FCUL's Ivester says League has No Intention of "Getting into Tit for Tat" with Thomas over Op Ed

TALLAHASSEE, Fla. – The Florida Credit Union League is not going to let itself get pulled into a back-and-forth exchange with banking watchdog Kenneth Thomas over an opinion article League President Guy Hood wrote in response to an interview article with Thomas in a recent edition of the South Florida Sun-Sentinel newspaper that included misstatements about credit unions. “We’re not going to get into a tit for tat with this guy who obviously has his own agenda,” said FCUL’s VP Marketing and Communications Mark Ivester. The op ed exchange between Hood and Thomas was touched off by a Q&A article the newspaper ran in its Oct. 9 issue based on an interview of Thomas by the Sun-Sentinel’s Antonio Fins. Thomas, who has been a vocal observer of the financial services industry including commenting on bank mergers and financial regulations, was questioned on a variety of topics such as Fed chairman Alan Greenspan, his policy for the national economy, and the proposal to raise the FDIC limit from $100,000 to $130,000. Last year, Thomas published a study on Greenspan that he said suggested the Fed chairman was becoming too politically connected. Fins also questioned Thomas about his support of legislation that would force credit unions to pay taxes and adhere to regulations similar to the ones banks have to comply with. When asked whether such legislation has a chance, Thomas replied, “It’s very difficult, I’m told it’s like an apple pie issue. There is no way you’re going to get credit unions to be taxed.” He continued to state that, “But it’s not just the lack of taxation. They don’t have the regulations of the Community Reinvestment Act.and other things. It’s really not a level playing field. They have the deposit insurance, the federal insurance. Remember that’s the quid pro quo. That’s the catch. That’s why we can ask banks under CRA to lend to their entire communities, to do things that we don’t ask McDonald’s and other companies to do, because we backstopped them. We did it with the S&L crisis. We do it with the credit unions and we get nothing in return in the same way that we do with banks. That’s wrong, and that should be changed.” Thomas went on to point the finger at some big credit unions in Florida he says look, act, walk and talk like banks. “So they should be regulated like banks, and they should pay taxes like banks. And it’s really not fair to Florida banks, or to any bank, that [credit unions] get this free ride.” In Hood’s reply to the Thomas interview article that was published in the Oct. 24 issue of the Sun-Sentinel, the Florida League president pointed out that “Mr. Thomas neglected to mention that credit unions are not-for profit.” As for Thomas’ complaints that Florida has become a banking colony – in his interview, Thomas discussed the banking merger scene in Florida by out-of-state banks – Hood wrote that “he neglected to mention that 100% of a credit union’s deposits stay in the area, and the benefits paid to members help bolster the local economy.” Hood corrected several other incorrect remarks by Thomas: * on CUs and CRA requirements, Hood stated that unlike banks that can lend outside their communities, CU can not. “Which is why it is ridiculours to suggest credit unions need to be placed under CRA,” he writes. * on rising bank fees and service charges, “Mr. Thomas neglects to mention that credit unions charge dramatically less in fees and that their very presence ensures lower fees, even for non-credit union members who do business at banks.” Hood further stressed that, “Credit Unions don’t need more regulation, they need a break from the regulations that try to stifle them now. Fortunately, nearly 100 members of Congress agree and have sponsored the Credit Union Regulatory Improvement Act (CURIA)). CURIA will give credit unions much more flexibility and freedom to better serve their members. We are hopeful it will soon be enacted.” In closing, Hood cited the efforts CUs and their members have made to assist other credit unions and residents in the Gulf Region areas recently devastated by this year’s hurricanes. On Nov. 7, the Sun-Sentinel published Thomas’ response to Hood’s comments. He attacked the League president’s commentary for using “mischaracterizations, misstatements and red herrings,” and denied Hood’s accusation that he represents the banking industry “in its ongoing efforts to have credit unions subject to taxes and community reinvestment regulations like banks. “Nothing could be further from the truth, as Florida’s bank trade association has been highly critical of many of my comments directed toward the industry over the years.” Thomas stated. Thomas cites, for example, that “Mr. Hood conveniently fails to mention that credit unions are the only financial industry benefiting from federal deposit insurance that does not pay similar taxes or are subject to federal community reinvestment regulations.” He counters Hood’s description of credit unions as being a “not-for-profit industry” by citing NCUA data that show the 222 CUs in Florida have a “whopping” $37 billion in assets and reported “net income” of $319 million last year and $189 million for the first half of 2005. In his latest response, Thomas also talked about the recent hearing held in the House Ways and Means Committee to consider revoking the federal income tax exemption for credit unions. Credit unions, he stated, can afford to charge lower fees “(and contribute more for lobbying efforts), since they are, in effect, being subsidized by all taxpaying individuals and companies.” Thomas said Hood also failed to mention that several of Florida’s largest credit unions have offices in other states, “some as far away as Maine. This means they take deposits from and lend outside of the state, contrary to his claim that 100% of Florida credit union deposits stay in the state.” FCUL’s Ivester denied any Florida credit union has an office in Maine. He told Credit Union Times that he personally went through the League’s database and “if there’s a Florida-based credit union in Maine, then that’s a surprise to me.” Ivester added that, “Mr. Thomas has his world and we have ours, and when he crosses over into our world and doesn’t want to listen to us, then we just have to move on.” -