It was an interesting question you raised in Frank Diekmann's Aug. 17 editorial asking, "What if it were 2009, but with 1979's membership rules?" Frank and (CUNA Mutual's) Dave Colby, who contributed to the editorial, were right on the mark with the answer to that question. The current economic downturn and financial industry debacle, whose headlines have largely focused on the banking industry, would have had many more credit union casualties.
When NCUA Chairman Ed Callahan first authorized multiple SEGs in 1983 and we expanded the ability of credit unions to convert to community charters and adopt underserved areas during my administration in the early 2000s, the purpose was to allow for membership diversification. Through that diversification, we hoped to avoid losing credit unions because their single company sponsor shut down or faced serious downsizing. When I arrived at NCUA in 1997 approximately 7% of credit unions were community chartered. Today the number of community charters is at 37% and another 18% have adopted underserved areas, thus bringing them some geographic diversity. I am convinced that the diversification allowed through multiple SEGs, community charters and underserved areas has saved hundreds, if not thousands, of credit unions.
When she served on the NCUA Board with me, the new incoming NCUA Chair, Debbie Matz, was a strong supporter of field of membership diversification and worked tirelessly to help us craft our 2003 re-write of the NCUA Field of Membership Manual. I fully expect and look forward to seeing a continuation of leadership at the highest levels of NCUA that recognizes the absolute value of field of membership diversification to a safe, sound and viable credit union.
For those who think that field of membership issues are yesterday's news, the future of tomorrow's credit union industry is still dependent upon workable field of membership options at the federal and state levels that will enable credit unions to better manage risk and diversify their deposit, loan and member base.
What if it were 2009, but with 1979's membership rules? Headlines, indeed...but not the kind we want.
Dollar Associates, LLC, Birmingham, Ala.
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