Now Is the Time to Level the Playing Field

One of my elective classes in high school was typing. I was accurate, but slow. No doubt such a class does not even exist today. First, there are no typewriters to be found and, second, preschoolers are already learning to keystroke via personal computers, smart phones and tablets. Fifty years ago, though, typing was a smart skill to have.

In typing class, the first actual sentence we learned after the location of the keys was the classic refrain, “Now is the time for all good men to come to the aid of their country.” Typing this phrase over and over was a drill that tested speed and accuracy.

I have considered modifying the refrain to, “Now is the time for all good bankers to come to the aid of their industry.” In Indiana, at least, many of our good bankers have come to the aid of our industry, but we may need more. We may have to fight for our very existence the next few years. I have seen data that indicates that, within the past five years, banks have grown at a 3 percent rate, while credit unions have grown at a 5 percent rate.

Though credit unions are only about 10 percent the size of banks and thrifts, they pose formidable competition for those community banks that share markets. Credit unions continue to enjoy a federal tax exemption that is worth about $25 billion every 10 years. They also enjoy regulatory advantages, such as exemption from Community Reinvestment Act rules.

Credit unions are continually appealing to Congress to increase their powers and to provide a mechanism, other than retained earnings, for growing their capital. They do so, even though study after study reveal that they are failing in their mission of serving “especially those consumers of modest means.”

From crisis normally comes change. Our country is gripped in a fiscal crisis, as is the entire world. Congress is, or soon will be, scrounging for every penny of tax revenue it can find. Now is the time that we might finally be successful in convincing Congress to revoke the credit union tax exemption.

I sense that the American Bankers Association and the Independent Community Bankers of America both recognize that now is the best opportunity we have to create a level playing field. It will be imperative that ABA and ICBA lead the fight in tandem. When they do, “Now is the time for all good bankers to come to the aid of their industry.”

My hunch is that bankers will respond!

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