Original message from: dtanner@shareone.com
Schapiro: Bank bill triggers quiet war
JEFF E. SCHAPIRO TIMES-DISPATCH COLUMNIST
Published: January 31, 2010
Richmond, Virginia
In the 1960s, Virginia's big banks were born. Schmoozed by courtly industry
visionary Harvie Wilkinson and a future U.S. Supreme Court justice, Lewis F.
Powell, lawmakers allowed banks to expand beyond their hometowns, doing away
with geographic restrictions that, quite literally, fenced out the
competition.
In the 1980s, Virginia's big banks -- then puny, compared to the behemoths
of North Carolina and California -- allowed the legislature to open the
state to outsiders. Virginia tardily surrendered to regional banking, and
promptly saw its native institutions swallowed by interlopers.
In 2010, with the industry reeling because of excesses perhaps fueled, if
only in small ways, by policies enacted over the past five decades by
Virginia politicians, banks plotting -- maybe plodding -- for post-recession
profits have a new target: credit unions.
In a largely overlooked, old-fashioned, big-money, insider brawl -- the kind
lobbyists of yore settled at boozy dinners in Richmond hideaways with
committee chairmen and caucus bosses -- banks and credit unions are fighting
over legislation that would allow the former to consume the latter.
The banks say that the measure -- make that, their measure, carried by
Senate Democratic leader Dick Saslaw and Del. Mark Sickles, both of Fairfax
-- is a two-way street: That a bank could acquire a state-chartered credit
union and vice versa. The credit unions, however, see the bill as a dead
end.
This struggle, which could play out this week before the Senate and House
committees that usually rubber-stamp the whims of business, recalls that
line from the movie "Ghostbusters:" "Dogs and cats living together . . .
mass hysteria!"
Though Virginia's banks and credit unions have a common interest -- managing
and investing billions of dollars -- they function within entirely different
templates, contributing to the friction over the Saslaw and Sickles bills:
Banks are shareholder-owned, for-profit, tax-paying entities, while credit
unions are customer-owned nonprofits exempt from taxation. It's plutocrats
versus the proletariat.
But banks, particularly smaller community banks -- some of which took
handouts from the federal government -- covet the loyal customer base of
credit unions. Also, these banks share with credit unions an emphasis on
personal service, which seemed to shrink as so many banks grew. That, even
credit-union devotees admit, could make for a good fit.
The credit unions have a bigger worry: Could the banks, navigating the
rubble of a deep recession, only be hunting for capital, attempting to
hoover up the few dollars available in a tough credit market?
To do so requires tweaking the law, eliminating a technicality that stopped
a state-chartered bank in Northern Virginia from merging with a credit
union. Federal law allows such mergers, though only a handful -- fewer than
six -- have occurred.
It seems the credit unions are playing defense. Their lobbyists floated a
compromise, proposing a merged bank and credit union operate as a mutual,
under which depositors would be shareholders. The banks apparently balked.
So much for corporate democracy.
Perhaps the banks believe their generosity to the politicians -- $334,174
last year by the Virginia Bankers Association, about three times what the
Virginia Credit Union League doled out -- will yield the desired dividend.
-----Original Message-----
From: bounce-5118004-8116452@list.cornell.edu
[mailto:bounce-5118004-8116452@list.cornell.edu] On Behalf Of ALBERT DESALVO
Sent: Monday, February 01, 2010 6:44 AM
To: communitydevelopmentbanking-l@list.cornell.edu;
'mohamad.nazirwan@live.vu.edu.au'; Henry Wirz
Cc: Bill Cheney (billc@ccul.org)
Subject: RE: 30 million for community banks
Your comments relate almost entirely to the large investment banks. I was
addressing the issues as related to community banks
Al De Salvo
Vice President
Community Reinvestment Officer, Capital Region, NY & Hudson Valley
327 Great Oaks Boulevard, Albany, NY 12203
518.464.6155 FX 518.464.1911 Mail code: NY6-G020
M&T Bank-"Understanding What's Important"
>>
From: "Wirz, Henry" <Henry.Wirz@safecu.org>
To: 'ALBERT DESALVO' <adesalvo@mtb.com>,
"communitydevelopmentbanking-l@list.cornell.edu"
<communitydevelopmentbanking-l@list.cornell.edu>,
"'mohamad.nazirwan@live.vu.edu.au'" <mohamad.nazirwan@live.vu.edu.au>
CC: "Bill Cheney (billc@ccul.org)" <billc@ccul.org>
Date: 1/29/2010 5:53 PM
Subject: RE: 30 million for community banks
No, I did not forget that. In fact it brings forth a great deal of anger.
Most of the securities that were purchased were triple A and double AA. The
investment banks that created the assets and the rating agencies that rated
these securities are the real culprits--not the credit unions that were led
to believe they were buying high grade, low risk securities. Your point of
view seems to be caveat emptor--let the buyer beware. That is exactly the
aggressive damn the customer point of view that caused this crisis. I agree
that the buyer does have to make an informed purchase but we also need a
honest seller. When Goldman Sachs and other investments banks sold these
types of securities they turned right around and shorted the market. Is
that ethical?
What is wrong with credit unions making business loans at reasonable rates
to their members who own businesses. There was nothing wrong with that
until the banking lobby decided that competition from credit unions was not
good. Name one business person who objects to having a choice and
competition for his business.
Your claim that credit unions are less well regulated than banks is absurd,
bias and false. Tell me how well Washington Mutual, Wachovia, and Citicorp
were regulated. History knows full well that bank regulation failed to
protect bank customers and the US Treasury.
And don't talk to me about credit union's paying taxes. If banks ever repay
the billions that tax payers paid to bail them out; if consumers could get
back the billion in lost interest on savings because the Federal Reserve had
to lower interest rates to zero to save the banking system--then and only
then could anyone pretend that credit unions have a tax advantage.
And then there is CRA that was passed by Congress because banks redlined
certain areas and refused to make loans. Credit Unions can only make loans
to members so they do not red line.
OH yeah, about that level playing field! No credit union is too big to
fail. We didn't get billions in bailout money, we don't control 75% of the
market; we have less assets than even Bank of America alone; and we don't
have the millions in lobbying dollars to have Congress legislate our agenda.
Why not find out the facts about Credit Unions. We do a great job and get
little recognition. Except by our happy members and angry bankers who want
to put us out of business and point out what great advantages we have. The
ultimate lie! Any bank that wants a credit union charter (complete with our
tax exemption) can get it. Name one bank that has converted to a credit
union in the last year. I can name a lot of credit unions that converted to
banks. Is the grass really greener on our side.
Come on--get real.
Henry Wirz
-----Original Message-----
From: ALBERT DESALVO [mailto:adesalvo@mtb.com]
Sent: Friday, January 29, 2010 11:45 AM
To: communitydevelopmentbanking-l@list.cornell.edu;
'mohamad.nazirwan@live.vu.edu.au'; Wirz, Henry
Cc: Bill Cheney (billc@ccul.org)
Subject: RE: 30 million for community banks
Did you forget that some Credit Unions got in trouble by buying CDO's, and
similar financial instruments that helped cause the collapse?. So credit
unions are not without blame.
Community banks are making plenty of small business loans as you mentioned.
If credit unions remained serving affinity groups, were regulated as heavily
and substantially as banks are, had CRA requirements and paid the fees and
taxes banks must, perhaps then the banking industry would see a more level
playing field and not lobby against raising the loan limits.
Al De Salvo
Vice President
Community Reinvestment Officer, Capital Region, NY & Hudson Valley
327 Great Oaks Boulevard, Albany, NY 12203
518.464.6155 FX 518.464.1911 Mail code: NY6-G020
M&T Bank-"Understanding What's Important"
>>
From: "Wirz, Henry" <Henry.Wirz@safecu.org>
To: "'mohamad.nazirwan@live.vu.edu.au'"
<mohamad.nazirwan@live.vu.edu.au>,
"communitydevelopmentbanking-l@list.cornell.edu"
<communitydevelopmentbanking-l@list.cornell.edu>
CC: "Bill Cheney (billc@ccul.org)" <billc@ccul.org>
Date: 1/29/2010 2:38 PM
Subject: RE: 30 million for community banks
I am the President of SAFE Credit Union in North Highlands, CA. We are the
number two volume SBA lender in our area. I applaud the President for
trying new ways to encourage more small business lending. Community Banks,
Credit Unions and micro-lenders are in the community making loans. We did
not cause the financial crisis. We did not harm our members with option ARM
loans and we didn't encourage members who could not repay loans to take on
more debt. Our goal is to make loans for provident and productive purpose
and to improve the financial well-being our members. If we do our job our
community financial well-being will also improve.
Unfortunately the banking lobby has done everything possible to limit small
business lending by credit unions. Historically credit unions did not have
a cap on business lending until banks imposed a cap. That cap prevents many
credit unions from making small business loans that would help create jobs
in our communities.
I hope that all community development groups will support removing or at
least raising the caps on business lending by credit unions.
It would be helpful if some of the capital intended for community banks
would flow into credit unions. Credit Unions can only build capital through
retained earnings. Credit Unions have 6% minimum capital requirement.
Therefore for every dollar of capital that is added to credit unions, we can
increase our loans by about $16. If Congress lifts the cap on business
lending, more of those loans would flow to small businesses. That would be
a good thing.
Henry Wirz
From: bounce-5082034-11587904@list.cornell.edu
[mailto:bounce-5082034-11587904@list.cornell.edu] On Behalf Of
mohamad.nazirwan@live.vu.edu.au
Sent: Thursday, January 28, 2010 11:47 PM
To: communitydevelopmentbanking-l@list.cornell.edu
Subject: 30 million for community banks
Dear all
This morning I watched Obama's speech at the Union in Melnourne, he promises
to put 30 million from the bailed out repayment for community banks. It
seems a good news for CB, CU and micro & small business, what do you think?
Regards
Iwan Nazirwan
Founder and CEO Minute Capitla
www.minutecapital.com<http://www.minutecapital.com> ('http://www.minutecapital.com>')
CDB list instructions http://www.runonthebank.net/cdblist.htm ('http://www.runonthebank.net/cdblist.htm')
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about consumers subject to the restrictions of the Gramm-Leach-Bliley Act
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for which you are receiving the information.
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