These changes are always hot topics at meetings and in publications, and they generate a lot of handwringing and frustration.
I’ve worked in the credit union system for more than 45 years. The exact same pressures and concerns existed then as today. When I began as a young federal examiner:
► Credit unions had an unsecured loan limit of $750 and a maximum term for any loan of seven years;
► A credit union as large as $1 million in assets was rare;
► The vast majority of credit unions kept member account records on ledger cards by hand;
► Statements were in the form of snap-out carbon copies;
► Loans were mostly restricted in practice to signature and auto loans;
► Loan forms were half-page applications;
► Auto loan notes required a full-page Uniform Commercial Code form; and
► A major challenge each month was balancing the share and loan accounts—a procedure “proved” by maintaining a properly labeled and stored copy of an adding machine tape.
Within two years after the start of my credit union career, several momentous changes took place. The Federal Credit Union Act changed to increase unsecured loans to $2,500, which caused my senior examiner to proclaim credit unions were doomed because, “You can’t lend anyone that much money, unsecured.”
Through actions by the federal government, loan terms were extended and the Truth in Lending Act passed. This created panic throughout credit unions because of added paperwork and compliance challenges. NCUA was established, and soon after, share insurance became a reality.
Since then, one change or crisis followed another. The greatest and most critical challenge was the Supreme Court ruling concerning fields of membership and the ensuing legislative battle to “Save Our Credit Unions.” This overwhelming victory not only saved credit unions, but proved the movement was a powerful political force.
Credit unions have survived all these challenges and have evolved into modern full-service financial institutions. They’re much larger, and are key players in many mortgage markets. They offer most of their services through electronic, remotely delivered systems. And member business loans, while always present in credit unions, have moved to the forefront as a highly valued and respected service to members and the country.
But some things haven’t changed:
► Credit unions were, are, and will continue to be a “smarter choice” for all consumers. They’re more trusted by members. They offer the best value. And they’re usually at least as convenient as their major competitors. Today, the vast majority of the U.S. population can join a credit union.
► Banks have done and will continue to do everything possible to eliminate credit unions. Much of the value delivered to consumers through credit unions isn’t the direct savings to our members, but the lower prices banks charge because of credit union competition. Their hatred for credit unions goes beyond any rational explanation. Credit unions must stay vigilant, united, and politically active to prevent banks from legislating them out of business.
► Credit unions and the people who run them were, are, and will continue to be truly committed to delivering the highest levels of service, quality products, and great value to their members. Survey after survey reconfirms this commitment.
As I near the end of my credit union career, I’m confident today’s credit union leaders will meet and adapt to the technology, service, and regulatory challenges and changes that arise, just as their predecessors have in the past. Only massive failure in the legislative arena can destroy credit unions, and a united front from all credit unions can prevent this.
As Benjamin Franklin said at the signing of the Declaration of Independence, “We must, indeed, all hang together, or assuredly we shall all hang separately.”
JOHN FRANKLIN is CUNA’s executive vice president and chief operating officer. Contact him at 608-231-4266.