ICBA - Publications - A Bridge Too Far

A Bridge Too Far

APRIL 16, 2004


Banker Update: A Bridge Too Far

A Bridge Too Far is the title of a 1970s WWII movie. I am reminded of that movie when I read HR 3579, the so-called Credit Union Regulatory Improvements Act. Unlike the factually based movie, HR 3579 is a clever work of fiction. It is not about "regulatory improvement" at all-the credit unions already have plenty of that. It is about yet another shameless grab for banking powers, without the responsibilities or tax burdens that go with them!

HR 3579 is the worst kind of trickery. Wrapped in the guise of regulatory improvements for the traditional mom and pop credit unions, in reality the bill is designed to continue to feed the insatiable appetites of the billion-dollar-plus credit unions. These mega credit unions want unrestricted membership fields, full bank powers-and no taxes that would siphon off internal profits feeding the ever-growing appetites of their senior executives. Just because they claim to be "not for profit" doesn't mean they don't make profits! They make plenty of profit. A quick read of a mega credit union financial statement is quite illuminating.

Don't get me wrong. I am not against credit unions that operate as they were intended - to serve persons of modest means in a single employer group. This isn't even necessarily about size. Some very large credit unions do stick to the well-intentioned roots of their beginnings. Credit unions were once regarded as something like co-ops, and most credit unions still operate in that manner.

However, there is a new mega class of credit unions-credit unions on steroids if you will-that want full banking powers while still enjoying the old co-op-like status of yesteryear. These mega credit unions have gone "a bridge too far" and want to serve the general public without restrictions. They are overreaching and further jeopardizing the careful balance that once existed between banks and credit unions and that served consumers so well.

The argument is simple. Credit unions that want to be like banks should be regulated and taxed like banks. If they want the powers of the commercial banking charter, credit unions should accept the regulations and tax responsibility that comes with the commercial banking charter. Credit unions can always convert to a bank charter, which some have. I applaud those former credit unions that had the integrity to do the right thing. They understood that if they wanted to act like banks, they needed to become banks.

Bankers understand that there is a price to be paid for the privilege of doing business as a commercial bank. Large, multi-group or geographic-based credit unions want all the goodies of the commercial bank charter but are not willing to pay the price of admission.

What galls bankers is that the mega credit unions wrap themselves in the warm and fuzzy cloak of mom and apple pie, spouting rhetoric such as 'we are not for profit and only exist to serve our humble members,' while actually making loads of profits and pressuring Congress to allow them to serve any air breathing mammal on the planet, with no strings attached! Enough is enough! As in the movie, at some point thousands of well meaning, small, traditional credit unions are going to be caught in the fallout when the weight of the mega credit unions collapse that bridge too far.

~ Cam Fine