After Meeting, CU Says Alliance Just A 'Sham'
Utah Community FCU went into a meeting with the bank-backed Resolution Alliance for Strong Banks and Credit Unions with an open mind about the group that touts itself as a neutral "honest broker," but it came out convinced that the group is "a sham."
"It was clear they were on the bankers' side, and all their arguments were from the bankers' side. It's obvious they represent banks," said Ron Eliason, CEO of the $360-million UCFCU, which is the only credit union to have met with the group. "They make great claims about being a neutral third party, they say they're a group of concerned citizens, but after meeting them, it's obvious it's a sham."
Indeed, the Alliance's administrator, Maura Carabello has conceded that the group's funding comes entirely from banks, and to date, the organization has not identified any members beyond co-founders former U.S. Sen. Jake Garn and former Salt Lake City Mayor Ted Wilson. Carabello told The Credit Union Journal that "two or three" people have signed up as members through the group's website, but that she doesn't "really know them."
The Alliance has been running advertisements in Utah targeting the state's two largest credit unions-Mountain America CU and America First CU-as being too big and bank-like and no longer qualified for the credit union tax exemption.
"They are trying to make a strong argument that credit unions have the tax exemption because of the common bond, but that's not it at all," said Eliason, citing the not-for-profit, democratic structure of a CU. Eliason further noted the group has been attempting to link the credit union tax-exemption as a source of school funding. "That's just an emotional appeal that muddies the waters. That has nothing to do with credit unions."
Utah League of Credit Unions CEO Scott Earl has surmised that the Resolution Alliance is attempting a "divide-and- conquer" strategy by pitting the state's small credit unions against the state's two largest credit unions-a strategy that banks have tried in the past. "(Garn) told us that smaller credit unions have been calling him on the phone saying they don't like what the league was doing," Eliason related. "Of course, he wouldn't name any of the credit unions."
Why, then, would the alliance court Utah Community FCU, which is the state's third largest credit union?
"I think they called on us because they learned that we don't belong to the league," Eliason told The Credit Union Journal. "But apparently what (the Alliance doesn't) get is that I just don't like untruths. We left the league because we didn't like the way they restructured the dues. I still have a great love for Scott Earl and many members of the league."
Moreover, UCFCU doesn't really have a dog in this fight, Eliason added, explaining that the ongoing war between banks and credit unions in Utah has to do with the state statutes covering state-chartered credit unions: Utah Community is a federal charter.
"Wouldn't you think, if they really wanted to be helpful, that they would try to meet with the two credit unions they seem to have a problem with," asked Eliason. "(Garn) said there are two credit unions breaking the law, which simply isn't true. In my opinion, what we have is bad public policy. There isn't even a fair playing field among credit unions. I'm glad we have a federal charter."
Though the bank-credit union battle in Utah doesn't really affect UCFCU, Eliason said he is sympathetic to his state- chartered brethren and is disappointed that someone who might have been able to come in as a neutral peace broker has instead come in with an obvious bias.
"I wrote a letter to (Garn) and told him if he wants to help, don't provide misinformation to the public," he said. "We're not part of this fight, but we're definitely sympathetic to the credit unions. Banks have had the biggest loosening of rules of any financial institution while credit unions have the most restrictive charter on the planet. What is particularly disturbing is that they could really be helpful by toning down this war, but instead, they're ratcheting it up. They're doing the exact opposite of what they say their mission is."