ABA Banking Journal - July 2011 - (Page 40)
Can large CUs be KO’d?
An interview with Keith Leggett, ABA vice-president and senior economist
ABABJ: What’s the latest on the credit union front? Keith Leggett: The Udall bill (S. 509) is an emerging concern. It would allow qualified credit unions to increase their business lending from 12.25% of assets to 27.5% of assets. That would be a real concern for community banks. ABABJ: Is there a chance that the legislation could move? KL: The credit unions are saying that, if they’re given greater business lending authority, they would make $10 billion in additional small business loans and create 100,000 new jobs. Anything that looks like it would help create jobs becomes attractive to Congress. I do think the credit unions run a risk. The expansion of business lending authority at the same time that Congress is looking for new sources of revenue could bring their tax exemption into play. ABABJ: Where are credit unions vulnerable? KL: There’s a widening gap between the large and small credit unions. The small CUs think the large ones are going to upset the apple cart. The industry is also still wrestling with how to deal with the clean-up of the corporate credit unions that failed. Credit unions will have to pay $8-$10 billion over the next decade. They’re going to have to borrow from Treasury, which is going to have some political liability for a tax-exempt entity. ABABJ: Are credit unions still making loans that are outside the bounds of their mandate to serve people of small means? KL: There are still credit unions making very large commercial real estate loans. There’s one in conservatorship in Texas that funded a shopping mall in Illinois. How a credit union does that is beyond me. ABABJ: You’re known as Mad Dog Leggett around ABA for your passion about credit unions. How did you get interested in the subject? KL: It fell into my lap. After I joined ABA in 1994, I attended
40 | ABA BANKING JOURNAL | july 2011
a Credit Union Task Force meeting. We needed to develop an expertise in the area, and I threw myself into it. I’ve always said I had the best job at ABA—doing opposition research. Digging up dirt on credit unions. I empathize with the bankers. There are injustices. When you have a credit union that sets up a not-for-profit organization so you can make a donation and become a member, it makes me mad as hell. How does giving a donation of $10 constitute a meaningful affinity or common interest? What is the common bond? ABABJ: Talk a bit about your credit union blog. KL: In part I’m writing to the credit union industry. In some cases, I’m presenting objective facts and numbers; sometimes it’s commentary. Almost everyone who responds does so anonymously. As long as they don’t use profanity, I post what they write. I do three pieces a week and the blog gets 3,500-4,000 visits a month. The address is creditunionwatch.blogspot.com ABABJ: Do you think any credit unions will be taxed in your lifetime? KL: Yes! I’ve always referred to the credit unions as Icarus. If they soar too close to the sun, the wax on their wings is going to melt. It’s hubris. Pride cometh before the fall. But we need to recognize that it’s going to take time. Keith can be reached at firstname.lastname@example.org or ask for him at 1-800-BANKERS.
Table of Contents for the Digital Edition of ABA Banking Journal - July 2011
ABA Banking Journal - July 2011
Inside family banks
Pass the Aspirin
New gold standard?
Still on their guard
First Person: Special Edition
ABA Banking Journal - July 2011