By Frank J. Diekmann
As 2020 winds down and I finish cleaning out the notebook, I thought it best to start where Santa starts—Down Under, with some hard-learned advice for American credit unions.
If you missed it, listen up, mate. It’s a warning from Mark Worthington, CEO of Australian Mutual Bank. In Australia, many credit unions now operate using “bank” or “mutual” in their names, just as many CUs belong to the trade group the Customer Owned Banking Association.
But something else came first...
Worthington told a recent Underground Collision meeting hosted by Mitchell Stankovic & Associates credit unions in the U.S. should be constantly tallying how they give back to communities in other ways and what it would mean if all of that was lost.
“This is one of our great mistakes in Australia by the Australian credit union movement or industry,” said Worthington, whose comments were shared during International Credit Union Week. “One of the great mistakes was to lose our tax exemption, which we lost back in 1992. The government approached our national association and said, ‘Justify your tax exemption. Tell us why we should continue it.’ Our national association then raced around trying to aggregate all the social responsibility activities that we do and measure them all up in dollar terms and so that we could go back to the government and say, ‘This is all that we do and this is why we deserve this exemption.’
“And we couldn’t do it, we couldn’t show them,” Worthington continued. “We couldn’t show them we were acting in a socially responsible manner. My view is that in order to prevent the loss or (the U.S.) tax exemption and not follow our mistake, then an organization should be calculating what the federal tax liability would be, and then ensure that the social responsibility activities, the social responsibility expense or investment, is equal to what that liability would be. And then when your tax exemption is under pressure, whoever it is, for instance, CUNA, could turn around and say, ‘Well, look, if you take our tax exemption away, all of these activities, all of these investments, all of these outcomes, would go. You really need to be able to balance them in order to keep them.”
It’s advice U.S. CUs should keep top of mind in 2021. And ‘22. And…
Speaking of Which…
If you ignore your roots, it doesn’t really matter how much you spent on the pretty leaves, they will eventually wither and die. Same holds true for credit unions and their reasons for being, and their differentiation. It’s that differentiation—not field of membership, as the banking industry fond of alleging, that is the basis for the tax exemption.
So, as I’ve written here before, it’s troubling and confounding and aggravating every time I and other media outlets receive communications from a credit union that seems to do the bankers’ work for them.
Last week I received a press release from a Texas credit union that referenced “customers,” while the CEO was quoted referring to members as “clients.” Walmart has customers. Generic TV ads about investment firms blabber on about clients. It’s the concept of membership creates the real bond with the owners.
If credit unions aren’t going to emphasize their differences, who will? You shouldn’t have to look all the way to the other side of the world to figure out what could happen as a result.
Rodney Hood? NCUA? Never Heard of Them
In response to news the SEC will be considering a board diversity proposal made by Nasdaq, David Clunie, the director of the Black Economic Alliance, told the New York Times’ DealBook that President-elect Joe Biden could make good on campaign promises by picking diverse candidates to head the key financial regulator, and others like it.
Saying it’s about a “paradigm shift in the culture of financial services,” Clunie, a former Treasury Department official, said Biden could “significantly change the reality that none of the federal economic agencies or financial regulators have ever been led by a Black appointee.”
That should come as something of a surprise across the Potomac in Alexandria, Va., where Rodney Hood became the first African American chairman of a financial regulator when he was appointed to the job, a fact and responsibility he has spoken of numerous times.
But perhaps we shouldn’t be surprised Hood and NCUA were overlooked. Clunie is also a former banker.
Just Be Glad You Don’t Have to Answer the Phone There
A trade group recently began its correspondence to the Hill, “This letter is in response to the Defense, Commerce, Justice, Science, Energy and Water Development, Financial Services and General Government, Homeland Security, Labor, Health and Human Services, Education, Transportation, Housing, and Urban Development Appropriations Act for Fiscal Year 2021.”
One Person’s Crisis Is Another’s…
The Ideal Timing of the Year Award goes to the National Credit Union Foundation, which introduced its new CUAid Disaster Recovery Act this summer. The app includes a list of the types of diaster-relalted resources available to a credit union, including from other credit unions, while also allowing the credit union itself ahead of time to double-check its disaster recovery and business continuity plan.
In the two weeks prior to the debut of the new resource, there was an earthquake in North Carolina, a fire in California, a hurricane/tropical storm along the East Coast, damaging storms in the Upper Midwest and, of course, a little thing called the coronavirus pandemic.
I’m not sure how the Foundation came to have this kind of influence, but advice for 2021: If you hear of the NCUF introducing something new, check your home insurance.
Even Payday Lenders Winced
It wasn’t just Mother Nature looking to take out humanity this year, there was humanity itself. The CFPB took action against a lender called Driver Loan, announcing the company “deceptively markets its loans as having an APR of 440%, when the actual APRs are about 975%.”
Because a 440% APR is high but you can live with it, but 975%? How very 2020 of them.
We’re Not Saying Bankers Aren't Loved at Home, Either, We’re Just Sayin’…
Rodney Nelsestuen of Aite Group told a CO-OP THINK Forum webinar, “We know of one bank that sent half its workforce home and within a week a half-dozen called and begged to come back
If You Learned Nothing Else This Year 1.0
Cheryl Connelly, a futurist with the Ford Motor Co., shared this piece of information during a webinar with credit unions: “Two billion people per day rely on insects and cricket flour for daily needs.” And this: “The first person to live to 150 years of age has already been born.
You Likely Learned This This Year 1.0:
Bob Trunzo, CEO of CUNA Mutual, shared an experience that likely sounded quite familiar to many CU leaders: “Like all organizations you practice these disaster recovery drills. I remember a few years ago at CUNA Mutual the exercise was all about cyber. Halfway through someone came in and said, ‘Oh my God, half our workforce is getting sick; there’s some sort of virus.’ And we all pushed back from the table and thought this was ridiculous. And now, boom, we’re remote.”
You Likely Learned This This Year 2.0:
The first step for many CU leaders was learning to use Zoom, then learning to use Zoom to conduct daily business, and finally learning Zoom (or whichever solution you prefer) needs to be about more than just business. An appropriate case in point…
“We have had full-staff meetings over Zoom,” said Jeff Benson, CEO of $347-million Case CU in Lansing, Mich. “We feel it is important for people to see each other regularly—keep that engagement. I also regularly hold half-hour Zoom ‘Rap Sessions’ where we all just talk. People share their thoughts, talk about how they are feeling…”
Benson also holds Zoom walks, where staff are invited to connect in the morning via Zoom on their phones.
“They can bring their dogs along, the kids…,” explained Benson. “We have had as many as 75 employees walking together at one time.”
Best Wishes to You
There is little I can add to the dumpster inferno 2020 has been. But I sincerely appreciate your readership this year, all of the feedback and suggestions and story tips and even the times you took me to task when you disagreed or I didn’t get something right.
Best wishes to you this holiday season and for 2021.
Frank J. Diekmann is Cooperator in Chief of CUToday.info and can be reached at Frank@CUToday.info. Mr. Diekmann is also author of the new book, ‘501 Name Tags: Everything You Need to Know About Business Can be Learned at a Conference & Forgotten in the Trade Show.” For info: www.501nametags.com.