Paul Gentile asked some very interesting questions about the future of small credit unions in his Aug. 30 column.
I think his idea about common compliance resources is an especially good and important one. Regarding technology and mortgages, these are precisely the areas the Federation began exploring several years ago. Our research (which by the way was assisted by Navy FCU and others) resulted in the Federation launching our CDCU Mortgage Center, LLC and special secondary market for nonconforming affordable housing loans. I believe that the industry is beginning to respond more to the needs of small and low-income credit unions. The Federation's Community Development Partners program is a focused effort to engage large credit unions in assisting CDCUs and using their capacity to serve more underserved low-income people. We're pleased that 36 mostly large credit unions have rallied to this banner, including half of the top dozen in the country. Yet, especially among our long-time members, we hear often about the changed relationship in the credit union movement over the decades, that the cooperative spirit has diminished, and that mentorship relationships are not what they used to be. How do we reconcile these perspectives? We think the answer is that the needs, especially around compliance and technology, are far greater and have grown faster than ever before. More is being done to help–but a lot more needs to be done. So, to answer Gentile's questions: Should more be done to help small credit unions survive? Absolutely.
Is it good for members? If it maintains affordable service to people who would otherwise be badly served–or not at all–certainly.
Recommended For You
Is it good politically? While this shouldn't be the key question, the answer is "yes." Many small credit unions, especially in low-income and minority communities, have surprisingly strong relationships with their legislators. This is a resource that the broader movement should not ignore.
Does helping small CUs do more harm than good long term? Not likely, though a case-by-case analysis is warranted. We find that most officials of small credit unions–even struggling ones–are proud, self-reliant people, who would not want to perpetuate relationships of long-term dependence.
Should market conditions win out? The market is extremely powerful, and may well win out. Certainly, there will continue to be losses of small credit unions. But should we simply accept this reality, encourage or applaud it? Not if our movement is sincerely dedicated to serving "people of modest means." An unfettered market will produce more and more payday and other high-cost lenders that rush in to fill the void created by the disappearance of small credit unions, especially in niche underserved markets.
We agree the answer is not simply to help small credit unions because they are small. The solution is not to "throw money" at them (though heaven knows, our government throws money at a lot less worthy causes). We need system-wide, long-term strategies. And yes, we need to make it a priority of the movement. Clifford N. Rosenthal Executive Director National Federation of Community Development Credit Unions New York
© Touchpoint Markets, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more inforrmation visit Asset & Logo Licensing.
