I often wonder how the role of independence and autonomy, one of the seven principles of cooperation, applies to the credit union business model. I’m of the belief that any sacrificing of autonomy and independence would mean that credit unions cannot truly be “cooperatives” in the strictest sense of the definition, well, at least perhaps in the way the
Rochdale cooperators envisioned. Maybe that explains the continuous struggle between credit unions and any outside agency vying to regulate its “cooperative” model.
Now, don’t get me wrong, if credit unions are to participate fully and legally in the
financial services system and offer their members the protection of the federal government, then, of course, I see no other way than to expect that credit unions play by the rules of the game. U.S.
But, here’s the challenging observation I have. Should credit unions be doing more for one another—cooperatively—to protect the independent and autonomous nature of all credit unions?
Here’s what I mean.
Given our cooperative nature, does the credit union system have to rely solely on NCUA to take prompt corrective action or conserve a failing credit union? Why should a credit union be forced to stand face-to-face with a government entity responsible for overseeing and rating its performance without first having the benefit of review by a resource that let’s just say, is less threatening; a resource that could point out compliance deficiencies and help set a corrective course of action? Is it really possible for credit unions to exercise a greater role in overseeing the performance of one another, stepping in to offer guidance, resolve problems or shore up inadequacies before it becomes necessary to have the regulator step in and place a shop into conservatorship?
I say make the regulator’s scalpel the last resort by designing innovative ways to first rely on one another for guidance in staying compliant with all those endless regulations.
Well, there may be such programs already in place. If so, are they affordable to all? Let’s hear about them. Or, can it be that working with one another to resolve performance shortcomings on a balance sheet is more dreadful and painful than having the regulator come walking through the door and us facing the consequences of their judgments and decisions? There has to be a better way.
What do you think? Share your thoughts and hopefully we’ll hear from leagues and associations as well; including some CEOs whose shops are about to go under the regulator’s magnifying glass.
The strength of credit unions is in their collective numbers. I say apply that strength to find ways to preserve any degree of independence and autonomy credit unions can muster.