100 Years in America…Time-honored Model Attracting Admirers

The power of the cooperative model is not going unnoticed in the currently volatile financial markets.


The power of the cooperative model is not going unnoticed in the currently volatile financial markets.  Federal Reserve Chairman Ben Bernanke cited the cooperative model as a possible alternative structure for the recast GSEs.  And, The Wall Street Journal talked about the FHLB system as “cooperatives owned by more than 8,000 commercial banks, thrifts, credit unions and insurers.” 

And, in fulfilling their member-centric mission, credit unions continue to “lean into the future,” with 2008 seeing 4,000 new employees join the credit union industry, 400 new branches open their doors, and solid gains in market share for autos, first and second mortgages and retail deposits

But what about the recently reported losses, you ask?  Yes, some credit unions are reporting losses.  But, the real question to pose is what would you expect a credit union to do in an economically depressed market?  By doing what they have been historically charged to do, serving members in need, some may, indeed, encounter increased losses.  Astutely managing the impact of such losses is the reason credit unions have capital and reserves, in both good and bad times.

Both the positive numbers and ones that some are interpreting as negative prove just one point:  the credit union system is working the way Congress and the states said it should.

More than a Financial Model

However, the credit union is more than an organizational financial model competing with other institutional interests.  As a new administration assumes the reins of power, the question on everyone’s mind is,  what shape will hope take?  Will it be an administration that focuses on saving large institutions first and foremost, or one that makes people feel that they count? 

The bottom line is that the challenge facing America is not just economic but moral.  Do we have a moral duty to each other or is society just to arbitrate the numberless drives of self interest? 

Or, as Franklin Delano Roosevelt succinctly observed 70 years ago in his Second Inaugural Address, “The test of our progress is not whether we add more to the abundance of those who have much; it is whether we provide enough for those who have too little.”

A Principled Foundation

The second cooperative principle – Democratic member controlled – is a keystone of the credit union movement: individuals have a responsibility to and for each other.

Dr. Martin Luther King once said from the trenches of the 60s Civil Rights movement, “the arc of the moral universe is long, but it bends toward justice.”  In this spirit, credit unions not only embody financial solutions, but a societal need to organize resources to serve individuals.  The 21st Century could indeed become the Age of Cooperatives, bringing solutions that supersede even the options of the market!




Nov. 24, 2008


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