A website by Liz Warren

Dedicated to scrutinizing the management of our Credit Union, and protecting our

collective wealth from unscrupulous self-interest.

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© 2014-2016 Liz Warren. Website last updated October 21, 2016.

Democracy Checklist

Update: October 17, 2016: They’ve done it! The Board of Directors has pulled the trigger and decided to go national. Do you think they’re interested in hearing dissenting opinions? Not a chance. My discussion of national expansion is here. Please come back over the next few weeks for updates.


If you want, you can skip this introduction and go directly to The Problems at Coast Capital.

Introduction to this Website

Coast Capital Savings is a credit union—like a bank except that it's owned by its members. It's a co‐operative. This website is devoted to educating you, the members, about co‐operatives and about Coast Capital.

Banking is a service that’s essential to society; commerce cannot function without it. In the old days, the big banks might not have been willing to service small and remote locations, so the residents needed to co‐operate among themselves by starting their own financial institution. These days, the bigger problem is that the banking industry can be powerful and domineering. It’s also very lucrative, and their profits (taken from you) get taken back to Toronto and given to their executives and shareholders. The goal of co-operatives is to return the profits to the members, or at least to keep the wealth within the community.

The problem we face is that most people don’t understand the value of co-operatives. Financial products are complex and so it’s difficult to know just how much of consumers’ money is being taken by the banks. It’s difficult even to believe that co-operatives could offer a better deal. What’s the catch? Yes, sometimes there’s a catch: co-operatives often return profits to the community rather than to the members, and so you might not see the cash yourself. You need to be worldly enough to value your community.

Co-operatives have another problem that is shared with any democracy: for any individual, it’s not worth the time and effort to learn about all the issues. One person’s vote counts for hardly anything. And it’s true: when things are going fine, your participation isn’t necessary because the co-operative has skilled professionals on staff to keep the business running.

But know this: your vote counts when the co-operative is under threat.

My goal with this website is to provide some independent advice about what’s in the best interest of members. I don’t have opinions on every subject; mostly just about issues of governance.

You might not know or care much about institutional governance, but good governance comes first. Only then can we talk about the things you care about, like service charges and interest rates.

What could go wrong?

There are two worst-case scenarios. The first—the one that's no surprise—is that bad governance and bad management could cause the business to fail.

The second—the more insidious problem—is that the Board of Directors and the Management could allow the wealth of the co-operative to be legally stolen away from us. I say "stolen" because in retrospect, the outcome for members is financially and morally indefensible. I say "legally" because the Board of Directors can change the rules to ensure that everything they do is within the rules. Supersized executive compensation is one technique—difficult to identify because it's difficult to say how much is too much. Sweetheart deals with other organizations is another technique.

Are these outcomes realistic?

Just as it would be foolish for Coast Capital not to have procedures in place to guard against their own employees stealing cash from the dispensary, it's foolish for the members not to have rules in place to prevent malfeasance by the Board of Directors and Management. Discussing such issues is not a slur on anyone's reputation. The famous phrase is appropriate here: "Trust but verify." The global financial calamity that started in 2008 revealed many examples of the bad behaviour that can happen in the financial world if nobody takes unbridled self-interest by executives as a serious possibility.

Is this urgent?

Implementing good governance is like saving for a rainy day: if you wait until you need it, it's too late. There's no better time than the present to start improving Coast Capital's governance. The perils are foreseeable—and some are upon us—and we should address them.

What should we do?

First, do not give up on Coast Capital! Management and the Board of Directors would like nothing better than for the members who would challenge their authority to go away. But the assets of Coast Capital do not belong to them. Those assets are a positive force in our community; don't abandon them.

Use the information on this website to learn about co-operatives and about Coast Capital. Learn as much or as little as you want. When it’s time to vote, vote in the interests of the membership and the community.

I hope that you will listen to regular members rather than believing everything that the Board of Directors tells you! Unfortunately, they’re currently not accountable to us.

—Liz Warren


Topics for Discussion:

The Problems at Coast Capital

About Co-operatives

How are co-operatives different than regular companies?

What’s the point of being a co-operative?

Does it make sense to have a co-operative financial institution?

Why is democracy important to co-operatives?

About Banking

How do banks (and credit unions) earn profits?

Why are banks so profitable?

Why are Canadian banks so profitable?

Why do executives earn so much?

About Credit Unions

Threats

Should a credit union offer lower fees and better rates?

About Coast Capital

The 2013-2014 Board declared war on active members

The 2013-2014 Board precluded a democratic election

The 2013-2014 Board prevented democratic outcomes

About Government Regulation

The enabling statutes

The government authorities

FICOM

The role that government should play

Threats to Coast Capital’s Members

Supersized executive compensation

Poorly motivated growth

Geographic expansion

National expansion

A comparison with political governance

Conversion to a bank

Regulatory capture


Coast Capital Savings Democracy Checklist


Other Information Sources:

Blogs and Opinion Articles

Press Coverage

Coast Capital Savings Corporate Documents

Provincial Government Documents

Federal Government Documents


You can also read my blog, the message forum, or contact me.