N.C. Credit Unions At A Crossroads; H.187 - "The End Of An Era Act"? Dr. Jekyll Becomes Mr. Hyde...

  ... the entire Nation is watching.

 

"Credit unions, once driven by purpose, began chasing expansion for expansion’s sake. The sacred notion of a common bond—once the bedrock of the movement—began to erode."

** Excerpts from a three part series published in CUDaily this month. Read in entirety here:  part-1 [link], part-2 [link], part-3 [link].

by Ed Speed **

The Final Reckoning: Has the Credit Union Movement Lost Its Soul?

"What credit unions have failed to realize is that their power never came from being banks without shareholders—it came from being a fundamentally different model of finance."

"The original credit union movement was built on the idea of people helping people—a grassroots, community-driven common-bond effort to provide financial services to those overlooked by traditional banks. But today’s credit union giants no longer resemble the small cooperatives they evolved from. Instead, they are:

• Focusing on expansion for the sake of asset growth, rather than community needs.
• Gaming regulatory loopholes to behave like banks while avoiding taxation and oversight.
• Prioritizing institutional preservation over the well-being of their members.

This transformation has led to a deep moral and strategic crisis. Credit unions today must confront a sobering question: Are they still serving their members, or are they simply another financial empire chasing profits?"

A Call to Action: What Must Be Done

"The credit union industry stands at a crossroads. If the movement is to survive as something more than just another banking sector, serious reforms must take place:

• Reaffirm the Common Bond
• Rein in CUSO Abuse: NCUA must examine CUSOs
• Prioritize Mission Over Market Share: Leaders must recommit to member-first policies rather than chasing asset size, geographic expansion and soaring executive compensation.
• End the Tax Loophole Hypocrisy: Either CUs return to their original purpose, or they must accept the full regulatory and tax burdens of their new identity.
• Regulatory Capture: It is time to merge the NCUA into the FDIC/OCC sphere, which is proposed in project 2025.
• Align executive compensation with performance metrics that prioritize member value, financial stability, and long-term sustainability rather than simply asset size."

Final Thought: A Movement on the Brink

"At their best, credit unions were once a shining example of cooperative finance—a testament to the power of community and shared prosperity. But today, the industry is at risk of losing everything that made it special."

"Credit unions have always prided themselves on being the alternative to big banks. But if they continue down this path, the irony will be inescapable: they will have won the battle for expansion, only to become the very thing they once opposed."

"At that moment, they cease to be credit unions. For those credit unions that are already beyond salvation, they are just banks.  It is time to regulate and tax them as such."

   With H. 187, North Carolina credit unions... "become the very thing they once opposed."

** Edward Speed is the retired CEO of a multi-billion-dollar credit union, who holds a Masters Degree in Theology.   These days he spends his time serving food, washing dishes and sweeping floors at a Catholic Work House helping homeless senior citizens.