By Frank J. Diekmann
As we all know, there’s such a thing as hitting a nerve. And then there’s the electric shock and pain from the Ulnar nerve, better known by its hugely ironic nickname, the “funny bone,” that I believe we all agree is anything but funny.
And an awful lot of people in Credit Union Land also seem to agree that what Joy Peterson recently shared with readers of CUToday.info hit the Ulnar Nerve of credit unions, and I don’t think anyone found it funny, either.
In fact, what Peterson wrote may have set a record among credit union leaders for eliciting Amens, hallelujahs and refrains of “I couldn’t have said it better myself.”
Peterson is CEO of the $44.2-million Bessemer System FCU in Greenville, Penn., and her account of how NCUA’s regulations and oversight of small and midsize CUs is the equivalent of “bayonetting the wounded” was obviously brewing for some time. The piece was heavily trafficked on CUToday.info’s “the ‘Tude” section and in addition to all those eyeballs it saw several-thousand more views just off my LinkedIn page.
The Dirty Laundry List
If you missed it, and you’re in the minority if that’s the case, here are some of the frustrations Ms. Peterson vented:
- Little Regard. Looking to the shrinking number of CUs even as the number of members grows each year, Peterson suggested, “Our regulator doesn’t hold that same high opinion of federally insured credit unions and their mission of service” as do members.
- Reversed Priorities. Given the “substantial regulatory changes in my credit union as well as the industry as a whole,” especially over the last decade, Peterson wrote, “Our members are not being served by their credit unions. Instead, our credit unions are serving NCUA.”
- Bowing to the Giants. Peterson said the disappearing number of CUs is being hastened by an agency that has “encouraged” mergers “in order to fulfill NCUA’s crushing requirements” for what is deemed to be “safety and soundness,” adding that it “seems NCUA would much rather provide oversight to a few giant credit unions than have to provide guidance and oversight to thousands of us little guys.”
- Just Another Wells Fargo. “Is that really what the millions of members of both small and large credit unions want?” Peterson asked. “Do our members really understand that there will come a time when belonging to a credit union is no different than being an account-holder with Bank of America or Wells Fargo as their individual control over their financial institution is being diluted at a record pace?”
- Why Volunteer for This? Peterson said it’s no wonder credit unions can’t recruit more board members given the increased burden upon them and the often “overwhelming” responsibility, which is only exacerbated by the fact it’s a volunteer job (at most CUs). “They are reminded with every NCUA contact of their culpability for any insider fraud or failure to mitigate risk appropriately,” she opined. “Rather than volunteers, they are becoming potential scapegoats for NCUA. In order to rope in replacements, we have to overstate the ‘service to your community’ aspect and seriously understate the actual responsibility of it all.”
- Hostage Negotiations. Peterson said NCUA’s “constant drumbeat” on vendor due-diligence is just piling on when it comes to the demands on the CEOs of small and midsize CUs, especially as vendors consolidate (meaning the customer CU just becomes smaller). “We spend thousands upon thousands of dollars and hundreds and hundreds of hours trying to make sure our vendors are safe,” Peterson opined. “In reality, small credit unions have very little choice of vendors and almost no control over their behavior, particularly in regard to information security.” She likened contract terminations to “hostage negotiations” with “bullies.”
- Stop Scolding. While credit union leaders were nearly overwhelmed dealing with all the change wrought by the COVID pandemic, Peterson said rather than guidance from NCUA over that pressing issue, suddenly the “talking heads at NCUA started scolding credit unions about diversity, equity and inclusion. Rather than real concern for our members--the salt-of-the-earth member/owners of our financial institutions who feel a common bond to a financial institution with their co-workers or their community--NCUA decided we are evidently racist and somehow elitist.”
- Someone Call Aretha. Finally, Peterson wrote (and no doubt found plenty of agreement in the process) that if the agency really wanted to help small and midsized CUs it could begin by showing some “respect,” and she listed six specific ways NCUA could do just that. “Respect for members is what makes us different. That is also what makes us sound. It doesn’t work the same, the other way around,” Peterson said.
What Wasn’t Said
Here’s what Peterson didn’t say, so I will. There are thousands of managers and CEOs of small and medium-size credit unions who obviously agree with Peterson, or the article would not have seen all the views that it did. But how many would also be willing to put their names on the same article and then have it published in CUToday.info for all the credit union community to see, including NCUA? Judging from how few similar pieces we’ve received, I’d say it’s not even a small to midsize group of CU leaders. And that, you may say, is just reality, but that doesn’t stop it from being a sad reality.
I’ve spoken with countless other CEOs and leaders of small credit unions who have expressed many of the same frustrations, but almost with a “Hey, this is just between us, right?” And then a nervous follow up just to confirm it’s an off-the-record conversations. Those exchanges are filled with stories about the frequent calls from larger CUs and consultants pitching mergers, and as I’ve written frequently in our ongoing analyses of the merger disclosure forms filed with NCUA, many CEOs and boards sound just plain tired when they explain why they are merging (although to be honest, often it's their fault) after finally taking the call.
All of that is my way of asking who else will speak up? So few do because of a long-time fear voiced by many, that they will be subjected to NCUA “retribution.” But Joy Peterson did (again, you can read it here), and fittingly, it was a joy to witness the courage. If you’re feeling wounded but are still willing to chance the bayonet, we’d love to hear from you.
Frank J. Diekmann is Cooperator in Chief of CUToday.info and can be reached at Frank@CUToday.info. Mr. Diekmann is also author of several new book, including the brand new “The Last Lyric,” a humorous satire about a murder investigation at the Rock & Roll Hall of Fame in which every line of dialogue is either a classic pop/rock song title or lyric. Available on Amazon, Apple iBook, Barnes & Noble and Smashwords. Mr. Diekmann is also author of a non-fiction compilation of the very best & worst he has seen and heard in covering more than 500 CU meetings and conferences, “501 Name Tags: How Everything You Need to Know About Business Can Be Learned at a Conference & Forgotten in the Trade Show.” It is available on Amazon, Barnes & Noble, Apple, Lulu, and Smashwords.