Latest bank attacks merely demonstrate the CU difference
The suggestion that banks and credit unions resemble each other is laughable, CUNA Chief Advocacy Officer Ryan Donovan wrote in Credit Union Times Thursday. Donovan wrote in response to a letter from banking trade associations opposing CUNA’s request that the Consumer Financial Protection Bureau (CFPB) hand over supervision to the largest credit unions to NCUA.
“It is not strange for the bankers to oppose this request. What is strange is the argument that they made. The banking trades opposed our request because, they say, credit unions resemble banks. That left us scratching our heads. Credit unions may offer similar products and services, but they do not resemble each other. The suggestion that they do is laughable.”
Besides the obvious differences (credit unions are member-owned and not-for-profit while banks are shareholder-owned and for profit), Donovan says in the context of consumer protections, the differences matter greatly.
The big Wall Street Banks engaged in activity that nearly brought down the economy a decade ago, and have been fined hundreds of billions of dollars, while credit union member service remains top-rate.
Donovan also pushed back on claims that credit unions buying banks is some kind of crisis, as claimed by a Florida bankers association.
“The solution to the problem appears extraordinarily simple: No one is forcing a bank to sell to a credit union. These transactions occur because they benefit both sides, and the fact that they happen again shows the difference between credit unions and banks,” Donovan wrote. “When the owners of a bank sell it to a credit union, they get cash rather than stock like they would if they sold to another bank. For the credit union, a bank purchase can be an efficient way of expanding service to a new area, buying a mature small business lending portfolio and investing more into an existing service area. As a result, the bank and the credit union each fulfill their purpose.
“We should not be surprised that the bankers are trying new ways to express their frustration with the market and with credit unions. But their latest outrages do more to prove the credit union difference than to dispel it,” he added.