Corporate CUs: An Enduring Model Of Cooperation Or A Dying Breed?
In recent years, many leaders in our industry have wondered if the cooperative system still works-at least as it relates to corporate credit unions. That's a fair question, given the losses incurred by some but which have been borne by many.
Yet, based on most credit unions' actions, the answer is a resounding "yes." Credit unions' recapitalization of strong corporates clearly shows that our model of cooperation is still vital.
The fact is the cooperative corporate model was never broken, but it did need attention. Some of this has come through new regulations. While not all regulatory changes have been beneficial, many have helped strengthen and stabilize the corporate system. Continuing corporates have developed new business plans, including plans for assuring adequate capital. For others, positive change is occurring through consolidation. By combining, a number of corporates are ensuring service continuity, preservation of member capital and reasonable fees, while also securing members' right to a voice in their governance.
So, if corporate credit unions are still vital, the question may be "why?" I think the compelling argument for corporates was determined by credit union leaders some 40 years ago. They reasoned that if credit unions are such a good idea, why not have "a credit union for credit unions?" Just like their natural-person cousins, corporate credit unions work for the benefit of their shared ownership. Even today, many credit unions would be hard-pressed to find quality financial service providers that are as affordable and reliable as their own corporates. Credit unions have a say in their corporate's success through member-ownership, financial support and usage. They also have a stake in making sure it remains on track. Where is such a spirit of collaboration found in the for-profit financial world?
I like to compare corporate credit unions to the Elks Theatre, a non-profit performing arts/cultural center in Middletown, Penn. The theater was built in 1911 and has served residents for a full century. It is one of the oldest, continuously operating theaters in the United States. Yet things could have gone differently. Over the years, civic pride diminished. The building became neglected, and its deterioration was painful to watch. But by working together, the local community and a non-profit organization changed that. As people in our town started thinking about the value provided by the Elks Theatre and their emotional ties to it, they decided to revitalize this hometown business, which in turn is improving the surrounding neighborhood.
The Elks Theatre is an important historical and community landmark that is being restored through grant money and local fundraising. It stands tall as a reminder of the power of collaboration-the same collaboration that is at the root of the credit union movement.
To some, our important mission of "people helping people" may seem quaint in an industry with sophisticated financial tools and high-tech delivery systems. But just like that old theatre, credit unions' century-old principles of mutual self-help are just as relevant today as they ever were. And credit unions' overwhelming support has shown that the corporate model of cooperation is clearly relevant, too.
Jay Murray is president/CEO of Mid-Atlantic Corporate FCU, Middletown, Penn.