Pub. 5 2014 Issue 3

www.wvbankers.org 6 West Virginia Banker T he article featured below, “Credit Unions Want It Both Ways,” was written by my friend and counterpart, Jim Pishue, president and CEO, Wash- ington Bankers Association. First, I will address some credit union issues. A few weeks ago Brian Thomas, president and CEO of Clear Mountain Bank, sent me a copy of an email he sent to a local credit union doing business in his market area. In the email he kindly requested that the credit union stop using the phrase “We are your community bank.” He quoted restrictions contained in the West Virginia Code on the ability of anyone to use the word “bank.” I made Sally Cline, Commissioner, West Virginia Division of Financial Institutions, aware of this situa- tion and sought her assistance in ensuring that state law was being followed in this situation. The Commissioner correspond- ed with the President of the West Virginia Credit Union League reminding him about the prohibitions on the term “bank” being used in advertising by credit unions. Shortly thereafter, Mr. Watts notified his member credit unions to cease referring to themselves as “banks” in printed or electronic materials. On the national front, Skip Hageboeck, current chairman of the West Virginia Bankers Association and president/CEO of City National Bank, recently contacted members of our delegation in Washing- ton concerning the fact that credit unions to not pay taxes. His remarks can be accessed on our website - http://www. wvbankers.org/news/taxinvcreditunions. Thank you Brian and Skip for being vigi- lant and bold and speaking out. “CREDIT UNIONS WANT IT BOTH WAYS” By James M. Pishue President and CEO Washington Bankers Association “There you go again.” Anyone of a certain age remembers candidate Ronald Reagan’s withering, four-word dismissal of incumbent Jimmy Carter’s tax proposal in their presidential debate. It’s exactly the reaction I have to the credit union industry’s latest incursion into the commercial banking marketplace. There they go again. Several months ago, an attorney represent- ing the Northwest Credit Union Associa- tion sent a letter to Scott Jarvis, director of the Washington State Department of Fi- nancial Institutions (DFI), demanding the right for his clients to use terms like “bank” and “banking” in marketing their services. The attorney’s credit union clients appar- ently considered the state law prohibiting such usage an inconvenience to be swept aside. The letter argued that the restriction “served no public purpose” and threatened legal action against Jarvis and the Depart- ment. Attached was a complaint, all ready to be filed. In response, Jarvis felt that he had no choice but to negotiate to avoid costly litigation. It may well have been the most one-sided negotiation since Peter Minuet bought Manhattan from Native Americans for $24. In the end, Jarvis issued a “Director’s Interpretive Statement” indicating that state-chartered credit unions – the only ones over which DFI has regulatory authority – will now be permitted to use terms such as bank, banker and banking as long as it’s done in a manner “that will not mislead the public that a credit union holds a bank charter.” As credit union executives are busy high-fiving each other over their latest vic- tory, the issue of “public purpose” should be put into context. What exactly is the public purpose in giving credit unions authority to advertise themselves as offering “banking services” when it’s a convenient way to lure custom- ers, while simultaneously doing everything they can to erode the credibility of the banking industry with the public? And what public purpose is served by large, expansionist credit unions lobby- ing Congress for additional commercial lending authority when the vast majority of credit unions aren’t using the authority they already have, and executives from within their own industry acknowledge that their staffs lack the necessary experience to make prudent loan decisions? Commercial and savings banks already have that expertise and capital available to lend. The simple fact is: Credit unions want it both ways. They want to be seen as banks when it suits their purposes – when troll- ing for retail and small business custom- ers – and very different from banks when that’s better for the bottom line. When it comes to one of the most import- ant obligations imposed on the banking industry – paying taxes – they’re nowhere to found. n A M essage from the P resident & CEO By Joe Ellison Credit Unions Want it Both Ways In the email he kindly requested that the credit union stop using the phrase “We are your community bank.” He quoted restrictions contained in the West Virginia Code on the ability of anyone to use the word “bank.”