There are people connected to credit unions that think small is synonomous with what credit unions are all about. They fret often and loudly that the gradual disappearance of small credit unions is going to have disastrous political consequences for those remaining (a.k.a. larger) credit unions. Some in high places have even gone so far as to claim that it is basically only the small credit unions that justify the long-standing credit union tax-exemption and are the key to keeping the banking industry and their political lackeys at bay. Apparently these credit union spokespersons don’t realize that they are playing directly into the hands of anti-credit union banking industry lobbyists who are trying to convince the world that the only legitimate credit union is a small credit union. They need to get off that kick ASAP! Size has nothing to do with how legitimate a credit union is. The only accurate measuring stick is how well a credit union serves its members. If they do that well, they will be around for a long time because serving members well is precisely why so many once small credit unions have become today’s large credit unions. What seems to be forgotten in the small versus large discussions is that there is no difference between credit unions of any size when it comes to the all-important CU definition of “not-for-profit, financial cooperative organized to serve the changing financial needs of the members who own it.” Navy Federal CU, the world’s largest, has exactly the same tax-exemption entitling structure as the tiny credit union down the street that has never exceeded 900 members and $1 million in assets in over 46 years. Many small credit unions do a good job of serving their relatively small number of members because those members have lower expectations for a small credit union. They realized long ago that they can’t get a full array of products and services from their small credit union so they go elsewhere for them, maybe even to a bank. Once there were thousands of mom and pop grocery stores, hardware stores, diners featuring home cooking, neighborhood sporting goods stores, two-pump corner gas stations, warm and fuzzy book stores, nearby office supply stores, etc. Most are gone. Maybe some folks don’t like the Wal-Marts, Office Depots, Home Depots, chain restaurants, mega sporting goods stores, huge book stores, and the Internet that eventually replaced the small guys. But they are a fact of life. Why should it be any different with credit unions? An effort to prop up entities for political purposes, or any reason other than the purpose for which they were created, just doesn’t work. For small credit unions to survive, they need to carve out a new niche for themselves. However, some small CUs don’t deserve to survive because the current staff and board have become all too comfortable with their status quo of providing only the basics and not seeking ways to better serve their membership. The purpose of small credit unions was never to connect them to life support systems so that they could be made available to trot them out and put them on display to allegedly protect credit union interests. In recent months, NCUA Board Member Deborah Matz has gotten back on her save-the-small-credit union bandwagon in a big way. She has even reconfigured a section of NCUA into the Office of Small Credit Union Initiatives to provide staff to support her efforts. (Watch for this arrangement to quietly disappear when Matz leaves the board later this year.) Every chance she gets, Matz keeps advancing the argument that small credit unions are especially important because they can be paraded in front of politicians and credit union detractors as real credit unions. She publicly wrings her hands whenever the stats are announced that on average, over 300 credit unions a year disappear. Matz calls the rapid disappearance of small credit unions a “disturbing trend.” Why? It is nothing more than the credit union version of evolving trends (see above) that have taken place across the broad spectrum of Americana. Statistics will show that members of former small credit unions, especially those that disappear via the merger route, actually end up being much better served. How many and how big of a mortgage can a $1 million CU make? She uses other words that cause the entire credit union industry problems as well. Like these: “If this dangerous pace continues, by the year 2020 the small credit union will be a thing of the past. This would be an absolutely devastating loss for the entire credit union community.” No it wouldn’t. There will always be small credit unions. By then, a $30 million credit union may be defined as small. So what? The only harm such a re-definition of small will cause is that generated by such inaccurate and inappropriate doomsday comments by a national regulator. There are many other Matz examples such as stating that small neighborhood CUs are the “only alternative,” that after merging large credit unions “shutter” branches and “cut back” on service, and that “it is small CUs that are in the forefront of serving the underserved.” Statements like these are simply not true. Has anyone ever heard of Access Across America? The banking industry lobbyists must love it every time Matz gets up to speak. Makes me wonder if she will follow in Norm D’Amours’ footsteps and be invited to speak to banking groups after she leaves NCUA? Don’t get me wrong. Unlike D’Amours, Matz cares deeply about credit unions and would not knowingly do anything to harm them. But unfortunately, all the yes people surrounding her don’t have the courage to tell her she needs to find another horse to ride in the weeks remaining in her term, or she will indeed harm credit unions, all credit unions, small and large. Matz needs to stop putting credit unions in categories like the bankers do. A credit union is a credit union is a credit union. Comments? Call 1-800-345-9936, Ext. 15, or Fax 561-683-8514, or E-mail [email protected].

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Peter Westerman


Credit Union Times

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