The Bankers Sure Have A Strange Sense Of 'Priorities'

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The American Bankers Association's government relations "super priorities" for the year rank securing the ability of financial holding companies to broker real estate, and taxing "expansionist" credit unions, above adopting banking policies that will combat terrorism.

It will probably come as a big surprise to legislators and policymakers that bankers consider credit unions a bigger threat than the money-laundering that supports international terrorism. In declaring that getting bankers into the real estate business and hurting credit unions is more important than fighting terrorism, or seeking other legislative and regulatory changes that will benefit consumers and the economy, the ABA is once again revealing that its "super priorities" are "super misplaced."

According to the "ABA's Government Relations Priorities for 2003," a copy of which was obtained by the California league, "protecting the product and service authorities in Gramm-Leach-Bliley" by allowing banks to enter the business of real estate brokerage and property management is the association's top "super priority."

Opposing credit union efforts to expand unfairly and supporting taxation of expansionist credit unions" is the No. 3 "super priority," followed by "working with law enforcement authorities, the Administration, and Congress to effectively fight terrorism through anti-money laundering efforts and other methods."

For more than two years, national banking trade groups and the National Association of Realtors have fought over a proposal, backed by the Federal Reserve Board and the Treasury Department, to allow bank holding companies to broker real estate deals. Realtors say the proposal violates Gramm-Leach-Bliley by dangerously mixing banking and commerce, while bankers say the proposal is in the spirit of the 1999 law.

While not taking sides in the issue, the California league has pointed out that the banking industry's complaints about "protectionism" and anti-competitiveness by realtors are the same points credit unions have made in protesting the bankers' attempts to limit the ability of NCUA to interpret and implement the Federal Credit Union Act, revealing an inconsistency on the part of the banking industry when it comes to their goals.

Among the ABA's 2003 priorities, real estate and credit union taxation also rank above privacy initiatives such as "leadership in keeping the trust of bank customers" and "promoting identity theft education;" bankruptcy reform; working to end predatory lending; and tax reform efforts such as expanding the number of shareholders a Subchapter S corporation can have.

I guess we should be thankful that the ABA considers fighting terrorism to be more important than expanding the number of tax-free banks in the United States. The bankers' list of priorities points to a fundamental difference between banks and credit unions: while credit unions pursue legislative and regulatory objectives that will be beneficial to their members, the working men and women of this country, banks pursue those that will make more money for executives and stockholders. Our focus on serving consumers, which is essential to our non-profit orientation, shows why credit unions are tax-exempt, and why the bankers' No. 3 'super priority' is so misguided.

Dave Chatfield is president of the California Credit Union League. Mr. Chatfield can be reached at 9500 Cleveland Ave., Suite 200, Rancho Cucamonga, Calif. 91730.

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