Academic journal article ABA Banking Journal

State of the (Credit) Union

Academic journal article ABA Banking Journal

State of the (Credit) Union

Article excerpt

I RECENTLY HAD THE OPPORTUNITY of debating the former chairman of the National Credit Union Administration in front of a group of 2,000 credit union board members from throughout the country. It was a lonely experience, made comfortable by being on the right side of the issue. In preparing for this debate, I was reminded how far many large credit unions, and their federal regulator, have strayed from their original, noble mission of serving people of small means within a narrow field of membership.

Every time Congress has examined this industry, it has reinforced these principles--most recently in the credit unions' own bill, the 1998 Credit Union Membership Access Act. In it, Congress found that credit unions' tax exemption was predicated on serving "consumers, especially persons of modest means." The bill also emphasizes the importance of a common bond marked by a "meaningful affinity" between the members. The bill also provides a means for credit unions to convert to mutual savings bank charters "without the prior approval" of NCUA.

But NCUA has seemed intent on tossing the common bond concept overboard, allowing credit unions to serve ever-larger geographic areas, torpedoing conversions, and generally playing a cheerleader role.

I told the crowd of credit union board members that we are not anti-competition. On the contrary, I noted that they looked like they represented a great crop of prospective community banks, and that I'd be delighted to help them achieve such a desirable outcome!

What we are against is a tax exemption that makes no sense at a time when we have an $8.2 trillion federal debt; when consumers have no shortage of credit available to them; when even the credit unions' friends use the term "abominable" to describe their record in serving those of small means; and when business banking, indirect lending, and other activities which are antithetical to the notion of a common bond are conducted by credit unions. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.