Predicted demise of credit unions didn't happen
It seems like someone is forever predicting what will, or won't happen to credit unions, if they do, or don't do certain things. For example, here are just three of many current predictions being made: If credit unions don't serve those of "modest means," they will get taxed. Expanded fields of membership will make CUs like banks. If credit unions change their names, build fancy buildings, charge fees, and reduce human contact, member loyalty will vanish. The prediction business has always been a part of the credit union world. Interestingly, however, seldom does anyone go back years later and see how some of these predictions actually played out. That's one reason why I was fascinated when I recently read a transcript with lots of dust on it. Some years ago, a high-profile credit union individual (held top leadership positions in a very large credit union and several national CU groups) made a presentation that contained a series of predictions to illustrate his strong convictions regarding the future of credit unions. Made to the board of directors of the Defense Credit Union Council (DCUC), that presentation included these predictions: "By the year 2000, credit unions will not exist in the United States. Any corporation, or other organization engaged in the business of accepting deposits of money and making loans or investments, will be called a `bank.' " A companion prediction stated that in that same time frame, all financial institutions would be lumped together under a single national regulator. That super regulator would be the Federal Reserve System. It would replace all separate state and federal regulatory agencies. The dual chartering system would be no more. Sound familiar? Today, some are predicting that there will not only be a consolidation of financial institution regulatory agencies, but that depository institution insurance funds may suffer a similar fate. These particular predictions were based on a document called a "Scenario for (the) Federal Reserve System in the Year 2000." It was written in 1974 as part of a planning exercise at the Federal Reserve Bank of Cleveland. When its release caused a major controversy, the Fed dismissed critics by claiming the scenario had no official status and was never meant to be a forecast. In 1981 the credit union volunteer repeated the Fed outlook in his remarks to the DCUC Board and added his own take: "Whether or not it was meant to be a forecast, the alarming thing is that it is well on the way to realization.possibly well before this century is over." As predicted, credit unions did undergo significant change in the past 20 years, but none of the specific predictions materialized. Also in the DCUC presentation, a strong case was made that those seeking to allow credit union managers to be called presidents are doing harm to CUs. In fact, those who sought to make credit union titles conform to "the common practice in other types of financial institutions" were thoroughly chastised. "Changes such as calling the manager president tend to weaken the role of volunteer officials," he said. He added that titles were one of the primary characteristics that distinguish credit unions from banks and S&Ls. In 2001, the CEO/President title is now universally accepted for CU "managers." Chairmen of the Board love being called Chairman of the Board. Volunteer officials are no weaker (or stronger) because of the title changes. And S&Ls are history. Later on in that same presentation, he railed on everyone who in any way advocated changes that would allow credit unions to expand their common bond and field of membership. He especially lashed out at supporters of what he foresaw as a growing trend back towards community-based credit unions. His conclusion was that they alone could cause credit unions to lose their tax-exemption and thus not survive the millennium in any form. Again, a lot has changed in the 20 years since that presentation, but the loss of the credit union tax-exemption isn't one of them. As for survival, he was dead on. A lot of credit unions did not survive. At the time of the speech, there were 22,000 plus credit unions; today there are 10,000 plus. There were also very specific comments and predictions regarding director's compensation, member loyalty, the role of the federal regulator ("They are leading us to our demise and helping make conversion to a bank easier."), supervisory committees, CU mission, credit union experience ("It is important that our trade association executives have actual experience as credit union volunteers or credit union professionals.") consumer affairs, counseling, education, equal treatment of members ("Credit unions are distinguished by not playing favorites with loan rates; high risk members pay the same fair rate as board members."), insurance coverages, and 18 ways CUs are different. Looking back, most of the predictions in the presentation ended up out in left field. With the benefit of hindsight, some now seem downright preposterous. Yet, my hat goes off to the man who stood up to be counted 20 years ago. Everything in his presentation came straight from his credit union heart. He wanted to save credit unions from themselves. He really believed that credit unions were, as he put it, "shooting themselves in the foot." At the very least, he made credit union people think seriously about credit unions and what makes them different, valuable, important, and very special. And about what possible dangers lurked ahead. Who knows, maybe this dedicated volunteer actually contributed to some of his most pessimistic predictions never coming true just by making them? The obvious conclusion of all this is to ask the question: How will all those dire predictions being made today stand the test of time? The only way to know for sure is to check them out from time to time (don't wait 20 years), not to take them too seriously, and hold those making them accountable. Comments? Call 1-800-345-9936, Ext. 15, or Fax 561-683-8514, or E-mail email@example.com.