Chip Filson
The Seated Boxer, an iconic ancient Greek work of art, shows a grizzled veteran of the ring, equal parts resigned and ready to spring into action.
What I like is a sense of respite from competition, the powerful athletic physique and the tiredness that surrounds his humanity. Is he a winner this day? Are there more fights to go? How will his efforts be remembered?
These are questions that all of us encounter, in literal or figurative ways, in our daily efforts.
In business and social analysis, the term “tragedy of the commons” is used to describe situations where there is no private, only general public use, of a natural or shared resource. The most common examples are public lands such as national parks or rivers and waterways. Even the air or access to sunlight in a city are considered open resources available to all, until someone tries to take for private advantage..
The following is a private-pubic use model that has not fared well because the public benefit, acknowledged by license, is overtaken by individual abuse, even theft:
Where Have Honolulu’s Bikes Gone? |
| Just 60% of bikes remain in Honolulu’s bike-share system, Biki. That means people often can’t find a bike, making it harder to generate revenue and trapping the system in a sort of doom spiral. |
Other examples are easy to find. Individuals with access to a shared resource act in their own short-term self-interest and ultimately deplete or ruin that resource for everyone.
As credit unions’ “ownership” equity is held in common with all other members, there is no individual interest identified. Rather it is a common resource that benefits all. And like common open grazing lands, it is a collective resource intended for future users and their descendants.
The expectation is that through either stewardship by elected or chosen third parties or civic governance, the financial and other benefits would be preserved and protected from individual taking or private abuse.
But when this oversight fails, then individual and even outside private interests will arise to assert the right or control of what was a previous public or community shared resource. The new interested “owners” may even assert they will enhance the resource and its benefit for all because of their better management skills and greater resources.
I recently read the Member Merger Notice for a credit union that urged its members to approve the transfer of control of all their individual and corporate financial resources to another credit union in another state.
The board’s recommendations were all about greater future capabilities and benefits if the members would turn over credit union leadership without any compensation, control or agreement as to what those benefits might be. This credit union was approaching $400 million, a result created through the loyalty and support of their local community for almost 90 years .
The members were not told they were giving up their ability to influence the legal circumstances of their charter as the surviving entity was chartered under a completely different legal and regulatory jurisdiction or that the new leadership team’s office in another state, was over 150 miles away.
The Notice said the reason for not providing members any compensation, other than future promises, was because they still had the same financial stake in the new combination. That is before and after the merger the member share value would be $1.09.
So the merger logic goes you didn’t give up a thing of value. Except the entire future use of a common community resources of almost $400 million created by generations of supporters. The entire investment of these local savings and equity are now controlled by an organization which celebrates its ambition to be a multi-state operation built on a uniform set of products and services.
These ambitions for consolidation are framed for members as in their “enlightened self-interest” instead of blatant commercialism. The entire credit union model has been hijacked by those who are skillful when presenting their institutional accumulations as serving member-owners.
The fact that the merging credit union’s leadership and board would send members such a vacuous, non factual, open ended statements about future benefits, suggests how shallow their grasp of their duty must be. There was no evidence of any fiduciary responsibility, options considered, nor any due diligence on the surviving credit union when recommending members approve the transfer for free of ten decades of locally created wealth.
The tragedy of the commons has infected the cooperative system on multiple levels. However, the wholesale transfer of a valuable cooperative franchises to outsider’s control who have no history, no presence and at most vague intentions is destructive.
It ends the faithful services and support by members who shared their resources for community benefit. And it destroys the reputation of credit unions for those members now at the mercy of those whose institutional ambitions have no alignment with their circumstances.
These events may seem benign at first. But at the core they are creating example after example where the movement has allowed its own actors and so called leaders to betray their core constituents. Selling out members is a tragedy in these specific circumstances. It is not a strategy for future success.
Several events you may have overlooked. I believe each has significance for credit unions’ future.
According to a Banking Dive article, this is the fifth proposed whole bank purchases by credit unions in 2026. The report says there was a record 22 bank purchases in 2024. The number. fell to 16 last year.
After Fannie Mae and Freddie Mac, the Federal Home Loan Banks are the third-largest “government-sponsored enterprise” created by Congress to support the housing market, , ,
Today, . .the nation’s largest banks and private equity funds on Wall Street have become the biggest borrowers from Federal Home Loan Banks — and recent analysis shows those large institutions no longer use those funds to boost their residential mortgage lending, as was the original purpose of the Federal Home Loan Banks. . .
The articles conclusion: Even if all the reforms discussed in today’s hearing were to pass, many communities won’t benefit from those changes without local banks or credit unions to make use of those changes.
And what has the CLF been doing to assist credit union mortgage lending?
In and earlier post this week, I lifted a headline from a front page story in Credit Union Times April 22, 1992, “High Roller” Lifestyle called “contemptible” in NCUA Memorandum. Several readers asked for more details.
The opening paragraphs in a very. long account:
Former credit union leader RichardD. Mangone has been enjoying the kind of retirement many people dream about: frequent cross-country trips, first-class accommodations, top-notch entertainment and more–all free of charge.
But Mangone’s “high roller” lifestyle was brought down to earth this month by court-imposed travel restrictions. The reason, according to National Credit Union attorneys, is that Mangone’s “life of Riley” has been at the expense of defrauded credit union members.
Since August 26, 1991, Mangone, most recently the president of Digital Employees Federal Credit Union, has been under a court order to limit his spending to $8,000 a month. The order was imposed to prevent Mangone from draining or transferring his assets while lawsuits are pending against him.
Mangone has been sued by NCUA, Digital Employees, and Berkshire County Savings Bank for his role in an alleged real estate loan scam.
Following several additional paragraphs, there is a related story with the title: Digital Members Set to Vote on New Board
So there was a time in the not too distant past when the NCUA, the members, the credit union’s new leadership and the community stepped up to hold self-serving leaders to account. Without leaders with integrity, governmental regulation and exams, internal governance and leader accountability are just concepts, not meaningful checks and balances.
The coop system did have such individuals who rose to their responsibility in the past. There was a credit union press which published traditional investigative journalism. And in the present?
What makes a credit union relationship special? Is it being a member and saying “I own it”? Is it some aspect of value which a may be important to a member?
Many organiations use the term member when seeking consumer business. But why do members often continue to carry their credit union’s credit card or keep an account open when they move away and take the bulk of their business elsewhere?
Sometimes it is easier to understand what matters in a relationship from seeing another life situation.
Last Sunday I received an email from an Ukrainian working for an American-Ukraine support group. The real name and city have been changed. It read in part:
I’m back from Ukraine. . .
Next Thursday, I’m bringing my sister and niece from Ukraine to stay with us for six weeks so they can have a much-needed break from the reality they have been living in.
I also just learned that the Melynks (name changed) did not receive the final paperwork needed to extend their humanitarian parole. Since their current status expires on July 22, they have decided that Nadia and their three youngest children will return to Ukraine, while Denys and their oldest son will remain here for a while to wrap up a few projects and take care of practical matters, including their house rental, car, and other commitments.
It is heartbreaking, but they do not want to remain in the United States without legal status.
Two years ago my wife and I along with a local church helped the Melnyks family settle into an apartment in Baltimore The family had three children and a fourth on the way. The father worked in construction in Ukraine, a skill much in demand here. The mother was a music teacher.
Their relocation was sponsored by a local family. Several other US families, the DC church and a number of Ukrainians living here helped to support their move as refugees to America.
The family could have filed appeals. Their 18 month old is an American citizen. I do not know how they made their decision and all the factors they considered.
But as an outsider looking at the news about America today, our national leaders attitude to immigrants, and the ever-threatening presence of ICE even with legal migrants, I suspect one factor may have been a simple human emotion. They did not feel they belonged here.
Belonging is a sense of comfort, a place of welcome where we are known and an aspect of our identity. It is like ownership, but more deeply personal and individual. The emotion cannot be generated via creative marketing appeals. It is the result of experiences that cause one to feel part of an organization.
When we do not feel we “belong,” we no longer attend meetings, revisit past places of residence, go to church, or even follow organizations that were once important parts of our lives. For example schools or colleges where we invested years in learning, or with organizations where we worked for decades and may have made meaningful contributions.
Some organizations do try to retain and honor prior affiliation and relationships. The event can be as simple as invitation to the organization’s annual meeting or holiday celebration. Sometimes this is through reunions, newsletters to keep alumni informed or even recognizing former members for prior service. Even when done for practical purpose such as alumni contributions, the result will depend on whether there is a sense of an enduring relationship.
But more often it is to recognize that a sense of belonging ensures the past, present and future are all vital to a community, an organization, or even a family’s sense of identity and meaning
In his many leadership roles, and especially on the national stage at NCUA, Ed Callahan make a continuing very public effort to recognize and honor those who came before him. Sometimes in public events such as the celebration of the Federal Credit Union Act’s 50th Anniversary. Or the simple act of attending the funeral of a nun in Youngstown, Ohio who had been a teacher while he was a student.
A sense of. belonging creates loyalty and the willingness to go the extra mile whether this be in one’s relationship with others, a volunteer commitment, with an employer, a community or even one’s home country.
It is a vital skill that defines effective leadership, especially in a democracy. It creates trust and mutual respect. It is not a transactional relation that can be bought. It is an earned outcome.
And when push comes to shove sooner or later in all our decisions about where we invest our time and resources, it will be in those situations where we feel we belong. For this Ukrainian family at this time, America was not going to be their future homeland.
This loss is America’s. It should remind us of the many and often much less consequential life situations where we are responsible for others feeling that they belong. Like being part of your credit union.
Before the era of virtual media, credit union stories appeared in print. The most newsworthy were the front page leads.
Here is an example of on issues top news:
The front page picture was of a CEO holding a piggy bank in one hand during a speech at a CUES conference. The speaker compares the priorities of credit unions versus those of for-profit banks. The CEO: Jim Blaine
If anyone can tell me the date and publication name, I will send them the only extant, actual copy of this critical chronicle of credit union history.
The issues and challenges remain very similar-high rollers, and NCUA costs-just the names of the players change.
Without a knowledge of the past, the movement’s leaders can become zombies-no past, no future, just present scares.
In a market.full of AI, fintech and virtual innovations clamoring for testing, how does an organization cope with all the calls for these future “necessities”? What is hype? What could be an essential component to add to a credit union’s platform?
Several years ago I taked with a successful CEO about his recent offering of crypto (bitcoin) to members. He said the members were asking for it. He owned some himself. Integrating with third party providers was straight forward. There was no risk to the credit union, The transaction fees added another source of revenue.
The CEO was very open about his reasons. He was one of fewer than ten credit unions then offering this member option. Now was the time to just let the members decide.
From crypto to financing cannabis banking to marketing partnerships that save members money by spending more, the opportunities are endless for the latest game changing service or product enhancement. Sometimes there is some member interest. Sometimes the change is a third party rollout, wanting to test launch an offering with a known market to establish a proof of concept.
What CEO wouldn’t want to be seen as a insightful leader versus a fast follower by peers? Besides a lot of the traditional service culture strategies can take time, can be hard to measure and at times boring.
Paul Krugman is a Nobel Prize–winning economist recognized worldwide for his work on international trade and hisopinionson the economic issues of the day, often from a progressive point of view.
An excerpt from his cJuly 10 onversation with Dennis Kelleher:
There is no legitimate use case for crypto. They’ve had 18 years to come up with one. They keep throwing things up like “an inflation hedge” or “source of stability.” Every one of them has turned out to be baseless.
The only real use for crypto is tax evasion, money laundering, and crime. It’s the preferred mechanism of choice for global terrorists, sex traffickers, and rogue nations like North Korea and Iran.
You have to ask yourself why crypto has basically hijacked the political agenda of Washington. It’s because they followed the Sam Bankman-Fried model of buying bipartisan support by spending hundreds of millions of dollars in campaigns. And this is the astonishing thing, Paul, that people don’t know. . . .
The Critical Faculty
So how does a coop or any leader decide what to test in a era of mixed messages and uncertainty about the future? It is a challenge as old as the parable of the seeds and the sower.
Where ever there is fertile ground both weeds and seeds will take root. Some may try to take out the weeds, but that can be hard especially early on when the plants are just sprouting, and later when mature growth is all mixed together. The story suggests the choice is not strictly binary– that is the proof of a plant, a new product or even an idea can be clearly projected as either a weed or the fruit of a seed.
What is required by a reader of the parable, or a CEO in real life is discernment. Some appeals by entrepreneurs or political leadership seeking support for their agenda will be compelling and relevant. Others, not so.
The ability to distinguish the important and lasting from the temporary and unproven comes from experience. This is the ongoing learning about one’s prior decisions and the people and process that were used.
Discernment is a lifelong challenge both for CEO’s and in life. Because change is inevitable, it is a skill that ultimately determines one’s ability to choose not just as a CEO but more importantly the right in one’s personal life choices.
And if the parable is representative, at times we will grow from seeds, and at other times perhaps weeds. The test is whether we can see the difference.
by Marge Piercy
Nobody rules. They all
take turns. I can never
tell who will chase who
playing war over the couch
and chairs, round and
round again until suddenly
they stop as if a whistle
blew in their heads.
Five of them, aged fifteen
to two. Who will curl
together making one cushion
of patchwork fur? Who
will painstakingly lick
a friend, washing and
cuddling. Who will growl
at their friend of last hour?
The one rule is where each
sleeps at night, their spot
in the bed and with whom.
It is written in bone.
Following is an introduction to a video lecture by historian Timothy Snyder titled “What is history?” (link)
We speak often about history, but we are careless with the past. When we choose not to know what has happened before, we are also choosing not to influence what will happen after.
If we don’t care about history, we find ourselves in an eternal present, denied any sort of imagination about the future, and nurtured on lies about a past in which we were innocent.
History does not mean these misleading tales; it means a search for knowledge, using a certain set of tools; it means a process that enriches and humanizes, one that allows us to name things by their proper names.
Whether you are a student at Western CUNA Management School or elsewhere, one purpose of education is to understand the road to the present.
These stories are vital for both individual credit union success and for creating system-wide priorities.
For example, beyond the founding stories of committed credit union organizers keeping records in a drawer at the work site, how were future decisions on FOM expansion and leadership changes made in different eras? What part of the legacy did the credit union preserve and what no longer applied?
Understanding an organization’s past events, both successes and disappointments, provides a perspective for future options. Most major decisions involve assumptions about options-those considered and others overlooked.
The same benefits are available at the national level for system issues such as regulatory oversight, legislative changes in statutory authority or enhancing the cooperative purpose in American society.
Rarely do we look back to learn from the past. Regulators do not conduct postmortems of failures preferring to move on versus evaluate where change might be needed. For example think of instances when NCUA has described credit union failure as due to “fraud” or “lack of board oversight” instead of asking why these multi-year deficiencies went undiscovered in exams. Using fraud or other credit union failure excuse deflects from regulatory accountability.
How are national legislative priorities determined? For example, the recently branded Credit Union Board Modernization Act included in the 21st Century Road to Housing bill, implemented without the President’s signature?
The legislation transitioned federal credit unions to a “risk-based board meeting schedule” giving well-managed institutions the flexibility to meet just six times a year (with at least one meeting per fiscal quarter) instead of the previous blanket monthly requirement.
The legislation also targeted requirements for newer/lower-rated credit unions as follows: New (“de novo”) credit unions and those with lower supervisory soundness ratings (composite or management capability ratings of 3, 4, or 5) must continue to meet at least monthly to ensure proper risk oversight. (AI)
This is modernization? Allowing boards to meet just six times per year is based on an NCUA process that reduces examination frequency for higher rated credit unions! How do either regulators or boards understand the state of risk by less frequent contacts? And when something untoward happens, the solution is to meet more often?
Do either the volunteers or the regulators believe less frequent contacts are a “modernization” step? Looking at the recent and past failures (Jefferson Financial, Creighton, Unilever, etc.) and the two year plus NCUA exam cycle heading into the 1980 financial crisis, suggest the real problems do not arise from too many meetings. It is just the opposite..
This “modernization” feels like a PR effort to convey legislative activity rather than addressing substantive issues of volunteer and regulatory effectiveness. Regulatory and board oversight are management and leadership issues, not a regulatory burden to be remediated.
History suggests the potential for real congressional change happens about once a decade. The three person board (70’s), deregulation (80’s), Member Access Act (90’s), and the financial crisis (00’s).
There are fundamental issues about the future of cooperatives including the role of the NCUA board (or even a separate coop federal regulatory system), the rights of members, the purchase of banks, the dearth of new charters and the merger payoffs schemes fueling consolidation.
With a knowledge of the past we know there will be an opportunity for major legislative change to further coop purpose and effectiveness. But is anyone even thinking about that plan?
Could that effort be a topic for students in the final year of their credit union educational experience? After all, it’s their professional future they would be shaping.
At the Western CUNA Management Scoool, students are discussing the future of credit unions. Is the cooperative system just another financial option for Americans or does it have a different public priority from its founding and subsequent tax exemption?
Some assert what makes credit unions different is that the system is based on values. Some would point to the seven or eight cooperative principles as one indicator of the difference from for-profits.
But can institutions have values? America was founded on values, especially the freedoms and rights founders asserted were enabled by democratic rule, that is the consent of he governed.
The Supreme Court has repeatedly ruled that organizations (such as corporations and unions) are “legal persons” and possess First Amendment free speech rights. Landmark cases like First National Bank of Boston v. Bellotti (1978) and Citizens United v. FEC (2010) established that political spending and advocacy by organizations are protected forms of free speech.
But institutional design, or legal character, do not guarantee virtuous conduct. Individuals are the source for corporate decision making. All organizations need individuals to participate and in some instance, to get their future back on track. Even credit unions.
Calling credit unions financial service providers is not incorrect, but the issue is why we believe that is credit unions’ defining characteristic. The challenge is not that the description is wrong, but why is it the primary focus.
People can lead credit unions but may have their outcomes set on the wrong things. Some believe and act as if it the size of the balance sheet along with the supposed advantages of scale are the critical factors in credit union success. Size denotes market power and can lead to market and financial dominance.
But credit unions succeed not with conventional approaches to market conquest, but with relational power. That is the trust and service that promotes members’ financial well being. Trust does not come in big or small packages. It is present or not in an organization’s action. A lesson Rudy Hanley used to guide his tenure at Schools First for almost 30 years.
Institutions don’t have values. People do. The responsibility for ethics and justice lie not in some abstract organizational concept, but directly with the individuals who design, participate in, and regulate that system.
The democratic credit union governance can be an advantage in achieving this relationship power. For democratic participation should enable constant debate to restate what ethical boundaries and values should be embedded in the financial rules of the game. Is this how your credit union acts?
Discuss with your fellow students.
What is credit union’s most important strategic advantage?
Is it the tax exemption? Their superior volunteer and professional ledership? The democratic member-owner design? Their origins and long standing member relationships? Is it superior size and scale? The ability to buy out their for-profit competitors in private? Or, the classic non-answer, It depends?
At this summer”s Western CUNA Management School, there will be discussions of strategy and the advantages credit unions bring to market competition.
Here is one perspective, not directly about credit unions, but which would certainly align with many successful credit unions’ approaches. As you read, ask what is the prevailing narrative for credit union strategy? Does that approach fit your credit union?
| As journalists, we’re constantly thinking about narratives. At Next City, we’ve been grappling with the question of how narratives change, or how new ones emerge. Part of the answer is ultimately doing the work it takes to do things differently than the way they’re done in prevailing narratives.
In one prevailing narrative, economic development is about “attracting and retaining” large corporations to “create better, higher paying jobs.” Tax incentives emerge to support deals that fit the narrative. Commercial or mixed-use lots that fall into city-owned hands get placed into the hands of whichever developer can assemble the “highest and best use” business plan, meaning they can attract the highest possible paying tenants. So much of what I’ve come across over the past 10 years at Next City has been about doing economic development differently. Community power over land, worker power over business, local power over finance. All of the different models for how those basic concepts manifest have emerged from conversations on the ground about how the prevailing economic development narrative doesn’t serve their communities. Talk may be cheap, but it plays a role, too. The prevailing narrative about economic development gets reinforced through regular nationwide convenings of economic development professionals, urban planners, developers, and investors where attendees are all caught up in that same narrative. And they all play a role in implementing and entrenching it further. Last week in the Bronx, I witnessed something I’ve seen only a handful of times, though it’s becoming more frequent in recent years: More and more of the people behind these models, people who are trying to do economic development differently, are finding resources to connect and share notes across different local contexts, from coast to coast and everywhere in between. There’s even a term they’re using to start describing this network of hyper-local initiatives: “trans-local.” (one credit union CEO calls these efforts networks)There’s a lot they have to learn from each other, even if they’re operating in different legals framework and funding ecosystems. Parallels are quick to emerge, like the role of certain buildings or spaces as a sort of community organizing anchor that draws community members in to start having conversations about how they can play a role in doing things differently.
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The following are links to a current, ongoing example about two opposing credit union approaches to community economic resilience: Stay local or transfer leadership and resources to distant, out of area organization?
Many relevant financial facts and future claims are outlined in this series of blog posts about the proposed merger of the 85 year. $4.5 billion , Sacramento SAFE Credit Union with the $29 billion BECU whose main office is in Tukwila, WA, (links)
Read or listen to claims for the merger versus the facts of the two credit unions’ current financial performance. Which option would you think is in the members’ best interests? How does your decision influence your approach to strategy for your credit union?
You can post your oinion in the comment section-or use in your final year’s class project.
How does any organization, industry or community assess the quality of its educational programs? Is it basic organizational skills learned? Applying technology to recurring management issues? Analyzing financials or applying other business oriented courses and strategic theories to coops?
Education evolves. Curriculum is never static. However the strength of a credit union based course should be the ability to understand more about the unique cooperative model. And how its evolution for over 100 years has created the current $2.6 trillion depository based non-profit financial system.
Enhanced skills are beneficial but often insufficient to fully appreciate the cooperative legacy that has been paid forward by prior generations to today’s aspiring leaders.
For the next two weeks I will periodically pose questions or topics that I believe would stimulate important discussion about the state of the industry today.
This month’s CUSO Magazine is presenting various aspects of credit union founding events. A recent article in the series documents the loss of contemporary printed publications created by the leagues, industry newsletters and even regulators. (link). There appears to be no central repository for personal, organizational or public records for future research.
Without an examined knowledge of the movement’s several eras, it is more difficult to understand and present future cooperative contributions. The default strategy can just become adopting competitor’s tactics, a surefire way to lose cooperative purpose.
Because history can inform both present and future potential, the following would be my first questions for WCMS’s final exam. It assess one’s knowledge of credit union history and its relevance for today in three brief essay answers.
2. Why did Filene hire Roy Bergengren? What did he feel the nascent movement needed in Bergengren’s skill set? Did the two founders have disagreements about how to proceed?
3. Do these founding events have echoes in today’s credit union movement? (Theory of change, strategies/tactic for movement success, leadership skills)
These questions may appear to be more liberal arts versus business skill sets. However this is the kind of discernment students will need when encountering practical challenges today and how simlar events were addressed in the past.
For example in 1982 when NCUA Chair Ed Callahan and Bucky Sebastian were seeking to understand the history of the field of membership in the Federal Credit UnionAct, they went to Massachusetts to learn about the movement’s founding practices. They wanted to know the background of the concept. Was it about more than a legal interoperation of the word groups?
In Filene’s home state, a cradle for the early movement, they learned that most initial state charters included local communities along with a sponsor. The field of membership was meant to fit individual circumstances not force prescribed boundaries or limits on who could become a member.
That was the basis for their bringing greater regulatory flexibility to the FOM interpretation of the FCU Act.
More exam questions later this week.