Wednesday, May 1, 2013

Credit Unions—Courting a Destiny of Failure?

(Originally published in January 2013 on CUinsight 

For some time now, I've had this nagging notion that all is not right in credit union land. It's been bugging me to no end and so it's about time I get this concern off my chest.

What I'm going to say may, for many, strike at the very heart of the credit union business model which I so respect. Yet, I realize I'll have to risk arousing the ire of industry associates and friends in raising the issue but, hopefully, they, too, will see the validity of my concern. Perhaps some will even respond by sharing their views for the benefit of us all.

What’s gnawing at me? I’m concerned that credit unions, as financial cooperatives, might be headed toward a destiny of failure. I fear they are moving in a direction that will eventually see them become exactly the same as their for-profit banking counterparts and this prompts me to wonder what is the threshold, which when crossed, determines that the credit union is no longer a “credit union.” Is it merely the charter that defines such an identity or does it depend on something much more pervasive?

For instance, when a couple is given their divorce decree, is it the decree that actually dissolves their marriage bond or was it of the couple’s own personal doing, months and possibly years before such a decree is ever issued?