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LOUISVILLE, Ky. – Kentucky credit unions this month were facing down a fresh attack from the Kentucky Bankers Association which managed to get prominent media coverage for a KBA-financed “study” harshly critical of CU loan practices with a swipe at “tax-dodging” policies. Conclusions of the so-called “Critical Assessment of Kentucky Credit Unions” produced by a Louisville consulting firm run by ex-bankers and reportedly given out to state lawmakers this spring surfaced in a Sept. 3 front-page issue of Business First, a Louisville weekly journal. League President Wendell Lyons called the study flawed, biased and another example of bankers eagerness to spread “misinformation” to the public. Lyons called on Louisville CUs to write the publication to correct the errors, ask for equal time rebuttal, and work to prevent such data from “gaining momentum.” There were also suggestions CUs might consider boycotting advertising in Business First, which is a member of a large Charlotte, N.C. chain of business publications. Among the claims in the article: CUs charge higher interest on loans to their members than banks, pay less on deposit, and receive higher service charges on deposit accounts as a percent of total assets. Another section argues that CUs in Kentucky are “substantially less efficient, spending a greater portion of their revenue and a greater percentage of their assets on overhead and operating expense.” In an e-mail sent to the author of the article, entitled “Bankers Challenge Credit Union Tax Exemption,” Lyons complained the story was unfair and lacked “balance” since many of the quotes were from bankers and the KBA. “Where were the statistics that we provided from Data Trac that are in direct contradiction to the KBA study?” asked Lyons referring to data supplied to Business First by CUNA from a Milwaukee vendor. “One would have thought our arguments and research would have been given equal prominence,” wrote Lyons. There was some question whether Lyons’ e-mail was actually received by Business First since the editor, Carol Timmons, said her staff does not recall the e-mail and received no complaints about the article. She went on to defend the story as “very well-balanced.” The Business First article did quote CUNA’s John McKechnie, senior vice president of government affairs, discussing the national CU/bank battle and stressing the cooperative nature of CUs. But the article was heavy on CUs paying no taxes with mention in the KBA study that “Kentucky loses about $4.7 million in bank franchise tax and $2.1 million in corporate income tax each year” because of the exemption. The article also hit on the familiar ABA theme that the CU problem rests with the large CUs as villains with “the small credit unions maintaining their traditional mission.” Lynn Huether, president/CEO of the $90 million Classroom Teachers FCU of Louisville, who was quoted in the article about CU structure, said “I had no idea” the tone of the article would “be so distorted” and her intent has been to complain to the publication since “Business First in the past has always been fair in the way they handle credit unions.” Huether, a director of the League, said she understands the KBA report authored by Financial Management Consulting Group, the Louisville firm made up of ex-bankers, had been distributed to Kentucky legislators, “but those I’ve talked to have laughed at it” understanding what she said was banker eagerness to clamp down on CUs. Echoing Huether, James Oliva, president of the $85 million B&W CU of Louisville, agreed that “our side did not get printed” with the article containing inaccurate comparisons on loan rates using unsecured data. Oliva said also that legislators he has talked to about the KBA study have also dismissed it as “so much baloney.” “I’ve spoken to our Congressional representative, Ann Northup from the Third District, and she doesn’t agree” with the findings, said Oliva. William J. Rissel, president/CEO of Fort Knox FCU, commenting on the Business First article said it his view the public “is getting pretty tired of bankers spouting tirades against credit unions, insurance companies and the real estate industry (among others) at the same time they are stuffing record amounts of money in their pockets.” “It seems to me the bankers need to make up their mind,” he said. “On one hand, their survey finds that credit unions pay less on savings and charge more for loans. On the other hand the survey finds credit unions are quickly gaining market share. The last time I looked, people brought money to and borrowed from financial institutions that offered them better rates – not worse.” [email protected]

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