You Might Not Like What Spirit of Christmas Future Says

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Credit unions have never been the Ebenezer Scrooge of financial services; indeed, credit unions have been his antidote, organized by the Bob Cratchits of humankind who believe in man's potential for a greater goodness if just given the opportunity.

Credit unions: prepare thyselves for some Bah Humbug!

Charles Dickens never provides details on Mr. Scrooge's profession, although the suggestion is clear he is a property owner (i.e. slum lord) or a banker of sorts, and the character's name has become synonymous with penny-pinching miser. It's not hard to imagine his son or grandson being the equally hardened Mr. Potter, the banker of It's A Wonderful Life infamy.

So CUs shouldn't be too surprised to hear this forecast from the Spirit of Christmas Yet To Come. In fact, this vision is going to come long before the next holiday.

Last week's Washington Post had a story headlined, "Credit Unions To Get Federal Assistance." Other news stories and wire service pieces carried the same. The Wall Street Journal, in a report muddying the line between corporate CUs and "large" CUs, also detailed the need for a federal bailout of credit unions.

The point here isn't to examine the coverage's accuracy like Scrooge weighing a half-penny. Rather, it's to remind credit unions of who is hunched over their own desks by candlelight right now, carefully clipping all those stories and headlines: the banks and their trade groups.

Surely, you say, given the state of the banking industry, the economy, the number of bank failures, the banks have better things to do with their time than beat that credit union mule again. Surely, I answer, you've got to be kidding.

Credit unions have always been a rallying point for the bank trade associations, a common enemy that keeps their own disparate members focused somewhere other than their own divergent interests. Now, with Congress and state legislatures demanding answers and even taking ownership shares in some large banks, credit unions can serve the additional purpose for the bankers by becoming body shields. "Hey, it's not just us," banks will tell detractors, "it's the credit unions, too. And anything you have planned for us you should plan for them."

But that's not the real Scrooge threat coming out of these holidays. Ebenezer asked the spirit, "Are these the shadows of things that must be, or are they the shadows of things that might be?" Here's not what might be for credit unions; here's what will be.

If credit unions or corporates (the bankers aren't going to differentiate) get federal tax dollars, then faster than you can raise an ATM surcharge the American Bankers Association and the state trade groups are going to be screaming to Congress and the national press-questioning how credit unions can receive tax dollars, but not pay tax dollars. (Attention Bob Cratchits of CU Land: Please do not confuse what may or may not be true with the likelihood it will or will not be said, argued, suggested, advertised, etc.) With state and federal budgets mightily strained for funds, the bankers' argument may attract some ears it wouldn't have in Christmases past.

And here's one other interesting note from the Spirit of Christmas Past, by the way. This year is not the first that credit unions have had to debate whether to accept funds from the federal Treasury.

During the Great Depression President, Herbert Hoover and Congress oversaw the creation of the Reconstruction Finance Corp., which sought to boost the economy with so-called "soft-loans" to banks, railways and larger companies. CU pioneer Edward Filene favored asking for $100 million in the form of "reconstruction credits" that would be pumped into credit unions. But his associate, Roy Bergengren, strongly opposed taking any such money.

Bergengren argued that doing so "meant destroying the vital principle of the whole movement by converting a community enterprise into an agency of the government. To teach people how to help themselves was more important by far in times of depression than at any other time."

Bergengren's argument prevailed over Filene's. Then again, Bergengren had never heard of a mortgage-backed security.

CUNA has been advertising its Governmental Affairs Conference scheduled for early 2009 in Washington by using the word "Change," a reference to the incoming Obama Administration. Just as President-elect Obama will be a new president facing some old problems, credit unions are going to arrive in Washington having to respond to some new twists on an old argument.

Bah humbug! Maybe. But get ready.

Speaking of Christmas, what one national sports columnist labeled the "nation's most famous County Credit Union Bowl," actually the San Diego County Credit Union Poinsettia Bowl, has landed a pretty good match-up for Dec. 23: 12-0 Boise State vs. 10-2 TCU. Make sure to tune in.

Frank J. Diekmann can be reached at

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