10 Years Ago, CUNA Embarked On A 'Renewal Project' To Overhaul Its Governance. A Look Back At Why, And Where The Trade Association Stands Today

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Ten years before there was such a thing as "Sarbanes-Oxley" the credit union system's largest trade group underwent what may be the greatest corporate restructuring effort in the movement's history: the CUNA Renewal Project.

Now, a decade later, the second Renewal Review committee is engaged in studying some of the very same issues along with tackling some new ones, as called for every five years by the original Renewal Steering Committee, just one of many legacies of that enterprise.

Renewal came about as the result of a slow uprising within a significant portion of the credit union community that believed CUNA had lost touch with the reasons for its existence, that its elected leadership mysteriously emerged from smoke-filled rooms, and that large credit unions were overly influential in its decisions.

"It was probably the most significant corporate governance restructuring in the credit union system," said Alan Peppers, CEO of Westerra CU (formerly DPS CU, formerly Denver Public Schools CU), and a member of the original Renewal Steering Committee. "At the time it was launched, there was a fracturing of the system. There was a lot of disaffiliation, most notably by Navy (FCU). At the time, there were varying opinions about setting the strategy for advocacy for credit unions. There was a need for a unified voice, but there was also a need to get all view points addressed."

Today, more than 90% of the nation's credit unions are affiliated with CUNA, including the world's largest CU, Navy Federal, which returned to the fold. CUNA, Peppers said, is "positioned to be a significant voice" on Capitol Hill for credit unions.

Not Perfect, But A Huge Achievement

State Employees CU CEO Jim Blaine-another member of that historic committee-agreed. "There was a need for a new governance structure for CUNA. It's very hard to rebalance the voices, and not everything was resolved, but it was a good effort," he told The Credit Union Journal. "It wasn't perfect, but it was a huge achievement. When you realize that as a result of Renewal we had a number of people who actually voted themselves out of power, that says something."

But it didn't happen overnight, nor did the circumstances that precipitated the need for Renewal. The original project lasted from 1995 to 1996, during which time the blue-ribbon panel of 25 credit unionists held focus groups, solicited comments and conducted surveys before passing its own recommendations onto the CUNA Board for passage.

"The result was a whole set of bylaws amendments," recalled Bill Hampel, chief economist for CUNA. "Up until then there were just 50 members of CUNA-the state leagues. To be affiliated with CUNA, you had to be affiliated with your league, and your league was your representative at CUNA."

While credit unions must still be affiliated with their state leagues in order to join CUNA (and similarly, they cannot be affiliated with the state league and not also be affiliated with CUNA), credit unions now have direct membership in CUNA, allowing for more direct say in the trade group, Hampel explained.

Another important change: the reduction of the CUNA board from 40 people down to a more workable 24.

But it wasn't just a question of "wresting control" from the state leagues. "It was bigger than that," Peppers asserted. "There was a lot of history of how decisions were made. You had people wanting to get to the table but felt they couldn't. It all had to be addressed."

Hampel agreed, adding, "a number of credit unions felt left out of the system, that they didn't have a direct enough voice to influence and guide CUNA's advocacy efforts. Now they tell us directly. There are no filters. They can call a board member who is a peer elected to represent them."

One issue that was a sticking point then and can still be a sticking point today is balancing the needs and power of large credit unions versus small credit unions - an issue banks have long sought to capitalize on as a means of playing at divide and conquer.

To come to a balance, CUNA divided the nation up into six districts with four board members from each district. Of those 24 board members, 18 are from credit unions, with each district having three classes (A, B, and C) of credit unions based on asset size.

As credit unions continue to grow and consolidate, the definition of what is a small, medium or large credit union is in a constant state of flux, so CUNA reviews those numbers annually to see if the current formula still makes sense.

An Issue That Was Set Aside Remains

Though Blaine described Renewal as "a huge achievement," that doesn't mean there aren't issues that are still to be resolved.

"There was one major issue that was discussed but essentially was set aside," he related. "Direct membership access to CUNA, in that some people still believe you should not have to join both CUNA and the state leagues. You had some small credit unions, for example, who maybe wanted to join their state league, but they didn't feel they needed to be part of CUNA at the national level. And on the other side, you had some multi-state credit unions that did not want to have to join a state league but wanted to be part of CUNA.

"There's a sense that leagues are losing their base of support, and what happens if they become regional leagues," Blaine continued. "That was essentially set aside."

And the question of balancing the needs and power of large credit unions and small credit unions is one that just won't go away.

"My position is that everyone should have an equal say, and when the board took their seats, they did have equal say. But there are still too many large credit unions and league CEOs in power," said Suzy Brinkman-Doughty, CEO of $41-million NAFT FCU and a member of the original Renewal Committee. "When I was on the CUNA board, we would go into a board meeting and whatever it was we were discussing it was already decided. I laugh about it now. I have said this from the beginning and I will say it to the end, large credit unions took too much ownership in everything and forgot to look at the small credit unions. Yes, large credit unions do the same things we do, but they have more power, and that's not right."

A big part of the problem, she said, is that CEOs of small credit unions don't have the time or resources to do some of the things that large credit unions-the kinds of things you have to do in order to have a voice in the leadership of the movement.

At the time, Brinkman-Doughty related, there were people who didn't know what CUNA Mutual was or even that it existed or that it wasn't separate from CUNA. In fact, she suggested there are still credit unions today that pay their dues but don't even know what CUNA is.

And if the problem still exists-and Brinkman-Doughty still believes "the people who controlled things before, by and large are still in control now"-it's not for lack of trying.

"[Renewal] needed to be done, and they tried to do it and do it properly," she related. "But we've still got problems. In my opinion, 10 years from now credit unions aren't going to be here, at least not as we know them. The small credit unions will be merged, and there will be fewer and fewer credit unions. We're already under 9,000 today. You have to ask: what are we doing to ourselves?"

4,000 Provided Input

Still, the original Renewal Committee has a lot to be proud of, according to a number of members of that panel.

"The fact that so many credit union weighed in on the information that was sent to them is phenomenal," said Travis CU CEO Patsy Van Ouerkerk, who not only served on the original committee but today chairs the second Renewal Review Committee. "About 4,000 credit unions provided input into that process. CUNA had this sense that we needed to know what was expected of us."

Making that happen was no small feat.

"Dr. John Odom was our facilitator, and I remember him telling us, as we were going through the process, "I have a client-Kraft Foods-that, in the time that you have spent studying all of this, Kraft has already reorganized one time," Peppers recalled. "If you go back to our early history, credit unions have always been slow to change, but we decided the time had come to put the pedal to the floorboard."

In deciding to sharpen CUNA's focus on advocacy, the Renewal effort eventually led to the hiring of Dan Mica as CEO and the metamorphosis that has turned CUNA into a political powerhouse, he added.

Describing the 18-month Renewal process as an incredible experience, Peppers noted that for all of its successes, there is no real end to Renewal.

"I don't think you do it one time and think 'this will be good forever,'" he offered. "I think the one piece that still needs to be addressed is whether CUNA should only be involved in national advocacy or is there a role for CUNA in offering business support to credit unions. The current Renewal Review Committee needs to look at the changing environment right now. We identified advocacy as CUNA's key role, but what other roles should be added or deleted? That's what they need to look at now."

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