Put Us Out of Business

A few weeks ago, a colleague of mine was co-presenting a talk about emerging technologies in financial services for a large group of credit union executives and volunteers. At one point the discussion turned to PFMs; specifically, how giving members more information about their financial behavior could allow them to reduce spending, enjoy the fruits of thrift, minimize their dependence on high-priced credit, and prevent costly overdraft charges.

During the Q&A session afterward, a credit union CEO asked (paraphrasing), "why on earth would we want to make our members less profitable?"

My colleague's response (again paraphrasing): "if your credit union's success is tied to your members' failure, you may want to rethink your business model."

As much as I liked this response, the fact that this exchange took place is disheartening. How did we get to this place? How did our service organizations morph into disservice organizations?

Contrast that CEO's mindset with Jack Moser, an Ohio drunk driving defense attorney hellbent on putting himself out of business. Moser is one of the area's biggest supporters of initiatives to eliminate the senselessness of driving under the influence, and yearns for the day he has no more clients.

Credit unions seem to have forgotten one of Edward Filene's greatest teachings; that if you offer anything except the best possible products at the best possible prices, you are instituting an unsustainable (and inefficient) business model. In way too many cases we've overspent, overbuilt, and overgrown. We've prioritized our credit unions' net income concerns over those of our members. We are on record fighting against the consumer protections outlined in the CARD Act and the larger financial reform bill.

In many ways we've lost sight of what it is to be a credit union.

I can't help but relate the devolution of credit unions to that of labor unions. (I know this assertion will rub some of you the wrong way, but I'm not shy.) Certainly, there was a time in our nation's history at which labor unions served a very important, and productive, role. Labor conditions for railroad companies and steel mills a hundred years ago were atrocious, and needed to be remedied. Unions fixed those conditions and made sure that workers were safe, fairly compensated, and assured some semblance of work/life balance.

Today, labor unions are at least partially responsible for allowing bad teachers to litter our schools, professional athletes to price most families out of watching them play, the collapse of the U.S. automobile industry, and the shipment of millions of jobs overseas. This wasn't the goal, of course. It's simply a display of what happens when good intentions get pushed aside by greed. At some point, it would have been nice if unions would have decided, "We did it! Our mission has been accomplished. Let's have a beer and reconvene if and only if we're needed."

Credit unions should be working to put themselves out of business too. Our goal should be to make sure that consumers have access to affordable credit for provident and productive purposes, while understanding (and demonstrating that understanding) the importance of thrift. Instead, we're fascinated with growth, net income, power structures, competition with one another, and a childish "banks are evil, credit unions are saints" mentality. Competition is healthy. But our supply far exceeds the demand for our services. This, in many ways, is due to our success. In many ways we've succeeded.

In many more, we've failed.

If we truly are different as a movement, we should move mountains so that some day we can all call it quits.