Academic journal article ABA Banking Journal

Credit Union Campaign Is Paying Dividends

Academic journal article ABA Banking Journal

Credit Union Campaign Is Paying Dividends

Article excerpt

IN MARCH, TREASURY SECRETARY Henry Paulson released his department's Blueprint for a Modernized Financial Regulatory Structure, and it says much the same thing about credit unions that ABA has been saying all along.

The blueprint's core message about credit unions is that they have changed fundamentally from their original mission of serving low-income consumers. Here is what it said:

"Some credit unions have arguably moved away from their original mission of making credit available to people of small means, and in many cases they provide services which are difficult to distinguish from other depository institutions."

That is what ABA has been saying for years! The blueprint also had this to say about credit unions:

* "Over time, a key aspect of the credit union system, the field of membership, has become less meaningful."

* "Multiple-common bond credit unions can add 'select employee groups' fairly easily ... "

* "... community charters where members share a geographic bond ... have expanded rapidly in recent years."

* "... the increasing share of credit union assets held by larger credit unions indicates movement toward a broader focus ... "

The blueprint also acknowledged that tax-exempt credit unions "typically focus on a range of services offered by commercial banks... "

Treasury's analysis of the credit union industry is correct. It recognizes the facts that ABA has been talking about to the public and to policymakers alike. The credit union industry has changed and the new breed of large bank-like credit unions act more like banks than the credit unions they were intended to be.

And they benefit, moreover, from two distinct advantages.

First, almost all credit unions are exempt from the Community Reinvestment Act requirements that banks must meet. …

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