SUBMISSION TO
THE COMMISSION ON CREDIT UNIONS
BY
JOHN T. O’RIORDAN.
AUGUST 2011.
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CONTENTS
1. Scope of this submission.
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2. Credit unions and political responsibility.
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3. The Credit Union Difference.
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4. Conclusion.
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Appendix 1
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The scope of this submission.
This submission will address and be limited to only one issue.
The Government has mandated the Commission to review the future of the
Credit Union movement and make recommendations in relation to the most
effective regulatory structure for credit unions.
The Commission has confirmed that it is to make such recommendations.
To develop and recommend an appropriate and effective regulatory structure is
the foundational obligation of the Commission. All other issues are predicated
on the fulfilment of that obligation.
One cannot review the future of the movement outside the issue of an effective
regulatory structure. With an effective regulatory structure a meaningful future
exists. Under the current failing system the only possible future is one which
anyone who cares about the movement or the nation does not want to see.
The whole movement wishes the success of the Commission but anyone who
has witnessed the downwardly accelerating regulatory mess of the past decade
cannot but be sceptical, especially when the custodian of the present flawed
system sits on the Commission.
In the Commission‟s request for submissions you have outlined nine questions
on which you seek views. No doubt the members of the Commission will
understand my scepticism when I find myself faced with nine questions not a
single one of which addresses the fundamental issue of regulatory structure,
when the regulatory structure is the preeminent issue the Commission is called
upon to address.
There are forces at work that wish to destroy the credit union movement and
force our people back to dependency on and exploitation by profiteering
bankers. For the members of the Commission to develop proposals for an
effective regulatory structure will require imagination, creativity and most of all
courage to face down those forces. If you succeed, the contribution will be
enormous, but if you don‟t you will have failed the government, the movement
and the nation. I would urge you to not be distracted by all the myriad of issues
and imagined futures thrown across your path but to keep focusing and
refocusing, again and again, on “effective regulatory structures”
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I will attempt to suspend my scepticism long enough to make a useful
contribution to your proceedings.
The only issue that will be addressed in this submission is effective regulatory
structures.
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Credit unions and political responsibility.
The Irish credit union movement is unique. Nowhere else has credit union had
such incredible social and economic impact as it has had in Ireland. Nowhere
else have such a high percentage of the population participated in credit union
membership. Nowhere else have so many lives been empowered and
perspectives widened.
When one goes to a „World Council of Credit Unions‟ (WOCCU) gathering and
you hear delegates expressing their aspiration for their credit union to be more
of an “Irish type” credit unions and their many similar comments and
observations you cannot but be struck by the esteem in which the Irish
movement is held by the rest of the international movement. You come away
with a deep feeling of pride in the Irish movement and what the Irish people
have done with the credit union concept. This distinctive Irish model is
described by Prof. Ian MacPherson as the „Irish mode‟ credit union “clearly led
by volunteers, strongly committed to education, and deeply rooted in the
communities they served” 1 National movements vary so much, each the product
of their own history and more particularly the regulatory structure to which they
have been subjected.
For the Irish movement all of our most significant advances were achieved
before the advent of IFSRA. Sadly the period since has been mainly just
treading water as more and more of the movement‟s energy has been sapped
away by irrelevant and petty bureaucratic regulatory interference. In the last
decade hundreds of volunteers have just walked away from the Irish movement
fed up of what, at least from this side of the fence, seems like needless
meddling.
We know and appreciate that the successful development of the movement in
the pre-IFSRA era did not just happen because of the quality of our people it is
very much also the product of wise political and regulatory supervision of the
movement which was based on respect for the dignity and integrity of credit
union activists and an understanding of the objectives and purposes of the
movement. I believe that that respect and understanding still exists at a political
level in Ireland but it is almost totally absent at the regulatory level.
1
MacPherson, Ian – Hands Around The Globe- 1999- Horsdal & Schubart Publishers Ltd. Victoria, BC, Canada.
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Let nobody mistake the desire for appropriate respectful regulation as a wish for
light regulation. On the contrary the movement has always led the way on
regulation, robust regulation is an essential fully understood by the movement,
indeed almost every single restraint put on the movement started its life as a
motion at AGM and when a standard was achieved the movement sought its
inclusion in legislation.
In the pre-IFSRA period there was a clear distinction between the political and
the regulatory and the Minister had many reserved functions under the Act on
which he could seek advice from CUAC and then decide. In the intervening
period the role of the Minister has moved from Industry & Commerce to
Finance and subsequently the Central Bank. Ministerial responsibility has been
abdicated in favour of the Regulator. We now have the situation where we have
a Minister with no functional decision making role under the act with a
committee to advise him on those decisions. A robust regulatory framework
must restore political responsibility to government through the appointment of a
Minister. The Minister for Finance is not in my opinion the appropriate minister
and although some would favour a return to Enterprise my personal preference
would be the Minister for Community Affairs or such other minister who is
responsible for the social economy.
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The Credit Union Difference.
I am sometimes amazed at peoples inability to understand (or maybe to wilfully
disregard) the fundamental difference between banks and credit unions. This
misconception permeates everything from the Central Bank and the Dept. It
permeates the Commissions terms of reference and even your own call for
submissions. The concept of making allowance for our „ethos‟ or our „nature‟ or
our „mandate‟ as if we were just the same thing as banks but we had this „ethos‟
or whatever hanging from us. This is demeaning to credit unions and ignores the
very essence of what we are.
Banks are licensed by the state to take deposits from the public and to use those
deposits to make profits for themselves by providing credit to the public. Credit
unions on the other hand have no licence from government. We are a group of
citizens who come together to provide for our own credit needs in opposition to
the exploiting and excluding actions of the licensed banks. We take power out
of the hands of bankers and take it in to our own hands as citizens. In doing that
we do not operate under the grace and favour of any state we exercise our basic
human right to provide for our own needs and to come together with our fellow
citizens to do so.
Look at the madness that arises out of an inability to acknowledge that
difference. We have the credit union movement pushed into IFSRA because of
a superficial similarity and we end up regulated by the Central Bank. We don‟t
forget that IFSRA only came into existence in reaction to the banks defrauding
the state by creating bogus non-resident accounts and the then Governor of the
Central Bank telling the Public Accounts committee that he was not responsible
for the banks tax that his function was “to maintain the system”. The Central
Banks principle function is to maintain the system of licensed banks, those very
banks that we seek to take power from. Sure they will look after us won‟t they!
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Conclusion
It is almost beyond belief that the Central Bank who is responsible for the
greatest supervisory failure in the history of the state should be placed as
regulator to the most successful social economy movement in the country on the
basis of nothing more than a superficial similarity in their activity.
It is like putting The Irish Cricket Board in charge of developing GAA on the
basis they are both sport!
“We will of course take account of your ethos but you are both sports”
“No No”
“More than that you are both summer sports”
“No you....”
“Much more you are both team sports”
“You don‟t ......”
“In fact you have almost the same size teams ....but with suitable rules we will
address that anomaly”
I struggle to find a metaphor that adequately conveys the madness of the present
system but the madness of the reality exceeds imagination.
I urge the Commission whatever else you do ensure that this great movement is
move as far away as possible from the influence of the Central Bank of Ireland.
John T.O‟Riordan
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Appendix 1
JOHN T.O‟RIORDAN
John O‟Riordan is a volunteer Credit Union activist since 1979.
He is a member of the Board of Halston Street Credit Union Ltd.
He is a member of the Board of Central Credit Union Ltd. (in dissolution).
He is a member of the Supervisory Committee of Clontarf Credit Union Ltd.
This submission is made in his personal capacity only and in making this
submission he is not, nor does he claim to be, speaking for or on behalf any
other person or entity.
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