John Radebaugh: Credit unions work for customers, not profit | News & Observer

As details emerge regarding Wells Fargo employees opening thousands of bogus accounts, people are either scratching or shaking their heads at this latest example of questionable corporate action. What would motivate employees to create accounts without consumers’ knowledge? Why would a well-known financial institution resort to such falsehood?

It boils down to this progressive equation: Stockholders want a great return on their investment. Wall Street wants to see great quarterly returns. People at the top want to make a lot of money, and people at the bottom given unrealistic goals are also pressured to meet them at the expense of customers and, in Wells Fargo’s case, a lot of them with new, fake accounts.

Do not blame those along the front lines for trying to keep their jobs. Do ask what kind of corporate culture allows them to do so unethically.

The good news: There are financial institutions that are wired differently. You won’t find this behavior at credit unions, which are not-for-profit cooperatives. They are led by volunteer directors, not paid boards. They answer to their member-owners instead of stockholders. Earned profits are returned to the member-owners – the account holders – in the form of lower interest rates on loans, higher interest rates on savings and lower fees.

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As their designation suggests, credit unions cooperate with account holders rather than use them, and the benefits are mutual. There is no external or internal pressure to do what Wells Fargo did.

If history repeats, look back at the financial crisis 10 years ago. How did that happen? Big banks wanted more profit, so they pushed customers to products and services they did not need or could not afford. That did not happen at credit unions, which for more than a century have focused on helping people, not hurting them.

Credit unions’ history of integrity, honesty and consumer focus is the one worth repeating.

The length limit was waived to permit a fuller response to the issue.