Green grass grows all around
Noting the upcoming first anniversary of the conversion of Massachusetts based Harbor One Credit Union to Harbor One Bank, I reflected back on my tenure at CUNA. The regulatory burden drum has been the most consistent sound that I have heard in all of my years involved with credit unions. In a recent interview, NCUA Chairman Matz recognized the fact that due to mergers and other factors we are losing 250-300 credit unions per year. Often it is expressed that regulatory burden on small credit unions plays a significant factor in credit unions merging or shutting their doors.
Of course, in light of a high profile conversion such as Harbor One, the idea of switching charters can become attractive.* Again, reflecting on my experience at CUNA, I was able to hear and see how changing regulations were affecting community banks as well. What the experience of Harbor One seems to be showing us is that the financial benefits for a conversion may not be all that they appear to be. At the same time, the regulatory environment is likely just as burdensome, and perhaps even more so in some areas on the bank side of the fence. Bottom line is, the grass is not always greener on the other side. Critics often point to our shrinking numbers. Less than 20 years ago there were 25,000 credit unions and 25,000 banks. Today, there are less than 7,000 of each. In the meantime, we have grown to 100 million members and about a trillion in assets. Now serving 1 in 3 Americans!
Just in case you haven’t heard, community banks have been walking the halls of Congress complaining about a whole host of regulatory burdens. In fact, there are cases of banks converting to credit unions, albeit only a few. In any event, as a small or medium sized credit union or community bank, there are a variety of factors that can drive a look to potentially greener regulatory pastures. For credit unions, we have a special and rewarding mission, we provide a much needed alternative, and we have tremendous resources, namely the compliance experts at CUNA and NAFCU who are willing to help find ways to economize the compliance process. For credit unions it is always important to keep in mind our mission and our members. I believe, from what I have seen, that through technology, cooperation, and constructive dialogue, we can develop an environment that serves the members of small and medium sized credit unions, and preserves are our record of safety and soundness that sets credit unions apart from banks.
*(by way of disclosure, the CEO of Harbor One is a great guy and a friend!)
