Pub. 5 2010-2011 Issue 4

www.nebankers.org 20 Extraordinary Service for Extraordinary Members. Reach Keith Leggett by e-mail at kleggett@aba.com. Read Leggett’s blog at http://creditunionwatch.blogspot.com . in the Senate to bring up legislation authorizing certain credit unions tomore than double their business lending. (Thanks to a heavy outpouring of communiqués from bankers, the Senate abandoned that idea—for now.) It’s difficult to understand how or why the credit union industry continues to be treated with kid gloves in the current environment. The corporate credit unions were clearly no more immune to the subprime meltdown than Wall Street. The biggest beneficiaries of the business lend- ing bill are a relatively few large, bank-like credit unions that want to focus more on business, not “people of mod- est means” (whom credit unions were created to serve). The CRA bill may be the most nonsensical of all. One proponent told the American Banker paper that the legislation would be a great equalizer, ensuring “that the entire financial services industry is responsible for meeting the credit needs” of their customers and com- munities. How can anyone think that when credit unions aren’t included? So back to the opening question: What should Con- gress do now that the American taxpayer has rescued credit unions? Answer: Stop coddling the bank-like credit unions and treat them like the full-service feder- ally insured depository institutions they are. What’s your opinion? Z A. Reward the industry by increasing business lending powers for some institutions B. Shield credit unions from efforts to apply Community Reinvestment Act (CRA) requirements to all financial institutions C. Continue to ignore the irony that credit unions are being rescued with taxpayer dollars, none of which came from them D. All of the above Recent events suggest there are plenty in Congress who would answer “D.” Policymakers have long looked the other way as a chunk of credit unions made a mockery of their “common bond” requirement andmorphed into full-service institu- tions—all the while retaining a tax and CRA exemption originally intended for the mom-and-pops. So I did not expect Congress to feel awkward authoriz- ing a $6 billion line of credit to help the National Credit Union Administration (NCUA) deal with the failed cor- porate credit unions that overindulged in toxic mortgage- backed securities. If credit unions’ tax-subsidized growth didn’t bother the Hill’s credit union stalwarts, neither would the irony of using taxpayer funds to save a $900 billion industry that pays no taxes. (Read more about the rescue on page 24 of this issue.) But if that wasn’t surprising, the introduction of a bill to extend CRA to all financial services companies except credit unions is. The same can be said for an attempt credit union watch: keeping an eye on the credit union scene Will Taxpayer Rescue End Credit Union Coddling? Keith Leggett, Senior Vice President & Senior Economist, American Bankers Association Question: Taxpayers extend billions in emergency loans to rescue the credit union industry. Should Congress: