Letter to the OA Responds to Culpepper: "What is First Basin doing?" (5-3-08)

5/12/2008 2:14:51 PM

What is First Basin doing?

May 3, 2008 - 6:59PM
BY: Martha Hulsey - Odessa

I am curious why the management of First Basin Credit Union continues to try and make the case for conversion to a mutual bank when they have already announced their intention not to do so.

The president/CEO of First Basin, Shem E. Culpepper, stated in his letter-to-the-editor that First Basin was unable to compete for commercial loans because of the percentage of assets cap on such loans at credit unions.

Credit unions are financial institutions formed by an organized group of people with a common bond.

Members of credit unions pool their assets to provide loans and other financial services to each other. They are designed to be an avenue for financial services, like checking/savings accounts as well as consumer loans, such as car loans. Because their focus is to help each other without profiting from such relationship they are a not-for-profit organization and are accordingly exempt from taxes on earnings. A bank is a very different kind of business, designed to provide more expansive credit services for the purpose of providing a maximum return to its shareholders. Because of this profit incentive, it is a taxed entity.

I do not believe the people who started First Basin intended it to become a financial powerhouse, but merely to be an economical way to handle their personal financial affairs. If a person wanted to do business with a bank, then they could simply go down the street to any number of banks in Odessa and surrounding communities.

The legislation before Congress providing for an increase in the lending cap for credit unions is drawing fire from banking groups who claim if you allow direct competition between banks and credit unions for commercial loans, then credit unions have a serious advantage because they are not taxed.

This makes a lot of sense when you consider the purpose for credit unions.

Credit unions came into existence in the United States in 1908. Credit unions are not the cause of today's housing and credit crisis; in fact they have drawn extensive praise from the media and policy makers for their performance and willingness to help consumers in troubled times. Unchecked greed is the basis of every financial crisis we have experienced as a nation. Since profit is not the motive for the formation of credit unions, they are the only financial institutions which have never required government assistance or rescue. In fact, they have been a source of help for consumers during the Great Depression, the SAL crisis or any other turbulent economic period in our nation's history.

Mr. Culpepper bemoans the fact First Basin is unable to take full benefit of the present boom in commercial lending in West Texas. However, anyone who has lived in West Texas for any length of time knows, the bust always follows the boom. Many local banks and savings and loans went under in the 1980s, but interestingly no credit union, including First Basin, did.

I was considering opening an account with First Basin but because of the lawsuit by the management against persons opposed to the conversion and the allegations of self-interest against the board, I am holding off. On the First Basin website, a letter is posted by the board chairman, which states the plans for conversion have been permanently abandoned and First Basin will remain a credit union. I guess time will tell the board's true intentions.

Martha Hulsey
Odessa

Read it here on the Odessa American website