HUGE Mitchelstown Credit Union uses the Mushroom Theory

“HUGE” Mitchelstown Credit Union & the Member as a Mushroom Theory
http://www.avondhupress.ie/story1.html
http://www.mytown.ie/town2,mitchelstown/news127,why-is-credit-union-losing-key-personnel.html

Once again Mitchelstown hits the headlines for all the wrong reasons. This time it seems its Board (not the credit union) was forced to respond to “mischievous rumours” of “going into liquidation”. A very odd concept for a credit union one would think. Maybe “liquidation” should mean “liquidity”? Could this be a liquidity story?

In any event it seems the CU is “awash with money”. It should be. It is after all a credit union that is only 35% lent.

The story within the story relates to what appears to be some quite significant governance issues.

There are three models in Credit Union governance. The balanced board/management model, the dysfunctional dominant manager and dominant board models.

It appears that Mitchelstown may fall squarely within the last category of an all too dominant board. It has a board of thirteen people along with nine committees who are quite busy. Commenting recently one director said:

“It’s a commitment that cannot be taken lightly. It is a huge financial co-op with membership totalling 17,000, shares and assets in excess of €90 million, loans of approximately €35 million and over €45 million in investments. To ensure that this is managed correctly is a huge task that takes many hours of careful consideration and consultation between investment advisors, board and management.”

No doubt the remaining Board members will have their work cut out for them. If a least to figure out just what size their credit union actually is, seeing another Director says it has “€100m in assets, comprising €35m in loans and €65m in investments and also have huge reserves”.

Since the beginning of the year it has lost its general manager, his replacement, its credit controller, assistant manager, its president and two supervisors. The latter resignations it seems are reportable to the regulator who presumably was informed.

It’s fascinating to watch this theme play out publically. Not one, but three board members have commented to the press, with differing messages winning the booby prize for media management.

To top it all on national talk radio we heard once again that grand Irish credit union tradition of the “the member is a mushroom” to be kept in the dark and fed a diet of credit union rhetoric. People were told that they would lose their "benefits" if they withdrew their money as a result of the rumours. Of course they were also told their savings were "insured".

No wonder the people of Mitchelstown are concerned. Refutation of mischievous rumour is one thing but explaining the loss of so many staff, supervisors and a president is something else altogether.

Update 29th September

Mitchelstown is once again on the hunt for a new manager, switching recruitment agents only weeks after confirming it had recruited a new manger but the appointment the board claimed was delayed due to “work commitments”.

Its membership will not be amused when it hears of the latest development in a saga that spilled onto the public airwaves. One of its directors rang into the popular talk radio show Liveline (RTE) to defend his credit union which was it seems experiencing substantial savings withdrawals. About 360,000 people heard its director claim that savings were guaranteed, when at the time they were not and to also imply that savers would lose their savings insurance benefits. The caller seems to have mised the point; savers would have to die first before the insurance becomes a benefit. Presumably savers with Mitchelstown were more concerned with staying alive than dying.

An unusual feature of the managers role appears to be its relationship with the board. The job as advertised says the manager will report to the treasurer. It appears to indicative of some credit unions continuing reluctance to move on from board dominance and embrace the modern practice where the majority of larger credit unions position their most senior executive as a general manager or CEO reporting to the board.