These credit union executives are proving that you can mix politics with business.
Driven by a desire to serve, a small handful of credit union CEOs also serve as mayors of their towns. Taking on this added responsibility is a way for these executives to use their financial acumen to help their communities while also developing greater name recognition for their institutions.
But there are also risks involved with taking on a public role. The CEOs might be forced to make a controversial decision as mayor, potentially driving away members. These risks are exacerbated during the current partisan environment, experts said.
“Anyone involved in both [business and politics] needs to be mindful and careful about how they make decisions,” said Stephen Hahn-Griffiths, chief reputation officer at the Reputation Institute, a consulting firm that tracks and analyzes customer perceptions. “We are in a highly polarized time so wherever you reside on the spectrum, you do run the risk of alienating large swaths of people if your political allegiances are clear and obvious.”
There are at least three current credit union CEOs who are also mayors. That’s in addition to
Credit union CEOs can bring a unique perspective to helping run a municipal government. For one, their understanding of managing money and investments can help their towns avoid getting into a financially bad deal, said Steven Reider, president of the consulting firm Bancography.
“Much of what a city needs to do gets financed with long-term debt,” Reider said. “It can be complicated and understanding that is important. Every once in a while you will run into someone who will talk you into something bad.”
As mayor of Texarkana, Ark., Allen Brown is eager to use his expertise in understanding budgets that he developed during his 33 years at the $120 million-asset Mil-Way Federal Credit Union, where he is president and CEO. He was elected mayor in an uncontested race in November and took office on Tuesday.
But Brown believes he will be able to help beyond that. Bolstering economic development in the town – population roughly 30,000 – will be the focus of his efforts, Brown said. The unemployment rate for the Texarkana metro area was 4.8 percent in October, compared with 3.7 percent for the U.S., according to the Bureau of Labor Statistics.
Brown's credit union background has made him more aware of the local business environment. He's met with new businesses opening in the area to offer their employees his credit union's services. And he has seen the impact of other companies announcing layoffs.
“Economic development has to be key,” Brown said. “When your city is strapped, it is because of lack of tax revenue. This is a place that is ready to boom, and I want to be proactive.”
Although the credit union executives emphasized they ran for office to help their communities, they also said the position can inadvertently help their institutions.
Mendell Thompson has been on the city council in Glendora, Calif. – a suburb about 40 minutes from downtown Los Angeles – for more than three years but mayor for less than a year. Every year the city council selects the next mayor from its ranks.
Thompson’s institution, America’s Christian Credit Union, offers a variety of business and consumer loans, including one to help families adopt children. At community events like ribbon cuttings, sometimes attendees will approach him to find out more information about the program and then subsequently come to the $388 million-asset institution for the loan.
Thompson has also helped the industry by encouraging the city to buy certificates from California credit unions after realizing that the government was just working with banks.
“We need more common sense, bright people who have a passion to give back and really reflect the credit union spirit” in government, Thompson said. “My advice is to run for office if you are thinking about it.”
But there can be significant downsides to seeking public office. There could be conflicts of interest between the two roles or at least the appearance of impropriety to constituents. This could arise in areas like granting zoning changes for a new branch for the credit union or denying an application for a competitor.
“First and foremost, transparency then having rules and criteria in place are necessary,” said Kent Redfield, an emeritus professor of political science at the University of Illinois at Springfield. “Then there are situations where it doesn’t matter how many Bibles you swear on, there will be people that think your thumb is on the scale. In those situations, which don’t come up that often, then recusal is the best route.”
CEOs also risk blowback if customers perceive them being on the wrong side of a political issue, especially in these hyper-partisan times. The Pew Research Center has found that the divide between Democrats and Republicans on key political beliefs has grown, and people are increasingly more uncomfortable discussing issues with others who have opposing viewpoints. For instance, businesses have been boycotted after their leadership met with President Donald Trump.
“If you get into partisan conflicts, then that may spill over into your private business,” Redfield said.
Mayors of many smaller towns are mostly insulated from divisive topics since local races tend to be nonpartisan but hot button issues can still boil over.
In Glendora, where Thompson is mayor, tension erupted during an October town hall meeting over immigration,
Thompson believes it’s possible a member has left his credit union because they were unhappy with a decision he had made as mayor or city councilman. But the credit union asks members to fill out a survey anytime they close their accounts and no one has cited Thompson’s public role.
“I’m sure over the course of three and a half years, I’ve probably voted one way that one or two people didn’t like,” Thompson said. “For the most part we are more concerned with water and infrastructure and public safety.”
Bonnette Dawson, who has served as mayor of Greenbrier, Tenn., since 2014 and CEO of Old Hickory Credit Union since 1999, cast the deciding vote against a contractor looking to build a controversial subdivision.
But most of Dawson’s time is spent on more mundane matters, such as working with the Tennessee Department of Transportation to install new safety measures at railroad crossings, and enticing a new grocery store to open after the previous one closed.
Even though serving as mayor in the town of 6,800 is a part-time position, it still means time away from the $231 million-asset Old Hickory. Because of that, it’s important to have a strong board and employees at the credit union and a good city manager to help juggle all of the responsibilities, Dawson said.
“If you are thinking about running for mayor, make sure the staff at the city are good people who will stay with you,” Dawson said. “Without them, I wouldn’t even attempt it.”
