Help, getting lost in the weeds!
Several readers - SECU members in particular - have asked for a roadmap, since it seems the blog keeps veering from ditch to ditch - issue to issue. A valid observation! Here's the list of concerns for you to think about:
1) The credit union movement/industry is rapidly consolidating for various reasons. There are @4,400 credit unions left - down from @23,000 several decades ago. The largest 400 or so credit unions represent 85% of all members and total assets.
2) Most larger credit unions no longer are bound by the traditional limitations on membership and are able to serve everyone. Many credit unions have moved beyond a traditional focus on consumer finance into commercial financial services and are difficult to distinguish from banks.
3) The similarity of functions between credit unions and banks has brought the tax-exempt status of credit unions increasingly into question. What would happen if the tax-exempt status were revoked?
4) The core cooperative governance and ownership principles of a credit union appear to break down and become irrelevant as a credit union grows large. Boards of directors are still elected by members to direct the day-to-day operations of the credit union. Boards however have increasingly infringed upon or eliminated credit union member governance rights. Is the credit union cooperative model relevant or appropriate any longer "at scale"?
5) History shows that "at scale" cooperative and mutual financial organizations - think savings and loans, mutual insurance companies, perhaps Blue Cross/Blue Shields, etc - are eventually converted into stock-owned, for profit businesses. Should a sensible path for the conversion of credit unions into for-profit institutions be established?
6) If credit unions by choice or "accident" become for-profit financial institutions, how will the accumulated billions of dollars in capital/reserves be disbursed among the member-owners and other stakeholders? History clearly indicates you don't want to leave this "to chance" - think avaricious consultants, lawyers and insiders!
7) Given the preference of many credit unions to transition to a more commercial, bank-like model is it time to redefine the principles and scope of a non-profit, cooperative credit union?
😎 Hope that helps... how would you reconcile these diverging issues?
What’s the status of your self-nominees getting their packets in? Reminder - the deadline is August 1st.
ReplyDeleteIs there a chance the NCUA believes that it is cheaper for the credit union share insurance fund to have more ways for capital to be infused into a credit union (ie give credit unions the ability to raise capital via additional membership qualifications instead of via additional insurance fund premiums)?
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