It wasn't all that long ago that to be a radical in the credit union business you made the switch to a community charter.
And that was back in the day when the definition of "community" was an actual community — a village or a town or, as NCUA used to quaintly define it, an area where people could be reasonably expected to interact (this would lead to great uproars in the Western U.S. over how regulators back east didn't understand that it isn't unusual in some parts to drive several hours to the grocery store).
Of course, when something is "radical" it requires that something else be traditional, and credit unions are nothing if not traditional. And that is generally a good thing. It's hard to know now just how many credit unions had "Employees" in their name, with that word a suffix to the name of a particular sponsor company or government body. The traditionalists objected to what they saw as an abandonment by some of the credit union "mission" — even if size of the FOM has nothing to do with it — and especially the violation of what was then the age-old Honor Code of Credit Unions, if you will: Thou Shalt Not Overlap Another CU's FOM.
Screaming & Gasping
Many of the traditionalists began screaming as some credit unions got city, county or even, gasp, statewide fields of membership. They protested to state regulators and to NCUA, and with the latter found a sympathetic ear in that of former Chairman Norman D'Amours. But the expansions continued, and the "Employees" references began to disappear as new names (some of them awful, frankly) were selected and new signs were put up.
Many of the traditionalists, although it was never phrased this way, liked their monopolies on certain groups, especially at larger employers that paid well. They didn't have to "compete"; new members flowed in regularly with every new employee orientation led by HR. They didn't have to innovate or be particularly lean or efficient or even smart. (And yes, I can already hear some of you sighing and longing to go Old School.) When other credit unions began to "overlap" them it wasn't long before deficiencies in management and boards at some credit unions were exposed. Surprise, a lot of those folks didn't much care for that, either.
Lessons From San Antonio
In this issue Credit Union Journal takes a look at the evolution in the credit union charter over the past decade. We do so in conjunction with CUNA's America's Credit Union Conference, which is being held in San Antonio, a city known for three things: an Alamo that doesn't rent cars; the foresight not to bury a small creek inside a concrete pipe like just about every other American city has done, and instead to turn it into a "Riverwalk" that is a gem of a tourist attraction; and third, of course, numerous, large, successful credit unions that all "overlap" each other.
It must have something to do with the saintly works credit unions believe they do, because San Antonio has joined San Diego as the two "credit union towns" in the country.
It can be argued that the expansion of charters has been the great defining change in credit unions over the last decade. For some people it will be argued without answer for another decade whether or not it has been a change for the good. Certainly, however, it seems there was no choice. Credit unions are a mirror of the country itself. Founded to serve low-income workers in a small milltown at the turn of the last century (coincidentally, that first CU, St. Mary's Bank, had a community charter), credit unions began to spread across the U.S. as new companies and industries and cities themselves took root. By the mid-1970s, there were more than 23,000.
But so much has changed since the days of gas lines and big hair, and credit unions had to mirror that change, too. Can you imagine the sad shape of the Credit Union World had so many of those single-sponsor or limited-SEG-based CUs never changed their charters? They would all have adjoining plots in the Cemetery of Once Great Companies That Have Shut Down, just another sign on a broken door inside a dark, now shuttered plant.
Yes, there are about one-third as many CUs today as there were just 40 years ago, and a year from now there will be fewer still. But credit unions are harldy alone in having to deal with marketplace changes no one in a Norman Rockwell painting could have ever imagined.
Down On Main Street
Credit unions like to think of themselves as Main Street institutions, but seldom give thought to how Main Street itself has morphed and evolved, much of it often painful.
To survive, Main Street retailers have had to be nimble and innovative in order to fill the gaps left by the generic Big Box stores in or near the mall. They have had to provide the personal service not found by clicking on the online links of Internet retailers. In short, they have had to do all the things credit unions have done and must do in order to open the doors tomorrow.
Main Street couldn't count on loyalty, but it could count on every community rooting for it to survive. After all, every community needs a Main Street, and every Main Street must be a part of its community.
Frank J. Diekmann can be reached at
