From Co-op Principles To A Cooperative Ending

Chip Filson's petition drive to have the White House include "commitment to cooperative princples" among the criteria used when nominating people to the NCUA board had just under 5,000 signees at press time.

While not saying so directly, Filson has made it pretty clear he doesn't believe the two current NCUA board members are sufficiently committed to or knowledgeable about those cooperative principles (you can read more at www.coops4change.org).

So what do the NCUA board members themselves have to say about the issue?

"I think that when someone is nominated to the NCUA board it is most important that they are well-rounded about credit unions," said NCUA Board Chairman Debbie Matz. "It is important to know the cooperative principles, but what must be understood is NCUA's role to protect the safety and soundness of credit unions."

Matz noted that while seven cooperative principles in and of themselves are not the topic of daily conversation within the agency, "What really drives us is we do understand that credit unions are there to serve their members, and by serving them well they thrive and grow. While that may not be articulated as a cooperative principle, it's behind everything we do."

Matz added that she respects the thousands of signatures the petition drive has gathered, but added, "I'm not sure people understand the role of the regulator. It is not to be a cheerleader. It is to set a high bar for safety and soundness."

Meanwhile, board member Michael Fryzel sent me a statement reading, "Board members need to understand the concept, purpose and mission of credit unions. They must adhere to the principles of safety and soundness that guide a regulator of financial institutions to find the necessary balance in creating and enforcing regulations and to make the necessary decisions to maintain a strong industry and Share Insurance Fund. Federal credit unions have served millions of Americans since the Depression, and that is a legacy board members must continue to foster and embrace."


* Was reading an interview recently in which someone was talking about how radical the whole concept of "crowdfunding" is. People coming together and pooling their funds and loaning it to someone whom they don't even know, and then earning a return on it. It's the "democratization of finance," is how the person being interviewed described this "new concept."

And I found myself thinking, "Hmm, where have I heard of something like this before?" Perhaps that should be the new credit union slogan: "Credit Unions: The Original Crowdfunding."


* As reported in the March 18 issue of Credit Union Journal, I sat in on an hour-plus-long discussion at CUNA's GAC on credit unions and cooperatives. For a number of years one of the side-discussions in credit unions has been this perennial issue of why don't credit unions (which are cooperatives) and other kinds of cooperatives cooperate more? Or, for that matter, cooperate at all?

Maybe the problem is that the question is just too broad. As the National Cooperative Business Association's president, Mike Beall, pointed out, there are 29,000 co-ops in the U.S. So why don't credit unions work with the NCBA to narrow that down considerably and select one sector of cooperatives to partner with every year? Say in 2014, food co-ops. There are some very large food co-ops, farms and distributors all over the country, and the growth (get it? Growth!) in organic foods has led to the creation of even more.

When there's one job in the Job Jar you know which job is going to get done. Credit unions should pick one co-op sector to focus on each year, get to know that sector, build relationships and drive results that are in the interests of both co-ops and CUs.


* Speaking of that GAC session, one of the panelists in that discussion, Joanne Todd, president of Northeast Family FCU in Manchester, Conn., said her credit union in the future will be highlighting the qualitative as well as the quantitative.

"Moving forward our annual report will have multiple bottom lines; it won't just be financials but also support of the cooperative principles," said Todd.


* The three words "growing regulatory burden" appear together so often it's almost as if they ought to just be one. New agencies, new rules, increased oversight; compliance has proven to be the great recession-proof industry. CUs, banks, brokerages and just about everyone else with a shingle have complained vociferously to Congress about the "growingregulatoryburden," but Congress never acts. That doesn't surprise one person.

As Princeton University professor and economist Alan Blinder has observed in a new book, "If you have multiple regulators you need multiple congressional oversight committees, each of which is a goldmine for political contributions."


* Coincidence? During the same week NCUA recently shut down two California credit unions, I.C.E. FCU and Pepsi Cola Employees FCU. Surely no one could have been surprised, as you would expect Pepsi and I.C.E. to go together.

Frank J. Diekmann can be reached at fdiekmann@cujournal.com.