A $13 Million Credit Union CEO Salary Made Clark Howard Say Management Can Hijack It to Enrich Themselves

A listener named Michael from California did immoderate homework connected his section recognition national and did not similar what helium found. The area's largest recognition national charged precocious overdraft fees, carried comparatively precocious owe rates, spent heavy connected advertising, and paid its CEO $13 cardinal per year. Michael brought this to user advocator Clark Howard, whose podcast regularly champions recognition unions arsenic the smarter alternate to large banks.

"Their CEO makes $13 cardinal per year. What? I don't deliberation their members cognize immoderate of this," Michael said. He recovered amended owe rates successful the backstage assemblage and encouraged radical to probe earlier joining.

Howard did not disregard the critique. His effect was unusually blunt for idiosyncratic who has spent decades endorsing the recognition national model.

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Credit unions are member-owned, not-for-profit cooperatives. The structural committedness is that without shareholders demanding returns, the instauration tin connection amended savings rates, little indebtedness rates, and less fees than a accepted bank. That committedness is real. The occupation is that "member-owned" does not automatically mean "member-controlled."

"Management of a recognition national tin fundamentally hijack it and marque it to enrich themselves arsenic managers alternatively of serving the members who ain it," Howard said. This is the halfway fiscal mechanic the $13 cardinal wage communicative exposes: governance drift.

Governance drift happens erstwhile the radical elected to oversee an instauration halt representing the radical who ain it. In a recognition union, the committee is expected to beryllium elected by members. But astir members ne'er vote. Turnout successful recognition national committee elections is typically successful the debased azygous digits. When astir nary 1 votes, incumbent committee members look nary existent accountability, and the executives those boards prosecute and compensate look adjacent less.