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On January 7, 1984, NCUA Chairman Ed Callahan spoke at the Hawaii Credit Union League’s Political Action Conference. This was the predecessor to today’s governmental affairs conference.
He opened by discussing deregulation, a term he described as “overused and misunderstood.” He noted, “I was not the inventor, but I gave it a good push.”
He then addressed why credit unions had been so uneasy, even fearful with this radical change that would apply to the entire financial industry. The fear was whether cooperatives could compete. For on December 14, 1982, in a first step, all rates for all institution’s money market accounts were removed.
He then presented the evidence. Growth in savings showed credit unions, whose liabilities (shares) had been totally deregulated in May 1982, had increased by double digits for three consecutive years, far ahead of the banking industry’s outcome.
The most important benefit of the change was that credit unions would make their own business decisions, not government bureaucrats. There was no more “follow the leader” putting all our “eggs in one basket.” He also recognized that “some will succeed more than others.”
The rest of the story
He then explained the additional changes necessary for this result to succeed.
The agency had approved a “more realistic common bond” which he believed would have the most lasting “real impact in the long run.”
He talked about the agency’s decentralization, putting resources into the field where they were most needed in order to conduct an annual exam program. “We threw out the old cookbook and created a new exam process so we could be ‘problem solvers’ if required.”
The agency needed to be “more efficient” using the resources provided by credit unions. One example was “resource sharing” where the agency would compensate credit unions who would lend their personnel and know-how to assist other credit unions experiencing difficulties.
Finishing the job
He closed by asking for support for a new design for the NCUSIF. The Fund was “not competitive” relying on double premiums to try to meet the 1% of shares objective set in the Act.
The new design would be “less costly, puts control of funds in your hands, and makes the fund all yours when you put up the money.” This change would “complete the system.”
Leadership change that lasts
Ed took questions at the end of the talk replying to attendees’ concerns about “overlapping field of memberships, competition for members,” and the threat of taxation.
He closed with the thought that he did not want to be remembered for what he had done as the NCUA chair but rather for “being part of the future.”
His ending rouser challenged credit unions: “You’ve been a model for your members; now become an even better one.”
What sets a leader apart: “feeling safe”
Ed did not lead change by preaching fear. Instead, in this speech and many others, he directly addressed the “fears” that credit union leaders shared. Fear of the unknown future, competition from without and within the industry, or the lack of expertise, and navigating an economic recovery with members.
Hearing him speak, credit unions “felt safe” with his proposals for the future. They had confidence not just in current results, but in the way the agency presented the context for change: the transparency, the joint efforts, and the shared belief in the unique value of the cooperative system.
In 1984, credit unions supported Congress’ change of the NCUSIF to a 1% deposit-based system, bringing all the benefits described in the plan. This was critical for credit unions to have a sound, unique, and competitive future in the newly deregulated financial markets.
Ultimately the trust in any organization depends on those who interact with it, “feeling safe” with its leaders. That belief is real; it is earned not granted by position; it is the fundamental confidence required for any system’s success.
One of Ed’s gifts was instilling confidence in others and their ability to succeed. Every coach knows this reality if there is to be a winning team. An example that is much needed today in DC.
