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When you have been reading and writing about credit unions for as long as I have, even every day news events reported each week in Credit Union Times can take on a different perspective. In the state of Utah, undeniably the current hot bed of anti-credit union initiatives, a Financial Institutions Task Force was created to allegedly study the state’s financial institutions and make recommendations. From my perspective, it was obvious from the start that the task force is little more than a front for bankers, banking lobbyists, and those with vested interests in the banking industry to go after Utah credit unions through the back door. Previous bank initiated legislative efforts to reign in large credit unions backfired as most of the large state-charters converted to federal charters. Sore losers that they are, the Utah banking industry, through the phony task force, has decided to now go after federally chartered credit unions by making recommendations to the Congress of the United States. Among other things, they want Congress to create a separate classification of nonexempt credit unions. Translation: to divide and conquer CUs by asset size. They also want Congress to overrule NCUA’s FOM regs and want the ability to levy taxes of their choosing on all credit unions operating in the state of Utah regardless of charter. But here’s the real kicker: Framers of the task force resolution have the unmitigated gall to request that if Congress retains the current tax structure (translation: retains the credit union tax-exemption), that Congress be required to provide states like Utah a reasoned explanation for maintaining the tax structure. From my perspective, it is clear that any time any state tries to dictate to Congress what it should do to satisfy its own narrow vested interests, it is doomed to failure! There is still another perspective in the Utah situation to consider. The chief antagonist in the state is an angry banking executive by the name of Harris H. Simmons, chairman and CEO of Salt Lake City-based Zions Bancorp. At one time credit unions were good customers of Zions, but Simmons and his crew’s anti-credit union rhetoric and actions eventually drove credit unions away. Did losing credit union business and increased CU competition hurt Zions bottom line? Far from it. To put this chapter of the anti-credit union battle in Utah in perspective, Zions Bancorp recently announced a record in third quarter earnings of $100 million, which compares to $62.1 million earned in the third quarter last year. For the first three quarters of 2004, Zions reported net income of $301 million, which compares to $242 million for the first three quarters last year. Total deposits at the end of the third quarter this year hit $23.2 billion, up 11% from the same period in 2003. The banking firm operates about 400 full-service branches in the state. When Simmons and his puppet task force start whining to Congress about how credit unions are hurting banks in Utah, he is going to come off as pretty foolish. But whine he will, especially after he finally gets his long sought position as chairman of the American Bankers Association, the country’s largest tax-exempt, not-for-profit national banking trade association. Talk about keeping things in perspective! Need more? The Federal Deposit Insurance Corporation (FDIC) has reported that the banking industry earned net income of just over $31 billion in the second quarter of this year. To put that in perspective, banks’ earnings for a single quarter equaled the combined total assets of the two largest credit unions in the country. And as mega mergers once again proliferate, bank executive compensation packages are going through the roof! Despite the obvious, the banking industry lobbyists continue to rail against credit unions every chance they get. Recently an article featuring the bank versus credit union arguments appeared in a monthly publication, the US Banker, with a predominately banking industry readership. CUNA’s vice president of legislative affairs and senior legislative counsel, Gary Kohn, more than held his own against chief credit union antagonist from ABA, Keith Leggett. One of the major points of disagreement was the proposed Credit Union Regulatory Improvements Act (CURIA). In a telling comment, Leggett said that banking lobbyists need to stop CURIA before continuing to pursue the ongoing effort to get credit unions taxed. Leggett was obviously well aware that CURIA had already attracted nearly 70 Congressional co-sponsors. From my perspective, the banking industry would fare far better if they concentrated on getting their own favorable legislation passed than spending the majority of their time trying to knock down credit union proposals. By the way, until just recently, US Banker was one of 54 publications (including the American Banker, National Mortgage News, Credit Union Journal, etc.) owned by Thomson Media, a banking industry publisher that was part of the giant Thomson Corporation. Thomson Media is being sold to a global investor, Investcorp, based in Bahrain. These facts in themselves put the recent article in perspective. Where perspective really comes into play is when the Comptroller of the Currency tells bankers to their faces to get off the credit union kick and start tending to their own knitting and cut rates and fees and improve service because they will never win the credit union fight. Or when another large national trade group, the National Association of Realtors (NAR) accuses the banking industry of “wanting it all” in paid newspaper ads widely read by members of Congress. Or when the current ABA chairman, a displaced community banker, tells her constituency that while banks are obsessing over credit unions it is in fact the mega banks that are causing the most grief for community bankers. Even the credit union industry’s “beloved” Norm D’Amours said in a speech to the Iowa Bankers Association convention that as bad as credit unions are, banks would never defeat them unless they drastically change tactics. 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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