Wirz: I Am Not Against Small CUs, but Do Object to the Focus on Size
I object that so much emphasis by trade associations and the NCUA is focused on one goal-saving small credit unions. I would rather that our focus be on making credit unions the preferred choice of consumers. If we do that, then all credit unions will prosper-large or small. The focus on small credit unions ignores the purpose of a credit union. The purpose is to meet the needs of members. The concern has been that we are losing our small credit unions, and, therefore, we need to do something. We are not losing small credit unions because they are small. When a credit union fails, it fails because it is not meeting the needs of its members.
There is, in fact, a perverse logic in focusing just on saving small credit unions. Asset size has a lot to do with the kind of resources available to meet member needs and to assure safety and soundness. We have lots of statistics and evidence that point to economies of scale that increase with asset size. We also know that internal control is a problem when you can't have segregation of duties. CU Times just reported two cases of embezzlement and said that even though both credit unions were small, it was not an indication that small credit unions have more embezzlement. But the article did note the problems with segregation of duties and other internal control issues. Large credit unions are not immune to any of the problems that small credit unions face, but they have the resources to manage those problems.
I worry that we will create a two-tier system for large and small credit unions. We can't have two sets of standards. A credit union charter is a responsibility to serve the membership by improving members financial well-being, provide excellent service and maintain a financially sound credit union. That responsibility to serve the membership has to be fulfilled regardless of size. And the standard for performance, whether set by regulators or by members, is and must be the same for all. My message is that we have to build great credit unions.
If I offended anyone, I apologize for not being more clear in my message.
SAFE Credit Union
North Highlands, Calif.