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Washington Archive

Washington

CUNA chairman attacks new breed of CUs misnomer

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WASHINGTON (4/21/08)--Credit Union National Association (CUNA) Chairman Tom Dorety isn’t happy about the Treasury’s blueprint to revise the financial system--and most of all, he’s “tired of this idea that there’s a new breed of credit unions.” The “new breed” of credit unions refers to a label that bankers use to describe some of the nation’s larger credit unions. At a hearing March 6, American Bankers Association Chairman Bradley Rock said expanding the credit union charter, while keeping the tax waiver, would help the “new breed of credit unions” (American Banker April 18). Rock’s testimony made Dorety’s blood boil, Dorety told the newspaper. Bankers argue larger credit unions have abandoned their original mission. But the larger size makes them “no less of a credit union,” Dorety told the newspaper. Dorety is CEO of Suncoast Schools FCU, Tampa, Fla., which has $6 billion in assets, making it the seventh-largest in the U.S. Suncoast has grown because it’s successfully provided services to its members, and if credit unions don’t grow, “we’re going to die,” he added. Dorety’s credit union was created by teachers as a non-profit collaborative with a few thousand dollars in assets and a volunteer board of directors. Today, though the credit union’s assets have grown, the collaborative status and volunteer board has not changed, Dorety said. But credit unions “can’t just serve people of modest means.” While Suncoast has members in low-income areas, it also has branches in wealthier ones, he told the newspaper. Small credit unions cannot be separated from larger credit unions because they depend on them for help. Requiring them to pay taxes would eliminate the credit union industry, Dorety said. Credit unions also do a better job than banks lending during a crisis. They are in a position to keep lending, he told the newspaper. CUNA has lobbied against the Treasury blueprint since it was released March 31. CUNA CEO Dan Mica has spoken against the plan, with his comments appearing in major media outlets such as The New York Times, Associated Press, The Wall Street Journal, The Washington Post and others. CUNA’s Credit Union Magazine also filed an open records request under the Freedom of Information Act to disclose bankers’ attempts to affect the Treasury plan in ways intended to put credit unions out of business (News Now April 4). For more information, use the links.

Inside Washington (04/18/2008)

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* WASHINGTON (4/21/08)--House Democrats are not waiting any longer for regulators to curb abusive credit card practices. Waiting for the Federal Reserve Board to act during the subprime mortgage crisis was a mistake, said House Financial Services Committee Chairman Barney Frank (D-Mass.) during a Thursday hearing (American Banker April 18). Frank indicated that it is appropriate for Democrats to take action, although Rep. Judy Biggert (R-Ill.) argued Congress needs to wait for the Fed and the Office of Thrift Supervision to define abusive practices. Frank and Rep. Carolyn Maloney (D-N.Y.) have proposed a bill that would create a cardholder’s “bill of rights” and ban double-cycle billing and universal default. The Fed is working on a proposal that would ban deceptive card practices and that could be released next month, said Sandra Braunstein, Fed director of consumer and community affairs ... * WASHINGTON (4/21/08)--A bill that would provide more liquidity for student loans passed through the House Thursday (American Banker April 18). Lenders are seeking other reforms, but they support the bill. The bill would allow the Education Department to buy Federal Family Education loans as a backup ... * WASHINGTON (4/21/08)--Three former Fannie Mae top executives agreed Friday to pay $31 million in a settlement to remedy claims that they boosted their bonuses by manipulating earnings. Regulators originally sought $200 million from the three (MarketWatch April 18). Former chief financial officer Timothy Howard will pay $6.4 million, former controller Leanne Spencer will pay $275,000 and former CEO Franklin Raines will pay $24.7 million ... * WASHINGTON (4/21/08)--National Small Business Week launches with a webcast, “Healthcare: Cost and Coverage” Tuesday at 9:30 a.m. EDT, according to the Small Business Administration. The week features national awards and issue forums. For more information, visit the website ...