By Christian Mullins The initial shock of the mortgage crisis and subsequent credit crunch has subsided to the point where more concern is expressed over employee bonuses than over the continuing failure of financial institutions. Credit unions are no exception to this mess, but unlike banks they have largely escaped criticism and outrage, at least from a national perspective. America’s credit unions find themselves in a curious position, depicted by newspapers, television, and the Internet as everything that is right about how financial institutions should conduct their operations. It has yet to be determined whether this will be a boon to the industry or not, but one thing is certain: Credit unions cannot afford any significant missteps in the foreseeable future. Credit unions, with a small overall market share, are the ultimate financial industry underdog: unable to offer all of the services of their banking brethren yet still providing better rates and lower fees. While there’s a long tradition in the United States of rooting for the underdog, it doesn’t last; the American public loves to tear an underdog down just as much as they love building one up. Sustained success or significant growth, combined with any decision the public deems questionable, is the death knell for any underdog, and it is here that the credit union movement should be cautious. In the last year, the credit union industry has been more lucky than good. Avoiding the acceptance of TARP money has been critical to public opinion, showing the nation that credit unions take responsibility for and solve their own internal problems. That many in the industry were asking Congress for access to the relief program a few short months ago seems like a distant memory. The failure of U.S. Central and WesCorp showed that many credit unions were blissfully unaware that the corporate system had placed too many eggs in the mortgage securities basket, but the industry has largely been given a pass as it accepts responsibility for the losses. This isn’t because every credit union wants to do the right thing; it’s because credit unions cannot ask for the kind of government aid that is plaguing the reputation of other financial institutions. Credit unions should take pride in the way they’ve operated and the positive influence they’ve had during the financial institution meltdown. Hindsight is always 20/20, and it’s easy to look back and point out where credit unions made mistakes or wanted to make them but couldn’t. Moving forward, as more people take an interest in the industry, the margin for error will grow increasingly thin, and one poor decision could result in an industry wide backlash. From natural person to corporate credit unions as well as the trade associations, it’s our shared responsibility to ensure that the credit union movement does not fall prey to short-term choices with long-term consequences. Christian Mullins is a strategist for the credit union industry and author of the CU Potential Blog.
