The Song of the Summer

Around this time every year, artist after artist tries to crank out that hit that really becomes the song of the summer, that one song that you just can’t get out of your head through the dog days. But for every hit single, we get a lot of recycled noise; the songs that sound formulaic, like a corporate machine is trying to keep up with the times through a fresh new face. You see it every year, and yet every year it just keeps happening.

It should come as no surprise that, like record studios around the world, the bankers have fallen into that same trap: once again, they’ve tried to repackage their sounds into a new hit, but just created the same old song and dance. We’ve heard their hits before, right? “Credit Unions Are the Same as Banks” gets airtime now and then. So does “Look at Their Risky Loans.” And who can forget “But Their Tax Status”? I guess you can’t blame them, then, for reaching back into this bag for their summer selection. Across a 40-page screed on all the ways credit unions have grown too big for their britches and how the NCUA has been complicit in letting us get there, a new American Bankers Association-funded research paper touches on all of this and alleges that credit unions no longer serve Americans of modest means.

What a bunch of nonsense!

It’s great to see the bankers try so hard, spending a lot of money to churn something so new, yet so old. We all know that not only do credit unions continue to be a great friend to consumers of every income level, we also continue to reinvest year in and year out to remain true to our roots of serving people for provident purposes.

Let’s look at a few of the misguided swings the bankers take in their latest LP. Right out of the gate, they accuse credit unions of losing sight of our common bond, arguing that the expanded application of community charters finds us growing for business-sake rather than to serve. They lump into this general thread the idea that credit unions continue to acquire banks to grow their earnings and share of the market, and that the NCUA has been too hands-off, allowing credit unions to grow essentially unchecked.

Last time I checked, it was Congress, not the NCUA who granted credit unions the right to serve a common community bond, and they did so nearly unanimously (503-14 across the two chambers) because they recognized that “the overwhelming majority of credit unions provide affordable financial services to working families across this country.” I think we can all recognize that by expanding to serve additional communities around the country, whether opening a new branch or taking on a faltering bank’s assets, credit unions are only serving to bring those affordable financial services to even more working families. That’s doubly so when the alternative is a bank closing its doors, leaving whole communities without a financial service provider.

That’s not all, though. The bankers go on to call into question our service to those working families, claiming that we’ve turned our attention instead to high dollar loans for items like jets and boats. That seems rather unfair when even the Federal Reserve notes in the Survey of Consumer Finances that the mean household income for credit union members is significantly lower than that of bank customers, with a larger band of accountholders’ income falling between $25,000 and $100,000.

Next, they call for lawmakers to pass legislation like an expansion to the Community Reinvestment Act to hold credit unions accountable in our mission to serve people of modest means. I guess they forgot that some of the most pro-regulation lawmakers have already recognized just how well credit unions serve historically disadvantaged and underserved communities, opting to codify existing NCUA guidance rather than expanding the CRA to cover our operations.

Lastly, in what can only be described as an act of despair, they try and invoke the financial crisis to show how credit unions fail their communities. No, I’m serious – the bankers have accused credit unions of being negligent and irresponsible ahead of the financial crisis! They castigate the $91 million in TARP funds used to support credit unions in need. They don’t mention that that same $91 million was less than one half of 1% of the $245 billion that was allocated to save financial institutions, the largest chunk of which went to the too-big-to-fail banks!

At the end of the day, the bankers have spent a lot of money to produce what they thought would be their hit of the summer, and they did it because they’re scared. They’re worried we have too much of the market (a paltry, if growing 9%). They’re worried that we hold $1.5 trillion in depository assets (never mind that they grew by $1.9 trillion in the last three years alone). And they’re upset that our constant willingness to step up and put our members and our communities ahead of our earnings reports continues to gain the admiration of lawmakers on both sides of the aisle.

So when I’m looking for the hits this summer, I’m open to just about anything that comes on the radio. But I certainly won’t be picking up what the bankers are producing.

Jim Nussle is President/CEO of CUNA. He can be reached at 202-508-6745 or jnussle@cuna.coop.