Get Your Hands Out of My Member's Savings Accounts!

After taking the crazy month of July off of blogging, I have decided to get back on the writing wagon.

 Let me start by saying that I am a big fan of the NCUA, for the job it has done in the past, keeping credit unions operating safely and  member's deposits secure and insured.  I even appreciate them stepping in over the past few years and making the corporate credit unions step up and be accountable to their member credit unions for the assets they manage.

Alas, the love affair is over.  Now...I'm mad.

Last year, as a part of the plan to "stabilize and recapitalize" corporate credit unions the NCUA snatched over $175,000 from MY members. (we are just under $40 million in assets...just imagine what the tab was for the $1 Billion shops!)  Most of these members have never heard of corporate credit unions.  Non of them have ever deposited a penny in a corporate credit union, and non of them were given a say in the decision to "give" this money to the NCUA to use as they saw fit.  The corporate credit union that we deal with (there are over 20 nationwide)is well capitalized and run conservatively, as it should be.  

Now I understand the need to strengthen the corporate credit union system.  The corporate credit unions act for credit unions as the Federal Reserve Banks do for the banking industry and yes, as a natural person credit union we do rely on them for processing and clearing.  They are a necessary and vital part of the credit union machine.  We dealt with it, we made budget changes to manage around the giant hole it left in our earnings.  We did not cry over spilled milk, even though the puddle was huge.

We planned for more NCUA antics this year...but I underestimated their greed.

This June the NCUA took another $42,000+ from my members.  Again with no real explanation and without the courtesy of a thank you.  We had budgeted for this.  This September the rumor has it we will see an even bigger request.  This one I didn't see coming.  Another giant handout to secure the NCUA's insurance fund, used for covering credit unions who have fallen below what the NCUA considers to be soundly capitalized, therefore "failing" in their eyes.  Very few credit unions actually "fail".  Most are forced to merge with a stronger credit union who then absorbs the members of the failed institution and adopts them as their own.  Think Brady bunch, with less polyester.  Often this is actually a positive from a member's perspective because it can open the door for more products and services then their previous credit union could offer.  This isn't always the case, but I try to look at the bright sides of the cooperative movement when possible.

What the NCUA is doing now, and will likely continue to do for the foreseeable future is wrong, it is self defeating, and it is at face value downright scandalous.  They are in essence taking the very capital away from the natural person credit unions they they are insuring, making us all weaker and less stable because, they say, we are weaker and less stable.  They say they need this additional capital because the capital ratios of credit unions are falling, but they are falling in large part because of the money that the NCUA is siphoning off.  It's easy to make up the rules of the game as you go when you don't give the players a voice or a vote.  The credit union industry is based at its core on cooperation and democratic control.  We give our members the right to vote and to actively participate in the governance and direction of the credit union.  I think that in the true spirit of the institution they are charged to protect, that the NCUA should give each credit union under its jurisdiction a vote.  They can give us the facts, explain why they need the money and put all of their cards face up on the table.  Give us time to look at our hands and then let us cast a vote.  Then WE are the ones who are on the hook to explain to OUR members where their money went, if we see that it really is needed in Washington.  The NCUA is in place to protect the deposits of credit union members.  Period.   It is an entity that is in business FOR credit unions and therefore, our members.  The least they can do is ask the members of the credit union movement to give their input, insight, and vote as to what they want to happen with THEIR hard earned money.

I will continue to run my credit union for the benefit of my members and NOT as a vehicle for funneling assets to Washington.  The NCUA, I fear, has become just another cog in the bureaucratic machine, losing the desire to listen to the people they protect.  They have caused us to tighten our belts to the point of wage freezes and cuts to programs, stifled growth and stopped momentum for a much needed expansion even though there would be no need for any cuts without the assessments.  Come Hell or high water though they WILL NOT keep us from serving our members who after all, own every penny of the assets we are stewards of, and that the NCUA can't seem to keep their hands off of.