Credit Union News Takes an Exciting Turn

In celebration of Credit Union Times' 25th anniversary, we discovered that many credit union issues are perennials.

Some weeks I struggle to find a new and exciting topic worthy of a weekly column and your valuable time.

The past two weeks, however, have been an exception.

NAFCU's disruptive move to expand membership eligibility to all federally insured credit unions captured the industry's attention. This was not totally unexpected; like a single-sponsor credit union, once an organization has maxed out its existing market, it can only grow by expanding it.

Chairman Ed Templeton, president/CEO of the $721 million SRPFCU, told us that the trade has been considering this move for at least a decade. Knowing that, the only head scratcher was why it took so long.

But timing is everything, and with CUNA appearing to spin its wheels on the evolutionary highway, this year was the right time. NAFCU has already gained new state-chartered credit union members, and some of them are large ones, well within the trade's sweet spot of $250 million and up.

Will CUNA answer? I hope so. The industry's larger and older trade has traditionally matched its competitor's move.

While I was surprised CUNA had no immediate response when NAFCU made its big announcement, I'm eagerly anticipating a big CUNA unveiling at America's Credit Union Conference next week in Denver.

I'm sure credit union executives are, too.

Some have said NAFCU's move could mean the end of NASCUS. I'm not sure I buy that argument. I've never seen NAFCU address NASCUS' primary focus of state regulators.

In fact, NAFCU made it clear they have no interest in addressing state issues.

Furthermore, new NASCUS CEO Lucy Ito seems like she will take the trade association in a bold and aggressive new direction.

According to CUTimes.com stats, our readers can't get enough of the Alabama One Credit Union saga. Rubbernecking is the word that comes to mind.

Until this week, most of our coverage had sourced the members who had filed suits against the credit union and associates of incarcerated check kiter Danny Ray Butler. Some days, they have made our pages more colorful than the New York Daily News. The good ol' boy nicknames, astonishing tales of corruption and even sex pumped up the excitement well beyond the standard NCUA and trade drivel.

But then just a few days ago, we were treated to something even more exciting: A lawsuit from Alabama One alleging a conspiracy that involves the governor's office and controversial Alabama Credit Union Administration Administrator Sarah Moore, who landed the job after her bank failed.

I've been watching a lot of “Scandal” lately, and while there doesn't seem to be any sign of the CIA's shadowy B613 unit – yet – this subplot juiced up a story I thought had been mostly squeezed already.

We were even gifted with a lengthy interview with Alabama One CEO John Dee Carruth (does everybody in the South use middle names?), who adamantly denied the accusations made by Butler and his cohorts that the credit union was complicit in his fraud. Carruth also confirmed the conspiracy accusations in Alabama One's lawsuit.

Elements of truth pepper both sides of this story, but there are also claims that make my reporter's third eye light up.

For example, Danny Ray Butler is no dummy. I have a hard time believing a man with a 9th grade education who rose to become a successful business man making multi-million dollar development deals could be so easily become a patsy. He may play the slack-jawed yokel role well, but I know from experience country folk can be every bit as wily as city slickers.

On the other side, I struggle to understand how a sophisticated, $600 million credit union could inadvertently — Alabama One's term — allow a member to borrow several million dollars above his member business lending cap, as the credit union claimed in its lawsuit. Inadvertently isn't flattering; it suggests the credit union is poorly managed.

We hammered Carruth on this question, and he said the problem was a disagreement between the ACUA and NCUA over how to aggregate MBLs. While I had heard that tip a few months ago, that doesn't sound inadvertent. That sounds like a child who doesn't like mom's answer and then asks dad.

One thing is certain: I can't wait to see what happens next.

CU Times Executive Editor Heather Anderson can be reached at handerson@cutimes.com