Morgan Stanley recently announced that it plans to spin off its Discover Financial Services unit, the parent of Discover Card. The valuation is estimated at about $14 billion, with 50 million cards outstanding. This presents a unique opportunity to the credit union industry to create a consortium, perhaps part CUSO, to acquire Discover Card and make it into the credit unions' unique credit card. Instead of regularly providing profits to the banking industry via MasterCard and Visa, the credit unions could have their own national credit card and enjoy a larger slice of the profit pie. There would be a few legal hurdles in constructing the right holding company, but there are a variety of ways the deal might be properly structured. It would take two to three years to complete the transaction, including the phasing out of the existing bank card contracts at CUs, and replacement with newly issued Discover Cards. Existing Discover shares could be purchased gradually in the open market, or via a one-time buy-out offering. The new credit union holding company would probably need to acquire 20% to 25% to have controlling interest, and still allow many shares to be owned by other investors. In addition to the existing 50 million cardholders, the 9,000-plus credit unions could add another 20 million new cardholders, thus boosting the size and earnings significantly. Jerry Goldstein Credit union Consultant St. Louis

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