Someone was sharing with me recently an exchange at a dinner several credit unions were having in Northern California.
The conversation, naturally, turned to what a year this has been for the country and for credit unions, with some gallows humor over whether the night out was the Last Supper for the group.
As the talk continued over chicken (not steak) and a side of mixed vegetable medley, one person happened to also mention the failure of WesCorp and the lawsuit a group of credit unions has filed against it (CU Journal, Nov. 30), its prospects for recovery and generally, the whole mess. When another noted he had just read about the suit, one CEO at the table piped up that the "media doesn't know what it's talking about and isn't reporting the facts."
We're going to assume Credit Union Journal is part of that "media." As has already been discussed in this column on a number of occasions, the challenges in covering and reporting on corporate credit union-related issues are more numerous than an economist's qualifiers. Ask a half-dozen analysts for opinions on a balance sheet's condition and you'll get a half-dozen, sometimes divergent views. We've sought to provide all those interpretations, and when any reporting hasn't gotten it right have worked to correct the record.
Another Force At Work
But there's another force at work here in the complaints and accusations that are heard over media coverage, and it was on display at that dinner. If you've ever taken Debate 101 you know default strategy No. 1 when you're on the low end of the argument is, presto, change-o the argument. We'll all be suffering through a nunhealthy dose of this sleight of hand in 2010 when every House seat will be up for grabs, and dozens upon dozens of other political races will also be underway. Get ready in every case where the media points out some contradiction or hypocrisy in a candidate's position(s) for an earful that the (insert appropriate "left wing," "right wing," "missing wing" reference) media has distorted the candidate's position, and "the media is the real issue, anyway, isn't it?!!!"
To make sure the argument shifts away from the issue at hand, the candidate will also keep the media issue alive by claiming there is a "need to get the facts right," while never actually sharing what the actual facts are supposed to be, noting only that they will "come out one day." And we wait. And wait...
And let's all start girding ourselves, too, for my other favorite debate defense strategy, the claim that the opposing party is wasting everyone's time and using the Old Faithful claim "we need to put this all behind us in the past" and "it's time to move on." I guess none of us should be too surprised that those who have done wrong or been responsible for actions they'd like to see forgotten are all-but-too happy to help us get the amnesia under way.
Wait, Before We All Move On
So why bring all that up here? A year that should have been one of celebration for credit unions, the 100th anniversary of the CU movement in the U.S., is one that that has been the Birthday Party Gone Bad. As we move into 2010 you can bet there are more than a few credit union leaders who want everyone to "move on." But not learning the lessons of 2009 would be a critical mistake. In many cases what happened among the corporates was unavoidable; the boat sank and it didn't matter if you had a cabin high above the water line.
But in other cases mistakes were clearly made. High yields were chased and promised. It wasn't just that everyone was happy to drink the Kool-Aid, in many instances they helped to mix it and serve it up to all the guests. Due diligence wasn't done, and common sense was left off where those higher basis points began. In many instances credit unions engaged in investment assumptions and behavior that had any individual member done the same with the business plan that accompanied his loan application, and he would have been rejected and sent for financial counseling. And the loan officer would have later regaled his fellow professionals with the story.
Frankly, I have little idea how the lawsuit against WesCorp or similar suits filed against other corporates elsewhere will fair. There are merits and demerits to both sides, I'm sure. Those who say the plaintiffs will gain nothing even if they win, may be right.
What I do know is the litigation isn't going to make things comfortable for a few, and may cause some squirming among the many. I was told that at that same Northern California dinner the same CEO unhappy the "facts" aren't being reported further complained that these lawsuits are counter to the "cooperative" CU model. In the spirit of the season and Ghost of Decisions Past, let me be the first to say "Bah Humbug!" to that. Always be wary of anyone hiding behind the "cooperative" curtain when it comes to something they don't want discussed.
Cooperatives are also democracies, and in democracies there is a vocal peanut gallery of views and disagreements. Democracies thrive only when questions are asked and challenges are made, mistakes acknowledged and mistakes rectified. To succeed, cooperatives must "cooperate," but that isn't to be misinterpreted or twisted to mean "keep your mouth shut and go with the flow." Remember that one-member, one vote thing?
That is the process that ensures that that dinner isn't the Last Supper, but just the first of many to come in 2010 and the years ahead.
Frank J. Diekmann can be reached at email@example.com.