The action by the NCUA board in proposing changes to its field of membership regulation has unleashed a fury of activity by the various banking trade organizations in an effort to intimidate the NCUA and fire up the banking community to aggressively oppose the FOM changes.
The initial shot across the bow came from Camden R. Fine, president/CEO of the Independent Community Bankers Association, in November of last year when he threatened litigation "if the NCUA doesn't back off." He called the board's FOM proposal the "last straw."
This month, the American Bankers Association joined the attack by sending a memo to all of its members urging them to write comment letters to the NCUA criticizing and opposing any change to the FOM. The memo, listing Brittany Dengler as the staff contact person at the ABA, stated that "the NCUA is an out of control agency cheerleading, not regulating … the credit union industry." The memo further stated that the NCUA proposal is contrary to congressional intent, urged its members to emphasize in its letters how banks serve their customers and communities, and stated that competition from credit unions negatively impacts the banks' business.
I have always been amazed at what I considered flawed reasoning by the banking associations. For years they have argued that credit unions are a threat to their existence, steal their customers and are at an unfair advantage because they are tax-exempt. What the bankers never talk about are their customers' dissatisfaction with the service banks provide – the difficulty in obtaining small business loans, the less-than- friendly attitude when applying for a mortgage, the excessive service charges and the absence of what community banks were once famous for: Personal contact.
The ICBA and ABA have made it very clear that they will attack credit unions in 2016 by going to Congress, inundating the NCUA with letters and complaining in the press about how member owned credit unions threaten bankers' continued existence.
If bankers feel they are so much better and have more to offer individuals than credit unions, let them do so by appealing to their customers with better products and services. Satisfied customers will never leave their financial service provider if they are happy and their needs are being met. Bankers need to look at themselves before striking out at others.
It's time for credit unions to once again stand up and say, "Enough is enough." For many credit unions, the proposed FOM changes are needed in order for them to serve the people who want to join but cannot because of an outdated and unfair regulation.
It's time for credit unions to once again draft their letters and send them to the NCUA as they did for the recent risk-based capital regulation. They must tell the NCUA to stand strong and pass the needed reforms to FOM regulation to enable a greater number of citizens to join a financial institution of their choosing.
The bankers have thrown down the gauntlet. The credit unions must now pick it up and throw it back with the force and strength of David taking down Goliath.
Michael E. Fryzel is a Chicago-based attorney and former chairman of the NCUA board. He can be reached at [email protected].
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