By Frank J. Diekmann
There is maybe a decade left before the long civil war between credit unions and banks comes to an end. By the mid-2020s, NCUA will be gone, swept into a super-regulator that also oversees banks and other financial institutions. Credit union uniqueness? You can pack up that piece of trite throwback and ship it off to America’s Credit Union Museum, um, sorry, America’s Generic Multi-Charter Financial Institution Museum, in New Hampshire.
Or at least those are some of the predictions offered by Keith Leggett, the longtime credit union adversary at the American Bankers Association, who is preparing to retire from the ABA and who shared with CUToday.info some of his thoughts on credit unions, the credit unions vs. banks battle, regulation, and a brochure full of other issues. You can read more about it here.
Leggett has always been a strong and passionate voice for banks when it comes to credit unions, and has on more than one occasion forced the latter to re-think some things and be true to the mission. And I’m not sure if anyone has ever realized it, but one of the great ironies here is that the very same association that can’t stop singing from the CUs-Are-The-Same-As-Banks Hymnal has also long employed a preacher who has helped to keep credit unions on the straight-and-narrow by reminding them of the differences. By criticizing the tax exemption, he has helped to preserve it.
But at the same time, in his interview with CUToday.info Leggett has also trotted out many of the same old saws about bankers being driven “crazy” because credit unions offer the same products, compete for the same consumers, and are able to pay better rates because of the tax exemption. No, that is not the reason—if it were, all those Subchapter S banks would be leading most markets on pricing. The real reason is that while it’s the stockholders who benefit at each type of institution, it isn’t the tax treatment that’s different, it’s who those stockholders are.
Leggett was also asked why, if CUs have all the advantages, the phone rarely ever rings at the We Want To Change To A CU Charter Hotline over at the FDIC. Leggett cites two “banks” that have converted, but both of those were mutuals and were, for all intents and purposes, credit unions already.
Of course, Leggett just could be right; maybe there really will be just one financial regulator a few decades from now. Then the real question will be just what kind of a budget increase is NCUA going to need to oversee all those banks.
Take a look at the interview, and see what you think.
New Attention to Another Old Issue
Credit Unions Vs. Banks are one age-old issue, and so is field of membership. Last week NCUA Vice Chairman Rick Metsger told a gather of credit unions he favors some changes in regulations that would give credit unions greater flexibility in defining their fields of membership.
Metsger said he has been “concerned” over FOM issues “for some time” and that certain FOM changes could allow credit unions to serve even more members, especially people of modest means. In remarks to a credit union group, he outlined five changes he’d like to see. You can read more about them here.
Finding new ways to serve new members is certainly worth exploring, but the big challenge for credit unions now is dealing with all the success. CUs, after all, pushed past 100-million Americans as members in 2014, and the growth continues. But a member is not a “member” unless he or she is contributing to the co-op, an issue CUToday.info is exploring throughout 2015. You can find coverage of that here and here.
Frank J. Diekmann is Cooperator in Chief at CUToday.info, and can be reached at Frank@CUToday.info.