Monday, December 26, 2011


Alas, we are standing at the front door of the New Year, 2012. Ready to cross over the threshold to greet all that will come our way this year?

Considering everything we’ve been through these last several years, what more can come as a surprise? My hope is that 2012—The International Year of Cooperatives—will turn the tide and see credit unions once again take charge of their own destiny in ways that offer more aggregation, more safety, more cooperation, and more prosperity. 

Having seen the news last week about U.S. Central Bridge and NCUA’s plan to shutter its operation, I can’t help but think back a decade to a time when all the talk about the corporate network consisted of who would replace Gigi Hyland upon her departure as CEO of the Association of Corporate Credit Unions; which corporate is in merger talks and who will offer me the most yield today on my investments.

Of course, all eyes were on the big guys like WesCorp, the largest of the retail corporates. Remember Empire and Southwest? They, too, were among the movers and shakers, as well as U.S. Central.

News about the corporates, their services and activities seemed to be unending, warranting a fulltime effort by journalists like Paul Gentile, who covered the beat for Mike Welch and the Credit Union Times. Over at the Credit Union Journal, Frank Diekmann held the post, keeping an ever-vigilant eye.

And certainly, when we think back to the corporates of a decade ago, we can’t forget the exceptional conferences and workshops that each sponsored for its membership. The speakers and educational value provided at these gatherings was by far, top tier, rivaling CUNA and NAFCU in scope and quality. And, remember the shrimp? I had a hard time distinguishing them from lobster tail!

There’s no question, corporates were at the top of their game at the turn of the millennium and everyone profited. Not only were investors earning an average of 12 basis points above LIBOR but corporates were also pouring tens of thousands into the National Credit Union Foundation and other credit union charities. The bounty and generosity of the corporates was simply overwhelming.

As organizations espousing the cooperative business model and its principles and values, one could say that the corporates may have been bending the rule about profitability and its place in a cooperative business, but with everyone reaping the benefits from the way in which corporates were investing, no one dared to rock the boat.

Then suddenly, after 40 years of corporate credit union history, it all got ugly—and fast. Could anyone ever have thought it would all end up like this: NCUA walking into two corporates on a typical Friday afternoon in March of ’09 and placing them into conservatorship, the creation of bridge corporates, the formation of Catalyst and Alloya, the burial of WesCorp, the closure of U.S. Central, hundreds of pink slips, and the loss of billions. We were all shaken to the very core of our being.

Yes, there are those who say we paid heavily for the 12 basis points, the shrimp, the first class speakers, and all the other services that corporates provided. They simply point to the loss of capital and the NCUSIF assessments. But back in the day, without a crystal ball and before OTTI and The Great Recession, our coffers were healthy, our bellies were full and the only complaint seemed to hinge on yield and the need for more. 

God willing I should live another score or two of years so that I might not only read how this whole era in America’s credit union history has been recorded but to see how the next generation of corporates will have evolved, how many will exist, how they will be living the cooperative principles, if at all, and how far the pendulum had swung back toward the glory days of old.

With a New Year comes a new beginning and a future that is now ours to reshape—and it is happening as the United Nations turns the world’s eyes towards the principles and values that define cooperatives. A coincidence in timing, I might ask, or a prophetic message to guide us toward our true destiny?


  1. It was all a house of cards... It looked tall, until it all came crashing down as it was destined from the beginning to do. You don't make those kind of investments to that level and expect any other outcome... it's a matter of when it would explode, not if it would.

    The BS about no-one seeing it coming just shows how little we learned and how we will be destined to repeat the stupidity of the debacle.

    The pendulum of NCUA actions have swung from "asleep at the switch" to "over-action and elimination of any risk taking whatsoever". It's going to be much harder to make up the impact of the assessments and over-regulation going forward.

    And we still have how many years of assessments to look forward to?

    I don't see any NEW BEGINNING in 2012, just the continuation of the grind of digging out from past follies!

  2. Many in the industry did see this coming. But because many didn't want to "rock the boat" their views were attacked and often disregarded. Others were intimidated into silence as not to create problems for a select few. Some took notice and others, that wanted to live vicariously through the wealth of the CEO's running these monoliths, just sat on the sidelines and also on the boards’ of the corporate’s in question and did nothing.

    Those that saw what was happening took action, and unfortunately have to pay for those that chose to do nothing (especially some corporate board-members lived it up, while everyone else paid). Here is your economies-of-scale argument; get more people to pay and we can have a bigger party.

    And while the corporates were a great idea (and still are), they will never regain the respect and admiration that professionals like Dick Johnson were able to obtain. Many credit unions have chosen to follow the “bankers” which in some cases promulgates an environment of “if it’s not against the law we can do it.” Well, I say, just because it’s not against the rules doesn’t make it right.

    Moving on…the corporate will become dramatically smaller. Gone are the days of the fancy retreats and Vegas forums. The business models have changed for every credit union however the “bankers” that have made their way into the credit union industry remain and some remain a continuing threat to an industry built on cooperation, sharing and ideals that are fading into the backdrop.