Bankers Slam Merger

The idea of a potential merger between two of Florida’s largest credit unions has the Florida Bankers Association livid.“Eastern was the poster child of credit union abuse,” said Alex Sanchez, president/CEO of the banking group, of Eastern Financial Florida Credit Union. “If they do merge, all the luck in the world to them because that’s a bad situation going worse.”Sanchez said Eastern Financial’s troubles are the result of what happens when large credit unions “go way out of bounds.” He emphasized that he does not have a problem with the 90% of credit unions that are “fulfilling their missions.”“Regulators need to seriously think about this. These are tax-exempt banks masquerading as credit unions,” Sanchez said. “Look at what happened with Suncoast and GTE.”In March, $5.9 billion Suncoast Schools Federal Credit Union and $1.9 billion GTE Federal Credit Union announced their intent to merge. Like many in the industry, both have been grappling with a sharp rise in loan losses.Meanwhile, given the economy, Sanchez posed two questions to the credit union industry: “In this struggling, why should a family of four struggle to pay state and federal taxes of a billion dollar credit union? Why should a small business struggling to meet payroll on Friday pay more in federal and state income taxes than a credit union?”The Florida Credit Union League said Eastern Financial’s situation is “an anomaly in the credit union movement” and is “not reflective of credit unions as a whole.”“What happened at Eastern Financial is not costing taxpayers one penny in terms of bailout or subsidy,” wrote Guy Hood, president/CEO of the Florida league, in a response to the FBA. “Can that be said about banks caught in similar situations?”Hood pointed out that the credit union industry’s loan delinquency rates and charge-off rates are 1.37% and 0.84%, respectively. Commercial banks are 2.93% and 1.28%, respectively, he added.“Credit unions are extremely responsible lenders. The Florida Bankers Association’s agenda toward credit unions clearly nullifies any opinion they might offer concerning credit unions,” Hood wrote.–[email protected]