March 12, 2012
Last fall’s Bank Transfer Season resulted in increased membership and greater public awareness of credit unions, and that attention even extended to legislators, with many officials pushing to re-examine state and city banking practices and many more sponsoring or voting in favor of credit union-friendly legislation.
Oregon and Washington, long leaders in the advancement of progressive credit union legislation, were again at the forefront of this movement.
Portland Mayor Sam Adams announced during a City Council meeting shortly after Bank Transfer Day that that he would pursue a plan to move Portland’s funds out of national banks and into local credit unions. The announcement came just two weeks after state Rep. Jefferson Smith, one of the mayoral candidates vying to replace Adams, wrote a letter challenging the city to move its funds.
Smith has demonstrated a thorough understanding of the context of his proposal and its national implications, describing it as an opportunity for the city of Portland to be a thought leader and to serve as an example for other public entities tackling similar issues.
“It started out when I supported legislation to allow for an increased cap in public deposits into credit unions, provided that those funds were adequately collateralized,” Smith said. “In looking around, seeing that there had yet to be the movement by cities to put the legislation into practice, I recognized that there needs to be and is a role for leadership from cities and local governments. And I decided to run for mayor in part because I saw national economic challenges that at least needed some response and some leadership shown by cities and local governments.”
Smith sees opportunity—and need—for continued credit union growth well beyond simply accepting public funds.
“With greater and greater consolidation in the banking industry, most of the money is banked in major institutions outside the state,” Smith said. “Despite that, still a majority of small-business lending is coming from local banks and credit unions. So, local institutions are punching above their weight class when it comes to small-business lending, and we know that most job growth comes from smaller businesses. There is a really important economic and jobs case that we need to make for banking locally.”
But Smith, who has deposited some of his campaign funds at an Oregon credit union, went on to caution against credit unions growing to the extent that they lose sight of their well-documented commitment to member service and responsible practices.
“It is even more important [now] for credit union boards, membership and leadership to cleave closely to the public missions of credit unions,” he said. “This should not be seen as an opportunity for credit unions to become more like national banks. This should be a time when we commit ourselves to responsible banking overall.”
Adams indicated that this was an issue he had been exploring before Smith took up the cause, but Wells Fargo, one of the most significant targets of the Bank Transfer Day and Occupy movements, still holds millions of dollars of Portland’s funds.
“I started looking into this issue when I was a Commissioner,” Adams said in an exclusive interview with Anthem. “At the time it wasn't really a public conversation, it was more of a personal instinct and conviction for me—I believe we should do as much business locally as is feasible, as a city and as individuals. I’ve long had a “buy local” passion. This isn’t to take away from national or international corporations. Responsible banking is one of the reasons I was attracted to and supported Occupy Wall Street.”
An organization called New Bottom Line also spearheaded a Bank Transfer Day-esque movement called Move Our Money, which is still working to get large entities to shift their funds from national banks to local institutions.
The Seattle City Council, meanwhile, voted unanimously in early November to review the city’s banking practices, a process that could lead to the removal of city funds from national banks. The resolution was sponsored by Councilmen Nick Licata and Mike O’Brien, both of whom supported the Bank Transfer Day movement personally as well as on a public policy level.
Licata left Bank of America to become a member of Seattle Metropolitan Credit Union during the week leading up to Bank Transfer Day, and O’Brien joined Verity Credit Union on Nov. 5.
Newell Aldrich, Licata’s legislative assistant, said that the Seattle City Council is still in the preliminary stage of moving the city’s funds to credit unions, but that progress continues, as it has been working with the city’s finance office to compile data.
“It’s something that I think we want to do carefully and not rush into,” Aldrich said. “There’s a lot of money involved, and we want to be careful stewards of the public’s funds.”
The months following Bank Transfer Season have also seen credit union legislation beginning to earn additional support on both a local and national level. Washington Gov. Christine Gregoire signed a bill last week allowing credit unions to accept public funds, and another bill recently originated in the U.S. House of Representatives that would allow credit unions to accept supplemental capital.
“It created a heightened awareness of credit unions with legislators,” said Mark Minickiello, vice president of legislative affairs for the Northwest Credit Union Association (NWCUA), of the events of last fall. “Shortly after Bank Transfer Day, we began receiving inquiries from legislators and their staff about ways they could help credit unions during the upcoming legislative session. It was a great opportunity for us to talk about our pending legislation, and I have no doubt that it helped us get our public funds bill passed out of both the House and Senate with healthy majorities.”
Questions or Concerns? Contact Matt Halvorson, Anthem Editor: email@example.com.