House Ways and Means Committee Chairman Bill Thomas (R-Calif.) has been painted as a villain by some in the credit union industry for his obvious interest in the credit union tax-exemption, which came to a head last year with a hearing on the matter in his committee. I have never viewed Thomas as a villain. This is a congressman who not only looked at the tax-exemption of credit unions, but of other nonprofits, such as hospitals. Thomas also made what I thought to be very reasonable comments about credit unions during and after the hearing. This did not seem like a congressman hell bent on getting credit unions taxed. The infamous hearing led to NCUA’s current data collection effort, which was a positive development in my eyes, and Thomas is the one who made it happen. Credit unions should be able to document how they are serving the underserved. Yes, I know there is no perfect formula to show all that credit unions do, but the ball has definitely started rolling and over time I believe an appropriate collection method will come to light. So Thomas, despite his reputation, has never hit my radar screen as a credit union antagonist. But that all changed last week when Thomas showed his hand – showed that, for whatever reason, he’s targeting credit unions. Thomas wrote a letter to NCUA Chairman JoAnn Johnson expressing his concern about NCUA acting as a “cheerleader” for credit unions. Thomas cited a Credit Union Times’ online story that quoted NCUA Board Member Gigi Hyland speaking to a group of California credit unions. Hyland (see page 1 story) essentially said that credit unions should view Congress’ interest in seeing how credit unions are serving the underserved as an opportunity for credit unions to tell their “feel-good” story of how they are helping people. Thomas wrote that Hyland’s comments caused him great concern about NCUA’s ability to conduct the data collection effort in an objective and independent way. Thomas, who is known as one of the brightest members of Congress, should have called on that intelligence and thought a little deeper before firing off this letter to NCUA. He states in his letter, “We do not need a cheerleader collecting and analyzing information about whether credit unions are fulfilling goals intended with their tax exemption. I ask that you be mindful of your role as an independent and objective regulator of credit unions as you move forward with your data collection project.” Is that so Mr. Chairman? Does this road go both ways or do banking regulators get a pass on objectivity? Thomas is a very informed congressman. Surely, he must know banking regulators have egregiously crossed the bounds of objectivity time and time again. If NCUA is a cheerleader then the FDIC is a whole cheering section. I wonder what Thomas thought when former FDIC Chairman Don Powell called for credit unions to be taxed. What in the world does that have to do with regulating banks? If that isn’t being a cheerleader, I don’t know what is. When the banking regulator is saying the same exact thing banking trade associations are saying about credit unions, you have some serious cheerleading going on. Powell wasn’t alone. Office of Thrift Supervision Director John Reich, a board member of the FDIC, has also called for credit union taxation. Not very relevant to regulating banks, but bankers get a pass for some reason. Maybe it’s because the banking regulators are more sophisticated than NCUA. No, that can’t be it. Wasn’t it the banking regulators that were asleep at the switch during the S&L crisis? A crisis that cost taxpayers more than a $100 billion. What about the commercial real estate problems that have plagued the banking industry? And now the banking regulators are doing all they can to bring bankers deeper into the real estate industry. Smart, objective regulating? I doubt it. Let’s play name that speaker. Here goes: “All of us should have a common goal to ensure that the next generation of the best and the brightest see community banking as a vibrant, prosperous, and promising business. …” Let’s think about it. The speaker says all of “us” and uses the word “prosperous” – that’s a banker talking if I ever heard it. Is it America’s Community Bankers President Diane Casey-Landry? Or maybe American Bankers Association Chairman Harris Simmons? No, it’s actually the Office of the Comptroller of the Currency’s Julie Williams. Now that’s cheerleader talk coming from a regulator. Thomas must have fired off a scathing letter to Ms. Williams criticizing her objectivity. Maybe the OCC isn’t as objective as Thomas would like, but he hasn’t bothered to criticize its objectivity-NCUA and the $700 billion credit union industry (smaller than the biggest bank Mr. Chairman) are on his mind. Here’s another one: “In my past life, I worked hard on the Senate Banking Committee staff, at the Treasury Department, and in private practice to enable banks to compete vigorously to provide consumers with the broad range of financial products and services they demand, wherever they demand it.” That’s straight from the mouth of Comptroller of the Currency John Dugan. Sure doesn’t sound like Dugan is objective. But that’s OK, bankers get a pass. Maybe it’s bankers’ record profits that impress Thomas. The banks are making the big bucks, charging the higher fees, let’s leave them alone, and instead target the $700 billion credit union industry (still smaller than the largest bank). Credit unions are small niche players that charge lower and fewer fees and pay better rates than banks, so they logically should be the ones scrutinized by Thomas. Now that Thomas has showed his hand, can we really expect him to be objective in analyzing NCUA’s data collection effort? I venture to guess no matter how good credit unions look in the data collection pilot, Thomas may not be satisfied. Objectivity goes both ways Mr. Chairman, give NCUA and credit unions the fair shake they deserve. Or at least take the banking regulators to task for their cheerleading. One last thing, Thomas didn’t interpret Hyland’s comments correctly. She was talking not about the data collection pilot, but about anecdotal stories credit unions should tell to demonstrate further their “people helping people” philosophy. He in effect misquoted her, which leads me to believe he didn’t think this through. -Comments? E-mail [email protected]

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