The Blog

Leadership Makes A Difference

The following is an excerpt from a Letter to the Editor, submitted to the Credit Union Times by Henry Wirz, CEO, Safe Credit Union

It is time we appointed people who understand that credit unions are cooperative institutions.  The CFL means something to those of us who understand that cooperation is the essence of how credit unions serve their members and our country.  The NCUA Board must not understand cooperative principles or they would be concerned about the loss of the CLF.  The CLF’s capital was contributed by credit unions so that credit unions would have a dependable source of liquidity.  That source of liquidity and the credit union owned capital are gone.

It is time we appointed people to the NCUA board who do not treat credit unions like banks.  Credit unions are democratically organized and operated.  Cooperative structures make it possible for each credit union to act locally but operate with the scale and efficiency of a national organization.  Now that the CLF is gone credit unions won’t have a cooperative liquidity solution and will again have to depend on banks for help when they need liquidity. Neither Chairman Matz nor Board member Fryzel made any mention of the CLF.  Congress intended credit unions to be a unique member controlled financial institution that is based on cooperative principles.  The CLF was based on those principles of cooperation. 

The White House should select NCUA Board members who abide by the same cooperative principles that credit unions follow.  NCUA’s regulatory practices demonstrate a lack of confidence in the cooperative principles.  The founders of credit unions convinced Congress that ordinary people had the common sense to manage and control the financial institution that held their deposits and loans.  During the recent financial meltdown the common sense leadership of volunteer credit union boards and supervisory committees made far better decisions than the financial experts at the investment banks and at the large national banks such as Chase, Bank of America,  and Citicorp.   NCUA ‘s lack of faith in the common sense leadership of volunteers is evident in the NCUA examiner’s micro management of credit union operations including everything from interest rate risk management to charter conversion.  NCUA’s lack of faith in the ability of ordinary people to run their credit union and be accountable for results is disappointing.  It is wrong for NCUA to tell Boards and management how to run a credit union rather than holding Boards and management responsible for outcomes.  NCUA’s own management of its budget, accounting and communication to Congress are hardly a testament to NCUA’s expertise at running a credit union.

I urge credit union leaders and officials to sign the Chip Filson led White House Petition at  .

Leadership does make difference at credit unions and on the NCUA Board.

On The Handling Of CLF Funds

There are a lot of opinions around the handling of the CLF funds by the NCUA, and I suppose they range from brilliant tacticians for using all system tools to advert a real crisis to that of being raiders, and self-proclaimed white knights saving us from a potential storm “they made real by using decade old proven destructive approaches to current problems”.  But in the end the real troublesome issue is that they really did not or do not wish to explain anything to any of us.  If they were a good regulator for our cooperative business models they would know that our members, our customer owners, deserve better from those who guarantee their safety in being “owners” of credit unions.  The NCUA has lost its compass for designing insurance and regulations when it comes to the credit union industry, it forgets that credit union members are both consumers and owners, and that when its actions and interactions with both consumers and owners of credit unions yield a one sided, heavy handed solution even in the name of protecting the consumer perspective it can destroy the owner’s perspective and crush the will of our citizens to organize and offer solutions (credit union solutions) to our communities and economy.

Should the NCUA not start to see their responsibilities to both hats that our member wear, they will continue to be one of the major challenges to the safety and soundness of our industry.  They need to step to the fact that their lack of attention to cooperative principles and recognition of the key success factors for the credit union industry could be one of the most serious challenges to our insurance fund and the industries safety and soundness.  We hope that should the NCUA adopt a better design for regulating cooperatives that our industry would have the confidence of both consumers as consumers and consumers as owners.

– Randy Karnes, CEO, CU*Answers