WASHINGTON -
And that's exactly why The National Federation of Community Development Credit Unions wants to see a "radical reorientation" of credit union regulatory and legislative standards that would create incentives for credit unions to serve low-income people and communities.
Noting the loss of low-income credit union charters through merger activity and the recent conservatorship of Communities United CU in Wichita, Kan., Federation Executive Director Cliff Rosenthal suggested that the carrots and sticks that are currently used to govern and motivate credit unions need to be reevaluated.
"What incentive is there to open a branch in a low-income area," he asked, noting that it is perceived as a potential risk to the NCUSIF.
Citing comments from CUNA Economist Bill Hampel about how some credit unions are over capitalized, Rosenthal suggested reforms to NCUA's Prompt Corrective Action regulations would help create an incentive for CUs to use their excess capital to extend service to low-income people.
"Sure, it's the right thing to do," he said. "But moralism won't get you there. You have to change the incentives."
To ensure credit unions attack these issues with a united front, the Federation has teamed up with the National Credit Union Foundation to create the Credit Union Development Corps, an exchange program between CDCUs and CU Development Educators (DEs).
The idea is to leverage the network of DE alumni-those who have gone through the intensive one-week primer on the foundation of credit unions and the people-helping-people philosophy behind the movement-and pair them up with CDCUs that are at the forefront of putting that philosophy into action.
DEs will visit CDCUs for up to two weeks, during which time they will have the opportunity to learn how these innovative institutions are able to effectively serve their low-income members with limited resources and staff.
At the same time, a representative from participating CDCUs will then spend one to two weeks at the DE's institution learning about the typically-larger credit union's programs and operations.
"These will be incredibly eye-opening experiences for the participants," explained Rosenthal. "In order for this program to work, it is essential that both parties learn from one another, and I am confident that will be the case. We believe that these exchanges will create strong partnerships between the participating institutions-partnerships that will bring together large and small CUs, foster the cooperative spirit, and create a stronger and more unified credit union movement."
The DE program was recently adopted by the NCUF as one of its initiatives but has been part of the movement since 1982 and is celebrating its 25th anniversary.
Rosenthal jested about the elusive DE secret handshake. "Since my staff who are DEs won't teach me the handshake, I created my own, which represents our vision of this program." Bringing his two hands together with the pointer fingers outstretched Rosenthal declared, "One: one movement, one philosophy! This is our vision."
