Underserved communities better served by CU-initiated solution

In the grand scheme of human endeavor, those initiatives that are driven by voluntary, altruistic and self-motivated action generally prove the most effective and sustainable. Actions that are coerced, demanded and imposed generally meet with less success. The human spirit is nurtured and buoyed by the former and distorted by the latter. It is the difference between the philosophy and outlook of Thomas Hobbs (1588-1679) and Jean Rousseau (1712-1778). Hobbs thought that life was "nasty, brutish and short." Man surrenders his natural rights and unwillingly submits to absolute authority of government to avoid the lawless acts of others. This meant laws and regulation over all aspects of life. Rousseau, on the other hand, felt that man naturally wanted to improve himself and help his fellow man and would continually seek new ways to achieve a better life. People voluntarily enter a social contract among themselves to correct inequalities. Stringent controls retard and distort man's natural inclination to do good. Credit unions in general and community credit unions specifically have a good track record of voluntarily and naturally serving their members and their communities irrespective of incomes, occupation or perceived "social status." The movement, the legislature, and the regulator affirmed this point during the national debate regarding a low-income service requirement (some would term CRA) as a part of the Credit Union Membership Access Act (H.R. 1151). A strong credit union grounded in the principles of financial cooperativism and built on the sound economic structure of diversification, not only does not avoid serving all the members of their community, they actively embrace that service. In fact, they are the community. The balance between depositors who have excess funds to invest and borrowers who need access to affordable loans is a winning combination for any financial institution. Any credit union that actually seeks to avoid serving the broader population only does harm to their own institution, a fact that most boards of directors would recognize and remedy. The National Credit Union Administration's proposed regulation to impose examiner review of each community credit union's action plan (CAP) with the discretion to pursue "appropriate supervisory actions" is a Hobbsian approach to serving members of modest means. While the intentions are good and consistent with what credit unions are all about, a hardened shell of meeting the "minimum requirement" will form around this solution not unlike banks' reaction to CRA. Credit unions will settle on satisfying the regulator's general perception of how to meet community needs rather than initiating innovative solutions that are better defined by the credit union and their community. Many will find ways of meeting their minimum requirement by investing "at a distance" instead of rolling up their sleeves and participating actively in the design and implementation of real solutions in the community at risk. Those are the typical reactions to a Hobbsian solution. A better, industry solution that has been devised and in place for over two years is the voluntary Statement of Commitment that credit unions complete as a part of Project Differentiation. Over 300 credit unions have completed or are in the process of completing their Statement of Commitment. The Statement of Commitment is a document prepared by the credit union detailing how they serve their communities and especially the underserved. I enjoy reading the Statement of Commitment for different credit unions posted periodically on CUNA's Web page. It is a dynamic and evolving process as credit unions come up with new ideas and share them with each other. At Truliant FCU, we have already updated our Statement of Commitment twice and may have to revise it twice a year just to keep up with all the developments in our community activities. It is imperative that every credit union participates in this worthwhile activity and shares their ideas with others. We must continuously look within our own credit unions and communities to determine how we can better meet the needs of all our members and reach out to potential members who are in need of affordable financial services. In so doing, we should be able to defend against a government-imposed solution that will come up short in actually meeting the objectives we share. Marc Schaefer President/CEO Truliant FCU