By Bernie McGlaughlin
I woke up last Thursday morning after attending CUNA’s Governmental Affairs Conference (GAC) in Washington, DC, to an article in CUtoday.info that reported about a letter sent to Congress by the American Bankers Association’s (ABA) James Ballentine, Executive Vice President, Congressional Relations & Political Affairs. In the letter, Mr. Ballentine outlined four questions for Congress to ask credit unions regarding recently proposed credit union industry rule changes.
Knowing that our industry has very solid answers to Mr. Ballentine’s questions, I’ll skip those responses and move on to four questions I would like Congress to ask the banking industry when they visit Washington later this month.
- Which financial institutions, banks or credit unions, played a central role in the 2008 financial crisis, and which of the two had nothing to do with the problem?
- What was the cost of the financial crisis of 2008 to American taxpayers as a result? (I think the answer may begin with a “T” and not a “B.”)
- What major changes have been put in place by anyone to fix, regulate and even to attempt to prevent another calamity like the 2008 financial crisis from happening again? (Oh, wait; there was the repeal of Section 716 of Dodd-Frank passed by Congress as part of the December 2014 budget deal reinstating some past practices that got us into trouble. Wasn’t it Albert Einstein who said “the definition of insanity is doing the same thing over and over and expecting a different result”?)
- Who has ever been held accountable for the crisis? (Anyone at all?)
Maybe it’s just me, but I think that the ongoing narrative we constantly see between banks and credit unions could use a “reset” in terms of what’s really important. For I believe that Americans are owed an answer to the four questions listed above, and that meaningful legislative action is needed by Congress to ensure that it doesn’t happen again. And if you attempt to label the 2008 financial crisis as “ancient history”, go back to question 3 above and try to make a case that it cannot happen again.
The Broken (Tax) Record
The ABA’s “broken record” on taxing credit unions and other credit union charter issues simply pale in comparison to the importance of reining in the banking industry from the potential of another economic meltdown.
The last time I checked, credit unions represented only about 6% of the total assets held by the financial services industry (hardly a major threat); we don’t participate in risky Wall Street trading transactions, have an attitude that we’re “too big to fail” so we have nothing to lose, or that a tax on credit unions would come anywhere close to solving the national debt crisis.
Put simply, trying to compare the costs associated with the 2008 financial crisis to a credit union tax - $2.7 billion annually - is laughable.
Finally, I point your attention to the political environment in our nation and the traction that both parties are receiving on this issue. Americans are still very angry about what happened in 2008 and that nothing has been done to fix the problem.
Instead of thinking about credit union taxation or the pros and cons of tweaking the credit union charter one way or another, why not focus on the much more important issue of the day: that of reinstating the principles of the Glass-Stegall Act.
Bernard McLaughlin is President/CEO of Point Breeze Credit Union in Hunt Valley, Md.