Truth and Moving Forward

Sorry to say, but there are rumblings from the growing banker volcano again. There's smoke and spurts, and the ground is beginning to quake.


Excerpted from Callahan's Credit Union Report

Sorry to say, but there are rumblings from the growing banker volcano again. There's smoke and spurts, and the ground is beginning to quake. They'd like to blow off with a good one and bury us in six feet of lava and dust.

We've heard grumblings from them about our "arrogance" and our "land grabs," that is, extensions of our authority to organize by communities rather than employers. For this we are to lose our tax-exempt status. The bankers will march on Congress to open Representatives' eyes to their lost tax revenues and convince them to end, as they would put it, our "federal subsidy."

These critics are absolutely wrong, of course, but they are framing the issue, and if we continue to let them frame it in the manner they wish, and to apply their Chinese water torture of taking their message again and again to Congressmen, then we are eventually going to lose in Congress and every other legislative body. He who frames the question guides the answer.

For all Americans

We cannot let bankers frame the issue. We cannot let them claim we are merely another kind of "community bank" that is receiving a "federal subsidy." We are something far more special, with roots in self-help activities codified in the 1936 credit union act.

Credit unions were not set up to serve employers. Credit unions after decades of work merely shifted to using employers as organizing tools, the easier to reach people who needed the kind of self-help financial services credit unions were meant to be.

We always were community-based. The early New England credit unions were established in communities and meant to allow anyone to walk in and join so long as he or she was willing to save and help other members. It was these kinds of credit unions that lobbied for the '36 Act.

Accordingly, Congress granted a federal credit union charter. It was for self-help, not-for-profit cooperatives meant for Americans of modest means and who were unlikely to enjoy a reasonable relationship with a bank, in other words, just about all Americans in 1936. For credit unions' not-for-profit status, they were granted freedom from federal taxes.

This is still good public policy today and good public policy for tomorrow. Any American who wants to join a cooperative for the purpose of helping himself or herself while helping fellow members should be allowed to do so. Here is something Democrats, Conservatives, Libertarians and Strict-Constructionists can rally to: self-help and cooperative help. It's good. It's American.
The fact that it has been modestly successful and helped a lot of people does not thereby mean the revenues it generates for its members should be taxed.

Modernize the Credit Union Act

A current problem is that we do not have the proper tools for the job we could be doing. The bankers have crafted new legislation granting them breathtaking powers for the coming century. Our own charter lingers from the time of the paper ledger and the wire-tugging switchboard telephone operator.

We need to modernize the Act in recognition of information and capital traveling around the world at the speed of light. And at the same time re-emphasize and recodify just what was meant back then: that Americans are savvy enough and community-spirited enough to have and run self-help cooperative not-for-profit financial service organizations -- of no matter what size -- that benefit those who join and serve, and that on account of the purpose and structure of these organizations no tax need be levied.

Recently banks were granted authority to engulf the insurance industry, and they are poised for taking over the investment banking and equities industries, not just in our country but globally. Now that S&Ls have disappeared there is only one obstacle to their utter dominance of financial services around the world -- cooperative credit unions.

We cannot let them frame the next issue or shape the next battleground. We have to keep saying what we really are.

Truthfully. Loudly. Over and over and over.




Oct. 9, 2000



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