A Moment of Impact for a Member

From Tim Mislansky, CEO, Wright-Patt Credit Union in Dayton, Ohio:

Kim Luke works as a Financial Coach at Area A. We have a member, David, who was declined twice for a home equity recently because he was applying for a fixed loan when his credit score would only allow for a line of credit.

Kim came across this declined application and knew this was not right and there was something we could do for him. Kim reached out to him, explained the situation, and David decided to proceed with doing the loan application.

After gathering all the information needed from David, Kim learned he was working multiple jobs and struggling with his credit. He had eighteen open lines and a mortgage on his report, all with different due dates. He was getting behind on payments due and struggling to keep up and was just generally having a tough time.

He has had some rocky payment history with us in the past because of this, but underwriters saw exactly what Kim did – the potential to drastically improve someone’s life and the loan request was approved.

With this consolidation, we paid off every debt and even had some room for home improvements he has been putting off for a while. He has gone from nineteen due dates and payments to just two. His mortgage and now this home equity. But here is the best part:

This consolidating is going to save David over $3,100 a month. This is going to completely change his life. He is going to be able to go back to working just one job again.

This loan had the ability to not only change someone’s life but also show him exactly what Wright-Patt stands for and what we can do for our members. It really put into perspective just how rewarding and fulfilling our job can be!

Thanks, Kim, for looking past what we cannot do, to what we can do, to make a big impact on David.

THE Strategic Question for the Credit Union System-and Congress

Lots of topics about credit union’s priorities last week here in DC.   The NAFCU caucus put their lobbying agenda on the table as they promoted the end of their independent efforts by merging with CUNA.

The continuing announcements of bank purchases, mergers and even member voting continue. Virginia Credit Union is asking members to approve management’s effort to convert to a federal vs state charter to “simplify” its regulatory oversight.

In these events and other well covered forums and leadership updates, one topic is missing from the discussions:  Is the credit union cooperative model still relevant?

Some credit unions still embrace their member-centered purpose.   The focus on member control follows.  But the actions of others suggest it is time to shelve that model.   The goal is to move on to some other understanding of the functions of a tax-exempt financial firm in a market economy.   As more credit unions embrace the tactics of their institutional competitors focusing on expansion and corporate success, does the coop’s role need to be rethought?

If one looks across the economy the needs of folk of modest means has not diminished.   It has actually grown.  The allocation of financial resources between the haves and have nots continues ever wider.

Cooperative design facilitates multiple business models, asset sizes, community roles and creative initiatives.   When an institution’s priorities become the center of effort versus the member-owners well-being, then is the model being disconnected from its primary purpose?

If we don’t discuss this situation openly, others will raise it for us.   Last week’s WSJ article Credit Unions Stray Far from Their Mission, was a well written hit job.  It included two supposedly academic articles to prove their point.

I would hope the concern is how can credit unions become better cooperatives for serving members, not debating competitors.   That member-focused discussion is one we would all tune in for.





Friday Thoughts

Once you know the right question to ask, the answer is often the easy part.    Anon

The truth is that, to mean something, values always cost you something. Otherwise they’re just platitudes.  Greg Satell

A reminder for work and ife:

People will forget what you said. People will forget what you did. But people will never forget how you made them feel.




The Contested Board Election at America’s Second Largest Credit Union

(Case study 3 of 3 on cooperative democracy)

What could be the most significant board election in the history of the credit union system is now underway.

State Employees Credit Union (SECU) North Carolina is in the middle of a two month qualification and member voting period for three open seats on its eleven person board.   There are six candidates on the ballot.  Three were board nominated-all sitting directors.  Three are the result of their garnering a minimum of 500 member signatures supporting their candidacy.

Absentee voting began September 1 and in-person voting ends with the Annual Meeting on October 10, 2023.

SECU’s website contains  documents  describing the Annual meeting, critical dates and voting steps.   The current board members are listed.   There is a “Statement of Background” on each of the six candidates.

There is no other election  information I could find on the website, such as statements from the candidates about why members should support them.

This Vote’s Impact the Credit Union System

SECU is huge.  At June 30 it reported  $49.6 billion in total assets, almost 8,000 employees serving  2.8 million members in 275 branches.

The first lesson from this vote is that one of the largest credit unions with members distributed throughout the state can successfully conduct a contested election for open board seats.  Most large credit unions’ annual director “elections” are via “acclamation.” The number of candidates equals the open seats, so no ballot.

SECU shows the feasibility of both an absentee ballot and in-person voting culminating in the Annual Meeting.

Secondly member-owner voting matters.  The outcome of this ballot will confirm or potentially reset the credit union’s business priorities with members.  Given the circumstances preceding this vote, the members’ choice will make a difference. This is the owners’ role, but one rarely consulted.

How This Contest Developed

At the October 2022 Annual Meeting former CEO Jim Blaine read a statement  asking how six “initiatives” were in the members’ best interests.   These included a potential merger, FOM expansion, risk based pricing and other service changes.   The  two resolutions were deeply informed and adopted without opposition.

Jim had been completely absent from the credit union for over  6 years.  His role at the 2022 Annual Meeting  was in response to concerns that many current members and senior staff of both SECU and LGFCU had asked be  raised on their behalf.

These employees and members were deeply apprehensive in the about face of SECU policies and practices.  Few however were in a position to knowledgeably question the changes.

Blaine and prior board’s leadership was based on a different cooperative vision of SECU than the new CEO, Jim Hayes and his team, were implementing.   Their business priority is to modify  SECU’s efforts to more closely mirror how other large credit unions were growing.

The cooperative model that Blaine and his successor Mike Lord had implemented was based on “a democracy of opportunity.”  Every member received the same rate for the same loan type and the same return on savings regardless of balances.

The focus was on serving those who might have the least, or know the least, but have traditionally been charged the most for financial services at other firms.

These two  CEO’s had invested decades creating a culture with SECU branches in every county, on-site decision making and execution, all informed by local advisory boards.   There was no upselling or employee bonuses.  Promotion from within was preferred.  Advertising was word of mouth or press  releases about SECU’s foundation grants.

To many an outsider and professional peers, this approach seemed “old school’, out of touch with current options and overlooking major markets of opportunity.

After waiting for a productive dialogue and response with the leadership, in February 2023 Jim launched a blog SECU-Just Asking ! to take the issues public.  The new CEO Hayes left in June and the board appointed 35-year SECU employee Leigh Brady as CEO.

Risk based pricing on consumer loan products continued.   Blaine’s blog became a center for critical commentary.  It is now engaged in the board election to support the three “outsider” candidates.

This contested election will give the member-owners the chance to express their views on the credit union’s direction-that is the one member, one vote coop design.

The Campaign Underway

The evidence of public campaigning for member support is limited.   SECU is putting its best food forward offering rate specials:

The web site has short  videos of Who We Are with emphasis on SECU’s North Carolina roots.  There are brief statements by board members on LinkedIn and reports of CEO Brady and board member visits to branches.

Blaine continues his daily analysis of current leadership and trends on Just Asking!.  For example he calls out the fact that  over the past 12 months members have withdrawn over $4 billion in savings.  He urges support for the three member nominated candidates and contrasts their views with the incumbent directors’ recent decisions.

I sent an email to all six candidates.  It stated I was  writing a blog on coop democratic governance and wanted to present their efforts as candidates.

I suggested three questions:  How are you campaigning? What is the value of an election for members?  Your top priorities if elected?

Two candidates responded, both member-nominated. Excerpts of their replies are below.  I believe that their words convey the issues more clearly than any professionally produced campaign statements or videos.

Michael Clements whose qualifications are on the website sent  the following:

How Campaigning: I have asked for support from our local advisory board (I am a member). . . asked them to share my information with their individual networks for support. . .  I am not on social media (but a member of several other boards) so for my friends and colleagues I have asked them to share with their social media contacts. 

Value of an election:   The value of any election is to bring in new people who may provide new ideas and alternate ways of doing business.  Historically, we were given the opportunity at the annual meeting to get nominations from the floor which, to me, represented an openness to potentially obtaining and recruiting new board members and maybe new energy and ideas. 

The present practice of the nominating committee to interview those members who want to serve and then rejecting them for the status quo seems disingenuous.  Then to ask that if you want to self-nominate that you will need to obtain 500 actual signatures in 10 days! appears as an attempt to discourage rather than encourage an openness to be inclusive for our members.  I have served on four boards/committee with SECU. 

Top prioritiesI could work to strengthen the foundation that has allowed SECU to become an incredible organization and the second largest credit union in the US.  MEMBERS FIRST!  When you look at our logo, State Employees Credit Union, it has the image of North Carolina and then states “There is a difference!” 

This difference is that in our credit union, every member is equal and can avail themselves of all of the services which they qualify for.  No member is better than another and will thereby receive preferential treatment.  This difference is that we will NOT treat our members as if we are a traditional bank. . .

The second replyis from Barbara Perkins whose background is on the website.

How campaigningI feel it is important to mention that the first members to whom I appealed were those serving on the Board of Directors. . . After striking out, I started creating awareness through my personal Facebook page and emails to family, friends, former coworkers, former NC SECU employees, Loan Review Committee volunteers (25+ years of service), and Advisory Board volunteers (8 years of service). . . Once I qualified to run for the board, many of my friends/family/coworkers volunteered to help me obtain the required 500 signatures in the given 10 days. . .  currently I have a post on my FB page leading them to the www.SECUjustasking.com blog so my FB friends and their friends can research the history of the current board, the changes to policies and examples of judgments that have been detrimental, in many people’s opinions, to the NC SECU. 

Value of an electionWe have had ‘contested elections’ in the past.  Any member could do what was truly a ‘self-nomination’.  They expressed their desire to run, their biography (which they were allowed to write) was distributed at the annual meeting, they were allowed to speak to the membership before the voting and we voted.  If you review the (new)  ‘rules of behavior’ for the Annual Meeting, this has changed. . .  ‘contested elections’ inspire transparency and communication which should be provided voluntarily by the board.  Public relations firms can provide fancy words but actions are the proof of intention. 

Top Priorities: Each topic included 3-5 specific actions, omitted for brevity.

  1. a) Return unity of purpose to the membership, the employees and the management by getting back to the basics
  2. b)  Prioritize member needs with Credit Union operating funds (
  3. c)  Return to programs that benefit the membership
  4. d)  Stay in our lane

The three member candidates were also profiled on Just Asking!

Member Commentary

Beyond the SECU website I could not find any other organized public coverage of the campaign. Some members following events are posting on the Just Asking! blog.  An example of their involvement are the 42 comments after the September 11, 2023 post which profiles an incumbent candidate, Garland, who would become the new Chair if elected.  Two of the many remarks:

Most people live in darkness with no clue what’s going on around them.. You don’t need to have 10 degrees to know that SECU losing 4 billion dollars under this leadership is not a good thing.  or,  

Let’s have the nerve to tell the members about this. They can see what is happening in the drop in quality, bad rates. We need to tell them who is doing it to them.

SECU’s  Example

In many credit union CEO’s  view, the cooperative model developed by Blaine/Lord is seen as an anachronism, behind the times.   The fact that it had become the second largest credit union in the country by far, and had recorded 85 years of steady growth was discounted as an anomaly to current strategic thinking.  SECU’s many innovations in both product and service strategies and the employee culture were largely overlooked.

However the most important result of this coop’s model is not financial asset size or stability. It is that members believe in and support their credit union.  That trust has been and still is the foundation to sustained success for every firm.

Democratic voting is the water that keeps a cooperative’s grass roots healthy.    In this case it may be the means  to bring it back to life.

Members have become engaged as owners.  They are using their voting to assert their views about the future direction of SECU.  This is what democratic governance offers.

This example is an event that could bring new life to other large credit unions, now groping with technology fixes, merger solicitations and even bank purchases to maintain their market relevance.

SECU shows the business process is much simpler.  Just give  members a voice and keep in touch with their priorities.   Members will transform into  owners willing to invest more than their money, but even more critically,  their energy and commitment when their credit union’s future is at stake.   Those are the fans whose loyalty any leadership team should crave.


The NAFCU-CUNA Merger and Cooperative Democracy

(Case study 2 of 3 on cooperative democracy)

There may be no more critical decision this year for credit unions than the voting now underway to merge NAFCU into CUNA.

Voting is the moment when the cooperative democratic process is most potent. One member, one vote regardless of asset size or other claims to influence.

While both trade organization’s members will vote, the choice that  really matters is what NAFCU  voters decide.  Their approval requires a two-thirds majority to dissolve the trade group.

What NAFCU members choose will affect every credit union.  Perhaps far into the future.

With NAFCU CEO Berger announcing his retirement, directors from both firms already working on transition plans, staffs  briefed on their future and joint leadership meetings to promote a single outcome, is this decision already a done deal?  Does voting matter?  If NAFCU members do not approve, is there a plan B for their organization?

Credit Union Trades Evolve with the Cooperative System

From the initial state leagues and Filene/Bergengren’s Credit Union Extension Bureau, collaborative trade support has evolved.  CUNA and NAFCU’s priorities have closely aligned with the dual chartering system.  CUNA focused on state leagues and regulations from its Madison WI headquarters and NAFCU the federal charter track from it’s sole DC office.  (See NAFCU’s 1967 founding statement at the end of this post.)

CUNA moved its primary leadership to DC in the 1990’s when it selected Dan Mica, a former congressman as its CEO. Has the time come when these different histories and organizational focus should combine?

This short summary by Berger presents the core merger rationale:  We’ve heard from many of you over the years about the need to better align our advocacy, reduce redundancies in the events and trainings we offer, and work together to strengthen the industry.

The (new) organization will be able to dedicate more resources to the areas that matter most to you. It will be the best of both CUNA and NAFCU – strategic, decisive, cost and value conscious, and responsive.

The Diverse Cooperative Model

Credit unions are not a monolithic system.  The genius of cooperative design is that it supports many different business models.   The  $ 15.5 billion Alliant Credit Union’s digital only model is the antithesis of the $5 million Sixth Avenue Baptist FCU (founded in 1963 in Birmingham AL) as described in this CUES article.

Navy FCU with over $155 billion in assets may have the same member-focused mission as the CDFI Holy Rosary Credit Union in Kansas City.  But their national representation needs are very different.

The two trades have addressed differing priorities when representing their members.  NAFCU has been more critical of NCUA spending, the TCCUSF merger and defending the unique 1% NCUSIF cooperative funding model.  CUNA and the leagues have defended the state insurance alternative, more open FOM approaches and even the purchase of banks, the vast majority completed by state charters.

Because NAFCU is smaller with a single organizational presence it has had to “try harder” at times.   When I asked the CEO of a state charter why the credit union belonged to both organizations, he replied: “The NAFCU team is very responsive and discounted our dues. They also have some great training programs and better conferences.”

At the NAFCU Congressional Caucus in DC this week, CEO Nussel described CUNA’s advantage as its “industrial strength” and NAFCU’s as being “more intimate.”

A key question is whether the credit union system is better off with a monopoly of national representation, or whether choice can be more effective for the system’s diverse business priorities?  Is it better to have a single unified voice or the option of a more accessible DC relationship?

Without  alternatives, the diverse needs of credit unions represented by  one organization could quickly follow the path of least resistance.   Instead of promoting more opportunities  for member solutions, lobbying protects the status quo: defeating tax threats, stopping Durbin reforms, limiting CFPB jurisdiction, responding to bank criticisms and challenging regulatory actions that enhance member transparency.

There Is No Easy Answer

This democratic merger vote matters.   The outcome will affect the future of advocacy in Washington for all credit unions.

A merger may resolve the future of NAFCU, but it could also create a new set of challenges.  Without alternatives large credit unions may decide to undertake their own DC representation, which several have done in the past.

Here is just one of many courses that help organizations navigate their DC interests: Decoding D.C.: Policy, Power, and People.

If the decision is indeed still open for your credit union,  consider critical questions before voting.   These could include:

  1. What do I rely on my trade organization participation and investment to yield?
  2. What does my community need from our cooperatives empowered by this combined structure and from the people attracted to these careers?
  3. Credit unions as cooperative organizations are most often local, personal, and vested in action – will this merger dilute or add to these capabilities?

And, does NAFCU have a Plan B?

Editor’s Note: NAFCU’s founding description from its website

In 1967, a group of hard-charging credit union CEOs pushed the envelope. They had to grow, and they needed an association that would help. So they created NAFCU–an aggressive association forged with equal parts expertise, political savvy and boldness.

Since its founding, our small, but agile association has been a highly effective advocate for credit unions at the federal level. We were the first credit union trade association to set up shop in the Washington D.C. area, and we’ve crossed many milestones since our first major victory in 1970, when the National Credit Union Share Insurance Fund (NCUSIF) was enacted.

We were the sole (and successful) defender of the NCUSIF in the early 1990s when regulators and the White House were advocating for major change to it, and we were the only trade association to oppose the CFPB’s authority over credit unions when the agency was formed (a stance we keep to this day as we fight to reduce the agency’s burdensome impact on credit unions).

The People’s Voice: Saint Lawrence FCU Owners Veto Merger

St. Lawrence is the largest county in New York State.    Its 100,000 residents live in a rural mix of small towns and farms in an area called the “North Country.”   Saint Lawrence CEO Todd Mashaw says he can see the bridge to Canada from his office window.   Montreal and Ottawa are closer to credit union’s Ogensburg head office than Syracuse, the nearest large city in the state.

Prior to his upcoming September 30 retirement, CEO Mashaw’s final project was a six month effort to negotiate a merger with the $806 million SeaComm FCU in Massena, New York.   In the merger video he states:  “If the merger goes through I retire and if not ,  I retire.”

When the final vote was announced in August the result was 2,428 (70%) against to 1,023  (30%) in favor.  This overwhelming rejection is unprecedented.   The approximately 30% of members who voted is the highest participation in a merger vote where proxies are not involved.

The Merger Project

The selling of the merger proposal was a joint “full court press” of the two credit unions’ CEO’s.   The special web site “merger page information” contains copies of the many communications to members including a video with the both explaining why they believed this action was necessary for the future.

The hour long video on the site is a free flowing discussion between the CEO’s presenting their case for the merger.  They cite industry merger trends, multiple predictions about future technology and competition, the need to change now and a frank conversations with staff and members, not all of whom were in favor.

The documents supporting the combination on the site are numerous.  These include the schedule of  ten town hall meetings and handouts, a discussion at the Annual meeting,  a joint letter from both boards, a merger timeline, press releases,  special mailings to members, merger FAQ’s, credit union data comparisons and merger myths.

This four month concentrated marketing blitz  culminated in the mailing of almost 11,000 ballots with the Special Meeting Notice and letter detailing the merger plans.

Why Did the Members Reject the Merger?

Saint Lawrence FCU was established in 1954 for the employees of the St. Lawrence State Hospital and their families. It will be 70 years old in 2024.  It became a community charter in 2002. Mashaw arrived in 2005 and has been CEO for thirteen years.

He acknowledges in the video that the proposal was disruptive and caused some friction with staff and members.    He said members were passionate in  opposition deploying several hundred yard signs and wearing T-shirts opposing the plan.

Saint Lawrence FCU’s Facebook has multiple member questions about fees, possible branch closings, ratio comparisons, even  one objecting to press announcements “as if it is a done deal.”

Mashaw commented, and he chose the word carefully, that there were “conspiracy theories” promoted about the merger.  These  included questions about whether he was receiving any special benefit should it proceed.  This was responded to in merger myth # 7.

Members As Fans

Many factors undoubtedly influenced the outcome.

Despite the volume of information, some of the logic seems self-contradictory.  Both CEO’s argued change is inevitable to confront  industry trends, technology competitors and provide staff with enhanced professional opportunities.

Yet throughout the video both assure members they will experience virtually no changes:  the same branches remain open, no employee will lose their job and both organizations have similar cultures.

As they summarized in the video:  “These are two good credit union taking care of St. Lawrence country members right here that want to continue doing the same thing, but together.”

This effort to assure members even led the CEO’s to agree that the Saint Lawrence signage will stay on the branches and current head office.

There may be two other factors that influenced members’ voting.

Through June 30, 2023 Saint Lawrence has reported “off the charts” financial performance.   The 12-month growth rate in loans is 25%, shares 15%, members 5%, and loan originations for the first six months 47%.  The net worth ratio is 10.6%.  The average salary and benefits per employee has increased from $65,000 to $88,000 or 35%.

The growth numbers are three to four times the national averages at June 2023 for all credit unions.

These results were accomplished when the primary focus of the entire senior management team and board was on the merger effort, including meetings with SeaComm staff on potential organizational roles.

A second factor, is that especially in rural New York state, local matters.  People want to do business with firms they know and trust.

One FB member post summarized his opposition this way:

Maybe it’s small town thinking.

1- bigger is not better,

2- competition is a good thing especially in banking.

3- If it ain’t broke don’t fix it .

The SLFCU is as strong as its ever been. 

What’s Next?

Mashaw leaves at the end of the month, but is staying in the area, remains a member and is available per contract for one year.

The nine-person board will decide next steps whether that be an interim CEO and whether to initiate a full search.

When members campaign using yard signs, wearing T-shirts opposing the plan and post strong opposition on the credit union’s Facebook account, these actions suggest the board and senior leaders were not on the same page as the members.

As one member posted: Haven’t see a SLFCU member who is FOR this merger except the CEO and Bd.

The credit union has been a part of the community for 70 years.  It is locally controlled and intimately involved with dozens of charities, festivals and special events.

The member-owners fought to keep the organization they built, support and believe in.   This is the cooperative democratic process in action.  The people’s voice has spoken.

The effort to retain their own, very successful member-owned financial firm was possible because of credit union design.  More importantly this loyalty is the intangible but real goodwill that is the foundation of every credit union’s strength.




A Democratic Renaissance Emerging In Credit Unions

Three events, two ongoing, one finished for now, have centered around member voting on the future direction of their cooperatives.

Each election is triggered by specific circumstances.  But they illustrate the benefits of going to member-owners for approval.

Voting is the essence of democratic governance, whether this is for local school board candidates, a political office or national politics.

The instinctive “rightness” of individual voting is so obvious that  the most authoritarian regimes  put on a charade of democratic process.  For even the most dictatorial leaders, voting connotes legitimacy.

In America, freedom and voting are inextricably linked.   When those in power seek to perpetuate their positions, manipulating or questioning the voting process is an ever-present threat to democratic rule.

A Frustrated Member’s Article

One long-time credit union member expressed his exasperation with his Board’s “closed shop”  elections in this opening of a public article.

I asked a friend recently if she could provide an answer based on the following clues:

1) It has billions of dollars in assets;

2) The overseers are not elected, rather;

3) they are appointed among themselves;

4) there are never any elections; and

5) all meetings are closed.

My friend guessed Belarus – a good guess, but Belarus has elections.

The answer is Orange County’s very own SchoolsFirst Federal Credit Union – the largest financial institution in the county and the fifth largest credit union in the nation. . .

The rest of the critique, Schools First . . .Democracy Last, by Dr.  Barry Resnick is here.

What makes credit union design unique is democratic governance–each member has one vote no matter their  savings and deposit balances.  Federal credit unions prohibit proxy voting  further reinforcing each member’s  ballot sovereignty.  Not all state charters have this limitation.

In credit unions, the people rule.  Cooperatives are, in theory, on the front lines in the practice democratic governance.  This was central to their public purpose and tax exemption. Since there have always been more poor people than financially well off, credit unions were intended to be a means to enhance economic equity for all.   Through member loans, the bulk of the population was to have  financing access that  those with wealth easily take for granted.

Moreover, voting for directors converts private, closed decision making in institutions into public accountability.

But to work, the people need to be informed even educated as to their owner role.   Voting is one of vital means for this process.   Candidates or leaders present their priorities to the membership  and seek support.

Democracy is much more than rules, bylaws, or following Robert’s Rules of Order at the annual meeting. These details do matter, but democracy requires a commitment for leaders to take their ideas to the public versus bureaucratic maneuvers to perpetuate positions of power.

Without the test of the ballot, incumbents may not see things as they are.  Rather they see the things that confirm to their assumptions or preferred way of looking at the world.

The Growing Distance

When  credit unions were predominately local,  member voting may be less vital because they see what’s happening with their own eyes.   When credit unions grow large, distant and generic, their responsiveness via democratic process becomes more crucial.

Credit unions have proven to be a success in creating very large, financially successful depository institutions.   But they rarely cultivate their members’ ownership role.

Absent voting where there are more candidates than open seats, credit union strategic priorities reflect incumbent power not policies  supported via a public contest of ideas and priorities.

When boards are on top, any public voting can be viewed as  threatening to their position.  Without leaders efforts to build “civic virtues” democracy can become form without substance.

Why Voting matters

“Democracy holds us together. We are a country rooted in the rule of law, where the protection of the rights of all people is paramount.” (G-20 Press release) Credit unions are a small but vital part of the democratic ethos that Americans often take for granted.

Member  voting is how their ownership  rights are cultivated and protected.  NCUA has long turned its back on any role in this responsibility.

When the will of the people is circumvented, the result is a growing erosion of member influence.  It is easier to lose member confidence than gain it.  Becoming customers versus owners, makes it easier for members to move accounts to a better deal whenever than comes along.

The Need for political courage

Democratic leadership is hard.  It takes courage and maturity to control the  human instinct to accumulate and maintain power.

Cooperatives  must evolve not merely financially, but also in their political  role with members if they are to remain bearers of their trust and unity.   Institutions should work for people, not the other way around.

Today, one can easily identify institutions and activities in the cooperative system that appear more motivated by self-interest than mutual benefit.

The first rule of democracy is the willingness to discuss, debate and argue about what troubles us.   Truth is not achieved by hiring a PR firm to sell a story or presenting a one-sided marketing campaign that has all the hallmarks of propaganda.

Transparency with full and timely information is the key to democratic practice.  I will follow with  commentary on three situations that I believe show the upside of cooperative democracy in action.

Also, a current  example of a credit union’s promotion of open board elections at Frontwave is described in this July 6 blog, Here They Go Again.



Going for the Green at USC

A source of federal funding in the Inflation Reduction Act will soon be making grants to accelerate solar energy investments.

The example of a credit union’s preparation to access these funds is from Next City an online reporting blog.

The case study by Bianca Gonzalez was posted this week and is  edited for brevity.

A More Equitable Approach to Financing Our Green Future 

The USC Credit Union, a certified CDCU and CDFI, recently developed several green lending products that make emission-reducing energy upgrades more equitable for communities near the University of Southern California campus in South Los Angeles and East Los Angeles.

In the 2021 Inflation Reduction Act (IRA), the Greenhouse Gas Reduction Fund creates the opportunity for CDCUs and CDFIs to take on more risk and bring emission-reducing and cost-effective energy products to communities that need them most.

The Act provided the Environmental Protection Agency with $27 billion for the Greenhouse Gas Reduction Fund. Through competitive grants, the fund will support financing clean energy and climate projects that reduce greenhouse gas emissions. This program will also meet the requirements of the Justice40 Initiative that 40% of the benefits are for federal investments to disadvantaged communities.

For example a 2021 study on US solar adopter patterns  shows that solar adopters tend to be higher income. In 2019, the annual median solar adopter income was about $113,000, while the overall U.S. median income was $64,000. The difference in annual income between solar adopters and the general population demonstrate that lower-income communities need equitable solar upgrade solutions.

Many USC Credit Union members have been left behind by traditional financial institutions, disproportionately impacted by climate change, and underserved due to a lack of accessibility for Hispanic and immigrant populations. These  factors highlight the need for green lending in low-income Hispanic communities.

USC Credit Union’s Preparation

“South Los Angeles in East Los Angeles are now primarily Latino communities,” says Gary Perez, CEO of USC Credit Union. “Several decades ago, the South Los Angeles area was primarily African American. So as the racial makeup changed, we had to understand more about the needs of the Latino community. We turned to Juntos Avanzamos for counsel.”

Juntos Avanzamos is a designation for credit unions committed to serving Hispanic and immigrant consumers. USC Credit Union became a designated Juntos Avanzamos CDCU  by Inclusiv, a CDCU membership organization and CDFI intermediary.

“We had to understand more about the first and second Latino generation members,” Perez says. Despite how convenient remote banking tools are, “the consensus is that these individuals prefer to bank in person. Why would these people prefer to commute to a bank? One hurdle is that they can’t access the same tools that English preferred or English native people can. So we’ve developed a new bilingual mobile banking system.”

With accessibility tailored to the Latino community and grants from the Greenhouse Gas Reduction Fund, USC Credit Union could  take more risk and loan to  members with a wider variety of financial circumstances.

The grant funding “will be used as loan loss reserves and allow us to lend to credit-challenged or income-challenged individuals who may have nontraditional sources of revenue,” Perez says. “We believe this use of IRA funds will do more for the inner city community.”

 Neda Arabshahi, Vice President of Inclusiv observed that more than financial products are necessary. “They need to be paired with technical assistance, training in how to vet contractors, build partnerships with  clean energy services and education of consumers,” Arabshahi says.

Perez and his USC Credit Union team completed the Virtual Solar Lending Professional Training and Certificate Program.  The course was developed by Inclusiv and the University of New Hampshire (UNH) Carsey School of Public Policy.

“Those who benefit most from lowering their cost of energy are those  struggling with the high cost of housing here in Southern California,” Perez says. “By providing accessible solar financing, we can  lower the energy costs for those individuals and allow them to maintain households in this expensive L.A. market.”

The Power of the Spoken Word

Words matter.  It is how we connect with each other.

Whether by blog post or biblical story,  words are how we navigate every aspect of life.

They can get stale, “decay with imprecision, will not stay in place,/Will not stay still,” as T.S. Eliot writes.

They get worn from overuse until reality brings us back to their core meaning.

Poetic usage has the potential to change how we understand meaning, transience versus transformative experience.   Here is  English writer Joesph Pearce describing poetry’s potential:

Poetry is the still, small voice of calm in a world gone mad with distraction. It finds us space to breathe. It allows us time to think. It takes us out of time and space into the realm of metaphysics. It takes us from the transient things to the permanent things, from the things of time to the things of eternity. It takes us to goodness, truth and beauty. Poetry takes us from the five physical senses to the five metaphysical senses: humility, gratitude, wonder, contemplation and dilation.

The Power of Voice

When I saw this poetry video “musical”  the power of poetry became even more dramatic.

“The forgotten dialect of the heart”






Affinity Credit Union Sues Apple, Inc.-the largest Consumer Tech Company in the World

In August 2023 Apple reported its June quarter sales of $81.8 billion and profit of $19.88 billion.  It has a market capitalization of almost $3 trillion and a price earnings ratio over 31 times.  It is the world’s largest and most powerful consumer-focused tech company.

Why would a small midwestern credit union sue over the fees Apple takes when its members use the iPhone’s pay-on-contact solution?

Jim Dean is the CEO of the 14,000 member, $147 million Des, IA Affinity Credit Union. It was chartered in 1948 to serve the workers at the local Firestone tire factory.   The credit union’s main office and plant are still within sight of each other.  The credit union is the first plaintiff on the suit.

Dean is a lifelong credit union professional and believer. He states, “This is not frivolous.   There are many reasons to feel optimistic about the outcome.  Either a win or loss will have a significant financial impact.”

Affinity was the initial, lead litigant.  Last October the complaint was amended to add GreenState, IA  and Consumers Cooperative, ILL credit unions.   “When I searched for support, many CEO’s were unaware that this pricing situation and Apple Pay exclusive to iOs devices even exists.”

Dean continues: “I learned their apathy comes from a lack of transparency from the largest EFT processors. If we don’t see this growing expense defined at the contactless transaction level, how would we know?”

The Case in Summary

The 54-page Amended Complaint was filed in October 2022 in the United States District Court for the Northern District of California against Apple, Inc.

The central issue is that Apple refuses to allow competing mobile wallets from using the iPhone contactless payment system. This allows Apple to charge fees for a service that other tap-to-pay alternatives do not charge for.

The fee applies to banks, credit unions, and other payment card issuers for use of the tap-to-pay function on the Apple Pay app.

The cost is 15 basis points on each credit card transaction and a flat fee of 0.5 cents on debit card transactions. These fees come out of the fees that merchants pay to card issuers. Apple prohibits issuers from charging them back to their customers.

By contrast, when customers use similar tap-to-pay apps (such as Google Pay, Samsung Pay and a variety of bank sponsored apps) on Android mobile devices, issuers are not charged any fees at all. In 2019, Apple charged issuers $1 billion, and those fees are predicted to reach $4 billion in 2023.

The lawsuit contends that Apple can charge those fees because it improperly does not let other payment apps (again, such as Google Pay, Samsung Pay and a variety of bank sponsored apps) have access to the Near Field Communications chip, or “NFC chip”, on its mobile devices.  This prevents other payment apps from offering a tap-to-pay service on Apple devices that would compete with Apple Pay.

The suit alleges that this violates the antitrust law.   The credit unions are seeking both damages for their class and an injunction against future anti-competitive behavior.

The goal in addition to damages is to force Apple to change its policy of prohibiting other mobile wallets from having access to the NFC chip contained in its products.

Going Forward

Apple’s motion to dismiss is still pending.  If it proceeds, there would be discovery and the drawn out legal process.  In all probability the case will go on long after Dean retires.

Apple expects to sell more than 200 million more iPhones worldwide this year and is increasing its total market share versus its rivals.

Dean believes, “Most credit unions are up in arms about Durbin, part 2 ; but these  leaders are completely in the dark about this growing expense.”

This is why starting now matters: “We are doing this because some day, people are going to wake up and realize that we have a really serious, expensive problem on our collective hands. I’m not looking for headlines, but simply trying to change what will become a massive concern when people understand the gravity of this.”

But there is also Dean’s spirit of standing up for the common member.  “Big firms pick on the weak.  And can become economic bullies in the “free market.” That’s why we have coops.”