WASHINGTON (4/13/15)--You know reason has left the house when banking trade associations oppose a state relief measure, one which would certainly help some of their members, solely to block credit unions from having the same relief. Jim Nussle said Friday that it is "hard to believe" bankers in New York would shoot their members in the foot by giving into a "knee-jerk reaction" against credit unions.
An article in the April 8 issue of American Banker reported that banking groups are opposing a state Senate bill that would lift a prohibition on municipal deposits at thrifts--a reform that would benefit some of their members. The article stated, "Their opposition stems from a provision in the bill that would also let credit unions accept public funds."
Nussle, president/CEO of CUNA, said, "It's unfortunate that banks put protecting themselves from competition from not-for-profit, cooperative financial institutions ahead of increasing alternatives to municipalities and households." In general, municipalities look for safe and sound investment alternatives for such things as tax revenues or budget allocations until those funds are used to cover expenditures.
Credit unions are authorized under federal rules to accept public deposits. Twenty-five states already include credit unions on the list of acceptable depositories, thanks in large part to advocacy efforts by CUNA, state credit union associations, and credit unions themselves.
"This is just another way that credit unions can support their communities and provide service excellence to their members," Nussle said. "By accepting public deposits, credit unions can do more to develop member services and increase their beneficial impacts on their communities as a whole."
Nussle added, "It's strange how the banking industry views every modest increase in credit union activity as an existential threat, while seemingly to ignore the real threat--large national banks."
In 1992, the largest 100 banking institutions controlled 41% of financial institution assets and smaller banking institutions controlled 53% of the total. Today, the largest 100 banks control 74% and smaller institutions control 19%, CUNA figures show.
Nussle also noted an even more recent article in American Banker in which mega banker Jamie Dimon, chairman/CEO of JPMorgan Chase, was described as defending the "size and scope" of his monolithic institution by pointing out "the (safety and soundness) fallibility of smaller banks" in his annual letter to shareholders.
Even the Banker, Nussle said, points out, "While these observations are hardly original, they seem somewhat brazen coming from Dimon, the head of a bank that received $25 billion from the government during the financial crisis."
"To speak frankly, I believe the banks should get their own house in order, and that smaller banks should realize they could have an ally in credit unions by uniting where possible on the regulatory relief front," Nussle concluded.