It is clear to most people that in a crisis, surviving as an operator of a financial service firm is not really based on capital, it is based on liquidity. Check out this article and think about it. Liquidity allows you to survive the marketplace, capital is just something you need to ward off the NCUA and examiner’s community. Because to most CUs, capital is simply the ante needed to lend other peoples’ money. What is secondary capital to you? Is it more money to ante up and grow based on a one-trick pony approach to earnings in a CU, or is it working capital that creates liquidity to survive the marketplace?
Or is it capital to build with and thrive in the marketplace? Does your organization understand the difference, and is it postured to act on all three fronts: up the ante to stay in the game? Balance working capital as liquidity to stave off regulators? Balance working capital to extend investments and thrive with multiple revenue modes and resource extensions?
My question to you is does the industry have enough players that would take the BIG GAME risks with secondary capital to make it worthwhile to take on the attackers that say we are so close to being bankers with a unfair tax status that the whole industry should be washed into a tidal wave of change? I relish the change, but do you, and how long before you would right the ship and push off to new brighter futures?
As a CEO I have never really had to push hard, I mean very hard, to raise capital… I have had to work very creatively to pay off the expectations of those who push capital into our balance sheet. And when money comes easily to our balance sheets because the owners of capital to burn send it our way, I wonder what they know about how hard it is to earn on capital these days that I do not.
Worry does not mean I am not in on the game, and would not build businesses to leverage new capital sourced in the CU industry network, but it does mean I worry for those who will not find ways to earn and pay back to capital sources.
Today our members, our owners, suffer in finding ways to believe that credit unions truly pay on the capital our ownership (members) sends to credit unions. Now of course CUs take little heed of this confusion, they wash it away based on the ideas that members are consumers and have little regard for ownership concepts or the fact that they are the providers of capital and balance sheet health for our cooperatives. So as an industry we are almost void of examples, tactics, and the overwhelming sense we respect the ownership persona of our members.
What will that mean to a new structure where capital may come from people who do care? Are we the agents (professional operators and industry designers) that are ready to toe the line for an active, demanding, and constantly auditing audience of a new kind of owner – the investor? I believe I am, are you? No matter how the investor wears their sheep’s clothing or hides their fangs – they will be different than a mild mannered consumer put to sleep by rate deals, smiles, and good intentions.
Tell me why I’m wrong!