How was the making of fraudulent construction loans in Florida by recently failed Colorado and Michigan credit unions consistent with the purpose of serving people of modest means?
Think that question was provocative? It was meant to be. Using hardball strategies straight out of a political race playbook, the American Bankers Association was ready and waiting when credit unions were in the capital recently for CUNA’s GAC. The above question is just one of 10 the ABA sent in a letter to members of the House of Representatives one day before the 4,000-plus CU reps were to Hike the Hill.
The letter, from ABA EVP Floyd Stoner, urges representatives not to become a co-sponsor on HR 1537 (Credit Union Regulatory Improvement Act, CURIA), claiming “this legislation will allow credit unions to divert financial resources from consumers they were chartered to serve by increasing their commercial lending authority and will make them more risky by reducing their statutory capital levels.”
Mr. Stoner goes on to add, “a fundamental change has occurred within the credit union industry that has separated the industry into two distinct groups–diversified conglomerate credit unions and traditional credit unions that continue to embody Congress’ original charge that they serve ‘people of small means.’”
It’s the same argument, new spin from the banks and Congress has heard it before. But that doesn’t mean it can’t be effective, such as leveraging failed credit unions such as Norlarco and Huron River as examples of a credit union community out of control. I used this space when the failures of those credit unions was first reported by Credit Union Journal to note it was only a matter of time before the banks took advantage of them. Last week, with CUs in town, it was apparently time.
Some of the other questions raised in the ABA letter are equally pointed. Among them:
* If some credit unions wish to expand their lending to all types of businesses, why not have them convert to become banks as some credit unions have done?
* Eastern Financial FCU was just forced to take a huge loss on a $30-million condo project. What was it doing funding a condominium development in the first place?
* If credit unions in Massachusetts can comply with CRA requirements, why can’t all credit unions?
* And the No. 1 question, according to ABA: “Why should members of Congress cosponsor HR 1537 if the credit union industry cannot answer these questions?”
Before you dismiss all of it as just more hyperbole from an association whose members have even bigger problems of their own, it might be a good exercise to consider how you would answer those questions. After all, you just may be asked.
It’s not every day you get to speak to the Statue of Liberty. She is known, after all, for being a bit of a hollow stiff. Yet there I was at CUNA’s GAC speaking to Lady Liberty–or at least someone playing her. In the exhibit hall CUNA had at its booth a person dressed as a very realistic portrayal of the Statue, so realistic that when she stood still and then moved it startled some passersby. When not posing with GAC-goers for photos, Ms. Liberty revealed her real name is Liz Demery, who, it seems, is a multi-purpose character with skills hardly limited to impersonating tall statues in harbors. She has at other times been Betsy Ross, Venus De Milo, and in a limited-time-only appearance, a Y2K bug in 1999.
Playing characters is easiest, said Demery, a local Washingtonian, because you get to move around. Standing for four and five hours at a time as Miss Liberty can stiffen the joints, she said, which is perhaps to be expected when you have a steel frame.
The Liberty costume, she said, was relatively easy to wear, because it covers so much, meaning little of her has to be painted as green as weathered copper (as her face, arms and neck were). Demery, who made for an outgoing and animated Statue of Liberty, said she strives to be pleasant. “No one likes a crotchety Miss Liberty,” she said, adding she found credit unions’ huddled masses to be among the most pleasant of immigrants she has welcomed.
And what advice does she have for budding Ladies Liberty? “You have to believe in freedom,” said Demery. “You have to accept everyone, and you can not rust easily.”
Frank J. Diekmann can be reached at fdiekmann
