives routinely present themselves as “better than banks.”
He quotes the CEO’s statement in  San Diego County Credit Union’s annual report that her goal is “putting people first and profits second.”   This would be an interesting ranking for any coop leader.

The reporter reinforces this contrast of public image versus organizational behavior by pointing out the CEO’s total compensation has “increased seven-fold over the last decade to nearly $12 million dollars according to the according to SDCCU’s latest financial statements.”

The articles provide examples from other area credit unions of the role of overdraft fees along with six figure CEO salaries. His thesis is that credit unions are not actually what they claim to be, “community-based alternatives to big commercial banks.”

Lessons from This Reporting

The two-part story was triggered by the first disclosure of overdraft fees required by all state chartered financial institutions in California.

By focusing on this newly disclosed datapoint, the writer suggests that credit union rhetoric and practice do not align because “these fees are typically paid by “the most vulnerable” customers.”

Several observations.  Compared with banks, credit unions are not as transparent in operational disclosures.  Member-owners have significantly less public information than do bank owners. This is not just about OD fees but many  other areas of operations including executive compensation.  Only state charters, not federal credit unions, must file a IRS 990 which requires compensation data be disclosed.

Lack of transparency prevents members from having critical data about their credit union’s performance, in both ordinary and special circumstances such as merger or buying banks.   Regular public information is also the best antidote to limit self-serving behavior.

Credit union leaders work in a capitalist economy.  Often it is difficult for those in coop leadership roles to overcome the residual lures of capitalism.  It is easier to adopt the priorities and practices of for-profit competitors than create the innovative options member-ownership offers.

The result of this investigative reporter’s story is “brand devaluation.”   It presents credit union as no different from the alternatives cooperatives were meant to counter.  It is a loss of real  value  in the both the public and political market place.

Talking to the Press

Repeatedly throughout his two part series, the reporter tells of his attempts to interview the leaders of the credit unions he is covering.  These efforts for comment include the California Credit Union League.

By not participating, credit unions reinforce the idea that they do not have an explanation or response to the writer’s point of view.

One leader is an exception: Bill Birnie, CEO of Frontwave. He goes on camera to talk about the credit union’s courtesy pay product. He discusses his current salary openly with the reporter.

He apparently was the only credit union person willing to engage on this sensitive topic.  The story was more than just OD fees and the members this affects. It goes personal by contrasting this practice with the compensation of those implementing the fees.

Leadership is more than trumpeting success. It  also requires a willingness to address criticism and possibly poor judgments. This is especially so when done in public where the critic may have the last word or “already has the story written.”

Leadership when confronted with alternative points requires character, a willingness to listen, and the courage to sit down with one’s questioners.

In this case, apparently only one person  was willing to stand up and be responsible.  I don’t think it was an accident that it was Bill, who came to credit union leadership later in life.  Here is a short synopsis of his career before coops:

Bill is a 25 year veteran of the US Marine Corps, retiring in 1997 at the rank of Sergeant Major with combat service in Operations Desert Storm in Kuwait and United Shield in Somalia.

Bill is an example of what it means when “we thank someone for their service” and what it brings to their subsequent civilian roles.

A Seasonal Song in a Time of Conflict

One of the most recognized Christmas songs is I Heard the Bells on Christmas Day.

On Christmas day, 1863, Henry Wadsworth Longfellow—a 57-year-old widowed father of six children, the oldest of which had been nearly paralyzed as his country fought a war against itself—wrote a poem seeking to capture the dynamic and dissonance in his own heart and the world he observes around him.

The words go from despair (There is no peace on earth,” I said;”For hate is strong, And mocks the song”) to hope:

Then pealed the bells more loud and deep:

“God is not dead, nor doth He sleep;

 The Wrong shall fail,

 The Right prevail,

With peace on earth, good-will to men.”

Here is Bing Crosby’s recording.

(https://www.youtube.com/watch?v=CPjwEI2f_DI&t=8s)

 

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Lives Lived with Purpose

The following persons are in transition.  They have dedicated most of their professional lives to the service of credit unions.

A Farewell Address

Jim Dean arrived at Affinity Credit Unions, Des Moines Iowa five years ago.  It was a turnaround situation in multiple respects.  In September 2023 the credit union was awarded NAFCU’s credit union of the year recognition.

The following is from his farewell message to the credit union members and the team he led.

“As the saying goes, days pass slowly but years go by in a blur. When we moved here from Illinois in September 2018, my commitment to the board of directors was to work as your CEO for five years. It’s been a pleasure leading this member-owned cooperative into its 75th year, but now is the time for me to retire and let a new leader take over.

“Our mission statement and vision of Building Better Lives was an important change introduced five years ago. That has been the focus ever since and we have made this a reality. We have excellent staff from front to back & our volunteers are engaged and motivated to work in your best interests.

“We don’t focus on the community to earn rewards but have earned rewards and the highest acclaim in large part because of our community impact.

“Our marketing focuses on our brand. If you compare our offerings to those big credit unions who do this, we line up quite well throughout our entire product line.

Yes, our commercials talk about the Best Credit Union Ever, but having received the National Credit Union of the Year in the $500 million and under category is something to shout about.

“We might add that our credit card program is the best ever as well as our checking accounts in terms of fairness and transparency.

“Highlights of my time include our Building Better Holidays campaigns. Non-profit organizations are reluctant to promote themselves, so we’ve done that for many in our community.

“We fought hunger in partnership with the Food Bank of Iowa & through our six-year partnership with the Iowa Wild and by working with organizations like Meals from the Heartland.

“When COVID-19 shut down Iowa, and much of the world, we immediately communicated our decision to waive all fees, allow payment deferments, and alleviate financial pressure that lost wages brought. We closed our lobbies and transitioned many employees to remote working for the first time ever.

“I’m very proud of the annual meetings we have conducted. Member democratic control, as well as education, are two of the seven principles on display the second Tuesday of May each year.

“Most of all, I’m proud of our people. This includes our leadership team, employees, and volunteers. They understand what working in the member’s best interest means and that is emphasized by all managers daily. This is a relationship business and much of our recipe for success.

“I probably should mention that our financial performance has been off the charts excellent, something we don’t mention often.

“My door is a quick left as you enter the Hoffman lobby. The door is (almost) always open, so stop by this month to say goodbye or maybe hello for the first time.

“Thank you for this opportunity.”

Honoring a Lifetime

On October 3, 2024 the cooperative community will inducte five new honorees in the Cooperative Hall of Fame in Washington, DC.  One is a credit union veteran.  Here is his brief resume from the announcement.

Introduced to credit unions in the late 1970s, Clifford Rosenthal has spent his career promoting financial equity and inclusion in the nation’s most overlooked and underserved communities.

Growing up amidst transformative campaigns for social justice in the 1960s, Cliff began his cooperative journey by organizing and managing food cooperatives in New York City and Connecticut. This led him to Washington, DC, and the National Association of Farmworker Organizations where he was tasked to organize a credit union to serve its members.

Upon his return to New York, Cliff joined the National Federation of Community Development Credit Unions (the Federation), first as a volunteer until he was hired as staff. By early 1983, the Federation was preparing to close for good after federal funding was eliminated.

Sustained by his conviction that community development credit unions (CDCUs) were important and must be preserved, he once again took on a volunteer role as the Federation’s Executive Director. In partnership with Annie Vamper, the pair rebuilt the Federation into a catalyst for transformative change.

Understanding the critical role capital plays in low-income communities and CDCUs, Cliff pursued a two-pronged strategy to capitalize CDCUs by creating new channels to mobilize private investments and by expanding sources of public financing. This eventually led to the birth of the CDFI Fund in 1994 after President Clinton signed the Riegle Community Development and Regulatory Improvement Act. As well, he worked to secure NCUA’s allowing low-income credit unions the privilege of raising secondary capital.

Cliff retired from the Federation in 2012, renamed Inclusiv in 2019, to join the federal government as the first head of the Office of Financial Empowerment within the Consumer Financial Protection Bureau. He subsequently published Democratizing Finance: Origins of the Community Development Financial Institutions Movement. In 2019, he was inducted into the African American Credit Union Hall of Fame.

I understand Cliff has another book to be released about his many adventures with low income credit unions.

Washington Credit Union Daily’s New Home

Credit union’s self-awareness depends much on the writers and press dedicated to telling the industry’s stories. One person is David Baumann. He has been covering the credit union industry for more than seven years, first at the Credit Union Times and then at CUCollaborate.

Based in DC, his blog is free on Substack.  His focus is the multiple legislative, regulatory, and political developments affecting credit unions.  Readers may go to his website, call up a story or scroll down to the “subscribe” option.

The Changing Seasons of Lives

I first heard a performance of O Love by Elaine Hagenberg (b. 1979) a week ago at American University’s December chorus concert.

The concert’s title was Stay with Me. The selections presented the theme of relationships on which all  depend.

The beautiful melody might not fall strictly into the Christmas music genre. Rather, it is a message for all seasons.

The words have a story. George Matheson, a Scottish Presbyterian minister, found himself at age 20 alone when he went blind and his fiancé decided to break off the marriage. She left him. He turned to the Lord. In the darkness of the moment, he wrote this hymn in five minutes. It never needed any editing.

(https://www.youtube.com/watch?v=U2cqblTDR8w)

Why this Day Lives in Memory

(https://www.youtube.com/watch?v=F9y3_cl5_SQ&t=1s)

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“Good People All”

Today’s carol and credit union story is captured in the opening line of the music below. First, the credit union’s account.

Every Touchpoint Matters

This is the story of a member contacting  the President of his Credit Union  after reading the monthly Newsletter.  And what happened next.  (used with permission)

From: Daniel H. <dh@xxx.com>
Sent: Wednesday, November 15, 2023 11:32 AM
To: Jeff Carpenter <jeffc@weokie.org>
Subject: Thank you

I received your news letters In Regards of thanksgiving and all the delightful things Weokie does for their members.  my wife and I are thankful for you and the company for providing good deeds to the community.  we ourselves have been struggling and I’m not going to lie. our account has been at struggles with overdrafting every month to make ends meet. but we work every day to try to improve ourselves to be better. one day our account will stay on the positive side and look forward to all the new adventures to come.

I loved this message because our member, who is going through some health and financial challenges, was simply thanking WEOKIE for being such a great community citizen.

Thanks to Diane we were able to learn more about his account.  We agreed that I should reach out to see if a meeting would be of interest.  I engaged in an email exchange with Daniel and coordinated a meeting with Daniel and his wife Jessica to meet with Patrick  and myself at South.

Setting up a Meeting

Patrick did some great work preparingfor the meeting. Together we probed to learn their story and understand how they got to this situation. Much was from their trying to help so many others in their family.

Patrick talked  through lots of options. I might have added some too, but in the end, Patrick was able to convince everyone (yes, including me) that taking “one step” not sixty, was the best path forward.

We extended a significant signature loan to get them out of the mountain of high-risk debt that was pushing them to the brink of financial collapse.  Patrick was empathetic, yet firm, in his conversations. He was able to gain agreement to eliminate Courtesy Pay, for WEOKIE to handle the pay-offs, and to set up automatic loan payments on the day their monthly income is credited to their WEOKIE account – all of these help mitigate our risk.

We met with them, took the loan application, approved it, and paid off their high-interest loans in 48 hours.  That led to the following email from Daniel:

From: Daniel H. <dh@xxx.com>
Sent: Tuesday, November 28, 2023 3:47 PM
To: Jeff Carpenter <jeffc@weokie.org>
Subject: thank you

Jeff

My wife and I would like to thank you for the help you and your team for the opportunity to help us succeed in our goals and for giving us Patrick to work with. he was an awesome gentleman. he worked hard to help us out and succeeded in getting what we needed done for a good approval. I’m looking forward to a good start in bettering ourself. we will keep in contact and keep you updated on our success. 

thanks again 

Dan and Jessica

Special thanks to Melissa, Diane, and Patrick for letting me participate in living our vision of making a difference, one person at a time.  And affirming that “every touchpoint matters” is a good strategy.

Today’s Music of the Season

The Wexford Carol  is a traditional religious Irish Christmas carol originating from the town Enniscorthy in County Wexford. The subject of the song is the nativity of Jesus Christ.  This recording is from Clare College, Cambridge in composer John Rutter’s arrangement, which begins with Good people all.

(https://www.youtube.com/watch?v=E4sC1mDPWao)

 

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Fall Colors

 

Burning Bush

Bethesda Tree

Last taste of summer sunflower

Logan berry

Autumn camellia

Pansies should winter over

Chrysanthemum

Leaves everywhere

European Hornbeam-last to shed

Fall’s endgame

 

 

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The Thanks in Giving

We give for many reasons and are better for it.

Poet Alberto Ross provides an understanding.

When Giving Is All We Have 

We give because someone gave to us.
We give because nobody gave to us.

We give because giving has changed us.
We give because giving could have changed us.

We have been better for it,
We have been wounded by it—

Giving has many faces: It is loud and quiet,
Big, though small, diamond in wood-nails.

Its story is old, the plot worn and the pages too,
But we read this book, anyway, over and again:

Giving is, first and every time, hand to hand,
Mine to yours, yours to mine.

You gave me blue and I gave you yellow.
Together we are simple green. You gave me

What you did not have, and I gave you
What I had to give—together, we made

Something greater from the difference.
 

One river gives its journey to the next.

A Teacher’s Story

 

 

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Wisdom: On Regulation

 

Share Insurance & Regulatory Choice

“The fact that there is an insurance option-private insurance for state-chartered credit unions-assures that the NCUSIF will be different from the premium based FDIC fund, that it will be funded with deposits from credit unions, and can be counted as an asset on the books of credit unions.  The fact that there is an insurance option guarantees there will be a charter option, and thus a regulatory option.

This is to the good for everyone.  A single regulator is sooner or later bound to become a lazy or an arrogant regulator.  The best ideas will not bubble up; the regulated will not flourish to their maximum potential.  But with two regulatory options, competition is going to allow the best ideas to come to the fore and allow the dynamic credit unions to expand.”  (pgs 46-47)

 

Note: From the Coach’s Playbook,  a collection of  Ed Callahan’s observations.  These are a summary of operating values for the credit union system. Ed began his professional career as a high school math teacher and football coach.  His thirty years in credit unions included Chairman of NCUA (1981-1985), co-founder of Callahan & Associates, and CEO of Patelco from 1987 through 2002.

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The Cooperative Advantage

Cooperatives Are Unique

“The first word in credit unions always has to be MEMBER.  The second word has to be COOPERATION.

“We are a cooperative movement.  Credit unions are co-ops.  People join, agreeing to cooperative to better one another’s lives.   They pledge themselves to cooperation.

“We have seen what this spirit has done for us in the past.  From fragile, tiny groups of people a hundred years ago pledging to themselves they would save and borrow from from one another in a spirit of helpfulness to a movement of 90 million Americans and $700 billion in assets. That is the power of helpfulness and cooperation.”  (pgs. 58-59)

Note: The Coach’s Playbook is a collection of the thoughts of Ed Callahan from his thirty years working a multiple levels including CEO of Patelco Credit Union and Chairman of NCUA (1981-1985).