About That Cooperatives Cooperating Thing, What Would Ed Say?
A few weeks back at a breakfast session that was sponsored by the Filene Research Institute, its executive director, Mark Meyer, pointed to all that was and is going on in the world and dusted off an old quote from CU pioneer Ed Filene: "Cooperation among individuals is no longer novel. Cooperation among cooperatives is imperative."
That was 1936. Ed, meet your offspring in 2009, where calls for "cooperation among cooperatives" are being viewed by some as a blatant and inexcusable attempt to deflect attention and pass the buck.
Case in point is all the talk over a corporate "bailout" and NCUA's stabilization plan, which has included plenty of references to the "corporate system." As the folks behind those "clean coal" commercials know, say something often enough and it becomes true. But faster than you can make an overnight deposit, that talk has resurrected a question some corporate CU execs have tried to raise in the past: just what "corporate system" are you talking about?
"You hear the term corporate system thrown around, but from my perspective we've not had that since NCUA gave a national field of membership to all corporates," said David Brehmer, CEO of First Carolina Corporate, which has joined EasCorp, Midwest Corporate and Iowa Corporate as the only four corporates to say "thanks, but no thanks" to participating in NCUA's expanded guarantee program. "The only thing (corporates) have in common is the investment in U.S. Central. I think the system itself needs some reform. The key for First Carolina is having a voice in that."
One of the other corporates taking a pass on the Letter of Understanding and Agreement with NCUA, EasCorp, reiterated what it told me last summer, and it's just what you'd expect from New Englanders-the idea of taxation without representation is an anathema.
"For EasCorp, and we are on the record with this, we reject the idea of a corporate system," said Senior VP Alan Bernstein. "There is no legal agreement. The idea of a corporate system has been used in somewhat of an insidious way by some who suggest we have a mutual problem that needs a mutual solution. And one of those solutions is combining the capital of all the corporate credit unions. But our members tell us very clearly that EasCorp's capital and retained earnings and intellectual property is not something they want transferred to someone else."
First Carolina's Brehmer, whose decision not to join in the plan to help prop up U.S. Central is especially interesting since he is U.S. Central's treasurer, is not a critic of the NCUA plan. "I don't envy NCUA and [its] situation. [It had] issues on multiple fronts and had no choice but to act. Our decision not to participate (in the deposit guarantee) is not a slap at NCUA," he said.
Instead, the issue for First Carolina Corporate, like the other three corporates not participating, has much to do with controlling its own fate. "I do hope that the solution we ultimately end up with can be openly debated and the stakeholders will have knowledge of the full extent of the issue," Brehmer added.
In the seven decades since Filene called on cooperatives to cooperate, much has changed. Filene spent decades and millions of his own dollars to create credit unions that could stand on their own, perhaps never realizing that when you're standing it's one thing to extend a hand to those who have tripped and fallen, quite another to extend a hand to those who have jumped into a deep hole all by themselves.
* Still trying to catch up with Gen X and Gen Y? You're like, sooo not going to. That's because you and your credit union are mistakenly segmenting consumers by age buckets, according to one new study. What your credit union needs to recognize, according to the study written by Adam Sarner for Gartner, is Generation V, as in Virtual. It isn't an age-denominated generation, as much as it is a mindset that is coming to dominate across all generations. For some CEOs, the upside of the recession is that the marketing budget has been cut so deeply you just don't have to think about these things right now.
* Speaking of recessions, when times are tough you occasionally hear these kinds of stories. The Pennsylvania CU Association recently reported that a long-time member of Superior Credit Union in Collegeville called the CEO, Matthew Jones, and said she had some extra cash and wanted to help another member. Jones and staff put together a list of struggling members. The member, who didn't want to know names, just circumstances, and also wanted remain anonymous, went to SCU's office and paid monthly loans for two members. When departing, the member added she would be back when she received additional money.
Frank J. Diekmann can be reached at firstname.lastname@example.org.