A Call To Arms In The Lone Star State
In keeping with the "Defending the Front Lines of Financial Freedom" theme chosen for the Texas Credit Union League's annual meeting, the conference became a call to arms for credit unions in the Lone Star State to defend credit unions against everything from a change in the tax exemption to conversions to bank charters.
CUNA President Dan Mica kicked off the meeting by telling Texas credit unions that tensions are running high on Capitol Hill, and while not all of the reasons for that have to do with credit unions directly, the potential fallout is of concern to CUs.
"The president is pushing for Social Security reform, and that is a highly contentious topic," Mica related. "There have been threats of making major changes in the way the U.S. Senate operates. There's a long-standing mechanism in the Senate called a filibuster. It's unlimited debate, and it's one way to keep a bill from getting anywhere, and it's been around for decades. The Republicans are talking about changing it, and the Democrats have said if that happens, it will touch off a political nuclear war. Things are very tenuous right now."
Mica said the Bush administration has indicated it hopes to devote the first six to eight months to Social Security reform, but later this year, credit unions could see an issue come up that is even nearer and dearer to the movement's cooperative heart: taxes.
The president has said he wants to address a variety of tax-related issues with the Tax Advisory Panel, Mica reported. "Everyone is very busy telling the panel not to tax them. You can bet the banks are suggesting we should be taxed," Mica commented. "It's highly unlikely that they will even touch on that kind of tax, but it's out there."
If there were two messages Mica hopes Texas credit unions take away from his speech at the league's annual meeting, they are: never concede "just a little something" in order to make an enemy go away, and the private sector-banks, in particular-needs the not-for-profit sector to succeed.
"The private sector, the for profits, corporate America, BANKS, cannot prosper if society fails," Mica said. "We are part of the non-profit sector that's making society succeed. You need both. If only the for-profits succeed, America loses its heart and soul."
But as banks continue to pound away at credit unions, Mica said CUs cannot compromise on the tax exemption. "There's wheeling and dealing, but not on this. Never, ever, ever give away something to someone who wants to hurt you to calm them down. It never works," he commented. "In war, in politics, in government, if you concede, if you give up a little piece, it only emboldens them."
Mica said he was compelled to make this point after someone came up to him and suggested that maybe credit unions should "give up a little something, just a little tax" to make the banks go away.
There was also much talk-both from the speaker's podium and in the hallways-about the impending conversions of OmniAmerican CU and Community CU.
The Texas Credit Union League recently came out with a position statement officially opposing conversions of credit unions to bank charter, and the American Association of Credit Union Leagues has put together a task force to study this issue, but with a few notable exceptions, state leagues have avoided jumping into the conversion fray.
Noting that most leagues have taken a "see no evil" approach to conversions, one conference attendee said he could understand why most leagues have been reluctant to get involved when a CU announces its plans to convert.
"Sure, the league is going to lose that credit union's dues when it converts, so it may seem like they've got nothing to lose, but that doesn't go below the surface," he told The Credit Union Journal. "League presidents answer to their boards, and their boards are made up of credit union CEOs, and the CEOs are thinking to themselves, 'but what if at some point down the line WE have to convert?' The league may be ready to push this issue, but you might be surprised that it's the members of the board-all good credit union people-who don't want to make waves on this."
Just hours later, Mica's opening remarks reflected this same sentiment. "When we in the trade associations hear about conversions, our gut instinct is to make sure we stop them from converting," he said. "But our members want to ensure that this option continues to exist for all credit unions. Not everyone agrees about exactly what needs to be done."
TCUL CEO Dick Ensweiler-who is also serving as chairman of CUNA-also briefly touched on the subject. "It's disappointing that they can't do for members what they should inside the credit union charter," he said. "But it's important that we move forward to address what needs to be done to strengthen the credit union charter."
But just as importantly, he said, is that credit unions must better educate their members about the benefits of membership/ownership.
"We need to tell them they own the place," Ensweiler exhorted. "It's their credit union, and they have something to lose."
To do this, CUs will have to get creative about driving home that point every day, he said, noting that West Texas CU, for example, has a full-length mirror in the lobby that includes a sign that reads, "Meet the owner of the credit union...YOU!"
"I want to see the day where every parking space in every credit union is labeled 'reserved for member/owners,'" Ensweiler commented.
And if credit unions really want to differentiate themselves from banks, then they need to stop using the "B" word in their advertising.
"You can show that difference by getting that four-letter word out of your advertising," he said, referring to CU promotions that have revolved around "better banking" themes.
Ensweiler related how when the league was lobbying state lawmakers about a bill that would have imposed taxes on state-chartered CUs in the Lone Star State, one legislator pulled out a credit union flyer that read "A Better Way of Banking."
"How can we persuade the public and our lawmakers that we're different if we use the the term 'bank' in our advertising? We are not like banks, and we must stop comparing ourselves to something we are not," he said. "We must get rid of the notion that banking is a generic term. It is not. Banks are for-profit, gouging their customers so they can take every dollar they can get. We are not like banks."