Reposted from MSN Spaces Blog. This blog allows anyone to comment.
I found this article in a web seach. Thought it was interesting and wanted to share and start some dialogue.
Is it just me or are the answers provided by the Credit Union folks rather weak? The article has a bank slant, imo, but still, it doesn't seem like the CUs are doing a good job of stating the difference. Or is there no difference and we are just fooling ourselves?
Article published Wednesday, June 21, 2006
Lines between banks, credit unions blurring
By
MARY-BETH McLAUGHLINBLADE BUSINESS WRITER
Ask executives at credit unions and banks to explain the differences between the two, and their answers show there is relatively little.
Credit union officials argue that their institutions are better attuned to customers' wants because members get to vote on issues involved in running the organization. Bankers, on the other hand, say their vast network of offices, automated teller machines, and Internet technology helps make the banking experience easier. "It's hard to put it in black and white anymore," said Charlotte Birch, a spokesman for the American Bankers Association. "Banks offer different kinds of benefits for their customers." The gap between the two is narrowing so much that the banking industry is zeroing in on two major exemptions credit unions have enjoyed for years: not having to pay federal income and most state taxes and not having to comply with the Community Reinvestment Act, which requires banks to invest in urban areas. "In an ideal world, the credit unions that have gone beyond their traditional memberships would pay taxes like everyone else," said Steve Verdier, senior vice president for the Independent Community Bankers of America.
Credit unions initially provided financial services to relatively small groups of affiliated individuals who were thought to be underserved by banks, and the larger financial institutions catered to the needs of many. But lines started to blur with passage of the 1998 Credit Union Membership Access Act, which relaxed membership rules. Further erosion has occurred as credit unions work aggressively to catch up in terms of services and technology. The loosening of rules was needed to help credit unions hold their own in a competitive marketplace, said Patrick McGrady, president and chief executive officer of the Toledo Area Community Credit Union, which has assets of $341 million. "If it shrinks, there's not the ability to grow that credit union and add services," he said. Mr. McGrady, whose institution is open to almost anyone in Wood, Fulton, and most of Lucas counties, said credit unions have boards that are unpaid volunteers, as opposed to the paid bank directors. Credit unions are regulated by the National Credit Union Association, which requires dues and a percentage of assets in non-interest-bearing accounts to serve as insurance on deposit accounts. Banks are more heavily regulated by the Office of Thrift Supervision and the Federal Deposit Insurance Corp. However, the exemptions from the Community Reinvestment Act and from taxes that are the biggest differences between the two. Barbara Berebitsky, local president for Huntington National Bank in Toledo, said the main issue is one of fairness, but there are concerns about large credit unions with more than $1 billion in assets. "If they look like a bank and they act like a bank, they should have to abide by the same laws and regulations that a bank does," she said. Asked about the opposition to the tax-exempt status, Mark Slates, president and chief executive of Glass City Credit Union in Maumee, said the institution is focused on home mortgages, car loans, and credit cards, rather than business loans. His credit union, originally founded for Libbey-Owens-Ford employees but now open to almost everyone in Lucas, Wood, and other counties, has $110 million in assets.
Contact Mary-Beth McLaughlin at
mmclaughlin@theblade.comor419-724-6199.
