What Should Keep You Up at Night in 2010

A guy named Steve has been a member of your credit union for 15 years. He was an upholsterer employed by one of your original SEGs until four months ago, when he (along with 200 of his co-workers) was laid off. While he never earned much while he was working, never maintained much more than a $400 balance in his checking account, and often cashed his check upon receipt, Steve opened (and paid as agreed on) no fewer than eight different loan accounts at your credit union over the years.

Although it's been a little rough, Steve's family has been able to scrape by on federal unemployment benefits and a thrifty lifestyle. Their savings and checking accounts have been completely depleted, but they are able to afford food, their $700/month mortgage, and necessary utilities.

Yesterday, Steve's widowed mother passed away. This wasn't really a surprise. She'd been very sick for years. Still, the loss couldn't have come at a worse time emotionally or financially. She had no assets to speak of and now Steve's family is left with trying to figure out how to pay for the funeral, travel expenses to her hometown 350 miles away, and not end up starving or out on the street.

They would sell their house, but they owe $150,000 on the mortgage and similar houses in the neighborhood have been selling for $115,000.

What should be keeping you up at night in 2010 isn't interchange legislation, corporate meltdowns, the Credit CARD Act, Reg Z, or a national credit union branding campaign. Instead, as a leader in the credit union movement what should be keeping you up in the coming year is how you can help Steve and his family get through this painful time. Maybe you do it with traditional services. Maybe you do it with new innovations. But you need to address this problem.

I worry about middle America. I worry about decades of over-spending, under-saving, and apathy concerning financial literacy. I worry about the lack of personal responsibility in our society. I worry about business models that are built on deceit. These are significant concerns that require significant resources if we have any hope of changing their courses for the better.

What I worry about most, however, is that these concerns will take precedence over Steve's. If you can help Steve, there are at least 15.4 million additional Americans that have been looking for a financial institution, and a conscience, like yours.

Is "character" still an important "C" of credit at your credit union? What will the reaction be as Steve sits across from your loan officer and asks for a $3,000 loan to make ends meet? Is the capital your credit union has grown over the years for your rainy days or your members' rainy days?

Bloody Labels and Second Chances

When I was 18, I worked in a factory that printed plastic labels for laundry detergent bottles, juice containers, shampoo bottles, and various other consumer products. My job (I couldn't make this up if I tried) was to wipe the dust off of giant sheets of labels with a rag-wrapped block of wood. Eight hours a day, five days a week you could find me doing the Mr. Daniel Larusso-esque wax on wax off technique in the corner of the production floor.

I was convinced that I had finally made it.

That is, until the day that I actually did make it. One day, the production manager asked if I could assist with the die-cutting machine. Albeit temporary, I saw this as the first "promotion" I had ever been offered. I jumped at the opportunity and committed myself to doing such a great job that the dusting table would forever be in my rearview mirror.

The die-cutting machine split large, rectangle-shaped stacks of labels into two stacks of labels along a contoured line. This was the second-to-last step in the label-making process, which culminated with a final pass through another die-cutting station, shrink wrapping, and boxing for delivery. My job was to grab the fast-moving stacks of labels off of the die-cutter and stack them in large wooden crates that could be wheeled over to finishing.

The job was easy in concept, but surprisingly demanding. The better I got that first night, the faster the operator made the machine go. The production manager walked past me after an hour or so and mentioned how impressed he was with how quick we were working. He was so impressed, that he wanted to see if I could go any faster. He took over as the operator and started pumping out labels as fast as the machine could go. I could barely keep up, but somehow got through the first crate load.

Just as the operator had pushed the power button to start the second crate, I noticed a cut on the tip of my right index finger. It didn't hurt, but it was a reasonably deep cut. There was no time to worry about it, though, because the labels had already started zooming out of the die-cutter. I grabbed them as fast as I could off of the machine, stacking them neatly as I could as we went. We finished that batch even faster than the last. The production manager patted me on the shoulder and said, "Wow, I haven't been able to run this machine that fast in years! Great job!"

I was beaming. He was pleased. I was sure that I would never have to wipe a label again in my life.

Then, his eyes caught a glimpse of the crate I had just filled. His jaw dropped. My head turned to see what he was looking at. There was a single droplet of blood on each of the 300 or so stacks of labels.

"Are you bleeding?" the Production Manager asked me.

"Yeah, I think I cut myself on the last batch." I said.

His face turned red, and I could tell he was livid.

"Do you have any idea how much that crate of labels is worth?" he asked.

"No idea."

"You just cost us about $4,000!" he exclaimed.

To this day, I'm still heart-broken by this moment. I can still remember the sweat dripping down my face and my sore shoulders from trying to keep up with the machine. I can remember how hard I was trying, how enthusiastic I was about doing a great job, and how devastated I was that I had failed nonetheless.

Luckily for me, the Production Manager gave me a second chance. I'm not sure he ever forgave me, but he didn't send me back to label dusting. For the next two months (until I left for college) I became his right hand man on the die-cutter. We ran at the machine's speed capacity every single time we worked together, and I became a valuable member of the production floor.

Young people mess up. Sometimes, they mess up in very big ways. But so did you. Somewhere along the way you screwed up (yes, even you). Somewhere along the way you got a second chance, too. Remember that?

When you finally come to the conclusion that the young, up-and-comer at your credit union is worth giving a chance to...please remember to give him/her a second chance, too.

Cooperation, Collaboration, and Compromise

Co•op•er•a•tion [koh-op-uh-rey-shuhn]
- noun
1. An act or instance of working or acting together for a common purpose or benefit; joint action.

Col•lab•or•a•tion [kuh-lab-uh-rey-shuhn]
- noun
1. The act of working together, especially in a joint intellectual effort.

Com•pro•mise [kom-pruh-mahyz]
- noun
1.  A settlement of differences by mutual concessions; an agreement reached by adjustment of conflicting or opposing claims, principles, etc., by reciprocal modification of demands.

I hear these three words in the credit union movement over and over. I'm glad I do. After all, each is necessary for us to realize our potential, maximize our impact, and fortify our future. Unfortunately, too many credit unions do not understand their importance. Worse, the ones that do get it sometimes think that doing any of the three without the others is sufficient.

Here's why it isn't.

Cooperation amongst credit unions means that the parties involved work together with a common purpose. I believe credit unions in fact do have a common purpose. There is, however, debate over what that purpose is. Some seem to think our purpose is being the low cost leader in the financial services world. Others think our purpose is to be cooperative banks; different in structure than banks, but direct competitors. Still others believe that credit unions are charitable organizations that fund our good work in the world with financial services. Most of us believe our purpose is some combination of these three. Cooperation, full cooperation anyway, requires a clear purpose. While way too many of us are not on the same page, we are for the most part in the same book. That's a start.

But say we all worked together with a common purpose. Let's say this is it: credit unions exist to provide members with control over their financial lives through the governance of their financial institution, access to affordable financial services, financial literacy education, and community impact. A credit union whose member owners, environmental factors, resources, or board disagree with the collective purpose, or even one component of it, would feel obliged to break from the pack. This is where compromise comes in. Each participant in the cooperative ensemble must be willing to give something, anything, up for the common good. Without compromise, we cannot be cooperative.

What about collaboration? A joint intellectual effort should go like this: a bunch of credit union people, regardless of seniority, sex, title, geographic location, politics or relationship with the meeting scheduler, come together to pick each other's brains about how to tackle a problem. All ideas are taken into consideration, none trumps any other, and collectively a solution is formed from the group that far exceeds the value of a solution any single member of the group could have come up with.

But what if the solution isn't consistent with our purpose as credit unions? Collaboration can yield great ideas, but those ideas need to be put into play and need to be consistent with the entire group's purpose. The solution must be one that credit unions will embrace and pursue. Without cooperation, we cannot be collaborative.

So, how about compromise? This is a touchy subject. There are certain things we should never compromise as credit unions: our autonomy as a movement (ahem, TARP debate), our member-ownership, and our mission, for example. Working within a system, a cooperative of cooperatives, however, we must at times allow ourselves to give up certain things for the greater good. Support of the corporate system has served as a simultaneous point and counterpoint to this statement.

We can't compromise for the sake of compromise. There are some things that we simply should not budge on. This is why collaboration and cooperation become so important. How can we put our collective minds together to create solutions to current problems, cooperate under the flag of a common mission, and give up a little as individual credit unions to see our vision through?

The three C's of credit unioning are easy to say and hard to do. And, try as we might, none of them are sufficient by themselves.