Some Insights That Captain Vancouver Could Have Shared
More than 1,000 federal credit unions came to Vancouver for NAFCU's annual meeting, and the really, really big news was, drum roll please, that there wasn't any really, really big news. And that can only mean there will be big news around 2011.
What a contrast from the last time NAFCU brought its convention to one of North America's prettiest cities in 1997. At that time the lead headline in The Credit Union Journal announced, "Combined Campaign Has Plans for Massive Petition Drive Among Members." The plan was to get at least 10-million names on petitions that would call on Congress to protect credit unions, after several court decisions had gone against credit unions.
In short, in 1997 NAFCU's annual meeting was about how individual credit unions could band together to do something for the credit union community. In 2004, the meeting was all about how the credit union community could band together to do something for individual credit unions, such as expanded capital options, investment powers, and more. In 1997, the entertainment for credit unions at NAFCU's conference was the Fear of God. At this year's meeting it was Bill Cosby.
To be sure there were some similarities. First, every credit unions' asset size grew when converted to Canadian dollars. Second, the bankers remain a painful thorn. In 1997, credit unions were just growing into a powerful lobbying force when it came to Congress, and one year later would demonstrate clearly what a force they had become when the landslide vote was held on the Credit Union Membership Access Act. That power in Congress remains, which is why the banks have shifted strategies to first, divide large and small credit unions, and second, to attack at the statehouse level.
It was the latter that led NAFCU President Fred Becker to deliver some of his most spirited comments. In 1997 federal credit unions had their arms around their state-chartered "brothers" asking for their support, repeatedly professing that "we're all in this together." The roles are reversed now and it's the state charters that need the support of the federals, and frankly it's debatable whether the feds are returning the favor.
Becker did his best to call members of his trade group to action and to attack what he sees as hypocrisy in much of the bankers' rhetoric. Among some of the points argued by Becker:
"I have heard the banks and their trade associations indicate that about one-third of the banks and thrifts have fewer than 25 employees and more than 1,000 banks and thrifts have fewer than 10 employees. Well more than three-fourths of credit unions have fewer than 25 employees and more than almost two-thirds have fewer than 10 employees!"
* "I have also heard the banks-and their trade associations-and even their insurer-talk of the cumulative weight of their regulatory requirements-stating that total regulatory costs account for 12 to 13% of the average banks' non-interest expense. Don't the bankers realize that new laws and regulations also add to the hefty burden on credit unions? The banks also ignore the fact that it is-in reality-credit unions that are more heavily regulated. And, the restrictions on the operations of a credit union are severe: Limits on who we can serve, limits on business lending, and lack of access to capital markets, to name just a few.
* "Last year the banking industry as a whole earned a record $120- billion, surpassing the previous record set in 2002. And bank profits have increased in 13 of the past 14 years. In fact, bank profits account for one-third of all corporate profits in the United States! Furthermore, community banks are among the top third of the nation's fastest small growing companies. The credit union industry, of course, is also doing very well, but our net income is less than 20% of the banks' $120-billion annual income, and, of course, we don't earn profits! I would also note that the total assets of the credit union community are only $627- billion-in just nine years the banks earn that!"
* Becker noted in closing, "I am here today to help the bankers in their efforts-assuming, of course, they want to truly benefit their customers. I will help them by forwarding a charter application to any bank that wishes to convert to a credit union."
Becker knows, of course, he won't be sending any charter applications to any banks. Indeed, sadly since the last time NAFCU came to Vancouver more than two-dozen CUs have moved to a bank charter.
In 1997 credit unions had circled their wagons in collective defense because they felt surrounded by enemies. In 2004, those wagons were all on different trails seeking their own paths and fortunes. That of, course, inevitably leads to attacks on individuals who find they can't go it alone and must find others with whom they can circle up.
So what does that seem to suggest will be on the agenda should NAFCU return to Canada in 2011? As Captain Vancouver discovered as he was seeking passage here, what goes around this port comes around this port.
Frank J. Diekmann is Editor of The Credit Union Journal.