Academic journal article ABA Banking Journal

This Is a Common Bond?

Academic journal article ABA Banking Journal

This Is a Common Bond?

Article excerpt

In preparing for a recent speech to the Texas Bankers Association, I came across an example of just the kind of "common bond" abuse that we are trying to stop in the courts and in Congress.

Among the 800-plus credit unions in Texas is OmniAmerican FCU, a $400-million institution in the Dallas-Fort Worth area. As Yogi Berra used to say: "You could look it up!" I did--on the Internet, at www.omnifcu.org. OmniAmerican has members from more than 1,200 sponsors. Everything from A-1 Wrecker Service through Kelly Moore Travel and Rose's Italian Restaurant all the way to Zeebs Enterprises.

Printed out, the list of sponsors runs 61 pages. This is a common bond?

Despite examples like this around the country, and our initial success in fighting common bond abuse in the AT&T Family Credit Union court case, victory is far from assured.

Credit unions are mobilizing their members to lobby Congress, trying to sell the idea that the big, greedy banking Goliaths are trying to stamp out the little credit union Davids.

It's going to be a tough public relations battle. Frankly, the public likes credit unions. You can understand why. Heck, as a consumer, I like higher savings interest rates and lower loan interest. I'd like it if I didn't have to pay income taxes, too. But the point is obeying the law and competing fairly. That's why educating Congress and the news media is so critical.

Gradually, we are starting to get our case across.

In a thorough story headlined "Piggy Banks with Muscles," The New York Times said credit unions now aggressively compete against banks in our traditional lines of business. The story suggested that banks won't get much public sympathy. But the Times did sympathize with bankers in an editorial, saying: "Many credit unions have expanded well beyond the 1930's notion of a common bond. They offer a full range of financial products. These large credit unions are just like banks. For the large credit unions, the bankers' case is compelling. Competition, not a tax break, ought to decide where Americans want to bank."

I couldn't have said it better.

The Chicago Tribune noted that a credit union in Peoria is larger than 98% of the banks in Illinois. A Tribune editorial said: "It is wasteful and unfair for taxpayers to subsidize the large credit unions. Small credit unions and those that finance community development may still need help. …

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