For Better Or Wirz?

Henry Wirz is one of the CU movement's best thinkers - and commentators.   Mr. Wirz is, also, remarkably credible since, over the years, he has served in numerous CU volunteer leadership positions and guides a highly successful CU in Sacramento, Ca.

Henry recently opined on "alternative capital" in the always incisive CU Times ("Capital Plan is A Bust" - 5/11/11).  While Henry gets much of it right, he is a bit of a "historical revisionista" on the origins of CU cooperative capital.  I ascribe this mainly to Henry's youthful inexperience; he's only been around for 25/30 years, a mere babe in the woods, still somewhat damp behind the auricular orifices.... looks like he's even begun to dye his hair gray to add "presence".  Youthful optimism and exuberance - not really a fault - but for those of us who were actually there "at the beginning"....



In the opinion piece, Henry easily disembowels the recently released NCUA "whitepaper" on alternative capital and rightfully gives very short shrift to the three types of alt capital outlined in the paper.  Henry doesn't even have to break a logical, theoretical sweat  in rebuking the NCUA document.  Easy pickin's, slam dunk!  But, before you give Henry too high praise; as they say, "consider the source" and author of the whitepaper.  After all,  you wouldn't ask a Nun about "worldly pleasures" and NCUA remains intellectually chaste when it comes to the subject of credit union capital. 


But unfortunately, Henry quickly snatches defeat from the jaws of victory as he proceeds to reject the concept of at-risk member capital altogether!  It is a forgivable mistake.  The phrase "alternative capital" is confusing and misleading from the "git go".  Let's backup and start from the beginning,  forget "alternative capital"!  What's  being requested is the ability to return to an original, core, cooperative, credit union principle - permitting the member-owners of the CU to once again have "at risk" funds on deposit in their CU - nothing more, nothing less.


Why would anyone object to a member-owner of a CU having an at-risk deposit in their CU?  Perhaps we would call it a "share account" on which we would pay "dividends"; and, if their CU prospered the member would see "capital appreciation" and if the CU faltered the member would see the share value decline... member ownership, "skin in the game", at-risk capital .


Henry, what is the problem?  Forget the whitepaper - "consider the source"; let's discuss principles!  As with age - as you will eventually find out - there are quite a few subtle wrinkles to this very important issue..... what have you got against member ownership and control of their CU?