CU Times Washington Reporter PARKERSBURG, W.V.-In one of the latest media skirmishes between banks and credit unions, the credit union community responded full throttle to accusations by a West Virginia banker that credit unions are not as strictly regulated as banks and, therefore, are not as safe. A July 1 article in West Virginia's The State Journal, a statewide weekly business newspaper with a circulation of around 12,000, quoted West Virginia Bankers Association President Doug Maddy as stating, "The banking industry is one of the most, if not the most, heavily regulated industries in the country," he claimed. "When dealing with a bank, customers are dealing with professionals who are under constant scrutiny to offer top services. Credit unions are not subject to regulations that banks are.[T]hey're not subject to regulations that ensure their quality." West Virginia Credit Union League President Kenneth Watts fired back a letter to the editor, published July 15, blasting Maddy's statements. "Mr. Maddy does West Virginia consumers and your readers a grave disservice by spreading such misinformation and by parroting the tired rhetoric of the banking lobby." Watts quoted the Treasury Department findings reported to Congress in January 2001: "Despite their relatively small size and restricted fields of membership, federally insured credit unions operate under banking statutes and rules virtually identical to those applicable to banks and thrifts." (Watts' emphasis) Watts also used the state's credit union capital ratios and the federal insurance fund equity ratio to show the strength of credit unions. "Countless businesses in West Virginia provide a valuable benefit to their employees by allowing access to a credit unions. Confidence in these viable financial institutions should not be diminished by such defaming, undocumented, and unsubstantiated comments as those that appeared in your recent article concerning them," Watts wrote. "Obviously, Mr. Maddy did not have all the facts and, unchecked, his allegations cast serious aspersions upon credit unions." NCUA even jumped into the fray with a letter from Director of Public and Congressional Affairs Cliff Northup published July22 stating, "I don't believe Mr. Maddy was an objective source and a more authoritative one should have been consulted.Credit unions are subject to the same quality safety, soundness, and consumer protection laws and regulations as are banks-rules issued and enforced by NCUA and other federal and state agencies." He also pointed out that more than 97% of credit unions are federally insured by NCUA up to $100,000 per account and "is backed by the full faith and credit of the U.S. government." Joetta S. Heck, CEO of Kemba Charleston (W.Va.) Federal Credit Union, also had a letter published in The State Journal. She told Credit Union Times that she was not one for letter writing, but felt compelled because of the banker's remarks. "What was really bad was that he had made the comment that he would caution anyone from using credit unions," she said. In her letter, Heck pointed out that the credit unions underwent annual examination by NCUA and auditing by an outside, independent firm. She also highlighted that Kemba maintained a 19% capital ratio at the end of last quarter. -firstname.lastname@example.org
CUs respond to banker's maligning statements on credit union integrity
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