By Frank J. Diekmann
It’s a sad state of affairs today that in our schools we continue to teach children Washington is best known as the capital of the United States, even though that’s really a minor piece of its claim to national and global fame. Instead, what students should really be learning is Washington is the capital of the Vocabulary Vortex, where the intent and meaning of the written and spoken word go to spin in eternity.
Judging from some recent “communications,” Washington is home to Embassy Row and countless languages, several dozen of which may or may not be English.
Two new monuments have been erected along the Vocabulary Vortex Mall, the first of which is courtesy of the Independent Community Bankers of America (ICBA) which is outraged—outraged, I tell ya!—by the steady acquisitions of community banks by credit unions.
Following the largest CU bank buy to date, MIDFLORIDA CU’s acquisition of the $730-million Community Bank & Trust, the ICBA said it was forming a credit union “task force” to deal with the issue (my guess is the “task” is to find some way to “force” the issue to the forefront).
"The recent surge in credit union acquisitions of community reduces tax revenues for local communities, worsens banking industry consolidation, and furthers the credit union industry's continued unbridled growth and encroachment into full-service banking," ICBA President and CEO Rebeca Romero Rainey said in a statement. "Through the ICBA Credit Union Task Force, ICBA and the nation's community bankers will be shining a light on this troubling trend, which yet again illustrates how far credit unions have strayed from the original purpose underlying their tax exemption.”
Methinks the group isn’t as concerned with the U.S. Treasury as it is with its own treasury, as every time a credit union buys a bank it eliminates a dues-paying institution for the ICBA.
And that’s just some of the hot air fueling the Vortex. Part II is how the number of community banks that have moved to Subchapter S charters seems to have been omitted from the ICBA statement. Every one of the approximately 2,000 banks that has made the move has done so to avoid the double taxation on profits—taxes that go to the federal government.
As for hurting local communities, the Vocab Vortex is closely related to the Vocab Vacuum, where what you don’t say is every bit as important as what you do say. Credit unions pay payroll and property taxes, as do their members.
But, hey, I could be wrong and may need to form a task force to look into the issue further.
What is the Meaning of This?
While the ICBA deserves its monument, it will unfortunately have to struggle to be heard above the giant sucking sound from the Vocab Vacuum emanating from the merger of two big banks (sorry, community bankers, but the mega-institutions are clobbering you here, too).
The big banks (like big entities of all type) spend big dollars to hire the big PR firms to create big messages that are actually great big bags of nothing. Just sit back and read the following and try to refrain from whistling out loud when you’re finished as you realize the magnitude of the smallness in this statement released by BB&T and SunTrust as they merge and announce their new name, Truist:
“Building on 275 years of combined history and culture, Truist's additional size and scale will redefine the client experience through innovative technology and create meaningful change in its communities,” boasted the banks.
Does that not sound impressive? Re-read it again. And again if you’d like. It’s almost majestic in scope. Has the key buzzwords. Sounds altruistic. And yet it says… what?
Credit unions may offer lower loan rates, higher savings rates, and fewer fees, but there are some areas where CUs are just going to have to concede to the banks.
And in other news…
An Outside Look In
Interesting outside perspective on the downfall of former CEO Kam Wong, who was recently sentenced to prison, and issues at Municipal Credit Union is offered by Crain’s New York Business here.
Never Been Wrong
The always entertaining Dr. Elliot Eisenberg had his usual fast-paced insights for an audience at a recent NAFCU meeting, including his thoughts around when a recession might hit the U.S., which you can read more about here.
Among some of his observations:
- Eisenberg noted any loan officer who has joined a credit union after the recession ended likely thinks of him/herself as some sort of lending superhero. “I always say the worst of loans are made in the best of times. Now, 10 years later, they have never made a bad loan.”
- He pointed out ISM Non-Manufacturing numbers are good, with the service sector holding up, and offered this reason: “We are spending an increasing amount on services to feed the unending need to show off on Instagram.”
- One drag on the economy, he said, is a slowing population and fewer people to hire. Eisenberg pointed to data showing many younger people aren’t in relationships and young couples aren’t having children. “If you really want to make America great, or greater, go home and make love for God’s sake. I had to get a job so I could get a car so I could make out. But, now that you’re not making out, what’s the point in getting a car?”
You Might Want a Second Drink
During that same NAFCU meeting, attendees were given an update on a wide variety of legal issues/threats from a panel of three attorneys. You can find more here. One of those attorneys, John Bredehoft of Kaufman and Canoles, explained how laws and rules related to class actions are a big reason CUs get hit with lawsuits, such as those around websites and ADA, or overdraft practices. It isn’t about those who may have been wronged; the lawyers in such litigation almost can’t lose.
“How many of you have been plaintiffs in a class action?” he asked. No hands were raised. “I’ll bet each of you have been. Maybe you once flew Eastern Airlines. The lawyers got $8 million and you got a free drink voucher.”
Frank J. Diekmann is Cooperator in Chief at CUToday.info and can be reached at Frank@CUToday.infoor @FrankCUToday.