Credit Unions Need Their Version of the Hippocratic Oath

Things were pretty serious last week with the private insurance column. This week I want to lighten up a bit with a new code credit union leaders should live by given recent events.

“I pledge not to sell swamp land in Florida.” While this sounds silly, it’s not after considering what happened to three credit unions (see story page 1) and the trouble they got into over what amounts to a real estate loan scam out of Florida. What makes this worse is these credit unions weren’t based in Florida! No they were based in Colorado (Norlarco CU and New Horizons CU), and Michigan (Huron Area River CU). We’re talking infomercials for real estate classes called Millionaire University and promises of real estate riches! This doesn’t sound like anything credit unions should be involved in. It led to heavy losses and all three credit unions being conserved. Critics of private insurance talk about the reputational risk that credit unions have should private insurance experience a failure–stories like this carry very heavy reputational risks. Where were the regulators on this one? Didn’t the out of state aspect signal any red flags. Reporters at a Colorado newspaper have dug in to this story and are ready to expose all the ugly details. We are working in conjunction with them so look for more updates in the weeks ahead.