By Ray Birch
BOOVILLE—Nothing is more frightening than the fear of the unknown—staring into the misty darkness, unsure of what the next step will bring, says Michaell Bell about the early days of credit union bank buys.
As Halloween arrives, the pioneer of credit union purchases of banks recalls the unsettling, almost eerie feeling he had back in 2009 when credit unions purchasing banks was merely a specter of an idea—untested, untried, but something just waiting to be created.
Bell spoke with CUToday.info about how what has now become a common credit union growth strategy began, how it has evolved and overcome bumps in the night that rise up like ghostly spirits, what evil lurks in the shadows, and how banking lobby demons can be vanquished.
“The fear of the unknown, I guess that could have stopped all this from ever occurring,” said the partner and co-chair of the Financial Institutions Practice Group at Honigman, LLP. “But, fortunately I was young and naïve over 14 years ago, and when you are that naïve you don’t think about that fear and just do it.”
Bell, at the age of 31 ventured into the murky waters to eventually fill a cauldron full of deals, nearly 50 to date. He admitted that years ago there were plenty of reasons not to pursue the idea.
Michael Bell
Not a Ghost of a Chance
“I've been a lawyer for 20 years, and if these deals had not started and you came to me today, I would probably say you can’t do them,” said Bell. “I'm serious. But back then I had been a lawyer for about six years and United FCU (St. Joseph, Mich.), which was the very first credit union to purchase a bank ($81-million Griffith Savings Bank in Indiana), came to me and asked me about buying the bank. We were just brainstorming and then we asked ourselves, what if we could do it? And I said, ‘Let’s try it.’”
Bell said the two organizations began talking in 2009 about a deal that would eventually close in 2010.
As CUToday.info reporting has extensively shown, credit union/bank agreements have now grown in number to the point where they have attracted the attention of some who would like to burn such arrangements at the stake
“The banking lobby…They began to watch these deals grow and they said, hey, remember, we don’t like credit unions. We need to remind ourselves of that. So, they just had to argue against these deals whether it makes sense or not,” Bell said.
Spreading the Fright
As CUToday.info has extensively reported, the banking lobby’s wizards have been reaching out to Washington with a message to Congress and state legislatures that these deals erode the nation’s tax base and they’re not good for consumers and communities.
“They're trying their darndest to take away the power of their own constituents, their own banks,” said Bell about the bankers. “They're going to various states and arguing that these banks should have less power and less choice when they go to sell. I'm sitting in these legislatures arguing against it, and I'm thinking to myself, ‘What's happening? These lobbyists are gritting their teeth waving their arms saying take away power from our banks. That they shouldn't be able to sell to a credit union’.”
Bell issued a stark warning to the bank lobby, pointing out only a limited number of credit unions have considered buying a bank, and if that number were to expand they won’t have enough magic in their fingertips to turn the tide in their favor.
“These agreements are appropriate for about 150 to 200 credit unions in America right now, out of 4,800,” Bell said. “If more credit unions begin to consider these buys, more banks will be selling to them.”
Not Unbeatable
But, while the banking goblins are big and powerful, they are not immortal and are beatable, said Bell.
“We have successfully warded them off in multiple states when they've objected,” said Bell. “And what is winning in front of the legislatures is the truth. They listen to the truth, see the facts and they always realize there is no substance to the bankers’ arguments.”