American capitalism shows a very strong trend to nationalization. Companies strive for a national scope. Pizza and coffee you would think would have a local focus (local should be fresh!), but witness Domino’s and Starbucks. Auto dealerships used to have a local focus, but many are now owned by large conglomerates.
The trend has been obvious in banks for decades, and the consolidation rumbles forward. The number of banks grows smaller and their size grows larger. Local banks sell out; their name comes down to be replaced by that of a bank owned and controlled in a distant city.
So the local bank has become a branch. The bank president, if he still works, is a branch manager. If he has quit the bank owing to the buy-out, a new manager takes his place. But likely this one is a corporate nomad. Probably he will be gone in less than two years to another branch in another city, hardly enough for a few meetings of the chamber of commerce.
Communities used to be watched over and run by the local bankers, local auto dealer owners, local real estate mavens and so forth. These businessmen had been there for 40 years. They knew the communities, knew what worked and how to get things done. And they knew where to put charitable and community development money in the right places to do the most good.
Now such local patrons are disappearing along with the local control of their businesses.
Filling the Local Leadership Void
Credit unions can step into the void. To be sure, credit unions are also consolidating. They are becoming fewer and some of these fewer are growing very large. Some of these are even national in scope.
But credit unions can and should do better than branch managers of national chains in local communities. For one, credit unions have always had more of a local focus and a dedication to local people. They either started as parish credit unions, community credit unions or credit unions placed in factories, school districts and the like. Even as individual credit unions grow larger and spread, they are likely to retain their tradition of local focus and dedication to a community far more than does a for-profit bank; they pay attention to their roots.
Second, credit unions have always cherished a tradition of service. A common slogan has been “Not for profit, not for charity, but for service.” Traditionally, the idea of the slogan has meant service to the members. But by extension it has embraced the more expansive concept of the membership. And this in turn has meant service to the community that has sustained that membership (the community where the teachers lived, the firemen lived, the factory families lived).
The Right Things for the Right Reasons
Third, the structure of credit unions more readily lends itself to community service and involvement. Credit unions are not-for-profit cooperatives. They are free of the pressures to meet Wall Street’s quarterly expectations. Banks are not free of these pressures. Banks must meet such expectations every three months. Whatever community service they plan, whatever donations they consider to the community development fund is always affected by their dominating goal of making money for shareholders. This may mean that such a plan or such a donation may suddenly shrink, but it always means that the bank is doing the right thing for the wrong reason: It is making its donation so that it gets a tax write-off, or makes political capital with the mayor or is going to get them more business and hence more profits in the long run.
As not-for-profit cooperatives, credit unions can do the right things for the right reasons. They do not have to look for a tax write-off, because they do not pay taxes. They do not have to make political capital with the mayor; they are already helping the community, not taking from it. They are not looking for anything in return. They are there to serve their members, and the good of their membership. That means serving and improving the communities in which the memberships live.
Credit unions may grow and their operations may encompass parts of states, whole states or whole regions, but they can do much better than the for-profit sector in assuming the mantle of community leadership.
This is because their leadership and their purpose have always been pure. They are meant to help and to serve. Now they should step up and be more vigorous in their community leadership roles. Everyone will benefit.
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