In 1998, my current Canadian bank was serving me well. But somehow, I felt I needed to make a statement. We need more co-operatives in our economy. We need less of the corporate model of business.
I moved my banking to the Credit Union in High River, Alberta. My first action was to purchase Credit Union shares. I bought $2000 worth.
Over the years, I have gleaned bits and pieces of history and operations of credit unions in Canada.
These “quasi banks” started in the 1920s. Many Canadian citizens grew frustrated with the big banks in Canada moving capital to Toronto. The credit unions promised that local deposits became local loans.
So each local credit union was actually an independent bank. But its operations were overseen by a nebulous credit union federation. For example, I moved from High River two years after I set up my credit union account. It was quite easy to transfer my account to the Credit Union in Brooks, Alberta. I didn’t see any difference in operations. The federation provided all the procedures and software to handle this transfer in which was, legally speaking, between essentially independent banks.
The Brooks Credit Union was looking for local citizens to sit on its board of directors. I wondered how many people in this rural community really knew anything about running a bank. I suspect the board was mostly a rubber stamp to the federation. To get an interesting life experience, I thought about applying. But I suspected a steep learning curve, and I had other things going on in my life.
Then I got a notice from the Brooks Credit Union. It was merging with the Lomond Credit Union. The new name would be “Chinook Credit Union.” I had no idea on whether this was a good move or not. If I cast a vote, I would only be negating the vote of someone who put more effort into understanding this matter. So I did not vote.
A year later, Chinook Credit Union wanted to merge with the Bassano Credit Union. I did not vote. The name remained “Chinook.” More local mergers every six months to two years. A few years later, the Chinook Credit Union merged with the High River Credit Union. I did not vote.
Chinook Credit Union gathered more local credit unions. Eventually it merged with Lethbridge Credit Union. The name Chinook was retained. I did not vote.
Then Chinook merged with the Calgary Credit Union. This time the name changed to Connect First Credit Union. I did not vote.
This year, Connect First merged with its cousin in northern Alberta, called Servus Credit Union. I did not vote. This time, both names were retained, with trade names staying with their original branch. Why, I don’t know.
It took about 20 years of legal working, but now all Credit Unions in Alberta are under one legal umbrella. And this big credit union is still connected to the credit union federation across Canada. I still have no idea of whether this one big credit union is better than many small credit unions. Or how this Alberta-to-Canada credit union connection works.
The Credit Union is not a true co-operative. Profits are distributed according to the shares held, not by level of banking activity. For example, my Credit Union account was fairly inactive for 10 years. I still got my usual dividend.
I did a little math. My original Credit Union shares averaged about 3.5% growth per year since 1998. Term deposit interest in this period was about 1% to 2%.
What more I don’t know about my credit union
• I never looked at a financial statement from my credit unions.
• I have no idea whether my dividends were the full share of profit or a fraction thereof.
• I have no idea what it cost to effect all these mergers.
• I have no idea who is the current CEO. And how much that person is getting paid.
• I have no idea of any powers struggles in this organization.
What I do know
The credit union system has been around a long time. It was born 70 years before I joined. It will thrive long after I pass away.
My shares grew at 3.5% per year for the past 26 years. Knowing that margins in banking are small (in terms of total money handled), this is a sign of wise banking management over decades. This return is not expected for a co-operative in a competitive industry.
What I could find out
All of what I told you above could be called mostly hearsay. I can only back up most of this story with my memory.
Despite being a reasonably well-educated person, I have little desire to figure out how the Canadian credit union system works. My knowledge of the workings of the corporate banks would be better.
My main motivation to join the High River Credit Union was to make a statement of co-operatives over corporations. And banking services in the credit union have been just as good as the corporate banks. I have no reason to leave the credit union system.
If I spent a day on the internet, I would be more knowledgeable. I could verify some of this article’s points. I might find some of my assumptions were incorrect. And I might learn new things about credit unions in Alberta.
But I won’t spend that day on the internet.
Instead, I have trust that everything is going to work out all right in the credit union system.
Strange, is it not? A significant part of my life is given to an institution I know so little about.
Dave, why are you bringing up this point?
Some readers will be aghast at my naïve trustful approach and unwillingness to become better informed. What if there was a power struggle in the credit union that became public? Could I not use my credit union shares to vote for one side or the other?
I kind of doubt a day’s research will help me in voting wisely. If a shareholders’ revolt results, both sides will hire their own PR firms to draft the rhetoric to get credit union shareholders to side with them. Making decisions with biased information is not making a wise decision.
I trust the credit union process to make many right moves most of the time. I trust that when the credit union does not make a right move, it will rectify the mistake.
Maybe that trust is warranted with wisely drafted legal articles that formed the foundation of governance of the credit union and its federation.
Maybe that trust is warranted because the credit union concept has attracted middle and high managers of a more consultative, collaborative, and consensual mindset that most corporations can only talk about.
And the Alberta Credit Unions have executed a 20-year plan to bring them together, legally speaking. I still don’t know if this a good move or not, but I know most corporations do not have that kind of long-term planning.
I need not become vigilant or hyper-vigilant about how my credit union is running.
I suspect that at least 95% of credit union members have the same involvement as I.
And yet the credit unions are functioning well.
Maybe the Alberta credit unions are a good example of what an institution can accomplish when trust is there. They have lasted a century in a competitive business. We members need not be vigilant.
Trust & TDG governance
Today’s Western democracies do not have this level of trust. Many citizens believe they and other citizens need to be more active in challenging the decision makers and the civil service. A high level of vigilance is necessary for democracy to function.
I believe that my Tiered Democratic Governance will produce a level of trust that is similar to the trust credit union members give to their credit union managers. When that trust is there, the TDG will be able to accomplish societal goals much better than any version of western democracy.
And most citizens can focus on other things of life than who is or is not in power.
Published on Medium 2024
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