'Lenders' Can't Hide In The Backoffice'
As he winds down his appearances before credit union groups, former CUNA Chairman Dick Ensweiler is exhorting the CU community to prepare for new tactics from banks, and to quit hurting their own cause by referring to themselves as "banks" and places to do "banking" (see item, right).
In remarks before the CUNA Lending Council's annual meeting aimed at providing a "State of the Movement" update, Ensweiler covered numerous topics. He bemoaned credit unions-including two large CUs in his own state of Texas, where he is league CEO-that have sought to become banks, and said that among the responses the credit union community can take are to "make sure that if members are approached with the opportunity to convert to a mutual savings bank that they understand what that means. In the cases in Texas, I don't believe the members truly understood what was at stake. I don't think they understood the nature of the organization."
Interestingly, proposed Ensweiler, one group that does understand the nature of credit unions is banks themselves, which are seeking to have the tax exemption revoked because they understand the implications. "The bankers new strategy is to contain and/or convert. If taxed the nature of credit unions would change immensely."
He reminded his audience that Harris Simmons, president of Zions Bancorp in Utah and who has had great success in his home state in limiting credit unions, is the new president of the American Bankers Association. "Simmons has said, 'I now understand what it is going to take to tax credit unions during my term, and I am going to do that,'" Ensweiler said.
Ensweiler wants credit unions to reexamine the business relationships they have with banks. "Many of the credit unions in this room do business with the big, big banks, but they have signed on with the Financial Services Roundtable, which is opposing the credit union tax exemption," he said. "If your credit union is one of those who does business with one of those banks I believe your CEO needs to draft a letter and deliver it in person to that bank and ask how is it that you belong to an organization that is trying to put us out of business."
Ensweiler also wants lending officers to see themselves as more than just a backoffice function out of sight of the member. "It can't just be the CEO or marketing director," he said. "It's your obligation as lenders that every loan you close has a strong message about how this can be done at these rates and with these fees and with this service because the loan is coming from a not-for-profit financial cooperative."