Academic journal article ABA Banking Journal

Straight Talk about Credit Unions and the FCS

Academic journal article ABA Banking Journal

Straight Talk about Credit Unions and the FCS

Article excerpt

Straight talk about credit unions and the FCS

ABA President Kelly Holthus doesn't mince words. In speeches around the country, the York, Neb., banker has called attention to the aggressive marketing strategies of credit unions and Farm Credit System banks.

Holthus isn't against competition. He's against unbridled credit-union expansion, especially when accompanied by tax-exempt status. Further, he is against pricing strategies of Farm Credit System banks that test the limits of safety and soundness.

Targeting CUs. As Holthus recently told the Texas Bankers Association:

"ABA is going after the credit unions--not the ones that mind their own shops and work within a well-defined membership bond. I'm speaking of those credit unions that have chosen to shed their common bonds and, through aggressive marketing, become full-fledged financial institutions."

Holthus continued: "We're educating our lawmakers and the public about an issue that really needs closer scrutiny. Credit unions simply can't have it all. They can't be allowed to grow and expand their range of membership and do it completely free of federal taxes on their profits."

ABA's progress on the credit-union front is hard to measure so far. Still, it's clear that the association's full-court press, led by community bankers like Holthus, is creating a much wider public awareness that "tax-exempt" really means "taxpayer subsidy." In an era of record budget deficits, no member of Congress can afford to ignore a potential source of new revenue for long.

Congress probably won't act on the credit-union issue soon. But, then, the ABA effort isn't meant to be temporary. And it must be having some effect on credit unions. …

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