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<p>There’s nothing positive to be gained for credit unions by the ongoing efforts of some individuals and some organizations constantly making comparisons, usually derogatory in nature, between small and large CUs. Although nothing new, unfortunately it seems like the volume is being turned up again. Putting all small credit unions on a pedestal and describing them as “the backbone of credit unions,” or as “the only real credit unions,” or as “what credit unions are really all about,” or as “the only reason credit unions don’t lose their n-f-p tax exemption,” is just plain ridiculous. It also shows profound ignorance regarding what makes a credit union a credit union. It certainly isn’t asset size! On the other hand, badmouthing large credit unions by charging that they “have become banks,” or that “they only care about the bottom line,” or that “they have lost sight of their mission,” or that “they don’t know their members and lack compassion,” also makes no sense and is equally ridiculous. Besides that, such assertions regarding both small and large credit unions are flat out wrong! Who does this? As you would expect, lobbyists and spokespersons from the dozens of not-for-profit national and state commercial banking trade associations. Also, congressional politicians, including some who are in powerful positions, have been known to generate such inflammatory rhetoric. So have credit union folks including some in high places. NCUA Board Member Deborah Matz is telling credit union audiences across the country in her get-acquainted speech appearances that “small credit unions are the backbone of the credit union community.” She goes on to explain: “small credit unions are performing the fundamental mission for which credit unions were created.” Small credit unions are not the backbone of the credit union community. All credit unions, regardless of asset size, that serve all of their members as effectively as possible, are the backbone of the credit union “community.” There is no argument that many small credit unions do a good job of serving their members, at least within the constraints of being small. But many large credit unions also do a good job of serving all of their members. Within that membership are individuals from all walks of life and every socio-economic level, the very same people served by small credit unions. So what makes small credit unions a “backbone?” Is it because they are trotted out every so often for avoiding taxation political purposes? Probably! But this too is wrong as well as dishonest. If all the larger credit unions disappeared as CUs tomorrow, would the American consumer be better off being served by the remaining “backbone” credit unions? Of course not! As for the comment regarding performing the fundamental mission, etc. yes, small credit unions do that and do it exceedingly well. But so do larger credit unions and in many instances, because they have the necessary resources, do it better than many small credit unions could ever hope to do. This statement has nothing to do with emotion or politics. It is just the reality of the credit union marketplace and virtually every other market place in this country. Small by definition does not automatically mean good. Nor does large automatically mean bad. All credit unions are exactly the same from a structure and purpose standpoint. All credit unions, regardless of asset size, are covered by the CU definition at the end of this column. All credit unions need to be evaluated based on what they do for their members. Period! Successful, when applied to credit unions, does not refer to size but strictly to member satisfaction. The crazy idea fostered by a previous NCUA Chairman that only small credit unions serve the (choose one) underserved, low income, poor, limited income, disadvantaged is part of the big lie advocated by the banking industry. What some “backbone” advocates may be overlooking is the fact that there are a number of credit unions that are small and have been small for many years because they are not doing a good job of serving their members. Others are small because the credit union has become the private preserve of a “manager” who doesn’t want the credit union to grow because to make that happen would require more effort than he or she is willing to put forth. Much easier to sit back and enjoy the accolades of those who think that small is an acronym for excellent. It is not. There are those who feel large credit unions should provide financial support and additional resources to small credit unions as part of their obligation for being large. Many large credit unions do in fact assist smaller credit unions in dozens of ways. That’s great, but they have no obligation to do so. Something else to think about: a major share of CU trade group dues dollars go to help smaller credit unions. Ditto regulatory dollars. Yet, all small credit unions together represent far fewer members than the larger credit unions. Most small credit unions do an outstanding job for their members. Many are small only because they serve a very limited “field of membership” and face serious expansion obstacles. Never forget that at one time even the very largest credit unions were small credit unions. Did they grow for growth’s sake as some have charged? Or did they grow because they were able to keep up or even ahead of members’ changing financial needs? For the record, I am not anti small credit unions. I have made that point in many previous columns. But I am against calling any segment of credit unions, small or large, a “backbone.” Finally, here’s that definition again, slightly modified based on the above: A credit union, regardless of size, is a not-for-profit financial cooperative organized to serve the changing financial needs of all the members who own it. Comments? Call 1-800-345-9936, Ext. 15, or Fax 561-683-8514, or E-mail [email protected]</p>

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Peter Westerman

Credit Union Times

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