Old Dogs Can Learn New Tricks-And Bite You, Too

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Hey, maybe you really can teach an old dog new tricks. And maybe that dog will bite you, too.

There is an influential interest group that has been working tirelessly to bring about change at the congressional level for many years now. To do so, it has sought to influence Congress directly with political contributions, powerful lobbying firms and by putting the public in public relations fight.

It's likely that remains your perception of their tactics. But very quietly and yet with great force, this interest group has been pursuing a new strategy that might best be described as a bundle of smaller, discreet strategies. I've heard it described as "nibbling around the edges," the recognition that the best way to confront an enemy of considerable strength is not head-on, but at its flanks, not with a massive assault, but with a series of well-planned and targeted strikes.

No, I'm not referring to the insurgency by terrorists in Iraq, although it's applicable. Instead, the strategy outlined above is one that has recently been reported as being pursued by opponents of the current abortion laws in the United States. Setting aside where you may stand on this divisive issue, as I listened to a radio commentator describe the efforts of what is generally referred to as the Right to Life movement I was struck by the extraordinary parallels that would be recognized by any reader of this publication. Their plan is to win minor battles in state courts and legislatures, by having small amendments tacked onto legislation unrelated to the abortion issue that is being passed in statehouses and Congress, and by steadily beating a drum in the background with the same message.

The radio report noted that the strategy of mini-strategies was perhaps best exemplified by the Civil Rights movement of the 1960s. While news reports were dominated by images of attacks upon blacks and examples of separate but egregiously unequal treatment, the victories that really mattered were reported inside and away from the front page-in the courts and legislatures and newspaper editorial boards-until they finally added up to the lead story.

It's sort of like creating a giant mural using dominoes.

Does any of that sound familiar? It ought to. As 2006 approaches credit unions would be wise to realize that while they are sinking big resources into Hiking the Hill to fight for the tax exemption in Congress, their opponents-the banks and their trade associations-are content to let credit unions think of themselves as King of the Hill while they move mountains an inch at a time. An inch with a win on field of membership in Utah. An inch with a hearing before the House Ways & Means Committee. An inch with the news media buying the "credit unions have abandoned their purpose" mantra. And a foot when credit unions start to disagree among themselves, buy into any of it, and believe that compromise will bring a peace treaty.

If you missed it, The American Banker last week published a special section on Community Banking that was based in part on a roundtable discussion among eight community bankers. As Alan Kline, the project editor observed, "Put a group of community bankers in a room and inevitably two topics will dominate the conversation: credit unions and regulatory burden." Here is some of what the bankers had to say:

* Ronald W. Heaton, president of State Bank of Southern Utah, noted one of that state's CUs has become one of the largest SBA lenders. Said Heaton, "I'm a third their size and in the last two years I paid over $2 million both years in both state and federal taxes. They're competing on the same product. That means the government is choosing who they want to be successful."

* When the bankers were asked whether they think they are making progress on the taxation issue, Kevin Olson, president of Grundy Bank in Morris, Ill., responded, "Our representatives are making more of an effort to understand the issue...that there are some credit unions that are staying within their original credit union charter, but then there are these others that are trying to become banks. In my area one credit union advertises that credit union is a 'better word for bank.' That's pretty bold when they're now taking our name and making it a commodity-type word."

Added Craig Meader, CEO of First National Bank of Kansas, "Our (Members of Congress) used to say 'We'll talk to you about several things, but not this.' They just didn't want to talk about credit unions. Now they do, especially since NCUA came out so strongly trying to block a legitimate move by a Texas credit union to become a mutual savings bank."

When pressed on how banks can complain about an unlevel playing field at the same time they are making so much money, the bankers indicated they saw no contradiction. When it was noted his bank was reporting double-digit net income increases, Heaton responded, "On the other hand, in my market the two big credit unions have tripled their retained profits the last three years. They're calling me a greedy banker?"

Reid Sharp, CEO of First National Bank in Bastrop, Texas, added, "We have a credit union in our market that just bought the naming rights to the (baseball) field at the University of Texas in Austin. They paid $13 million. They didn't ask their members before they did this. That's what we paid the last eight years in income taxes."

The bankers have a number of other interesting things to say. If you haven't seen the report, you should get a copy. You'll find these old dogs aren't at all incapable of new tricks.

Frank J. Diekmann is Editor of The Credit Union Journal.

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