Been reflecting more on this call by the head of the US #creditunion federation to end Field of Membership. In addition to the governance issues I raised in response to his post, I think there's also an interesting connection to the collapse of CU entrepreneurship worth exploring https://twitter.com/JimNussle/status/1278003365029588992

When the National Credit Union Share Insurance Fund was created at the end of the 1960s, the growth pattern of the credit union movement fundamentally changed from extensive to intensive growth. More CUs to fewer bigger CUs. 2/

cc: @Richard_Dines @morrischris @SarahSnellCooke

At the surface level, the explantion seems to lie primarily in external forces - the financial sector was being de-compartmentalized and deregulated. Those factors, combined with technological change, determined that CUs needed to consolidate and professionalize or die. 3/

While those forces were meaningful, they are far from the whole story. Equally (or more) important was the bureaucratic logic of the regulatory regime that came with the Federal insurance scheme. 4/

For both operational & sociological reasons, regulators prefer to deal w/ a few large professional organizations rather than many semiformal community-based ones. This led to open conflict with credit unions in marginalized communities in the early '70s, followed by slow burn 5/

As this process progressed, the center of governance accountability shifted from the common bond community which the credit union existed to serve to the regulator whose job was to safeguard to systemic stability of their insurance fund. 6/

This meant that (1) marginal credit unions tended to be nudged towards merging into their larger professionalized peers, and (2) the barriers to creating new credit unions became increasingly steep. 7/

One of the factors that drove the explosive growth of the credit union movement in its early years was the simplicity of starting the model. All you needed was seven people to each chip in $5 and a set of template documents from the @CUNA Supply Cooperative, and you were g2g. 8/

By the late 80s, the number of new credit unions being formed (even w/ the #CDCU designation) was minescule, & it only got more challenging & capital/labor intensive from there. 21st c examples include the failed @internetarchive CU saga & the recent challenges in Minneapolis. 9/

In 2020, while asset & member numbers continues to climb, the number of credit unions stands at about 20% of the 1969 peak. And while I do think the case for increased scale has some merit, the near impossibility of new institutional formation is a long-term existential risk. 10/

One way of counteracting this challenge lies in not simply abolishing the Field of Membership, but proposing its use for supporting new credit union formation in the way it supported the work of hundreds of thousands of our CU ancestors. 11/

Proposal: Revive the original requirements for starting a credit union (but w/ digital tools replacing the lock-box and forms), and give such groups five years to operate ourside of the Federal insurance scheme and its accompanying regulations. 12/

If they succeed in building momentum and capacity, at the end of that five years that can make the decision to either become an insured credit union, or merge into an existing one on negotiated terms. Either way, the movement is stronger w/ fresh blood and energy. 13/

Without a decent framework for new credit union formation, our movement is one S&L crisis away from multiple generations of progress in co-op finance being obliterated. Let's fix that problem while we still can. 14/14