Editor’s Note: The following was originally published at ChipFilson.com and is reprinted here with permission.
By Chip Filson
If you have ever speculated about what is lost in a merger of credit unions, leagues or trade associations, the following example may be a helpful reminder of why choice matters.
CUNA’s Letter on NCUA Leadership
The Credit Union National Association’s August 6, 1973 letter to the White House:
Dear Mr. President:
The members of the Executive Committee of CUNA, Inc respectfully and unanimously urge you to replace Herman Nickerson, Jr as Administer of the National Credit Union Administration…
We are urging General Nickerson’s replacement because we feel that his actions as Administrator are creating growing bitterness and antagonism throughout the credit union movement, and this is causing a serous loss of confidence and trust in his administration…we would particularly like to call your attention to the following:
- General Nickerson’s arbitrary and authoritarian attitude in dealing with credit union problems…
- General Nickerson’s excessive issuance of burdensome regulations…
- Diminishing morale among employees at the NCUA.
- General Nickerson’s refusal to cooperate on legislative matters…
- General Nickerson’s poor public image. . .
Signed by the entire executive committee including Herb Wegner.
NAFCU Responds
On August 10, 1973, NAFCU’s executive vice president, Jim Barr wrote the White House:
Dear Mr. President:
We have received a copy of the August 8, 1973 letter from CUNA…signed by all members of the Executive Committee.
The letter contains a series of five charges against General Nickerson. . . We totally disagree with the five allegations contained in the August 8 letter…
- Allegation (4): He has always cooperated whenever possible with this Association
- Allegation (5); “General Nickerson’s poor public image.” . . .I was not aware that Mr. Jack Anderson (and his column The Washington Merry-Go-Round) was the final authority in assessing an individual’s public image. . .
In conclusion, may I add that as a representative of the credit union industry, I am appalled that a letter of this type would be directed to you by a sister trade association…may I state on behalf of the officers and directors of NAFCU that we continue to give an unqualified endorsement and support to General Nickerson…
(Source of letter excerpts: NAFCU’s Washington Line, October 1973, pages 15-16)
The Credit Union System’s Challenge Today
A current echo of this concern of a single administrator is the ongoing political debate about the structure of the Consumer Financial Protection Bureau and its lone director.
The above debate on NCUA’s single overseer was real. The situation was resolved in 1977 when legislation was passed creating NCUA as an independent agency with a three-person board. No more than two members could be from the same party. The board structure was intended as a check and balance on the chairman’s power and to facilitate different points of view on policy and oversight.
As mergers continue to reduce the number of independent voices in the cooperative system, how are different and sometimes opposing points of view get published? The credit union community values relationships. Public disagreement is rare. Internal board dissent is even more likely to go unaired.
One hope is that the competition of ideas will occur in the “free market” and different points will automatically arise. Rarely happens. Mergers are often of competing organizations as in CUNA and NAFCU’s recent combination. The same occurs in many credit union tie-ups.
Reading All About It?
Another hope is an independent press, but the structure and resources of oversight of these organizations are limited. The general press rarely follows credit union events, unless there is a crisis. There is no requirement that institutions respond to press queries.
Finally, some put their hope for dissenting views in external oversight by Congress or state regulatory or legislative activities. The current effort to amend the federal credit union act to accommodate Navy’s management of a military bank has found sponsors and opponents submitting their views to congressional committees-which are then reported publicly.
When any industry is marching to a single drummer, sooner or later that approach will be found wanting. Ensuring there is open and full consideration of differing points is how change begins. Defending the status quo can lead to irrelevance or worse, purely self-dealing decisions.
Mergers at their core, are anti-competitive. Anyone doubt that motivation?
Chip Filson is a co-founder of Callahan & Associates and well known within credit unions as an author, frequent speaker, and consultant. Filson also previously served as president of the Central Liquidity Facility (CLF) and Director of the Office of Programs at NCUA. For more info: www.chipfilson.com.