Back in mid-March, the Credit
Union Times carried a front page story on Chip Filson and his petition for NCUA board members to be
motivated by the unique contributions and needs of a cooperative business.
The article included comments from several credit union
executives, two of which struck a chord with me. One was Randy Karnes, CEO of
CU Answers, who said Congress didn’t create the credit union charter because
the nation needed “nice banks.” He pointed to the cooperative principles as the
defining element which makes the structure of credit unions different from
banks.
Henry Meier, associate general counsel for the Credit Union
Association of New York was the second. Henry suggested that those advocating
for the cooperative structure to play a larger role in the credit union
industry seem to be promoting it for its own sake.
Hearing the comments of both executives took me back down
memory lane into the corporate credit union environment. There, as I rubbed
elbows with right-brainers and left brainers alike, I began to realize more and
more how important it was to find a course of harmony between the cooperative
principles and the principles of asset/liability management, if a credit union was
to be truly faithful to its “soul” purpose.
Lean too far to the right and the organization can become
akin to a social service agency lacking in ability to manage its fiduciary
responsibility; too far to the left and the organization is no different than a
bank or investment firm.
The experience taught me that in a credit union, the cooperative
principles and the principles governing balance sheet management must work
together, hand-in-hand. I also came to realize that the cooperative principles exist
not as some kind of superfluous guidelines that are up for interpretation and
debate at each and every shop. No, they exist in the DNA code of every credit
union. They make the credit union, a credit union.
This is why I content that they should never be viewed
distinct and apart from the credit union balance sheet. Their role must be one
of harmony with balance sheet management and every other aspect governing the fiduciary
responsibility credit unions have to their member/owners. In the very same way,
they must also be in harmony with any efforts at cooperation with other co-ops,
social responsibility or reaching out to the underserved.
Yet, even though they are what defines the very heart and
soul of the credit union business model, there are many throughout the entire credit
union system today who may be dismissing these principles too quickly. Just
bring up a conversation about the role of the cooperative principles with your
own staff or board members and judge for yourself. Measure their knowledge and
interest in, what is essentially, the value proposition of any credit union.
Perhaps this explains why so many of us feel a deep
conviction to constantly draw attention to the role of these principles in
credit union operations. Lose the heart and soul that defines who you are, and
you not only lose touch with your roots but also with your very identity as
well; and many of us believe that credit unions are flirting with the loss of
their heart and soul. Just look around. Where’s all the cooperation between
credit unions today? With community charters, it’s more a game of competition
than cooperation. Come on, let’s be real. We can either continue on the current
path (and we can see where that’s leading as the number of credit unions
becomes less and less each year) or as Bill Cheney and CUNA have advocated, Unite for Good.
I see it this way for anyone of influence at a credit union—either
embrace the cooperative principles as that which fundamentally defines your
business model and see that they are actualized throughout your operation, or ask
yourself if the for-profit banking model might be more suited to your tastes.
After all, the “soul” purpose of a credit union is not
determined by opinion or an executive’s perspective on balance sheet
management. Credit unions don’t need bankers to ensure the success of their balance
sheets and cooperative business model, just as much as bankers don’t want
credit union folks to tell them how to distribute their profits.
For credit unions, the focus should always be more than
price and yield. Yes, while price and yield are important, there’s a whole lot
more. Credit unions should not see themselves simply as commodity providers but
rather as organizations that abide by a vastly different set of ethics and
values from others in the financial services industry.
Just look at the success associated with The Cooperative Bank in the U.K.
and its member-led ethical policy. So, don’t tell me customers are concerned
only about price! If so, The Ritz-Carlton and The Four Seasons would have
succumbed a long time ago to the likes of the Red Roof Inn.
Look at it this way. There are different religions, each
with its own code of beliefs, yet all are similar in their ability to unite the
believer to the divine.
For instance, if you happen to espouse, let’s say, a
Lutheran tradition, you would accept and live by the principles of that
tradition. On the other hand, if you find that living as a Baptist more
accurately defines your core beliefs, you wouldn’t remain a Lutheran and
continue to live your Baptist principles within a Lutheran congregation, right?
While both the Lutheran and Baptist spiritualities are reverent
pathways to the Divine, there are differences in approach that define each code
of belief. It’s not about changing those codes but rather recognizing which one
resonates most closely with your set of beliefs and then living that code to
the fullest within the congregation it represents.
If you want to adhere to a banking model, one that is for-profit in nature and
shareholder-driven, then fine; work in a bank. They do CRA. They help people. It
can be an honorable profession.
On the other hand, if you lead a credit union, then for
God’s sake, live and abide by an approach to financial services that’s defined
by the set of principles associated with cooperative values (open and voluntary
membership, democratic control, non-discrimination, service to members,
distribution to members, building financial stability, ongoing education,
cooperation, and social responsibility). Don’t sweep those principles under the
rug, belittle their importance or divorce them from your management style
because you feel they have no bearing on the balance sheet and the price of
your services.
The credit union difference is one of principles—to be
embraced; to be lived; and to be celebrated. Wouldn’t you agree?
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