“It is nationwide — the credit unions are very large in home-equity loans and first mortgages. They are major lenders. It’s part of the reason the banks and credit unions have been having so many battles.”

Al Mansell Realtor and president of the National Association of Realtors told the Journal that the growing presence of credit unions in the loan market in recent years had redefined the playing field.

Mansell was in Guam on July 27 to meet with the Guam Association of Realtors.

He said the market had polarized into different providers for different loan sections.

“In my state [Utah] the banks are almost out of the business of making car loans. The automobile loans are almost all with the credit unions now.”

Mansell former president of the state senate of Utah said efforts to interest politicians in actions to stop the credit unions had not been successful. “They’ve tried to get the government and local state legislatures to do what they could to pull them back but they’ve not been very successful with that because the public likes dealing with credit unions.”

Mansell said the reason was simple — cheaper loans. “If you don’t have to pay taxes it’s cheaper.”

Mansell said things would not continue unchanged forever. “There’ll have to be a reckoning but when that point is I don’t know. It’s very difficult to allow two parallel systems one taxed and one untaxed to do all the same things. I suspect someday the federal government is going to have to deal with that; right now they haven’t been very willing to do very much about it because it’s so popular.

“The other alternative of course is to make banks untaxed but banks enjoy some other advantages — they’re regulated by the Federal Reserve [Bank] and the Treasury. They’re more like permitters than they are regulators.”

Gerard A. Cruz president and chief executive officer of the Community First Credit Union said the situation was different on Guam.

“We do business with a few of them and have what we think is a real comfortable competitiveness between us but on the issue of credit unions versus banks that’s always been a national issue than necessarily a local one.”

He said the market on Guam was large enough for all entities to make a difference in the market.

“But as long as our competitors nationally and the banks want to get bigger — and the credit unions want to get bigger as well — then there will always be somebody looking for an opportunity to chip at what they perceive to be their competitors’ advantage. Fortunately that hasn’t necessarily translated to Guam at the fervor that has been talked about and argued and lobbied in the states. For all intents and purposes regardless of size we’re all really community banks for Guam because it’s really a finite community that we serve.”

Cruz said the situation was not a new one. “Several years ago credit unions went before the Supreme Court and we won. Under Title 12 we were given the right to operate. The fight between credit unions and banks has always been there.”

He said oversight was not necessarily a problem.

“If you are going to tax credit unions then so be it. All I am asking for is to be allowed to have the same opportunities as banks.

“For years credit unions in the states have been aggressive in their product offerings and providing more benefits to members. They’ve been providing home loans car loans and personal loans. Now we’re also providing home loans.”

John Z. Arroyo president and chief executive officer of the Government of Guam Federal Credit Union said “Across the board credit unions are doing well primarily because they are a lot more aggressive in these areas.”

He said credit unions had gone deeper into the loan market because their members had requested them to.

“Credit unions have jumped on to the bandwagon to capture as much of that market as they can. The charter allows better fee structures and credit unions take on higher risk because the whole idea is to help the folks who are financially needy and of course you’re offering larger loans to value ratios.

Arroyo said technological advances had also helped people to receive a loan decision quickly for car-loan applications.

“Recently there has been a proliferation of these services specifically for credit unions. There is a complete use of technology in the indirect lending area — dealer lending — applications via the Internet or electronically — and at the receiving end an automated underwriter system that can render a decision in seconds.” He said some companies had taken the process up for mortgage applications but decisions were not rendered quite as quickly.

GGFCU has about 34 200 members of which about 30% to 35% are active employees of the government of Guam with $132.35 million in assets in March GGFCU began offering residential mortgages at the end of 2004. Arroyo said “It’s going fantastically well — we’re quite busy and it’s still exceeding our expectations.”

Arroyo said banks had been politically active in the U.S. mainland as credit unions became popular. “For sure in the mainland the banks are lobbying hard to prevent credit unions from expanding membership and moving into markets that were traditionally reserved for bankers.”

He said however that credit unions were cohesive as a group and provided a service. “The whole idea behind the credit union philosophy makes sense. We are making overtures to expand and offer products and services to a whole range of individuals who can’t get that range of services from their local bank.” MBJ