As in the Past, Credit Unions Have a Role to Play in Building a Better, More Prosperous Future for Michigan and Its Citizens
The Chinese character for “crisis” is a combination of the characters for two other words: “danger” and “opportunity.”
That remarkable bit of linguistic trivia has been cited in the presentations and books of many a motivational speaker, business consultant and self-improvement guru. Whether or not it is literally true — and those who actually know the Chinese language generally reject it — the underlying wisdom is profound. This is certainly true here in Michigan, where the local economy appears to be in crisis — presenting both a danger and an opportunity for Michigan credit unions.
With Michigan’s manufacturing base shrinking, the iconic Big Three auto manufacturers bleeding red ink and jobs, real estate values falling, foreclosures on the rise and unemployment stubbornly high — these are indeed the times that try Michiganians’ souls. But then, the Great Lakes State is no stranger to economic difficulties.
“The history of Michigan is in large part the history of economic cycles,” said MCUL Consulting Services Director Brian Paul, who regularly authors an economic and statistical analysis piece for Contact Magazine. “Of course, what seems to be at issue today is something a little more profound than the typical economic cycle.
“In the long term, we’re likely to emerge with a stronger and more stable economic base, one built less on the volatile manufacturing sector and more on technology, information and services. But, in the short term, there is bound to be a lot of disruption and pain for individual Michiganians.”
The same might be said for Michigan’s credit unions. In the short term, an increase in loan defaults, foreclosures and bankruptcies are sure to be problematic. But, in the long run, a healthier Michigan economy will create new opportunities for credit union loan and membership growth.
Although Michigan’s credit union law dates to the boom times of the mid-1920s, it was the Great Depression that provided the greatest impetus for credit union growth. It was in 1934 — in the wake of bank closings and an unprecedented collapse of the nation’s financial system — that Congress approved the Federal Credit Union Act. Credit unions could then be chartered under federal law anywhere in the United States, providing all Americans with the opportunity to organize a not-for-profit, self-help financial services organization that was in perfect sync with the times.
Today’s economic problems in no way compare to those of the 1930s — but credit unions again have the opportunity to step up and show how they differ from banks and other for-profit financial service providers. And that extends beyond the obvious credit union mission of providing a safe place for members to save and a fair place for them to borrow.
“Service is the central credit union value, concisely stated in the traditional credit union credo of ‘Not for Profit, Not for Charity, but for Service,’” said MCUL President/CEO David Adams. “As not-for-profit, member-owned financial cooperatives, credit unions focus on serving the needs of their members and improving their lives. Yet, in fulfilling that role, credit unions are also aware of the bigger picture — the need to be good citizens, good neighbors and build stronger communities. Social responsibility has always been recognized as part of each credit union’s mission.”
Credit union philosophy and the credit union difference were never on display to greater effect than last October, when Michigan Gov. Jennifer Granholm led an impressive list of special guests at a press conference in Dearborn announcing the “Career Transition Program,” (CTP) a joint effort by Michigan credit unions to assist members impacted by the state’s unprecedented job losses in the manufacturing sector. A consumer information Web site offering more information on the CTP is available at www.ctpforcumembers.org.
DFCU Financial (MW), Michigan’s largest credit union and the originator of the CTP, hosted the press conference, which was also attended by OFIR Commissioner Linda Watters and Michigan Department of Labor and Economic Growth (DLEG) Director Robert Swanson. DFCU Financial launched the program with a commitment of $10 million and nearly 40 Michigan credit unions have committed a total of some $40 million to the program. The DLEG is chipping in with an additional $1.5 million to assist CTP participants with the cost of textbooks and $200,000 for career counseling and placement services.
Through the CTP, credit union members are able to obtain a 10-year unsecured loan for career retraining and education at significant discounts over an ordinary unsecured loan or even the Stafford Loan rates available on typical student loans. Granholm cited the CTP as an example of an effective partnership between state government and the private sector and praised DFCU Financial and Michigan credit unions for taking a leadership role in helping Michigan’s economy.
“As a member of DFCU Financial, I’m particularly proud to be here to help announce this program,” Granholm said. “We want to make sure workers impacted by our transitioning economy are able to update their education and enhance their job skills. This program will help make that education and training a reality for people who need it, helping them keep food on the table and dignity for their families.”
Noting that the press conference was being held in the shadow of Ford Motor Company headquarters, DFCU Financial President/CEO Mark Shobe said development of the CTP was rooted in Ford’s recent massive restructuring and job cuts.
“When DFCU Financial learned about these sweeping cuts and realized that many of our members may be adversely affected, we had to do something,” he said. “Our history began at Ford and our success is linked to Ford, so this is our way of trying to help these and other workers who are struggling. And (the CTP) is good business, too. We can only be as successful as the people and communities we serve.”
Echoing the credit union movement’s oft-quoted motto, Watters praised the CTP as an “excellent example of ‘People Helping People.’ I applaud this program and the steps credit unions are taking to help our state’s displaced workers. It is the right thing to do.”
Adams also noted that the CTP is a natural fit with the credit union mission and philosophy. “Even in Michigan’s struggling economy, credit unions are extremely well capitalized and are able to meet the obvious need for this type of educational assistance,” he said.
“In addition, many credit unions’ fields of membership and history link them to the manufacturing sector — uniquely positioning them to assist members adversely affected by the state’s loss of these types of jobs. This is a great opportunity to show how Michigan credit unions are reinvesting in their communities and helping build a stronger Michigan.”
Michigan credit unions have also gained considerable positive media coverage as a result of the CTP, with stories appearing in newspapers such as the Macomb Daily, Battle Creek Enquirer, Lansing State Journal, Kalamazoo Gazette and Marshall Chronicle. A radio interview with Adams and Shobe was featured on the Rick Bloom Show on Detroit’s WDTK-AM (1400), and WXYZ-TV (Channel 7) in Detroit also featured an extensive segment highlighting the CTP.
“We have always made it a priority to develop products and services that truly benefit our members' financial outlook,” said Christian Financial CU (ME) President/CEO Roger Quitter, quoted in the Macomb Daily piece. “The Career Transition Program allows us the unique opportunity to serve a group that could definitely use a brighter outlook than the one they see today.”
“We’re very pleased with all the positive media attention the CTP has received,” said MCUL Community Reinvestment Initiative (CRI) Coordinator Judy Gardi. “Certainly, this program is an effective way to demonstrate the credit union difference, and how committed credit unions are to serving the needs of their members.”
CRI was launched by the MCUL in 2004, to re-energize and track credit union community service activities. Nothing revolutionary was involved in the effort — credit unions already were good citizens and actively involved in their communities. What CRI does is raise the long-recognized credit union social mission to a strategic level, encouraging credit unions to enhance these efforts and record them as well.
“The benefits of this are many,” Adams said. “Not only does CRI promote and encourage credit union social involvement, it also builds community awareness of credit unions as good neighbors, and this positive perception obviously contributes to credit union growth and success.
“And, significantly, the availability of quantifiable data on the credit union social mission underscores the difference between credit unions and for-profit financial institutions. This information is particularly useful in discrediting notions that credit unions must be legally compelled to invest in their communities, as banks are through the Community Reinvestment Act, and is an effective tool in combating attempts to repeal the long-standing credit union exemption from corporate income taxes and other anti-credit union initiatives.”
CRI is focusing on broad areas that impact all Michiganians, such as an expansion of shared branching, promoting financial literacy, assisting students in paying for their education, and helping fund and stimulate the renewal of our state’s urban areas. In addition, credit union involvement benefits a host of charitable organizations and community-service efforts.
“All Michiganians have a stake in the health and vitality of our local neighborhoods, our communities and our state,” Adams said. “Credit unions have, are and will continue to do their share and more to make Michigan a better place to live.”
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Regulatory Affairs
