Value Blockers Can't Belong to the New Tier of Corporates - the Pump Value into Credit Unions Tier

We all have mission and vision statements. I really like ours. It consists of a few statements starting with “Because of credit unions.,” with the last one being, “Because of credit unions, we exist.” We strive to add value to credit unions. Is this crazy talk? I hope not. We are small. We’ve even been accused of being a country club corporate. I’ve seen many articles referencing the various tiers in the corporate network. “Top tier” is often used. I guess it’s always better to be in a higher tier rather than in a lesser tier. Nobody wants to be lesser. Wait! I’ll create a new tier. We are now officially in the “pump value into credit unions tier.” We’ll focus on paying our country club members as much as possible to bring in deposits and not worry about those other tiers. I’ve heard comments like: “Move your business from U.S. Central to us,” or “Maybe we don’t need U.S. Central.” I sometimes wonder about the tier system. And hey U.S. Central, I’ve been mad at you. I’ve even said mean things about you. Nonetheless, we continue to rely on you and use almost every service you offer. Frankly U.S. Central, our success depends a great deal on your success. I’m a loyal member-owner. So, why are others in the network making these statements? Are they trying to replace you? If U.S. Central’s role were to diminish, so too would the expertise and solid infrastructure that has taken years to build. Why duplicate these capabilities multiple times and spend more credit union money in the process? Spending all that member money doesn’t make sense. We need one U.S. Central with robust systems and backup systems. So let’s do it once, and pump the rest of the money into credit unions. It seems to me there has been a tremendous amount of time and energy put forth in the pursuit of conquering new markets. An old friend called me recently. After we exchanged pleasantries, I heard “When you are ready to merge, call us. We are the nice merger partner.” I had no idea we were getting ready to merge. But wait, we have tremendous market penetration and loyalty. Sure, this could change. But, I think I’ll worry about being the best we can be instead of trying to remember which entity is the “nice one.” Maybe corporates should focus less on consuming each other and more on competition such as the agency market. There is much discussion about corporates finding a way to attract dollars from the agency market into the corporate network. If memory serves me right, this type of initiative was listed in the U.S. Central Strategic Plan. Nice work U.S. Central. The U.S. Central Transferable Certificate Program is an effective tool for providing member-owners to achieve this goal. Have you heard about the U.S. Central Transferable Certificate Program? It’s a brilliant opportunity to leverage U.S. Central’s tremendous credit rating, infrastructure, and expertise. A corporate can purchase a certificate of deposit from U.S. Central and “transfer” ownership to a natural person credit union. This simple process allows the credit union to hold a CD issued by U.S. Central, which carries the highest counterparty credit ratings in the land. Now all that needs to be done is to remove the restrictions, which I call value blockers, placed on this product. Let’s remove the 6-month minimum duration restriction; let’s remove the required basis point amount to be taken based on tiered amounts. Oh boy, back to that “tiered” structure where only size matters. Don’t get me wrong; if I were a large entity I might not care about the small ones. I hope I wouldn’t say that I care, and then take action indicating otherwise. But even if I didn’t care about smaller organizations, I would not be a value blocker standing in the way of the greater good for all. We can’t tolerate value blockers in a cooperative industry. When talking to U.S. Central, they let me know that removing these restrictions causes no ALM issues for them. So why the value blockers? Are we corporates afraid this is the beginning of the end, and that U.S. Central will ultimately replace us and serve credit unions directly? If the answer is yes, then we corporates must be nothing but a layer of cost and we need to get out of the way. But if the answer is no, congratulations and welcome to the “pump value into credit unions” tier. You see, corporates in this tier care about transferring value from the corporate network into credit unions more than they care about self- preservation. I need to face the facts. It’s not U.S. Central’s fault there remains value blockers in the U.S. Central Transferable Certificate Program. It’s mine. I’ve done a lousy job of congratulating U.S. Central and its board for providing a tool to capture deposits from the agency market to bring dollars into the corporate network. This enables participating corporates the opportunity to add more value to natural person credit unions in the form of higher rates if they want to. I want to. It’s okay if others want to penetrate the agency market with on-balance sheet products and good luck to those who do. But don’t block the rest of us from leveraging U.S. Central’s products and services. We all want to penetrate the agency market. U.S. Central has provided us a brilliant tool to do so. Now, we need to remove the restrictions so that all credit unions, if they so desire, can benefit. We need to: Remove tiered spreads based on SIZE of investment making it 5 basis points for all. Remove the 6-month minimum duration to a one-night duration. The U.S. Central Transferable Certificate Program is but one example of a creative and innovative way to transfer value from the corporate network to credit unions. I hope focusing on being better for credit unions by leveraging established and paid for infrastructure and expertise continues. To all the value blockers out there, go find your own tier; you can’t be in the “pump value into credit unions” tier. We need one U.S. Central in the corporate network, value blockers removed, and a “pump value into credit unions” tier. May the needs of natural person credit unions determine our future, and may the best corporates serve.