Of Credit Unions & Unicorn Diets
A unicorn prowls the money matrix, waiting for people to clap him to life:
Being generally curious and ever-willing to throw myself into the clutches of danger, I’ve recently started researching how to start a credit union. Not that it’s a priority project, but it’s fascinating to think through what people could do better with a custom bank. I posted an email signup at unicorndiet.com (that’s an anagram of credit union, thank you) if you’re interested in getting infrequent updates on new discoveries and maybe some meetups on the topic in Detroit.
This morning I met up with someone who’d gone through the process of getting all the paper work together a ways back, but decided not to pull the trigger. If you’re interested, here’s a link to and breakdown of the application to start a state-based credit union in Michigan, copied and pasted from an email I sent to the 40ish people on the Unicorn Diet list.
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Greetings Unicorn Dieticians!
I thought some of you might be interested in seeing the state-based credit union application for Michigan: http://www.mi.gov/documents/cis_ofis_fis_1056_24802_7.pdf
Remember, I have no clue what I’m talking about and am diving in from scratch, but these seem to be the key points of interest in the application (which I’d guess are *at least similar* to what other states require — note: there’s also a different way to become federally accredited if you want to, but, one bite at a time):
• You need 7 lead organizers who each fill out background information (relatively extensive, but mostly work experience and “have you committed any crimes?”-type stuff) including a focus on financial experience. As you’d expect, the more you can fill this roster with people who’ve worked with banks and the like, the easier it should be to get approved.
• You must define a “field of membership” that bonds all CU members. In my research I’ve seen these tweaked pretty far (for example, Disney’s CU is open to Disney employees *and their roommates* — I mean, I had a roommate that worked for Disney once, and it’s funny to think I could have joined their CU…). The application says:
“Common Bond Membership in the proposed credit union must be limited to one or more of the following groups:
(a) of any size that have common bond of occupation, association, or religious affiliation; or
(b) whose common bond is residence, employment, or place of religious worship within a geographic area; or
(c) whose common bond is common interests, activities, or objectives”
• You have to provide information on how many people you expect to join and at what level:
“The number of persons estimated to be the potential membership is _____…
The number of persons expected to join the credit union at organization is _____…
The estimated member share subscriptions total is $_____…
The par value of the shares of the proposed credit union shall be $_____ (Usually $5.00, but not more than $100.00)”
• You need to describe how funds will be deposited, withdrawn, and managed, as well as how you’ll do your record keeping, and if you’ve got any fancysauce up your sleeve:
“Describe the plans for the collecting of funds for share and loan payments, the type of books and records to be developed and maintained, the surety bond, and any special or out-of-the-ordinary program for publicizing or expanding the services of the credit union.”
• You need to write an essay on The Benefits of Membership:
“In narrative form, state reasons for the Commissioner of the Office of Financial and InsuranceRegulation to find the organization of the proposed credit union to be consistent with the purposes of the Michigan Credit Union Act, PA 215 of 2003, as amended, (MCL 490.301 et seq.), and state the benefits to membership which will result from organizing the proposed credit union. Comments should include a discussion of: potential for membership growth and how determined; income characteristics of the field of membership; market area competition, including competition from non-depository institutions; and services to be provided”
• Aaand you need to make a bunch of different financial and membership projections for the next 3 years.
There are a few other things (do you have a sponsor? will you have a main office? what are the demographics of your local geographic area?), but that basically looks to be it. It’s not incredibly long but, of course, requires a strong organizational team and serious thought.
Besides that, the thesis still bears out that this looks totally doable for those so inclined.
OK! Until the next glitch in the unicorn money matrix,
Jerry Paffendorf
908-343-1981
PS Standard Disclaimer: I could be horribly wrong about everything.™
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