CU-banker conflict piques Wall Street Journal
WASHINGTON (3/8/06)—The conflict between credit unions and banks received national attention in a front-page story in the Wall Street Journal Tuesday. Credit Union National Association (CUNA) President/CEO Dan Mica was quoted as saying that the bankers’ attack on the tax status of credit unions is a “life-and-death” matter for the movement.
The article noted in particular Zions Bancorp President Harris Simmons’ active grudge against credit unions.
The well-known business daily said that Simmons tried unsuccessfully for years to get the American Bankers Association (ABA) to focus on credit union competition and tax status as a priority issue. Simmons was quoted as saying bankers “would all look askance” at these efforts, until finally the flames took hold and, as the newspaper phrased it, “the issue has caught fire among bankers” in the last few years.
Credit Union National Association President/CEO Dan Mica, Scott Simpson, CEO of the Utah League of Credit Unions, and Rick Craig, CEO of American First CU in Ogden, Utah were interviewed by reporter Bernard Wysocki Jr. for the credit union view.
Addressing field-of-membership issues raised in the article, American First’s Craig said it would be unfair and make no sense for credit unions to stop serving their lower income members as their economic situation improves.
The league’s Simpson pointed out credit unions’ vital role of putting the brakes on usurious bank pricing. “Would banks be offering totally free checking or 9% Visa cards without credit-union competition? Absolutely not,” Simpson told the Wall Street Journal.
The article noted: “Credit unions have muscled aside banks by offering auto loans at 5% interest, low-interest credit cards and home-equity loans at the same rates banks give to their best business customers. Nationally, real-estate loans by credit unions—the bread and butter of many banks—jumped to $191 billion in 2004 from about $80 billion in 1999. Business loans outstanding also zoomed during that period, raising debate about how much credit unions should be allowed to expand beyond their consumer base.”
In the article, CUNA’s Mica said that Simmons’ anti-credit union rhetoric appalls him. Wysocki quoted Mica from CUNA’s Governmental Affairs Conference last week when the CUNA leader identified the bankers’ attack on credit union tax status as a “life-and-death issue” for the movement.
Regarding credit union-bank competition, the article said, “Mr. Simmons...has long had a penchant for doing rigorous, and sometimes offbeat, financial analyses to prove the encroachment of credit unions on Utah’s banking industry.”
It added: “If credit unions have cramped Zions’s style, it’s hard to see on the bottom line. The bank earned $480.1 million in 2005, up 18% from a year earlier. Its stock has risen 38% in two years.”