OKLAHOMA CITY-Ken Fergeson is tired of being "harassed" by credit unions. He likens credit unions to "quitters" and believes they are a burden on society. Asked if his expressed (and written) opinion about CUs being parasites on the back of America is just a little over the top, he smiles a wide-open, friendly grin and shakes his head. Fergeson is chairman of the National Bank of Commerce, Altus, Oklahoma; he's on the board of directors of the American Bankers Association and he'll soon be chairman of the ABA's Governmental Affairs Committee. That means that he'll be in a position to spur the ABA on to continue, in his words, "this Don Quixotian battle," and that is his intention. Although he admits to being "tired of fighting a possibly losing battle. "I know that the cause is just, the enemy overwhelming," so he won't give up. So much for the olive branch extended with hopefulness to the ABA recently by CUNA President Dan Mica. During a wide-ranging interview with Credit Union Times, Fergeson reasserted the anti-credit union sentiments he expressed in a column appearing in the ABA Bankers News on April 4th. "In fact, I thought I was rather mild," he said. He was smarting, however, from the recent court ruling that proved to be a CU victory in the ABA appeal of NCUA's chartering manual. "We got beat up pretty bad," he admitted. "Credit unions have a cheerleader regulator," he said. Fergeson believes that "a society where credit union ideas are carried to the extreme would have no government. It would have no social services." He vowed to carry on the fight, for the sake of his children. The linchpin for Fergeson's argument is that public schools, national defense, roads, and all other services administered by government are dependent upon taxes, and because CUs do not pay taxes, "they do not contribute to this way of life." "The credit union industry is subsidized by the federal government. They don't pay federal or state taxes. We (banks) don't have a true level playing field." Fergeson's idea of a credit union is "a place where a small group of people with a common bond join together and pool their resources to help each other." The structural difference of credit unions as not-for-profit cooperatives with voluntary (unpaid) boards of directors was dismissed as immaterial. Fergeson said that because there are other financial institutions that do pay taxes- banks and thrifts-that provide these services, it was blatantly unfair for CUs not to pay. Is there no place for co-ops in the financial marketplace? Must CUs be done away with? No, but their size should be limited and their fields-of-membership restricted, he said. And they should contribute to the community. "I don't see credit unions donating to the local music symphony, the theater group, or making community development loans to revitalize blighted areas the way banks do. Do they make corporate contributions to the United Fund? If they do, I haven't seen it." Bob Bianchini, president of the Oklahoma Credit Union League said Fergeson's statements are "misleading and inaccurate. I'd like to think he doesn't speak for the entire banking industry. His characterization of nearly one million Oklahoma consumers who are CU members as parasites is a vicious attack..." Bianchini said CU members pay taxes, and so do credit unions; just not federal income tax. "He'd be surprised to learn that Oklahoma CUs pay hundreds of thousands of dollars in state taxes each and every year, and support a multitude of community activities and charities in our state." Fergeson reserves his greatest disdain for the managers of credit unions. "Some credit unions, led by greedy managers, want to take advantage of the tax rules designed for their small group and expand it to feed their own egos and pocketbooks." These "greedy managers" cost American taxpayers $900 million last year alone. "Competitive? Heck yes," he said. "There sure is competitive pressure. These credit unions are hard as nails. They get into places we can't get. They go to a company, the company gives them free space, they get free referrals. And because they don't pay taxes, their rates and terms are lower. I don't hate credit unions, really. A lot of the blame is on the managers. The bigger the credit union gets, the higher the manager's salary. They just pyramid the tax (exemption) into getting bigger and bigger-into a monster organization like Tinker (Tinker CU, Tinker Air Force Base). A community bank has to offer good service and serve the community in order to stay in business, he said. His philosophy doesn't sound that different from that of credit unions. "We have to be good corporate citizens. We can't take every penny we can in short-term profit because we've got to stay competitive. If our business customers don't make it, we don't make it. We need his loan payback to finance another business loan. It's about the quality of life. We need a full, vibrant business community, and we're a part of that," said Fergeson. He is concerned that so many other entities are getting into the financial market, and sees the competitive threat from mega-banks, securities companies, department stores and Internet banking sites. But there's a credit union right across the street that doesn't pay federal tax and that bothers him. The day before the interview, the Oklahoma City National Memorial was dedicated. The Federal Employees Credit Union on the third floor of the Alfred P. Murrah Building was completely destroyed; yet, within 48-hours, it was reopened for business and serving members at an emergency location donated by Tinker CU and staffed by CU personnel from other CUs in the city, from around the state and as far away as Kentucky. If Fergeson's National Bank of Commerce had been on the third floor, could he imagine the Bank of Oklahoma and other neighboring banks in town sending its loan officers and tellers to help reestablish his bank's operations? Didn't what happened there demonstrate the difference between cooperatives and for profits in a definite and meaningful way, even if the example is extreme? "Banks would have done the same thing," answered Fergeson. "I think of the example of the floods in Iowa. It happens all the time, and it happens in other industries as well. I thought it was a wonderful thing and I would expect nothing less from credit unions." Bianchini accepted the compliment, but asserted that rather than a bank donating an operations center and other banks providing the personnel to operate it for many weeks, it's more likely that they would vie for the customers left without service as opposed to helping restore a competitor. "The FECU experience demonstrated clearly the difference between credit unions and banks," said Bianchini. Difference or no, Fergeson predicted that the CU tax-exememption was doomed. "It's only a matter of time," he said. -
caburger@cutimes.com
