From the April 9, 1990, issue of Credit UnionTimes.

WASHINGTON, D.C. – “If you can't beat 'em, join 'em ” might wellbe the subtitle of the final chapter of the just released study ofcredit unions by the American Bankers Association.

After spending more than 200 pages criticizing many aspects ofcredit unions' organization and operation, the study devotes itsfinal pages to strategies for bankers to compete with CUs. It's aringing endorsement of the personal service and convenience thatCUs claim is the reason for their popularity. The study alsoincludes praise for the NCUSIF.

The chapter includes ideas on providing quality service,developing strong customer relationships and a sense of belonging,and encouraging and promoting direct deposit. On pricing ofservices, the study recommends bankers look specifically attransaction accounts and possibly venture into offering truncatedchecks with lower fees to attract customers used to doing businesswith credit unions.

The study entitled “The Credit Union Industry: Trends, Structureand Competitiveness” explores the structure of CU movement,membership demographics, products, services, supervision,regulation, the common bond and taxation.

The study portrays credit unions as fast growing, expansive financial institutions that have strayed from theirorigins and serve a membership of predominantly educated,high-income consumers. The study not only supports the bankers'call for taxation of CUs, but it also raises issue with the sponsorsubsidies many CUs enjoy. “…The credit union tax exemption is onlyone of many elements in the competitive equation linking banks andcredit unions. Even after its removal credit unions will still beable to tap the advantage of their past tax-free status, loweroverhead expenses, and freedom to offer a wider variety ofproducts…” it concludes.

Commissioned by the ABA at a cost in the “six figures,” thestudy was done by the Secura Group, a Washington, DC-basedconsulting firm headed by former FDIC Chairman Bill Isaacs. Many ofthose working on the study have former ties to the bankingindustry, which has lead credit union groups to roundly dismiss theimpact it will have in Washington.

While critical of common bond expansion and the tax-free statusof credit unions, the study does have some positive things to sayabout the health of the CU movement and its insurance fund,claiming the fund and CUs are in “relatively good health.”