In recent days, The Credit Union Journal and its fellow industry pundits have published tons of charter conversion coverage on their web sites and printed editions. These stories unequivocally confirm that credit union trade associations are directly involved in disrupting credit unions' business activities. The two members of Congress who are associated with the most recent public intervention In Lafayette Federal CU's private business decision, were obviously coached by NAFCU, CUNA, the Maryland & District of Columbia CU Association and/or the National Cooperative Business Association staff. Their rhetoric fit very familiar patterns.
The entry of the NCBA into the melee is no surprise. For decades CUNA, NAFCU, and individual credit unions have been major funding sources for NCBA. According to the NCBA website, the NCBA board members include Fred Becker of NAFCU, Mark Wolff of CUNA, Larry Blanchard of CUNA Mutual, Kathy Brick of U.S. Central Federal (sic) Credit Union, state CU trade association executive Kevin Chandler, and several other credit union industry-related individuals. Nobody's fooled by the pretense of NCBA as anything but a stand-in for the CU trade associations. Similar tactics were also used in the past by the CU trade associations with another surrogate, the Consumer Federation of America.
As illustrated in these news stories, the credit union charter choice is no longer the most important public policy issue on the table. The bigger issues are:
The crackpot customer-enabling governance structure at credit unions, especially federal credit unions (the anachronistic FCU bylaw flaws), that gives disproportionate disruptive power to a mere handful of dissident customers to the detriment of the majority.
The potential threat to federal deposit insurance (NCUSIF) that such flawed governance structure-created reputation risk represents.
The out-of-control credit union trade association interference in the business decisions of a federally insured financial institution threatens its reputation, as well as the reputations of all that share the credit union name.
The trade associations' shameful zeal to go public with their interference, to dupe members of Congress into being agents of that interference, and to mislead credit union customers about conversions seems at a minimum irresponsible, and at its worst is a violation of those laws governing false and malicious statements about financial institutions that cause dangerous runs on deposits.
The anti-conversion tactics illustrated in these recent news articles serve to inflame reputation risks, undermine every credit union's public image, and may even be a direct threat to the NCUSIF. Won't such public displays of street fighter-style rabble rousing alarm credit union customers, and ultimately dissuade them from trusting credit unions with their personal finances?
Responsible public policy makers, including judges and Congressional leaders, should intervene before the situation becomes a threat to the stability of the country's financial system. Do rational thinking credit union executives actually support the counter-productive behavior by their dues-supported trade associations? The more responsible voices among the credit union industry must act to stop the madness and implore everyone they know to do the same.
Marvin C. Umholtz, President & CEO
Umholtz Strategic Planning & Consulting Services
Castle Rock, Colo.
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