Earlier this week, I got an email excitedly telling me that my local credit union was merging with another credit union again. This is becoming a fairly common occurrence so I just made a note for a news story here on WOSH. But then I noticed that the credit union about to be folded in with mine is located in La Crosse--and I have a problem with that.
When they started and were initially chartered, credit unions were intended to be "owned and operated" by members who shared a commonality. The first were usually employees of the same company with some being the ones who provide capital (the savers) and those who provide revenue (the borrowers). Then credit unions started offering membership based on geography--people living or working in a certain county were elligible. But the mega-credit unions forming with the recent rash of mergers seem to have blown the "commonality" format out of the water too. Southwestern Wisconsin is in no way contiguous with the Fox Valley.
This merger-mania is transforming the local, community credit union into a slightly-modified version of the same mega-banks that so many of us chose to flee for our financial services. Except the CU's are regulated differently and are taxed in a different way as well--which some in the banking industry see as an unfair advantage--especially as they move beyond the "two branches in one town" model that existed when the initial laws were put into place.
What's more, that "owner-member" aspect is continually diluted as more and more credit unions are folded into one. Talking with a friend who works in the industry, there could be as few as 12 to 15 "mega-CU's" with at least a billion dollars in assets in Wisconsin in the not-too-distant future if the current trend holds. And how will that be any different than the 5 or 6 "too big to fail banks" that dominate the financial landscape?
While it may be convenient to have branches every few blocks in every town--or free ATM's scattered around the state--let's not lose sight of what credit unions are supposed to be: smaller, better and more customer-friendly.