Pub. 9 2019 Issue 3

20 www.azbankers.org F OR TOO LONG, BANKS WITH LEGITIMATE CONCERNS ABOUT UNBRIDLED CREDIT UNION GROWTH HAVE BEEN PORTRAYED AS GOLIATH PICKING ON DAVID. THE TRUTH IS THAT IN MANY STATES, A CREDIT UNION IS ONE OF THE LARGEST LOCAL FINANCIAL INSTITUTIONS, OUTRANKING MOST OF THE STATE’S COMMUNITY BANKS IN SIZE. But rather than trying to convince policymakers or the public that central casting got it all wrong – that it’s big credit unions that are harming small banks – ABA, with guidance from our long-standing banker Credit Union Task Force, has made a deliberate effort in the past two years to raise the level of awareness about credit union policy issues and excesses among third parties and the media. We believe this strategy is effectively reframing the debate from banks vs. credit unions to credit unions vs. taxpayers, a crucial step toward drawing more oversight of the industry. More people now are questioning whether credit unions, which enjoy a generous federal tax exemption, are earning this benefit. Even major media outlets like The Wall Street Journal, The New York Times and National Public Radio have turned a critical eye to credit union practices – running stories on the lax enforcement of meaningful membership restrictions and an exposé of the industry’s taxi medallion loans, which imposed predatory terms on thousands of taxi drivers and drove some credit unions out of business. The most recent criticism comes from a respected independent research firm – Federal Financial Analytics, run by veteran bank - ing policy analyst Karen Shaw Petrou who has a strong interest in matters of economic inclusion. ABA commissioned the study but had no editorial control over Federal Financial Analytics’ research and conclusions. Petrou’s study assessed not only the extent to which credit unions meet their mission, but also how their federal regulator judges and enforces it. The paper found, among other things, that credit union members are disproportionately from middle- and up- per-income households, that the National Credit Union Admin - istration maintains no data on credit unions’ effectiveness at providing financial services to people of “small means,” and that By Rob Nichols, President and CEO American Bankers Association Reframing the Credit Union Debate