Credit unions for Nunavut?

The Bank of Montreal may not be very good at telling the truth or keeping a promise.

But give them credit for owning at least one highly-developed skill: the effortless propagation of finely-honed bullshit.

Consider, for example, the BMO’s mission statement on corporate responsibility: “Building on a tradition of social accountability, we remain committed to being actively and generously involved with the communities we serve.”

Right. Tell that to the BMO’s 5,000 or so clients in Nunavut. They found out from a sign posted on the door of its Iqaluit branch that BMO’s bosses will dump its Iqaluit operation in about four months.

The BMO Financial Group earned $602 million from its operations across Canada in February, March and April of 2004, the second quarter of their fiscal year. That’s a 47 per cent increase from its performance over the same three-month period in 2003.

Only a tiny portion of that profit, of course, was earned from its activities in Nunavut. But we do know that its Iqaluit branch wasn’t a money-loser. Even Ralph Marranca, the BMO’s professional mouth-piece in Toronto, said so in an interview last week.

Here’s another BMO nose-stretcher, taken from a document called “Our Community Vision”: “We strive also to build trusted relationships with the communities where we do business.”

How touching. Such is their dedication to Iqaluit, they’ve offered to transfer customer accounts to the nearby community of — Pembroke, Ont. Don’t worry, we don’t know where Pembroke is either.

To be fair, Canada’s much-hated chartered banks have actually built a fairly stable system, compared to many other countries, but that’s only if you live in big cities and large towns in the South. If you live in northern, rural or remote regions, the banking system sucks.

Even now, there are charter bank branches in only three Nunavut communities: Iqaluit, Cambridge Bay and Rankin Inlet. Canada’s chartered banks have failed Nunavut, and the rest of northern Canada. In most Nunavut communities, people still use a primitive range of financial services offered by co-ops and Northern stores. People give them their pay cheques to be kept as account balances, unprotected by deposit insurance, and earning no interest.

With no place to save it, many Nunavummiut still don’t save their money. This makes it harder for people to establish credit ratings, which in turn makes it harder to get loans for major purchases, or to finance new businesses. When economic activity is lost because loans are not available, a community’s entire economy suffers.

Worst of all, perhaps, is the lack of informal financial education. People who rarely have to make out a cheque, fill out a deposit slip or read a bank statement are at an overwhelming disadvantage when they try to start their own businesses and discover they lack the financial experience to qualify for bank loans or government loans and grants.

About 16 years ago, the government of the Northwest Territories put a lot of work into figuring out what’s wrong with northern Canada’s banking system.

In response, Arctic Co-operatives Ltd. and some other groups produced a detailed proposal for the creation of a northern credit union system. For those who have never heard of them, credit unions are community-based banks run like co-ops, member-owned, placing a high value on service and financial education.

In other regions of the country, rural credit union systems, such as the Caisse Populaire Desjardins in Quebec, which is now a financial powerhouse, have been a spectacular success.

ACL’s credit union proposal needed $7 million in one-time-only start-up funds. After that, the system would have been self-sufficient. But governments, and Nunavut Tunngavik Inc., did not embrace the idea, and ACL was never able to put together a start-up fund for its proposal. In 1996, the federal and territorial governments pulled their already lukewarm support and ACL shelved its proposal.

Now might be a good time to revive it.

Last month, the Atuqtuarvik Corporation, an Inuit-owned body set up as an instrument for lending Nunavut Trust money to Inuit businesses, issued a request for proposals. In it, they say they want someone to produce a feasibility study for “a new financial institution for Nunavut.”

Because of decentralization, at least 11 communities now play host to relatively large numbers of well-paid GN workers — potential depositors who did not exist in 1990, when ACL prepared its credit union proposal.

If it was possible to make a viable business case for a credit union system in 1990, then surely it must be possible now. With their stated interest in training and economic development, the Government of Nunavut and all other organizations cannot afford to let the idea lapse again. JB