CUNA Board Chair Letter to the Hill Regarding CURIA
March 9, 2006
Early last week, the major banking trade associations sent to you a letter expressing their "united opposition" to legislation pending in the House meant to modernize credit union law, and give credit unions more flexibility in providing outstanding consumer service to their members.
I urge you to reject the entreaties of the American Bankers Association, America's Community Bankers, and the Independent Community Bankers of America as merely obstructionist tactics designed to hobble or hold back credit unions from fulfilling their role of serving their members.
As the article appearing on the front page of Tuesday's (March 7, 2006) Wall Street Journal pointed out, this is only the latest effort by the banking industry to "keep credit unions in check." Led by extremists, most recently such as ABA Chairman Harris Simmons, the bankers have been working against credit unions for more than 70 years. Through that entire time, credit unions have persevered, and American consumers are clearly better for it.
The irony of the bankers' joint letter opposing congressional support for CURIA is that it maintains that the legislation would place "tax-paying financial institutions at a greater competitive disadvantage." This specious claim is made the day after banks have announced their most profitable year ever (with $134.2 billion in profits). On top of that, the so-called "community banks" themselves have identified other community banks as their greatest competitive threat.
Beyond these ironies are the half-truths of their claims about CURIA and its impact on credit unions.
- The bill would reduce the standard net worth ratio requirement for credit unions to a level comparable to what is required of banks and thrifts insured by the Federal Deposit Insurance Corporation. When the bankers argue against this change, they are in substance arguing against the capital standards that apply to their own institutions, and their own safety and soundness.
- A study issued by the Small Business Administration a year ago (March 2005) found that the explosion of bank consolidations is leading to a decline in access to credit for small business owners. To help staunch that decline, the SBA in 2003 changed its rules allowing more credit unions to take part in its small business lending program. Credit unions should be able to meet the needs of their membership, as they are uniquely positioned to fill the niche that is not being served by many banks.
- Finally: Bankers need to re-read their history books, and be clear on who learned what in the 1980s. In the early part of that decade, credit unions recognized that their savings insurance program, the National Credit Union Share Insurance Fund (NCUSIF), needed to be more adequately capitalized to face the challenges of the future. In 1984, credit unions themselves recapitalized the savings insurance fund, with deposits equal to 1 percent of their insured funds.
No taxpayer funds were used. By the end of the decade - when the savings and loan industry imploded, its insurance fund folded, and the banks' fund needed to be recapitalized, the credit union fund remained fully capitalized - never asking for nor receiving dollars from the taxpayers' pockets.
I hope you will take these points into consideration when reading the latest banker missive, or any others developed and delivered to you at the direction of the reactionary banker leadership.
Credit unions merely want to serve their consumer members as effectively as possible; CURIA gives them the tools for doing just that.
Chairman, Credit Union National Association
President and CEO, Northwest FCU