Yesterday, I wrote a diary about my bank, USAA. The CEO, Joe Robles, sent out a membership-wide email requesting that we write our Senators to protest the financial reform legislation.
I've learned a few things since writing that diary.
First, we have lots of USAA members among the DKos family. Frankily, I was surprised. I like to think of USAA as my small town bank - it's rather hard to believe that a fellow USAA member should belong to yet another small community of mine. What are the odds?
Second, this is making waves beyond my small world. You can check out stories at all over the web. I provide links below the fold.
Third, I started reading comments on the USAA website. Holy Cow! USAA is a microcosm of the rest of the USA! Who would have thought that a supposedly conservative, Republican organization like the military could have such diverse opinions? I think the CEO is shaking his head in wonder. He probably expected all USAA members to be Glenn Beck fans and FOX news aficionados.
USAA is a unique bank in many ways. It started off as an insurance company back in the 1920's to help military members who couldn't find affordable coverage because of the constant moving. It wasn't until the 1980's that they became a bank. They built a company by supporting active duty and retired military through the entire military moving process - from basic training to retirement. Overall they've done a good job.
That's why this email is making waves. Here are just a few of the pages I found in a quick Google Search, Red State, The Washington Examiner, CNN Money, and my old (as of a couple weeks ago) local newspaper, the San Antonio Express News, hometown to USAA's only brick and mortar bank.
The irony is that I learned more about what's going on from these articles than from my own bank. The article at the small paper, the Express News, was most enlightening:
Insurers invest some of the premiums they collect to ensure funds exist to later pay claims. USAA's insurance business invests in equities, real estate and investment-grade corporate bonds, said spokesman Roger Wildermuth.
Under the Volcker Rule, USAA's investment activity could be significantly limited to government securities — which don't earn enough to keep its insurance products affordable, the company said.
As a result, USAA added, it might need to charge higher premiums on insurance policies and pay less favorable rates on annuities.
Basically, the bank USAA has little to worry about. It's the insurance company that has concerns. CNN Money claims that USAA runs off a European model (please don't share that with out friends at Red State, they might have a cow), and the Volker Rule does not take this into account. It may be that if the legislation passes as is, USAA might have to separate into two companies - get a little smaller. Hmmm... isn't that the point of the whole legislation? To prevent large companies from getting too big? Or maybe I'm oversimplifying things.
If you want to see oversimplifying, just click to visit the USAA website. The comments clearly show a split between members with just a few smack dab in the middle. One side clearly stands with USAA and has decided that we should all send letters to our Senators just on the word of USAA alone. A few go to a further extreme and claim USAA should have asked us to "Kill the Bill," though no one used those exact words.
Most of those agreeing with USAA have a common theme - "I don't trust the goverment!"
Veterans _Retired Fed
04/23/2010
I and my husband are tired of the Federal Government trying to take over every aspect of our lives and those of our children. Government must be limited in the amount of power it has over the people it governs. This bill represents yet another attempt grow more federal government control over free enterprise and the American People as a whole. Will Orson Wells's book '1994' actually become a reality? This bill needs to be defeated as a whole. We already have regulatory agencies in place to do what this bill porports doing. The Securities Exchange Commission needs to do its' job.
I left the 1994 comment as is just because I'm an English Major and it tickled my funny bone.
And many more take that theme a little further, "I don't trust the government but I do trust USAA!"
MODs
04/23/2010
I trust USAA more than I trust a politician.
I have been an active member since 1982. I personally think this goes way beyond greed or any type of "Corporate conspiracy." In part it's about trust. When you have been with a company that consistently takes care of it's members and has not been involved in any known scandals.That company is ernest in its mission and has dedication. There are not too many companies looking out for the interest of the military family. I applaud and will support there efforts....THANK YOU USA A :-)
A concerned person
04/23/2010
I'm OUTRAGED that USAA has to step in and take a stand against a bill! What is this country coming to? If someone had just come to this country and learned what was happening, they would think that the government was trying to take over the private sector. And now, USAA has proven to be more trust worthy than our own government, which is not really a surprise, but still. I have been with USAA my whole life, and so have my parents and grand parents, they have always been there; honest, loyal, and straight forward. I may not have a big voice, but USAA does, and I stand behind them 100%
The other side are asking for more information. Please note that few are telling USAA they are wrong about the Volker Rule. Most are merely asking for clarification!
04/23/2010
I wish USAA had been a bit more specific on what is desired. I asked my Senator to amend the Volker rule so that subsidiaries and affiliates would not be included in the restrictions on proprietary trading by banks. It seems to me that this is a fairer request than to ask for specific favoritism to USAA. And, it highlights the ease by which lawmakers' sweeping statements tend to induce or exacerbate undesirable side effects.
J4DJR
04/23/2010
USAA has not sufficiently explained why we should support the USAA position on the Volcker Rule. If USAA is structured so that it COULD have done the same stupid things that Goldman, CITI, Wells Fargo, J P Morgan, Lehman Bros, Bear Sterns and the other big investment banks did, requiring a bail out using OUR tax dollars, then I SUPPORT the Volcker Rule. Even if USAA apparently did not act greedily and stupidly like the other big investment banks, the part of USAA that handles FDIC insured deposits MUST be separated from the rest of the operations so that a bailout using Federal tax dollars is not required.
NoTeaForMe
04/23/2010
If there is one thing that the last 2 years has taught us, it is that the free market system is not self-regulating and self-healing. It may deliver the best products in the world at the best prices, but if there isn't an umpire to make sure the playing field is safe and level, then there is no guarantee that the competition won't devolve into a riot that burns the whole stadium down. It happened in the Great Depression, it nearly happened in the fall of 2008. And 80 years separated those events precisely because effective checks and balances were erected in the 1930s, like Glass-Steagall, that were then dismantled in the last 15 years. Those who rail about the evils of government-- aren't you USAA members precisely because you worked for that government, as members of the military? Was that government evil and incompetent? No, by and large it is a force for good and order in the world.
As to the merits of this particular letter, it is not clear to me whether it is seeking a large loophole in the Volcker Rule, which I oppose, or a narrowly tailored exception for USAA, which I would support.
However, a few take it a little further and tell USAA where they can stick it:
B in CO
04/23/2010
With all due respect USAA - you can kiss my grits. This legislation is about protecting consumers from predatory and dangerous banking processes. While USAA may not have engaged in this practice directly, they are part of the monetary market that exploited and hid values of assets being traded as derivatives.
Do me a favor - stay out of politics. I don't care one whit about what USAA wants its customers to do on their behalf. You protect your own hide - don't try to play me into protecting it for you. You want to impress me, stand up for your members and hold the banking industry accountable - support this legislation instead of trying to impede. USAA isn't the only bank most of us do business with, and we are worth protecting from other unscrupulous lenders.
I am amazed at the spectrum - if I were to place all these responses on a dot plot, I believe we would find a close approximation of the general US public with a slight skew to the right. I do know that USAA must have been shocked to find so many comments offered to the left of the spectrum. A few people have argued that this isn't political at all and that USAA is just looking out for it's customers. Bullshit. USAA is playing a political game - they never asked us to write to our Senators to help strengthen rules to protect consumers, they've only asked us to write to weaken them. It's political.
Like many of the Progressive responses, I am very concerned that my bank asked me to send a letter to my Senators before I fully understood exactly what was being asked of me. To make things worse, I only learned about the Volker Rule after visiting the USAA website. If I had just read the email and clicked the link to send a letter, I wouldn't have been any wiser. USAA has done a lousy job of educating it's members as to why this is a bad idea. CNN Money tends to agree:
USAA's website offers a page with a higher level of detail, but it is not the main instrument being used in the campaign. Rather, it's the email, which can be seen here, that most members have read.
The email message doesn't, however, address any of the issues in the raging debate over the financial regulatory reform proposals currently winding their way through the Administration and Congress. It's not clear that USAA is seeking to educate its members about the issue as much as it's concerned about putting on a campaign that spurs them to action for its particular cause.
So I sent my own letter to USAA. I got a response from Lisa Calzoncit. Lisa has no title, so I have no idea who she is or if she has any authority to answer my letter. But no big worries as she didn't give me anything new at all. She basically repeated exactly what CEO Joe Robles had sent out the day before:
USAA is not like the banks and other companies that helped bring down our economy, and we never took a penny of TARP funds. However, the Senate bill would disproportionally impact USAA because we are a unique and fully integrated member association. USAA does not engage in the harmful practices this legislation seeks to resolve.
Simply, for the benefit of our members - the men and women of the U.S. military and their families. USAA supports financial services reform. If unchanged, the bill would jeopardize our ability to continue offering many of our competitive products and limit our ability to return money to our members.
Last year, USAA returned $1.2 billion* to our members in the form of distributions, dividends, and bank rebates and rewards. It is important to remember that USAA does not engage in the harmful practices this legislation seeks to resolve.
For more information on the Volcker Rule, please refer to the Newsroom article titled "Legislation Prompts USAA to Urge Action." We will provide regular updates in Newsroom.
We value your business and the opportunity to serve all your financial needs.
Thank you,
Lisa Calzoncit
USAA
*$1.2 billion includes amounts returned to members, associates and other customers. Past dividends or distributions are not a guarantee or promise of future dividends or distributions.
Note that USAA is playing all it's cards. First, it isn't like other banks. You'll notice that many members agree with them. I agreed with them until just recently. They have been recruiting new members like there is no tomorrow and I'm very concerned about the rapid growth. The bank is quickly losing it's small town feel. I'm sure that long time members of AIG felt like their bank would never let them down either. I can't imagine a customer of Bernie Madoff's saying that he was a bad guy before they found out he was a bad guy. We can trust banks only as much as we can trust any company... when they start getting big, I tend not to trust them at all. I feel the same way about my farmer - I'd rather buy local beef than a McDonald's burger any day of the week.
Second, they play the patriot card. They claim this bill would prevent them from helping their customers, all hard working military members and their families. Therefore, the government is screwing the military. A few USAA members would agree:
icemanbrice
04/23/2010
Im a soldier in the United States Army and need and appreciate what USAA does for me. Come on Democrats, you already denied the military a pay-raise, don't take away our banking privileges too! What special privileges do we get for dying for our country? This bank is one of few and you want to take that away also. COME ON!!!
eckdawg
04/23/2010
Top 500 Contributor
I think the goverment should stay out of private military affairs like USAA this is our's and our families sector.
I hate it when politicians, companies, etc. play the patriot card. I kept my mouth shut for far too long because I didn't want to be unpatriotic. I don't believe the patriot act anymore. True patriots don't need to call attention to the fact. And this bill has nothing to do with milking the military - it has everything to do with preventing financial institutions (not just banks) from milking all of us.
Third, they must be a good company because they can give money back to us. Well, if you note the little asterisk, that's not guaranteed in the future anyway, with or without any new legislation. So who cares? My dividends might take my family out to dinner and I get them once a year. So, goodbye dividends. I want a bank that doesn't have outrageous fees and gives me a good return on my investment. I would like no ATM fees, especially overseas, so that when we move, I can get foreign currency easy. I don't need much more than that.
So, I sent a new email tonight. This time I asked for specifics:
Please tell me why the Volker Rule will prevent USAA from:
- Managing the association's portfolio as we have for the past 87 years?
- Jeopardize USAA's ability to continue offering many of it's competitive products? And which competitive products would you no longer be able to provide?
- Limit your ability to return money to your members in the form of dividends, distributions and bank rebates and rewards?
I hope I get a real answer. Maybe USAA really does need to have an exception carved out of the Volker Rule. Sweeping legislation can do exactly that, sweep up the little guy along with the big ones. But until USAA can convince me, I'm not playing their game.
How about you?