A Reminder CUs Are All Strapped To The Same Deck
In 1959, Parker Brothers introduced the board game Risk to the United States. And I'm guessing it was just a very short time later some kid playing the game found him or herself on the losing end and introduced the concept of throwing the board and pieces into the air and storming away.
Some 50 years later credit unions in the U.S. have found themselves up close and personal with risk and boards of a different type, and while sorely tempted to also throw their hands in the air and walk away, they are well aware they cannot.
Board games are ripe for "if only's," and in this case that's one parallel with the experience of credit union leaders of the past several years. If only we had watched our expenses more carefully. If only we had paid closer attention to members' changing credit scores. If only, and this is the big one, we had not invested in the corporates.
That last question will vex CUs for years to come, even if it's not particularly productive, pointed out NAFCU's president, Fred Becker.
"As I have said, I don't know that anyone in the industry looking back would not have done things differently and who is not in some way accountable," observed Becker. "We can spend the rest of our lives figuring out where everyone falls in, and we will. The lawsuits (filed against various corporates) will help us sort some of this out."
Becker, who graduated from the U.S. Naval Academy and who often turns to naval metaphors, said he believes the focus should be on "getting the ship righted. We need to learn the lessons."
One of those lessons, Becker believes, is that credit unions got away from a key component of mutual cooperation.
"We have forgotten we are a cooperative industry," said Becker during a discussion in the exhibit hall at the group's recent annual meeting in Chicago. "The 1998 Treasury Report discusses the 1% deposit (in the NCUSIF). What we said was we have the system we have because it is a cooperative system. The 1% deposit results in credit unions paying attention to what others are doing. We are all strapped to the deck together, to use another Navy term. I'm not so sure we've been watching each other. We have violated the Warren Buffett rule (to always go and see what he is investing in)-but then, so did he, as he admitted when he said he didn't go out and visit the FICO companies."
But all the on-site visits in the world aren't a guarantee some things won't still turn sour. "No one is invaluable. People make mistakes," said Becker. "There is no way to diversify away all the risk. You can't do it."
• Recent headline: "Two Armed Women Rob Credit Union." Indeed, we would expect they were.
• Are you in the middle of your strategic planning for 2011? Perhaps a board retreat or at least an off-site is planned sometime soon? During one recent meeting a speaker asked a CU audience of about 150 people how many had a board member under the age of 35? Three hands were raised.
This whole issue of youth, by the way, is by no means a newly born issue. Caught a repeat of the AMC series Mad Men recently in which the advertising agency that is the focus of the show moves to hire some of the upcoming, "mod" generation. The show is set in the early-1960s, which means the new hires were the front end of a generation that would come to be known as the Baby Boomers-the same boomers now considered out-of-touch, Walkman-wearing relics by Gen X and Y and Next-and who comprise many CUs' boards.
The young characters in Mad Men tell their new bosses their generation is made up of "independent thinkers who like to make decisions for themselves and don't like to be told what to do." Sound familiar?
• As noted above, the recession's impact is seen most distinctly in the struggles of many corporate CUs. But the pain is also being felt at the various foundations credit unions support, most notably the National Credit Union Foundation, which has recently been forced to cut costs and reorganize, leading to lay-offs, including the highly respected Tom Decker, who among other duties headed up the Development Education program. Bucky Sebastian, the group's new Executive Director and the former CEO of GTE FCU in Tampa, Fla., said the moves will "enable the foundation to operate more efficiently and cost effectively, which is in line with the expectations of our donor community."
Sebastian is a believer in the work foundations can do for credit unions; indeed, GTE FCU has a foundation of its own. "I think we need a visible, viable, vibrant foundation to help bring the credit union message to the United States," he said. "You may remember the old saw, 'Not for profit, not for charity, but for service'? I think too many think that not for charity meant not for charitable giving. That's not what it meant at all. One of my goals as new executive director of the NCUF is to try to talk to credit unions about thinking about setting aside a little piece of income every month to do good where they do business, and then maybe sending a little to Washington so we can do good around the country."
• For frequent flyers, news last week of the JetBlue flight attendant who, fed up with at least one passenger, grabbed a beer, activated the emergency slide and exited to the tarmac, raised one critical question: why doesn't this happen more often?
Frank J. Diekmann is publisher of Credit Union Journal and can be reached at firstname.lastname@example.org.