Dear Mr. Donovan

I read with much disappointment an article in the CU Journal that you are spearheading another effort to access TARP money for credit unions.

Credit Unions cannot, under any circumstances cost taxpayers money. Not only will this jeopardize our tax exempt status and separate insurance fund it is absolutely in oppositon of the seven principles of cooperatives, which we hope to remain, a financial cooperative.

Credit Unions were offered taxpayer money after the Great Depression and although Edward Filene was in favor of it, Roy Bergengren (first president of CUNA) opposed it saying
(a quote from CUNA’s website):

“To him, it meant destroying the vital principle of the whole movement by converting a community enterprise into an agency of the government. To teach people how to help themselves was more important by far in times of depression than at any other time.”

That’s what we HAVE to do. Figure out a way to help each other. I understand that many credit unions in the California and Nevada Leagues’ (your former employer) membership are hurting. One solution, of course is merger and another would be for them to convert to a Mutual Savings Bank to gain easy access to TARP.

CUNA’s National Brand Campaign states “Where People are Worth More Than Money.”

If we take TAXPAYER money to bail out a few COOPERATIVES what does that say about CUNA?

Credit Unions celebrated their 100th birthday recently, I for one am proud to have devoted the last 28 years of my life to furthering the movement. I’d hate to see your name in the history books as the one that helped destroy it.

Business Weak by BusinessWeek Magazine

Picked up a copy of it at the airport because the cover was NOT about Baby Bumps or President Elects. In fact, no pictures at all. Just the title “Why America Needs an Economic Strategy.”

Michael E. Porter from the Harvard Business School states:

“The stark truth is that the U.S. has no long-term economic strategy – no coherent set of policies to ensure competitiveness over the long haul.”

He goes on to say:

“Strategy addresses what to do, but also what NOT to do.”

And so we have to decide. What are credit unions GOING to do and what are we NOT going to do in this economic crisis. As long as there’s the phrase “bail out” in our vernacular, we won’t give it all we got, IMHO.

Credit Union Journal the same week reported: Momentum is Beginning to Build For A CU-Specific Bailout Package.

“With increasing portions of the $700-billion bailout package being earmarked for banks, credit unions are looking to develop a rescue plan of their own.”

There are two scenarios, but this is the one to adopt. The one that has clear strategy for the long haul and protects our 100 years of reputation:

Credit Unions would fund their own program by a special assessment on their 1% NCUSIF deposit. That way, the plan would be credit union-financed and credit unions could continue to assert they have never been the beneficiaries of a taxpayer bailout, helping to bolster their argument for continuation of the tax exemption.

Number two, NCUSIF could accept funds under the Treasury’s program and direct them to needy programs.

As Dan Mica is fond of saying, “Credit Unions are part of the solution.” Welllll…….if that IS our strategy, option two cannot be considered. This is the what NOT to do. According to the article “NAFCU is still focusing on ensuring that credit unions get to fully participate in the sale of troubled mortgage assets sales to the Treasury.” Thankfully Paulson took care of that option this week – not gonna happen for anyone.

NAFCU and CUNA need to get on the same page. I know there’s been talk of merging these two groups so we have ONE lobbying body. We don’t need the distraction of merger on paper – let’s merge in our minds and hearts and values and do the paperwork later.