Credit Card Issuers View More Credit Unions as Threats

For decades, credit unions have positioned themselves as hometown alternatives to major banks, even going so far as to post scenes from "It's a Wonderful Life" on an industry advocacy website. However, a coalition of community bankers has expressed concern that loose rules governing credit union membership has created the non-profit equivalent of corporate mega-banks.

On a trade association website cited in a recent New York Times report, community bankers track instances where credit unions may have gone out of bounds by soliciting new members from outside their charters. Government rules require credit union members to share a common bond. Bankers say that bond gets blurred when credit unions encourage prospects to join membership organizations that can qualify them for share accounts, credit cards, and mortgages.

For instance, Pentagon Federal Credit Union's popular credit cards offer special benefits for military families. Prospective applicants with no military ties can pay $20 to join the National Military Family Association, qualifying them for PenFed Credit Union membership. Other credit union partnerships chronicled by the New York Times included an association that produces money management seminars and a regional bird-watching society. Bankers say that they'll lobby for lawmakers to review tenuous links between credit unions and membership organizations, so they can compete for banking customers on equal footing.