Credit unions, banks meet in court

Phil Hagen

Monday, Nov. 3, 1997 | 10:55 a.m.

BOULDER CITY -- Is this town big enough for three major banks, a minor bank and the Boulder Dam Credit Union?

"I'm sure they're hurting for business in this town," says Robert Crowe, president of the local Chamber of Commerce. "The credit union has something like 90 percent penetration in town, so it's gotta affect them. But I don't hear anybody bad-mouthing them. On the other hand, I don't see them emulating them, either. ... You'd almost think they'd try to emulate that service, or whatever it takes to try to get that type of penetrate."

No, the mouthing isn't bad here; it is nationwide.

Banks are fighting the credit union system in the U.S. Supreme Court -- in particular, over a 1982 interpretation a 1934 law that broadened membership criteria for all credit unions. Banks are finding it harder to compete with credit unions, which, they argue, avoid paying $1 billion in taxes a year because they're nonprofit institutions.

"The smaller communities (like Boulder) are tougher for us because they're so entrenched and they do have that penetration," says Bank of America spokesman Paul Stowell. "But our position all along is let's put everyone on an equal playing field and allow the market to dictate.

"Credit unions are allowed to do everything we do, and it's not fair for them to not pay federal taxes and be able to offer those products and services at a discount."

Manager Bill Ferrence says the Boulder Dam Credit Union won't be affected at all by the Supreme Court. For one, it has a state charter, not a federal. Two, it's a community credit union, with a well-defined membership (you have to live or work in Boulder City).

But he's still pulling for a victory in the high court, as it would hinder the banks' future efforts to "level the playing field."

"When they talk about a level playing field, we never thought that a level playing field was anything but what we wanted," Ferrence says. "All we'd say is, why don't they just return all their profits to their customers? That's a level playing field. If they return all their profits to their customers, they won't have to worry about taxation. They don't want a level playing field, they want the upper hand."

Meanwhile, branches like BofA's stick in Boulder City because they're part of a bigger picture.

"We have invested a lot of time and capital in creating the largest ATM network in the country," Stowell says. "We're saying if customers want advantages and benefits of banking with someone that provides convenience and choices, well, we've got the most choices."

BofA banks on customers wanting the big ATM network, wanting to make transactions by phone or over the Internet, wanting to walk into another branch wherever they are -- even the grocery store. They also have drive-through tellers, seven-day service and much longer hours.

"Those are choices a credit union can't offer," Stowell says.