A few weeks ago I received a prospectus/information pack/mini-telephone book from a mutual fund in which I have some money. I'd be clearer about what exactly the document was, but I didn't take the time to read it. It was bulky and packed with small type and legalese and it was among mail I picked up at the end of a long day. As you might guess, it was soon headed for reincarnation in the recycling bin.
You've likely done the same with documents and disclosures you've received from companies with which you have just a distant relationship. Subconciously, all of us routinely discard important materials because we assume that ultimately, "they" are looking out for us. "They" are the unseen, often unknown entity we just take for granted as being out there somewhere looking out for our best interests, ensuring that laws are being upheld (including in spirit), that the right thing is being done and that we're not being harmed. We aren't even sure who "they" are, just some omnipotent but invisible-to-us regulator or government agency or consumer group that ensures consumers are protected.
For the past few months NCUA has been "they," yet incredibly, "they" are taking heat and criticism for standing up for the members/consumers of Community Credit Union and OmniAmerican Credit Union and every other CU that is seeking or may seek to turn itself into a bank.
That mysterious logo of NCUA ought to be replaced with a target, because like all regulators the agency and its staff spend most of their time being shot at. But this time NCUA and its chairman, JoAnn Johnson, along with board member Debbie Matz, deserve a lot of credit for taking on what State Employees CU CEO Jim Blaine has called the "No. 1 problem facing credit unions" in the United States.
Incredibly, some folks currently residing in the Land of Blissful Ignorance have actually charged that NCUA is the "No. 1 problem." Rep. Patrick McHenry (R-NC) has even introduced the Credit Union Charter Choice Act designed to rein in NCUA's power over conversions after the agency rejected bids by the two Texas giants to convert because of improper disclosure. If McHenry wants to live up to the public service expected of Congress, perhaps he should introduce the Member Choice Act, which would provide members with a simple, plain-English choice in any conversion: Keep my money or give it to a dozen or so insiders.
Over the past couple of years you've heard much about and been asked to donate more to CUNA and NAFCU to support political lobbying. In an ironic twist, the two trade groups are now proving how valuable a Washington presence can be-by being absent in the discourse over charter conversions. Their absence means just one version of the conversion story is being told, and it's being told by the very small group that profits from turning credit unions into banks.
I wonder how Rep. McHenry would feel-and what choice he would make-if one of the two major credit unions serving members of Congress put forth a conversion proposal that enriched those boards at his expense?
One unfortunate development of the past few months is that NCUA's actions have been seen as making too much out of how a piece of paper was folded. It's like arguing over "hanging chads" when the much bigger issue is integrity in voting.
Last week, NCUA Chairman Johnson issued a statement that eloquently states the real value that is at stake, observing, "The American credit union system, founded in the very fabric of a democracy, recognizes members have the right to be informed of the consequences of their decision when voting to convert the not-for-profit financial cooperative to a mutual savings bank. In the spirit of ownership, credit union members count on their credit union executives and boards of directors for that leadership and wise stewardship. Where NCUA finds that a credit union's leadership has not fulfilled its fiduciary responsibility to their membership in an open, fair and consistent manner, the NCUA will not waver in upholding its statutory duty."
Some will suggest that a Republican appointee (Johnson) should be an advocate of allowing the markets to decide. But another person with strong Republican ties told me during last week's WOCCU World Conference in Italy that there is a fundamental difference between "making money and taking money."
In this case, NCUA has been the "they" we all assume are looking out for us, and "they" deserve comment letters from credit unions recognizing them for taking a stand. Taking a stand takes courage, which is why so many people prefer to sit. But at that same WOCCU meeting last week there was an extraordinary insight shared by Sherron Watkins, the mid-level accountant at Enron who tried to warn the company's CEO about huge problems at the scandal-plagued company but who was ignored.
"Diffusion of responsibility was at the heart of Enron's problems," Watkins said. "People just assumed that someone else would catch the bad behavior. The sense that you don't have to take a stand, that you don't have to take an uncomfortable position or have that uncomfortable conversation is what allowed Enron to happen."
NCUA's stand may make you uncomfortable. But consider for a moment the comfortable alternative.
Frank J. Diekmann is Editor of The Credit Union Journal and can be reached at fdiekmann
