Consolidation has happened on all levels of the bank and credit union industries so last week's announcement that the American Bankers Association and America's Community Bankers are merging is no big surprise.
In fact there may be even more dramatic changes coming if the Office of Thrift Supervision merges into the Office of Comptroller of the Currency, which is a strong possibility.
So what does the ABA/ACB merger mean to credit unions? Well we all know they are both vocal critics of credit unions. While the ACB may be a bit more dramatic at times, I think the ABA can be equally as bad. It has led lawsuits against credit unions, is trying to split the industry into big CUs and small, is pushing hard against the Credit Union Regulatory Improvements Act, etc.
One could argue that the ACB has more of a dog in the fight against credit unions than the ABA. It represents organizations closer to credit unions in size and operations in community banks. The ABA also has smaller banks and community banks in its fold, but it serves the mega banks, which have very different needs.
I hate to wimp out and fall in the middle on this merger, but I truly believe it is both good and bad for credit unions.
It's good on one hand because there is now one less organization on Capitol Hill picking apart credit unions. One less trade association to send out press releases, make anti-CU statements, get a sound bite, put its name behind PAC contributions, etc. I don't necessarily believe that two trade associations are better than one, but in this case it helped the bankers. The banker groups really came together on the credit union issue in the last few years and that helped them gain traction on Capitol Hill. Having the ACB, representing smaller community banks, attack credit unions was somewhat more valid than big, bad ABA doing it. So folding these two organizations together into the ABA means when ABA speaks on credit unions, no matter how much it says it represents all its members, big banks just don't care about credit unions and Congress knows it. This could mean a less vociferous ABA if big bankers dominate ABA. That won't happen tomorrow, but it could over time. Big banks need to worry about players like Wal-Mart, not XYZ credit union, eating their lunch. Big banks have real estate on their mind, they want to get rid of depository limits--these are not ACB issues.
The bad news? Some times two voices representing the same industry isn't such a good thing. It's become clich?(C) in this industry to say two voices are better than one in representing credit unions on Capitol Hill. But that's certainly not always the case. CUNA and NAFCU have wasted a lot of time and money on some issues trying to explain their different views (more importantly different methods) on credit union issues in D.C. Has there really been that many issues where that so-called second voice has helped on major issues? You'll hear about bankruptcy and the 1% for NCUSIF, but I'm not sold that there have been that many major issues the trades disagree on, though I would testify in court their approaches can be night and day. I also always worry about the credit union trades doing things just to be different from each other. That's only good if it's for the good of credit unions. I am certainly not advocating a NAFCU/CUNA merger (I would need to get my bullet proof vest on first, but more importantly I am not sold on it.), just making the point that there have been times when two voices has hurt.
Going back to the banks. With ACB and ABA as one, there's less of a chance they are tripping each other up on strategy and message. The message will be more unified and that could very well be a good thing for banks and bad for credit unions. The new organization will also be bigger and have even more money, but don't get too excited over that, the ABA was already superrich before the ACB. Would a CUNA/NAFCU merger make financial sense?
Speaking of bankers, I moderated a session at CUNA Mutual's Discovery Conference in Nashville with WesCorp CEO Bob Siravo, CO-OP Financial Services CEO Stan Hollen, Fiserv Credit Union Division President Joe Barry and CUNA Mutual CEO Jeff Post. It was a fun, lively session and one of the big focuses coming from the panel was credit unions supporting credit union organizations. Obviously everyone on that panel has a vested interest in that, but forget that for a minute. Credit unions clearly need to stop doing business with banks. One of the few advantages credit unions have over banks is credit unions' cooperative nature. Credit unions should be supporting the major credit union CUSOs, the trade associations, credit union vendors, and anyone else that is tasked with improving this industry. Hollen also stressed that the many vendors that do very well from serving credit unions should give something back to the industry. Amen. If you're a vendor out there with a major stake in this market and you're not supporting CU causes, shame on you. These causes are what keep credit unions strong.
Credit unions of course can't do business with credit union organizations if it puts them at a competitive disadvantage. They can't overpay for comparable services. But certainly if the pricing is close, credit unions should look to support the industry option. I know there are CUs out there who take pride in not doing business with some of the traditional credit union players. That's fine, but it's these players who can be relied on when things get tough.
It's time for credit unions to remember that now more than ever all segments of the industry have to come together as one. We can't afford not to.
One parting shot: If the shrimpers can do it, why can't credit unions? I caught a few Wild Shrimp America commercials this weekend that explain that a lot of overseas companies that grow shrimp in tanks are moving in on the American shrimpers who deliver shrimp from the wild. I only saw two of these commercials, but it resonated with me. I'll look at the labels now.
Credit union groups are making branding too complicated. I spoke to one credit union leader recently who supports a national branding campaign, but said it's very hard coming up with a single message for a national branding campaign. Focusing on the fact that credit union members are owners hits home with older members but not the desirable younger membership segment. Talking about the convenience of shared branching or other network attributes is perfect for younger members, but not as important to older members. This is all just static! Anything that raises the awareness of credit unions is good! It's all about awareness. The shrimpers made it simple, choose American. Credit unions can be just as simple. As for the age-old money question and getting the dollars to support a branding campaign, there is a CUSO for everything under the sun, I think we can afford one more on branding. With 11% capital in this system, money isn't the problem. Like so many other things, it's politics.
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