Anyone knowledgeable about earth's seasonal cycle will look atthis headline and retort: “No, winter actually begins on Dec. 21.”(And no, this is not a “Game of Thrones” reference, for thosekeeping score). The seasons I am referring to are societal seasonalcycles – transitions from prosperity, to struggle, to prosperityonce again.

Regulations Chase a Changing Society

Rebecca Ryan in her book “ReGENERATION, A Manifesto forAmerica's Next Leaders” describes this cycle. America started in awinter period (the American Revolution), and the nation hascompleted three entire spring-summer-fall-winter cycles. Fastforward to recent memory. Ryan writes, “Winter crashed into Americawhen two planes hit the World Trade Center on September 11, 2001.American's long-running bull market had ground to a halt. WallStreet hustled to find new ways to make money and prop up America'sfinancial system. The housing bubble was born, preceding theeconomic meltdown of 2008 and subsequent Great Recession.”

So, what does this have to do with regulation? My hypothesisis:

Society is at an inflection point. The growing economicinequality and inability of low and middle-income Americans to justget by is unsustainable. Society will demand greater and moreequitable access to economic opportunity and prosperity.

Government regulation follows societal drivers.Patterns show it does this by: 1) Forcing institutional change toalign with society's mandate, or 2) Enabling forward-thinkinginstitutions to thrive and solidify their competitiveadvantage.

Credit unions focusing on mission over margin willestablish long-term success for themselves AND theirmembers. Those who actively and strategically choose toaddress economic inequality and serve the financially vulnerablewhere others do not will not only live their missions by helpingstruggling consumers survive the current “winter,” but also be bestpositioned to thrive when regulations nudge toward the path ofsocietal progress.

The Chill of Winter Eventually Thaws

Ryan explains that societal winter manifests itself in manyforms. Who among us has not been affected by:

• Our loved ones being laid off and struggling to find work;
• Our soldiers sent back for a third (or fourth!) tour ofduty;
• Our lenders saying our homes aren't worth what we paid forthem; our equity being vanished;
• Our kids earning college degrees crushed by debt and beingunable to find jobs; or
• Our parents who planned to retire by now but are still working,afraid there won't be enough saved to live on.

Did the chill of winter permeate your body when reading thosestatements? Like the climatic seasons of the planet, spring willreturn to renew and invigorate the nation.

Ryan further demonstrates that things do get better, but howsociety supports the transition to spring determines the level ofprosperity and equality experienced. These seasonal changes won'thappen unprovoked; people and the institutions they create are thetrue forces of nature.

Even if you don't believe in this seasonal theory of Americansociety, look around. Times are tough, economic systems the countryhas held onto for decades are in upheaval, and change is coming.We've gone through a divisive presidential election fueled bymasses that are fed up with the current system. Income inequalitycontinues to grow and is not expected to level off until 2035,according to a Congressional Budget Office report. About one in 10student borrowers are behind on repaying the loans, the highestdelinquency rate of any type of loan tracked by the New YorkFederal Reserve's quarterly households debt report.

Winter's ice is cracking society's seams and something's got togive. Like Ryan, I believe society is at an inflection point and weare on the cusp of melting into spring.

Focus on Where Society Is Heading, Not the Short-TermRegulatory Environment

There is a pattern of not-so-subtle action in our history asgovernment catches up to a society demanding more equity for all.Reference these prominent examples of government interventionforcing change regarding:

• Racial justice and equality: The Emancipation Proclamation of1863 and the Voting Rights Act of 1965.
• Financial justice and security: The Banking Act and SecuritiesAct of 1933 and the Dodd-Frank Act of 2010.

Regulation need not force industry's hand. Both right and leftcan agree it's better when government doesn't force action butrather enables society to take care of itself. One familiar exampleof government action enabling industry was the Federal Credit UnionAct of 1934, which jump-started the credit union movement.

While regulations are in constant flux (for example, calls forrepeal of financial regulations under the current presidentialadministration), if the industry takes a step back and looks alonga multi-generational time horizon, it will see society marchingtoward America's next spring in the form of support for greatereconomic opportunity for all. Regulations will follow thismarch.

Some financial institutions are acting on this horizon andestablishing themselves as leaders in supporting transition. Needproof? Despite the current administration's roll-back of theFiduciary Rule, a poll by Fidelity Investments found that 63% of financialadvisors said the administration's postponement of the rule wouldhave little to no impact on their efforts to comply. These bravevisionaries see the societal writing on the wall and are puttingthemselves at a long-term competitive advantage despite thetemporary fluctuations in regulation.

The Will to Shape the Future, Not Let the Future ShapeYou

Credit unions, bydefinition, exist to serve all members fairly and equally.Keeping both eyes on year-to-year regulatory shifts may help keepthe ship afloat for today, but a reactive stance makes for a poorlong-term strategy and leaves a tremendous opportunity on thetable.

Keeping an eye on societal trends puts credit unions one step infront of the regulations. History tells us society shapesregulation, not the other way around. And if credit unions look atwhere society is heading, they'll see that the members they serveare hurting. Those with the will to shape the future will take boldaction to frame a brighter future, recognize it as the only pathforward, and deem any other path as far riskier both for thebusiness and for the community.

The Choice Is Yours

Credit unions can wait for regulations to mandate support offinancially vulnerable populations, or use the regulations to theiradvantage when said regulations inevitably enable, uplift, andfacilitate financial equity and inclusion.

Those that choose to act now to support the un- and underbankedwill be future-ready. Some will say that this is being on the rightside of history. Others will say this is having strategic businessforesight, developing a competitive advantage, and serving anuntapped market in a highly competitive financial servicesmarketplace.

Ryan in “ReGENERATION” states, “Americans alive during thiswinter have a noble task: To think and work and act not forourselves (because many of us may not be alive when spring comesagain). We must act with the wisdom and grace to do our best forour children, and theirs.” Vulnerable consumers have always neededcredit unions' help and will continue to in the future. The will tolook beyond current regulatory challenges and act as a leaderpressing for a more just and equitable financial future takesguts.

Spring is coming. Will you be ready?

Adam Lee is Incubator Director forthe Filene Research Institute. He can be reachedat 608-661-3747 or [email protected].