I don't believe any of this was part of the grand plan.
Like carefully planning a child's special birthday party only to have Aunt Tina get drunk and light the curtains on fire after shoving the birthday girl aside and trying to blow the candles out herself because she was never her mother's favorite and never had a cake as a child, and then having half the guests leave while talking lawsuit between the hacking coughs from the smoke inhalation, 2009 has not been the year it was supposed to be for credit unions.
You probably have forgotten by now, but credit unions are "celebrating" their 100th anniversary this year. It all seems so quaintly archaic all of a sudden that a short century ago millworkers and a parish priest in New Hampshire helped to charter the first credit union in the United States. To fete the event, plans called for credit unions around the country to mark the anniversary. Credit Union Journal has a video recreation of the first day of business on its website at cujournal.com. CUNA made sure to host its America's Credit Union Conference in Ed Filene's hometown, Boston, this summer. There were to be commemorations and declarations and citations.
And then 2009 happened.
Granted, it does depend on how you look at it, because just as planned the movement has come together (lots of mergers), has reexamined its business model (the charter conversion sharks smell blood), has reinvigorated its trade associations (CUs are demanding their leagues and CUNA and NAFCU "do something"), has highlighted the role of the separate credit union regulator (some loyalists are mulling a lawsuit or two against NCUA), and members have reached out as never before to their credit unions ("I'm calling because I heard something about a corporate conservatorship or federal takeover, or whatever; anyway, I'm coming down to get my money").
It is common to have fireworks with a big anniversary, and you can't say credit unions haven't delivered that. But it's also common to have a period of reflection, of examination of the road behind and the road(s) that may lie ahead. Yet who has time to reflect? Reflection and long-term planning are usually the first two casualties in a crises; most often, the choices made are explained away as the best choices available "at the time."
Should NCUA have placed U.S. Central and WesCorp into conservatorship? "Yes," the agency will certainly argue, with thousands of pages of PIMCO analysis to back it up. "No," plenty of critics are now charging, with 1.6 billion reasons of their own. That was the asset size of the failed Capital Corporate FCU in Maryland, seized by NCUA over Super Bowl weekend in early 1995. Twenty-twenty hindsight was able to show that had many of the investments held by CapCorp been held to maturity, instead of sold by NCUA, they would have turned a profit and it's likely Capital Corporate would be with us today.
Incidentally, given all that's occurring with corporate credit unions now, here's an interesting paragraph from the GAO report in the wake of the CapCorp mess: "Cap Corp's failure resulted from a number of factors, including an inappropriate investment strategy, an inadequate risk management system and insufficient board oversight, lax regulatory supervision and examination, and inadequate capital."
Sound familiar?
Another lesson from the CU past that shouldn't be forgotten is HR 1151. Credit unions were so desirous of having (needing) the Credit Union Membership Access Act pass Congress in 1998 that they swallowed a compromise with the 12.25% cap on member business loans. Now, many credit unions are desirous of relief from that cap.
Today, credit unions are lusting after federal help with the tab for the corporates and may have to bite the bullet on another compromise - CRA. Just don't forget what they also do with bullets.
A few months back I talked to one person who lamented, "I've been a CEO for 31 years. I should have retired after 30." He's not alone. Special "assessments" and conservatorships and economic news have folks afraid to click on their in-boxes. But now is the time for leaders to step up and think about that century ahead.
No doubt some of those in Boston this summer for the CUNA meeting will follow the freedom trail and will hear the near mythical story of Paul Revere's warning to American troops. The revolutionaries had it easy, because for credit unions it's "One if by land, two if by sea-and three if by our own hand."
What to do with that hand? Burn it on the birthday candles, or use it to make them a torch to light the way? It's up to credit unions.
Frank J. Diekmann can be reached at
