May 15, 2008 Letter to Senators Warner and Webb
James Landrith
PO Box 8208
Alexandria, VA 22306-8208
May 15, 2008
The Honorable John William Warner
United States Senate
225 Russell Senate Office Building
Washington, DC 20510-4601
The Honorable Jim Webb
United States Senate
144 Russell Senate Office Building
Washington, DC 20510
Dear Senators Warner and Webb:
As a former employee of America's Community Bankers and a customer of a local community bank, I urge you not to co-sponsor S. 2957.
A small, but aggressive, group of nontraditional credit unions are pushing the Credit Union Regulatory Improvements Act of 2008, S. 2957, in order to increase their business lending authority and weaken their capital requirements. As a constituent, I would like to thank you for not cosponsoring this legislation and respectfully request that if the credit union lobby asks you to cosponsor the bill, you say "No" for the following reasons:
Increasing commercial lending authority is inconsistent with the historic mission of credit unions. Credit unions were created to serve low- and moderate-income individuals who did not have access to financial services.
For that reason they were given an exemption from federal and state income taxes. However, several recent studies, including one by the Government Accountability Office (GAO), have shown banks are doing a better job of serving low- and moderate-income individuals than credit unions are, despite the credit unions' tax exemption. The powers these aggressive, new breed credit unions are asking for will only take them further from their congressionally mandated mission to serve people of modest means.
I am also concerned about the provisions of the bill that would weaken the capital standards for credit unions. Credit unions, as member-owned cooperatives, can only build capital through retained earnings. To protect the safety and soundness of the credit union industry, Congress subjected credit unions to higher minimum capital requirements. Weakening these requirements would be to forget the lessons of the 1980s about the importance of a strong capital base for depository institutions.
Giving even more powers to credit unions that aren't fulfilling their original mission, yet have participated in prior legislative and regulatory attempts to curtail the ability of banks to better serve their own customers, doesn't make sense. If these new -breed credit unions want to be banks, let them change their charters. Otherwise, they should refocus their attention on their original mission.
Thank you for considering my comments, and for not cosponsoring CURIA.
Sincerely,
James Landrith