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Lobbyists for the numerous banking industry trade associations, in an ongoing effort to justify their existence, are not satisfied with banks having by far the largest slice of the financial services industry pie. They obviously want it all! Thus it is not surprising that collectively they went ballistic when the NCUA Board unanimously approved further changes to credit union fields of membership (FOM) policies and released them for comment. Within hours of the vote, the banking industry’s staff members currently assigned to bash credit unions issued official statements. One by one they dragged out the same tired old rhetoric and threats against credit unions (see page one of 12/4 issue). “If you credit unions don’t stay small and plain vanilla like God meant for credit unions to be, we’ll sue you (again!). You have no right to compete against banks since you don’t pay taxes and we do. Why don’t you listen to us?” Don’t blame the banking lobbyists for talking trash. That’s what they get paid to do as part of their mandate to represent banking interests. But don’t take them too seriously either. After all, Congress doesn’t. Congressional leaders have made it known that they too are getting sick of the constant whining by an industry that speaks out of both sides of its mouth. Granted the NCUA’s latest FOM proposals have enough new twists to give the banking industry lobbyists a couple of more things to crab about. For example, to address but one of several initiatives that would allow credit unions to serve millions more members, they don’t like the new TIP proposal one little bit. TIP stands for trade, industry, or profession and represents a new approach to occupational common bonds. Under TIP, a credit union could choose to serve those individuals in its “local community” representing a specific industry, occupation, or profession. For example, all doctors, lawyers, accountants, clergy, printers, media employees, or even bankers, etc. could become eligible for credit union membership. The list of TIPsters is endless. So how about something that I tried to get accomplished when I served on the board of directors of the American Society of Association Executives (ASAE)? I worked hard to create an ASAE Credit Union for ASAE staff and members. The strategy was that eventually ASAE members who joined the credit union would consider starting a CU for their association’s membership. Sort of an earlier try at TIP I suppose. Unfortunately some influential board members who represented banking groups were able to shoot the idea down before it ever got off the ground. Too bad. Visualize a credit union for such groups as the American Medical Association, the American Bar Association, the AICPA (American Institute of Certified Public Accountants), and perhaps even the American Bankers Association. Could there be any tighter common bond than serving everyone who has in common a profession by which they make a living? Isn’t that what the world’s largest credit union, Navy Federal, does? Isn’t that what the second largest CU, State Employees of North Carolina, does? Perhaps some new ideas aren’t so new or radical after all? Of course TIP is only on top of the credit union iceberg as far as the bankers are concerned. They also have acute indigestion over the NCUA proposal that anyone who lives, works, worships, or goes to school in a city or county qualifies as a local well-defined “community, ” regardless of size. Another proposal provision that drew immediate protests from banking industry spokespersons is the one declaring that credit union shared branches and wholly-owned CU ATMs should meet the definition of service facility. This would give credit unions a far greater geographic reach than they presently enjoy. Shared branches make logical sense and should be a no-brainer even to bankers. It is a credit union’s branch and thus service facility. Maybe the ATM angle is a stretch but with the rapid pace of technological advancements changing the way credit union members access their credit unions, maybe this provision is simply recognizing the emerging electronic methods of doing business. Back to our friends the bankers. As usual they are screaming that the latest proposals are unfair if for no other reason than because “ credit unions don’t pay taxes.” Truth is, credit unions do pay taxes, lots of them. Granted, CUs don’t pay any federal income taxes. Nor do any of the state and national banking trade groups. Nor any of the other million plus not-for-profit organizations. The answer as to why not remains the same: because they are not-for-profit and don’t have any profits on which to pay taxes. Banks understand the importance of achieving the best tax break to which an entity is entitled whether a bank, a trade group, or a credit union. That’s why there has been a surge of banks switching to the Sub Chapter S organizational format. That’s why banks are pushing to be allowed to re-organize as Limited Liability Companies (LLC). Once again bank group mouthpieces are wailing that the latest proposed FOM changes just prove further “that credit unions have lost their roots.” Not so. Credit unions were formed to serve the changing financial needs of members. What’s changed? One more thing. Banking industry lobbyists need to get off their kick that credit unions are subsidized by the federal government and that money saved by eliminating the CU tax-exemption could be better spent on social causes. If that were true, then it has to apply to every single not-for-profit, tax-exempt organization in this country including every state and national banking trade group. While banking industry lobbyists continue to howl at the moon, it is up to credit unions to flood NCUA headquarters with letters, faxes, and e-mails, to show overwhelming support of the new FOM proposals. Otherwise NCUA Board’s leadership will have gone for naught. Comments? Call 1-800-345-9936, Ext. 15, or Fax 561-683-8514, or E-mail [email protected]

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Peter Westerman

Credit Union Times

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