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Community banks deserve support, too

I read with interest Peter Yarrow's recent opinion piece in The Sun ("Tell the banks 'no thanks,'" Nov. 4).Though I certainly get his point about providing the public sound options in support of their banking needs, he threw smaller community banks under the bus by stating that "it might make sense for you to take your money and run — directly to the nearest credit union."

Community banks across this country do, in fact, have tight ties to the communities they serve, provide tremendous charitable support for things like Habitat for Humanity, Little League, and local Main Street businesses. Visit a community bank in Iowa, and you'll probably be greeted by the same teller who has been there for years who knows her customers very well and offers a lollipop for the kids. You will see firsthand an institution that is very much a part of the fabric of the community — and committed to its success. By and large, such local lenders did not participate in the excesses of the past several years — but have often been lumped into the same category as Bank of America, Goldman Sachs, Lehman Brothers, AIG and the like, which is unfortunate. It's become open season to tar and feather banks regardless of their size.

As a result, many small banks are having a rough time of it — what with increased regulation (in response to problems they played no role in) and competition. This competition includes credit unions where the definition of "members" has cleverly expanded to include almost anyone. Credit unions also continue to pursue expanded services like business account and commercial lending to further blur the line. Oh, and did I fail to mention that credit unions pay no taxes (unlike community banks)? This means credit unions provide no underlying support for our infrastructure, our military, education, and so on. The average cop patrolling the street pays more in taxes than a credit union.

I have a number of friends who work in the credit union industry. They are fine individuals and fine institutions that serve their constituents well. However, I will tell you that in many of these credit unions, their loan portfolios are a train wreck. Sound lending standards went out the window in the interest of serving their members regardless of their credit worthiness. In fact, the National Credit Union Administration has had to step in to bail out some of these credit unions and the entire industry has had to take on a larger assessment due to these underlying problems. So no one is "out of the woods" given the current economic environment.

At the end of the day, consumers have choices, and it's important that they do the research, understand the options and select the financial institution, whether credit union or community bank, that best meets their needs. You can probably tell that I have worked at a community bank that was very much involved in supporting its customers and local small businesses.

I hope Mr. Yarrow will consider these thoughts as he finalizes his book on the early 20th century thrift movement. I look forward to reading it.

J. Edrington, Baltimore

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