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TULSA, Okla. – Bob Bianchini, president/CEO of the Oklahoma Credit Union League may have called the Oklahoma Bankers Association’s criticisms of credit unions “the same old rhetoric” and “old news,” but that doesn’t mean he’s shrugging them off. The OBA’s statements, said the League, is a reminder of how important it is that credit unions continue to work together to protect the future of the industry. Bianchini was responding to an article that ran in the Oct. 22nd edition of The Journal Record, “Getting off the back burner” which began with a discussion of a trip OBA President Roger Beverage and other financial officials made to Washington, D.C. in September “to begin a congressional version of trench warfare in their battle against credit union expansion – a fight that would be measured in incremental victories that used committee votes, amendments and the conference committee process as weapons of choice,” the article read. The OBA’s plans were put on hold because of September 11′s events, and for the time being “banks and credit unions will have to observe a cease-fire of sorts.but that situation won’t last forever,” Beverage stated. According to the article, the latest round of confrontation between banks and CUs “was sparked, in part” by CUNA’s Renaissance Commission report. Beverage said the document amounted to a `credit union wish list that would greatly expand credit unions’ “ability to serve just about anybody, and to do so without giving up their tax advantage or their exemption from the Community Reinvestment Act or anything like that that other financial service providers have to deal with.” He continued that, “Any expansion of credit union membership fields or growth in the types of services they can offer places credit unions in direct competition with banks and gives the credit unions an advantage due to their tax-exempt status. Bankers don’t object to competition, the article quoted Beverage saying. They do object to “competition that has a built-in advantage” compared to banks. Because of those exemptions, Beverage said credit unions could become positioned to cherry-pick the very best loan opportunities from the community and leave banks only higher-risk loans, the article read. “They’re going to target and go after the very best of the best commercial business risks, and what that does is leaves for commercial banks the not-so-very best,” Beverage stated. He also noted that credit unions are now providing commercial loans on a regular basis for the first time in their history, and he took issue with credit union reforms that Beverage asserts has “dramatically expanded the pool of clients for credit unions.” Beverage said bankers have two strategies to remedy what they allege are problems: they plan to lobby Congress to place credit unions under the same regulations and tax status as banks if CUs provide the same services to consumers; if that tactic doesn’t gain support, banks may seek to have the same tax-exempt status as credit unions. Lastly, Beverage asserts that the war on terrorism will force Congress to seek new sources of revenue to finance a military buildup and economic stimulus and that the credit union industry may be seen as an untapped source of revenue. “They have outlived their original purpose and the reasons for their tax-exempt status and t their exemption from rules and regulations like the Community Reinvestment Act,” Beverage stated. “Now, if they want to be able to serve anybody and everybody that walks through the door, bankers generally will have no objection to that as long as they have to play by the same rules that banks have to play by.It’s going to be a while before we get into this fight, but it probably will be a fight.” In a follow-up article, “Credit union leaders fend off attacks by bankers” that ran in the Nov. 5th issue of The Journal Record, Bianchini fired back at the OBA, saying the reason CUs are tax exempt is because of their not-for-profit structure. “It has nothing to do with the size of the credit union. It has nothing to do with the number of members that they serve. It has nothing to do with what kind of services credit unions provide. It is just simply a matter of structure: We are nonprofit cooperatives, and cooperatives are not taxed because the profits are distributed to the people who own the organization,” said Bianchini. He invited banks to convert to credit unions. League Vice President Lisa Finley explained that credit unions face more stringent regulations than banks do and enumerated other differentiating factors between credit unions and banks. Bianchini said banks’ focus on credit union activity “is misplaced.” Both he and Finley asserted “credit unions aren’t targeted because they may take market share away from banks, but because they create market pressures forcing banks to rein in their fees and interest rates on loans. “Credit unions have been acting as the conscience of the financial marketplace for many, many years,” said Bianchini. Finley told Credit Union Times that “the taxation issue has been floating out there for years, and Beverage has been a vocal opponent of credit unions’ tax exempt status.” She said the League intends to remain vigilente and keep a close eye on OBA activities. It will also continue its statewide media campaign that explains the differences between banks and credit unions. Beyond that, Finley said the League will respond “if something happens, but we are not going to do something before that.” Finley pointed out that there have been several credit union initiatives the OBA has been supportive of. Among them are the recently passed rules concerning state chartered credit unions’ conversion to community charters. Finley said the OBA did not protest the rules as they worked their way through the state legislature. – [email protected]

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