Time To Quit Blaming The Credit Union Charter; Plenty of CUs Are Growing
Peter Duffy, the self-appointed expert on charter options, has spoken once again about the horrific limitations of the credit union charter. In the article "Outside Perspective: Takeovers Not Issue" that appeared in the Aug. 27 issue of the Credit Union Journal, he cites his usual array of statistics that indicate, at least in his for-profit world, the insignificance of credit unions in the financial service sector. According to Mr. Duffy, credit union growth is abysmal and, of course, he knows the cause - it's our outdated, onerous charter. But he doesn't stop there. No, he wants us to know who the culprit is - "the serious constraints upon the credit union business model are not being addressed by leadership."
Mr. Duffy points out that the "top 100 mortgage originators in the U.S. make 83% of mortgages, leaving 16,000 banks and credit unions to fight over the remaining 17%." Okay, so we're not Countrywide or HSBC (anybody want their business models?) Mortgage balances at U.S. credit unions increased by 13% last year. And, in today's environment, any credit union with a viable mortgage offering is able to do better than that. I'm confused as to how those "serious constraints" are impacting our ability to grow mortgages.
Here's another one: "The top 10 credit card issuers have 86% of the market." Again, we're not Bank of America or Citicorp-so what?! If you look at the top 100 Visa/MasterCard credit card issuers' outstanding balances, you'll find 43 CUs with an average annual increase of 18%. Those top 10 issuers that Mr. Duffy refers to had a 9% increase, which included several large portfolio purchases. Hard to see how the current regulatory environment is holding us back here either!
The last example: "They (banks) have 10 branches per bank; the average credit union has two." Now that's shocking. You mean banks really do have more branches than we do? Think it has anything to do with size? The average bank is 10 times larger than the average CU. Once again, this has little to do with any regulatory constraints. In fact, we'd be out of business pretty quickly if we tried to catch up. (Come to think of it, that would boost Mr. Duffy's business considerably.) In recent months, we've witnessed CU purchases of credit card portfolios, auto-buying companies, insurance agencies, real estate agencies, investment brokers, and even check-cashing operations. We've also seen some credit unions go into conservatorship due to large real estate investments in southwest Florida. (Expanded powers aren't always smart!) Funny how limited charter options didn't prevent those initiatives.
I'm sure Mr. Duffy will continue his campaign to lay all our problems on the altar of an inferior charter. He'll go on manipulating statistics to make his argument in print and in his presentations. After all, his employer is a consulting firm that specializes in charter conversions. But there's one thing he needs to stop-referring to credit unions as "we." He does it quite often and it's wrong! It's like Karl Rove calling himself a Democrat, Donald Trump claiming to be a friend of Rosie O'Donnell, or Michael Vick saying he's a member of PETA. It's an insult to the entire credit union community. I know "we," and Mr. Duffy, you're no "we"!
Now, are there regulatory improvements we'd like to see? Sure there are, and some are being addressed by CURIA. Despite Congressional preoccupation with the war in Iraq, the presidential campaign, and, recently, the fallout from the sub-prime market collapse, we are making real progress with CURIA. For Mr. Duffy to suggest that leadership isn't addressing such issues shows a total lack of understanding of the legislative process or an intentional misrepresentation of the facts. I'm not sure it matters which!
Tom Dorety, President, SunCoast FCU, Tampa, Fla.