After years of remaining in the background, several of the nation's largest banks are gearing up for a legislative attack on California's credit unions, an official with the California CU League warned.
Bob Arnould, the California league's vice president of state governmental affairs, told The Credit Union Journal banks are pushing to bring CU taxation bills before California's lawmakers in 2005. He said the banks initially will make credit unions with $1 billion or more in assets their target in an attempt to divide and conquer, but soon will expand their focus.
"It should be a concern to the credit union movement that the entire banking concern is here in Sacramento-which is a departure from what we've seen historically," he said. "Bank of America, Wells Fargo, Citigroup and others all are fully engaged in Operation Credit Union. That's a very different game once you bring in the big banks; the battle is much bigger. You don't pull together all that firepower with the intent of holding a parade."
Arnould said the "battle cry" of the banks is there is "unfair competition" in the marketplace.
"The bankers are running around telling legislators that credit unions are putting small banks out of business. We all know that's a lie, because every day you see a successful small bank selling itself to big banks. But in California, the banks benefit from term-limited lawmakers. The banks' claims ring hollow on the ears of experienced legislators, but freshman lawmakers are vulnerable."
Members of the state assembly are limited to six years, while state senators must leave office after eight years. Every two years, at least one-third of the assembly turns over, Arnould noted.
"The re-education process in California is ongoing," he continued. "The league conducts regular meeting with legislators, and we have the charts and graphs to disprove the banks' claims. Because bankers have money from the big banks, we're going to be head-to-head throughout the state."
Arnould said the big banks are being advised to go after CUs in the Golden State - perhaps because they fear fee income may be topping out. "They've decided they need to covet the 10% deposit market share owned by credit unions," he declared. "Credit unions need to get to the highest level of political activity. In the 10 years I've been here, I've never seen the large banks fully engaged, putting time and resources going after the credit union share of the market."
