A CUNA GAC general session is the latest example of a representative from the banking industry being given a top spot on a credit union program to advance the banking industry’s ongoing efforts to eliminate all but the tiniest credit unions. Meanwhile, credit unions have yet to be extended the same privilege at any banker confab to present the other side. Nevertheless, the banking spokesperson, Ken Fergeson, who is this year’s elected chairman of the American Bankers Association (ABA) as well as chairman of NBanC, a relatively small $270 asset commercial bank in Altus, Oklahoma, has no idea what he has gotten himself into. Previous CU versus Bank “debates” have been little more than polite mini-speeches. While a so-called moderator looked on, each side took turns speaking uninterrupted and without any immediate challenges. Much like the nationally televised so-called debates between presidential candidates, these sessions have proven not to be debates at all. But the GAC session could be different. At the GAC, industry curmudgeon Jim Blaine, long-time CEO of giant ($11 billion and growing) North Carolina State Employees Credit Union and Mr. Knowledgeable Extraordinaire about all things credit union, will espouse the credit union viewpoint. Poor Fergeson. If Fergeson and his ABA PR handlers think Blaine intends to sit idly by while he spews forth the usual banking industry baloney, he has never met Mr. Blaine on a stage. Typically the audience will be asked to be kind to the blue-suited fox in the hen house. And they will be. Polite applause and all. They will probably not be given an opportunity to ask questions either. After all, without a muzzle on them, they might say something that might offend the guest banker. Offend a guy who has called credit unions “non-taxed banks?” Too bad. However, having no such restraints, I thought I would at least offer up here some questions that would be appropriate for still another banker sitting on a credit union stage. Questions like these: At what point does a credit union member have too much money to still be considered a person of modest means and thus no longer eligible for credit union membership? Can you define “modest means?” Besides serving those of modest means, can you think of any other reasons for credit unions to be in existence? Can you define a bank? Can you give the credit union industry’s definition of a credit union? If yes, what specifically is wrong with the definition of a credit union? What is the primary difference between the definition of a bank and of a credit union? Do you support the not-for-profit concept for the million plus organizations in this country so designated, including all national and state banking associations? If yes, are the 9, 786 federal and state-chartered credit unions the only n-f-ps you don’t support? To use banker terminology, could you estimate what all not-for-profits in this country “cost” the federal government in “lost tax revenues?” Is there a specific asset size at which a credit union is no longer a credit union? What is that asset size? Is billion dollar North Carolina State Employees Credit Union a credit union or a “non-taxed” bank? In your view, are there any products and services credit unions should be allowed to offer members other than pass book savings? Should the approximately 85 million credit union members be forced to go to a bank for such things as checking accounts, credit and debit cards, and mortgages? As a practical matter, doesn’t a credit union or any other financial entity have to be of a certain size to make most traditional offerings feasible? According to a 1994 law, no one bank is allowed to have 10% of the industry’s total assets. Do you agree with this restriction? How many trillion dollar banks should be allowed? Is there an asset size at which a bank is too big and no longer a bank? If tomorrow all credit unions larger than $100 million in assets were given the choice of closing their doors or converting to some type of bank charter, what affect would this have on the profits generated by the banking industry? What about the bottom line of your bank? Should there be a limit on the amount of profit any one bank can make? How about on the size of the compensation package for the CEO and board members? In a February 9, 2004 Wall Street Journal special section on emerging national trends in major economic sectors including banking, credit unions were never mentioned. Do you know why not? Are credit unions taken as a whole too insignificant to even be considered a trend factor? It has been reported that about 250 out of 320 banks in Wisconsin have established out-of-state (mostly in Nevada) subsidiaries costing the state of Wisconsin approximately $170 million in lost tax revenue in 2001 alone. Should this be allowed? To what do you attribute the phenomenal growth of S-Corp banks? Does switching to an S-Corp charter provide the bank with any tax advantages? Should this be allowed? Assuming you have not already joined the thousands of banks that have made the switch, any plans to become an S-Corp bank? As the banking industry seeks and finds new tax advantages, do you see any hypocrisy in their attitudes towards the credit union not-for-profit status? Banking trade groups have been waging war on credit unions non-stop for over 40 years. Meanwhile, credit unions have grown by leaps and bounds as they found new ways to serve more and more members. Do you think these largely unsuccessful lobbying and legal efforts are a good use of banking trade association dues money? Have you ever considered converting to a credit union charter? Of course these questions will never be asked because credit unions traditionally play defense rather than offense. Maybe this time will be different? 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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