While a member of the NCUA board, I was the only board member who spoke against a proposed rule that would have required home-based credit unions to obtain commercial space for their operations or face closure. Advocates for the rule cited examiner safety, lack of bathroom facilities, inadequate working space, everyday access to the credit union and the inability for the credit union to grow.
The proponents of the rule forgot an important historical point. Credit unions had their start at a kitchen table where founding members put in $5, $10 or $20 bills to begin a cooperative venture, enabling people to save as well as make loans to those who needed to borrow. It was the beginning of the people helping people philosophy that enabled the credit union movement to grow and prosper.
They forgot that credit unions were established to serve specific groups: Members of a church or fraternal organization, individuals who live in a certain community, those who worked for a specific employer and others who shared a common purpose.
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Many of these credit unions grew into large institutions offering every type of financial service for their members. Others stayed small, many by their own choice, and continued to serve the members for which they were chartered. Most importantly, they remained strong, financially sound and compliant financial institutions.
For the NCUA board to then say that these small credit unions, which for decades have faithfully served their members, now must comply with rules telling them where they should locate their business and when they must be open was wrong. Further, it was presented under the premise that this will help them grow and better serve their members. Fortunately, many saw through the veiled proposal.
Small credit unions across the country rallied together and sent letters to the NCUA in protest of what was seen as an attempt to rid the agency of bothersome credit unions. Some individuals believed the small, home-based ones would be forced to merge or close, thereby eliminating the agency's need to deal with the mom and pop locations.
Fortunately, the board members supporting the flawed approach felt the wrath of the small credit unions and let the proposed rule sit in abeyance. Last month it was announced that the proposed rule perhaps was not really needed and would not move forward. It had been relegated to where it belonged, in the shredder.
Occasionally it takes individuals a while to reflect on what they may be proposing and upon reviewing all the facts determine that their approach is wrong. They may not admit it, but their decision not to try and advance it speaks volumes. In this case, the board's prolonged silence resulted in a clear and decisive victory for small, home-based credit unions.
At times, silence can be golden.
Michael Fryzel is a Chicago-based attorney and former chairman of the NCUA board. He can be reached at [email protected].
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