The more things change, the more....vested interests do all they can to protect turf and paychecks.
Case in point is the 100 Years War II between banks and credit unions. First, congratulations to the American Bankers Association, which as the centennial anniversary of women's right to vote approaches has finally elected its first female chairperson, Betsy Duke, a former bank president who is now EVP-community bank development at SouthTrust Bank in Virginia Beach, Va.
But proving that limits to attacks upon credit unions knows no sexual boundaries, Duke said her "No. 1 issue is the tax-free status of credit unions and the expansion of their charter." Not serving existing customers better. Not ensuring bank services are available to all. Not even returning more value to their own shareholders. Nope, attacking credit unions remains Job #1.
The reason is no secret, it's just not acknowledged. Nothing unifies a group that would otherwise be at each other's throats and whose members would like to see each other out of business like a common enemy does. For (the non-income-tax-paying) ABA, this all comes down to two issues: 1) Dues, and 2) Keeping Dues Coming. As I've noted before, voters don't approve the bond issue for that fancy new fire truck unless you're always shouting fire.
All this comes as the bankers were given some prescient insights from the outgoing Comptroller of the Currency, John D. Hawke, who has always been on the bankers' side in the bank/CU battle. In remarks before the ABA, Hawke told the bankers they would be better off achieving their long-sought "level playing field" by attempting to gain regulatory and tax relief, and improving service to their customers instead of trying to tax credit unions.
"As credit unions broaden their fields of membership and their product offerings, and continue to make inroads in markets that traditionally were dominated by banks, the industry's frustration is understandable," said Hawke. "But what has the industry strategy been to deal with this? It's been to ask Congress to increase the tax and regulatory burdens on credit unions. Just think for a moment of the implications of this strategy: You are asking members of Congress to vote to deprive credit unions of the very advantages that you say enable them to offer services to consumers at better rates than you can offer."
Hawke also said banks should take a look in the mirror, noting banks don't chain down the pens because customers are stealing them to write on their behalf to their congressman. He asked banks if they could "explain the near-fanatical devotion of credit union members that makes them such a potent political force and that makes credit union powers one of the untouchable 'third rails' of U.S. politics?"
"For some I suspect the answer is philosophical," said Hawke. "They have a commitment to the cooperative movement and to the concept of mutuality. But for most, the answer is that they feel more comfortable with their credit union, and they see a superior commitment to customer service. They see modest, low-cost, user-friendly facilities run by people whose motivation is not to maximize shareholder value, they frequently participate in the governance of the institution, and they like the lower costs on loans and the higher rates on deposits."
Hawke nailed it like a, well, hawk. But trade groups don't get those dues checks for informing the membership that the problem is them.
* In this issue The Credit Union Journal publishes its giant 2005 Meetings & Events calendar. It will also be available at www.cujournal.com, where it is constantly updated. In reviewing the myriad locations planned for CU events next year (I'm guessing with the World Council meeting in Rome that there will be an explosion of interest in international credit union development), one of the league meetings that caught my eye was that of the Massachusetts CU Association, which will hold its annual slightly west of the Berkshires-in San Francisco.
How in the name of Ed Filene does a small credit union afford to attend a meeting so far away? MCUA spokesperson Rob Kimmett said it's not that big an issue. "The only real difference is the cost of getting there. Hotel expenses in the greater Boston area are pretty high," he said. "It's a chance for people to get off-site and into a new environment and out of the office. It has worked well for us."
The MCUA has met out-of-state quite frequently, taking its show to Las Vegas earlier this year and drawing about 1,000 people. Kimmett said the group has had "good representation" across all asset sizes at its meetings, and that the locations of the meetings "has been mentioned, but not often and not loudly."
"The small credit union faces the same issue in getting to any meeting, regardless of whether it's 10 miles or 1,000 miles, and that is staffing and covering the office when they're gone," he observed.
What goes unmentioned is that state leagues have something in common with the aforementioned ABA-their annual meetings can be big income producers and help keep a lid on the sensitive issue of dues. And as every meeting organizer knows, people talk meeting content, but they buy meeting location.
Frank J. Diekmann can be reached at fdiekmann
