Bankers struggle to contain growth of credit unions
By Bernard Wysocki Jr., The Wall Street Journal
SALT LAKE CITY -- Harris H. Simmons is the banker credit-union executives love to hate.
As some credit unions have used loosened rules to grow into multibillion-dollar institutions, Mr. Simmons has made it his mission to keep them in check. The chief executive of Zions Bancorp, who also leads the American Bankers Association, is stirring up battles in the courts and in Washington over advantages enjoyed by credit unions -- especially their tax-free status.
"My bank paid $263.4 million in state and federal taxes last year," Mr. Simmons says. "Credit unions paid zip."
Such talk appalls Dan Mica, the chief executive of the Credit Union National Association, who says the tax exemption is a "life-and-death issue." Last month, Mr. Mica, a former Florida congressman, warned 4,200 of his members gathered in Washington that "Harris Simmons is crisscrossing the country attacking us everywhere he goes." After years of "hand-to-hand combat" between banks and credit unions, Mr. Mica said, the rivalry "could break out into open nuclear warfare."
Traditionally sleepy local institutions, credit unions have quietly become a major threat to banks, especially in some regions and market niches. They have assets of nearly $700 billion, or about 7 percent of U.S. bank assets. States have relaxed laws that once limited credit unions to a single community or work group, and some credit-union executives have become eager empire-builders.
Now banks are questioning whether the breaks enjoyed by credit unions have outlived their relevance....for more of the story