Credit unions enjoy exceptional popularity in Ireland. People love their friendliness and informality. Even in these cash-strapped times, their total deposits still amount to €12bn.
But like so many other Irish institutions, our 400-plus credit unions are in severe difficulties. Many of them have insufficient capital. Some are in serious danger. The figure for loans in arrears has been estimated at €1bn.
Although the movement's troubles have been greatly aggravated by the financial and economic crash, their origins go farther back. Credit unions have in effect only one source of income and one outlet for lending -- to their own members, mainly in the form of small short-term loans. In the current circumstances, that looks dismayingly like an out-of-date, even a broken, business model.
Can it be repaired? This time, happily, the prospects would seem to be good -- but only in the event of radical action.
Today the report of the Commission on Credit Unions headed by Professor Donal McKillop goes to the Government for consideration. It is expected that its key recommendation will be a sweeping programme of mergers to remove the weaker branches from the system and ensure the health of the remainder. The number could fall to 250 in three years.
This goes hand in hand with stronger regulation. Mergers are not the only weapon in the Central Bank's armoury. It could force closures or the appointment of special managers, as has already happened.
But more is needed. Restructuring will have to include rules governing the appointment of board members. That does not simply mean appointing persons of good character. It is also necessary to find members with management skills, above all leadership skills, at present too often lacking.
And the commission will propose an expansion of the credit unions' activities.
In addition to the current limited activities, they will be empowered to introduce debit cards and online accounts.
Thus fortified, they should find themselves in a good position to find new customers and compete with the banks. In the meantime, the Government has allocated €250m to help the weaker credit unions this year and promised a similar amount next year. It is thought that it has a good chance of getting the money back.
There is no evident reason why the Government should not endorse the commission's proposals and create a situation in which there should be many winners and few losers.
A thriving credit union movement can ease, at least to some extent, the dearth of competition in financial services. It can also maintain a valuable tradition of ease of access and community spirit. Ireland without that tradition would be a poorer place.