At the end of the September quarter, credit union total assets of $2.25 trillion were just 9.7% of total banking assets. However their participation in the special emergency Federal Reserve lending program equaled 27% of the BEFP’s loans at yearend or three times their share of total assets.
The September 2023 call reports show 307 credit unions with Federal Reserve borrowings of $34.9 billion, an average of $114 million. For these credit unions, the Federal Reserve represents 66% of their total borrowings. For 112 of this group, the Federal Reserve is their only source. The largest reported loan is $2.0 billion and two credit unions report draws of just $500,000 each.
In an ironical coincidence with the BTFP participation, this total was also 27% of all credit union borrowings at the quarter end of $130.3 billion. Moreover this $35 billion was only a small portion of the reported $173.4 billion in total lines these credit unions had established with the Federal Reserve.
Most of these loans were drawn following the banking liquidity crisis in March. The Fed created the emergency Bank Term Funding Program (BTFP) after the Silicon Valley Bank failure to prevent a system wide run by uninsured depositors on other depository institutions.
This facility was different from traditional Federal Reserve programs. Eligible collateral security was expanded, all collateral was valued at par, not market , and draws could go up to one year. The rate for term advances under the Program is the one-year overnight index swap rate plus 10 basis points. The rate is fixed for the term of the advance on the day the line is drawn down.
What Happens Next?
In a January 9, 2024 speech to Women in Housing the Federal Reserve’s Vice Chairman for Supervision, Michael Barr, was asked about the program’s future when the initial one year life is over. Here are portions of his reply:
Moderator: I wanted to ask you about the future of the BTFP. We are rapidly approaching the one-year mark, is this something where the Fed is planning on extensions, or any information to be released to the public on usage?
Vice Chair for Supervision Barr: So when the funding stress happened in March 2023, over the weekend the Federal Reserve, FDIC and Treasury agreed to a systemic risk exception to least cost resolution for the FDIC. And the Federal Reserve and the Treasury worked together to create an emergency lending program for banks and credit unions, the Bank Term Funding Program that you are referencing. And the Bank Term Funding Program enables banks to use collateral that was in place as of that time – as of March of 2023 – that is, essentially Treasuries and agency mortgage-backed securities, to pledge those, and to be able to get borrowing against that up to a year at the par value of those securities.
That program was really designed in that emergency situation. It was designed to address what in the statute is called unusual and exigent circumstances – you can think of it as an emergency. . .we want to make sure that banks and creditors of banks and depositors of banks understand that banks have the liquidity they need. And that program worked as intended. It dramatically reduced stress in the banking system very, very quickly. And deposit outflows which had been very rapid in that short period of time normalized to what had been going on before and in fact maybe flattened out to some extent a little bit.
So that program was highly effective, banks and credit unions are borrowing under that program today, but it was really set up as an emergency program. It was set up with a one-year timeframe, so banks can continue to borrow now all the way through March 11 of this year. . .a bank could continue to borrow or refinance under the program and in March of this year have a loan that then extends to March 2025.
I expect continued usage until that end date of March 11, but it really was established as an emergency program for that moment in time.
The article reported that the BTFP pricing, based on the benchmark interest rates average plus 10 basis points, was less than the 5.4% the Fed was paying on overnight excess reserves. This arbitrage opportunity has resulted in an increase of $12 billion in more drawdowns since yearend even though no liquidity strains were apparent in either system.
Credit unions can request extensions up to one year until March 11, 2024. After that date, the statement above and the most recent activity suggest the program will end. Credit unions should plan to either repay or tap other sources of liquidity.
And the CLF?
It should be noted that the Central Liquidity Facility reports no loans this year as of its November financial statements. In fact it has initiated no new loans since 2009. The BTFP participation suggests credit unions certainly have liquidity needs. However the CLF, designed to serve and funded totally by credit unions, is not as responsive as the Federal Reserve Banks.
Last Friday the four largest banks in American announced their 4th quarter and full year financial results.
All had one new, significant expense in the 4th quarter. Here are the numbers from the New York Times article: Biggest Banks Earn Billions, Even after Payments to the FDIC Fund-(January 13, 2024)
Bank$ FDIC Payment
JP-Morgan $2.9 billion
Bank of America $2.1 billion
Wells Fargo $1.9 billion
Citigroup $1.7 billion
These premiums are necessary to cover the costs for the FCIC’s losses on bank failures earlier in 2023. FDIC’s reported loss expense through the first three quarters of 2023 was $19.7 billion.
The FDIC is collecting approximately $16.3 billion in this fourth quarter assessment. The four largest banks will pay the $8.6 billion shown above or 53% of the total.
Premiums comprised more than 81% of the FDIC ‘s total revenue through the first three quarters of 2023. Interest income from the FDIC’s investments, the other revenue source, would cover FDIC ‘s operating expenses. But the $600 million excess would not even begin to cover the almost $20 billion in estimated insurance losses. (all data is through September 30, 2023).
FDIC Premiums and Insured Deposits Not Connected
There is no relationship between premiums and FDIC’s insurance coverage of $250,00 per account. Instead premiums are calculated on a bank’s net assets which is called its “assessment base.” At September 2023 this was $20.7 trillion versus just $10.7 trillion of insured shares.
FDIC’s revenue is no longer based on its stated goal to protect depositors’ savings but rather the FDIC’s role in stabilizing the entire industry’s balance sheet. When banks succeed, shareholders win. When banks fail, everybody pays.
FDIC’s Complex Pricing Structure
The FDIC may set the premium at whatever level it deems necessary to achieve its minimum ratio goal of 1.35%. The fund recorded an approximately $10 billion operating loss through the September quarter putting the ratio at just 1.13%. The $17 billion new assessment is needed cover this shortfall and grow the fund’s ratio target.
Moreover premium rates can vary from 2.5 to 42 basis points depending on bank size, that is whether an institution is more or less than $10 billion in assets. The final rate is based on each bank’s CAMELS rating plus, for larger firms, a scorecard which measures “complexity.”
The assessment rates are so complicated that the FDIC posts three different calculators for banks to determine what amount they must pay.
This premium system provides virtually no check and balance on pricing, except the rule making process. It is frequently “updated” and always open- ended in amount. There is no incentive or check and balance on FDIC effectiveness in its oversight or problem solving roles. Banks must bear the costs not only from institutional failures but also from FDIC’s supervisory effectiveness, good and bad.
The Cooperative Alternative in the NCUSIF
By comparison the NCUSIF is simple to understand, administer and monitor. Statements are posted monthly. Public board updates on investment returns and overall financial trends are presented at least quarterly so credit unions can track their cooperatively designed fund.
The 1% deposit underwriting means premiums are extremely rare, assessed only four times in 40 years since the 1984 redesign went in effect. Dividends have been paid out over a dozen times.
When the 1% deposits totals are added to the retained earnings, the investment portfolio remains relative in size to the insured risk at all times. Investment income has proven adequate to meet all of the fund’s operating expenses and sustain a stable operating level between 1.2 and 1.3% of insured savings. Based on the latest November NCUSIF financial report the fund’s equity should be at or above the long-time upper cap of 1.3% at yearend 2023.
With NCUSIF equity at the high end of the .2-.3 range, it means there is over $1.7 billion in additional reserve for any contingency. In the October NCUSIF update the CFO reported the five-year loss average since 2017 was only .1 of 1 basis point. The net actual cash loss so far in 2023 was just $1.0 million in the same update.
With over 40 years of data from all economic cycles, financial crisis and evolving credit union business models, there are decades of real data to validate the NCUSIF’s financial design. This record shows that to maintain a stable NOL a yield on investments of 2.5-3.0% would sustain the fund through virtually any growth or economic cycle and any operating contingency.
This historical 1.3 % cap is due for Board review in February based on 2023 yearend earnings. This decision is an important commitment of NCUA to the credit unions who underwrite the fund. Unlike the FDIC’s premium dependency, the NCUSIF’s investment portfolio return has proven to be a reliable, predictable and sufficient model-in all environments.
Therefore, when net income exceeds the NOL cap, the credit unions are paid a dividend on the excess income recognizing their overall sound performance. This return is a critical element of the cooperative design.
The FDIC’s premium model is unpredictable, subjective and arbitrary, and most importantly unrelated to the actual insurance coverage per account.
Why the NCUSIF Design Works
The credit union model is based on the historical operational and cooperative values on which credit unions are founded. All participants are treated equally. Risk and expenses are shared alike for all. It is democratic and accountable in its structure.
The redesign was accomplished with industry-wide collaboration and participation. It required congressional approval. It was based on the oldest of cooperative concepts: self-help. No government assistance or funding was sought or necessary.
Instead the credit unions put themselves in the law as the underwriters of the fund’s resilience, no matter the circumstance. This is how they intend to maintain their independence as a separate financial system. For example the S&L’s were merged with the banks and the FDIC when their system collapsed. Unlike the for-profit, stockholder owned banking system, the moral hazard examples of excessive risk taking by management are extremely rare in the cooperative model.
Understanding NCUSIF’s unique history and design and why it fits credit unions so well is especially important whenever a new board member comes to NCUA. It will be especially critical Tanya Otsuka be informed of NCUSIF’s special character and long term performance, as much of her professional background is within the FDIC.
The February NOL setting will be the first of many opportunities she will have to show her understanding of the differences between bank and credit union regulation. Credit unions should be communicating that distinction now.
Martin Luther King, Jr made many memorable speeches.
One I find most compelling is from December 5, 1957. In this long address (later transcribed) to the Second Annual Institute on Nonviolence and Social Change at Holt Street Baptist Church, in Montgomery, Alabama are the seeds of much of his later actions and rhetoric.
He combines humor with logic in addressing the assembly.
“I’m grateful to these ministers of the gospel. I look about here and I see them. They are not Baptists; they are not Methodists; they are not Presbyterians; they are not Episcopalians; they are not Lutherans—they are Christians first, and Baptists, Lutherans, Presbyterians and all of that second.
They realize that we are all one in this struggle for freedom, and we have been able to come together and forget about our denominations. You see, these things can so easily divide us. And the thing I like about the God that we worship is that He isn’t a Baptist; I like that about Him. I would be confused if God was a Baptist. I’m happy that God isn’t a Methodist. He would be arguing over whether you should be sprinkled or immersed. I’m glad of that. And we have come to see in our own struggle here, that there is a unity, there is a oneness.”
It Will Be Long
“I don’t want to talk too long tonight, but I want to talk to you about something very practical, nothing profound. . . Don’t look at your watch there, Brother Binion; we’re just getting started. He’s looking at his watch. I’m just getting started. Give me, give me a little break.”
After more humor describing reactions to other speeches, he goes to his purpose this evening, which I summarize as a primer on self-help:
“This evening, I’m not going to say anything about the role of the church; I’m not going to discuss the role of the federal government; I’m not going to discuss the role of white liberals, North and South. I just want to talk with you about some things that we must do, as Negroes. We must realize that there is something that we can do to bring this new order into being.”
Using Economic Resources Cooperatively
He proceeds for 30-40 paragraphs with concrete examples and explicit statements for what Negroes, or any American, must do to achieve equality. At one point he talks about money and economic power:
“The average Negro wage earner today makes four times more than the average Negro wage earner of 1940. The annual income of the Negro is now at about seventeen billion dollars a year, more than the annual income of Canada, and more than all of the exports of the United States. We’ve come a long, long way.
“Now, what are we going to do with this? That’s the question. What are we going to spend this money for? Are we going to pool it in cooperative enterprises that will make for economic security for the race? Or are we going to waste it with meaningless things? That’s the question.”
On Leadership
King challenges with words, instances and rhetoric that resonate today. He closes with what it means to be a leader of a movement. His description is relevant to all in current positions of responsibility.
“we must develop intelligent, courageous and dedicated leadership. This is no day for the rabble rouser, whether he be Negro or white. We are grappling now with one of the most pressing and weighty social problems of the generation, and in the midst of such a weighty social problem, there is no place for misguided emotionalism. We must avoid the extremes of hotheadedness and Uncle Tomism, and somewhere develop the type of leadership to see the issues and that will move on calmly in the midst of strife-torn situations.
Leaders are needed all over this South, in every community, all over this nation: intelligent, courageous, dedicated leadership. Not leaders in love with money, but in love with justice. Not leaders in love with publicity, but in love with humanity.
I know if you’re a leader, you’re going to have to have money to live like everybody else. If you’re a leader and you are in a situation that has the spotlight of the world, you will inevitably get some publicity. But these things must be incidental to the greater end. We must have in this hour leaders who are dedicated to the cause of freedom and justice, who have the love of humanity in their hearts.”
This was in 1957. Many of his ideas are presented with rhetorical phrases we often identify with later and more public occasions.
King’s vision for America was formed by many personal experiences and study. His gift was presenting it in a way that is both timeless and timely. That is what leaders do. It is needed now more than ever.
Yesterday the Dakota Credit Union Association announced that NCUA had agreed to pay more than $11.9 million to the former credit union members of Midwest Corporate Credit Union. Their pro rata share of US Central’s capital, along with a similar recovery by Iowa credit unions, will bring the total payments to over $16 million.
This outcome culminates efforts commenced in 2021 by the two Leagues and their members. Ultimately legal suits were filed when NCUA rejected the credit unions’ repeated recovery efforts.
In his October 2023 ruling the Chief Judge of the US District Court District hearing the case wrote: “simple logic and hornbook property law support construing the FCUA as including automatic transfer of assets. In general, assets do not simply evaporate when the owner is unable to collect; rather the property must go somewhere.
Consequently, a credit union’s asset likewise do not cease to exist come the last day of a wind-up. Instead, the most logical conclusion is that the assets vest in the credit union’s shareholders.”
A Three-Year Bureaucratic Slog
According to an August 29, 2022 statement by the Dakota League challenging NCUA “To Do the Right Thing”, the Agency had actually been ready to release checks in 2021. NCUA changed its mind when informed that the (federally chartered) corporate had been voluntarily liquidated years earlier.
North Dakota’s two Senators wrote NCUA Chair Harper concerning the nonpayment. He replied on September 2, 2022 that “After careful review and legal consideration, the liquidation agent determined that because Midwest no longer exists no distribution can be made to Midwest or its former shareholders.”
The League tried the administrative claims process. Again NCUA denied the request. President Olson’s response to this final effort in February 2023 showed his frustration: “This is a clear case of obstruction through bureaucratic hurdles and complicated language where the process is the punishment, and does not provide justice.”
The North Dakota League filed its lawsuit in April 2023. This was followed in June when 63 of Iowa’s 75 credit unions sued the NCUA for $4.2 million to recover their U.S. Central claims. Joining in the lawsuit was the Iowa Credit Union League, its foundation, political action committee and an employee benefits company.
A Lesson in Bureaucratic Obstinacy and Blindness
These years long efforts included all three branches of government. The Dakota league attempted to play NCUA’s administrative game in which it learned that “the process was the punishment.” It requested and received support from North Dakota’s two senators. Chairman Harper stonewalled the appeal from the legislature.
The last remedy was the judiciary. The judge explicitly rejected NCUA’s logic. “The fund’s vest in the credit union’s shareholders.”
It is not a comforting example of regulatory judgment when common sense or “doing the right thing” apparently had little role in NCUA’s decision. When dozens of staff lawyers and three “independent” board members see only one position, this raises concerns about the agency’s deliberative processes and/or the competency of the advice being given.
CooperatIve Action in the Members’ Interest
The good news is that cooperative efforts, especially at the league level, persistence and advocacy did prevail. It is hard for an individual credit union to counter an NCUA position. Collective action is a credit union advantage even in regulatory judgments.
The credit union shareholders, the members of Midwest and Iowa corporate, have received their just due. And that standard, what is in the members’ best interest, should be the determining one.
Thank you to the cooperative leaders in these two states that stood by their members.
In this poem published in 1927, author A. A. Milne’s words create that special feeling of a child’s trust.
Furry Bear
If I were a bear, And a big bear too, I shouldn’t much care If it froze or snew; I shouldn’t much mind If it snowed or friz— I’d be all fur-lined With a coat like his!
For I’d have fur boots and a brown fur wrap, And brown fur knickers and a big fur cap. I’d have a fur muffle-ruff to cover my jaws, And brown fur mittens on my big brown paws. With a big brown furry-down up to my head, I’d sleep all the winter in a big fur bed.
Yesterday Tanya Otsuka became the 25th NCUA board member since its establishment in 1978.
Her professional resume includes serving on Senator Sherrod Brown’s banking committee and as a staff attorney at the FDIC.
Her direct experience with the credit union community is limited.
Onboarding is a critical process for anyone new to cooperative system leadership. She has significant responsibility in overseeing and managing NCUA’s relationships with credit unions.
What Makes for Effective Onboarding?
Newcomers to important credit union leadership roles are becoming more frequent.
One example is BECU’s CEO Beverly Anderson. Her professional background was in banking. She provided an extended CU Times interview describing her transition as a first time coop CEO:
“What’s exciting about this role is, one I’m a first-time CEO, two I’m in the credit union movement for the first time, and three it’s my first time at BECU and here in the Pacific Northwest. . .
“The first six, seven months or so have really been about listening and learning. I did 30-plus deep dives with the organization, used that time to get to know the team and have them get to know me, and learned a lot about the business.
“The second thing I did was begin to understand the movement. It was very clear when I started using language like ‘profitability’ and ‘ROA,’ and people very quickly suggested I use some different language.
“It’s helped me to understand that the movement is in fact very, very different. Our return is around return to member, not necessarily return on assets, and that was a very big shift and pivot, but one that I quite relished.
“The third thing was getting to know my board – I have a new kind of boss and leader, a board. . .they are encouraging, engaging, experienced in their own right, and they have a lot of support and commitment for this organization.”
Onboarding An NCUA Board Member
Immediate board items and credit union events in 2024 will provide examples of Otsuka’s approach in her new role.
The following are questions on areas vital to credit unions as she undertakes her responsibilities.
What is her understanding of the role of the non-profit, tax exempt, member-owned cooperative system in the American economy?
Who does she turn to for advice?
How does she learn from the credit union constituencies she is serving?
Does her response to credit union issues enhance the member-owners’ role?
What is her availability and openness with the public? (e.g. Anderson’s interview above)
The First 100 Days
Credit union press accounts presume Otsuka will become Chairman Harper’s policy doppelgänger. That is, her democratic credentials mean her role is simply a reliable second vote for him to assert his regulatory and spending views on the industry.
Or, as an outsider might she bring a new generation’s fresh hope and enthusiasm for credit unions unique opportunities? Are credit union priorities for NCUA a question of party labels?
My hope is that her unfamiliarity with cooperatives and NCUA result in an enlightened voice supporting innovation with a passion for credit unions.
When one reads BECU Beverly Anderson’s learning process, there is a sense of confidence, commitment, and positive leadership energy.
That learning spirit is especially needed in this moment of credit union challenges and NCUA’s increasing peripherality.
For forty years, the NCUSIF has maintained not only its own financial integrity but more importantly, the trust and confidence of the credit union system’s members. This record of stability began in 1985 and continues unabated through 2023.
Over the same four decades the FSLIC, the separate S&L fund, failed and merged into the FDIC. The FDIC has had negative net equity on several occasions requiring an explicit government guarantee. It has constantly modified its premium model to accommodate numerous industry crisis. These include multiple premium levels, risk based pricing, an expanded assessment base for premiums, differential pricing according to institution size and other financial or accounting maneuvers. It’s equity to insured deposits has fluctuated from negative to 1.1% at June 30, 2023.
During this same period of national economic and interest rate cycles, the NCUSIF’s unique cooperative design allowed it to remain strong. The fund’s yearend equity level of 1.2-1.3% of insured shares has always been met. Premiums have been necessary only four times in this four decades.
“D” For Deposit Day
This fundamental redesign was a two-year industry wide effort.
This priority came to fruition in January 1985 when the first 1% credit union deposit underwritings for the new insurance model were delivered to NCUA. The event was pictured in NCUA’s 1985 Annual Report (pg 21):
(caption: NCUA Staff Member Wayne Robb accepts a hand-delivered capitalization deposit in the unheated Washington lobby of the NCUA.)
The Chicago Tribune described this historic change in an article later that year:
“The solitary messenger clutched a plain brown envelope as he picked his way carefully across a deserted, icy sidewalk near the White House. In- side was a check for $13 million.
“It was inauguration Day, 1985, a morning most memorable for the raw cold that forced cancellation of a parade and drove President Reagan inside to take his second oath of office.
“But for the messenger, and for the trio huddled around an electric space heater waiting for the check, it was also the deadline for credit unions to deliver payments to the new-look federal insurance fund that backs the deposits of 51 million credit union members.
“The $13 million check, the largest single payment, was from the huge Navy Federal Credit Union in Washington.
“The little-noticed transaction–one of more than 7,000 totaling $480 million that frosty January weekend–illustrates how the nation’s 15,000 federally insured credit unions have quietly put their house in order.
“Edgar F. Callahan Chairman of the National Credit Union Administration said credit union’s willingness to embrace a new approach to shoring up their insurance fund was just one example of how the industry has recovered from the hard times of 1981.
The challenge for his successor, Callahan said, is to keep Congress and other policy-makers aware that credit unions are unique.
“You’re in an industry this often grouped with banks and S&L’s and there’s a tendency to get painted with the same brush,” he said.
“There is a danger to getting sucked into that atmosphere. My successor will need to maintain that credit unions have been ahead of the problem curve and need not be grouped with other financial institutions.”
The Workup for Change
The NCUSIF was created in 1970, with no government-provided startup capital. The Fund’s design mimicked the premium base of both the FDIC and FSLIC each which had a 35-year head start accumulating retained earnings. But from 1979 onward the premium approach, even with doubling assessments, did not prevent the Fund’s equity ratio from decline.
In April 1983 the NCUA presented a Report to Congress on the Credit Union Insurance Fund. The Report was over 130 pages in seven chapters responding to specific Congressional questions and making four recommendations:
All credit unions, federal or state, should have a choice of insurer;
Capitalize the NCUSIF with a 1% deposit of insured shares;
Authorized at least one uninsured share per member as capital;
Keep the insurance fund independent from FDIC/FSLIC due to the unique nature and role of credit unions.
The Report included direct quotes from leagues, private cooperative insurers, credit unions along with a history of credit union stabilization options prior to NCUA insurance.
Following the publication of this Report, NCUA and credit unions working in partnership developed an alternative to the traditional premium model describing it as, A Better Way. It drew upon the two decade experiences of private insurer alternatives. It rested on the fundamental cooperative concept that members should own their own fund.
The financial logic and analysis was summarized in a video sent to all credit unions and interested parties on the NCUA’s Video Network. The following is an excerpt from this longer analysis, A Better Way:
This redesign was achieved by challenging long time conventional governmental practice. The alternative was drawn from cooperative experience and principles.
Trust in the Fund was not due to more regulation or open ended premium assessments. It was constructed on mutual commitments including frequent and audited financial transparency, accountability for expenses and legislative guardrails.
This capacity to “imagine differently” resulted from collaboration and open communication at every step. The historical financial analysis (above) and future forecasts were public, for all to review and refine.
The effort was not a sudden epiphany. Rather it resulted from hard work, shared viewpoints, a desire to create something better and courage to change.
The First Year’s Bottom Line
At the end of fiscal 1985, the fund held $883 million in 1% deposits. Earlier in the year each credit union received a pro-rata equity distribution (in excess of the Fund’s .3% equity) of $80 million to meet the January 1% funding obligation followed by a $30 million cash dividend at yearend.
This 12.5% return on the 1% capital deposits was on top of fact that this was the first year since the Fund opened in 1970 that no premium was charged. (page 5, 1985 NCUSIF Annual Report)
In future blogs I will present how the fund navigated specific economic and industry challenges.
Continued success does not rest on design alone. Credit unions must also exercise continuous oversight of NCUA’s vital responsibilities for fund management and supervisory oversight.
Scott Galloway is professor of marketing at NYU’s Stern School of Business. He is a prolific writer, commentator and provocative analyst of America’s economic successes and failures.
The following is an excerpt from a much longer December essay on current trends titled Prof G Person of the Year:
The real Person of the Year in 2023? A: Money.
I’ve experienced this firsthand, watching as faculty who can’t teach or pen relevant research create a weapon of mass distraction from their mediocrity: DEI. But that’s not what this post is about.
America is becoming more like itself every day: Money is the arbiter of … everything.
There’s a view that the rise of money is a good thing. Or at least not all bad. Human society has never been fair, and as long as people are status-seeking, competitive animals in a world of scarce resources, it won’t ever be. Historically, many of the lines that divided society traced innate characteristics like race or sex, were based on inheritance, or were determined by the exertion of physical strength.
Money doesn’t care about any of these things, and it has washed away barriers in ways that potentially make institutions more accessible. There are now nine Black American billionaires. Good news — and their rise is correlated to an increase in civil rights.
What stops this from being a Hallmark channel version of capitalism is that money, when not reinvested/redistributed (pick your word) quickly pools and concentrates, and innovation and competition decline. “Competition is for losers,” is how Peter Thiel puts it. And he’s following through, buying Senate seats (his protégé, J.D. Vance, is leading the charge to defund Ukraine) to secure the influence of his money.
We aren’t going to end the power of money any time soon. In an economy increasingly run on financialization, with so much wealth in circulation, our objective should be to ensure that it keeps circulating. Money = power, and power should be distributed as widely as possible. . .
My Comment
Galloway’s critique is one of the reasons for cooperatives such as credit unions in a capitalist economy. That is until the alternative begins to act like capitalists.
I believe the greatest challenge for credit unions is not external–competition, economic uncertainty or technology disruption–but rather internal. That is, the loss of confidence in who we are and how we try to counter the inevitable goals of more and more money and power, not for members, but for our personal and institutional ambition.
The greatest challenge is how do credit unions re-engage with members, not as mere customers, but as real owners in the “distribution of power” as Galloway describes it.
