Greed, Watchdogs, Guts, Kudos, Unnecessary, and More

Whoever said credit unions don’t make enough news to fill a big and getting bigger weekly credit union publication must be hiding in a cave. Time for some more Catbird Seat observations: A pledge form sent out to credit unions begging for donations to support the lets-all-become-banks activities of the Coalition for Credit Unions Charter Options is very telling. The group is asking for $25,000 from credit unions with assets of a billion dollars or more. The suggested contributions scale slides down in five CU asset category steps to the bottom rung which is credit unions under $100 million. From them the coalition would like a mere $2,000. Apparently the coalition has concluded that larger credit unions can afford more substantial charitable contributions. Or could it possibly be that the anti-credit union, anti-NCUA, Coalition figures that CEOs and boards of the over one billion dollar credit unions have more to gain if and when their credit union converts to a bank charter? And thus the big boys would be eager to pony up more member cash to make it happen? One CU CEO recipient of the Coalition’s plea for operating funds made this observation: “Maybe if they `folded’ their mailing to put the solicitation form first, results would differ?” As events continue to unfold in areas ravaged by Katrina, it appears certain, sad to say, that the current number of credit unions, 9,062, will be dipping below the 9,000 mark much sooner than I anticipated in an earlier column. I haven’t had much positive to say about rookie North Carolina Republican Congressman Patrick McHenry who is proposing legislation that is designed to curb NCUA powers when it comes to bank charter conversions. But I take my hat off to any guy as unpopular as he is among credit union folks who will stand up in front of them to speak. McHenry is on the program at the upcoming NAFCU Congressional Caucus. Be nice to this one term legislator. Kudos to CUNA for its leadership in announcing R.E.S.C.U. which stands for Relief Effort and Support for Credit Unions. Better late than never. Coordination among credit unions and CU groups is sorely needed when disasters like Katrina occur. Everyone wants to help, but often confusion reigns regarding what’s the best way to achieve swift and maximum effectiveness to assist the needy. Besides CUNA’s ability to coordinate an industry wide response, they can play a critical role in keeping the glory seekers and scammers at bay while making certain that generous credit union industry contributions of time and money get to where they will do the most good as efficiently as possible. Good leadership here. Marvin Umholtz is a name long familiar on the credit union scene, and more recently someone who has become best known as a person in the forefront of those once credit union individuals who have done a flip flop. By seeking to eliminate credit unions one at a time, Umholtz has gotten probably a lot more ink in this publication than he deserves. Recently, he really put his foot in it. He stated that because of NCUA’s actions in regard to the two Texas credit unions soon-to-be-banks that the federal regulator “needs a watchdog.” He’s got it all wrong. NCUA was just doing its job, but got out lawyered into a judicial defeat. It’s Umholtz’s new coalition group (see above) that needs a watchdog to protect credit union members. So do the small number of credit union CEOs and boards who see nothing wrong with putting personal greed before the interests of members. In ruling in favor of bank charter conversions in Texas, the judge called NCUA’s actions “arbitrary and capricious.” That’s offensive to NCUA and credit unions, but think how the banking industry must have felt when another judge recently labeled the FDIC as “a corrupt agency with corrupt influences on it” in handing down a decision against the bank regulator. Makes me wonder if a big mouth is a requirement to be appointed a judge? Speaking of watchdog, as I was above, that’s exactly the word some credit union folks like to use to describe the function of credit union supervisory committees. But is that really the role they play in today’s credit unions? Depends who you ask. Current members of supervisory committees understandably defend their importance. But ask many CEOs, especially of the larger credit unions, and they will tell you in confidence that the only way to describe supervisory committees is “unnecessary.” Although I also have seen a dramatic transformation in their function in credit union governance over the years, I wouldn’t go that far. In many credit unions, supervisory committees serve as an excellent training ground for new board members. In many others, it is the supervisory committee that hires, fires, and works with the external auditor. And has the internal auditor report directly to them. Remember that old and controversial debate? Unfortunately some supervisory committees try to act like they are more powerful than the board of directors and in extreme cases even attempt to act like a board. On the other end of this spectrum, there are far too many credit union supervisory committees that do nothing other than get elected. One thing is certain, the role of CU supervisory committees has undergone change and many more changes are on the horizon. These are the types of topics you will always find on the program agendas at meetings targeted at members of these committees. Which leads to this question: Are credit union supervisory committees still needed? Parting shot: credit union groups have proudly announced that they are getting back into formal financial counseling training. Hasn’t financial counseling always been one of the things that makes a credit union different? Comments? Call 1-800-345-9936, Ext. 15, or Fax 561-683-8514, or E-mail [email protected]