Thoughts on the merger of Progressive Credit Union
I recently read an article from Chip Filson about the merger of Progressive Credit Union, a 16-year CU*Answers client, and PenFed, and it got me thinking. To some the merger may have come as a surprise, but for those aware of what made Progressive so successful for many years, the taxi medallion industry, it did not come as a shock. Rather, Progressive was caught up in the tides of an industry being swept away by Uber and other rideshare services. But instead of serving as a cautionary tale, I think Progressive’s legacy will be one to inspire others looking for that next big thing.
There’s no doubt that Progressive was a long-term leader in leveraging a marketplace for its members and the members of many other credit unions—they positively worked by proxy for us all. Robert Familant and his team creatively encouraged community lending (participation lending) and its evolution to aggregate capabilities to reach more people than they could otherwise have done alone.
And Progressive did leverage the medallion economy to great success, seeing their assets rise with the bubbling medallion prices, which climbed from an average of roughly $200K in 2002 to $1M in 2014, and have since crashed back down to 2002 levels. As new entries into the market disrupted the medallion industry, Progressive, among many others, was part of the wave requiring everyone to adjust to new norms.
No insurance company puts any credence to the idea of working things out, whether it be living through a portfolio of loans, or working through lawsuits, or trying to defend taking on hard roads ahead. They put so much weight on removing the topic from the to do list, that they weight their models for only their goals. While I think that the credit union might have been able to work it out over the long term, the NCUA would never have allowed them to continue riding the roller coaster of adjustment. They doomed the credit union for convenience and a sense of calm—get Progressive and medallions out of the news.
The taxi medallion business was a great business and the lifetime earnings of those who were good at it cannot be denied as anything but positive. It had its phases of wins and losses, but on the balance did very well for Progressive and its members. Its time has run out and so has Progressive’s. Not being flippant here, far from it, I respect Robert, Progressive, and all of the CUs that helped their members through the years based on the economies created by medallions and credit union hard work.
Every generation must learn this evolution of economies and the wins and losses that come with it. To 1) see the constant need to search for opportunities; 2) constantly consider how those situations might be disrupted; 3) avoid the impatience of disconnected regulatory oversight; and 4) see the long-lasting triumph of those who lead into the future without regret instead of clinging to the injustice of what was. There are lessons to be learned, adjustments to be made in the next cycle, and joy over the fact that it worked for Progressive for as long as it did.
Tell Me Why I’m Wrong