True Stories from the 20th Century at Pacificorp

Banks and Credit Unions

By J. Charles Cheek

© November 2005

Not for profit, for charity, but for service. That is the motto of the credit union movement. I learned about the service component vividly in my first few days of employment at Pacific Power & Light Company.

In January of 1961 I was a 27-year old new college graduate with a wife and four young sons. I asked a large Portland bank for a $900 loan to consolidate debts accumulated during my last semester in college.  The bank loan officer insisted that I make out a written net worth statement even though I told him my total holdings included only a $50 car and some used furniture worth about the same amount.  I told him my net worth was about minus $800. The young loan officer chastised me for, “not being worth more at my age,” and again said I would need to furnish him a written net worth statement.  Among other loan papers he said the bank would require me to sign a chattel mortgage – a lean on my $50 car and other personal assets such as furniture and clothing. 

I took the bank loan application forms and fumed out the door into the lobby of the Public Service Building. More than annoyed, I took the elevator back to the 15^th floor of the Public Service Building then walked up the stairs to the 16^th floor loft location that housed the design engineering section. I later learned that some top executives and other employees derogatorily referred to that attic location as the “drafting room.” That attitude was a byproduct of the authoritarian management style of the organization at that time. But I digress. Stories of management at PP&L are better dealt with separately in stories central to that subject.

Back at my drafting desk a fellow employee noticed my annoyance and asked, “Are you okay, John?”

I blurted out the story of my just finished visit with the bank loan officer.

“Screw them,” he replied. “Why don’t you check with Electra Credit Union[1] for a loan.”

 “What is a Credit Union? I have never heard of that, but then I didn’t know what a chattel mortgage is either until that loan officer said I would be guaranteeing my loan with everything I own. ”

“Yeah, well don’t worry about it. That A-hole loan officer probably never heard of a moment diagram either. He’s probably just jealous of you being a graduate engineer.”

I was easing up and beginning to see a little humor in the situation. But very little, as my $900.00 loan was due 30 days after graduation and that date was fast approaching. At this point in the story let me make it clear that I am not against banking per se. I am not opposed to the free enterprise system in its entirety. My annoyance is against big impersonal national and multi-national corporations, including large financial institutions. Many recent examples are available to show that the pursuit of profit for the personal gain of those running the big corporations is a prime motivation. Notable examples of the dishonesty, greed and hypocrisy in corporate America today are Exxon, WorldCom and even Arthur Anderson, the giant and formerly prestigious giant auditing firm. Even cooperatively owned credit unions are not immune from the drive of individuals to make huge personal gains by devious and cunning maneuvering. Almost two dozen have converted to banking institutions. That is another story that needs telling, a story of the cunning, devious, and legal process that has been used by some credit unions to convert the net assets of a credit union into a stockholder bank. But I digress.

Anyway, I owed the $900.00 to a little family owned bank in Pullman, Washington. That little bank had just a few employees and the loan officer was the owner himself. When I told him that I had just one semester left to get my degree in civil engineering and already had several job offers he readily agreed to loan me enough money to finish my engineering education. I simply went to him at the first of each month and told him how much money I needed for the next 30 days and he would write me a check for that amount in exchange for my signature on an updated loan paper. I would have been pleased to extend the loan with that little bank but in those days it was inconvenient to do business when physically separated by several hundred miles.

Electra CU had a one-employee closet size branch office on the fourth floor the Public Service Building. I told the lady running the branch my story and Electra CU readily loaned me the money.  No net worth statement was needed, just my signature on a promissory note and an agreement to have the monthly payment deducted from my paycheck.  From that day forward I have been a diehard believer in credit unions. Today, seventy percent of my total liquid assets are invested in insured deposits at Credit Unions. So, in addition to being a diehard believer in the credit union way, I have a highly vested interest in keeping credit unions as successful financial organizations.

In 2003 I got vitally interested in the governance of credit unions when one that I was a member of, Columbia Credit Union,  announced that they were going to convert to a mutual bank. I was adamantly opposed and joined a small group who waged a battle over the issue and stopped the conversion. I hope to tell that story elsewhere and reveal the process that white collar thieves use to get a credit union’s net assets transferred into the ownership of a very small group of former credit union officials and a few knowledgeable investors.

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