Why We Should Pause & Reflect On The Passing of U.S. Central
When credit union pioneer Edward Filene died in 1937, many mourned the man dedicated to cooperative principles and their effect on the daily lives of ordinary people. Franklin Roosevelt wrote of him, "He was an analyst who was able, by mathematical calculations, to make plain to us that our modern mechanism of abundance cannot be kept in operation unless the masses of our people are enabled to live abundantly."
These words from the past are relevant today in light of news that U.S. Central Bridge FCU's doors will close this October. The loss of U.S. Central marks the end of an important era in our nation's credit union movement. Say what you will about the unfortunate events that caused it to be conserved in 2009, but few can deny that U.S. Central served corporates and credit unions-and, thus, ordinary people-very well for nearly 40 years.
U.S. Central was the hub of the credit union financial system at a critical time in our history. In the same way corporates work to benefit their member credit unions, U.S. Central pooled resources and aggregated services for corporates, allowing our industry as a whole to be efficient and competitive.
Chartered in 1974, U.S. Central's initial purpose was to serve as the national liquidity source for CUs, but soon, its value was embraced and its role expanded. Where before CUs had been forced to look to banks for correspondent services, U.S. Central and the corporates provided better and less costly solutions, creating an efficient cooperative settlement and payments system anywhere.
U.S. Central's automated settlement system worked so seamlessly, it was easy to forget that many millions of member transactions were handled each and every day, totaling some $4 billion. Just as drivers who start their cars with a turn of a key and little thought of the mechanics, CUs looked to their corporates and hence, U.S. Central, to provide dependable and efficient service without a second thought. And for three-plus decades, it did.
This is not to gloss over the grievous result of the financial crisis - we're all painfully aware of the harmful effect U.S. Central's problems has had on the industry. But focusing only on the negative aspects and ignoring its good work would overlook an integral and beneficial part of our industry's past. U.S. Central was the consummate model of the power of collaboration and the power of the group buy.
Entering A Different Era
Today, we're entering a different era, and corporate credit unions that have survived the crisis are stronger. Further, we're proof of the industry's recognition that the same cooperative model that made U.S. Central a good idea in 1974 is still valid.
Here's an example from Mid-Atlantic Corporate: When we apply sustainable growth calculations to our membership, we find that CUs with less than $100 million in assets spend some 70 cents to make a dollar, while credit unions with more than $500 million in assets spend only 49 cents to do the same. Working together, collaborating credit unions can drive greater efficiencies.
Looking back on 38 years, it's clear that U.S. Central helped make our industry stronger for many seasons. But now, as we move ahead, we can be assured that our cooperative movement continues to be alive and well.
Mr. Filene referred to the credit union movement as "a great movement, worthy of great deeds, deserving of great loyalty." Powerful words that still ring true.
Jay Murray is president/CEO of Mid-Atlantic Corporate FCU, Middletown, Penn.