Saturday, December 05, 2009


Having read through the latest FICCO Newsletter, it can only be inspiring going through the lead article with its articulation of its clear and unmistakable twin messages. That this union can continue to grow only through its membership; and that these continuing hard times require extraordinary measures and efforts from both the organization’s hierarchy and the general membership.

Though implied but not expressly mentioned, one could also take pride in where real strength and stability lie in the organization – in the collective membership where individually, one member on average accounts only for 23,347 pesos in deposit. Meaning therefore that ownership and stakeholding are well distributed among the many members of the union, rather than ensconced in a small elite group accounting for a great majority of the ownership.

Having been a longstanding member through all these many years, one is also heartened by the two graph insets, tracing the growth of membership and total assets. When I left the city in 1980, indeed total membership counted in the single thousand, and assets were mostly in loans and cash in bank. But look at the very big and diverse picture now!

Truly this credit union is where many dispossessed people, people unable to be properly serviced by mainstream financial institutions, can go to seek relief for their many and multifaceted credit needs, rather than to the informal underground institutions which cater and prey on a people weakened by stubborn ignorance and very emaciated economic conditions.

It is an organization that will also aside from providing credit, teach one how to secure and manage debt, and to build a good credit record and history.

But beyond that, it is also the organization where one can truly learn to manage one’s family and business finances – in the areas of saving for the future, saving for business expansion, etc.

In short, it teaches the entire panoply of good and sound personal finance, which is the only basis for hoping and building for a better future, especially in a land filled with asset- and cash-strapped families.

It is therefore quite a damper listening to some current and prospective members recount their initial dealings with FICCO employees where emphasis is placed too much on first building a good credit history to aim for that Class A label. Thus, the recommendation is for members to start borrowing early even before being able to build a good deposit history, so they can become proud Class A members quickly.

Imagine for a moment what kind of a credit union it would be if the driving motive for becoming a member is so one can borrow, typically an amount way beyond what one has put in deposit?

The union would quickly run out of funds to lend, since loanable funds come essentially from members’ deposits.

For a union to continue to prosper there has to be a very delicate balance between those who borrow because they need to, and those who will deposit so they can build for their future and/or in anticipation of some future needs that will be financed or collateralized by their accumulated deposits.

There has to be enough numbers of the second kind, so that the union can continue to have sufficient funds to lend to those truly in need of credit.

In balance therefore, it should be easy to see why both kinds of members are exemplary members, and not that one is rated better than the other. Consider their symbiotic relationship, one cannot live without the other.

In fine, this is the simple and pure logic why financial institutions exist and survive. They pool the community’s savings which in turn will be lent out to those with legitimate needs but lack enough savings to profitably finance them.

All can be member depositors all the time, but not all can be member lenders all the time.

Think about that.