As reported in your newspaper, the stance by the Independent Community Bankers of America regarding credit unions owning ILCs is troubling. Two such ILC charters are under review by the FDIC, each chartered for the purposes of providing the CU community with a greater set of choices for their credit card programs. The ICBA's argument against these programs is both inaccurate and nakedly self-serving.
Neither ILC proposal is designed to offer credit cards on some national level marketed under the ILC's name, but each instead is intended to offer credit unions that are considering selling its credit card program a "friendly" solution. The ICBA's motives are so transparent as to be laughable: by preventing credit unions from selling their portfolios to other credit unions, all the ICBA seeks to do is continue to aggregate credit card balances within the banking community. It's no more complicated that that. Already owning 96% of all credit card balances is not enough for the bankers, apparently.
It will be unfortunate if the FDIC allows the ACBA to delay or prevent either proposed ILC authorization. As of today, credit unions that believe it makes sense to partner with a larger institution to issue credit cards must choose from a limited set of bank-only solutions. While those options may be acceptable to many, there is no reason interested credit unions should be prevented from trying to keep their credit card assets "in the movement." And the reasons are more than philosophical. Practically speaking, large banks have shown a willingness to assess higher late and overlimit fees and assess "penalty rates" far more quickly than credit unions. Partnering with issuers more closely tied to the credit union movement may help insulate CUs that choose this route from substantial member dissatisfaction if (or is it when?) these events occur.
By making such broad, inaccurate and self-serving arguments the ICBA makes it clear its agenda is not fair competition, but the elimination of every creative idea the credit union community develops.
Tim Kolk, Managing Partner
Brookwood Capital, Peterborough, N.H.
