Will Magnus- I love you man, but BZZZZTT!

Will Magnus is a comic book scientist, and the pseudonym for a very smart guy who is giving us an insider’s view of the mess at the Corporate Credit Unions.

His blogging has enlightened me in ways that an outsider otherwise would never know, including sharing with us a top-secret Letter of Understanding and Agreement that the NCUA foisted upon all but four of the Corporate Credit Unions.

In his latest missive, he’s given a very thoughtful response to how the Corporate Credit Union system should be reformed. There are many details in it that are way beyond of my circle of knowledge, so I have no comment on them. But I offer an even higher altitude suggestion for the reform of the corporate credit union system.

Will Magnus advocates for all Corporate Credit Unions to be abolished or phased out, and replaced by one single Corporate that will then be responsible for…. well, everything.

I love you Will, but WRONG WRONG WRONG.

Efficiency is a worthwhile pursuit. But efficiency above all else leads to disastrous results and unintended consequences.

How *should* the Corporate CU system be restructured?

I advocate a system modeled after one that has proven itself for more than two hundred years; and that’s our government. Yes, the government is not perfect and has its share of problems. But I am writing specifically about our three-branch system of checks and balances. The Executive, Judicial, and Congressional branches keep each other in check. The geometric shape which is the strongest is the one which contains the fewest sides, and that is the triangle. There is a reason why Schoolhouse Rock sang that “three is a magic number” a couple of decades ago, and the reason is as old as time.

A single Corporate Credit Union, no matter how well regulated and transparent, smacks of what America itself rebelled from, namely monarchical rule.

The current investment losses have to do with bad mortgage securities. We can write regulations to prevent that in the future. But that’s like removing your shoes to go through airport security- a knee-jerk response to trying to prevent the latest threat, when the next threat will be something else entirely, having nothing to do with airplanes OR shoes.

Creating a single Corporate Credit Union to maximize efficiency is the worst possible solution to this problem. The credit union movement flourishes because of its diversity. One of the problems with the Corporate Credit Union system is that there is only one “wholesale” credit union that all regional “retail” corporates invest in. The problem is that so much money, and therefore power, is invested in a single entity. There is truth in the old saw “absolute power corrupts absolutely”.

We ought to divide US Central into three relatively equal entities that compete yet cooperate with each other. Whatever form a re-engineered corporate credit union network takes, we need our Corporate Credit Unions to be based on the exact same cooperative principles that regular credit unions operate by. The seven cooperative principles should be etched in stone at the entrance to any corporate, league, office, or branch of credit unions of any type.

That’s my two cents on reform, feel free to share yours.


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One Response to “Will Magnus- I love you man, but BZZZZTT!”

  1. Family Guy online Says:

    Just bookmarked this web site!Glad i came across it.Love Will Magnus- I love you man, but BZZZZTT! EverythingCU.com World 2.0 Adventure

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