Well, finally heard back from the FDIC! The official letter of response was a tour de force of precision and clarity. No room was left for doubt nor argument. The logic was crisp and well-reasoned; the legal opinion definitive; even the letterhead oozed with quiet, self-assured authority. Without question the gig was up, fini, chapter closed. Mr. Robert C. Fick, legal counsel of the FDIC, had written the final scene in the 2004 remake of "Miracle on 34th Street." And, as the cameras panned toward the heavens, the screen faded into the credits ...
Huh? What? "Miracle on 34th Street?" Oh, you came in late? Well, let me bring you up to speed. Back in December several folks connected with the National Association of State Credit Union Supervisors (NASCUS) ventured over to the FDIC-the "other" federal deposit insurer-to talk about capital, risk measurement, insurance, state/federal cooperation, corporate governance and more! We met with FDIC Board Member Tom Curry, who in a former life was a Massachusetts' financial regulator. Mr. Curry is a brilliant man, well-tempered by hands-on, in-the-trenches practicality; broad-based, all-institutions experience; and a well-seasoned "real politick." The discussions were terrifically beneficial, the insight enlightening. These days so many "experts" are one-issue, one-trick ponies with a thin range of understanding. It's always wonderful to stumble onto an impresario-someone who grasps the subtleties of the larger circus! Mr. Curry is such a man in the financial regulatory world. Time well spent!
The Answer Was 'No'
On the issue of whether or not credit unions could qualify for FDIC coverage, Mr. Curry was certain and convincing that the answer was "no." Despite the fact that the FDIC insures all sorts of commercial, community, industrial, cooperative banks and several flavors of thrifts; all in the room who had done some prior legal research (including us!) agreed with his opinion. Still, it was intriguing that the actual question had never officially been asked.
Mr. Curry indicated that a letter of request sent directly to FDIC Chairman Donald E. Powell would be the proper channel and protocol. Now, as most of you probably know, Chairman Powell is a distinguished community banker with some very decided, very public opinions about credit unions. Asking Chairman Powell what he thinks about credit unions (let alone insuring them!) is much like asking a fire hydrant how it feels about dogs. But...
Thought about it for a couple of weeks. Maybe it was the time of year. After all, it was Christmas, the season of hope, the season of joy and giving. Maybe it was because I'd just finished watching the 1947 movie classic, "Miracle on 34th Street." Maybe it was one too many glasses of Albuquerque Gruet Champagne! At any rate, wrote up a letter to the FDIC and, right before Christmas, dropped that sucker into the mail.
For those of you who aren't old movie buffs, guess a synopsis of "Miracle on 34th Street" would help at this point. Storyline is that Macy's Department Store in New York City hires an elderly gentleman as an in-store Santa Claus. The new employee proves to be a smash with the kids and creates a publicity sensation for Macy's by sending parents to other stores (including Macy's archrival Gimbels) when better bargains can be had. All goes well until Macy's personnel department checks up on Santa's background. He claims his real name is Kris Kringle, home address North Pole, and is adamant that he truly is Santa Claus! You get the drift. The evil human resources director decides to try and have Santa legally committed.
The final, dramatic scenes occur in the courtroom where the State of New York is trying to prove mental incompetence. Santa proves to be the State's best witness as he firmly, but politely, sticks with his story. The defense attorney rallies with testimony from Mr. Macy, who, fearing bad publicity, supports Santa, and with the State prosecutor's six-year-old son, who testifies that "his Daddy" believes in Santa Claus. ("His Daddy," of course, has to agree.) The judge, however, demands testimony and support from a "fully competent, authoritative source."
That's achieved at the 11th hour when the U.S. Postal Service, an agency of the Federal Government, weighs in by personally delivering 150,000 letters addressed to Santa Claus directly to Mr. Kringle at the courthouse. Decision for the defense. case closed!
At this point, if you're thinking "I don't get it!," consider this. Here's the most important sentence from Mr. Fick's, the FDIC legal counsel, letter: "Since a credit union is neither a bank nor a savings association, it is not a "depository institution" and, therefore, is not eligible for federal deposit insurance."
Still in the dark? Well, the bad news is that credit unions aren't currently eligible for FDIC insurance; but the good news is that we're not eligible because we're not a bank!
Our detractors and political opponents always claim that there is no difference between banks and credit unions (they probably tell their children and grandchildren there isn't a Santa Claus, too!). Well, we now have Chairman Powell's FDIC, a federal agency and a "fully competent, authoritative source," OFFICIALLY RULING THAT CREDIT UNIONS ARE DIFFERENT and are certainly not worthy of being considered banks. What a wonderful Christmas present!! Copies of the FDIC opinion letter are, of course, available should you wish to send one to each member of your Congressional delegation (or to everyone in the State of Utah!).
Folks, there is a Santa Claus, "miracles" do happen-credit unions are for real!!
One final thought. There was much breathless gossiping and hand wringing when news "leaked" of the FDIC application request. Quite a few pundits and several politicos jumped to a totally wrong delusion. So, just for the record, hope no one will miss the point when they hear about our pending application for membership in the American Bankers' Association (ABA) ...
Get the picture? "It's a Wonderful Life"!
Jim Blaine is CEO of State Employees Credit Union, Raleigh, N.C.
