Oct. 13, 2014. The problems and practices that toppled the financial sector in 2008 remain in effect today, according to Jim Blaine, president and CEO of the State Employees Credit Union. But those problems have not affected credit unions, which remain locally owned and managed.
Blaine was the key speaker during the Boyles Distinguished CEO Lecture held Oct. 9 at Appalachian State University. The lecture is sponsored twice a year by the Walker College of Business.
“The failure of the United States’ financial system in 2008, which brought the world to the verse of economic collapse, was at heart a failure of stewardship by our financial leadership,” Blaine said. “That lapse in leadership and abandonment of principles was both intentional and purposeful, and it was criminal in many respects. Accidents on that scale just don’t happen.”
Six years later, he said, the “anything goes” and “let the buyer be damned” attitude persists in the financial system designed and rigged to “prey upon those who have the least and know the least, prey on the unsuspecting, the poor and those who trusted in good financial stewardships.”
Through mergers and consolidations, banking institutions are losing their connection to the community they serve, Blaine explained.
“Financial instruments (loans, mortgages) are now quite often packaged and resold worldwide as investments,” he said. “The local financial professional no longer must live with the consequences of bad financial practices or with bad financial advice. The local professional usually is a party of the financial transactions for no more than 30 days. A homeowner stuck in an exploding mortgage is penalized for a lifetime.”
In contrast, he said, credit unions are a locally owned, member-managed financial cooperative, which provides financial services on a not-for-profit basis. They are governed by a locally selected board of directors elected by the members, or account holders, of the credit union.
“True democracy,” Blaine called the membership structure. “It doesn’t matter who you are, what you are worth, where you come from or what you look like,” he said. Each member has an equal vote. Members of the board of directors serve as volunteers without compensation.
“Credit unions are the premier model of good stewardship in the financial industry,” he said. “The mission statement for our organization is simply ‘do the right thing.’”