Way to go CUNA, I hope this was the first shot of many. CUNA finally decided to mount its own onslaught against the bankers by publicly opposing Utah-based Zions Bancorporation’s acquisition of Texas-based Amegy Bancorporation. About time. This is a dramatic change for an association that in the last few years of intense banker attacks has turned the other cheek. CUNA would probably take offense to that portrayal, but it’s true. Sure CUNA has come out and vehemently reacted to bankers’ wild claims of dangerous credit union expansion. It certainly has staunchly defended the industry – when attacked. The problem is CUNA has always been reacting to banker attacks. When you’re the one backing up on your heels, it’s hard for your own punches to land. CUNA, flanked by the Texas CU League, decided to come out and play the consumer card, saying the Zions/Amegy deal would have no benefit to the market and consumers. It also pointed out the windfall the bank executives stand to earn in this deal. That approach is fine. Is it rock solid? Absolutely not. There’s no reason to believe Amegy customers won’t benefit from added economies of scale. The insider profit argument can be made in industries all over America, but still it is an important point for CUNA to argue. It shows yet another difference between credit unions and banks. No one gets rich off credit union mergers. Where CUNA’s approach makes the most sense to me is the competition angle. CUNA is putting credit unions and community banks on the same level, saying `hey the credit unions and community banks lose in a deal like this, and big banks continue to get bigger and more dominant.’ So often we hear that credit unions and community banks have similar approaches and face similar operational issues, why not try to befriend this segment? It is however a difficult path to take. Community bankers believe credit unions will always have an advantage over them because of the tax exemption. But a few big mergers like this, and the “us” (CUs and community banks) against “them” (mega banks) approach all of a sudden seems more viable. CUNA was right to play this merger as a consumer issue, they should make it about obscene compensation for the insiders, and they definitely need to play the competition card. But please don’t make it personal. A few CUNA execs were quoted as saying they want Zions CEO and new American Bankers Association Chairman Harris Simmons to know that CUNA is watching him. Simmons has rabidly attacked the credit union industry, and is clearly public enemy No. 1 for credit unions, but let’s not make that the reason for finally going after the bankers. And even if it is some semblance of revenge, don’t talk about it! This isn’t about Simmons. It’s about the credit union industry stepping up and firing salvos against the banks like the banks have done to credit unions for so many years. So why did CUNA choose Texas to pick on the bankers? Only CUNA can answer that, but it’s certainly an interesting place to start. In case you haven’t noticed, Texas is one of the hottest banking markets in the country. Wachovia, Citigroup, Chase, and Washington Mutual to name a few have all made major moves in the state, either by mergers or rapidly expanding their branch networks. The number of players in the state is going down, but assets are exploding. There is $310 billion on deposit in the state. Credit unions have a lot to lose in Texas. They’ve already lost two billion dollar credit unions in OmniAmerican and Community CU to bank charter conversions. They certainly don’t want to sit back and see big banks attempt a take over. The Zions/Amegy deal also puts into perspective the massive size difference between banks and CUs. With $7.6 billion in assets Amegy is nearly twice the size as the largest Texas CU, American Airlines Employees FCU. On the top 100 list of all CUs, Amegy would fall in at number four, just behind Pentagon FCU and considerably ahead of The Golden 1 CU. With $40 billion in assets Zions is larger than any credit union. It operates more than 400 branches in eight states. This is its first move into Texas. Looking at Zions’ balance sheet and expansion over the years, it’s almost comical that its leader, Simmons, would go after credit unions in Utah so aggressively. It still makes no sense. How great would it be to get Simmons and new CUNA Chairman Juri Valdov to face off on these issues? Maybe not even at a CUNA conference, but a banker conference. Maybe a community banker conference. Maybe credit unions could go and see just how much they have in common with community bankers – Zions certainly doesn’t. So what does CUNA do next? Will it start attacking banker legislation just as bankers have done to credit unions? It has always taken the high road on legislation, but maybe that will change too. One thing I won’t question with CUNA is its political power. It clearly has a strong voice on Capitol Hill. And while it hasn’t been aggressive in going after bankers in the court of public opinion, it has been aggressive in trying to get credit unions more bank-like powers. Look no further than the Credit Union Regulatory Improvements Act which is rapidly approaching 100 co-sponsors. Comments? E-mail [email protected]

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