It is time to once again embark on a new age of invention in the credit union movement. It's what the pioneers of this movement would expect.
To invent, we must first understand. To understand we must first learn. That which we truly learn, we learn forever. Learning is permanent; it changes us. It is behavior set in stone that is quarried from trial and error, hammered by reason and questioning, and shaped by human curiosity, need and inspiration.
But the value of learning all that we can comes only when we use that knowledge to fashion changes that improve our lives and our circumstances. In practice, we learn so we can understand our environment and then we invent what we need so we can fulfill our dreams.
Credit unions are an example of our distinctly human capacity to learn and then to invent, and then to reinvent, an idea that retains its original worth.
The credit union community exists today because a handful of people desired to improve the quality of life of Americans. They invented a new way to bring financial services to Americans. They invented an approach to those services that was radically different from what was then available. They applied the "not-for-profit" principle to the financial services system with the goal of fulfilling dreams.
Early on, CUs served whole communities, and later, employer based CUs were created to serve the country's emerging manufacturing sector. Whatever form they took though, credit unions always reflected the economic topography of the time. They were flexible, and because of that, they have grown to earn their members' trust and to be expected to fulfill their members' changing needs.
Because credit unions are more than a business, though, credit union innovation has always moved slowly throughout the system. It is for that very reason that credit union innovation has generally found its roots in the state credit union system. State-by-state innovation has allowed the movement to savor change in a laboratory crafted to contain experiments.
Eighty-five years ago, the state legislature in Oklahoma empowered credit unions to serve their members as mortgage lenders-an authority that made its way into the Federal Credit Union Act in 1987. Today, mortgage lending accounts for the bulk of CU loan portfolios.
Checking accounts are another example of innovation that emerged from the state system and was later universally adopted as a system of share drafts. Credit cards are another.
The state system, by virtue of its more manageable, individual approach and close relationship with legislatures and regulators, has always been the perfect kitchen for cooking up new dishes for the CU menu.
I am not suggesting that innovation has stopped.
Innovation continues and that is evidenced by the wellspring of many of the ideas the members of this NCUA board, under Chairman Dollar's leadership, have placed on the regulatory table for promulgation during these recent months. Those include shifts away from unnecessarily restrictive member business lending rules-changes that were nurtured in the state credit union regulatory system-that will soon become universally available within the credit union movement. They include, too, the adaptation of state regulatory protocols that enable credit unions to remotely report to their regulator and are leading toward the application protocols that will support remote examinations of credit unions. The list also includes programs that extend regulatory relief that frees credit unions from unnecessary or burdensome processes and paperwork.
But I worry.
I worry that the changes embraced in recent months are not innovative in the sense that they empower credit unions to move to new levels of service.
Today's challenges cry out for a new age of invention. I am not referring to the promise of technology, although that is certainly an aspect of what must be nurtured. I am referring, rather, to a welcoming of new approaches, services, products, ideas and applications that strengthen every credit union's ability to fulfill members' changing expectations and serve their members better, faster and more economically.
There are new ideas that are being nurtured in the state system and some are on the edge of reaching fruition.
Supplemental or alternative capital is one. If natural person credit unions are allowed to use this tool, just as Congress already allows corporate credit unions and low-income credit unions to do, credit union managers will have a new tool that will allow them to expand products and services that members expect from their credit union.
Member business loans are another. State credit unions all over the United States have embraced a model that enables credit unions to meet the "small business" needs of their members.
They are successful but they can better fulfill the needs of a changing America if the statutory handcuffs can be thrown aside.
But more innovative concepts should be in the pipeline.
State legislatures and state regulators are receptive to proposals that modernize laws and rules in ways that improve the lives of the citizens of their states. In many ways, that receptiveness should challenge credit unions and leagues to keep the juices of innovation flowing.
Our job at NASCUS is to share with other state regulators the new ideas that emerge from their experiences and to enable each state to then customize these to fit the particular needs of their agency and their credit unions. When a new approach is applied in enough states that it proves workable and beneficial, it is often adopted systemically by the federal regulator and the federal insurer.
I am advocating, merely, that the credit union movemen rededicate itself to tapping the differences between the state and federal system and using those differences to invent programs that fulfill their members' dreams.
It's what the pioneers of this credit union movement would expect.
Doug Duerr is the president/CEO of the National Association of State CU Supervisors (NASCUS)., Arlington, Va. Mr. Duerr can be reached at 703-524-1082, or via www.nascus.org.