PHOENIX – The official program of the American Bankers Association annual convention contained nary a mention of credit union competition, but it emerged in a handful of speeches and on the cocktail circuit as a high priority topic. Indeed, the outgoing president of the ABA, James E. Smith, in his farewell remarks to the gathering said the question he heard most often from bankers during his term was, “what are we going to do about credit unions?” And the answer, he said, is for the industry to rid itself of complacency and “show more passion and commitment” to the job of political activism and bolstering banking’s public image to help beat back CU competition. Smith, who also is chairman and CEO of Citizens Union State Bank & Trust Co. of Clinton, Mo., conceded that CUs “are simply more committed than we are” in making their case before the public and lawmakers. But that advantage, he said, needs to be reversed considering “we’re a much larger industry than they are” and have far more political clout and manpower. The Missouri banker noted there are 1,500,000 employees of banks in the U.S. which he said dwarfs CUs’ employee count, and “when you consider outside directors” the numbers are even higher. “They can’t match us,” he said, which makes it puzzling that the industry has been outmaneuvered in countering CU advances. On the ABA’s assertion that some CUs are acting like banks, the newly elected chairman of the ABA, Aubrey Patterson of Mississippi who is succeeding Smith, told Credit Union Times that large credit unions seem to be “pushing the envelope” and creating great divisions within the CU movement. These large CUs, which he did not name, “no longer play by the rules” by subverting the common bond principle and pursuing an ill-founded strategy, maintained Patterson, who is chairman and CEO of the $10 billion BancorpSouth Corp. of Tupelo. He urged the CU leadership to pressure those offending CUs and “these very troubling practices” which are being subsidized by taxpayers. Patterson, a former member of SAC Federal Credit Union in Omaha before joining the regional bank in Tupelo, said he knew of new state suits underway against CUs though that is an issue that would be taken up by the ABA Board. “I see no reason why we in the banking industry cannot co-exist as long as everyone is on the same playing field,” said Patterson, adding that “what has occurred is a distorted view of the common bond principle” as pushed by large CUs. The Mississippi banker said he did not necessarily agree with comments in the October issue of ABA Banking Journal, the trade group’s house publication, that the ABA had been “creamed” in “in the last frontal assault” on CUs, an apparent reference to H. R. 1151. The “Editor’s Column” article in the Journal, written by Bill Streeter and headlined “Just Do Something” in an appeal for the industry to be more pro-active, suggested that the ABA’s future strategy might now be toward “smaller, flanking movements” to halt CU expansion. “The tendency when mad is to just `do something-anything’ but remember the last time the industry took on credit unions in a full frontal assault, it got creamed,” the column read. “Patterson,” wrote Streeter, ” thinks credit unions can be forced to make a choice: keep their tax advantaged status but operate traditionally with a real common bond or become taxpaying financial institutions.” Accomplishing that feat, however, “ will take more than angrily demanding that some one do something,” said the article. It will require “cold, patient determination to build momentum to put this inequity right.” The Journal issue also contains a feature article on CU expansion into business lending and shared branching suggesting CUs have now “even eclipsed the once favored savings and loan business” in their growth helped along by the tax advantage and the NCUA, which “can out cheerlead the old and defunct Federal Home Loan Bank Board.” -

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