Certain subjects lend themselves to perpetual debate: Red Sox vs. Yankees. Red states vs. blue. Pretends to know which wine to order vs. the rest of us. And then there’s credit union careers vs. most others.
There remains a fundamental difference in the soul of credit union folk: passion. In today’s world it’s corny and goofy and outmoded and, to bankers, unfathomable, and yet you still find CU execs who talk as if they would do the job for a sandwich and a can of soda if they could.
Pete Crear is one of them. Crear, the long-time league and CUNA exec, has already retired once, yet here he is punching the clock again at more than 40-plus-hours every week, and not at some job that has “emeritus” in the title and “pose for picture” in the job description. Crear is CEO of the World Council of Credit Unions, a job that requires the skills of a diplomat to work for an international board, a close relationship with Mr. Samsonite, and a great gift of patience in not having your translator tell the government official across the table that his stubbornness and shortsightedness is keeping thousands, if not tens of thousands, of people in his struggling country from being able to help themselves through credit unions.
“I love WOCCU, I really do,” said Crear, who for 15 years was CUNA’s liaison to the group. “I got to see a lot of things up close. I don’t think anything else could have dragged me out of retirement.”
Like much of the world, WOCCU is focused on China, which has the potential to make the World in World Council much larger. The Chinese are keen to reincarnate credit unions, which existed in China until the 1950s (and used as their symbol, by the way, the same hands-and-globe icon familiar to U.S. CUs).
“Credit unions are a business that can solve a major problem for China,” said Crear. “They are facing what every country has faced at one time. As manufacturing has grown in the cities, young people have migrated there. That has left a population that is elderly and has little income in rural areas. Banks have to have profits, and the profits are in the cities.”
In the 1950s, China’s communist government turned its former credit unions into rural credit cooperatives. In this century, the commu-apitalist government initially planned to turn all those RCCUs into banks, and it appeared initially Red China would be Dead China as far as CUs were concerned. But then WOCCU met with a high-ranking executive with the People’s Bank of China, which acts as the country’s Fed, who recalled credit unions from her youth. “We would welcome assistance in setting up credit unions,” she told WOCCU.
In China, noted Crear, many of the government-run credit unions were managed by cronies of local politicians. Because the government guaranteed loans, due-diligence is and was, well, mostly due. “The delinquency data we’ve seen is real suspect; we suspect it may be around 29%,” said Crear. “They need training and best practices. They have a beautiful training facility and an adjacent hotel, but don’t have any content. We have content, it just needs to be translated. They need products and services, and they need a regulator. There is no standard of accounting or for collecting data. They have big problems, but they are not insurmountable and it’s the kinds of things we’ve seen before. In Kenya, there were 106 credit unions that we analyzed and not one passed due diligence, and they had a regulator.”
China’s financial co-ops, incidentally, put the “pop” in mom and pop and are substantial in size. One, noted Crear, has $7 billion in assets. Data processing systems range from pencil and paper to sophisticated operations.
China’s emerging CUs would seem to be ripe for a business model such as that deployed by the Desjardins movement of Quebec, where all backoffice functions are centralized. Crear agreed, citing Brazil’s fast-growing CUs, which are also centralized, as another example. There is talk of shared branching in China, and some well-known vendors are looking to build a footprint in the country. And why not? In all, there are approximately 20,000 RCCs in China serving a whopping 300 million people.
Obviously, there are some major differences. China’s credit unions, for instance, have both members and investors, and offer dividend-yielding stock. “We may learn something here from China on capital structure,” said Crear.
But China will also have to learn the lesson other countries have had to if it wants WOCCU’s assistance in establishing CUs. “The one member, one vote is not always embraced, but it’s a deal-breaker,” he noted. “Credit unions export democracy. It has been unheard of in some places.”
WOCCU, of course, is more than just a China Shop, and Crear said there are always projects underway in 12 to 15 countries.
“Our projects now are in places that if you had said we’d be in 10 years ago I’d have said you were nuts: Iran, Iraq, Vienam, China, Russia. These are movements with traction,” said Crear.
Not everything has been a success: he admitted he’s been frustrated with the lack of progress on CUs in South Africa, and WOCCU’s big Forum scheduled for later this year in Hong Kong has been lagging in attendance, as a slowing world economy and rising travel costs appear to be having an affect. Still, those challenges hardly discourage Crear. “Credit unions do solve problems. They really do work,” he said.
Frank Diekmann can be reached at fdiekmann
