I strongly urge all credit union executives to support the corporate credit union model. Not recapitalizing corporate credit unions may be a long-term solution to a short-term problem. While our industry is growing, it is still a very small player in the financial landscape. We can’t afford to become retail customers in a system controlled by our competition.
Credit unions that have been longtime members and used the corporate system heavily, such as Mid Oregon FCU, may find the ROI of recapitalization can easily exceed 10% per year. Add to that the operational costs, pain of extraction, the potential negative impact to credit union members and the extremely low-risk nature of corporates going forward, and the decision becomes clear: We need to make sure the corporate option continues to exist.
The credit union movement is at a crossroads regarding the future of the corporate credit union network. Each credit union is currently working through its own decision whether they will stay with their current provider or move to a new entity for item processing, liquidity and investments. I strongly support every credit union making the decision that is best for them and for the industry. However, I also believe that anything that strengthens the movement will strengthen your credit union. This is why a system created by and for credit union is preferable to a for-profit solution created and controlled by competitors.
Due to their cooperative business model, the corporate system has provided cost-effective financial services, which has likely yielded a total overall net savings for the credit union community over the years, despite recent assessments.
This is not a time for further splintering of the credit union industry. Ultimately, the greatest likelihood for success lies in credit unions working together, in moving as one body. The effects of the corporate credit union model dissolving would be far-reaching and dramatic for many credit unions, and is certain to weaken the movement.
I encourage you to reach out to your peers, investigate the options, and make a decision that is in the best interest of your credit union and the movement. I believe recapitalization of corporates is both.
Northwest CU Association
Mid Oregon FCU