LAS VEGAS-For the majority of credit union leaders, the focus is on the current bottom line, and not being a "model for others" in the 21st century.
And yet Chip Filson, president of Washington-based Callahan & Associates, believes the bigger picture makes clear credit unions have a dynamic niche in the financial services market. "The last 18 months show why credit unions exist, and why cooperatives are needed," he asserted. "Virtually every financial instituion has been affected, plus there have been bankruptcies in other industries. One year ago, it was unthinkable that one of the Big Three automakers would declare bankruptcy. Even major newspapers have been hit hard."
Does Capitalism Work As It Should?
The crises in the markets has begged the question, does the capitalist system work they way it is supposed to, Filson noted. "Some failures have been exposed. But not just failures; there was a moral challenge. We lost that moral compass we thought was in the system."
So what have CUs done to serve as a model? According to Filson, quite a lot. He pointed out that long before the federal government began intervening in September 2008, credit unions were the first to create solutions for lending. They began modifying the terms of real estate loans prior to the establishment of the Making Homes Affordable plan. And, they have had "fair" terms on credit cards for years.
"Credit unions don't take risks and they conserve capital, but through the economic crisis they continued to lend in record numbers," he said. "Credit unions have been the nationwide leaders in response to the student loan crisis. Their resilience is demonstrated by record share growth and loan originations, the highest membership growth since 2004, and the expansion of credit card lines."
Filson, who was part of NCUA under Chairman Ed Callahan in the 1980s, said the agency has $182 billion in credit union resources under its umbrella: $10 billion in the NCUSIF, $41.5 billion in CLF borrowing authority, $30 billion in the corporate stabilization fund, $28 billion at U.S. Central and $18.3 billion at WesCorp, and $55.5 billion in corporate share guarantees. "NCUA has never in its history had so many resources under its control," Filson said. "We must bring NCUA into the 21st Century by changing a culture developed in the 20th Century."
What Happens If CUs Don't Tell Their Story
CUs exist to help the people who own the least, because those folks are forced to pay the most for financial services, Filson noted. "But if we don't document what we are doing and tell our story, others will tell it for us and might distort it. Remember: credit unions are a blessing for members, not just a financial transaction."
As for what lies ahead for credit unions, Filson cited a statement from Jim Collins, author of "Good to Great" and "Built to Last," defining a movement as "bigger than a company." "Credit unions were born out of a moral premise tht the marketplace does not always know what is best for individuals," Filson said. "If banks are 'too big to fail,' where are credit unions? The answer: they are too important to fail."
