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Kansas Corporate’s annual meeting features call to “Change the World”
Callahan & Associates’ Chip Filson, guest speaker, challenges credit unions to speak out for the cooperative model; highlight system’s positive influence on people, economies
KANSAS CITY, MO (May 27, 2014) — In a world with virtual branches, optimized websites and mobile banking, what can the credit union community learn from the 80-year-old Federal Credit Union Act? A lot, it turns out.
During Kansas Corporate Credit Union’s 63rd Annual Meeting & Convention May 15-16 in Kansas City, Mo., Callahan & Associates Chairman Chip Filson discussed the public policy that brought the Act into being, and why it remains an innovative, even revolutionary, concept.
“The cooperative design was unprecedented, and it’s still an idea that can cross local or national barriers to be life-changing for people,” Filson told more than 80 conference attendees, including leadership of the Kansas, Montana and Nebraska credit union leagues, and the state regulator from the Kansas Department of Credit Unions. “It can break the rigid thinking that persists among some policymakers and regulators, who believe the only ways to create and manage wealth are through the private markets or the government.”
Citing Capital in the 21st Century, a new book by economist Thomas Piketty, Filson explained the greatest source of income inequality in American society today is the uneven ownership of capital. But, he said, credit unions have proven their ability to change that disparity.
“You don’t have to look any farther than the Great Recession to see how credit unions are able to stimulate economic growth. During 2008 and 2009, in the depths of the worst financial crisis in 70 years, credit unions achieved their two highest years of loan originations – $525 billion,” he said.
With $1.1 trillion in assets and 90 million members, credit unions have shown the cooperative financial model not only works, it has been extraordinarily successful in America for the past century. In Kansas alone, KCCU helps its member credit unions manage nearly 40 percent of their $2.7 billion in investable funds, and credit unions benefit directly from working with an entity they own, one that ultimately understands their business and financial needs. But, Filson cautioned, the industry as a whole needs to protect the Act’s intent and cooperative design so credit unions can continue helping ordinary Americans manage their money and improve their financial lives.
Filson outlined two challenges facing credit unions as they work to help people and drive local economies. “The first is our industry’s own achievements,” he said. “Will they displace the passion, purpose and vision that ignited our movement? Financial resources are only part of the cooperative financial system equation. It’s human capital that has truly resulted in its success. It’s the drive and desire of people who want to work together in the spirit of mutual self help.”
According to Filson, the second challenge facing the industry is “regulatory myopia” – a tendency to treat financial cooperatives like banks. “We’re seeing a growing number of rules and regs, with one in particular – risk-based capital – being the most onerous,” he said. “The NCUA’s seeming lack of appreciation for the cooperative financial model is troubling. Kansas credit unions and others are strong because of your focus on people. They’re strong because their human capital, not financial capital, works to generate economic wellbeing.”
Filson cautioned that preserving the cooperative model depends on credit union voices being heard by the regulators and throughout the halls of Washington.
“We need to speak out about the credit union difference through comment letters, during Capitol Hill visits, in conversations with elected officials, and in our communication with members,” he said. “The cooperative model will disappear if our institutions continue to be regulated like banks. This is our chance to show that the cooperative idea can change the world.”
To see more of Filson’s commentary on this topic, visit www.creditunions.com.
About Kansas Corporate Credit Union
Kansas Corporate Credit Union (KCCU), chartered in 1951, is a full-service corporate credit union providing financial services to its member credit unions. Headquartered in Wichita, Kansas, KCCU serves 199 retail credit unions and credit union organizations in the states of Kansas, Montana, Nebraska and Colorado.