It’s been a tongue-in-cheek rejoinder for years: If banks covet credit union advantages so much, they can always change charters. Huffington Post blogger Mike Garibaldi-Frick takes it a step further in his post Transform Banks Into Credit Unions. Forget the market, he says, charter change should be a mandate.
A summary of Garibaldi-Frick’s reasoning goes like this:- Banks are receiving billions in taxpayer dollars while seeming to offer very little help in solving the financial crisis.
- Credit unions offer the same consumer services as banks but they’re more accountable to members and they haven’t been part of the problem.
- Therefore, banks should be nationalized and turned into credit unions—or at least conscientious consumers should patronize credit unions more often.
Now The Huffington Post is to liberal readers what The No-Spin Zone is to conservative listeners, so this is not a mainstream proposal (and unlikely to make it onto Timothy Geithner’s new desk). But the proposal illustrates a real perception that’s still growing in the marketplace: Credit unions are the good guys.
Unfortunately for credit unions, Rep. Barney Frank says it’s unlikely that goodwill will translate into legislative victories. But it is a great time to tell local markets that financial services are healthy and bailout-free at your credit union. At least until the TARP money comes through.
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Executive Summary: Credit unions are the good guys. At least until the TARP money comes through.
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True that. I have yet to see a blogosphere defense of credit unions accepting TARP money, but I’ll attempt a devil’s advocate position here:
Alright, Denise Wymore, let me have it.
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Say 1000 credit unions are asking for TARP (this has never been publicly available information). That’s roughly 1/8 of all credit unions. I couldn’t imagine a scenario in which leadership, true leadership anyway, would give even a second’s consideration to tarnishing the remaining 7/8 of the industry because of the minority’s misdeeds.
Self-preservation for an individual credit union is no justification for bringing down the entire system. Not in a cooperative of cooperatives, anyway. Mergers aren’t the end of the world. For credit unions, TARP could be.
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Bit late to this blog but thought I would share the following related to TARP and the NCUA action—Today at a local United Way board meeting a local banker approached me.
To quote ” I heard one of the largest credit unions in the country is asking for TARP money. What does that mean for your tax exemption?” Ouch. You can see where the bankers will go with that. We must be careful what we ask for because, yes, it can hurt the entire industry.
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