This commentary was written by former VSECU CEO Steven Post and former VSECU board chairs Jerry Diamond, Kimberly Cheney, Wally Farnum and Bob Shattuck.
Sometime this fall, members of the VSECU will be asked to vote on a proposed merger with New England Federal Credit Union. Calling All Members is a collaboration of members working to defeat this merger and to preserve the VSECU as an independent statewide financial cooperative built by Vermonters, for Vermonters.
The current VSECU leadership has tried to portray the Calling All Members founders as too old to appreciate how rapidly the industry is changing. Yet the industry has been changing rapidly for a long, long time and each of the founders, along with many other volunteers and employees, worked to build an organization that was capable of meeting the challenges of a dynamic marketplace.
It is the current leadership that has abandoned the vision and mission of the VSECU and is proposing to turn control of our credit union over to the New England Federal Credit Union board of directors. We think that is wrong, and that VSECU members should soundly reject this merger proposal.
Calling All Members has spent several months exposing the procedural flaws that have resulted in this unjustifiable proposal.
From conflicts of interest to withholding information to providing false information, to stacking the board, to decision making without internal discussion, to substantial executive payouts if VSECU ceases to exist, everything about this campaign has troubled (and even insulted) many of those who worked to create a member-centric, democratically controlled institution that could stand the test of time.
VSECU members are now being inundated with surveys and marketing material in an effort to sell this idea. We estimate that if all the costs were ever to be fully disclosed, the price of this initiative would be close to $1 million of the members’ money. With flashy slogans like “Leading from the Future” and “True to Vermont” the relentless campaign is based entirely on bigger is better, and that the merger will somehow produce more of everything and everything will be better.
Much more about Calling All Members can be learned at callingallmembers.org. We obviously cannot compete against the resources that the VSECU has at its disposal. Still, we are hopeful that members will stay tuned, and when the time comes to vote that they will vote NO on the proposed merger.
Why vote no:
- Vote no to save VSECU. The vision of a not-for-profit democratically controlled financial cooperative focused entirely on serving Vermont and Vermont communities will be lost forever if this merger happens.
- Local control will be lost. VSECU is regulated by Vermont. New England Federal Credit Union is regulated by Washington. Vermonters have always favored the local solution.
- VSECU’s distinctive statewide field of membership and focus will be lost as New England Federal Credit Union expands to areas and groups outside Vermont.
- This merger does not produce any new products or operational capabilities. Each credit union offers different versions of the same basic banking products. VSECU is already a full-service institution. If this proposed merger takes place, Vermonters will actually experience fewer options for banking services, not more.
- New England Federal Credit Union is essentially acquiring one of its major competitors — for free. The merger is being sold as a “partnership” but that is just a marketing ploy. New England Federal Credit Union is acquiring VSECU. It will gain 72,000 members, $1 billion in deposits, $90 million of VSECU members’ equity plus many millions of dollars of real estate, and eliminate a major competitor, all at the expense of VSECU members. Vermont’s cooperative financial services industry will be weaker, not stronger, if this merger proceeds.
- Large financial services providers like Chase, Walmart and others will not be impacted at all by the so-called “scale” that this merger will produce. If anything, by having one institution to compete against instead of two, large banks and others will have an easier time in Vermont.
- There are alternatives to merger that will help achieve operational efficiency without destroying a 75-year-old healthy, strong and unique cooperative. Many credit unions around the country have maintained their independence while entering partnerships that tackle every banking challenge. Known as Credit Union Service Organizations (CUSOs), this approach to cooperative banking in Vermont would be far more beneficial than this merger.
- VSECU members will lose control of the assets that have been accumulated over its 75-year history and will lose the financial self-determination achieved thus far.
- The way to defeat big banking has always been to create a unique brand, deliver quality products and exceptional service. That is what VSECU achieved over the years with much success. The notion that bigger is better and that bigger is stronger is a fallacy that Vermonters have dismissed for years.
Vote NO and reject this merger!
Read the story on VTDigger here: Former VSECU leaders: Save the Vermont State Employees Credit Union.