If it weren't so irritating, it is almost getting boring writing and reading about the never-ending attempts by banking industry lobbyists to continue to harass credit unions in an effort to render CUs impotent as a competitive threat. The lawsuit by the American and Utah Bankers Associations and a handful of Utah banks is just the latest example of never-ending anti-credit union attacks designed to cause irreparable harm to credit unions and the millions of American consumers they serve so well. But this time it's different. First, after messing things up so badly in Utah, costing the state regulator lost fees and the state itself substantial lost income, bankers are now going after credit unions' federal regulator, NCUA. Second, their timing this time around couldn't be worse. The bankers filed suit when banking profits, stockholder payouts, CEO pay packages, and customer fees are heading for the sky, including at Utah's big banks. The banking industry hopes to improve on those numbers, too, by seeking a number of its own tax breaks that could eventually dwarf those they claim credit unions enjoy. Plus, banking lobbyists have just announced that they are opposing key CU provisions in the comprehensive regulatory relief bill, a move sure to annoy the bill's sponsors. As for their track record, the banking industry was just soundly defeated in their high profile attempt to encroach on the turf of the real estate brokerage industry. To me, what is more important than all of this, is that within days of the lawsuit being filed, every credit union leader spoke up in the strongest possible terms, something they were reluctant to do in the past. As someone who has been imploring credit unions to field an offensive team for years, it is refreshing to hear immediate and strong factual comments by CUNA's CEO Dan Mica, NAFCU's President Fred Becker, NCUA Chairman Dennis Dollar, Utah League President Scott Earl, spokespersons for the targeted credit unions in Utah, and even CU CEOs letters to the editors of banking and credit union trade publications. Here's a brief sampling of some of the music to my ears: Dan Mica: "The bankers are earning a reputation for hypocrisy in Washington; pressing their attacks on Capitol Hill could well backfire on them." Fred Becker: "(this lawsuit) is all part of a banking `campaign' to impede CU growth." Dennis Dollar: "We have never allowed the fear of a lawsuit to prevent us from taking an action we feel is appropriate for the credit unions we are charged by Congress with the responsibility of regulating." Scott Earl: "Congress has spoken; the courts have spoken; the people of Utah have spoken. The problem is that the banks just can't hear." Utah CUs: "We are proceeding on the same schedule to open new branches and add members." ABA claims it is trying to protect the interests of small credit unions. Ridiculous! Who appointed them to do that? Better they concern themselves with the rapidly decreasing number of small banks. As far back as four years ago, 94% of banking assets in Arizona were controlled by out-of-state entities. Another 16 states had nearly half their deposits controlled from out-of-state. Where do the declining numbers of small banks fit into these stats? The bank lobbyists have also anointed themselves as experts at interpreting federal CU regs, a responsibility that NCUA has proven that they are more than qualified to do, certainly more qualified than a group of banking trade association staffers. Besides wasting a lot of banking and credit union industry resources, the latest bank lawsuit tells us some thing else. The ABA now appears to be spending more money trying to destroy credit unions than it does advancing the banking industry. This is a fatal PR mistake that will eventually backfire on the banking trade group. It might be better for ABA to pay attention to the very real threat to the well being of its bank members posed by Wal-Mart's efforts to get into retail banking. Now that's a threat to be concerned about. (Perhaps the credit union industry needs to join forces with Wal-Mart?) The lawsuit also reminds observers that trade groups are notorious for creating issues to solve to justify their own existence. ABA is a master at this. Unfortunately, they see credit unions as an easy and highly visible target. Also note that rarely is the CEO of ABA, Donald Ogilvie, ever heard from. The most vocal mouthpiece in most recent banking lobbyists versus credit unions is none other than Howard Headlee, the head of the Utah Bankers Association. Could it be that Headlee sees a chance to advance his own career by taking the point position against credit unions? Does he have his eye on the top spot in ABA when Ogilvie departs? A victory against credit unions would win him much support to move into a lucrative national job. Whatever the real motivation is for the latest banking industry lawsuit, credit union leadership should carry their new-found aggressiveness to the next level. Put simply, it is time for credit unions to sue the American Bankers Association. The list of possible charges against ABA is long and getting longer. As a not-for-profit, tax-exempt trade association, ABA is using harassment techniques to stifle legal and fair competition; it is spreading falsehoods about credit unions and their regulators; it is deliberately misrepresenting the banking industry's true intentions; and it is willfully misinterpreting credit union regulations and legislation for its own gain. Also, ABA has filed a lawsuit without standing; has engaged in repeated attempts to undermine consumer confidence in CUs; is undermining the CU dual chartering system; is encouraging credit unions to convert to bank charters (25 to date); and much more. A credit union case against ABA would be much better than the bankers' case is against credit unions. Time for the sleeping CU giant to awake.

Continue Reading for Free

Register and gain access to:

  • Breaking credit union news and analysis, on-site and via our newsletters and custom alerts.
  • Weekly Shared Accounts podcast featuring exclusive interviews with industry leaders.
  • Educational webcasts, white papers, and ebooks from industry thought leaders.
  • Critical coverage of the commercial real estate and financial advisory markets on our other ALM sites, GlobeSt.com and ThinkAdvisor.com.

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.