July 2013        

Credit unions a target for carpetbaggers


In the race to accumulate, nothing is immune from being grabbed by speculative capital. Now the credit union movement seems destined to finally fall into the clutches of the exploiting class.
     Modern credit union history dates from 1852, when Franz Hermann Schulze-Delitzsch consolidated two pilot projects in Germany, one in Eilenburg and the other in Delitzsch, into what are generally recognised as the first credit unions in the world.
     The Irish League of Credit Unions was set up in 1960 by a small group of credit unions to represent and service affiliated bodies. It is the representative body for 508 credit unions in Ireland. According to the ILCU, “credit unions are Ireland’s successful financial co-operatives run by—and for—their almost 3 million members. Credit unions hold €11.9 billion of savings; €15.1 billion in assets and (at over €750 million) are Ireland’s leading providers of social finance.”
     Generally speaking, credit unions see themselves as being on higher moral ground than banks; they feel they are “community-oriented” and “serve people, not profit.”
     Traditionally, the credit unions were run on a strong co-operative basis. They had strong links with their communities and were mainly built up by unpaid local volunteers. But over the years this has changed. The changes mirror the demise of the agricultural co-operatives, where members far removed from, and barely aware of, the struggle and sacrifice of earlier generations gave their power to a professional managerial elite and ultimately sold out to the profit-making ethos of the PLCs.
     Now credit unions are heading the same way. Local boards of management still exist, but their power tends to be that of rubberstamping decisions made by the ubiquitous manager. In some instances this is made easier by the cosy networks built up by some board members. This may lead to soft business loans and jobs for the chosen few. Co-operative principles are conveniently forgotten.

Neo-libs

The assault on the credit union ethos began in earnest with the neo-liberal principles championed by Charlie McCreevy and Mary Harney. Credit unions were cash-rich and attracted envious glances from the banks and the profiteering classes. All that cash—nearly €12 billion—could be acquired through the issuing of worthless junk bonds.
     In the early 2000s McCreevy, as minister for finance, set the ball rolling by putting pressure on the credit unions. He proposed changing crucial new legislation in a way that would treat credit unions in the same way as the big commercial banks. A non-profit, community-based co-operative was to be treated in the same way as the big banks.
     Right-wing commentators have become more vocal in their shrieking about the need for “reform” of the credit unions and for them to be hit with penal corporation tax. And the new Credit Union Regulator has announced a plan to consolidate the 430 credit unions in the country into 100. Dónal Coghlan has taken up the role of chief executive of a newly created body, the Credit Union Restructuring Board, which will oversee multiple mergers of credit unions.

Vultures gathering

This has been given a spin by the Irish Independent as “a process that is a tacit admission that the current model for the movement is broken.” Of course the O’Reillys and Denis O’Brien will eagerly champion the transformation of the credit unions into instruments of profit, ripe for takeover by themselves and their mates. Buzzwords like “slimming down,” “modernisation,” “viability,” “sustainability” and “restructuring” are being bandied about. At least one right-wing commentator has raised the spectre of only fifty credit unions making the grade.
     All this softening up before the final onslaught of neo-lib shock therapy will hopefully mean submissive credit union shareholders willing to sell out. If allowed, it will mean a huge set-back to co-operative principles. As TM wrote in this paper in March 2012, “The credit union movement is one of the last bastions of democracy in this country. Each credit union has a distinct and important role in Irish society and has close links to local communities, in which it plays a vital role, giving people access to affordable credit. The loans and dividends paid out are spent in the local economy; the board of directors of each credit union stems from their local community; they support their communities through sponsorship and donations to clubs and organisations; and they provide employment in their locality.

Fight

In the midst of economic depression and the savage “austerity” measures being heaped on the poor to bail out the rich, the loss of the people’s bank through “reform” or takeover would be another victory for the rich. And, once lost to the community, they will prove near-impossible to regain.
     As communists we must fight any attempt to privatise credit unions. We can join with community campaigns to save and revitalise credit unions on co-operative principles. And we can unite in action with republicans and socialists to fight this execrable assault from big banking and their gombeen stooges.
     It is all part of the big picture. As outlined in a statement by the National Executive Committee of the CPI on the political situation on 18 May 2012, “building the people’s resistance and presenting an alternative direction for all our people, north and south—beginning the difficult but necessary reconquest of Ireland for and by its people.”
[MA]

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