The 2010 holiday season was not the normal slowdown period in the news business.
A preliminary ruling in the WesCorp lawsuit came across our desks. The ruling, which won't be finalized until later this month, tentatively dismisses charges of breach of fiduciary against former directors of WesCorp. However, the judge allowed the case for breach of fiduciary duty and fraud to continue against former WesCorp CEO Bob Siravo and other former senior executives at WesCorp.
The suit stirred up many feelings over the last year, from cheers to jeers. Though some didn't sign on as plaintiffs prior to the NCUA's takeover of the case, they cheered in the background. Others questioned the validity of the suit to begin with and the eventual cost of it. It got a lot of play in the media because of the big names charged, like Siravo and CUNA CEO Bill Cheney, and big stakes involved-not just the money but possibly all the defendants' careers. In the end, the judge found that the volunteers did not shirk their responsibilities, but the case for the executives is an entirely different deal. It will continue to grab headlines in 2011, and our new correspondent covering corporate credit unions, Robert McGarvey, will be on the case.
Last year was the year for poking authority in the eye for some credit unions. The WesCorp suit was filed when the original plaintiffs, seven mostly small credit unions, felt the NCUA was slow to act. Randy Karnes, CEO of CU*Answers, a core processor serving primarily smaller credit unions, started a petition on behalf of his clients and other credit unions imparting a vote of no confidence with the NCUA and trying to jump-start a major overhaul of the agency.
The petition fell flat, garnering just 98 signatures as of Jan. 6, about two weeks after its launch, and about half of those were anonymous or duplicates. There were a number of reasons for this. First and foremost is a lack of support. A handful of bitterly angry and vocal credit union executives are out there allowing their anger blind them to reality. Another is that many credit unions are scared to death to say anything negative about the regulator for fear of retribution. Still another is that it was not well-crafted or well-planned.
From what I can glean in conversations with credit union executives, most would rather have a flawed NCUA that could be reformed rather than a bank regulator that would not understand the nuances and very different business motive of credit unions.
Despite the petition's flair for the dramatic-just read the introduction-it does make one very valid point: the current restriction to one credit union professional serving on the NCUA board at a time makes no sense. Requiring two as the petition suggests is no better. Just because someone can run a credit union doesn't mean they understand the ins-and-outs of regulating and politicking. Both are important qualities for NCUA board candidates.
My proposal would be to allow more than one credit union professional to sit on the board but make them earn the political street cred needed to get the job. Last week a banker was named the White House chief of staff, and in a story we wrote on his consideration,First Security CU CEO Dennis Fisher posted a comment asking why credit unions weren't lobbying for the Republican National Committee chairmanship when, and if, Michael Steele is ousted. Great question!
Credit union trade associations have taken some hard knocks in the last couple of years. Why didn't CUNA see the corporate crisis coming, especially when you had executives on the boards? Where are the legislative victories to expand business lending and capital authorities? Tell me why I should pay my dues this year when I'm already losing income left and right?
Michigan Credit Union League CEO Dave Adams wrote his membership, asking them not to sign the petition. Given the petition was a nonstarter, the only thing Adams e-mail did was provide publicity to the cause. It was how Credit Union Times came upon the petition in the first place. The same may have held true for MCUL members.
But the language of his e-mail left much to be desired and made me think twice about the need for an outside voice. When I read it, I could imagine how I would feel as a credit union CEO being condescended to.
Adams made valid points about paying dues for the trade association to serve as credit unions' advocates every year, and experts are needed for lobbying. He noted a "shared passion for change" but discouraged credit unions from signing onto the "well-intentioned petition."
OK, I can accept that-except I might have forgotten it after I read, "I discourage it because it hasn't been properly coordinated with the trade associations that are hired to represent our industry. Further, I believe that the core positions being taken by the petition are counter to the current positions of CUNA and state associations." (My emphasis) So whose positions exactly are being taken? This appears a case of believing the tail wags the dog.
This response not only shined a light on a petition that wasn't going anywhere to begin with, but it also illuminates the trade association as master rather than credit unions' best friend.