AUSTIN, Texas -
Indeed, Dollar is predicting that by that same year "credit unions will be the dominant community financial institutions" in the country in large part because the "merger mania in the banking industry is going to drive more and more community banks out of business."
Those same communities, and especially small business owners, will embrace local credit unions, according to Dollar, as "the person they used to see at the Little League or at the Rotary Club who used to make those decision will not be able to make those decisions any longer."
That isn't to suggest the market won't have hurdles for credit unions. Dollar noted that the CU community will "have to do more to show our service to people of modest means," especially to ensure credit unions don't ever all under CRA. In part due to demands to serve low-income markets, Dollar predicted the checking account will emerge as a "driver" in growing business.
Dollar, now a Birmingham, Ala.-based consultant, offered his views during the Shared Branching Forum hosted by CUSC at the Barton Creek Resort here. The abbreviated remarks, themed "CU 2020: An Insider's Insight Into The American CreditUnion Movement in the Year 2020," were distilled from a much larger presentation Dollar said he typically makes to credit unions during their planning sessions.
Dollar isn't optimistic about the chances that CURIA will pass this Congress, describing its prospects as "sketchy." But he does believe that due to the number of co-sponsors, now more than 135, that portions of the bill could be passed before Congress adjourns, including perhaps risk-basked capital for credit unions, which Dollar championed while at NCUA.
"I think risk-based capital is crucial," Dollar said. "It brings us into the regulatory mainstream. Right now we have much more capital than we need in our system and are overcapitalized. I think under a risk-based system that today we have well in excess of 15% capital, and that would allow us to remove some of the pressure we're feeling on ROA. That would first, save a lot of credit unions that are being forced to merge, and allow credit unions to invest more in their communities."
Some of Dollar's other observations:
* With approximately one credit union per day disappearing due to mergers, some are going to question whether NCUA still needs a $160-million annual budget and 1,100 employees, Dollar said. That, in turn, may cause the agency to slow the pace of mergers.
* Dollar said he believes other CUs will seek to convert to mutual savings banks, but overall believes "98%" of credit unions will remain credit unions. He was critical of how the agency has handled several recent conversion attempts, saying he believes that if members are given proper disclosure and they still vote to convert, "let them go. I think if the regulators would make the regulatory environment better for credit unions that want to stay instead of stopping credit unions that want to go, most credit unions would stay."
* Dollar predicted that if CRA is ever applied to credit unions it will lead to the merger of 1,200 to 1,800 CUs that just can't handle the compliance requirements.
* Dollar said he sees no threats to the credit union tax exemption.
