For as much as credit unions have changed, one vestige from the movement’s early years is still alive and well at some institutions.
A handful of credit unions across the country continue to be run by employees at the institution’s sponsor organization, such as active-duty police officers who split their time between their jobs as cops and as credit union chief executives.
Among them is Mark Smith, a fraud investigator with the Spokane Police Department, who until recently was also CEO of Sears Spokane Employees Federal Credit Union, the last remaining credit union chartered to serve the retail giant’s employees. It
While early in his career he had planned to work for the U.S. Marshall Service or the Drug Enforcement Agency, “as with most things, I met my wife and everything changed,” he explained. “So I took a part-time job as a courier at a local credit union and fell in love with the mission of our credit union system, and have been in the industry since.”
Smith and other police who double as credit union executives can be seen as a remnant of days when credit unions had closer ties to their sponsor organizations, sources say, and while the practice is decreasing, it still occurs at a small percentage of CUs – especially those that are SEG-based.
And even at larger institutions, similar ties remain. Earlier this year, American Airlines FCU announced that it was
Grant Sheehan, CEO of the National Council of Firefighters Credit Unions and retired CEO of Miami Firefighters CU, said some CUs he works with are still run by on-duty firefighters, but generally only at smaller shops – and almost never at institutions with more than about $5 million in assets. Those credit unions also tend to only be open a few days per week and focus exclusively on savings and loans, and don’t offer checking accounts or other services, he said, adding that once CUs start to get much more complex than that it becomes too difficult for an on-duty firefighter to run the show and a “civilian” is brought in.
“It used to be that they would hire on-duty firefighters to work as tellers on their days off, but I think that practice is being phased out,” he said.
Rick Roll is CEO of $24 million-asset Town of Cheektowaga Federal Credit Union of Cheektowaga, N.Y., just outside of Buffalo, N.Y., and a police lieutenant for the Cheektowaga Police Department. Roll was a credit union employee before joining the police department, and he has spent more than two decades in both fields.
“The credit union has always been a labor of love,” Roll said. “Long days and nights become a part of your life, but when you enjoy what you’re doing, it’s not a burden.”
Roll’s credit union now serves 1,400 members and has seven employees.
“I work full-time as an officer and part-time as a credit union executive,” Roll said. “Our select employee group comprises town and village employees, including police officers and firefighters, but both of my jobs are separate. I have learned skills from both careers and I have been able to cross-utilize those competencies.”
Some of the credit union cops say the two fields overlap. According to Smith, his investigative work with the Spokane PD has a direct link to issues credit union members face.
“My commission does not have a broad scope,” Smith explained. ”The main reason the police department commissioned me was to take some of the load off of the detectives. My commission allows me to investigate (gather evidence), question witnesses and charge individuals with the crime. Once I have charged them, the prosecuting attorney’s office makes the decision, based on the evidence, to issue a warrant and prosecute the individual, as I do not have the power of arrest.”
Changing landscape
Having CEOs or other management who also work for the sponsor group isn’t unique to police and firefighters CUs. Celeste Shelton, executive director of the National Council of Postal Credit Unions, said she is not aware of any CEOs of postal CUs that also work for the U.S. Postal Service, but indicated those sorts of arrangements may have been more common in the past, particularly if a credit union branch was located in an actual postal facility and the employee could move back and forth between the two roles.
“That has changed as postal credit unions have become larger and more complex, and want to offer the same things other financial institutions can offer,” she said. “There was a simpler time when there wasn’t the same technology that is a part of banking now, and certainly there are more regulations and things they have to deal with. So they’re not able to wear both hats in most cases.”
And in instances where employees from a sponsor group also run the credit union, sources say, most institutions have policies in place to protect against preferential treatment such as executives at the CU giving better rates to their friends at work. In order to ensure all members are treated equally, said Sheehan, many credit union in this situation rely on loan committees to make lending decisions rather than leaving those decisions to individuals.
According to Michael Edwards, VP and general counsel at the World Council of Credit Unions, cross-employment between sponsor groups and credit unions is on the decline globally but tends to be seen more often in nations where the CU system is not as advanced as that of the U.S. And much of that, he said, ties back to the U.S. having larger credit unions with economies of scale.
Growth in the industry has made things such that “You don’t really need to be part of your sponsor group anymore – you’re generating enough to pay for your own operations rather than the credit union being a service supported by the company for its employees,” he said.
Edwards added one other change is slowing this practice – the decline of common bond at credit unions not just in the U.S. but globally. Australian credit unions don’t require members to hold any common bond, while Canadian credit unions are open to anyone who lives or works in an entire province – a move that may catch on, he said, given a law in Vermont that some other states are considering.
“In the U.S., the banking industry is a big part of why the common bond is still around, because they would oppose legislation to change that, and they’ve put forward a lot of lawsuits over the years to try to restrict common bond,” he said.
For now, though, many are happy those bonds are still there.
“When I retire from law enforcement,” said Town of Cheektowaga FCU CEO Rick Roll, “you will find me at the credit union.”
Aaron Passman contributed reporting to this story.
