Consultant: Credit unions lent as banks held back

When the American financial industry collapsed late last year, the country's member-owned credit unions kept on lending while commercial banks cut back on loans, a credit union consultant told several hundred people at a Las Vegas conference on Tuesday.

"We didn't wait for the government, and we didn't wait for government programs," Charles "Chip" Filson told members of the California and Nevada Credit Union Leagues on the second of a three-day conference at The Mirage. Filson is president of Callahan & Associates, a Washington, D.C.-based consulting firm for credit unions and former supervisor of the Illinois Credit Union Division.

"Credit unions are filling a void left by the market-based institutions," Filson said, adding that banks have curtailed lending despite getting money from the $700 billion Troubled Asset Relief Program.

"At this very same time, credit union loan originations are at an all-time high. Your institutions have continued to lend," Filson said. "Sometimes, the market doesn't always produce the right or best solution."

Banking industry representatives rebutted Filson's comments.

Bill Uffelman, chief executive officer of the Nevada Bankers Association, said most of the country's 8,000 banks received no money through TARP, and he said credit unions did receive assistance from the Treasury.

In an e-mail, Bill Martin, chief executive officer of Service1st Bank, said the speaker "fails to mention that credit unions have been on the biggest government dole for over 80 years -- (a) massive subsidy by the U.S. taxpayer since credit unions pay no taxes resulting in billions in lost tax revenue.

"Nor does he mention that the multiple credit union failures locally and around the country resulted not from loans to members but rather from multimillion-dollar commercial real estate loans gone bad, a lending power for which his membership and he lobbied for years," Martin said.

Filson said credit unions made $2 billion in student loans last year after securitized loans from the for-profit financial sector evaporated.

Credit unions have enjoyed rapid growth in deposits and members, he said. "Members are coming home to credit unions."

Filson said credit union membership increased 11 percent in the third quarter.

"We have the strongest capital levels of all financial institutions," Filson said.

In Nevada, regulators this year have seized four credit unions and transferred their deposits and loans to other credit unions. Since July 2008, regulators have closed five banks.

The conference attracted 400 paying attendees plus an equal number of other guests such as exhibitors.

Contact reporter John G. Edwards at jedwards@reviewjournal.com or 702-383-0420.